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What are the current best explanations as to why does division of labor work?

It seems like black magic in complex economies.

closed as off-topic by Swami Vishwananda, Frank Hubeny, Conifold, Mark Andrews, Geoffrey Thomas Sep 8 '18 at 8:45

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  • Because different people are better or worse in different activities? And also different types of work require different skills and knowledge all of which cannot be acquired in considerable amount of time (even human lifetime). – rus9384 Sep 6 '18 at 14:02
  • @rus9384 But there's also some decision made between e.g. passion vs responsibility as well. One can also "falsify" the motives. One can choose to do less useful job instead of a more useful one. Due to opportunity cost one loses the chance to do other things, if one chooses one. – mavavilj Sep 6 '18 at 14:05
  • It is impossible for a single person to be great in everything. That's why division of labor exists. Job usefulness is vague. The one who pays much has a reason to do it, because it is useful for the employer. Consider actors, some actors are paid well, but one can argue they do not do anything useful, compared to doctors, for example. But they attract audience which will pay for tickets in cinemas. – rus9384 Sep 6 '18 at 14:48
  • Even assuming that this is a question about philosophy rather than economics it is a kind of question more suitable for reading about in encyclopedias rather than asking on SE, e.g. Wikipedia's Division of Labor. – Conifold Sep 6 '18 at 17:42
  • It's very simply about getting efficiency from bulk purchasing and reduced context switching. And it doesn't always work – Richard Sep 6 '18 at 20:00
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Complex economies - or technologically advanced economies ?

The division of labour, for the reasons Smith identifies below, would seem more relevant the more complex an economy is. But perhaps you have in mind that advanced economies now standardly use technology which is simple enough for anyone to operate without the specialisation involved in the division of labour. If this isn't your point, I think I need you to say in more detail what the tension between the division of labour and the complexity of the economy is.

Adam Smith - and a gap in Smith

Adam Smith

In the opening paragraph of his Wealth of Nations, Adam Smith [1776, Book 1, Chapter 1] postulated that the "greatest improvement in the productive powers of labour, and the greater part of the skill, dexterity, and judgment ... seem to have been the effects of the division of labour." According to Smith, the benefit of the division of labor has three main sources. First, the division of labor increases the dexterity of each worker as he specializes in a single operation. Second, it saves time that is otherwise lost in changing from one task to another; and last, it facilitates the use of machines that complement specialized labor. (Wenli Chen, ' A Benefit from the Division of Labor that Adam Smith Missed', Eastern Economic Journal, Vol. 38, No. 3 (Summer 2012), pp. 310-318 : 310.)

Smith's gap

There is in fact another important source of benefit from the division of labor that Smith failed to mention, namely that the division of labor shortens the time required in the capital formation process and makes continuous roundabout production (that is, production with capital-using technology) possible. To illustrate, imagine a fishing village where the villagers can use two different fishing "technologies": one is to fish with their bare hands; the alternative is to make nets first and then catch more fish with nets. Assume for simplicity that it takes one day to make a net. In the absence of the division of labor, each villager catches fish with his bare hands on Day 1 and consumes some of the catch. On Day 2 he makes a net, which will be available for use on Day 3. With the division of labor, the production arrangement is different. Some villagers fish with their bare hands on Day 1, others make nets. As a result, nets are available for use from Day 2, one day earlier than the case with no division of labor. This simple example points to an additional mechanism through which the division of labor improves individual welfare. That is, the division of labor shortens capital formation time — the capital good, net, becomes available one day earlier and consequently the villagers enjoy the benefit of the more productive "capital-using technology" sooner. In addition, the division of labor enables continuous production with capital-using technology — a villager does not have to stop fishing to make a new net when his old net wears out. (Chen : 310.)

The shadow of Marx

Marx had an uneasy relationship to the division of labour. His views changed over time but one aspect of the division of labour that he did not think had any benefit is capitalism's 'confining of managerial, administrative, and intellectual work to some people and of manual work to others'. Among other things, this blocked the 'the all-round development of the workers' (J. Plamenatz, Karl Marx's Philosophy of Man, Oxford : OUP, 1975 : 169). This is only a glimpse at Marx's complex and shifting attitude but it is worth noting as a counterweight to the near-universal celebration of the division of labour.

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