The Wealth of Nations

Book 1, Chapter 3

the Division of Labor Is Limited by the Extent of the Market

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Chapter 3 Summary


In areas in which the market is very small, the division of labor tends to be limited, with workers often needing to do several jobs rather than focusing on a single trade or task. In a small village, for example, a farmer will often act as the butcher, baker and brewer for his own family.


Let us compare the transportation of goods between London and Edinburgh by land versus by ship. By ship, it would take only six to eight men to transport the same quantity of goods as it would take 100 men, fifty wagons and 400 horses to transport by land. As for expenses, transporting 200 tons of goods by land from London to Edinburgh would incur costs for the upkeep of 100 men and 400 horses for three weeks, as well as the wear and tear to the fifty wagons. Expenses for transportation by water would be for the upkeep of only six to eight men and the wear and tear caused to the ship by the cargo. To this we must add the difference in insurance costs for transport via land versus water.


Plantations in North American colonies have consistently been planted along shorelines or riverbanks.


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