I have heard of Menger’s theory of the origin and evolution of money, in which he shows how money grew out as a product of the market process. Is there any similar theory that explains the phenomena of the division of labor?
As far as my reading goes, I’ve seen Mises talk about the “law of association” in which people with inequal capabilities cooperate since it is to the advantage of both. I would like to hear more on any theoretical light shed on the issue.
George Reisman covers the division of labor in his treatise: Capitalism.
http://www.capitalism.net/#contents%20in%20brief
The PDF is is on his site. (It’s huge.)
Here:
[quote=“Ludwig von Mises, “Human Action”, Section 8.4”]
The law of association makes us comprehend the tendencies which resulted in the progressive intensification of human cooperation. We conceive what incentive induced people not to consider themselves simply as rivals in a struggle for the appropriation of the limited supply of means of subsistence made available by nature. We realize what has impelled them and permanently impels them to consort with one another for the sake of cooperation. Every step forward on the way to a more developed mode of the division of labor serves the interests of all participants. In order to comprehend why man did not remain solitary, searching like the animals for food and shelter for himself only and at most also for his consort and his helpless infants, we do not need to have recourse to a miraculous interference of the Deity or to the empty hypostasis of an innate urge toward association. Neither are we forced to assume that the isolated individuals or primitive hordes one day pledged themselves by a contract to establish social bonds. The factor that brought about primitive society and daily works toward its progressive intensification is human action that is animated by the insight into the higher productivity of labor achieved under the division of labor.
Neither history nor ethnology nor any other branch of knowledge can provide a description of the evolution which has led from the packs and flocks of mankind’s nonhuman ancestors to the primitive, yet already highly differentiated, societal groups about which information is provided in excavations, in the most ancient documents of history, and in the reports of explorers and travelers who have met savage tribes. The task with which science is faced in respect of the origins of society can only consist in the demonstration of those factors which can and must result in association and its progressive intensification. Praxeology solves the problem. If and as far as labor under the division of labor is more productive than isolated labor, and if and as far as man is able to realize this fact, human action itself tends toward cooperation and association; man becomes a social being not in sacrificing his own concerns for the sake of a mythical Moloch, society, but in aiming at an improvement in his own welfare. Experience teaches that this condition–higher productivity achieved under the division of labor–is present because its cause–the inborn inequality of men and the inequality in the geographical distribution of the natural factors of production–is real. Thus we are in a position to comprehend the course of social evolution.
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If you ever get your hands on the wealth of nations (I actually read the whole thing and it’s not worth it, simply read sections of it) Smith’s section on the division of labor written 240 years ago does great justice to the subject.
Although I don’t have any other written examples off the top of my head I’ve already seen it as a rather simple concept.
I can make 10X you can make 10Y then we can trade for whatever I think your Y and whatever you think my X is worth.
Well, yes, it’s simple if you look at it that way. But with a complex economy, people don’t really have the resources to think of millions of exchange opportunities. But still people do certain jobs in which they are comparatively better than other guys, and they don’t really ‘think’ that way to do the job. It’s just marvellous how the price system coordinates such things.