SPECIALIZATION AND EXCHANGE IN ECONOMICS

a) Specialization

The economies of mass production upon which modern standards of living are based would not be possible if production took place in self-sufficient farm households or regions. As such, many societies and individuals specialize or concentrate on only one activity or type of production.

Division of labour and specialisation

Division of labour refers to the situation in which the production process is split into very large number of individual operations and each operation is the special task of one worker. The workers then specialise on one activity. Four distinct stages can be distinguished in the development of division of labour and specialization. Specialisation craft Specialisation process Regional specialisation International division of labour Advantages of Division of Labour

(i) Greater skill of worker
The constant repetition of a task makes its performance almost automatic. The workers thus acquire greater skills at their job.

(ii) A saving of time
By keeping to a single operation, a worker can accomplish a great deal more, since he wastes less time between operations. Less time, too, is required learning how to perform a single operation than to learn a complete trade.

(iii) Employment of specialists
Specialisation makes it possible for each workman to specialise in the work for which he has the greatest aptitude

(iv) Use of machinery
Specialisation permits the use of some tools specific to a particular task, which can make the life of a worker that much easier.

(v) Less fatigue
It is sometimes claimed that the worker, habituated to the repetition of simple tasks, becomes less fatigued his work.

Disadvantages of Division of Labour and Specialisation

(i) Monotony
Doing the same work repeatedly can result in boredom, and this can offset the efficiency that would otherwise result from experience.

(ii) Decline of craftsmanship
If a person does the same kind of work repeatedly according to laid down routine, he loses initiative for innovation and this can lead to loss of job satisfaction.

(iii) Greater risk of unemployment
If a worker is highly specialised, he can be easily unemployed if something goes wrong with the product of his industry (e.g. if the product is found to have negative effects to health, and demands for it falls) or if a machine is introduced to perform his work.

(iv) Increased interdependency
Since each worker contributes only a small part towards the completion of the final product, the efficiency and success of the whole process will depend on the efficiency and co-operation of all the workers. If some of the workers are inefficient, they can frustrate the whole system even if the rest of the workers are doing their work properly.

Exchange
When societies or individuals specialize, they are likely to produce a flood of “surplus” goods. They are thus bound to exchange this surplus for what they don‟t produce. In primitive cutlers, this exchange will take place in the form of barter. For example, it is not uncommon for food to be exchanged for weapons; or for aid in the building of a house to be exchanged for aid in cleaning a field. But exchange today in all economies – capitalist or communist takes place through he medium of money.

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