1.2 KiB
Division of Labour
Definition
The separation of work into specialized tasks that increases productivity and depends on opportunities for exchange.
Source Chapter
Book I, Chapter 3
Context
Smith explains that the power of exchanging gives occasion to the division of labour, but that this division is constrained by how much exchange the market can support.
Economic Domain
Production
Original Wording
Smith writes that the power of exchanging gives occasion to the division of labour.
Modern Interpretation
Specialization works only when producers can exchange specialized output for the goods they need.
Market Extent
Definition
The geographical and economic reach of exchange that determines whether specialized producers can find enough demand for their surplus output.
Source Chapter
Book I, Chapter 3
Context
Smith states that the extent of the division of labour must always be limited by the extent of the market.
Economic Domain
Exchange
Original Wording
The extent of this division must always be limited by the extent of the market.
Modern Interpretation
Market size sets the practical ceiling for specialization because small markets cannot absorb surplus production.