Division of Labour

By division of labour we mean the allocation of labour such that each worker specializes in one

or a few functions in the production process. Adam Smith illustrated the principle in the different

stages of pin-making: drawing the wire, cutting, head-fitting, sharpening. The division improved

labour productivity (a) by the more efficient acquiring of specialist skills and (b) through the saving

of the time because workers did not have to move from one operation to another. Through the

division of labour economies of scale could be achieved. The exchange economy was essential to its

operation. Each worker could so specialize as long as he was assured that he could exchange his

output for others to satisfy his needs. The principle applies to firms and countries also: similar

benefits may be achieved by the specialization in those activities in which the firm or country has

a comparative advantage.

Vocabulary Notes to Text 1.7.1.3

1. the allocation of labour — размещение (распределение) труда

2. economies of scale — экономия на масштабах производства

3. acquiring of specialist skills — приобретение специальных навыков

4. the saving of time — экономия времени

1.7.1.4. Read the text “Economies of Scale” and discuss it in the form of a dialogue.