Hello everyone! Here is the next post in my summer series of reviews on the Wealth of Nations. Thank you to everyone who is has been commenting their feedback. The ideas that you have presented really have been helpful in my interpretations. If you have missed any of the previous articles in this series, they will be linked at the bottom. Now, without any further adieu, let's get into today's review!

Here is my review and commentary on Book 1, Chapter 3: "that the Division of Labour is Limited by the Extent of the Market":

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Text Source, The Wealth of Nations by Adam Smith

Book 1, Chapter 3: "that the Division of Labour is Limited by the Extent of the Market"

Smith starts by making the point that because a division of labor comes from the power of exchange, the extent of that power is the extent of the division of labor. Meaning that however effective a market may be is also how effective dividing labor is. In a market that does not value making mud balls, making mud balls will not be productive no matter how efficiently you may make them.
The more people there are in a given area, the more opportunities there will be for trade. Large numbers of people in a town mean a larger market which means a larger division of labor. Smith gives an example, stating,

“A porter, for example, can find employment and subsistence in no other place. A village is by much too narrow a sphere for him; even an ordinary market town is scarce large enough to afford him constant occupation.” - Book 1, Chapter 3, Page 27

As a result of this smaller populous and market, people need to learn more skills than are necessary in an area with a large number of people closer together. Smith demonstrates this through an example he gave, stating,

“In the lone houses and very small villages which are scattered about in so desert a country as the Highlands of Scotland, every farmer must be butcher, baker and brewer for his own family. In such situations we can scarce expect to find even a smith, a carpenter, or a mason, within less than twenty miles of another of the same trade. The scattered families that live at eight or ten miles distance from the nearest of them must learn to perform themselves a great number of little pieces of work, for which, in more populous countries, they would call in the assistance of those workmen.” - Book 1, Chapter 3, Page 27

I think this is a problem that is also solved by the internet as well as cryptocurrency. And come to think of it, the railroad, which came after Smith. In modern times, these things allow a farmer to specialize in one specific field if he so chooses because they create a huge (global) market. Though these are some very fair points for Smith's time, I feel that the internet as well as fast shipping means that there is a market for nearly everything of value. However, I will say that division of labor is still not effective for something that does not hold value in a market. So, in those regards, Smith is still right.

Land vs. Sea

Smith then discusses the difference between transporting goods by land and by sea. He makes the point that a lot more goods can be transported by sea than by land. This is embodied in the statement, >“. . . Six or eight men, therefore, by the help of water-carriage, can carry and bring back in the same time the same quantity of goods between London and Edinburgh, as fifty broad-wheeled waggons, attended by a hundred men, and drawn by four hundred horses” - Book 1, Chapter 3, Page 28

He also makes the point that because sea trade is so much more efficient than land trade, coastal towns are much more progressive in terms of industrial development than towns in land. He made the point that a civilization really needs to have a lot of resources in order to have towns in land that thrive as well as a coastal town.
These are good points. However, I don't think that it still applies ever since the creation of the rail road. The efficiency that the railroad brought really allowed for a huge surge in trade inland. The railroad was incredibly revolutionary because it introduced an incredibly beneficial and efficient form of land transportation.

Smith also brought up points about many of the first civilizations as well as complex “modern (18th century)” industries forming around water. He talked about the plantations of the southern area in North America forming around rivers and coasts as well as the ancient Mediterranean civilizations. He then discusses civilizations such as Egypt with their use of the Nile, Bengal and their use of the Ganges, and Chinese provinces which used inland rivers for travel.
It is obvious that civilization forms and advances where there is water, and this is an especially clever observation. I found it funny that he said “our North American colonies” when discussing the plantations of the south and their uses of rivers because it was his work that helped influence these colonies when starting their own separate government.

The Safety of Sea vs. Land

Another interesting point which Smith brought up was about the safety of sea travel vs. land. He first brings up a point about goods going bad over the longer period of transport created by land travel. Some goods will spoil after a week and need to be transported under fast and efficient circumstances. Another point Smith brings up is about thieves. Back then, traveling by land was quite dangerous, especially in foreign countries. This is embodied by the quote “. . .with what safety could they be transported through the territories of so many barbarous nations?” - Book 1, Chapter 3, Page 29

This was also an incredibly good point for Smith's time. I remember learning about Marco Polo, and his search for a sea route to Asia in order to avoid going through the very lands that Smith discusses. This problem had obviously existed for several hundred years. However, I think this is a problem that was also largely solved by an advancement in technology. Specifically the railroad as well as trucks and air planes. But this is very important to consider when trading. How much are you willing to risk in regards to transporting goods? This is the very reason that many modern companies take out insurance on goods in case of events involving pirates. So, this is obviously also a problem that still presents itself today.

Inland Africa

Smith closes by discussing the lack of inland rivers in a majority of Africa. He makes the point that their lack of civilization could be due to the lack of close inland rivers to perform trade.
I don't necessarily think this is true. And if it is, it won't be for long. As technologies like the internet and air and land shipping progress, I think you will see a surge of civilization in these areas.

Previous Reviews

The Wealth of Nations

Book 1

• Chapter 1: "of the Division of Labor"
• Chapter 2: "of the Principle which gives Occasion to the Division of Labour"
• Chapter 3: "that the Division of Labour is Limited by the Extent of the Market"

The Confucian Analects

• Table of Contents and Statistics

The Art of War

• Table of Contents and Statistics

Schedule (hopefully)

Friday - Tuesday: "The Wealth of Nations" review
Wednesday: Break/Free write day
Thursday: Weekly7

Closing

Thanks for reading this! I am sorry that this wasn't up earlier, but my family and I spent the day binge watching Lost. Anyway, please remember that feedback is always appreciated. Hopefully I will see you in the next article!

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