The Division Of Labour And Institution Change: Relationship And An Economics Analysis

The division of labour is an ancient theme of Economics. Adam Smith, the author of Wealth of Nations, wrote at the beginning of the book: "The greatest improvement in the production power of labour, and the greater part of the skill, dexterity, and judgement with which it is any where directed, or applied, seem to have been the effects of the division of labour." According to economics researcher, the deeping of the division of labour means the improvement of production power, what more, the division of labour plays an important part in institution change, institution change in itself is the change of people's behavior rule. The change of behavior rule bases on the production form and transaction form takes the form of the deeping of the division of labour. Just as Marxs pointed out : "The level of the production power of a nation can be completely identified by the level of the development of division of labour of the nation." In some case, the division of labour creats institution change, because the division of labour change the people's economic enviroment and interest pattern. Thus, Maxs said : "The phase of the development of division of labour is correspondent with the phase of the ownership ."In this way, the thesis analyse how the division of labour leads to martet system. In accordance with this thesis, martet system is not only a social instrument of resourse allocation, but also a institutionarrangement that deals with people's transaction relationship, interest argument and the efficiency of transction and production. The origin, nature and evolution of the instition arrangement are closely related with the development of the division of labour. If the division can't be fully developed, the martet system can't be fully developed, too. Furthermore, it is only after the birth of martet system that the social division separates form enterprise, and eterprise become essential to reduce the risk and uncertarity of the division of the labour, the trasanction costs inorder to achieve "cooperation surpls ". Since the martet system and enterprise system are closely related with the division of labour, evolution of the economic system is alse connected with division of labour. The division of labour eventually change the resourse endowment and relative price of production factor that the system depends on. As a result, if only institution evolution fails to meet the need of the constrction of factor endowment and lacks new division of labour, it won't lead to economic growth and won't be widely accepted. In theory, institution evolution should be extended not by the artificial construction, but by the path dependence of self -expansion and self -organization. In order to verify the thesis,the author, taking wnezhou for example, analyse the connection of the division of labour and institution change in the process of institution change and draws correspondent conclusions.