Review on Wealth of Nations by Adam Smith - Term Paper Example

?Book Review on Wealth of nations by Adam Smith Adam Smith, in his seminal work The Wealth of Nations has laid the foundations of all the modern economic thought and political economy. Smith has published his thoughtful insights on various political economies through five major books and this review focuses on Book One where the author deals elaborately with the causes of improvement in the productive powers of labor. The book is divided into various chapters and this review specifically deal with the first three chapters of the book as they deal with the division of labor, the principle behind it and clearly shows the reader how the nature of market limits the division of labor. No doubt, this review will provide any student of economics useful insights regarding the various aspects of the concept of the division of labor. Chapter one of the book unearths the meaning and scope of the division of labor. At the very outset of the chapter Smith purports that the division of labor has tremendously improved the productive powers of labor. He offers a number of instances to prove that the concept of the division of labor has drastically changed the nature of markets and economies. Smith then goes on to enumerate the benefits as well as the various effects of the division of labor on workforce productivity and the extent of the market. For him, the division of labor works effectively with both small and great manufactures even though with the latter the division is less observed. Smith explains the benefits or advantages of the division of labor by explaining the example of the trade of a pin-maker. He postulates that while one individual may find it difficult to make a single pin within a day it is possible for a group of ten workers to make forty-eight thousands pins in a day through ‘proper division and combination of their different operations’ (Smith, 2009, p.8). However, he also cautions that the division of labor should take into account the separation of various trades or labors and the variety of skills required for each operations in the subdivision of labor. Thus, he makes it clear that the division of labor contributes towards better productivity in a limited span of time. In this respect, Smith’s observations on agriculture and agricultural labor are noteworthy. He observes that agriculture does not permit one so many subdivisions of labor as in the case of manufactures. He also observes that one of the reasons why agriculture has failed to cope up with the pace of improvements in manufactures is this impossibility of separating the various branches of labor in agriculture (Smith, 2009). He also observes that wealthy nations are marked by greater superiority in manufactures rather than in agriculture. In chapter one, Smith also argues that the division of labor can positively contribute to the three different circumstances that increase the quantity of work: “first, to the increase of dexterity in every particular workman; secondly, to the saving of the time which is commonly lost in passing from one species of work to another; and, lastly, to the invention of a great number of machines which facilitate and abridge labor, and enable one man to do the work of many” (Smith, 2009, p. 9). Division of labor increases the dexterity of the workforce by reducing the volume of work into simple operations; it saves the time of the workforce as each one indulges in such operations of personal expertise; and proper machinery (the workforce will soon identify new machineries that would facilitate their subdivisions of labor as and when their expertise increases) will also result in more productivity. A probe into history will convince one that wealthy nations are characterized by these three favorable circumstances. Smith thus concludes the first chapter of the book by reinstating that no nations could become prosperous or wealthy without the proper division of labor within the country. Having dealt with the advantages of the division of labor Smith goes on to describe the principle that provides occasion to the division of labor in the second chapter. For him, the principle that governs the division of labor is “the propensity to truck, barter, and exchange one thing for another” (Smith, 2009, p.12). Humans by nature seek co-operation and assistance from others and these occasional wants very often prompt man to indulge in treaties and barter systems. Similarly, everyone tends to exchange the surplus part of the produce of one’s own labor and these form the basis of the division of labor too. The differences in the talents possessed by individuals contribute to the division of labor only when individuals are ready to share such unique talents. Unlike animals, humans on the one hand make use of their dissimilar talents and geniuses ‘to truck, barter, and exchange’ and on the other hand each one purchases whatever talents he has occasion for. Thus, all throughout the second chapter Smith stresses the exchange of the work forces’ talents, expertise, geniuses and labor which makes the division of labor meaningful, productive and fruitful. In chapter three of the book Smith tries to establish the relationship between division of labor and the extent of the market. The extent of the market affects the division of labor either positively or negatively. When the market is small the occasions for the laborers to indulge in exchange are also limited. On the other hand, a more extensive market would open more opportunities for exchange as well as the division of labor. While this has been the common understanding of the nature and size of the market Smith believes that “industry of every kind naturally begins to subdivide and improve itself, and it is frequently not till a long time after that those improvements extend themselves to the inland parts of the country” (Smith, 2009, p. 15). While a market that is capable of producing every sort of labor seems to be the most desirable one, one should always bear in mind that the extent of market will always be ‘in proportion to the riches and populousness of that country’ (Smith, 2009, p. 15). Smith’s theorem also argues that the presence of similar specialists in a market would adversely affect its division of labor. It also points out that scarce specialists’ occupations would establish their monopoly over the extent of the market. Thus, Smith in the third chapter of the book asserts that lack of sufficient opportunity for exchange in any market would result in lesser division of labor which will adversely affect the economy’s pace towards a wealthy one. To conclude, it can be stated that the first three chapters of Book One by Adams deals with the various factors affecting the division of labor. The author has successfully shown the relationship between the division of labor and the extent of market. Similarly, the underlying principle that governs the concept of the division of labor is also vividly pictured by the author. The large variety of examples and the supporting evidences employed all throughout the chapters not only make it an interesting one but it also contributes to the credibility and authenticity of the book. The three chapters also contribute to a thorough understanding of the book’s major thrust on the productive powers of labor. Chapter one shows the reader how the division of labor has a positive impact on the productive powers of labor in any market. The number of instances offered by the authors is many and varied. Smith’s observations on the underlying principle that determines division of labor are quite appealing. He stresses on the need to exchange various skills and talents in a market and makes clear that this is the only way to make nations wealthy. The review of the three chapters also convince one that lack of sufficient opportunity for exchange in any market would adversely affect the division of labor. Thus, it can be stated that Book One of Adam Smith’s The Wealth of Nations offers a wealth of useful insights to anyone who seriously reads the text. References Smith, Adam. (2009). The Wealth of Nations. Digireads.com Publishing. Read More