Division of Labor: Smith and Taylor

The Division of Labor: Adam Smith and F. W. Taylor

In the very first chapter of The Wealth of Nations Adam Smith propounded an idea that seems commonplace, yet it is the basic theory of all modern economics. This is the theory of the sub­division of labor. The idea of each man doing the thing he is most capable of doing was not unique with Smith. Plato, in his Re­public, claimed that the formation of society itself was due to the benefits achieved through specialization. Articles of consumption were produced better, more easily, and more abundantly "when one man does that thing which is natural to him . . ." The Physiocrats, likewise, were aware of the advantages of specializa­tion, but their emphasis was on the unproductiveness of some labor and the productiveness of other. Agricultural labor pro­duced all value from the land; other labor was sterile and drew its reward from the original value created by agriculture.

Smith took a different view of things. Labor was the source of wealth. Not just some types of labor, but all labor. All labor pro­duced value, and in the fact of their cooperation none could be called useless. At great length Smith described the tremendous amount of cooperation which was necessary to provide a nation with the things it desires. The true source of the increase of the wealth of nations lies in the subdivision of labor and the system of automatic exchange which enables specialization to take place. The increase in total production is best exemplified by the pin industry, said Smith, and he then described it, showing that one man working alone could produce from one to twenty straight pins a day, while through specialization and subdivision of labor each workman could make the equivalent of more than one pound per day. The reasons for these great advantages were stated clearly: learning one job well saved the time usually absorbed in changes from job to job, and the close acquaintance with a single job led to the invention of new techniques. In further describing the division of labor he saw only two limits to its gradual increase—the extent of the market and the supply of capital. The former was a limitation because specialization re­quired the presence of a large market in which to exchange the increasing quantities of the product. The latter was a limitation because subdivision required increased investments for space, materials, machinery, and advances for wages. These are not clearly defined by Smith but seem to be implicit in his description. The other side of specialization Smith believed would be taken care of by man's "propensity to truck, barter, and exchange one thing for another," and the beneficial effects of each person seek­ing his own self interest. In exchanging that part of one's labor which was a surplus for the surplus of another, both were bene­fited; and through the participation of all, the total wealth of society increased. That some of Smith's assumptions were naive, such as a "propensity to truck and barter," is obvious, but these are more than offset by the clarity with which he described the methods and advantages of division of labor and free exchange.

Criticism of the division of labor because of its dehumanizing effects has come from many sources. Smith himself said that con­centration upon a few simple operations for long periods of time might cause the laborer to lose the faculty of exercising intelligent thought. William Graham Sumner, an ardent advocate of many of Smith's theories, noted that the subdivision of labor caused the wage earner to lose all sense of responsibility for the conduct of the business and to lose with it his ability to calculate his own advantage and to foresee opportunities to improve his lot. The chief critics of the subdivision of labor are the Socialists. Marx claimed that machinery and the division of labor had taken from the work of wage earners all individual character, leaving only simple, routine, monotonous jobs which reduced the worker to an unimportant cog in a vast system of production, with his wages lowered to the level of the means of subsistence for propa­gation of his kind.

From the time of Adam Smith until early in the 20th century no real advance was made in the theory of labor's use as a pro­ductive agent. Then came the farsighted ideas of Frederick Winslow Taylor. Called scientific management or Taylor-ism, the plan was the beginning of revolutionary changes in the application of labor to industry. Taylor's aim was to introduce into industry certain "natural laws" which if followed would result in maximum prosperity for employer and worker alike. In general the plan called for the introduction of three new prin­ciples of industrial administration: First, to secure greater co­operation of the labor force, the best workmen were hired at wages high enough to guarantee their continued affiliation with the company. Second, to secure greater efficiency, work was standardized and reduced to a routine. Third, to insure the suc­cess of larger ventures as well as efficiency in small ones, a system of functional planning was introduced. It was business organized, not by the profit maker but by the engineer.

While the great hopes for prosperity and harmonious industrial relations faded rapidly in the disturbances accompanying World War I, Taylorism set the pattern for the gigantic workshops of today. Labor has opposed scientific management, and employers have abused its programs and purposes; but like Adam Smith's outline of the division of labor it presaged something new in the relationship of labor to production.

One final word on the subject of labor may not be amiss. The economic developments described so clearly by Smith, especially his division of labor, have cut the general population into an­tagonistic parts, each with its own economic interests, organiza­tions, and political programs. This tendency was described by Marx as the class struggle' and elevated to the position of the central factor in human history. In the Communist Manifesto, Marx described the process of the class struggle. In modern society this exhibits itself as the struggle between the property-less wage earner and the owners of the means of production; that is, the proletariat and the bourgeoisie. The latter group, not satis­fied with its economic control, seeks to perpetuate its privileged position by securing control of the government.

The wage earner finds the mechanization of his job the cause of declining wages. Women and children are brought in as competitors to do the simple tasks created by machines. Moreover the working class is constantly being augmented since the lower strata of the middle class is being pushed down into the ranks of the wage earner. Ac­tually, however, the increasing size of business units brings work­ers together in larger masses, makes them aware of their common problems, and welds them into a strong revolutionary force. Such is Marx's theory of the progress of labor to a position of power. Even those who do not subscribe to Marx's theories have been inspired to seek a fuller understanding of the problems of the wage earner. The Webbs, Sidney and Beatrice, English author­ities on labor and social problems, describe the progress of the trade union movement in England, and point out clearly in their book, Industrial Democracy, how the organization of labor unions is gradually removing freedom from the labor market, substi­tuting in its place institutional procedures of collective bargain­ing, wage determination, and control of working conditions, thus reverting to the controlled labor and customary wages and prices of the Middle Ages.