Division of Labor

Posted by PITHOCRATES - November 4th, 2013

Economics 101

(Originally published October 24th, 2011)

The Division of Labor gives us our Houses, Food, Cars, Televisions, Smartphones, Laptops and the Internet

We can’t do everything ourselves.  It’s not efficient.  And most times not even possible.  We don’t build our own houses.  Grow our own food.  Build our own cars.  Manufacture our own high-definition televisions.  Smartphones.  Laptops.  And we don’t build our own Internet.  No.  Instead, people everywhere across the economy specialize in one thing (i.e., work for a living).  And together these specialists fit into the big economic picture.  Which gives us our houses, food, cars, televisions, smartphones, laptops and the Internet.

It started with the most basic division of labor.  Prehistoric women raised their young.  While prehistoric man hunted.  Which was necessary for the propagation of the species.  And us.  For if they all hunted and no one nursed the young the young would have died.  And with them the species of man.  For there was no formula back then.

The next great leap forward on the civilization timeline was the indispensible plough.  The prime mover of civilization.  With the food problem managed, famines were more the exception than the rule.  And with fewer people needed to produce a food surplus, people could do other things.  And they did.

The Division of Labor let us Create Surpluses in Food, Ploughs, Shoes, Tools, Harnesses, Etc.

The division of labor gave rise to artisans.  The first skilled trades.  Made possible by a food surplus.  As other people grew the food the artisans made the tools and crafts the farmers used.  They specialized in plough making and designed and built better and better ploughs.  Lots of them.  Shoemakers made shoes.  Lots of them.  Metal workers made tools.  Lots of them.  Leatherworkers made harnesses.  Lots of them.  See the pattern?

The food surplus gave us surpluses in ploughs, shoes, tools, harnesses, etc.  The division of labor let us create these surpluses.  Specialists made continual improvements in their areas of specialization.  Producing better things.  And more of them.  Which led to another key to the advanced civilization.  Trade.

The shoemaker didn’t have to grow food.  He could trade shoes for food.  Ditto for the plough maker.  The metal worker.  The leatherworker.  And the farmers didn’t have to make any of these things because they could trade food for them.  So we became traders.  We created the market.  And traders took their goods and/or services to these markets to trade for other goods and/or services.  First by foot.  Then by animal.  Then by boat.  Then by train.  Then by truck.  Then by airplane.  Artisans (i.e., workers) traded their specialization for the product and/or services of another’s specialization.  Then.  And now.

The Division of Labor made the Complex Simple and our Lives Rather Comfortable and Fun

The division of labor gave rise to the artisan.  The skilled trade worker.  The middle class.  People who can specialize in one thing.  And trade that one thing for the other things he or she wants.  Whether it be a skilled blacksmith hammering out farming tools.  A tool and die maker working in a factory.  An accountant.  Or a software engineer.  We have a skill.  Our human capital.  And we trade that skill to get the other things we’re not skilled in.  The end result is a modern, bustling, free market economy.  An advanced civilization.  And a high standard of living.

All thanks to the division of labor.  Which made the complex simple.  And our lives rather comfortable.  And fun.  Unlike prehistoric man.  Who knew of no such things as iPhones.  Indoor flush toilets.  Movie theaters.  Or restaurants.  No, he didn’t do much other than survive.  Which was no easy thing.  But he did.  And for that we are grateful.

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Religion

Posted by PITHOCRATES - November 14th, 2011

Economics 101

Living Together in Large Cities goes against a Million Years or so of Evolution

Agriculture advances gave us food surpluses.  Food surpluses gave us a division of labor.  The division of labor gave us trade.  Money made that trade more efficient.  By reducing high search costs inherent in the barter system.  And this efficient trade gave us advanced civilizations.  For these developments allowed great gatherings of people to live together in urban settings.  Well, these things, and something else.

For a million years or so man was a hunting and gathering species.  Which meant they traveled in small groups.  And followed food.  Why small groups?  Fewer mouths to feed.  Remember, hunters and gatherers need a lot of land to survive.  Because food wasn’t so plentiful in any one area.  And the last thing they wanted when they found food was to share it.  So when they weren’t killing their food they were killing those trying to take their food.  Which was the key to survival.  For he who eats today shall live to see tomorrow.  When the Europeans settled North America the Native Americans were still hunters and gatherers.  And they were a martial people.  Fierce warriors populated their tribes.  Why?  To protect tribal hunting grounds.  By killing any interlopers.  And they were doing this long before the Europeans set foot onto the continent.

So living together in large cities goes against a million years or so of evolution.  Which is why it didn’t happen overnight.  The transition from hunting and gathering to farming.  Before we could work together we had to learn to live together first.  And it all started with thinking.

Religion allowed People to Live Together like Family who were not Family

As we thought and developed better tools and better ways to farm we started thinking about something else, too.  Why are we here?  Who created ‘here’?  Why did the creator create ‘here’?  And what happens when we leave ‘here’?  After we die?  To answer these questions we developed religion.  And it brought us together as a people.

This is truly what separated us from the animals.  Because animals can use tools.  A bird can hold a stick in its beak to probe a hole for food.  But birds don’t worship.  They don’t have faith.  Only man does.  Because we started thinking about other things.  To see the bigger picture.  To understand this life.  And the next life.  Spiritually.  And this was the key to allowing great gatherings of people to live together in urban settings.  Religion allowed people to live together like family.  Who were not family.  Because we shared a common faith.  A religion.

Man was still cruel, though.  We spent a million years or so being cruel.  And that capacity to be cruel just didn’t go away.  But religion softened us.  It began a process to soothe the savage breast.  It allowed us to see something in people that wasn’t threatening.  And it allowed civilization to flourish.  Despite our cruelties.  Which were now reserved for those outside our own civilization.  Our enemies.  Heretics.  Especially those who attacked us.  And it was on these people, those who did not share our common faith, that we unleashed that repressed cruelty.

Religion Allowed us to Live in Crowded, Urban Cities Creating Commerce and Trade

A lot of atrocities have been committed in the name of religion.  This is true.  But sharing a common faith united us like nothing else could.  For our faith was bigger than us.  We learned to live by moral codes.  We worked together.  Voluntarily.  For the betterment of the cities we lived in.  And to serve our god(s).  In cities that priest-kings typically ruled over.  Guided by our religious beliefs.

Everything we did was for that spiritual journey.  Working hard in this life.  All the while preparing for the afterlife.  Bringing the people of a common faith together.  We became so close to each other that for the first time in history we could live in crowded, urban cities.  Creating commerce and trade.  In an advanced civilization.  None of which would have been possible if religion hadn’t softened up that cruelty within.  Instilled in us for the past million or so years.

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Money

Posted by PITHOCRATES - November 7th, 2011

Economics 101

The High Search Costs of the Barter System Hindered Trade

Agriculture advances gave us food surpluses.  Food surpluses gave us a division of labor.  The division of labor gave us trade.  And trade gave us an advanced civilization.  By allowing more specialists to live together in crowded urban settings.  Creating a rich surplus of goods for trade.  That people traded.  With other people.  Near.  And far.

As trade grew civilizations got better.  The division of labor grew larger.  And more complex.  Producing more things.  Soon there was a rich variety of goods to trade with for other goods.  From civilizations in distant lands.  Which made life more interesting.  And enjoyable.  During that brief time when you weren’t working.  Or trading.  Which was taking more and more time.  To find someone to trade with.  That had something you wanted.  And who wanted something you had.

This is the barter system.  Trading goods for goods.  Producers took their goods to other producers.  And asked, “What will you take in trade for that?”  Often the response was, “Nothing that you have.”  To which the trader replied, “Very well.  I shall keep looking.”  And sometimes would spend days, weeks and even months looking.  And that was time spent not making anything new.  This was the high search cost of the barter system.  And it hindered trade.  We needed something better.

Money made Trade more Efficient and Unleashed the Human Capital of the Middle Class

For civilization to advance further we had to make trade more efficient.  We had to reduce these search costs.  What we needed was a temporary storage of value.  Something we could trade our valuable goods for.  And then trade the value of our goods, held temporarily in this temporary storage of value, for something else of value later.  And we call this temporary storage of value money.

Money greatly simplified things.  Allowed a more complex economy.  A greater division of labor.  And it allowed wages.  Allowing more people to work on more narrow specialties.  These producers could then take their wages to market.  And buy what they needed.  Instead of spending days, weeks or even months traveling to find people to barter with.

Money made trade more efficient.  It allowed cities to grow in size.  And become even more advanced.  It unleashed the human capital of the middle class.  For they could spend more time creating and building new and better things to trade.  And this economic activity allowed more people to live together peacefully.  As producers produced.  And traded with other producers.  All made easier by money.  A temporary storage of value.

Money doesn’t Create or Produce, it just Temporarily Stores the Value of what we Create and Produce

Please note what came first here.  First there was trade.  Then there was money to make that trade more efficient.

At the heart of all economic activity is our human capital.  What we use to create and produce.  Money doesn’t create or produce.  It just stores the value of what we create and produce.  Which is why Keynesian economic stimulus doesn’t work.  Making money to give to people to spend simply does not create new economic activity.

Our skills create economic activity.  That ability to create things other people value.  And wish to trade for.  Because we are traders.  Not spenders.  We trade things of value.  And to trade things of value someone has to create them first.  If you just take things of value without offering something of value in trade it is not trade.  It’s plunder.  And little different from the uncivilized barbarians on the frontier of the civilized world.

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Advanced Civilization takes a Huge Step Forward with the Bronze Age

Posted by PITHOCRATES - November 2nd, 2011

Technology 101

Bronze gave the Artisans the Tools to Unleash their Human Capital and Increase the Quality of Life

Two things put man at the top of the food chain.  The ability to think.  And hands that could build the things we thought of.  In particular, tools.  First it was sharpened sticks and antlers.  Stone and flint.  These were steps forward.  But the quality of these tools was poor.  They weren’t ideal.  They were the best we could chip out from what we could find.  And they didn’t hold a sharp edge very long.  But that all changed with metallurgy.

Enter the Bronze Age.  Where man could cast pretty much any tool he thought of.  By pouring molten metal into a mold.  This was a huge step forward.  Because we could make tools to fit the job.  Any job.  They were strong, too.  And could hold a sharp edge for a longer time.  This exploded the growth of cities.  Farms.  And urban life.  Artisans now had the tools to unleash their human capital.  Cities became rich in finished goods.  Things that increased the quality of life.  And attracted the attention of envious neighbors.  And the uncivilized barbarians beyond the civilized frontier.

With bronze they could make better weapons to defend themselves.  And they did.  The Sumerians used bronze to create one of the most formidable defensive units of the time.  The phalanx.  A formation of soldiers armed with bronze-tipped spears.  This spear could reach further than a sword.  So swordsmen attacking a phalanx were at a disadvantage.  The phalanx could stab with the spear before the swordsman could stab with his sword.  The same principle of the defensive mechanism of the porcupine.  The phalanx was such a formidable defensive unit that it saw service for many centuries.  Letting civilizations grow because they could defend themselves from their envious neighbors.

It took Regional and Long Distant Trade to get the Copper and Tin to Smelt into Bronze

The Stone Age lasted a long time.  And the change to the Bronze Age didn’t happen overnight.  Because you don’t mine bronze.  You make it.  When you melt two or more metals together.  And the two most popular metals of the time were copper.  And tin.

The Sumerians used bronze tools and weapons.  But the Fertile Crescent didn’t have any ore deposits.  So the metals necessary to make bronze were not indigenous to the Fertile Crescent.  That land between the Euphrates and the Tigris.  So how did a people with no ore deposits smelt copper and tin into bronze?  Trade.

You have to dig copper out of the ground.  You have to dig tin out of the ground.  And you typically don’t dig copper and tin out of the same mine.  Worse, tin wasn’t as close to the Sumerians as copper was.  So it took regional trade.  And long distant trade.  To get the ore to smelt into bronze.

Trade gave us the Bronze Age and Advanced Civilizations

The Bronze Age created advanced civilizations.  But it took an advanced civilization to make bronze.  So what came first?  The Bronze Age?  Or advanced civilization?  That’s an easy answer.  Trade.

An advanced civilization could create great things.  As long as they had the ingredients to make those things.  Some of these things were indigenous to their civilization.  A lot of them were not.  So you traded.  To get the things you needed but didn’t have.  With the things you had.  And the things you built.  From both.

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Trade

Posted by PITHOCRATES - October 31st, 2011

Economics 101

People Traded the Things they Made to have Things they couldn’t Make

Agricultural advances gave us food surpluses.  Food surpluses gave us the division of labor.  And spare time.  For the first time everyone didn’t have to hunt or gather food.  They could do other things.  Think.  Experiment.  Innovate.  Create.  And they did.  Becoming specialists.  A middle class.  Artisans.  People who became very good at doing one thing.  So they kept doing that one thing.  Finding ways to improve that one thing.  And created surpluses of their own.  Potters made excess pottery.  Shoemakers made excess shoes.  Tanners made excess leather goods.  Metalworkers made excess metal goods.

Cities grew in the center of the sprawling farmland.  And it was in the cities where these artisans lived.  Where they honed their specialties.  And met.  With other specialists.  And with farmers.  To trade.  The potter would trade pottery for shoes.  The farmer would trade food for shoes and metal goods.  The tanner would trade leather goods for pottery, shoes and food.  And so on.  People traded the things they made.  To have things they couldn’t make.  Everyone was able to have more things.  Thanks to this trade.

This unleashed the vast human capital of the people.  Their cities.  And their civilization.  Cities on the coast fished.  Cities closer to the forest harvested wood.  Cities closer to the hills mined silver, gold and copper.  And coal.  And the cities traded their surpluses with other cities.  Metal workers and potters traded their goods for fuel for their forges and kilns.  Miners traded their ore and coal for grain and fish.  Either directly.  Or indirectly.  When other people traded their large surpluses with other people in other cities.  With the miners getting a portion of these large-scale trades for all their efforts to make those trades possible.

As Civilizations became more Complex they became more Dependent on Trade

All of this trading made cities grow.  And as a result the civilization they belonged to grew.  And became more advanced.  People ventured further.  Looking for other resources.  And met people from other civilizations.  Who had raw materials that were different and interesting.  As well as finished goods that were different and interesting.  And these civilizations traded with each other.

Civilizations established trade routes with each other.  Which connected civilizations with others in the unknown world.  Beyond the civilizations they knew.  Markets appeared on these trade routes.  Bringing the exotic from the furthest corners of the world to everyone.  As well as new ideas.  And innovation.  The civilized world grew more advanced.  More interdependent.  More peaceful.  And better.  There was more food.  More technology.  More goods and services.  And more leisure.  Giving rise to the arts.  And entertainment.

But it was not all good.  As cities grew they grew attractive to the uncivilized barbarians beyond the frontier.  Roving bands of hunters and gatherers.  Who were more partial to plunder than trade.  So a portion of their surpluses had to be set aside for city defenses.  The building of city walls.  Implements of wars.  And standing armies.  To defend their cities.  Their civilizations.  And their trade routes.  For as civilizations became more complex they became more dependent on trade.

Trade Improved the Quality of Life which is the Hallmark of an Advanced Civilization

Trade unleashed our human capital.  Because it drove innovation.  There was a big world out there.  Creating a lot of fascinating stuff.  And the only way to get it was to trade your fascinating stuff for it.  And when we did everyone won.  Life got better.  We learned new and interesting things.  That we used as building blocks for further innovation.  And further advancement.  Which led to a better quality of life.  The hallmark of an advanced civilization.

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Pottery Stored Food Surpluses and Created Advanced Civilizations

Posted by PITHOCRATES - October 26th, 2011

Technology 101

An Advanced Civilization requires a Food Surplus and Something to Store it In

Take a look around your kitchen.  Your pantry.  What do you see?  Storage jars.  Canisters.  And, of course, cups and plates.  They’re so prevalent in your life you don’t even notice them.  You just use them.  You drink from them.  Eat off of them.  Shake salt and pepper from them.  Store flour in them.  Sugar.  Coffee.  And tea.

It would be hard to live your life without the things in these containers.  It would be harder still if you had no containers to store these things in.

And it’s been this way since the dawn of civilization.  In fact, there would be no advanced civilization without one invention.  Pottery.  Because to form an advanced civilization requires a food surplus.  An excess of grain.  That they had to store.  Where animals and bugs could not get at it.  Or moisture.  Today we use storage jars and canisters in our pantry.  Back then they used pottery.  In their homes.  Even in their granaries.

Pottery allowed the Farmer and Artisan to Eat at the Harvest and Long After the Harvest

Pottery and agriculture were attached at the hip.  They both needed each other.  The mass farming of these early civilizations, before the plough simplified farming, required a lot of labor.  Which produced highly populated cities.  With a lot of mouths to fed.  And they did produce a lot of food.  So much that they had a food surplus.  To feed the farmers.  And the non-farmers.  The artisans.  At the harvest.  And long after the harvest.

They could grow a food surplus.  And did.  But a surplus without the ability to store it was useless.  So following the great agricultural developments came the all important granary.  And pottery storage vessels.

The development of pottery required a dedicated work force.  A division of labor.  The potters couldn’t farm.  They needed to spend all their time mass-producing pottery to meet the demands of their civilization.  Plates.  Bowls.  Cups.  And storage vessels.  To store that food surplus.  So both the farmer and artisan could eat.  At the harvest.  And long after the harvest.

The Division of Labor gave us Agriculture, Pottery and an Advanced Civilization

The hunter and gatherer life was simple.  You followed the food.  And hunted.  Which pretty much consumed all of your time.  And kept you on the move.  That changed after some key advances.  Agriculture.  And pottery.  To name only two.  The rise of these specialties allowed people to settle down.  To stop following food.  And, instead, to grow it.  And store it.

None of this would have been possible without the division of labor.  Which allowed the rise of artisans.  Specialists.  A middle class.  To make the things that made a civilization advanced.  And a food surplus.  Which allowed an advanced civilization to survive.

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Division of Labor

Posted by PITHOCRATES - October 24th, 2011

Economics 101

The Division of Labor gives us our Houses, Food, Cars, Televisions, Smartphones, Laptops and the Internet

We can’t do everything ourselves.  It’s not efficient.  And most times not even possible.  We don’t build our own houses.  Grow our own food.  Build our own cars.  Manufacture our own high-definition televisions.  Smartphones.  Laptops.  And we don’t build our own Internet.  No.  Instead, people everywhere across the economy specialize in one thing (i.e., work for a living).  And together these specialists fit into the big economic picture.  Which gives us our houses, food, cars, televisions, smartphones, laptops and the Internet.

It started with the most basic division of labor.  Prehistoric women raised their young.  While prehistoric man hunted.  Which was necessary for the propagation of the species.  And us.  For if they all hunted and no one nursed the young the young would have died.  And with them the species of man.  For there was no formula back then.

The next great leap forward on the civilization timeline was the indispensible plough.  The prime mover of civilization.  With the food problem managed, famines were more the exception than the rule.  And with fewer people needed to produce a food surplus, people could do other things.  And they did.

The Division of Labor let us Create Surpluses in Food, Ploughs, Shoes, Tools, Harnesses, Etc.

The division of labor gave rise to artisans.  The first skilled trades.  Made possible by a food surplus.  As other people grew the food the artisans made the tools and crafts the farmers used.  They specialized in plough making and designed and built better and better ploughs.  Lots of them.  Shoemakers made shoes.  Lots of them.  Metal workers made tools.  Lots of them.  Leatherworkers made harnesses.  Lots of them.  See the pattern?

The food surplus gave us surpluses in ploughs, shoes, tools, harnesses, etc.  The division of labor let us create these surpluses.  Specialists made continual improvements in their areas of specialization.  Producing better things.  And more of them.  Which led to another key to the advanced civilization.  Trade.

The shoemaker didn’t have to grow food.  He could trade shoes for food.  Ditto for the plough maker.  The metal worker.  The leatherworker.  And the farmers didn’t have to make any of these things because they could trade food for them.  So we became traders.  We created the market.  And traders took their goods and/or services to these markets to trade for other goods and/or services.  First by foot.  Then by animal.  Then by boat.  Then by train.  Then by truck.  Then by airplane.  Artisans (i.e., workers) traded their specialization for the product and/or services of another’s specialization.  Then.  And now.

The Division of Labor made the Complex Simple and our Lives Rather Comfortable and Fun

The division of labor gave rise to the artisan.  The skilled trade worker.  The middle class.  People who can specialize in one thing.  And trade that one thing for the other things he or she wants.  Whether it be a skilled blacksmith hammering out farming tools.  A tool and die maker working in a factory.  An accountant.  Or a software engineer.  We have a skill.  Our human capital.  And we trade that skill to get the other things we’re not skilled in.  The end result is a modern, bustling, free market economy.  An advanced civilization.  And a high standard of living.

All thanks to the division of labor.  Which made the complex simple.  And our lives rather comfortable.  And fun.  Unlike prehistoric man.  Who knew of no such things as iPhones.  Indoor flush toilets.  Movie theaters.  Or restaurants.  No, he didn’t do much other than survive.  Which was no easy thing.  But he did.  And for that we are grateful.

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