Through these two concepts, a society can fully utilize its resources and excel as a nation. “THE GREATEST IMPROVEMENTS in the productive powers of labor, and the greater part of the skill, dexterity, and judgment, with which it is anywhere directed, or applied, seem to have been the effects Of the division Of rapidly makes this concrete by giving the example of a pin factory where of course pins are being produced.
He stresses just how much this work is divided up into different branches and operations and that no one person can come close of doing all that work homeless. Its notes a matter of the one person not having enough time to do all those task but there are more fundamental factors operating. As professor Goulash mentioned in lecture five, Adam Smith gives three main reasons why the division of Labor leads to greater productivity. The first is simply the increase in dexterity or learning in performing a particular operation (Goulash).
The second is the saving of time in passing one task to another, a worker who is specializing can concentrate on one task without having to deal with those switching cost. Finally the most dynamic effect perhaps even the most important is that the focused worker is more likely to invent and innovate and come up with new and better ways of performing the task. At the bases of all Adam Smith’s beliefs lies a strong belief in Laissez-fairer economics. Laissez -fairer basically means to have the government leave you alone.
Adam Smith thought that the nations did not grow wealthy from tariffs, rather free trade caused nations to get wealthy. Free trade is trade with no regulation and no government interaction, which as perceived that it would boost the economy and result in making more money. This created a new way of thinking called capitalism. This new way of thinking thought that companies should be private and the sole reason to invest money was to create profits (Owens). With the appropriation of companies comes in the factor of competition.
The more business there are the more competition is created, ultimately this competition creates a better product. Also Smith identified another reason why competitive markets are beneficial, that reason being how competitive markets “prevent any individual errors from exacting a price higher than that set by the market simply means that the influence Of someone powerful cannot influence the competitive markets, rather if the person does it is loss of themselves not the com appetite market.
This idea of capitalism as it spread during the industrial revolution in particular, focuses led a lot of people to very productive efforts, creativity, and new inventions, that allowed a nation to become more productive especially England. The measurements and the gross domestic product of England was producing ore and more making it a highly productive nation (Goulash). But this was not the case when analyzing the success of England in a microeconomic way.
There were actually very disturbing things that were discovered from the great success of England. The factories that were constructed were very unsafe and uncomfortable. Workers were being abused by the owners of the factories, as they were forced on working long hours from twelve to fourteen hours, six to seven days a week. Why? To make more profit. If you could hire a worker and keep his wages very low and keep you’re price up you could make ore profit and the lower the wages the more profit was made.
So the owners of many business’s saw that and basically viewed there workers as simply another com opponent of production just like another piece of equipment, as Karl Marx mentions “Division of labor within the workshop implies the undisputed authority of the capitalist over men, that are but parts of a mechanism that belongs to Just like hiring a person, put that person into the job, teach that person specialized work he does, if the person gets sick or hurt then hire someone new just like a machine.
This fatalist approach was creating an inequality between the owners and the workers, and the idea of a safe working place, minimum wage was completely unheard of in a capitalist economy-Karl Marx believed that capitalism was an economic system evolving into a social system, where there is the wealthy and then the workers. Marx emphasizes that if the laborers did not do anything against the owners then this cycle of oppression would be a never ending problem. Furthermore Karl Marx criticized the idea of capitalism, which he thought brought inequality in society and created social classes thin a nation.
Poor people will stay poor and the wealthy will stay rich. On the contrary Marx ideologies favored socialism, where the people will be educated and learn how they can cooperatively engage their efforts, raise productivity, and improve their lifestyles. In conclusion, Adam Smith’s theory of Division Of Labor and free market economy leads to increase efficiency and productivity within a nation, at the cost of inequality and social classes within a society. In which a small amount benefit and majority suffer.