The Division of Labor in Our Economy

Categories: Economics

How hard would it be for one man to live if he had to do everything himself (EconClips, 2017)? Probably really hard seeing that that one person would have to do everything from hunting his meals to making his clothing and creating his shelter from scratch. He wouldn’t get much else done seeing that he would be focused on keeping himself alive most of the time. It would be so much easier if he simply focused on creating shelters while someone else did the hunting for him, then he could simply trade a shelter he built for a meal hunted by someone else, this is the division of labor.

So how does the division of labor work? The division of labor allows people to focus on the field of work that suits them best. When people specialize in their areas they can exchange any surplus they produce, any free and voluntary exchange of goods always benefits the parties involved (EconClips, 2017). Specialization is really just another word for the Division of Labor (Bite-size Econ, 2018).

Importance of the Division of Labor to a Capitalist Economy

At its root, capitalism is an economic system based on three things: wage labor (working for a wage), private ownership or control of the means of production (things like factories, machinery, farms, and offices), and production for exchange and profit (Steven, 2011). Due to the private ownership or control of the means of production businesses can mass-produce a certain product they specialize in and trade any surplus of the goods they produce for any other goods they need.

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By doing so they maximize the number of goods that both business produce while still having access to other particular goods. The existence of different professions is the division of labor (EconClips, 2018). It is everywhere in our economy and since we can all specialize in a particular profession we all can have an important impact in this capitalist economy utilizing the division of labor.

The Efficiency of Production in the Division of Labor

Since specialization is just another word for the division of labor (Bitesize-Econ, 2018) it makes mass producing a good so much easier. According to (Adam Smith, 1776) Not only the whole work is a peculiar trade, but it is divided into a number of branches, of which the greater part are likewise peculiar trades. Adam Smith explained the division of labor in his book The Wealth of Nations, Book 1, Chapter 1. He explained the division of labor by dividing the steps of producing a pin. Here’s how it worked, One guy starts by drawing out wire, the next guy straightens it, the third guy cuts it into pieces, the fourth guy gives each piece a point, the fifth guy grinds the other end, two or three other steps make the head, the next guy attaches it, then a guy paints them white, and the last guy bags them I missed a couple of steps but I’m told it’s 18 distinct tasks (Bite-size Econ, 2018). Without the division of labor, these guys were barely able to make 20 pins each or maybe none at all, now they were making about 48,000 per day, that’s about 240 times more pins being produced a day (Bite-size Econ, 2018). Why is the same labor more productive using the division of labor? There are 3 reasons one being dexterity because each worker becomes really good at doing their one specific task, second no switching between tasks which takes time to do, and finally automation because as one studies the task they do repetitively they find easier ways to do that task which can simplify it or create something to do the task for them it is almost inevitable (Bite-size Econ, 2018)

Personal Experiences of the Division of Labor and Specialization

I believe we all have had many personal experiences with the division of labor just because it exists in our economy all around us. Every profession is a result of the division of labor because it consists of a group of people specializing in one study or line of work in order to contribute to this economy. Just because I worked as a mechanic for vehicles all my life doesn’t mean I can’t purchase fresh produce it just means that instead, I focus on one profession and let someone else harvest my fresh produce. I might even work on a farmers’ vehicle to some time for some produce instead of the farmer having to learn the trade himself and lose time doing what he already has lots of experience in which is harvesting fresh produce. As you can see the division of labor can be applied to any industry although not equally easily but as much as it can be applied it increases productivity to the same magnitude as we saw in the pin maker factory (Bite-size Econ, 2018).


  1. Econ Clips. (2017, November 16) Division of Labor and Comparative Advantage | Free Trade [Video]. YouTube.
  2. Bite-size Econ. (2018, October 3) Adam Smith’s The Wealth of Nations – Book 1 Chapter 1 [Video]. Youtube.
  3. Steven. (2011, May 15) Capitalism: an introduction. Libcom. Retrieved February 15, 2020, from
  4. Adam Smith. (1776) The Wealth of Nations. Capitalism.

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The Division of Labor in Our Economy. (2021, Mar 10). Retrieved from

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