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"The annual labor of every nation is the fund which originally supplies it with all the necessaries and conveniences which it annually consumes." (Wealth of Nations, p. 1) He stated that a nation could increase the efficiency of the potential of its people by increasing these two aspects of the work force: (a) Skill, dexterity, and judgement with which labor is applied, and (b) Proportion of those employed in useful labor to those not so employed.
For the first aspect, Smith noted that the best way to increase the efficiency of labor is the division of labor. The division of labor is the central factor in Smith's theory of economic growth...
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