Adam Smith and the division of labour: is there a difference between organisation and market?

Abstract

The paper claims that, in The Wealth of Nations, the division of labour refers simultaneously to two different things: a social division of labour and an organisational division of labour. The central point is that the organisation of work (the organisational division of labour) in the firm is the logical counterpart of the social division of labour, and that these reflect two inseparable aspects of the process of the division of labour. Smith is thus concerned with organisations as well as with markets, each functioning according to the same principle. Hence, Smith does not believe that the organisational and the social divisions of labour are fundamentally different, although he does recognise some variation between them and describes different states of the division of labour within the firm, liberal and capitalist. Copyright 2003, Oxford University Press.