Most economists from Adam Smith onward have sung the praises of the division of labor. It has even been said that the more specificity a labor pool is the more advanced the economy. A more productive economy has more task specialization. However, doesn’t the law of diminishing turns apply even to the division of labor? At some point, does specialization shift beyond the equilibrium point of the utility function / production frontier and result in inefficiency? I am not the biggest fan of neoclassical methodology, but in certain areas of economic life, Pareto-efficiency makes sense. It should not be rigidly applied without any qualitative context. That only provides us with a one dimensional account of economic activity.
At work, I am being assigned to help out with some of the workload in our parent division of the company. I can’t help but be awed by how inefficient their process is. This is where my observation of applying the law of diminishing returns to the division to labor becomes pertinent. The way the process was devised for processing orders for the headquarters of our company, requires actions to be passed off to multiple teams. The total process can take up to forty-eight hours. The process that was originally trained on, takes only four hours and a transfer between only two departments to complete. Does having a hyper-diversified and stringently delineated process help the customer? I would argue that it does not. Giving tasks that could easily be done by one person to three people means there could be a time gap in between task serving only to make the process more lethargic. Making the premise of utilizing a proverbial “assembly line” method counterproductive and detrimental to the customer.