Saturday, April 07, 2007

More on the 'Quantity of Work'

The source of the Bank of England’s statement about the division of labour in manufacturing, namely that ‘the great increase in the quantity of work that results’, is from a discussion by Smith (WN I.i.5: p 17) about a consequence of the vast increase in productivity that results from the three circumstances that enable that productivity to take place.

Specifically, these circumstances are: the ‘increase in the dexterity’ of each workman - he is undertaking a simple task or operation instead of many; the saving of time’ commonly lost between moving from one task to another through all the tasks he has to do to complete all the operations necessary for each unit of output; and the ‘invention of a great number of machines which facilitate and abridge labour’. The unprecedented process of rapid invention got under way within a few decades of Wealth Of Nations.

The increase in ‘the quantity of work’ is not, however, the purpose of the division of labour. The three circumstances explain what the division of labour does, not what it achieves – they are caused by the division of labour, necessarily, but are not the objective of employing such work arrangements.

The division of labour achieves a massive increase in productivity and continues to do so well beyond its first steps. As the manufacturing process spreads and deepens, it also attracts innovation and technology. Smith draws attention to the numbers of persons labouring in separate sectors, all over the country, and abroad, who combine in markets to produce a common labourer’s woollen coat.

Markets through the prices of their outputs, which become inputs into the woollen coat, co-ordinate thousands of people, most of who, if not all, do not know (nor need to know) anybody beyond the immediate ones they transact with in traded exchanges. Yet the total of their transaction chains co-ordinate the work of all the multiple labours of the hundreds of people that is necessary to produce millions of simple woollen coats. Extend that market-co-ordinated process across all the products in a fairly primitive commercial economy, as Britain was in the mid-18th century (it was still largely an agricultural society and was to remain so well into the late 19th-century), and you define what a society looked like where the division of labour was more complex than it ever had been in the previous millennia of human history. It became more complex on an unimaginable scale by the 21st century.

And it became yet more complex because of the impact of the innovation and invention of power-driven machinery, and later automation, where fewer and fewer quantities of work were needed to produce units of output. I have already quoted the figures (from Professor Mike Munger’s research) that showed the decline in the number of pin factories from 1776 to only 2 in 1960 (1 per cent of the 18th-century pin making work force), and the increase in the number of pins at 48,000 a day per factory to millions of pins per shift in about 100 years. The division of labour ‘compressed’, if I may say so, the work of a notional 48,000 pin makers working at the rate of one pin per day, into the work of 10 labourers in each of hundreds of factories, into only two factories by the mid-20th century.

Similar histories can be shown in other manufactured items, especially now that Japan, China and India have joined the global manufacturing business.

The division of labour is about raising the productivity of labour and, as technology is applied (automation), also economising on the numbers of labourers, reducing prices per unit (inclusive of substantial quality improvements), and raising the real incomes of consumers. This happens in every mass consumer product, and in the hardware (and now, software) of the industries that produce them.


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