Division of labour is the outcome, not cause

I’ve written twice now on the spurious ideas in the division of labour story as an underlying cause of productivity growth in economics.

First I questioned whether Adam Smith’s observation of a division of labour in 18th century pin factories made much sense, given that the 18 tasks required to make a pin were undertaken by 18 men in some factories, but only 10 men or fewer in others. Clearly even in this iconic case it was not the division of labour tasks into more specialist roles that was the cause of rapid productivity gains in pin factories.

Second, I made the comment that the division of labour story has become an endless repository of ad hoc explanations for productive gains. The story has even captured the imagination of archeologists and anthropologists who saw the invention of tool-making as “gearing up for a clearly defined division of labor.” Yet the simple logic of increasing the number of possible production tasks following the invention of certain tools would mean that each person could do more tasks rather than fewer, suggesting a rather strange interpretation of the division of labour. I also noted that the division of labour story rests on labelling conventions of roles in society rather than actual units of labour being devoted to fewer clearly defined tasks.

Here I want to be even more clear on this final point by presenting a minimal example of how confusion between our socially-labelled productive roles (i.e. butcher, baker etc.) and tasks (baking, mixing, filleting etc.) is partly to blame for this peculiar sate of play. I also emphasise that productivity is the result of doing more tasks with fewer people - the opposite of specialisation.

Inspired by the ancient tool-making tribes of Jordan referred to in my previous post, my example is a 6-person tribe that undertakes 6 defined tasks, of which the two named roles undertake 3 each. Thinking in terms of roles there are 3 hunters and 3 gatherers, yet each person undertakes just one task within those roles.

Task	Role	Person in role
Track	Hunter	1, 2, 3
Kill
Clean
Collect	Gatherer	5, 5, 6
Prepare
Cook

You might want to argue that the way I define tasks offers limitless ad hoc classification. Tracking an animal could be further divided into a team pursuit with specific sub-tasks for each member. Same with cleaning an animal. But this is kind of the point. Any defined task will be a bundle of sub-tasks. But in order to understand the division of labour we need to keep track of tasks at any one particular level of aggregation and not fall into the trap of calling something specialisation when it is just a different bundling of more tasks into one job.

One of the tribe members now invents the spear and woomera. Regular production of these tools requires 3 additional tasks to be undertaken by the new toolmaker role in the tribe.

Task	Role	Person in role
Track	Hunter	1, 2
Kill
Clean
Collect	Gatherer	3, 4
Prepare
Cook
Collect	Tool maker	5, 6
Carve
Assemble

Now we have more roles and fewer people in each of them! Exactly as predicted by the division of labour story.

But if we instead look at the tasks, we have more tasks per person. Each hunter, instead of being able to specialise in one task, like tracking, now must undertake more than one task on average as there are only two hunters available for three tasks. The same for our gatherers. What we see as specialisation in roles is the automatic result, not cause, of increasing productive capacities.

What has happened is that the invention of new production techniques has allowed more tasks to be undertaken by each person leading to fewer people in each role. It is not a case of dividing labour in a way so that each person completes fewer tasks, each requiring less training, in order to increase aggregate output, as is often argued. The most productive countries are not full of people doing repetitive narrowly defined non-skilled tasks, but highly educated people doing ‘specialist’ roles involving a hierarchy of complex and interrelated tasks that require years of training to master.

You might still be thinking that the joint production function from specialising on the task that each person has a relative advantage in rescues the division of labour story. Crusoe catches fish, Friday gathers coconuts, and their combined output can be greater than if they individually produced what they consumed. But the simplification in this story ignores the possibility that if Crusoe and Friday gather coconuts together, then fish together, that the complementarities in joint production for each task might increase their combined output by more than if they specialised and worked alone.

Maybe catching fish involves a number of distinct tasks that, when shared between them, would increase their their output beyond twice that of the most productive of the two men. Would that also count as division of labour? If so, then it appears that any joint production can be labelled as a division of labour without offering any insight as to why one division is better than another. What Crusoe and Friday actually need to grow their economy is to each achieve more tasks each in a given amount of time.

To cap off, for the division of labour story to me is just an observation about the human roles in large scale production. It is not a causal story for increasing productivity. Productivity requires that labour bundling, or given more tasks to each person, is the way to increase output.