Division of labor and specialization as applied to ideas

Two important concepts we get from economics that enable the human race to go to the next level are division of labor and specialization. Adam Smith, in formulating the notion of the division of labor, said that it was always “limited by the extent of the market.” Smaller groups of people or markets have a more limited number of dedicated jobs that any one person can do, but as the market grows there is more and more room for specialized work.

Imagine you are founding an agricultural society. The first settlers arrive and start farming the land, using whatever tools they can fashion for themselves. As more and more people arrive, at some point it becomes possible for one person to dedicate themselves totally to the task of tool manufacturing and so become a blacksmith. They can then trade their tools for some of the food that the farmers produce. Now the farmers can dedicate themselves to farming without the distraction of tool creation and maintenance.

As the society grows, there becomes enough excess food available for trade that more and more people can specialize as blacksmiths, until there are enough of those (remember the extent of the market?) that one of them finds that they can dedicate themselves totally to, say, the manufacture of barrels, and so becomes a cooper.

With the labor force thus divided, the individual workers can now specialize in their craft and several things can suddenly happen. For one, there tend to be greater-than-linear returns on ability per time invested or number of units produced. That is to say, if I spend twice as much time making barrels, in general I can produce more than twice as many barrels since I learn a lot of tricks (even just knowing how to position my body properly) that make me a better cooper. Anybody who has ever learned a skill can recognize this, as there are usually large skill gaps separating the experienced practitioner from the novice.

Another thing that specialization helps foster is investment and innovation in your craft. If I can dedicate myself totally to being a blacksmith and not have to help out in the fields, perhaps I can spend a large bit of capital on a good furnace that will improve my productivity greatly. If I had to split my time among maintaining my tools, feeding the animals, weeding, etc I probably couldn’t justify such an expense. And with all my time spent in the smithy, I’ll be more likely to notice ways to improve its running (innovation) than a part-timer.

People generally display a variance in their skills as well, so among 100 or so people there will be those who are just better at blacksmithing than others, so if people specialize based on ability there will be even further gains to productivity. Note that this is not required though for the above analysis. If you were better at literally everything than me, there would still be gains to be made by me focusing on one area and us trading our goods. Say as a farmer you could produce 15 bushels a day (just making up numbers and units here) and as a blacksmith you could produce 5 tools a day. I’m a shitty farmer so I can only produce 5 bushels a day, and I’m also a worse blacksmith so I can only produce 3 tools a day.  You could divide up your time during the day and produce, say, 9 bushels of food and 3 tools. But now say I spent my whole day producing 3 tools, and you spent your whole day producing 15 bushels. If you traded 5 bushels for my 3 tools (the cost due to my productivity), you’d still come out ahead at 10 bushels and 3 tools net, rather than just 9 and 3. Division of labor and specialization with trade still improves total productivity even with large disparities in skill (and typically there will be at least something I’m better at than you).

And so we come to ideas.

The extent of the modern market is so large that we have many professions devoted not to producing things but to producing thoughts. Academics, journalists, bloggers, researchers, etc all engage in the production of ideas, theories, models, etc rather than physical goods. Often these ideas have great serial depth, where it requires many other ideas in a long chain to bridge the gap from common to specialized knowledge. This is why books are so valuable: they are material preservations of idea chains of great serial depth that people other than the author can consume over long stretches of time.

We get the added advantage of specialization we don’t just have “thinkers” as a category, but many varieties of thinkers: resource economists, 13th century historians, superconductor theorists, ethics bloggers, algorithm popularizers, and so on and so on and so on. Our civilization produces such an enormous flood of knowledge, in the form of books, essays, podcasts, video lectures, blogs, tweets, listicles, long form articles, etc. The problem, in my opinion, isn’t lack of ideas but in trying to absorb even a tiny sliver of the good stuff (remember Sturgeon’s Law: 90% of everything is crap [1]) while still living a life involving earning a living, commuting, having relationships, keeping healthy, and so on. In fact, just knowing that there is particular stuff to know is now a challenge, as you can go a lifetime without ever being exposed to some of the more obscure branches of knowledge.

The problem now is a meta one: In order to learn all the cool things out there one wants to learn, what are the best sources? The most readable textbooks? The most entertaining expositions? The clearest and cleanest arguments? Which of the hundreds of intelligent layperson popularizations should I read? The rate at which I consume books is less than the rate I accrue them which is less than the rate I add them to my Amazon wishlist. Consuming the flood is hopeless. I just want reliable sources to help me manage it.

All that because there are enough people and productivity gains that we don’t all have to be out in the fields. Isn’t economics awesome?

[1] … including invocations of Sturgeon’s Law 😦

This entry was posted in Economics. Bookmark the permalink.