International Division of Labour Vasily Erokhin School of Economics and Management Harbin Engineering University
Contents: Concept of Division of Labour International Division of Labour Transnational Corporations Pros and Cons of Global Division of Labour
Concept of Division of Labour
Division of labour Separation of a work process into a number of tasks, with each task performed by a separate person or group of persons.
Specialization Individuals, organizations, and nations are endowed with or acquire specialized capabilities. Specialized capabilities may include equipment, natural resources, skills, training, etc. The division of labour is the motive for exchange (trade) with the results of specialized capabilities, i.e. the source of economic interdependence.
Simple division of labour When the production is split up into different parts and many workers come together to complete the work, but the contribution of each worker cannot be known.
Complex division of labour When the production is split up into different parts and each part is performed by different workers who have specialised in.
Occupational division of labour When the production of a commodity becomes the occupation of the worker
Geographical or territorial division of labour When the workers or factories having specialised in the production of a particular commodity are found at a particular place
William PETTY (1620-1687)
“Political Arithmetick“
Petty’s studies: Different teams of workers doing similar operation in relation to successive products. Division of the work in such a manner that large parts of it could be done by people with no extensive training.
Bernard de MANDEVILLE (1670-1733)
“Fable of the Bees“
Mandeville’s propositions: Original principles in human nature is to produce, barter and trade for private advantage, which then propels commercial society forward resulting in economic advancement and prosperity. People freely specialize and wholly apply themselves to certain types of jobs, and through this they not only become useful to one another, but also further improve their skills.
David HUME (1711-1776)
Hume’s propositions: When every individual person works for himself only, his force is too small to execute any considerable work. Using all his powers for satisfying all his demands, a man is never able to satisfy all of them in a full extent, nor attain perfection in any particular art. By the conjunction of forces, power of society is augmented.
Henri-Louis Duhamel du MONCEAU (1700-1782)
Monceau’s propositions: On the example of pin making activity, he describes successive stages of work process („division of work“). Division of work is a form of division of labour which lets producing complex things at a low price.
Adam SMITH (1723-1790) “An Inquiry into the Nature and Causes of the Wealth of Nations”
Smith’s propositions: Division of labour is a dynamic engine of economic progress. In the context of organization, or society, it is important to match skills of the workers with equipment. Specialization and concentration of the workers on their single subtasks often lead to greater skill and greater productivity than would be achieved by the same number of workers each carrying out the original broad tasks
Smith’s propositions: Division of labour was not itself the effect of any human wisdom or foresight It is a necessary, albeit very slow and gradual, consequence of the propensity to barter and exchange one thing for another.
It gives rise to differences among men more extensive, more important, and ultimately more useful than those implied by their natural endowments.
David Émile DURKHEIM (1858-1917) “The Division of Labour in Society”
Durkheim’s social dimension of division of labour: Specialization arose from changes in social structure caused by an assumed natural increase in the size and density of population and a corresponding increase in competition for survival. Division of labour functioned to keep societies from breaking apart under these conditions .
Durkheim and Smith: similarities Greater concentrations of productive forces and capital investment seemed to lead modern industry, business, and agriculture toward greater separation and specialization of occupations, and even a greater interdependence among the products themselves. This extended beyond the economic world, embracing not only political, administrative, and judicial activities, but aesthetic and scientific activities as well. .
International Division of Labour
International division of labour Specialization of particular countries in distinct branches of production, whether this be in certain products, or in selected parts of the production process. It denotes any organization, co-ordinating individuals, or even countries carrying out different, but integrated activities.
Division of labour & globalization World trade is based on comparative advantage = countries specialise in the work they can do at the lowest cost.
International specialisation cannot be explained sufficiently in terms of comparative advantage (see further lectures as the course goes); specialisation is guided more by commercial criteria, which favour some countries over others.
Global industrial shift Spatial shift of manufacturing industries from advanced capitalist countries to developing countries. Low-cost labor-intensive parts of the manufacturing process are shifted to the developing world
North vs. South
Global division of labour More equal trade and flow of capital would allow the possibility for developing countries to further develop economically. Production has expanded across borders, so too has the division of labour Production is no longer confined to national economies. Highly mobile or migratory labour is an increasingly important part of the global division of labour.
Labour migration and global division of labour
Gendered character of global division of labour Men tend to be grouped into different jobs from women.
Gender refers to the idea societies have about what social roles and forms of employment are most appropriate for men and women. In the global economy, women are the majority of workers in export processing zones and men are the majority of managers
Ethnic character of global division of labour The categorization of labor along racial, ethnic or gendered lines has the same basic objective: to legitimize their different social, legal, and economic status and to justify exploitation.
Transnational corporations in global division of labour By relocating across national boundaries firms may be able to employ workers who they can hire for a lower wage or who they can compel to work longer and harder. The higher the rate of profit achieved in a particular sector, the more rapidly that exceptional rate of profit will be eroded by the entry of new capital. Labour has less freedom to move across national boundaries than capital means that differences in the rate of exploitation may be sustained for long periods of time
Transnational Corporations
Transnational corporation Incorporated or unincorporated enterprises comprising parent enterprises and their foreign affiliates. A parent enterprise is defined as an enterprise that controls assets of other entities in countries other than its home country, usually by owning a certain equity capital stake
Categories of transnational corporations: 1.
multinational, decentralized corporation with strong home country presence
2.
global, centralized corporation that acquires cost advantage through centralized production wherever cheaper resources are available
3.
international company that builds on the parent corporation's technology or R&D
4.
transnational enterprise that combines the previous three approaches
Characteristics of transnational corporations Operate on several national markets. Utilize difference between countries. Show high geographical flexibility.
Rapidly transfer their operations to other parts of the world.
Advantages in establishing a transnational corporation:
1.
Vertical economy of scale
2.
Horizontal economy of scale
3.
Increased market share
4.
Transfer of expertise from country to country
Critics of transnational corporations: 1.
Economic and, often, political means of foreign domination
2.
Developing countries are particularly vulnerable to economic exploitation
3.
Monopolistic practices
4.
Human-rights abuses
5.
Disruption of more-traditional means of economic growth
Pros and Cons of Global Division of Labour
Advantages
1. Increase in production and efficiency Worker output can increase exponentially. If an employee performs the same set of tasks each day, then he becomes an expert at his job over a period of time
Advantages
2. Increase in mobility of labour Worker becomes professional, which leads to the occupational mobility. Division of labour implies a large-scale production and labourers come to work from various locations. Thus, it increases geographical mobility of labour.
Advantages
3. Increase in use of machines The division of labour is the result of the largescale production, which implies more use of machines. The division of labour increases the possibility of the use of machines in the small-scale production also.
Advantages
4. Increase in employment opportunities Division of labour leads to the diversity of occupations which further leads to the employment opportunities. Scale of production being large, the number of employment opportunities also increases.
Advantages
5. Work according to taste A person can take up that type of job for which he considers himself to be the most suitable and which is in accordance with his taste. Division of labour extends the work to such an extent that every person can find work according to his taste and interest
Advantages
6. Work for disabled Division of labour splits up the production work in small processes and different persons can work at different places with the help of machines. Disabled persons can also find work according to their suitability.
Advantages
7. Best use of tools It is not necessary to provide each worker with a complete set of tools. He needs a few tools only for the job in which he can make their best use. Continuous use of tools is possible which are used at different stages.
Advantages
8. Best selection of workers As the work is divided into different parts and each part is taken up by such a worker who is more suitable for it, the employer can select the man who is best suited for the work
Advantages
9. Good of superior quality When the worker is entrusted with the work for which he is best suited, he will produce superior quality goods.
Advantages
10. Saving of time There is no need for the worker to shift from one process to another. He is employed in a definite process with certain tools. Continuity in work also saves time and helps in more production at less cost
Advantages
11. Reduction in the cost of production Because of the economy of scale, division of labour increases production which reduces the average cost of production. Saving of capital, tools and machinery also help in the reduction of cost of production.
Advantages
12. Cheap goods Division of labour helps in mass production. Production becomes less expensive and more economical.
Cheaper goods are turned out, which improve the standard of living of the people.
Advantages
13. Cooperation Division of labour gives chances of working with the cooperation of each other. It further gives rise to the feeling of cooperation and trade unionism. The work cannot be completed unless the workers or producers cooperate with each other.
Advantages
14. Development of international trade Division of labour increases the tendency of specialisation not only in the workers or industries, but in different countries also. On the basis of specialisation, every country produces only those goods in which it has a comparative advantage and imports such goods from those countries which have also greater comparative advantage.
Disadvantages
1. Monotony Under division of labour, a worker has to do the same job time and again for years together. After some time, the worker feels bored or the work becomes irksome and monotonous.
Disadvantages
2. Loss of joy In the absence of division of labour, he feels a lot of pleasure on the successful completion of his goods. But under division of labour, nobody can claim the credit of making it. The work gives him neither pride nor pleasure.
Disadvantages
3. Loss of responsibility If the production is not good and adequate, none can be held responsible for it. It is generally said that “every man’s responsibility is no man’s responsibility”.
Disadvantages
4. Loss of mental development When the labourer is made to work only on a part of the work, he does not possess complete knowledge of the work.
Disadvantages
5. Reduction of mobility of labour The mobility of labour is reduced on account of division of labour. The worker performs only a part of the whole task.
It may not be easy for him to trace out exactly the same job somewhere else, if he wants to change the place.
Disadvantages
6. Increased dependence When the production is split up into a number of processes and each part is performed by different workers, it may lead to over-dependence.
Disadvantages
7. Danger of unemployment When the worker produces a small part of goods, he gets specialised in it and he does not have complete knowledge of the production of goods.
Disadvantages
8. Increased dependence on machines As division of labour increases, there will be an increased use of machines.
Almost all the workers work on different types of machines. It is difficult for them to work without machines.
Disadvantages
9. Danger of over-production Over-production means that the supply of production is comparatively more than its demand in the market. Because of the division of labour, when production is done on a large scale, the demand for production lags much behind its increased supply.
Disadvantages
10. Exploitation of labour Division of labour is concerned with large scale production in big factories. No poor worker can afford to start his own production. Therefore, they have to seek employment in big factories. These employers pay less wages to them as compared to their marginal productivity, because there is no other alternative to the workers but to work at very low wages.
Disadvantages
11. Industrial disputes Division of labour results in the division of society into workers and employers. The employer always tries to increase his profits by exploiting the workers and workers form trade unions against the employers to put an end to their exploitation or to make them increase their wages.
It gives rise to a severe conflict between the employers and the workers.
Interdependence of division of labour and extent of market If the demand for a commodity is low, the size of its market will be small.
If there is great demand for the product, the size of the market will be large. In order to meet the large demand, the manufacturer will increase the scale of production. Thus division of labour depends on the extent of the market. When there is division of labour, there is specialisation and the production is on a large scale. This leads to lower costs of production and cheap products. As a result, the demand for products increases and the size of the market is extended.
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