Chap 3: Division of Labour And Market Size

Book 1, Chap 3: Division of Labour is Limited by the Extent of the Market

The Most Important Factor That Leads To The Division Of Labour In Society

1 Since the power of exchanging creates the division of labour, the extent of the market must always limit that division.

  • When the market is very small, no one can dedicate himself entirely to one employment because few people will buy his excess produce.

2 There are some industries possible only in a great town.

  • A porter can find only find work in a great town.
  • In very small villages with scattered houses in the Highlands of Scotland, every farmer must be butcher, baker and brewer for his own family.
    • There are rarely smiths, carpenters, or masons within less than twenty miles.
    • The scattered families that live eight or ten miles apart, must learn those many works themselves.
  • Country workmen must apply themselves to all industries which use the same materials.
    • A country carpenter deals in everything made of wood,
      • He is also a joiner, a cabinet maker, and even a carver in wood, as well as a wheelwright, a ploughwright, a cart and wagon maker.
    • A country smith deals in everything made of iron
    • It is impossible to find a nailer in the remote parts of the Highlands of Scotland.
      • Such a nailer, producing 1,000 nails a day for 300 working days in a year, can make 300,000 nails in the year.
      • But it would be impossible for him to dispose of 1,000 nails in a year.

How Shipping Increased The Division Of Labour In Ancient Civilizations

3 Water carriage opens up industry to more markets than land-carriage.

  • Industries along the sea coast and rivers naturally subdivide and improve itself faster than the inland parts of the country.
  • A broad-wheeled wagon run by two men with eight horses can carry four tons between London and Edinburgh in six weeks
  • A ship navigated by six or eight men sailing between London and Leith can carry 200 tons in the same length of time.
  • Six or eight men using water-carriage can carry the same quantity as 100 men drawn by 400 horses between London and Edinburgh.
  • Land carriage becomes more costly than water-carriage even if it is less risky.
  • If water-carriage was impossible, commerce would be so expensive that there could be little commerce.
    • “What goods could bear the expence of land-carriage between London and Calcutta?”
    • With what safety could they be transported through so many barbarous territories?
    • Those two cities currently trade with each other and encourage each other’s industry.

4 The advantages of water-carriage led to the natural improvement of art and industry earlier near the water than the inland parts of the country.

  • The inland parts of the country cannot have any other market than the area around them.
    • The extent of their market must for a long time be in proportion to the riches and populousness of that area,
    • Their development must always be posterior to the development of that area.
  • In our North American colonies, the plantations have followed the sea-coast or navigable river banks
    • The plantations have rarely extended far from them.

5 The first civilized nations in written history were those around the Mediterranean coast.


  • That sea had a lot of islands, neighboring shores, and a smooth surface as it had no tides and only waves created by the wind.
    • This made it favorable to early navigation before the compass was invented and while ships were imperfect.
  • To sail out of the Straits of Gibraltar was considered very dangerous in ancient times.
    • Only the Phoenicians and Carthaginians, the most skilful navigators and shipbuilders of those times, attempted it.

6  Egypt was the first of the countries on the Mediterranean coast to develop agriculture or manufactures.


  • The Nile allowed communication by water-carriage to all parts of the country in the same way as the Rhine and the Maese do in Holland.
  • The extent and easiness of this inland navigation was probably one of the principal causes of Egypt’s early improvement.

7 Bengal and Eastern China also had early improvements in agriculture and manufactures.


  • Bengal has the Ganges and other great rivers.
  • Eastern China also has several great rivers.
    • It affords an inland navigation much more extensive than the Nile or the Ganges put together.
  • Neither the ancient Egyptians, Indians, nor Chinese encouraged foreign commerce
    • They all derived their great opulence from inland navigation.

8 All the inland parts of Africa and North Asia were barbarous then and now.

  • The frozen Sea of Okhotsk allows no navigation
    • Their great rivers are too far from one another, unable to carry commerce and communication.
  • No great inlets exist in Africa
  • Great inlets carry commerce into the interior parts of other continents:
    • The Baltic and Adriatic seas in Europe
    • The Mediterranean and Black seas in Europe and Asia
    • The gulfs of Arabia, Persia, India, Bengal, and Siam [Thailand], in Asia
  • The commerce carried on by rivers which do not break into canals or runs into foreign territory before it reaches the sea, can never be considerable
    • The foreign nation can obstruct the communication to the sea.
    • The Danube is of very little use to Germany, Austria and Hungary.

Next: Book I, Chap. 4: The Origin and Use of Money

Words: 855

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