Economics 101 & Public Square

An Unexpected Source of Human Flourishing

Email Print

Economists at the Brookings Institute bring the happy news that the United Nations’ goal to reduce the number of people in extreme poverty by fifty percent by 2015 has likely already been met.

This blessing has occurred through the benefits of international trade and the global division of labor.

In a previous post, I explained that economics helps us fulfill the cultural mandate by guiding us to the sources of economic development necessary for productively exercising dominion in our fallen world of aggravated scarcity, and helps us do this without starving to death or killing one another. One of those sources is the global division of labor.

A case in point is the number of benefits Africans receive from the use of mobile phones. Use of such devices has allowed Africans, like the rest of the earth’s population, to increase their standard of living in various specific ways. Mobile phones in Africa make available better banking options, increased exposure of political atrocities, less expensive and more plentiful educational materials, wider options for information and entertainment, more efficient disaster refugee management, and quicker agricultural price information to Africa’s farmers. All of this and more is the result of access to mobile phones.

What does this have to do with division of labor?

It turns out that the vast majority of mobile phones used by Africans are made by people elsewhere who specialize in the mobile communication business. The makers of the most popular mobile phones used in Africa—Nokia, Samsung, Huawei, and Blackberry—have headquarters in Finland, South Korea, China, and Canada.

These same companies have production and retail operations across 120 countries including Hungary, Mexico, and Malaysia. The circuit boards used by Blackberry alone are made by a company with sales and engineering operations in the United States, the United Kingdom, Taiwan, South Korea, and manufacturing facilities in China.

Note that the best-selling mobile phones in Africa are made by people who do not live in Africa. Just as I have not made the cell phone I use, Africans also do not. Instead they take advantage of the division of labor.

The division of labor contributes to prosperity because people are more productive when they specialize in doing those tasks at which they are relatively most efficient. Instead of every person producing every good that he consumes himself, all of us are more productive if we specialize in producing those goods for which we are the low-cost producer.

This division of labor, therefore, results in more productive use of the scarce resources at our disposal. We all benefit from access to more goods that allow us to improve our lives.

How does Specialization Help Us?

One of the beauties of creation is that God has made a world with seemingly endless variety.

  • God has created mankind with different abilities in human labor.
  • He has also providentially distributed natural resources differently over the earth.
  • Additionally, different people possess different quantities and kinds of tools, buildings, and machines.

Due to these differences, people are relatively more productive at certain tasks than others. These differences and the ability to produce more in certain lines of production create an incentive to specialize in production.

Given the differences in the created order, people living in Africa find it in their interest to specialize in making those goods at which they are relatively better at producing. As everyone specializes in producing goods, they can make at the lowest cost compared to anyone else, the total output of all members of society increases.

Mobile phone makers can specialize in making telecommunication devices. People in Africa can devote their land, labor, capital goods, and time to mining for minerals, growing crops, and operating telecommunication systems. People in China, Finland, and Canada can specialize in producing mobile phones Africans can purchase with income earned from their productive activity.

As people exchange their output with others who have participated in the division of labor, they are also able to obtain more goods and satisfy more ends than they could without the division of labor. Hence, the division of labor is an important social phenomenon contributing to human flourishing.

It’s one more reason to praise our Creator.

Leave your comments here.

Have our latest content delivered right to your inbox!
  • These are interesting thoughts but I am wondering how you take into account the fact that the global industrial economy thrives on slave labor and deplorable working conditions for the world’s poor who are producing goods for those of us here in America and elsewhere. These injustices are too thoroughly documented to ignore – especially for Christians who care about the dignity of all people.

Further readings on Economics 101 & Public Square

  • Economics 101
  • Public Square

Do you know what’s great about a jigsaw puzzle? You always know what it’s supposed to look like in the end….

  • Economics 101
  • Public Square
Does “Fair-Trade” Coffee Help Poor Nations?

By: Dr. Wayne Grudem

7 minute read

The following article is an excerpt from an essay by theologian Wayne Grudem and economist Barry Asmus in IFWE’s new…

Have our latest content delivered right to your inbox!