On the Division of Labor

The discovery of what is called the “division of labor” is one of the great insights of economic science. The division of labor — the cooperation of many people into segmented aspects of the production process — is a primary source of the rise of wealth, increasing luxury, and the cooperative and peaceful human relationships that emerge out of the war zone of the state of nature. This idea of the division of labor was one of the many insights in Adam Smith’s masterpiece The Wealth of Nations, a book that is still considered the founding document in understanding the basis of modern capitalism.


This excerpt from Wealth of Nations helps us to understand how individuals come to cooperate together to be productive and innovate and create wealth. The larger the range of possible cooperation, the more potential is unleashed for rising prosperity for everyone.