The Division of Labour stands as one of the founding theories of economics, and, over the last two and a half centuries since it was first published, has been built upon and extended, so it is as relevant today as to when it was first written. This chapter looks at the evolution and development of the Division of Labour from Adam Smith to the present day. Smith focused on what we would now call a single set of work activities or department, but the unit of analysis changes through history – expanded to whole nations by Babbage, Marx, and Durkheim, and then contracted to the manufacturing ‘shop’ by Taylor, Gantt and the Gilbreths starting in the 1880s before being extended to the whole firm by Ford at the Highland Park plant in Detroit beginning 1908.

The Founding Father: Adam Smith

Adam Smith’s Wealth of Nations, first published in 1776, is often claimed to be the founding work of economics. The work is divided into three books, the sub-title of the first of which is:

Of the causes of improvement of the productive powers of Labour, and of the Order in which its Produce is naturally distributed amongst the different Ranks of the People. The title of first chapter is ‘the Division of Labour’.

Smith illustrated the Division of Labour with examples from a pin factory, shown in Figure 5 below. For many centuries prior to the development of the factory system, craftsmen had produced a wide range of metal goods, usually after following a seven-year apprenticeship with a master. The craftsman was expected to understand and to be able to perform all the operations required to make such goods.

Figure 1: Division of Labour in the Pin Factory 1776

Smith pointed out the revolutionary consequences of dividing the work into ten discrete steps, each performed by a different worker. He claimed that a single worker would find it difficult to make twenty pins a day, but ten workers, with appropriate machinery, could make 48,000 pins a day. His explanation for this dramatic increase in production is succinct.

This great increase of the quantity of work which, in consequence of the division of labour, the same number of people are capable of performing, is owing to three different circumstances; first to the increase in dexterity of every single workman; secondly to the saving of time which is commonly lost passing between one species of work to another; and lastly, to the invention of a great number of machines which facilitate and abridge labour, and enable one man to do the work of many. (Smith, 1776)

The First Cotton Factory: Richard Arkwright

In the same year that Smith published Wealth of Nations, Richard Arkwright opened his first cotton mill in Derbyshire. According to Fitton (1989), Arkwright not only created the first cotton mill, but diffused the entire factory system across the UK — to the extent that his son was the wealthiest man in England by the turn of the century and in the following century the British textile industry became the biggest in the world. Fitton also includes a description from 1812 of a typical cotton mill, from which it would be possible to construct a work activity map.

A large cotton mill is generally a building of five or six stories high: the two lowest are usually for spinning frames, if they are for water twist, because of the great weight and vibration caused by these machines. The third and fourth floor contain the carding, drawing, and roving machines. The fifth story is appropriated to reeling, doubling, twisting, and other operations performed on the finished thread. The sixth, which is usually in the roof, is for the batting machine, or opening machine and for the cotton pickers, who for a large mill are very numerous.

Note how much more complex this is compared to Smith’s pin factory.

Fifty Years Later: Charles Babbage

Writing fifty years after Smith, Charles Babbage (Babbage, 1832) completed an economic survey of the UK economy which reported on the extraordinary growth of British Industry caused by the expansion of the factory system to many other industries. As he explained, this groundwork for this survey arose from his work on the ‘calculating engine’ which had led him to visit a considerable number of factories and workshops over the previous ten years. His snapshot of economic activity in a number of different countries and their impact on the population growth of UK shows the extraordinary impact of the division of labour since Smith’s days. He compares the ratio of employment between agriculture (100) and other industries in four countries:

Figure 2: Declining share of Agriculture in high productivity growth countries

Babbage then looks at the growth of population in Great Britain from 1801 to 1831 and finds that whilst population had increased by 52% over those 30 years, the population of the top five manufacturing cities (Manchester, Glasgow, Liverpool, Nottingham, and Birmingham) had grown by 132%. This is probably the first recorded evidence which ties productivity growth to economic growth and population growth.

In Chapter 19 of On the Economy of Machinery and Manufactures, Babbage then extends Smith’s description by providing additional information about the division of labour, which included the labour employed (breaking it down into men, boys, women, and girls), together with their labour costs, labour times, machinery used and material costs for each step. Thus, Babbage provides a complete description of the division of labour, including the steps, the roles, the machinery, the materials and, crucially, the measurements which apply to the description of the work. He also summarises the key advantages of the Division of Labour which had underpinned the economic growth of manufacturing employments:

  1. The time required for learning – traditionally five to seven years for an apprenticeship which is driven by the difficulty of execution of each process and the variety of distinct processes (work-activities) to be learned. Reduction in variety of work-activities learned leads to a reduction in learning time.
  2. Waste of materials in learning – Reduction in variety of work-activities leads to a reduction in waste.
  3. Saving the time lost in changing from one occupation to another – ‘when the human hand or the human head, has been for some time occupied in any kind of work, it cannot instantly change its employment’.
  4. Change of tools – the more complex the tools the bigger the time and effort needed to switch from one work-activity to another.
  5. Skill acquired by frequent repetition of the same processes – ‘The constant repetition of the same process necessarily produces in the workman a degree of excellence and rapidity in his particular department, which is never possessed by a person who is obliged to execute many different processes’.
  6. The division of labour suggests the contrivance of tools and machinery to execute its processes – Babbage argues that the focus on a single process is more likely to result in improvement to the tool than if the worker were distracted by a greater variety of processes.

The Appropriation of Labour: Karl Marx

Harry Braverman (1974) writing a hundred years after Karl Marx, presents a detailed historical analysis of the use of the division of labour which builds on the work of Smith, Babbage, Marx, and Taylor. He complements this historical analysis with his own work experience on the shop floor, first as an apprenticed coppersmith in a naval dockyard, and then in pipefitting, sheet metal work and layout in different engineering firms, and latterly as an editor and publisher of socialist magazines and books.

It was Karl Marx, looking back at the economic history of Great Britain from the 1860s, who first took the Division of Labour, which under Smith and Babbage had been applied to shopfloor work in factories and extended it into a macro-economic construct, whose unit of analysis was no longer the shopfloor, but now the whole nation. As Braverman summarised:

The central place in the first volume of Marx’s Capital is occupied by the labour process as it takes place und the control of capital, and the subtitle describes it accurately as a ‘critical analysis of capitalist production’. (Braverman, p. 6.)

Braverman claimed that the American Capitalist system was based on four pillars: control; deskilling; appropriation and marketization. Taking each one in turn. Control was introduced in the factory system, first implemented in Great Britain in the 18th century. This replaced the traditional contracting out system which was primarily home based. The factory system enabled the owners (who at that time were also the managers) to control the working hours and conditions of their workforce. Once factories were established, mostly in the textile trade, it became possible to implement the Division of Labour as described by Smith. The primary benefit of the Division of Labour was to reduce the complexity of each step and thereby reduce the labour cost of each step by using child and female labour, as illustrated in Babbage’s example.

Once the division of labour for textile production was implemented in factories, machines could be developed which further reduced labour costs. The complete system (factory, division of labour and machines) was first deployed in the textile industry and dramatically reduced the costs of spinning cotton and weaving it into fabrics, which could then be finished and made up into garments. This new cotton-based clothing was much cheaper than traditional woollen wear.

Appropriation describes the method by which surplus value created by labour was appropriated by the owners and managers as payment for their capital investment and managerial work. The fourth component of the industrial system was marketization which substituted home based products and services for manufactured products and services.

Marx’s analysis reframed the Division of Labour from an economic phenomenon to a political one, which focused on the power relationships between the different social classes and the ability the capitalists to control the distribution of the economic benefits which resulted from the Division of Labour.

The Social Division of Labour: Emile Durkheim

Writing his doctoral dissertation in the 1890s, Durkheim (1902) was well aware of Marx’s extension of the Division of Labour to include power relationships traditionally dealt with by political sciences. He followed Marx by continuing with the same unit of analysis (the nation state) and further extending the Division of Labour to include sociological constructs. As Lewis Coser explains in his 1984 introduction to Durkheim’s Division of Labor in Society:

Writing over a century after Adam Smith, Durkheim was no longer concerned with the productive gains made by the new division of labour, nor was he much concerned with what Marx had called alienation, although he was indeed perturbed by what he called the pathological consequences and the ‘abnormal’ conditions of the contemporary division of labour. What concerned Durkheim above everything else were questions that had hardly been raised by his predecessor, though there are anticipations of his thought amongst such thinkers as Auguste Comte or Saint-Simon. What were the consequences of a complex and advanced system of the division of labour on the cohesion and solidarity of societies? And more important still, how could the autonomy of the individual, to which Durkheim was passionately attached, be reconciled with the necessary regulation and discipline that was required to main social order in modern differentiated types of societies. How in other words could social bonds be maintained and reinforced without submitting individuals to the distasteful guidance of tutelary institutions that would repress human autonomy and individuality? (Durkheim, Coser introduction p. xiv)

Durkheim believed that the Division of Labour would increase social solidarity and that this could be measured by the growth of law governing contracts compared to those governing behaviour, which he saw as belonging to an earlier age of feudal society. But he also understood that his version of the Division of Labour might not always result in increasing social solidarity and identified three pathologies. The first of these was the Academic Division of Labour which he had learned from the works of Comte which would require a national effort to remedy. The second one was the Forced Division of Labour as described below.

We are certainly not predestined from birth to any particular form of employment, but we nevertheless possess tastes and aptitudes that limit our choice. If no account is taken of them, if they are constantly frustrated in our daily occupation, we suffer, and seek the means of bringing that suffering to an end. There is no solution other than to change the established order and create a new one. For the division of labour to engender solidarity, it is thus not sufficient for everyone to have his task: it must also be agreeable to him. (Durkheim p. 294)
And the third was the misuse of labour:

It often happens in a commercial, industrial or any other kind of enterprise that functions are distributed in a way that they fail to afford sufficient scope for individual activity. It is plain that there is a regrettable waste of effort, although we need not deal with the economic aspect of the phenomenon here. What should be of interest to us is another fact that always accompanies this wastage, that is, a more or less lack of co-ordination of these functions. We know that in a business where every employee has insufficient work to occupy him activities are badly co-ordinated, and operations are conducted in an ill-concerted manner; in short solidarity relaxes its hold and incoherency and disorder appear. (Durkheim, p. 304)

The Division of Labour and Bureaucracy: Max Weber

For a modern-day reader, Weber’s unit of analysis in Theory of Social and Economic Organization (1947) is extraordinarily wide. It spans modern day societies without geographic restriction; it spans a historical perspective which goes back to the world of the Greeks and Romans, and it includes at least five separate disciplines: history; culture and religion; sociology; political science; and economics. Weber’s goal was to provide a descriptive language and a set of ‘ideal types’ which would enable historical records to be analysed and compared across disciplines over long time periods. Not only does Weber state this point explicitly, but he is also clear that this descriptive language is not meant to deal with the dynamic.

What follows is not intended in any sense to be ‘economic theory’. Rather it consists only in an attempt to define certain concepts which are frequently used and to analyse certain of the simplest sociological relationships in the economic sphere…. For the present all questions of dynamic process will be left out of account. (Page 158)

The Importance of Bureaucracy

One of Weber’s most important contributions was his concept of bureaucracy. This followed his analysis of sociology and economics and was a separate section of his work concerned with the basis of legitimacy. The construct he used to explain this was ‘imperative co-ordination’, which he defined as ‘the probability that certain specific commands (or all commands) from a given source will be obeyed by a given group of persons’. In order to anchor this construct in historical evidence he outlined what he called ‘the three pure types of legitimate authority’ which included ‘rational grounds, traditional grounds, and charismatic grounds’ (Weber, 1947).

Of these three the ideal type for rationally grounded authority was an organisation established with legal authority with a specified field of competence. This organisation was free to hire employees to work in a clearly defined hierarchy of ‘offices’ (later called roles by Parsons). Appointments to these offices would be based on free selection and educational and technical competence. Weber argued that the ‘purely bureaucratic in type of administrative organisation is, from a purely technical point of view, capable of attaining the highest level of efficiency and is in this sense formally the most rational known means of carrying out imperative control over human beings’ (Weber, 1947).

Avoidance of Historicism

As Parsons points out in his lengthy and explanatory introduction, Weber was well aware of the German historical approach which had been used by Marx and Spengler. This is what Karl Popper (1957), writing after the second world war, called historicism. Weber wished to avoid historicism precisely through the use of a neutral non-dynamic descriptive language, which is as powerful today as it when it was first written 100 years ago. One example will suffice: Section 24A (Weber, 1947) is entitled, The Principal Forms of Appropriation and Market Relationship. Any reader of Marx will know that appropriation by capitalists of the ‘surplus value’ produced by labour is a key tenet of what Braverman called ‘labour process theory’. Based on his own historical analysis of British industrial capitalism in the third quarter of the nineteenth century, Marx had argued that this was a deterministic feature of all capitalism.

What Weber was providing was not a deterministic view but a descriptive one. It enables an observer to document the types of appropriation to be found in market relationships. The benefit of this language is that it enables different historical periods in different societies to be observed and classified using the same descriptive typology. Weber was also aware of the enormous changes in industry which had taken place in the forty years since Marx’s death, many of which had been driven by the creative destruction, caused by technological innovation, so well described by Schumpeter (1911) his Theory of Economic Development.

Weber understood the division of labour very well. In section 25, Conditions Underlying the Calculability of the Productivity of Labour, he states the following:

There are three primary conditions affecting the maximization of calculable performance by labour in carrying out the specifications: (a) The optimum of aptitude for the function; (b) the optimum of skill acquired through practice; (c) the optimum of incentive for the work. (Weber, Op. Cit. p. 261)

Weber specifically refers to the Taylor system as providing rational methods for accomplishing these three conditions. He also understands that a successful market economy must appeal to the workers’ self-interest. In order for such a market economy to operate, the following conditions must apply:

It presupposes the expropriation of the workers from the means of production and their dependence on competition for paid employment. This in turn presupposes that the appropriation of the means of production by the owners is protected by force. As compared with direct compulsion to work, the system of free labour involves responsibility for reproduction, in the family, and part of the responsibility for selection based on aptitude is turned over to the workers themselves. Further, both the need for capital and the risks to which it is subjected are, as compared with the use of unfree labour, lessened and made more calculable. Finally, through the payment of money wages on a large scale, the market for goods which are objects of mass consumption is broadened. (Weber, Op.Cit. p. 262)

In contrast to Marx’s determinism, that capitalists would always appropriate labour surpluses and drive wages down to subsistence levels, Weber left the possibility open, that it might be in the interests of capitalists in general not to drive wages down to subsistence levels since that would reduce the markets for their goods and services.

Scientific Management: Frederick Taylor

Scientific Management was well understood by Weber and Alfred Chandler, the great American economic historian, who summarised its pivotal importance:

In 1895, Frederick W. Taylor delivered his first paper on what he soon termed ‘scientific management’. He explicitly addressed himself to improving the gain-sharing plans of Towne and Halsey. First, he pointed out that the costs and the resulting savings to be shared should not be based, as they were in those plans, on past experience, but rather determined ‘scientifically’ through detailed job analyses and time and motion studies of the work involved. In addition, Taylor would apply the stick as well as the carrot. He would do this by returning to the piece rate and by paying a ‘differential piece rate’. The workers who failed to meet this standard time and output receive a lower rate per piece, while those who excelled received a much higher rate per piece. (Chandler, 1997. p. 275)

The study and measurement of efficiency in manufacturing industry and the roles and responsibilities of managers for improving efficiency at the shopfloor level, was invented, developed, and diffused by Frederick Taylor between 1881 and his death in 1915. He did this with his close colleagues, Gannt, Frank and Lilian Gilbreth, and others, together with intermittent support from the American Society of Mechanical Engineers (ASME).

Taylor started as a shop floor worker at the Midvale manufacturing works in Philadelphia in 1883, and based on his experience, developed what we now call a ‘work description language’ to describe work on the shop floor. This language enabled him, and later his colleagues, to describe roles, managerial relationships, working relationships, material work-objects, information work-objects, work-descriptions and to then document these in the form of work process blueprints for every shop.

Taylor also recommended a new type of organisation which he called ‘functional foremanship’ for which eight roles were needed. These included route clerks, instruction card clerks, cost and time clerks who plan and give directions from the planning room and gang bosses who provide coordination and control. Three other functional foremen, the speed boss, the repair boss, and the inspector were concerned with the performance and result of the work. An eighth, the shop disciplinarian reviewed the workers’ ‘virtues and defects’ and aided them in more effectively carrying out their tasks (Taylor, 1905). Note how far the simple division of labour in the pin factory has grown.

In addition to describing the work, he also created a method for measuring work-activities, of all kinds, using a stopwatch to time them. This enabled him, and later his colleagues, after sufficiently numerous observations, to define a ‘standard time’ for each work-activity. This was the time during which the work-activity could be performed by a ‘first-class man’. These individual measurements were then bundled to create standard costs for each unit of output.

Thirdly, he created a method for implementing these descriptions and measurements on the shop floor and for training workers and management on their use. This included the need for specialised roles to ensure that each production worker was supported by the necessary equipment, knowledge, work-descriptions, and machine maintenance to achieve these standard times and associated quality measurements.

Any Colour You Like: Henry Ford

Ford’s new Highland Park plant opened in 1908 to build the Model T, famously offered ‘in any colour you like, as long as it’s black’, and Taylor’s division of labour was adopted. A number of other innovations were implemented which included electric motors, which freed factory layout from the constraints of overhead belts, and interchangeable parts which reduced the amount of work in progress stock. This was documented by Arnold and Faurote in Ford Methods, Ford Shops published in 1919. The introduction of the moving production line, perfected by 1914 also had a dramatic impact on productivity as Womack (1990) shows in Table 2 below.

Table 1: Production line efficiencies achieved (Womack, 1997).

Ford’s fourth innovation, one which both Taylor and Gantt (1911) had foreseen, was the introduction of the five dollar a day wage which was double that which a ‘high priced man’ could earn. Drucker (Op. Cit.) points out that the implementation of Taylorism by Henry Ford resulted not only in the highest manual worker wages in the US but the productivity gains from the moving production line pioneered by Ford resulted in a Model T being available for $250 in 1926. This represented less than three months’ wages for a Ford production line worker, a figure which compares very favourably with the UK in 2023, where it takes ten months’ wages for full time worker on the average salary £38,270 (Indeed website, 2023) to buy a medium sized car: Volkswagen Golf – Style £31,050 (Car Wow website, 2023).

The Division of Labour in Motion: Frank and Lilian Gilbreth

Industrial engineers led by Taylor created their own language to describe work and working. This language later became standardised by the American Society of Mechanical Engineers (ASME) after Taylor’s death and was extended to include the Gilbreths’ notation of movement. In 1921 the Gilbreths published the first edition of Process Charts (an example of which appears in Figure 3 below).

Figure 3: A Gilbreth Process Chart

Their introduction to Process Charts (Gilbreth, 1921) clearly sets out the purpose of these charts:

The process chart is a device for visualizing a process as a means of improving it. Every detail of a process is more or less affected by every other detail; therefore, the entire process must be presented in such form that it can be visualized all at once before any changes are made in any of its subdivisions.

In any subdivision of the process under examination, any changes made without due consideration of all the decisions and all the motions the precede and follow that subdivision will often be found unsuited to the ultimate plan of operation. In the present paper the authors point out the place of the process chart in management and present established working date used successfully in numerous working installations for many years. They also point out its simplicity, field of application, its relation to standardization, etc. While the process chart method will be helpful in any kind of work and under all forms of management, the best results can come, the authors state, only where there is a mechanism of management that will enforce and make repetitive the conditions of the standards.

The Gilbreths’ notation enabled much richer descriptions of work activities to be created which were still in use during WW II. Anne Shaw (1944) wrote a short book with the title, An Introduction to the Theory and Application of Motion Study, first published in 1944, with a foreword by Stafford Cripps, who was the minister for aircraft production during the war. She pointed out that time study and motion study were complimentary.

Reducing the cost of Production: Wright’s Law

Taylor’s scientific management as extended by the Gilbreths and others and Ford’s practices were embodied in the new professional discipline of Industrial Engineering, which was applied to both existing and new industries. Experience shows that the more times an activity has been performed, the less time is required for each subsequent iteration. This relationship was quantified by TP Wright, who determined that every time total aircraft production doubled, the required labour time decreased by 20% (Wright, 1936). Subsequent empirical studies from other industries have yielded different values ranging from only a couple of percent up to 30%, but in most cases, it is a constant percentage. Far from being obsolete, Wright’s law is still used today to predict the cost of batteries for electric vehicles.

Writing in the 1990s, Peter Drucker (1993) summed up the extraordinary contribution of Taylorism and Industrial Engineering:

What, then, overcame the ‘inevitable contradictions of capitalism, the “alienation” and “immiseration” of the labouring class, and with it the whole notion of the proletarian?’ The answer is the Productivity Revolution. When knowledge changed its meaning two hundred and fifty years ago, it began to be applied to tools, processes, and products. This is what ‘technology’ means to most people and what is taught in engineering schools. But two years before Marx’s death, the Productivity Revolution had already begun. In 1881, an American, Frederick Winslow Taylor (1856-1915), first applied knowledge to the study of work, the analysis of work, and the engineering of work. (Drucker, p. 33)

From the turn of the twentieth century shortly after BLS started measuring the productivity US firms, Drucker observed:

Within a few years after Taylor began to apply knowledge to work, productivity began to rise at rate of 3.5% to 4.0% compound a year – which means doubling every eighteen years or so. Since Taylor began, productivity has increased some fifty-fold in all advanced countries. (Drucker, p. 38)

He goes on to assess the significance of Taylor, Ford, and Industrial Engineering’s contribution to the Allied victory in WW II:

Taylor’s axiom that all manual work, skilled and unskilled, could be analysed and organized by the application of knowledge seemed preposterous to his contemporaries. And the fact that there was a mystique to craft skill was universally accepted for many years. It was this belief that encouraged Hitler, as late as 1941, to declare war on the United States. For the United States to field an effective force in Europe would require a large fleet to transport troops. America at that time had almost no merchant marine and no destroyers to protect it. Modern warfare, Hitler further argued, required precision optics in large quantities; and there were no skilled optical workers in the United States.

Hitler was absolutely right. The United States did not have much of a merchant marine, and its destroyers were few and ludicrously obsolete. It also had no optical industry. But by applying Taylor’s Scientific Management, US industry trained totally unskilled workers, many of them former sharecroppers raised in a pre-industrial environment, and converted them in sixty to ninety days into first rate welders and shipbuilders. Equally, the United States trained the same kind of people within a few months to turn out precision optics of better quality than the Germans ever did – and on an assembly line to boot.

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