Monday, June 26, 2017

"The Division of Labour is Limited by the Extent of the Market"


Thought for today from Adam Smith's "The Wealth of Nations"
"There are some sorts of industry, even of the lowest kind, which can be carried on no where but in a great town. A porter, for example, can find employment and subsistence in no other place. A village is by much too narrow a sphere for him; even an ordinary market town is scarce large enough to afford him constant occupation.

In the lone houses and very small villages which are scattered about in so desert a country as the Highlands of Scotland, every farmer must be butcher, baker and brewer for his own family. In such situations we can scarce expect to find even a smith, a carpenter, or a mason, within less than twenty miles of another of the same trade.

The scattered families that live at eight or ten miles distant from the nearest of them, must learn to perform themselves a great number of little pieces of work, for which, in more populous countries, they would call in the assistance of those workmen."
A high-tech economy requires a very great profusion of experts which can only be sustained by a very great market - in the billions of consumers.

Yet a market of any large scale - billions of transactions spread across vast swathes of space and time - requires the supervision of sustained, disinterested and effective institutions: a happy state incompatible with endemic tribalism, kin-preference and endemic looting rent-seeking.

We come to understand the timeless economic dysfunction of Africa and the Middle-East.

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