According to Smith, the greatest improvements in the productive powers of labour, and the greater part of the skill, dexterity, and judgment, with which it is anywhere directed, or applied, seem to have been the effects of the division of labour (pg. 3). The division of labour plays a extremely important role in book I. Adam suggest that this will spread wealth all the way down to even the poorest in society, an idea that closely resembles the theory of trickle-down economics. He implies that because the division of labour would be met with great success, it would create a surplus of products in the market and therefor create a greater access of goods to those who would generally be unable to afford these types of products. He argues that goods are produced at a much accelerated rate when the labour is divided. The division creates specialised knowledge and workers with dexterity (pg. 1) . His model of labour seems to closely resemble that of the industrial revolution and sweat shop labour, and I am guessing that his theory still plays a large role in manufacturing today, especially in developing nations where factory work is common, such as in China, Costa Rica, Indonesia, India, etc.

In chapter II, Smith goes on to say that the idea of trade, is embedded in human

nature (pg. 10). When a surplus is created, man can trade his good for one of his neighbours, which increases the wellbeing of everyone in a society. Adam’s writes, « It is the necessary, though very slow and gradual, consequence of a certain propensity in human nature, which has in view no such extensive utility; the propensity to truck, barter, and exchange one thing for another » (pg. 10) . When two people come together, each one is lacking an item that they require and leave with something they previously did not own. According to Smith, the human desire to trade is something that makes us human and that this desire can be found in all societies throughout all ages and nations and even
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2 of 2 in the most primitive societies, such as hunting and gathering societies. Adam’s goes on to make a point which I agree with greatly, « The difference between the most dissimilar characters, between a philosopher and a common street porter, for example, seems to arise not so much from nature, as from habit, custom, and education » (pg. 12) . I’ve never thought about this before, but when Adam’s makes this point, I can’t believe how true and relevant this still is in modern culture. In most cases, we are a product of our environment and our habits. If both of my parents are successful business executives, the most natural path for me to take would be that of my parents and would start from early childhood with my habits and my education.

In chapter III, Adam’s title and main point of this chapter is, the division of labor is

limited by the extent of the market. Smith writes, « When the market is very small, no person can have any encouragement to dedicate himself entirely to one employment, for want of the power to exchange all that surplus part of the produce of his own labour, which is over and above his own consumption, for such parts of the produce of other men’s labour as he has occasion for. » (pg. 13). He makes the point that a larger market is needed to consume the surplus of goods created by the division of labour, and therefor, in rural areas, the population is too small to require all of the good produced, so the market in these less populated areas, the division of labour must be limited, so a surplus of goods do not go unused. I think that this point is not as relevant today as it was in
Adam’s time, as people today are much more mobile and even rural areas can still sustain a local economy of their own and can manage to trade with others outside of their jurisdiction, especially via the internet.

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