Smithsonian Economic Theory in the Information Age

Topics: Economics, Capitalism, Free market Pages: 4 (1299 words) Published: November 15, 2008
Smithsonian Economic Theory in the Information Age

The basis tenets of Adam Smith’s concept of division of labour, first printed in his book, The Wealth of Nations (cited herein as reprinted in Patrick Murray’s Reflections on Commercial Life), have been staples of economic thought for well over 200 years. Initially, however, the French economist François Quesnay, as interpreted by Walter Eltis in his 1988 Oxford Economic Paper “The Contrasting Theories of Industrialization of François and Adam Smith”, believed that industry, by its very nature could not produce a net gain, and moreover (in the context of 18th Century France), that “state support for industrialization in France had reduced population, cut living standards, and undermined government finances (p. 269).” This point of view, presented first in 1759 by Quesnay, and subsequently readdressed by Eltis, directly conflicts with Smith’s now well-accepted theory of division of labour. The purpose of this paper will be to present and reaffirm Smith’s concept and benefits of Division of Labour against Eltis’ modern (1988) adaptation of Quesnay’s argument against industrialization. Smith observed that, via division of labour, or industrial specialization in a manufacturing context, Information Age 3

productivity was substantially increased due to three key elements. 1.Improved worker dexterity
2.Increased worker efficiency
3.Technological innovation
Improved worker dexterity, or skill, Smith argues, is garnered simply from a worker’s ability to master one simple component of the manufacturing process. Smith cites the manufacturing process required to create a pin, as an example, and begins by stating that if a worker was unfamiliar with the process of creating a pin, it would be difficult for him to produce even one in a day. However, an unskilled worker could be trained, and rapidly become an expert in one component of the pin making process (p. 177). Increased worker efficiency is derived by...

References: Eltis, W. (1988). The Contrasting Theories of Industrialization of François Quesnay and Adam Smith. Oxford Economic Papers.
Murray, I. P. (1997). Reflections on Commercial Life New York, NY: Routledge.
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