Adam Smith and division of labor

Abstract

Adam Smith, who criticized mercantilists for their wrong concept of the wealth of nations, considered that the real wealth is the annual produce of the land and labor of the society (Smith 1776, p. 12). According to Smith, furthermore, the high productivity of labor in civilized and thriving nations seems to have been the effects of the division of labor. International trade certainly pre-supposes the division of labor among different countries. As for the nature and causes of international trade, therefore, we can expect to learn very much from Smith’s theory of the divisions of labor.