PART III THE CREATION OF THE COMMUNITY OF ACQUISITION AND THE FORMATION OF INCOME
He explains these effects from the example of a small Scotch pin factory which he had visited. We shall briefly reproduce this illustration which has become famous in the history of our literature. We call attention to it not merely because of the clearness and pregnancy with which it presents the problem to the reader but even more because it shows unmistakably the limits that confine the classical view of the subject. In this pin factory ten workers were employed; there were approximately eighteen operations required to get the pins ready for packing and shipping. These started with the drawing out and smoothing of the wire. The eighteen processes were divided among the men. Owing to the ingenious distribution of their labors they were able to turn out 48,000 pins daily, an average of 4800 pins per man. Adam Smith believes that if one of the men had been working alone he could not have turned out more than twenty pins at best, and perhaps only a single pin. He thus calculcates that the division of labor in this case has increased productivity at least 240 fold, possibly even 4800 fold.