[Guide to the Market Economy] The Magic of Division of Labor and Specialization

“Just as every person has a different face, each has different abilities.

When each person specializes and divides labor, society as a whole prospers.”

At 221B Baker Street in fog-shrouded London, England, lives a tall, gaunt man. He enjoys smoking a pipe, and whenever a case breaks out, he rushes to the scene in a trench coat and a deerstalker pulled low over his head. The man who effortlessly solves all manner of unsolved cases that even the police cannot easily crack through his razor-sharp powers of deduction is none other than Sherlock Holmes. He is the private detective and world-famous sleuth created by Arthur Conan Doyle.

Sherlock Holmes’s Specialization

Holmes’s weapons are his exceptional powers of observation and insight. Just by looking at a person’s outward appearance, he can instantly discern not only where they come from and what they do for a living, but even what kind of situation they are currently in. Holmes’s deductive ability, which picks out a person’s history one detail after another as if he had supernatural powers, is always astonishing and marvelous to behold.

In this way, Conan Doyle, through the fictional character Holmes—who is specialized in solving cases on the basis of superb analytical ability—made the profession of private detective widely known throughout the world and at the same time secured literary status, wealth, and fame. Needless to say, Holmes also established an unshakable position as the very symbol of the detective.

Holmes’s life as portrayed in the novels is quite interesting. Ordinarily, he is endlessly lazy and never rises early in the morning, but the moment he is asked to take on a case, he changes as though he were a completely different person. He carefully observes the scene, gathers evidence, and analyzes the case meticulously. What amazing deductive power—to solve in the end even a case that at first glance appears to be the perfect crime! Holmes uncovers the truth of a case in full, catches the real culprit, and lives on the rewards he receives for solving cases. The reason Holmes can live perfectly well by investigating cases alone is that there exists the profession of private detective, a job specialized in what he does best: deduction.

The Relationship Between Specialization and the Division of Labor

Specialization is an economic concept related to the division of labor. In economics, specialization is defined as “the division of different productive activities among different individuals, industries, and regions.” Simply put, it means becoming expert in a particular task among a range of subdivided tasks, and it therefore necessarily presupposes division of labor. Each economic actor becomes specialized by learning and developing the skills needed within the production process for which he or she is responsible.

Specialization has the advantage of enabling individuals to make full use of their abilities. If one is going to work anyway, would it not be more desirable, both for the individual and for society, to take charge of work in which one can make more active use of one’s abilities? In this way, specialization operates as a principle through which people naturally arrive at a division of labor by taking on the work they are best able to perform.

Specialization also affects the subdivision of occupations. Sherlock Holmes’s profession, private detective, can likewise be seen as an occupational category that emerged through social specialization. Specialization—that is, the professionalization of a specific field or occupation—tends to accelerate with urban development and population growth. The reason is that the larger a city becomes and the more people gather there, the more actively division of labor and specialization take place. The more people there are, the more the process of handling a single task is broken down into smaller parts, and as the scope of each person’s responsibility narrows, much deeper and more sophisticated work becomes possible.

The Difference Between Self-Sufficiency and an Exchange Economy

People differ in the abilities they possess and the environments in which they live, and the fields in which each person can develop expertise and competitiveness also differ. The same is true of regions and countries. Even when doing the same work, they display different levels of productivity. Naturally, it benefits everyone more for people to specialize in fields suited to them than for everyone to do the same work. The division of labor through specialization has the effect of making it possible to achieve higher productivity at lower cost and in less time. In this way, specialization enables people to do even better what they already do well and generates greater gains.

Moreover, the division of labor through specialization played a major role in shifting people away from a self-sufficient economy and toward an exchange economy. Specialization made it possible to expand the scale of trade and contributed to increasing the wealth of society as a whole. It made selection and concentration possible, and it is the driving force that has enabled us to enjoy so much today.

● Please remember

The larger a city becomes and the more people gather there, the more actively division of labor and specialization take place. The more people there are, the more the process of handling a single task is broken down into smaller parts, and as the scope of each person’s responsibility narrows, much deeper and more sophisticated work becomes possible.

Sung-no Choi, President of the Center for Free Enterprise (CFE)

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Original title: [시장경제 길라잡이] 분업과 특화의 마술

Author: Sung-no Choi

Date: 2019-11-04

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=column&pn=11&idx=22021