Reference no: EM131147446

reply this discussion post. Answer the following questions.

Adam Smith begins in Book One by stating that our best improvements of the productive power is in the division of labor. Whether it it be small or large products, division of labor increases productivity. Specialized knowledge through the division of labor makes the worker more dexterous and more productive. It saves the worker time by not having to stop and do many different tasks with different tools and materials throughout the day. Increased division of labor also increases innovation because the worker is more focused on a single task and is looking to work in a way or with the machinery that makes he or she most efficient.

By this, the division of labor increases the productivity and makes the country more wealthy. Adam Smith claims that division of labor is not an outcome of any authority but something natural to mankind. Our ability to barter and trade is what makes us human, Smith would say.
He also states "When two parties enter into a trade with one another, both come away with something they were previously lacking". The division of labor continues to work as long as this is fulfilled.

Adam Smith claims that the professions of most people are not determined by talent, but determined by custom, habit, and education. Having specialized knowledge is how people fulfill certain roles in modern times. A system of specialization and education of trades would not be possible without the capability of trade. Without trade, people would have to learn a wide variety of skills to sustain him or herself. This, in Smith's eyes, is the distinction of humans from animals, which do not have the capability of trade.

The Wealth of Nations denotes that the division of labor is limited by the extent of the market. The size of the market regulates the degree of the division of labor that it can support. The bigger the market, the more labor can be effectively divided. A bigger market is needed to consume the products produced by the increased productivity created by the division of labor. The division of labor must be limited in some ways in rural areas because the market is too little to absorb the products created from an extensive division of labor. In the past, advancements in industry are made only when there is the promise of a big market that will be able to absorb the products of labor. Such occurs when the market inevitably grows or when transportation has been made more available to other markets.

Currency, or money, serves to expand the market because it facilitates trade to a large extent. Without a universal and standardized currency, people would have to seek out bartering partners that had exactly what they were in need of. It would be a rarity that both parties found what they needed. Therefore, people would have less certainty in the ability to replace the surplus they produced with the things that they needed, and would discourage them from producing a surplus from the beginning.

• After reading the Wealth of Nations, what are some of the benefits of having a division of labor? Does it bring about wealth to people other than the landlords and business owners?

• In accordance with the text, or in your own opinion, what makes trade natural to human beings? What is it about it that makes it intrinsic to us?