Adam Smith and the Neanderthal

Adam Smith presented the theory that division of labor and specialization creates a more robust economy. Don Boudreaux reviews how a group of three Economics professors explain that a misunderstanding of this economic principle led to the demise of the Neanderthals in the article Did Use of Free Trade Cause Neanderthal Extinction?

Neanderthals had to cooperate to some extent, but there is no evidence to show that they understood the concept of division of labor or trade. When modern humans arrived on the scene they established an inter-group trading system, and brought about technological innovations. The trading which took place allowed a division of labor as well as specialization. Exchanges of goods and ideas among different groups helped create "supergroup social mechanisms " which helped the cultures survive and led to new cultural advancements. Because the humans naturally followed this economic principle, they survived. The "self-sufficient" Neanderthals perished because they did not.

Did the early humans survive due to a primitive form of outsourcing? Did they do what they were good at and allow somebody else to do what the other excelled at? If we try to keep all jobs in America, even the ones that others can do better, might we go the way of the Neanderthals? Let us do what we are good at and let others do what they can excell at doing. If we do, we will find new things we can do better than others and continue to advance as a society.

1 comment:

Dr. Tufte said...

I don't find this at all surprising. I wish I'd thought of it first.