Labor Theory Of Value

and finance Allah shmoop What is specialization of labour All

right people While some of us are simply better at

math than others some of us are more creatively inclined

than others And some of us enjoy the social aspect

of a job While others prefer to be left alone

Teo titrate their chemicals and be left in peace and

quiet Well specialization of labour takes advantage of these differences

creating more value and higher overall output Well then without

specialization classical economist Adam Smith the guy who made the

invisible hand a thing saw the specialization of labour as

the driving force for economic growth Think about it all

of the engineers designers and marketers who went into creating

the very device you're on right now because they're able

to buy what they need to survive rather than fending

for themselves in the woods Well they can focus on

specialising their skills providing more value to the economy Hey

maybe that's myth Guy was on something right to really

see how much the specialization of labour affects the world

let's imagine a world without it So first people would

all be fending for themselves making their own clothes farming

their own food cutting their cutlery making their own video

gaming consoles and stuff like that but with specialization of

labour Well it allows us to focus our individual attention

in a particular specific area because other people specialize in

other things taking care of those things for us We

can also specialized for the rest of the market right

Well we all become experts of some sort by doing

our jobs and that activity increases productivity This is how

specialization of labour gives us absolute advantage in the market

We'Ll absolute advantages when one group can create a good

or service using fewer resource is than another group Example

If sewing Sally can so close with much less time

than you can it benefits both you and sewing Sally

If if you just let her make the clothes and

then buy them from her she's just plain better It's

sowing than you are so it's best for both of

you this way on a global scale Specialization of labour

gives us this absolute advantage For example southeastern Asian countries

will always be better pineapple and mango producers than North

American countries Global trade combined with specialization Let's each of

us produce what we produce best and that benefits everyone

Okay Second say goodbye to your smartphone computer refrigerator water

heater air conditioners cars airplanes bikes and the Internet Without

specialization of labour nobody would have gone deep enough in

the technological stack to make let alone imagine the technology

we have today So yesterday's technology breathes could graze the

much more advanced technology which then breeds more human capital

or intellectual capital Right Think about labor in terms of

opportunity Cost Is your time more valuable doing your job

Or is it more valuable forging steel into the shape

of a fork Well this is the stuff of comparative

advantage When a group or person can make a product

or service at a lower opportunity cost then can another

group or person Well even if you figured out how

to whip up a crappy fork how many lost hours

is that that you could have spent doing your job

But you're actually good at like how much money did

you lose tryingto make a four We're not saying you

shouldn't go fork forging or fishing or whatever thing it

is that you might do for fun that you aren't

very good at But we are saying that the value

that specialization of labour creates can be easily seen Once

you think about it in terms of opportunity cost well

a chef can provide a ton of value at a

restaurant Well that same chef Yeah not very much value

Add at a technology firm A tech bro can provide

Aton of value with the tech firm like Keats are

us But those people well they don't add much value

at a construction site All right what about a lawyer

who can type faster than her secretary Should she just

do all that typing herself No because a lawyer's time

is better spent loitering than it is typing Which is

why she hired her secretary in the first place Typing

is just a bad use of her way more valuable

time right Even if the lawyer is better a typing

than her secretary that opportunity costs for her secretary Typing

is much lower than it is for her loitering Well

comparative advantage shows us how specialization can help us all

add value to the market even though each have different

skills and skill levels Well the more specialized we all

are at what we d .'Oh well them or others

are willing to pay for that specialization and the more

value we're providing to each other within the economy While

specialization of labour has created a lot of value not

everyone's a fan Critics have cited that a too high

a level of specialization can lead Toa unhappy workers and

burn out probably does In fact the forty hour work

week became a thing on Lee after factory worker burnout

at the Ford factory caused extremely high turnover rate As

benefits of specialization spread globalisation started to make more and

more economic sense because the specialization of labour provide so

much more value to the economy than well if we

were all a bunch of hermits you know forging her

hone forks it's profitable to make things in one country

and ship them halfway around the world to be sold

in another country Absolute and comparative advantage make global trading

like this oh so worth it So today we can

see that event Siri's in the extreme With giants like

Amazon Walmart and Ali expressed facilitating globalization spreading the economic

fruits of specialisation on the insanely useful and maybe scary

We've got machines learning algorithms and artificial intelligence in the

works On the of course that's a thing side While

we've got heated driveways monster energy sliced ham and eighty

five dollars rock in a bag a toothpaste squeezer and

other things you didn't need to know that existed All

right just moving right along here people Where's