The other side to the division of labour: the concentration of attention

Adam Smith’s theory on the division of labour first appeared in 1776 in The Wealth of Nations. The idea was later revived by The Coasters in their early 1960s B-side ‘My Baby Comes to Me’.

Well, she go to see the baker when she wants some cake
She go to see the butcher when she wants a steak
She go to see the doctor when she’s got a cold
She go to see the gypsy when she wants her fortune told
But when she wants good loving my baby comes to me
When she wants good loving my baby comes to me.

As Mr McClinton explains, rather than dividing his efforts between the supply of cake and fortune-telling, the baker is better off concentrating on the former. Similarly, the doctor will be better off not diversifying into the provision of ‘good loving’, leaving that market niche to the narrator, who seems to enjoy a healthy competitive advantage.

What is interesting about the division of labour is not just that it works, but that it works in many different ways. At the most basic, it arises from the simple insight that ten people each concentrating on one task will do a better job than ten people dividing their time between ten different tasks. But it also works elsewhere. For instance a butcher will be able to stock a greater range of meats if his shop is not cluttered up with cakes.

It also works at the level of trust and reputation. A fishmonger suffers more damage from selling poor fish than a general retailer. We therefore trust them not to do it badly. Would you buy oysters from a cake shop?

Consumers seem to understand the benefits of specialisation instinctively. When I see a restaurant which advertises ‘Thai food and tapas’ I do not think ‘What an excitingly diverse eating experience’ but ‘Hmmm, probably a rubbish restaurant’.