Not a Zero-Sum Game - Ludwig von Mises Institute

The Division of Labor
ost explanations dealing with the division of labor are lim-
M ited to how it leads to specialization and a subsequent
increase in individual productivity. The most often cited example
is Adam Smith's pin factory. Smith compares the meagerness
of production before division of labor with the much
enhanced production that comes with the specialized division of
tasks.8 However, this is only part of the story.
Neglected in most traditional explanations is how wealth
increases when tasks are divided up according to comparative
advantage, even without any improvement in individual skills or
the introduction of new methods or technology. Furthermore, the
fact that this increase in group productivity occurs in all soci-
eties, from hunter-gatherer to advanced, is also neglected.
In his book, Human Action, Ludwig von Mises states that "in
a hypothetical world in which the division of labor would not
8. Adam Smith, An Inquiry into the Nature and Causes of the Wealth oj Nations
(Indianapolis: Liberty Fund, Inc., 1981), pp. 13-24.