Division of Labor

The notion of the division of labor is central to classical liberalism and the theory of a market economy. The division of labor refers to the situation that obtains when different individuals perform different tasks and then trade with each other in order to get what they prefer. Instead of having John grow his own food and be his own doctor, John, who is primarily a farmer, trades his products for money, which he then uses to buy many diverse goods and services from others, among them medical care.

Discussions of the division of labor go back to Plato and have been dealt with by numerous writers over the centuries. However, it was not until 1776 and the publication of Adam Smith's Wealth of Nations that ...