Smith opens The Wealth of Nations with a famous example of a pin factory: ten workers specializing in distinct tasks can produce thousands of pins per day, whereas each working alone might produce only a few dozen. He identifies three reasons why division of labor increases productivity:

The Wealth of Nations directly influenced classical economists like David Ricardo and Karl Marx (who built on and critiqued Smith’s labor theory). In the 20th century, free-market thinkers such as Milton Friedman revived Smith’s ideas. However, critics note:

Adam Smith’s The Wealth of Nations remains a foundational text because it shifted economic thinking from state-controlled mercantilism to market-oriented growth driven by specialization and voluntary exchange. While subsequent economists have refined or rejected parts of his analysis, Smith’s core insights—that productivity depends on the division of labor, that self-interest can serve the common good under competition, and that governments have limited but essential roles—continue to inform debates on trade, industrial policy, and the nature of prosperity.