Tuesday, March 21, 2006

Division of labor

The concept of the division of labor is a fundamental one in economics. Leftists despise it of course, but that's for obvious reasons: They don't understand the actions of man. When a headline states that Outsourcing is a win win proposition it is not just stating a result of an experience - it is stating a logical conclusion which results from the division of labor. Or in the words of Mises (bold is my doing:

If, through his superiority to B, A needs three hours' labor for the production of one unit of commodity p compared with B's five, and for the production of commodity q two hours against B's four, then A will gain if he confines his labor to producing q and leaves B to produce p. If each gives sixty hours to producing both p and q, the result of A's labor is 20p + 30q, of B's 12p + 15q, and for both together 32p + 45q. If however, A confines himself to producing q alone he produces sixty units in 120 hours, whilst B, if he confines himself to producing p, produces in the same time twenty-four units. The result of the activity is then 24p + 60q, which, as p has for A a substitution value of 3 : 2q and for B one of 5 : 4q, signifies a larger production than 32p + 45q. Therefore it is obvious that every expansion of the personal division of labor brings advantages to all who take part in it.
It takes a certain kind of human mind to deny the participants in the economy the full freedom to participate in a completely open and restriction-free market of theoretically indefinite division of labor. This certain kind of mind is a one that focuses on public popularity, voters, personal gain and power, but not on welfare and wealth increase, improvements in lives and personal liberty. Socialism is the name, death and destruction is the game.

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