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DIVISION OF LABOR

Origins

We have explained the very first reasons for the division of labor to appear. Now it is time to further expand on its origin.

The pressure to succeed in the competing environment imposed by the free markets forced suppliers to improve their products. But improvement takes time and resources. If I am trying to develop a larger, healthier goat for sale, I won’t have time to farm dates. I will leave date growing to other people, who will not be interested in goat improvement.

Characteristics

The characteristics and success of each participant in the division of labor depends on many factors, some of them are:

  • Differences in know-how, trades or skill levels
  • Quantity and quality of capital goods investment
  • Quality and quantity of consumer goods production (durable and perishables)
  • Environmental conditions determining suitability and yield for the farming or manufacturing of consumer goods.
  • Desirability of consumer goods and transportation (logistics)

And many others.

Definition

So far we have talked about the division of labor but we never defined it. We thought that it was quite intuitive, but if you require a definition, here it is: the Division of Labor is an economic concept that states that in order to achieve maximum profits in a free market, suppliers of goods and services must improve their products over the competition. In order to do that, they must specialize.

Advantages

There are several key advantages in having a functioning division of labor. Just a few:

Better goods and services. As people specialize in improving different aspects of products its desirability increases. Sometimes desirability translates as higher quality, sometimes as larger quantities, but sometimes is the reverse. Cheaper products of lower quality but still capable of satisfying peoples’ needs and wants.

Conflict avoidance. As technology becomes more sophisticated, it also becomes more globally dependent and integrated. The rewards from declaring war on your customers and potentially taking over are greatly diminished. What is the point of conquering a country if their wealth drops and with it, yours. Mutually assured economic debacle.

Better specialization. Effective and efficient innovators need lesser effective and efficient suppliers to provide goods and services that they could provide themselves, but would take time from their main goal. In this manner, both groups benefit and with them the whole of society.

Benefits regardless of motives. When people engage in division of labor they benefit themselves but they also benefit other people. For others to benefit it is not necessary for suppliers to have the same motives or that those motives be selfless. On the contrary. The process of division of labor works regardless of any motive suppliers may have, particularly if those motives are selfish.

It is distributed in nature. The division of labor happens everywhere and it is not controlled or commanded from a central bunker. It is not mandated or regulated by governments. It is not centralized in a few think-tanks nor is it dependent from the opinion of politicians, academics of the power elite. Because of this property, the division of labor is unstoppable.

It is indestructible. The reasons why the division of labor came to be are still as valid today as they were in the past. We can all understand them. They are so simple that they are all in us. The only way to stop the division of labor would be to kill us all. For any intent and purpose, the division of labor can de temporarily subdued and gagged, but it can never be stopped.

Engine of civilization

The process of division of labor in a framework of catallactic competition is truly what drives innovation and with it, civilization. It is true what George Bernard Shaw said:

The reasonable man adapts himself to the world: the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man.

The division of labor is the most effective and efficient way we have to adapt the world to our needs and therefore increase our standards of living. Any foolish attempt to interfere with it such as what totalitarian regimes attempted to do, will only bring misery, poverty and ultimately self-defeat.

Competition without the division of labor is pointless, because it does create innovation at a sufficient rate to have any impact.

Albert Einstein said:

Compound interest is the most powerful force in the universe.

If this is true, then the division of labor lingers proudly in second place.

CONCLUSION

Adam Smith once said that the free markets seem guided by an invisible hand. He was mistaken. It was the division of labor within catallactic competition.

The division of labor is the most powerful weapon we have against poverty and misery. But for it to work properly, we must set it free. We cannot tolerate government interference because if we do we will be their accomplices in delivering misery to other people. The world is difficult enough as it is and we, all, deserve better.

It is your choice now. You know what’s at stake. You know where it all leads (we have been there). It’s your turn to make a decision. Make it a wise one. Or not.

Note: please see the Glossary if you are unfamiliar with certain words.

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