1.1 Overview of the Division of Labor
The greatest improvement to the productivity of labor has been the effect of the division of labor.
Smith gives the example of pin-making: a single person unfamiliar with the way in which pins are made could scarcely produce a pin at all, and even given the proper equipment could make at best a few pins per day. But in a manufacturing operation, tasks are specialized: one man draws metal into wire, another cuts it to the appropriate length, another sharpens it, another grinds the head, etc.
And by this process, a group of about a dozen workers can produce nearly fifty thousand pins in a day, far more than if each attempted the entire task. In addition to the fantastic increase in output, this process is highly efficient: each person in such an organization of labor performs a simple task, for which little training is needed, and each uses specialized equipment rather than needed ten workshops identically equipped.
The Division of Labor
Smith acknowledges that a pin is a "trifling" object with a simple process of fabrication, but the same process can be applied to any manufactured good - and the more intricate, the greater the efficiency of the division of labor. (EN: And this is not considering automation, unheard of in Smith's time, which allows a very small number of workers to produce an enormous quantity of goods with very little time and effort.)
Scaling up from the manufacture of a single object to the manufacture of all goods in a society, some degree of specialization can be found in the notion of trades: a farmer grows crops (and often a specific crop), a carpenter fashions houses and furnishings, etc. And beyond that, men of various professions may work in concert, each inheriting the product of another: a farmer grows cotton, a spinner makes thread, a waver makes cloth, a tailor makes clothing. Even at this level, a society in which work is specialized enjoys a greater quantity of and higher quality of goods than one in which each person must do every task to suit their own needs.
But even at this level, the degree of specialization varies by industry: the spinner, weaver, and tailor are commonly separated but all the tasks of farming may be done by a single person. And in some cases, such as agriculture, it is more sensible and efficient to do so, in that the same person cannot be fully employed, at all times of the year, in a single task: the man who ploughs a field in spring has nothing to do in autumn if it is left to another person to do the task of reaping - though it is noted that the more "opulent" nations generally out-produce other nations even at agriculture, producing more crops per acre by virtue of more skillful labor and better management of their lands.
There is some concession in agriculture to factors such as geography and climate, and the assertion that because it is not a process that lends itself to the specialization of labor, it is fairly simple for a poor country to produce wheat in the same quantity and "degree of goodness" as a wealthier one, given the same number of workers and the same acreage. (EN: I doubt this remains true today, given that technology has progressed agriculture. However, this is the result of factors other than the division of labor, such as the use of specialized equipment - the same worker may plant and harvest, but using different farm machines to do both tasks.)
Efficiencies Gained
The reason division of labor results in such efficiency and productivity is attributed to three factors: (1) The increase in dexterity of each worker, (2) the saving in time of passing from one "species of work" to another, and (3) to the employment of various equipment and machinery that save labor.
The first advantage is "dexterity" of labor - that is, the amount of production that can be done per unit of time - arises from the simplification of tasks. Even a skilled blacksmith must learn or discover how to create an object using his skills - the first time he makes a nail, it will be a poor nail; and if he makes nails only occasionally, he will not become very adept at the task. But the worker who makes nails every day, and no other object, will become very proficient at the task of manufacturing nails of high quality, compared to a smith who makes a wider array of goods.
Smith draws on experience, of a master smith who produced a few hundred nails in a day, contrasted to several teenaged boys who did nothing but make nails, and each of whom produced over two thousand nails of higher quality than the master. He imagines that if the task of nail-making were further divided - one man to tend the fire, another to heat the iron, another to draw it out, another to forge the head, and another to sharpen the tip - the quantity and quality of nails would be even more greatly improved.
The second advantage is gained by saving the time in passing the work from one shop to another. That is to say that very different equipment and skills are needed for the tasks of threshing cotton, spinning yarn, weaving cloth, dying cloth, cutting cloth, and sewing cloth to create a garment. If all is done in a single space, much effort is required to set up the equipment for one task, then break it down and assemble the stage for the next act of production. Aside of the time required, there is the effect on human behavior - Smith asserts that people "saunter into" the start of the task, and are slothful at setting up and breaking down a shop, but show a much higher level of productivity when all is prepared and the "real" work can be done.
Smith also discusses matters of logistics gained by collecting shops into a single manufacturing operation. A factory located next to a cotton field can intake raw cotton an output finished garments with great efficiency - as contrasted to a system in which cotton is grown in one location, ported to another location to be seeded and washed, to another place to be spun, to another place to be woven, to another to be dyed, to another to be cut and sewn into garments. (EN: This seems a matter of logistics rather than division of labor.)
The third advantage is the application of the proper equipment and machinery to any task of labor. Smith feels "it is unnecessary to give any example." (EN: but for the sake of clarity of interpretation, I'll donate one: consider the quality and efficiency of plowing a field with bare hands, versus a shovel, versus a horse-drawn plow, versus a steam tractor, versus a gas-powered cultivator.) It is self-evident that the act of labor is greatly improved in both quality and quantity by use of machinery.
It is less evident, however, that the process of inventing or devising machinery or methods of work is best accomplished by a man whose full attention and occupation is with a specific task rather than a myriad of things. The smith who makes the occasional nail will not consider how it can be done with greater efficiency, whereas the nail-maker will readily recognize opportunities to save labor and produce with greater efficiency.
The example is given of a boy whose entire job it was to pull a lever to open a valve on a steam-engine - and who out of a desire to "play with his companions" discovered by observing the engine that a given piece of the equipment moved at the same time as he was to pull the level - and by rigging a bit of string from that part to the lever completely automated the process. As such, "one of the greatest improvements" to the engine was made by a young boy who merely wanted to reduce the tedium of his work.
Smith concedes that many of the improvements to machines were not implemented by workers, but developed by engineers - invertors or "philosophers" who stood back from the work in observation to discover inefficiency and determine a plan for improvement. But this, too, is a specialization of labor. While science and philosophy are not "labor" in the sense of routine activity of daily production, they are nonetheless tasks that are done with higher effectiveness by a person whose sole demesne is the task of observation and discovery.
Aggregated Effects
The greater the degree of division of labor in society, the greater the "opulence" can be seen to extend even to the lowest ranks of the people. Manufacturers produce a greater quantity of goods that provide for the necessities and conveniences of life, the cost of goods is lower in the markets, and the workers achieve greater income with less effort.
While the poorest classes are fond of complaining about their lot, it can be readily observed that the basest worker in an industrialized society is far better off than his companion in a less industrialized one. There is greater production of goods, and greater sale of goods, which can result only in the greater consumption of goods within an economy.
A few examples are given of common conveniences of an industrially advanced society: the day-laborer's woolen coat is the product of the joint labor of a "great multitude" of workmen: the shepherd, the sorter, the carder, the dyer, the scribbler, the spinner, the weaver, the fuller, the tailor, and man others must join their separate efforts to produce a simple object (EN: and that's considering only the cloth and thread). This omits too the myriad of individuals involved in getting the coat to the worker (the merchant, the warehouseman, the sailor, etc.) and those who made the tools of their trades (the sailor must have a ship) and those who made the tools of their trades (the shipbuilder needs wood, pitch, rope, nails, canvas, etc.) The complexity is mind-boggling, and it would take a work of several volumes to fully describe the entirety of effort necessary to produce a simple woolen coat.
It is thus a consequence of the division of labor that the European peasant has the ability to gain for himself a higher standard of living by his own contribution to a cooperative effort in a country of ten thousand inhabitants than can be had by an African King who exercises absolute dominion over a tribe of ten thousand savages.