Posted by: erichosemann | December 15, 2009

TWN: Book 1, Chapter 3

Chapter 3  That the Division of Labour is Limited by the Extent of the Market

27, 1 The bigger the market, the wider the scope of the division of labor; i.e. the more people there are to trade with, the more likely their labor will be specialized.

27,2 Some occupations can only be found in large cities, that of a porter, for instance.  Rural areas don’t allow for much specialization because groups of people are smaller and there are wider distances between them.   “The farmer must be butcher, baker, and brewer for his family.”

Country specialists such as carpenters provide the services of several “city” specialists.  Because opportunities for trade are few, a country carpenter must be a cabinet maker, wheel wright, and a joiner, among other things, whereas a city carpenter can make his living pursuing only one of those fields.

It is unlikely a country blacksmith would specialize in nail-making, but if he did, and he was as productive as a city blacksmith, because the extent of his market for nails is limited, he would be unable to dispose of the majority of his produce.

28,1 Water carriage—transportation of goods by river and sea—is inexpensive in terms of manpower, wear and tear on equipment, and time, compared to land carriage.

There are few goods that could bear the cost of land carriage from Calcutta to London, but water carriage cheaply and efficiently mediates trade between the two cities.

Because of the advantages of water carriage, arts and sciences develop first among coastal towns and settlements, and lastly among inland parts of a country.

The extent of the market for a country’s land-locked areas is limited to trade with ports and coastal cities, while the extent of the market for coastal cities is limited by the ease and efficiency of water carriage.

30,1 Those countries with port cities and navigable waterways were the first to become civilized; those lacking such resources, such as Africa and Siberia, and those with navigable waterways but no access to sea ports, such as Bavaria, Austria and Hungary, have had their development impeded or severely limited.

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