SOCB30H3 Chapter Notes - Chapter 1-5: Circulating Capital, Fixed Capital, Factor Price
Document Summary
Adam smith begins by stating that the greatest improvements in the productive power of labor lie in the division of labor. Even in the production of very simple products, division of labor always increases productivity exponentially. Smith offers three reasons for this increase in productivity. First, the division of labor creates specialized knowledge of a particular trade or task. This, in turn, makes the laborers engaged in this task more dexterous, and therefore more productive. Secondly, the division of labor saves the laborer time. In focusing on one task, rather than passing from one task to another, a process that requires him to use different tools and materials, he is able to maximize his time, thus increasing productivity. Finally, the amount of time spent by laborers on an isolated task leads to innovation in the methods and tools employed in the task, and therefore to technological innovation that ultimately makes that task easier.
