The Simplified Wealth of Nations of Adam Smith, Book 1, Chapter 3: Division of Labour is limited by market size
Chapter 3: Division of Labour is Limited by the Extent of the Market
The Most Important Factor That Leads To The Division Of Labour In Society
Since the power of exchanging creates the division of labour, the extent of the market must always limit that division.
- When the market is very small, no one can dedicate himself entirely to one employment because few people will buy his excess produce.
There are some industries possible only in a great town.
- A porter can find only find work in a great town.
- In very small villages with scattered houses in the Highlands of Scotland, every farmer must be butcher, baker and brewer for his own family.
- There are rarely smiths, carpenters, or masons within less than twenty miles.
- The scattered families that live eight or ten miles apart, must learn those many works themselves.
- Country workmen must apply themselves to all industries which use the same materials.
- A country carpenter deals in everything made of wood,
- He is also a joiner, a cabinet maker, and even a carver in wood, as well as a wheelwright, a ploughwright, a cart and wagon maker.
- A country smith deals in everything made of iron
- It is impossible to find a nailer in the remote parts of the Highlands of Scotland.
- Such a nailer, producing 1,000 nails a day for 300 working days in a year, can make 300,000 nails in the year.
- But it would be impossible for him to dispose of 1,000 nails in a year.
How Shipping Increased The Division Of Labour In Ancient Civilizations
Water carriage opens up industry to more markets than land-carriage.
- Industries along the sea coast and rivers naturally subdivide and improve itself faster than the inland parts of the country.
- A broad-wheeled wagon run by two men with eight horses can carry four tons between London and Edinburgh in six weeks
- A ship navigated by six or eight men sailing between London and Leith can carry 200 tons in the same length of time.
- Six or eight men using water-carriage can carry the same quantity as 100 men drawn by 400 horses between London and Edinburgh.
- Land carriage becomes more costly than water-carriage even if it is less risky.
- If water-carriage was impossible, commerce would be so expensive that there could be little commerce.
- "What goods could bear the expence of land-carriage between London and Calcutta?"
- With what safety could they be transported through so many barbarous territories?
- Those two cities currently trade with each other and encourage each other's industry.
The advantages of water-carriage led to the natural improvement of art and industry earlier near the water than the inland parts of the country.
- The inland parts of the country cannot have any other market than the area around them.
- The extent of their market must for a long time be in proportion to the riches and populousness of that area,
- Their development must always be posterior to the development of that area.
- In our North American colonies, the plantations have followed the sea-coast or navigable river banks
- The plantations have rarely extended far from them.
The first civilized nations in written history were those around the Mediterranean coast.
- That sea had a lot of islands, neighboring shores, and a smooth surface as it had no tides and only waves created by the wind.
- This made it favorable to early navigation before the compass was invented and while ships were imperfect.
- To sail out of the Straits of Gibraltar was considered very dangerous in ancient times.
- Only the Phoenicians and Carthaginians, the most skilful navigators and shipbuilders of those times, attempted it.
Egypt was the first of the countries on the Mediterranean coast to develop agriculture or manufactures.
- The Nile allowed communication by water-carriage to all parts of the country in the same way as the Rhine and the Maese do in Holland.
- The extent and easiness of this inland navigation was probably one of the principal causes of Egypt's early improvement.
Bengal and Eastern China also had early improvements in agriculture and manufactures.
- Bengal has the Ganges and other great rivers.
- Eastern China also has several great rivers.
- It affords an inland navigation much more extensive than the Nile or the Ganges put together.
- Neither the ancient Egyptians, Indians, nor Chinese encouraged foreign commerce
- They all derived their great opulence from inland navigation.
All the inland parts of Africa and North Asia were barbarous then and now.
- The frozen Sea of Okhotsk allows no navigation
- Their great rivers are too far from one another, unable to carry commerce and communication.
- No great inlets exist in Africa
- Great inlets carry commerce into the interior parts of other continents:
- The Baltic and Adriatic seas in Europe
- The Mediterranean and Black seas in Europe and Asia
- The gulfs of Arabia, Persia, India, Bengal, and Siam [Thailand], in Asia
- The commerce carried on by rivers which do not break into canals or runs into foreign territory before it reaches the sea, can never be considerable
- The foreign nation can obstruct the communication to the sea.
- The Danube is of very little use to Germany, Austria and Hungary.
Next: Chapter 4: The Origin and Use of Money