Specialization in Perspective

SPECIALIZATION IN PERSPECTIVE Specialization is a method of production in which each person concentrates on a limited number of activities. The gains from specialization, whether they arise from developing expertise, minimizing downtime, or exploiting comparative advantage, can explain many features of our economy. For example, college students need to select a major and then, upon graduating, to decide on a specific career. Those who follow this path are rewarded with higher incomes than those who dally. This is an encouragement to specialize. Society is better off if you specialize, since you will help the economy produce more, and society rewards you for this contribution with a higher income. The gains from specialization can also explain why most of us end up working for business firms that employ dozens, or even hundreds or thousands, of other employees. Why do these business firms exist? Why isn’t each of us a self-employed expert, exchanging our production with other self-employed experts? Part of the answer is that organizing production into business firms pushes the gains from specialization still further. Within a firm, some people can specialize in working with their hands, others in managing people, others in marketing, and still others in keeping the books. Each firm is a kind of mini-society within which specialization occurs. The result is greater production and a higher standard of living than we would achieve if we were all self-employed.

Specialization has enabled societies everywhere to achieve standards of living unimaginable to our ancestors. But, if it goes too far, it can have a downside as well. In the old film Modern Times, Charlie Chaplin plays a poor soul standing at an assembly line, attaching part number 27 to part number 28 thousands of times a day. In the real world, specialization is rarely this extreme. Still, it has caused some jobs to be repetitive and boring. In some plants, workers are deliberately moved from one