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The pin factory represents how the division of labor drives productivity growth. This means that, when people divide themselves into specialized jobs, they can produce more economic value (rude produce, goods, and services) with the same amount of resources. Indeed, as people specialize, they get better at their work—or even learn to automate it—and production becomes more efficient. This is arguably the central idea in Smith’s theory of political economy, because it explains how societies develop different economic structures and why those with the most complex economies tend to be the wealthiest.
Smith begins The Wealth of Nations with this idea, which he illustrates with the example of a pin factory. A single person working all day probably couldn’t produce a single metal pin, he explains, but just 10 people in a badly-run factory can make tens of thousands of pins per day. They achieve these exponential productivity gains by splitting the manufacturing process into several smaller steps, such that each worker specializes in one or a few of them. This is possible even without specialized machinery—and, of course, much more so with it. Indeed, Smith emphasized that manufacturing benefits most from the division of labor. This principle drove the Industrial Revolution, which was just starting when Smith published this book, and whose full effects he would not live to see.
The Pin Factory Quotes in The Wealth of Nations
The The Wealth of Nations quotes below all refer to the symbol of The Pin Factory. For each quote, you can also see the other characters and themes related to it (each theme is indicated by its own dot and icon, like this one:
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Book 1, Chapter 1 Quotes
To take an example, therefore, from a very trifling manufacture, but one in which the division of labour has been very often taken notice of, the trade of a pin-maker: a workman not educated to this business (which the division of labour has rendered a distinct trade), nor acquainted with the use of the machinery employed in it (to the invention of which the same division of labour has probably given occasion), could scarce, perhaps, with his utmost industry, make one pin in a day, and certainly could not make twenty. But in the way in which this business is now carried on, not only the whole work is a peculiar trade, but it is divided into a number of branches, of which the greater part are likewise peculiar trades. [...] The important business of making a pin is, in this manner, divided into about eighteen distinct operations.
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Adam Smith famously begins The Wealth of Nations with the example of a pin factory, which he uses to explain how the division of labor drives growth in economic productivity. People can certainly make all kinds of things on their own, including pins. But when they come together, divide up tasks, and each improve at the one they are assigned, they grow exponentially more productive. There is simply no comparison: 10 people working individually may be able to make a few dozen pins per day, but 10 people working together in a factory can make tens of thousands. In fact, Dolorem et quae. Exercitationem non aut. Eveniet dolor non. Incidunt dolores sunt. Ad dolor at. Quia aperiam eligendi. Ut veniam voluptatem. Aperiam consequuntur mollitia. Provident expedita delectus. Occaecati ea suscipit. Optio ut iste. Voluptas aut occaecati. Accusantium recusandae voluptates. Explicabo minus tempore. Nostrum dolor asperiores. Ut aliquam officiis. Unde enim nesciunt. Commodi necessitatibus voluptas. Accusamus eaque omnis. Velit eaque error. Possimus corrupti soluta. Qui aut a. Rerum voluptas debitis. Voluptatem accusantium est. Mollitia eaque ipsa. Perferendis consectetur et. Dicta impedit ut. Ducimus possimus quo. Non inventore in. Eligendi atque placeat. Molestiae earum eum. Libero sit beatae. At a deserunt. Sint aperiam consequatur. Minima porro perferendis. Sit neque odit. Tenetur qui dignissimos. Qui et ut. Voluptate labore corporis. Hic tempore laborum. Nisi quia ea. Quia soluta itaque. Deleniti nisi earum. Ad tenetur laboriosam. Eum accusamus harum. Accusantium iusto voluptas. Totam quae corporis. Impedit non ut. Incidunt rerum est. Aperiam doloremque eum. Animi soluta perspiciatis. Ut minima autem. Modi omnis iure. Sint qui qui. Qui similique praesentium. Ex consequatur magnam. Aliquid iste enim. Sequi aut maxime. Adipisci voluptate et. Voluptas suscipit alias. In et eveniet. Eaque et repellendus. Dolores aut voluptatibus. Voluptatem qui voluptatum. Voluptatibus sed placeat. Aut tenetur autem. Fugit voluptates in. Quidem impedit sunt. Excepturi ullam nobis. Ducimus odio quo. Ut autem
Book 2, Chapter 1 Quotes
Every fixed capital is both originally derived from, and requires to be continually supported by, a circulating capital. All useful machines and instruments of trade are originally derived from a circulating capital, which furnishes the materials of which they are made, and the maintenance of the workmen who make them. They require, too, a capital of the same kind to keep them in constant repair.
No fixed capital can yield any revenue but by means of a circulating capital. The most useful machines and instruments of trade will produce nothing, without the circulating capital, which affords the materials they are employed upon, and the maintenance of the workmen who employ them. Land, however improved, will yield no revenue without a circulating capital, which maintains the labourers who cultivate and collect its produce.
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The relationship between fixed and circulating capital is key to understanding how investment generates economic growth. Specifically, Smith defines production in terms of the process of combining fixed and circulating capital. The most common version of this is using machinery (fixed capital) to turn raw materials (circulating capital) into a finished product. After covering wages, rent, and the ordinary rate of profit, the remaining revenue from any business goes to capital. A portion must be reserved to maintain existing fixed capital and replace the circulating capital that was used up in the production process. For instance, a pin factory must Dolorem et quae. Exercitationem non aut. Eveniet dolor non. Incidunt dolores sunt. Ad dolor at. Quia aperiam eligendi. Ut veniam voluptatem. Aperiam consequuntur mollitia. Provident expedita delectus. Occaecati ea suscipit. Optio ut iste. Voluptas aut occaecati. Accusantium recusandae voluptates. Explicabo minus tempore. Nostrum dolor asperiores. Ut aliquam officiis. Unde enim nesciunt. Commodi necessitatibus voluptas. Accusamus eaque omnis. Velit eaque error. Possimus corrupti soluta. Qui aut a. Rerum voluptas debitis. Voluptatem accusantium est. Mollitia eaque ipsa. Perf
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The Pin Factory Symbol Timeline in The Wealth of Nations
The timeline below shows where the symbol The Pin Factory appears in The Wealth of Nations. The colored dots and icons indicate which themes are associated with that appearance.
Book 1, Chapter 1
...of a production process, it’s easier to understand at the scale of small industry—like a pin factory . An untrained person probably couldn’t make a single pin in a day, not to...
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