Related Links in the Library:
The Division of Labour: Adam Smith and the Pin-Maker; J.B. Say and the Playing Card Manufacturer
One of the most famous stories in economics is Adam Smith's story of the pin-maker.
It has been repeated endlessly by other economists as it encapsulates quite
nicely one of the key insights of economic analysis, namely the benefits of
the division of labor. It would have to rank alongside Frédéric Bastiat's story
of the broken window in popularity. The purpose of the story is to illustrate
how much greater output could be achieved if numerous workers cooperated by
taking one small task each in building a complex good like a pin or a nail.
Adam Smith developed his ideas about the division of labour in the 1760s and
1770 as he was giving lectures and writing the Wealth of Nations (1776).
At the same time Denis Diderot in France was compiling the famous Encyclopédie,
ou dictionnaire raisonné des sciences, des arts et des métiers which appeared
between 1751 and 1772. The articles in the Encyclopédie were
accompanied by beautifully drawn illustrations, such as the ones we include
below of a pin factory. Members of both the Scottish and French enlightenments
were facsinated by the opportunities offered by technological and economic
change in such things as seemingly "very trifling" as the making
of a pin.