Adam Smith on the greater productivity brought about by the division of labor and technological innovation (1760s)
Found in The A B C of Finance
In an early draft of the Wealth of Nations (1776) which Adam Smith wrote in the 1760s he discusses the very great increases in productivity brought about by incremental improvements in technology such as the plough and the corn mill, often brought about by the users of the machines who stood to benefit from them:
Every body must be sensible how much labour is abridged and facilitated by the application of proper machinery. By means of the plough two men, with the assistance of three horses, will cultivate more ground than twenty could do with the spade. A miller and his servant, with a wind or water mill, will at their ease grind more corn than eight men could do, with the severest labour, by hand mills. To grind corn in a hand mill was the severest work to which the antients commonly applied their slaves, and to which they seldome condemned them unlessl when they had been guilty of some very great fault. A hand mill, however, is a very ingenuous machine which greatly facilitates labour, and by which a great deal of more work can be performed than when the corn is either to be beat in a mortar, or with the bare hand, unassisted by any machinery, to be rubbed into pouder between two hard stones, as is the practice not only of all barbarous nations but of some remote provinces in this country. It was the division of labour which probably gave occasion to the invention of the greater part of those machines, by which labour is so much facilitated and abridged. When the whole force of the mind is directed to one particular object, as in consequence of the division of labour it must be, the mind is more likely to discover the easiest methods of attaining that object than when its attention is dissipated among a great variety of things. He was probably a farmer who first invented the original, rude form of the plough. The improvements which were afterwards made upon it might be owing sometimes to the ingenuity of the plow wright when that business had become a particular occupation, and sometimes to that of the farmer.
This quote from an early draft of the Wealth of Nations is interesting for not only making the point that the division of labor creates greater productivity but also for stating clearly that it stimulates technological innovation as well. When “ the whole force of the mind is directed to one particular object”, such as the use of a plough or a grain mill, the users of technology naturally strive to reduce the amount of labor they must expend and hence come up with incremental improvements. Gradually over time new improvements are added by different users of the tools which add even more to the productivity of their labor. Smith concludes that “(t)hese different improvements were probably not all of them the inventions of one man, but the successive discoveries of time and experience, and of the ingenuity of many different artists”, a conclusion which seems very similar to Adam Ferguson’s description of social orders like the market, which were “the result of human action, but not the execution of any human design”. What Smith does not state, but which is implied in what he is saying, is that these technological innovations come about because humans are stimulated by the incentive of economically benefiting from the improvements they introduce to productive process if they are the property owners of the greater output which results from the effort and ingenuity.