SYMBIOSIS LAW SCHOOL, PUNE

SUBJECT : Concept of Wealth and

Prosperity

TOPIC : Division of Labour vis--vis

Wealth

NAME : Adhiraj Singh Chauhan

CLASS : B.A.LLB Div. B Year II
PRN NO. : 14010125102

Content

Introduction
Division of Labour
Wealth
Background
Limitations
Emerging New Trends
Conclusion

Introduction

When one understands the concepts and applications of Division of Labour and
how wealth, in terms of economic growth is generated, we find how one is
connected to and influences other. Division of Labour leads to specialisation
and cooperation which in the long run gives impetus to economy and wealth of
the nation. Despite its limitations and restrictions of leading boredom,
alienation and lack of initiative, it is the prime mover of growth and capital
assets. It has led to industrialisation and capitalism. In present day of
globalisation and importance of human capital, the economic growth and
wealth is shifting towards the developing countries, where there is abundant
labour, readily available and ready to learn the given task.

Division of Labour

It is the specialization of the functions and roles involved in production.

Division of labour is closely tied with the standardization of production, the
introduction and perfection of machinery, and the development of large-scale
industry.
Among the different categories of division of labour are territorial, in which
certain geographical regions specialize in producing certain products,
exchanging their surplus for goods produced elsewhere; temporal, in which
separate processes are performed by different industrial groups in
manufacturing one product, as the making of bread by farmers, millers, and
bakers; and occupational, in which goods produced in the same industrial
group are worked by a number of persons, each applying one or more
processes and skills.
Modern mass-production techniques are based on the last type. The
proficiency attained through experience at one task and the time saved by
concentration on one phase of an operation are such that the total production
is many times what it would be had each worker made the complete article.
The classic example is that given by Adam Smith, advocate of free trade (of
which the division of labour is the underlying principle), in which 10 men, each
performing one or more of the 18 operations necessary to make a pin, together
produce 48,000 pins a day, whereas working separately they could not make
200.
Problems created by the division of labour include the monotony of
concentration on routine tasks, technological unemployment for people whose
skills are not in demand, and eventually chronic unemployment if the economy
does not expand quickly enough to reabsorb the displaced labour. Each variant
of the division of labour has its own peculiar problems of distribution.

Wealth
In ordinary language, WEALTH conveys an idea of prosperity and abundance.
It means riches, prosperity etc. A man of wealth is a rich man, i.e. one who is
prosperous. But, money is not the only form of wealth. Anything which has
value is called Wealth in Economics.
The term Wealth is synonymous with economic goods. Economic goods are
scarce and command a price in the market. But scarcity alone does not make a
good wealth, if it is a useless thing. E.g. is a rotten egg. Nobody would like to
have it and it will not be wealth. It is wealth only if a man needs it and uses it.
Therefore, besides being scarce, a commodity must have utility. Even a harmful
thing will be regarded as a wealth provided it possesses utility and can satisfy
a want. Further, the idea of ownership is also present in wealth. This means
that unless an article can be owned and is capable of being transferred from
one owner to another, it cannot be regarded as wealth.
It should further be noted that money is a form of wealth. All money is wealth
but all wealth is not money. Moreover, income is different from wealth, wealth
yields income. Also, wealth and welfare are closely related, wealth is the
means and welfare and end.
Wealth can be classified as :I.
II.
III.
IV.
V.
VI.

Individual Wealth : Material Possession like land, building cash etc.

Personal Wealth : Refers to personal qualities like intelligence, skill etc.
Social Wealth : They are things owned by society e.g. building dams,
roads etc.
National Wealth : They are the natural resources like rivers, climate,
ocean & seas etc.
Cosmopolitan Wealth : It is the wealth of the whole world. It is a sum total
wealth of all nationals.
Negative Wealth : It refers to debts owned by individual of Government.

Background
As brought out in earlier paras, when individuals specialise and cooperate with
each other to perform specific tasks and roles, it is termed as Division of
Labour. Tasks are allocated to individuals or organisations as per their skills and
equipments and a large amount of labour and longer training period was
saved, leading to overall efficiency and productivity, growth of
production/output, trade and eventually economic growth/ wealth.
Historically, it is associated with growth of capitalism and industrialisation and
rise in wealth of nations.
One of the earliest proponents was Plato who described it in his The Republic
that origin of state lies in natural inequality of human beings which is
embodied in division of labour. He recognised its economic and political
benefits with respect to power and wealth.
Medieval scholar Ibe Khadun, 14th century AD, too emphasized the importance
of division of labour in the production.
It was Sir William Petty who was first modern writer to take note of division of
labour, sharing its importance in Dutch Shipbuilding industry.
Perhaps the most prominent advocate of division of labour and relationship
with generation and growth of wealth, was Adam Smith, the famous economic
thinker of century AD. According to Smith, it was Division of labour which led
to qualitative increase in productivity and was dynamic engine in economic
progress of nations, especially where the industrialisation was taking place.
The specialisation and concentration of workers, on their single subtasks, often
leads to greater skills and productivity, thereby generating wealth. On the
other hand division of labour can often lead to corruption and degeneration of
people unless Government takes pains/make efforts, to prevent it. It
materialises man more than anything.
Whereas, the famous socialist thinker, Karl Marx, postulated that, increasing
division of labour, leads to specialisation, leading to poorer overall skills, lack
of enthusiasm for work and eventual alienation. It also creates less skilled

workforce as work is repetitive, so less training is needed and so workers are

less skilled.
Henry Thoreau, another socialist and humanist thinker, criticised division of
labour, as it disconnects, people from society and nature, solely concentrating
on production and generation of goods and wealth.
Emily Durkheim, like Adam Smith, positively correlates with society
advancement, productivity and goes further to add that it applies to all
organisms. He considered it a Natural Law and fosters social solidarity
organic solidarity prevails in advanced societies while mechanical solidarity
typifies less developed ones.
As for Ludwig Mises, the Austrian economist, economic growth, accruing out of
division of labour, far outweighs the costs and one can achieve balanced
development within capitalism.
In present times, Global division of labour (as per International Labour
Organisation) in 1990s show that 15% worked in Industries, 33% in service
sector and 40% in agriculture. However, in 2007, services sector surpassed
agriculture for the first time in human history. It thus shows, that division of
labour, led to specialisation, providing more and better services to growing and
demanding population.
Division of labour to a great extent is inevitable, simply because no one can do
all tasks at once. However, advancement and use of new technology has made
it easier for fewer employees to accomplish a variety of tasks and enhance
production and thereby wealth. In general, in any economy, the generation of
wealth, with least input, will be adopted.

Limitations
As per Adam Smith, it is the extent of market that defines as well as limits
division of labour. So reduction in barriers, leads to increase in division of
labour, and drive economic growth.
Division of labour, thereto specialisation, so as to repeatedly do a task, results
in demotivation, due to boredom and alienation which can lead to less
production/growth.
Classical political economists like Adam Smith and David Richards, raised issue
of productive and unproductive labour, which influences nations wealth.
Human labour is source of wealth and unproductive labour, limits it, for
example, tasks/labour, involved in cleaning, record keeping, domestic servants,
soldiers etc., though necessary, dont seem productive in sense of increasing
material wealth of nation. Part of the population, consumed wealth but didnt
create it so to maximise growth/wealth, unproductive costs are to be
minimised and productive labour is to be maximised.
However this concept was later rejected in neoclassical economics, as largely
arbitrary all the factors of production viz land, labour and capita, create
wealth and are all productive in one way or the other.
Marx, on the other hand, regarded, land and labour, as the source of all wealth
and distinguished between natural and human wealth. In his Theories of
Surplus value a labour which adds to value of capital or results in capital
accumulation, is productive. And division of labour is modified to make more
and more labour productive, for eg. through marketization and privatisation.
However, it is an evolving process. In division of labour of modern advanced

societies, unproductive functions of work in classical sense, occupy a very

large part of labour for example, in USA, from available labour data,
facilitating exchange and financial claims, alone is main activity of 20 million
workers; legal staff, police, security personnel etc. number 5 million.

Emerging New Trends

With Globalisation, there has emerged, a new international division of labour

there is a shift of production, geographically, as it is, no longer confined to
national economies. Now, in the so called developing economies, as they
merge with world economy, more production/wealth takes place, having more
labour population at cheap costs. So, the division of labour, which results,
closely follows North-South, socio-economic and political divide, wherein,
North, with 25% of world population, controls 80% of world income, while
South, with 75% of population, has access to 20% of income.

Conclusion
To conclude, as one goes through the concept and historical evolution, one
realizes that the very concept is inevitable as no work can be accomplished or
goods can be created without dividing the tasks among many rather than
expecting one to do it all. Doing the specific work continuously leads to
specialization. To top it, the technological advancement has given it an impetus
thereby leading to generation of wealth and economic growth. On the other
hand, it has its own problems to look into viz monotony, sidelining of those not
skilled enough to perform, materialization and disconnection from society.
So present day economists and social thinkers have to look into human factor
of labour whose productivity shouldnt be solely based on production of goods

and material wealth, but should also be assessed vis--vis his contribution to
family, fellow coworkers and society in general.