How Does Specialization Affect Trade & Markets?


The division and specialization of labor is great, but only if you've got buyers for the products you'd like to sell. You can divvy up a process as much as you'd like, and yes, you'd have a much more productive and efficient operation, but what good is all that if you don't have a market in which to sell your products? Not very good, that's what. Specialization makes only as much sense as the market behind it allows. If employees, or those who are engaging in specialized tasks, get paid for their efforts and are able to go out to purchase the goods and services of others, they can support to division and specialization efforts of others. This is called trade and this is what's required for a functional economy.

The beauty of the division and specialization of labor is that only those who are engaging in the process of creation need to understand the specifics of the task. Sure, the owners of the business and the engineers who have initially created the process need to know too, but by and large, it's the person or group who are responsible for completing the task who need know most about it. If you think about it, if we drive a car, we don't need to know about every single function that makes it work. We simply need to get into it and drive. If we play baseball, we don't need to know every single step necessary to make a baseball bat. We just swing and hit the ball. In fact, we hardly need to know anything that goes into making the products we use every day. All we need to know is that they exist and how to use them. We don't need to know the processes involved and we don't need to learn all the skills required for production, that's for sure. It's the market that allows for all of what we know to function smoothly. All we need to perform is a tiny sliver of labor and to get paid for that. Once paid, we can trade our money for all the tiny slivers others have contributed to the same market. When combined, the tiny slivers and the market as a whole creates what we understand to be the economy.