The Benefits of the Labor Division by Adam Smith - Term Paper Example

Wealth of Nations by Adam Smith Adam Smith states that division of labour has various advantages, which enhance the productivity of a nation. However, the author further states that this is not because of human wisdom. Smith states that nations have to engage division of labour, which is a slow but gradual progress (Smith, 1776). For a nation to enhance its wealth there is a need for division of labour. This is where individuals engage in the same activity repetitively. As such, they perfect their work, which leads to an increase in the value of the products.

This can be used to enhance trade, which in the 18th century was mostly barter trade. The author quips that all animals are dependent on each other in different occasions. However, when a human being or an animal needs the services of another, there is a need for an agreement (Smith and Bullock, 2007). The individual or animal with the services that are highly needed has to be persuaded to offer the services. On the other hand, the needy person or animal has to make the approach known to the holder of the services.

As such, they will be in constant communication in concern to the exchange of services. For example, when two hounds are chasing a single hare, they often look like they are in a concert, each fighting to get the hare. However, when looking closely at the situation, each hound is chasing the hare towards the other. In this situation, both hounds are in need of a service they do not have. Apparently, the hare is what they need. However, they have to make a strategy when chasing the hare. When they decide to chase the hare concurrently, they are in a sort of division of labour.

Though they have no formal agreement, they are chasing for the same service. Ultimately, they catch the hare due to the division of labour. Human nature at times uses the same paradigm when they want some services that are not in their favour. As such, they have to gain the favour of the people that have the services. At times, this is not the occasion, which may lead to other avenues of finding the same services. For example, in the animal kingdom, animals resorts to fists and fights for the services they need (Smith, 1776).

Apparently, humankind lives in a civilized society. Therefore, some avenues of finding the services they need are not allowed. As such, there is a need for cooperation and assistance from other people that own the services (Smith and Bullock, 2007). This leads to a situation where humankind has to make relations with other people, who will be dependent on their friendship. This is an avenue of ensuring humans have the services they need, especially when they do not have an avenue of getting the services.

Strangely, this is not seen in the animal kingdom. When animals reach maturity, each animal is independent. As such, they do not rely on cooperation and the help of other animals. This is a prevalent situation in the animals, as each animal longs for independence. Humankind has a different perspective when it comes to independence. Even after maturity, the human race will rely on the support of other humans to have an acceptable living. However, humankind has various avenues of survival and prevailing in life.

For example, humans have a high likelihood of thriving, when they show priority in their self-interests. Smith states that love for individual interests is a proof to other human beings that services in the individual’s favour is to their advantage (Smith, 1776). This is seen especially when the individual requires the other people to do a favour in accordance to the individual’s interests. Such prevailing instances have led to interdependence in human beings, as they often state that when an individual offers a favour, it should be returned.

From this statement, it is evident that each person has focus on personal interests. As a result, each person has to consider personal interests in each occasion. Conversely, the humankind is dependent on reciprocation of favuors, since each person has the interests that should be fulfilled (Fleischacker, 2004). This leads to interdependence, where a person expects a favour in return, after working on the interest of another individual. The wealth of nations is build through the personal interests of individuals.

The human nature is based on fulfilling personal interests. For example, when humans need food, they have to get foodstuff from a butcher or a grocery. Apparently, the grocery and butcher have their personal interests, which are instigated by the love for one-self. When taking foodstuff from a grocery or a butcher, it is an advantage to the butcher and grocery. As such, the person in need of the services of the butcher of grocery has to return a favour in accordance to the services that are offered.

In such instances, the wealth of nations is created, as people have to exchange services by returning favuors, which in the current world is money. From such a scenario, people have to look for resources, which are scarce. With the resources, they are in a position to exchange with the services they need. The exchange of service and money leads to creation of wealth, as the people with an advantage gain more than the people that need the services (Smith, 1776). For example, the grocery store and butcher have a gain from the services they offer to the people that need the stated services.

In this scenario, Smith explains that humans do not address the issue of humanity by exchange of services. However, they exchange services due to the self-love of each individual. They have needs they need to satisfy in each situation. As such, they have to get other services in exchange. Consequentially, the advantageous person stands to gain than the person demanding a service. In addition to this, the author gives coherent explanations on other humans who do not have a favuor in exchange do not stand to gain in the scenario.

For example, beggars do not have a service in exchange, when they need a favor from other people. As such, they depend on humanity of other individuals for their life. Strangely, this can be a way of creating wealth. At times, the services offered by other people who do not need favuors in exchange can be overwhelming. This could lead to a self-sustenance situation. In Smith’s explanation, it is evident that nations have to create wealth for sustenance (Smith, 1776). Apparently, wealth is ostensibly created when humans exchange services in return for favuors.

The favuors are explained as a form of transactions, where money is exchanged. As such, the economy stands to gain since people from different levels of the economy are gaining wealth. With an increased exchange of services in the economy, there is an increase in the wealth. The same applies to a nation, when there is an increase in the exchange of services (Smith and Bullock, 2007). This paradigm has been used by many nations in creating their wealth. The creation of wealth is classified in different levels.

For example, there is the exchange of products on the individual level. This is where individuals trade products on an individual level. Similarly, there is the trade in which organizations exchange services in bulk. In addition to this, there is the exchange of services on the national level, where nations exchange products for gain. Using the explanation by Smith, it is evident that nations make wealth in such an avenue (Fleischacker, 2004). Consistent gain and improvement in the gains leads to creation of wealth.

Consequentially, the people should also look for the resources, which are scarce. When they have resources for exchange of products, they will be in a position to freely exchange products. In conclusion, Smith’s explanation is considered one of the vital documents that were published in the 18th century. Even though this happened the same time when there was declaration of independence, the wealth of nations is still one of the prevalent documents in the history of the world. As a fact, this is due to the global impact of the document, as it has enhanced studies in the economic sense.

For example, Smith opposed mercantilism, which stated that nations create wealth when they hoard to precious metals, limiting imports through tariffs, while increasing the exports. However, Smith’s explanation is greatly used, as it focuses on the fundamental aspect of wealth creation. References Fleischacker, S. (2004). On Adam Smith's Wealth of nations: A philosophical companion. Princeton, N.J: Princeton University Press. Smith, A. (1776). Of the principle which gives occasion to the division of labour.

In The wealth of nations (Book 1). Retrieved from http://www.gutenberg.org/files/3300/3300-h/3300-h.htm#link2HCH0002 Smith, A., & Bullock, C. J. (2007). Wealth of nations. New York: Cosimo Classics.