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The Labor Theory of Adam Smith

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Smith was the first author who viewed the significance of the specialization and division of labor as the primary source of productivity and the principle of invisible hand to illustrate the potential tendency of self-interest-motivated individuals to be directed to undertake works and collaborative activities in accordance to the free-market system and based on legislated economic and market policies. Division of Labor amp. Contemporary Implications The increase of population, peoples’ migration, and increasing needs of urbanization found the division of labor as a mechanism to address problems on the scarcity of goods and needs for trading. With labor being categorized based on their expertise and skills, companies created branches or divisions to meet its peculiar production needs with the use of technology. For instance, in the production of microSD chips, the ten persons are expected to produce at least a specific number per day. Hence, the division of labor remained significant up to these days because companies are still bound by targeted results with the highest level of the industry as the desired consequence. This is also true to the agro-industrial company. For example, in a pineapple company, the farm-workers are divided into managers, plowman, harrower, sower, reaper or harvester, peeler, cutter, canning, and labeling. The work forcers will also have that in-charge for marketing, distribution, and accountants. All of these functions are technologically assisted to keep pace with the improvement of trading relations. supply-demand factors. and by the drive for profit. Modern economists call this systematization of labor forces as optimization of performance management. In this theory, workers are subjected to company targets and quality control. Thus, it wouldn’t be surprising to note that companies would prefer skilled, professional, motivated, and knowledgeable too about the use of info-technology and other machinery to abridge labor and become more productive of goods in masse. The use of machinery hastens their works and made the company optimize results. Thus, it can be observed these days that agriculture is not solely focused on agronomy but have also attached with it about the use of modern technology for plowing, in harvesting, in processing, in marketing, in distribution, and in accounting. Even workers salaries these days are distributed via automated machines. Such meant that technological advancement is warranted to assist workers in the production of goods at a given scale of time. Hence, human resources report to work on time and are paid by the number of hours rendered in service. The loss of hours means the deduction of a salary commensurate the hours of absence or tardiness.This systematization of labor is perceived very helpful in understanding human resource and the need for performance management in business management in a growing liberalizing economy. Smith himself posits that division of labor is significant in understanding and in examining the role of states in international relations and trading.