« Regional disparities in Canadian economic growth: Theory and evidence | Main


Feed You can follow this conversation by subscribing to the comment feed for this post.

If you have six identical men, then by definition you cannot have an economy because that requires division of labour and hence non-identical men.

Therefore none of them owe anything to the others, and have no particular reason to do the job, with or without a roll of the die.

Besides that, the Confederate Army lost the war, so everyone would have been better off if they refused to fight (including but not limited to themselves).

Tel: Division of Labour can also be based on Economies of Scale (Adam Smith), as well as Comparative Advantage (David Ricardo).

"First, the improvement of the dexterity of the workmen, necessarily increases the quantity of the work he can perform; and the division of labour, by reducing every man's business to some one simple operation, and by making this operation the sole employment of his life, necessarily increases very much the dexterity of the workman. A common smith, who, though accustomed to handle the hammer, has never been used to make nails, if, upon some particular occasion, he is obliged to attempt it, will scarce, I am assured, be able to make above two or three hundred nails in a day, and those, too, very bad ones. A smith who has been accustomed to make nails, but whose sole or principal business has not been that of a nailer, can seldom, with his utmost diligence, make more than eight hundred or a thousand nails in a day. I have seen several boys, under twenty years of age, who had never exercised any other trade but that of making nails, and who, when they exerted themselves, could make, each of them, upwards of two thousand three hundred nails in a day. The making of a nail, however, is by no means one of the simplest operations. The same person blows the bellows, stirs or mends the fire as there is occasion, heats the iron, and forges every part of the nail: in forging the head, too, he is obliged to change his tools. The different operations into which the making of a pin, or of a metal button, is subdivided, are all of them much more simple, and the dexterity of the person, of whose life it has been the sole business to perform them, is usually much greater. The rapidity with which some of the operations of those manufactures are performed, exceeds what the human hand could, by those who had never seen them, be supposed capable of acquiring."

When I read that, it sounds to me very much like a description of individual specialization. Even if you believe that people start out identical, you won't get a non-linear economy of scale unless those people start to focus on particular tasks and improve their skills within a narrow area. Emphasis has been added by me, not in the original.

Tel: simplest example: the 6 men only learn 1 job each, instead of each learning all 6 jobs. Specialisation saves on training costs.

How does bargaining go between the keeper of the die and the person with whom he cuts the deal?
Keeper to person 1: I will guarantee you win, improving your expected value 6-fold, if you pay me a 90% of the increase in EV
Person 1: I'll give you 1% of the benefit.
Keeper: I'll go to Person 2 and get a better deal
Person 1: I'll tell 3-6 and they'll find a new keeper or revert to auction

"Specialisation saves on training costs."
Yup, and it also make people non-identical.

Hence a Plumber is not identical to an Electrician, is not identical to a Mechanic, is not identical to a Programmer.

Verify your Comment

Previewing your Comment

This is only a preview. Your comment has not yet been posted.

Your comment could not be posted. Error type:
Your comment has been posted. Post another comment

The letters and numbers you entered did not match the image. Please try again.

As a final step before posting your comment, enter the letters and numbers you see in the image below. This prevents automated programs from posting comments.

Having trouble reading this image? View an alternate.


Post a comment

Your Information

(Name and email address are required. Email address will not be displayed with the comment.)

Search this site

  • Google

Blog powered by Typepad