The Process of Specialisation
What it is, its benfits, and its singnificance in the field of economics
In the “Wealth of Nations”, Adam Smith describes the gains yielded from specialisation in the production process of a pin. One workman alone may struggle to produce a single pin a day, but ten workman who have specialised in a certain task, are able to produce upwards of 4800 pins each day. He mentions that this increase in efficiency comes about since specialisation increases the dexterity of the workman.
What is specialisation?
To me, specialisation involves the division of labour so that groups or individuals perform a specific part of a more extensive production process to increase output or productivity. In Adam Smith’s example, dividing up the responsibilities in the pin manufacturing line so that one worker draws out the wire while another cuts it, specialisation is in practice. Specialisation can occur on a micro level within a specific process or on a macro level whereby certain countries perform specific tasks. Macro specialisation, let us say, would exist in the making of an iPhone where parts of Africa mine the raw materials, and its assembly occurs in China, for example. In football, 11 players do not all stand in goal while also trying to score. By assigning each player a position, the overall team’s performance will be complete, robust, and likely lead to a better outcome. Similar results should occur when applied to the production process.
Benefits of specialisation
The main benefit of specialisation is its increase in labour productivity, the units of output per worker. As Adam Smith’s example describes, one person alone may struggle to make twenty pins or even a single pin a day, whereas an individual worker may be able to contribute to the production of upwards of 4800 a day when specialising in a group of 10. No additional workers are required to increase the output meaning few extra resources are required, a marginal cost equal to 0. Hence, specialisation allows firms to increase output at no extra cost.
Additionally, specialisation increases the dexterity of the workers leading to productivity and output gains. As Adam Smith describes, “reducing every man’s business to one simple operation… necessarily increases… the dexterity of the workman.” Spending their lives in one process increases their skills at the task allowing them to produce more goods of better quality. Considering tedium is essential, as performing the same repetitive task becomes draining. A result could be a net loss of productivity due to demotivation.
Specialisation can also improve accountability and monitoring of supply chains. Observing faults in the output, such as a bent pin, can be traced to a particular part of the process. Firms can then identify the faults in either the labour or capital and act accordingly. A production method where each worker performs every part of the build would not have the same level of oversight and thus may struggle to identify product floors — the ability to adapt and manipulate the building process is of paramount importance in today’s evolving society.
Significance of specialisation
Specialisation has become a significant part of today’s economies. Coupled with globalisation, it has led to substantial productivity gains that allow firms to sell at lower prices. Countries have become renowned for what they do best: Germany produces cars; the UK produces jewellery; China produces just about everything else. The ability to specialise in a particular part of the process has allowed countries to emerge from poverty. India’s IT sector has improved its connectivity with Asia and the rest of the world. However, most productivity gains occur in tangible goods such as Bangladesh’s massive making of clothing and fabrics.
While specialisation has massively increased global output, it has also led to declining work environments. Sweatshops around Asia exploit workers by making them work long hours of repetitive tasks on little pay.
The gains in the product come at the expense of the welfare of our workers, while humanity’s lust for productivity gains endangers the future labour market. Is the life of a worker worth expending for an extra sweatshirt or toy car?
Covid has exposed the flaws of specialisation. Supply chain turmoil and halted global trade has exploited our reliance on world areas to produce our necessities. China, responsible for the production of the majority of the world’s PPE, has suddenly been unable to provide for us in the UK when we need them most. Consequently, there was a shortage of medical equipment, costing the lives of those working on the frontline and vulnerable.
While specialisation provides a solution to higher output and greater productivity, it has its faults. As demonstrated by Covid 19, we cannot depend upon areas of the world economy for the goods that we need most during crises. Hence, specialisation remains a significant yet vulnerable concept in the field of economics today.
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Ted Jeffery
