5.5.15

SPECIALIZATION AND DIVISION OF LABOUR.

Somewhere in my attempts to teach production theory, I stumbled into the habit of describing the tasks of the Adam Smith pin factory as enabling a worker to purchase the goods and services required of a commoner by performing one or a few simple tasks.  Now comes Arnold Kling, codifying that description.
The most striking thing about a modern economy is specialization. Most of us produce goods or services that cannot be directly consumed. And all of us consume goods and services that we could not possibly produce.

As an individual, I earn a living by doing a few tasks that do not produce a single item that I consume. Instead, my few tasks allow me to exchange for goods and services that require many tasks.
I also, in teaching principles and a survey of public policy course, attempted to characterize unemployment as a knowledge problem, namely the challenge of finding a mutually beneficial trade between the entrepreneur and a job-seeker.  I never came up with something this straightforward.
A job is a context for performing a particular small set of tasks that can be exchanged for the means to obtain goods and services produced by a far larger set of tasks.
And here, dear reader, is the knowledge problem.
You cannot just do any random set of small tasks to earn the means to obtain the goods and services of the market. That is why I do not define a job as the set of tasks. Instead, I define it as the context in which those tasks are undertaken. Without a context in which the set of tasks adds value, there is no basis for exchange. In order to have a job, you or an employer must discover a context in which sufficient value is created by a particular set of tasks that you are capable of performing.

This definition avoids the suggestion that jobs are lacking because of a scarcity of wants. It also avoids the suggestion that the labor market should be described as a “matching problem,” with employers and potential employees in search of one another. It is a definition of a job that reflects the importance of patterns of sustainable specialization and trade.
But where there is specialization and trade, there is still a matching problem, namely "coincidence of wants."

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