### TL;DR
**[The Wealth of Nations](https://www.adamsmith.org/th...
Adam Smith was an 18th-century Scottish economist and philosopher, ...
Smith points out that the division of labor didn't happen because s...
> ***"It is common to all men, and to be found in no other race of ...
> ***"Give me that which I want, and you shall have this which you ...
Smith exlpains that in a market economy, most exchanges are based o...
Smith suggests that without the tendency to barter and exchange, ea...
Not a single maths equation
Smith emphasizes that unlike other species, humans benefit from the...
CHAPTER II
Of the Principle which gives occasion to the Division of Labour
tTHIS division of labour, from which so many advantages are derived,
is not originally the effect of any human wisdom, which foresees
and intends that general opulence to [20] which it gives occasion, t
It is the necessary, though very slow and gradual consequence of a certain
propensity in human nature which has in view no such extensive utility;
the propensity to truck, barter, and exchange one thing for another. 2
2 Whether this propensity be one of those original principles in human
nature, of which no further account can be given; or whether, as seems
more probable, it be the necessary consequence of the faculties of reason
and speech, it belongs not to our present subject to enquire. 3It is common
to all men, and to be found in no other race of animals, which seem to
know neither this nor any other species of contracts. Two greyhounds,
in running down the same hare, have sometimes the appearance of acting
in some sort of concert. Each turns her towards his companion, or en-
deavours to intercept her when his companion turns her towards himself.
This, however, is not the effect of any contract, but of the accidental
t LJ (B) 2xS--x9, ed. Cannan t68 reads: 'We cannot imagine this to have been an effect
of human prudence. It was indeed made a law by Sesostratis thatevery man should follow
the employment of his father. But this is by no meanssuitable to the dispositionsof
human nature and can never long take place. Everyone is fond of being agentleman,
be his father what he would.' The lawis also mentioned in LJ (A) vi.54. See below,
I.vii.3x and IV.ix.43.
2 This paragraph closely follows the first three sentences in ED 2.x2. The propensity
to truck and barter is also mentioned in LJ (A) vi.44., 48 and LJ (B) 2x9 If., ed. Carman
I69. Cf. LJ (B) 3oo--x, ed. Carman 232: 'that principle in the mind which prompts to
truck, barter and exchange, tho' it isthegreat foundation of arts, commerce and the
division of labour, yet it is not marked with any thing amiable. To perform any thing,
or to give any thing without a reward is always generous and noble, but to barter one
thing for another is mean.' In a Letter from Governor Pownall to Adam Smith, being an
Examination of Several Points of Doctrine laid down in his Inquiry, into the Nature and
Causes of the Wealth of Nations (London, x776), theauthor objected that the analysis
of this chapter stopped short in ascribing the division of labour directly to a propensity
to barter (4-5). Pownall, a formerGovernor of Massachusetts, also criticized Smith's
views on labour as a measure of value, papermoney, theemployments of capital, colo-
nies, etc. Smith acknowledged Pownall's work in Letterx8a addressed toPownall, dated
x9 January x777. In Letter208 addressed to Andreas Holt,dated 26 October x78o
Smithremarked that: 'In thesecond edition I flattered myself that I had obviated all
theobjections of Governor Pownal. I find however, he is by no meanssatisfied, and
as Authorsare not much disposed to alter theopinions they have once published, I am
not much surpdzed at it.' There is very little evidence to suggest that Smith materially
altered hisviews in response to Pownall, but see below, p. 50, n. xS.
3 In LJ (B) 22I, ed. Carman x7x, Smith argued in referring to the division oflabour
that'The realfoundation of it isthat principle to persuade which so much prevails in
human nature.' The same pointis made inLJ (A) vi.56.
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26 The Nature and Causes of [I.ii
concurrence of their passions in the same object at that particular time.4
Nobody ever saw a dog make a fair and deliberate exchange of one bone
for another with another dog. Nobody ever saw one animal by its ges-
tures and natural cries signify to another, this is mine, that yours;I
am willing to give this for that. When an animal wants to obtain some-
thing either of a man or of another animal,it has no other means of
persuasion but to gain the favour of those whose service it requires. A
puppy fawns upon its dam, and a spaniel endea-[2I]vours by a thousand
attractions to engage the attention of its master who is at dinner, when it
wants to be fed by him. Man sometimes uses the same arts with his breth-
ren, and when he has no other means of engaging them to act according
to his inclinations, endeavours by every servile and fawning attention to
obtain their good will. He has not time, however, to do this upon every
occasion. In civilized society he stands at all times in need of the co-
operation and assistance of great multitudes, while his whole life is scarce
sufficient to gain the friendship of a few persons. In almost every other
race of animals each individual, when it is grown up to maturity, is in-
tirely independent, and in its natural state has occasion for the assistance
of no other living creature,s But man has almost constant occasion for
the help of his brethren, and it is in vain for him to expect it from their
benevolence only.° He will be more likely to prevail if he can interest
their self-love in his favour, and shew them that it is for their own ad-
vantage to do for him what he requires of them. Whoever offers to another
a bargain of any kind, proposes to do this. Give me that which I want,
andyoushall have this which you want, isthe meaning of every such
offer; and it is in this manner that we obtain from one another the far
greater part of those good offices which we stand in need of. It is not from
4 The example of thegreyhounds occurs in LJ (B) 2x9, ed. Carman I69. LJ (A) vi.44
uses the example of 'hounds in a chace' and again at 57. Cf. LJ (B) e22, ed. Carman XTt:
'Sometimes, indeed, animals seem to act in concert, but there is never any thing like a
bargain among them. Monkeys when they rob a garden throw the fruit from one to
another till they deposit it in the hoard, but there is always a scramble about the divi-
sion of the booty, and usually some of them are killed.' In LJ (A) vi.57 a similar example
is based on the Cape of Good Hope.
s In ED _.12 an additional sentence is added at this point: 'When any uncommon mis-
fortune befals it, its piteous and doleful cries will sometimes engageits fellows, and
sometimes prevail even upon man, to relieve it.' With this exception, and the first sentence
of this paragraph, the whole of the preceding material follows ED 2.t2 very closely and
in places verbatim. The remainder of the paragraph follows ED 2.I2toits close.
6 'To expect, that others should serve us for nothing, is unreasonable; therefore all
Commerce, that Men can have together, must be a continual battering of one thing for
another. The Seller, who transfers the Property of a Thing, has his own Interest as much
at Heart as the Buyer, who purchases that Property; and, if you want or like a thing, the
Owner of it, whatever Stock of Provision he may have of thesame, or how greatly soever
you may stand in need of it, will never part withit, butfor a Consideration, which he
likes better, than he does the thing you want.' (Mandeville, The Fable of the Bees,pt. ii.
4_x-2, ed. Kaye, ii.349.)
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I.ii] the Wealth of Natiom 27
the benevolence of thebutcher,the brewer, or the baker, that we expect
our dinner, but from their [22] regard to their own interest. We address
ourselves, not to their humanity but to theirself-love, and never talk
to them of our own necessities but of their advantages.7 Nobody but a
beggar chuses to depend chiefly upon the benevolence of his fellow-
citizens. Even a beggar does not depend upon it entirely. The charity of
well-disposed people, indeed, supplies him with the whole fund of his
subsistence. Butthough this principle ultimately provides him with all
the necessaries of life which he has occasion for, it neither does nor can
provide him with them as he has occasion for them. The greater part of
his occasional wants are supplied in the same manner as those of other
people, by treaty, by barter, and by purchase. With the money which one
man gives him he purchases food. The old cloaths which another bestows
upon him he exchanges for other old cloaths which suit him better, or
for lodging, or for food, or for money, with which he can buy either
food, cloaths, or lodging, as he has occasion.
3 As it is by treaty, by barter, and by purchase, that we obtain from one
another the greater part of those mutual good offices which we stand in
need of, so it is this same trucking disposition which originally gives occa-
sion to the division of labour. In a tribe of hunters or shepherds aparticular
person makes bows and arrows, for example, with more readiness and
dexterity than any other. He frequently exchanges them for cattle or for
venison with his companions; and [23] he finds at last that he can in this
manner get more cattle and venison, than if he himself went to the field
to catch them. From a regard to his own interest, therefore, the making
of bows and arrows grows to be his chief business, and he becomes a sort
of armourer,s Another excels in making the frames and covers of their
Cf. LJ (B) 2zo, ed. Cannan x69: 'The brewer and the baker serve us not from bene-
volence but from selflove. No man but a beggar depends on benevolence, and even they
would die in a week were their entire dependance upon it.' Also LJ (A) vi.46: 'You do
not adress his [the brewer's and baker's] humanity but his self-love. Beggars are the only
persons who depend on charity for their subsistence; neither do they do soaUtogether.
For what by their supplications they have got from one, they exchange for something else
they more want. They give their old cloaths to a one for lodging, the mony they have
got to another for bread, and thus even they make use of bargain and exchange.'
sCL LJ (A) vi.46: 'This bartering and trucking spirit is the cause of the separation of
trades and the improvements in arts. A savage who supportshimself by hunting, having
made some more arrows than he had occasion for, gives them in a present to some of his
companions, who in return give him some of the venison they have catched; and he at
last finding that by making arrows and giving them to his neighbour, as he happens to
make them better than ordinary, he can get more venison than by his own hunting, he
lays it aside unless it be for his diversion, and becomes an arrow-maker.' Similar points
are made in LJ (B) 22o, ed. Cannan I69-7o, and a similar passage occurs in ED 2.t3.
Mandeville (The Fable of the Bees, pt. ii. 335--6, ed. Kaye ii.284) also noted that: 'Man',
as I have hinted before, naturally loves to imitate what he sees others do, which is the
reason that savage People all do the same thing: This hinders them from meliorating
their Condition, though they are always wishing for it: But if one will wholly apply him-
self to the making of Bows and Arrows, whilst another provides Food, a third builds
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28 The Nature and Causes of [I.ii
little huts or moveable houses. He is accustomed to be of use in this way
to his neighbours, who reward him in the same manner with cattle and
withvenison, till atlast he finds it his interestto dedicate himself entirely
to thisemployment, and to become a sort of house-carpenter. In the
same manner a third becomes a smithor abrazier, a fourthatanner or
dresser of hides orskins, the principal part of the clothing of savages. 9
And thusthe certainty of being able to exchange all that surplus part of
the produce of his own labour, which is over and above his own con-
sumption, forsuch parts of the produce of other men'slabour as he may
have occasion for, encouragesevery man to apply himself to a particular
occupation, and to cultivate and bringto perfection whatever talent or
genius he may possess forthat particular species of business. 1°
4 The difference of natural talents in different men is, in reality, much
less than we are aware of; and the very differentgenius which appears
to distinguishmen of different professions, when grown up to maturity,
is not upon many occasions so much the cause, asthe effect of the divi-
sion of labour,tt The difference between the [24]most dissimilar charac-
ters, between a philosopher and a common street porter, for example,
Huts, a fourth makes Garments, and a fifth Utensils, they do not only become useful to
one another, but the Callings and Employments themselves will in the same Number
of Years receive much greater Improvements, than if all had been promiscously follow'd
by every one of the Five.'
9 Cf. Hutcheson (System, i.288-9): "Nay 'tis well known that the produce of the
labours of any given number, twenty, for instance, in providing the necessaries or con-
veniences oflife, shall be much greater by assigning to one, a certain sort of work of one
kind, in which he will soon acquire skill and dexterity, and toanother assigning work
of a different kind, than if each one of the twenty were obliged to employ himself, by
turns, in all the different sorts of labour requisite for his subsistence, without sufficient
dexterity in any. In the former method each procures a great quantity of goods of one
kind, and can exchange a part of it for such goods obtained by the labours of others as
he shall stand in need of. One grows expert in tillage, another in pasture and breeding
cattle, a third in masonry, a fourthin the chace, a fifth in iron-works, a sixth in the arts
of the loom, and so on throughout the rest. Thus all are supplied by means of barter with
the work of complete artists. In the other method scarce any one could be dextrous and
skilful in any one sort of labour.'
10 This paragraph is based on ED 2.13, which it follows very closely.
tt 'When we consider how nearly equal all men are in their bodily force, and even
in their mental powers and faculties, till cultivated by education; we must necessarily
allow, that nothing but their consent could, at first, associate them together, and subject
them to any authority.' (D. Hume, 'Of the Original Contract', in Political Discourses
(t752); Essays Moral, Political and Literary, ed. T. H. Green and T. H. Grose (London,
i882), i.444-5.) Cf. Treatise of Human Nature, III.i: 'The skin, pores, muscles, and nerves
of a day-labourer, are different from those of a man of quality: so are his sentiments,
actions, and manners. The different stations of life influence the whole fabric, external
and internal; and these different stations arise necessarily, because uniformly, from the
necessary and uniform principles of human nature.' On the other hand, Harris (Essay,
i. 15) believed that: 'Men are endued with various talents and propensities, which natur-
ally dispose and fit them for different occupations; and are.., under a necessity of
betaking themselves to particular arts andemployments,from their inability of otherwise
acquiring all the neceq._aries they want, with ease and comfort.This creates a depen-
dance of one man upon another, and naturally unites meninto societies.'
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I.ii] the Wealth of Nations 29
seems to arise notso much from nature, as from habit, custom, and educa-
tion. 12When they came into the world, and forthe firstsix or eightyears
of their existence, they were a, perhaps, a very much alike, and neither their
parents nor play-fellows could perceive anyremarkable difference. About
that age,orsoon after, they come to be employed in very different occupa-
tions. The difference of talents comesthen to be taken notice of, and widens
by degrees, till atlast the vanity of the philosopher is willingto acknow-
ledge scarce anyresemblance.But without the disposition totruck, barter,
and exchange, every man must have procured to himself every necessary
and conveniency of life which he wanted. All must have had the same
duties to perform, and thesame work to do, and there could have been
no such difference of employment as could alone give occasion to any
great difference of talents. 13
5As it isthis disposition which forms that difference of talents, so
remarkable among men of different professions, so it isthissame disposi-
tion which renders that difference useful. Manytribes of animals acknow-
ledged to be all of the samespecies, derive from nature a much more
remarkable distinction of genius, than what, antecedentto custom and
_aI, 4e-6
12 Cf. V.i.f 51. LJ (A) vi.47-8 reads: 'No two persons can be more different in their
genius as a philosopher and a porter, butthere does notseem to have been any original
difference betwixtthem.Forthe five or six first years of their livesthere was hardly any
apparent difference: their companions looked upon them as persons of pretty much the
same stamp. No wisdom and ingenuity appeared in the one superior to that of the other.
From aboutthattime a difference wasthoughttobe perceived in them. Their manner
of life began to affectthem, and without doubt had it not been forthisthey would have
continued the same.' Similar arguments appear in LJ (B) 220, ed.Carman XTO. There
is an interesting variant on this point in LJ (B) 327, ed. Cannan 253, where Smith com-
mented on the factthat 'probity and punctuality' generallyaccompanythe introduction
of commerce. He added that varying degrees of these qualities were 'not at all to be
imputed tonational character assome pretend.There is no natural reason why an English-
man or a Scotchman should not be as punctual in performing agreements as a Dutchman.
It is far morereduceable toself interest, that general principle which regulates the
actions of every man...'
13 The whole of the preceding paragraph follows ED 2.I4 to this point. In ED, how-
ever, the sentence ends with'... any great difference in character' and goes on: 'It is
upon this account that a much greater uniformity of character istobe observed among
savagesthan among civilized nations. Amongthe formerthere is scarce any division
of labourand consequently no remarkable difference of employments; whereas among
the latter there is an almost infinite variety of occupations, of which therespective duties
bear scarce anyresemblance to one another. What a perfect uniformity of character do
we find in allthe heroes described by Ossian ? And what a variety of manners, on the con-
trary, in those who are celebratedby Homer? Ossian plainly describes the exploits
of a nation of hunters, while Homer paints the actions of two nations, who, tho' far from
being perfectly civilised, were yet much advanced beyond the age of shepherds, who
cultivated lands, who built cities, and among whom he mentions many different trades
and occupations, such as masons, carpenters, smiths, merchants, soothsayers, priests,
physicians.' The texts then assume asimilar form untiltheend of the followingpara-
graph of the WN. The uniformity of character found among savages is alsomentioned in
LJ (A) vi.48 , LJ(B)22i, ed. Carman x7o.
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3o The Nature and Causes of theWealth of Nations [].ii
education, appears to take place among men. By nature a philosopher is
not in genius anddisposition half so different fromastreet porter, as a
mastiff is fromagreyhound, or a greyhound from a spaniel, or this [25]
last fromashepherd's dog. Those different tribes of animals, however,
thoughall of the same species, are of scarce any use to one another. The
strength of the mastiff is not, in the least, supportedeitherby the swift-
ness of the greyhound, or by the sagacity of the spaniel, or by thedocility
of the shepherd's dog. The effects of those different geniuses and talents,
for want ofthe power or disposition to barter and exchange, cannot be
brought into a common stock, and do not in theleast contribute to the
better accommodation and convenieney of the species. Each animal is
still obliged to support anddefend itself, separately and independently,
andderivesno sort of advantage from that variety of talents with which
nature has distinguished its fellows. Among men, on the contrary, the
most dissimilargeniuses are of use to one another; thedifferent produces
of theirrespective talents, by the general disposition to truck, barter, and
exchange, being brought, as it were, into a common stock, whereevery
man may purchase whatever part of the produce of other men's talents
he has occasionfor. 14
t4The text ofED continues beyond this point to include an additionalfolio (N8) which
elaborateson the interdependence between the philosopher and the porterand the ad-
vantages to be gained from theseseparate trades. This passage opens with the statement
that 'Every thing would be dearerifbefore it was exposed to sale it had been carried
packt and unpackt by hands lessable andless dexterous,who for an equal quantity of
work, would have taken more time, andmust consequently have required more wages.
which must have been chargedupon the goods.' It is interesting to note that FA begins
with the words '... who for an equal quantity of work' and then continues in parallel
with ED for some z5 lines. The fragmentthen proceedsto elaborateon the linkbetween
the division of labour and the extent of themarket(a subject which is not mentioned
in ED) whereasED continues with the precedingtheme. It is possible that the fragments
represent an alternative,and a later, rewriting of this section of Smith's work.The inter-
dependenceof philosopher and porter is brieflymentioned in LJ (A) vi.49, LJ (B) 2ax,
ed. Carmanx7x.
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Adam Smith was an 18th-century Scottish economist and philosopher, best known for his influential book "The Wealth of Nations," which laid the foundations for classical economics.
He introduced the concept of the "invisible hand," suggesting that free markets, through individual self-interest, naturally drive economic prosperity and efficiency. Smith is often regarded as the father of modern economics, and his ideas have significantly shaped economic theory and practice over the centuries.
Learn more here: [Adam Smith](https://en.wikipedia.org/wiki/Adam_Smith)
Smith points out that the division of labor didn't happen because someone planned it all out for the sake of increasing wealth. Instead, **it emerged naturally because of a basic human tendency to trade and exchange goods and services.**
Humans naturally seek to trade what they have for what they need or want. For example, if you're good at baking bread but need clothes, you might trade your bread with someone who makes clothes. **Over time, this natural inclination to trade leads to people focusing on what they're best at, creating the division of labor.**
> ***"Give me that which I want, and you shall have this which you want, is the meaning of every such offer; and it is in this manner that we obtain from one another the far greater part of those good offices which we stand in need of. It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest."***
Smith exlpains that in a market economy, most exchanges are based on mutual self-interest rather than altruism.
When we make a purchase, like buying dinner, we are not relying on the benevolence of the butcher, or baker. Instead, each party in the transaction is motivated by their own self-interest: I want to eat, and they want to make a profit. This mutual self-interest leads to a situation where people provide goods and services to others because it benefits all parties involved.
This idea is central to Smith's view of how economic systems naturally regulate themselves.
Smith suggests that without the tendency to barter and exchange, each person would have to produce every single thing they need or want on their own.
This scenario would mean that everyone would have to engage in the same activities and tasks, leaves no room for specialization or the development of individual skills.
Smith emphasizes that unlike other species, humans benefit from their differences: people with various skills and abilities are useful to each other. This variety of talents yields division of labour and produces a wide range of goods and services.
> ***"It is common to all men, and to be found in no other race of animals, which seem to know neither this nor any other species of contracts."***
Smith notes that the ability to barter and exchange is unique to humans. This ability to negotiate and exchange is fundamental to the development of more complex economic systems and is at the core of human society's economic interactions.
### TL;DR
**[The Wealth of Nations](https://www.adamsmith.org/the-wealth-of-nations)** is Adam Smith's most influential work. It is the first comprehensive work on economics which laid the foundation for modern economic thought.
**Concepts like the division of labor, free markets, and the "invisible hand," were introduced in this book.** Adam Smith's insights revolutionized how economies are understood and managed, influencing both economic policies and the global economic system.
The division of labor is a key concept in the book. Smith believed that the division of labor, leads to greater efficiency and productivity. Each person becomes really good at their specific task, much like how a factory line works, where each worker is responsible for a particular part of the assembly.
Of the Principle which gives occasion to the Division of Labour is a chapter 2 of the book The Wealth of Nations. In this chapter Smith's points out that this division of labor didn't happen because it was planned for the sake of increasing wealth - but rather emerged because of a basic human tendency to trade and exchange goods and services. People naturally seek to trade what they have for what they need or want. For example, if you're good at baking bread but need clothes, you might trade your bread with someone who makes clothes. Over time, this natural inclination to trade leads to people focusing on what they're best at, creating the division of labor.
This process leads to increased productivity and, ultimately, to the wealth of nations.
Not a single maths equation