ADAM SMITH AND CHARLES BABBAGE CONCEPTS 13
After industrialization, economists noted that workers had tounderstand the specialization of tasks in their places of work.Therefore, organizations, be it in production, assembly ormanufacturing started having specialized roles in the productionunits. Economists and industrialist came up with the notion ofdivision of labor to explain the relevance of specializationand continue the trends of economic efficiency. According toDurkheim (2014), the division of labor isthe specialization of individuals who work together in stratifiedlevels to perform specific tasks. In the specific tasks, the workerneeds to have extensive knowledge and be very efficient to meet theobjectives of the division of labor It was necessary for theeconomists and industrialists to define the concept of division oflabor so that workers and employees would understand its underlyingprinciples. After the introduction of the concept, there were somespecial contributions to the concept and theory of division of laborby renowned economists such as Charles Babbage and Adam Smith.Specialization has been a very influential economic tool, affectingall aspects of production including the political ideology, laborproductivity and efficiency of the production process.
Definition of the division of labor
The concept of the definition of labor grew out of the need forindustrialists and economists to control labor, especially inlarge-scale economies. The traditional approach to the division oflabor was through gender and class differentiations (Kaya, 2015Mullings, 2014). However, after the advent of industrialization,countries’ economies and systems were divided, based on theindustry and its labor requirements. The labor requirement wasoccasioned by the fact that some industries had more levels ofdivision than others did. For instance, the production industry,which involves assembly, manufacturing, and supply of goods, has moredivisions than the entertainment industry. At the same time, theeconomists presented the notion of the division of labor tohelp people avoid struggling to have knowledge in a wide variety ofskills, and instead, mastering a certain set. Presently, the divisionof labor follows global economic and educational divisions. However,modern economists derive their knowledge of the division of laborfrom the ideologies forwarded by some renowned economists, such asCharles Babbage and Adam Smith.
Charles Babbage on Specialization
Charles Babbage is one of the most significant contributors tosystemization. Babbage proposed that the world isalways in constant need for economic system designers, who are peoplewith the ability to take on and break down the tasks in the universeinto comprehensible pieces (Makinen &Kasanen, 2014 Blaug, 1996). He centered his ideology of division oflabor on this school of thought. Babbage guided other economists intoa perspective of viewing the division of labor through the lens ofpractical ramification. His publications on the matter drew a lotfrom the works of Karl Marx, producing works that helped the worldeconomists to understand economic relations in the society through adefinitive division of labor (Marx, 1867). At the same time, hisideology on the subject turned out to be a popular reason forspecialization of the workers. Blaug (1996) and Brian (2004) suggestthat Charles Babbage notably proposed that work has to bedivided into sub-tasks, where maximal deployment of personalskills would follow.
The work of Babbage was very influential in the development ofeconomic systems in the world. Babbage had proposed that in theproduction systems depended on the functionality of the society asopposed to the appeal of particular fields to an individual (Blaug,1996). In a way, the proposal was seen as the groundwork on which theideals of capitalism were built. Incapitalism, as outlined in the Communist Manifesto by Carl Marx, thesociety needs to have specific skills to suit productivity indifferent sectors (Marx, 1867). The expansion by Marx proposes thatthe contributions of Babbage were more concern with the welfare ofthe society than the economic viability of dividing labor (Marx,1867). Nonetheless, the work of Babbage proposed that in dividinglabor, the entire society had a role to play, and the result of theproductivity was productivity for the entire society.
Adam Smith and Division of Labor
In the book Wealth of Nations, Adam Smith captured his ideologiesregarding the division of labor in the society (Smith, 1776). Hisideology is based on the concept ofeconomic growth. He showed that dividing labor increases productivityand each job is relevant to the results of the process of production(Bladen, 1974)). In thebook, Smith showed similar ideologies to Babbage in proposing thenecessity of specialization in stimulating economic growth (Smith,1776). According to Smith, in the production process, the workers hadto meet the minimum requirements of the industrialists and produce insurplus. Where such divisions were not possible, the process ofdivision failed to have sufficient deviation from unspecialized labor(Smith, 1776).
Smith also described the concept of value. He proposed that thenatural value of labor is the price ofproducing a certain quality of service (Takashi,1993 Meek, 1954). According to Smith, if the demand for laborincreases, the cost of the value also increases. Therefore, wherethere is a deficiency in certain specialized skills, there is anincreased demand. Smith proposes that labor is merely a commodity inthe capitalist market, same as all other goods and services for saleand the demand and supply follow all the laws of economics (Smith,1776). Value is a very important aspect of labor because itdetermines the payment derived from the specific skills of allworkers (Samuelson, 1971).According to the work of Ricardo, labor is available for buying andselling. The costs of labor are determined by the availability of therequired labor, creating the impression that increased costs of laborare a function of detailed requirements of labor.
Adam Smith vs. Charles Babbage
There is an interesting debate between the two classical economists.They both assume that the division of labor has a positive influenceon the production process. While Babbage proposes that the divisionof labor serves to reduce stratification in the society, Smithproposes that in the open market, labor is merely a service availableto the highest bidders (Takashi,1993). Therefore, the economic models resulting from the workof Smith and Babbage are different because they envisioned differentresults to the division of labor.
Expansions of the earlier proposals of Smith and Babbage haveresulted in the emergence of two economic systems, the capitalisticideology of the west and the Communism ideology proposed by Carl Marxand the likes of Lenin. In communism, the labor market is determinedby the demand and the ability of the workers to meet the requiredexpectations. For example, experience results in increased incomebecause of the association between experience and the expectedoutcomes. On the other hand, in communist societies, all members havespecific roles to play and the functionality of the society isdependent on the ability of every member to play their roles (Marx,1867).
The main difference here is in the element of the value of labor tothe individual and the society. The model proposed by Babbage had agreater impact on the society because it divided the entire societyinto specialized units. On the other hand, according to Smith, thedivision of labor had an important role to play in motivatingindividuals to be more productive to increase their value and thusincrease the expected income. In addition,according to Smith, the value of labor was attached to reducing thecosts of production and at the same time increasing the efficiency ofthe production models (Takashi,1993 Samuelson, 1971 Skinner, 1993)). Therefore, wheremachines produced better quality labor, they were preferred to humaninput because of the aspect of meeting the expectations and reducingthe costs of productivity. In the contemporary times, the choice ofspecific fields of specialization depends on the availability ofopportunities in the job market. Therefore, it is safe to concludethat the contributions of Smith have the greatest impact on thecontemporary western society. Babbage and his contributions may haveplayed an important role in motivating communism and thus shaped theprevious decades in world powers such as China and the former USSR(Miura, 2015). Thedifference shows the importance of the division of labor in theproduction systems and local economies.
Division of Labor and Human Resources
Why does specialized labor pose such a big point of discussion? Isthere a relationship between specialization and increasedproductivity? According to Babbage, in performing specialized tasks,“that person must possess sufficient skill to perform the mostdifficult task and sufficient strength to execute the most laborious,of the operations into which the art is divided” (Miura,2015). In the present day, specialization requires trainingand thus increases the costs of labor. The implication is that laborprices are increased the division of labor while they may have beenlower where the worker required no specialized training (Meek, 1954Bladen, 1974 Takashi, 1993).Therefore, Miura proposes that the work of Babbage is useful inexplaining the correlation between the specialized and the unskilledlabor. In the ideal productivity, the payment should be interms of hours of work as opposed to fixed rates (Miura,2015). In this way, the coexistence of the specialized and theunspecialized labor makes the best possible use of specialization anddecreases the costs of productivity.
According to Babbage, specialization produced an increase in thewages and thus increased all aspects derived from the productionprocess. Therefore, Babbage proposed that in the ideal productionunit, only a certain number of people needed specialized skills(Miura, 2015). During theindustrial revolution in Europe, the nature of the skills and thescope of application increased as therequirements for specialization increased. In fact, the relevance ofspecialization stratified the society by creating the need forfarmers and other related fields where the workers were reduced toreduce the costs of productivity. On a holistic scale, the divisionof labor produced a functional society where all the processes wereinterrelated. The implication is that the value for money wasrelated to increasing costs of labor, and where the costs oflabor increased, the need for commodities produced by the high costswould increase the costs of living, creating conditions where thevalue of labor remained constant (Adolphe,1984). In this regard, there is a consensus between Smith andBabbage because both envisioned the effects of increasing labor onthe costs of living. Smith proposed the solution bemechanization while Babbage proposed including unspecialized labor inthe production process and payment on the hourly rates to increaseefficiency (Smith, 1776). Consequently, the specialty of individualworkers improved the efficiency of the production process by limitingthe costs of labor.
Smith proposed that the division of labor bea useful part of the production process because it increasesefficiency (Smith, 1776). In his model, the workers are paid based onthe usefulness of their input and their ability to exceedexpectations (Adolphe, 1984).Therefore, the workers are motivated to work hard and to increase theelement of usefulness to their employers. However, in the idealworking conditions, the production requires no specific skills. Inthese cases, the motivational levels are not useful because theworkers perform routine tasks (Miura,2015). There is an interesting implication of the work ofSmith because he created the impression that where the nature of workis mundane, the employers should consider the use of machines. Here,the view resonates with one of the themes of modern day humanresource management that human capital isunderutilized when it is applied in areas that do not requirecreativity. Therefore, the argument by Smith resonates with theargument that the principle human motivation is to reach one`s fullpotential. Specialization allows workers to reach their fullpotential by creating economic incentives to specialize and increaseproductivity.
The arguments show that division of labor is a positive economicconcept because it not only increases the productivity of workers,but it increases the ability of people to reach their full potential(Smith, 1776). In the ideal conditions, the division of labor is apowerful motivator for employees, and itallows reduction of the costs of production where there is an idealmix of skilled and unskilled labor (Ricardo, 1817). Payment by thehour increases the application of skilled labor to suit the specificrequirements of an employer. Where the ideal areapplied to the communist ideology, the entire process ofproduction fits the requirements of the society, as was proposed byCarl Marx. In the communist ideology, different areas specialize indifferent aspects of production and instead of payment the productsare shared equally by all the different systems participating in theproduction process (Marx, 1867). However, the process fails becausepeople need the motivation to produce. Incapitalism, the results are communal as opposed to personal.Therefore, the participants are not motivated to better themselves,hence the eventual failure of capitalist States (Adolphe,1984). The realization shows that specialization is animportant source of human motivation because it offers theopportunity for personal growth.
Division of Labor and Productivity
Specialization of distinct workers has a positive effect on theeconomy (Smith, 1776). Productivity measures economic output and theoutput is a derivative of the quality of labor involved in theproduction process. However, it is important to note that inrequiring specialization, a job requires additional training and thusreduces the number of potential workers (Durkheim,2014). Therefore, by reducing the number of potential workers,specialization increases the costs of labor byreducing the supply.
According to Portes & Walton (2013), a complex division of laboris associated with economic output and the rise of capitalism. At thesame time, by breaking down specialties and assigning the appropriatepersonnel to handle each, the production lines flow smoothly. Thisway, the production can meet the demand and possibly have a surplus,which can be re-invested back into the production process (Durkheim,2014 Dumitraşcu A & Dumitraşcu V, 2012). Finally, incomplex production industries, which give the direction of economicprogress in the modern world, a division oflabor increases technical efficiency, a key performance indicator ofsuccess (Durkheim, 2014).Division of labor affects two main aspects of the production process,efficiency, and productivity.
Efficiency: in the production process, it is important to balance thecosts of labor to productivity. There is no direct metric to show theeffects of the division of labor on the costs of capital. However, itis possible to show that since the introduction of the division oflabor, the costs have not risen as would be expected (Miura,2015). Instead, the costs are determined by the requirementfor specialization and the presence of qualified capital. At the sametime, the specialization has resulted in many different academicfields and thus advanced the fields of application by introducinginnovative minds (Heinz, 1992).Therefore, the application of the principles and the hourly rates ofpayment have reduced the negative effects of specialization on theproduction process and increased the efficiency of the process byassigning jobs to qualified individuals. In the ideal conditions,Smith proposed that division of labor must produce a surplus. Thesurplus can be reinvested in differentfields and thus aid in the expansion of the companies (Smith, 1776).Today, where the labor is too expensive, there is active outsourcingto reduce the costs of labor and increase profitability. Therefore,the efficiency of the capitalistic ideology and its application is afunction of the division of labor.
Productivity: does specialization increase productivity? Improvingthe quality of human labor produces a direct increase inproductivity. However, Babbage predicted that the correlation wouldnot be as direct as the theoretical situation implies (Miura,2015). Therefore, he proposed that the productivity bea function of synchronization of processes as opposed to improvedquality of labor. Despite the undoubted potential of improved qualityto improve productivity in complicated and competitive markets, theeffect is not direct in the mainstream production medium (Mullings,2014). Therefore, despite the relevance of specialization inincreasing productivity, division of labor has an important effect onthe costs of labor. Therefore, the free markets and the ability offree markets to regulate the costs of labor are a useful tool forincreasing efficiency. Where a person isspecialized, he or she performs a task in minimal time and atoptimal speeds (Miura, 2015).Therefore, the division of labor increases productivity. The increaseis relevant in determining the enumeration of workers and isinfluential where hourly rates and payment on commissions areused.
The division of labor is an economic ideology that gained momentumduring and after the era of industrialization. By using its concepts,industrialists and economists have been able to design labor systemsthat are geared towards global economicdevelopment. Adam Smith and Charles Babbage were some of the mostnotable contributors to the debate on the division of labor, andtheir ideologies have guided the design of modern economic andproduction systems. Studying the concept of the division of laborwill expand the knowledge base in it, hence opening up moreopportunities for better comprehension of productivity, andconsequentially, global economic growth.
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