Division of Labour is pretty much that, a group of people dividing what labour they must do to meet their needs. A complete lack of division would necessitate every person be entirely self sufficient, they make their own clothes, grow their own food, make their own medicines, etc.
Obviously this isn’t very efficient and it means no person can really get all that good at a specific task. If one guy can specialize into just making clothes, some woman only catching fish, etc they become better at that task than they would if they had to do everything else.
But that causes a problem, the tailor needs to eat and fisherwoman needs clothes but they cant do those themselves (or at least arent as good at it). So there needs to be some mechanism to exchange the goods/services between them, otherwise this system doesnt work. This mechanism doesn’t *have* to be a market, but in Adam Smith’s time of Mercantilism and early Capitalism, that’s what the mechanism was.
So the division of labour is limited by the extent of the market, because if there isnt someone specialized in the job of making medicines within the market, then the fisherwoman and the tailor have to do that for themselves.
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