Question

Discuss why Adam Smith wrote in Wealth of Nations that "the greatest improvement in the productive power of labour, and the greater part of the skill, dexterity and judgment with which it is anywhere direct, or applied, seem to have been the effect of the division of labour."

Answer 1

Division of labour refers to a worker doing only a part of the entire job, so as to gain specialization in that job, instead of doing everything and being good at nothing. he saw the production of pins in England at that time and realized that if every worker does only a specific part of the entire production process, repeatedly, then there will be gains from specialization. This specialization leads to more efficient production as each worker is getting better at the specific work that he is doing. This increases productivity. Repeatedly doing the job helps the worker learn the intricacies of that job and improves skill and judgement.