In 1776, Adam Smith – the father of modern economics – wrote An Inquiry into the Nature and Causes of the Wealth of Nations, commonly known as The Wealth of Nations. The first part of this book is entitled The Productive Powers of Labor, in which Smith describes the benefits of the division of labor – the process by which functions of labor become divided into specific tasks to be performed by individuals. Smith argues that the division of labor has been the ‘greatest improvement in the productive power of labor’ 1, and that in a large enough market it is in the interest of both the individual and the market for it to happen. I argue that the internet is such a market, and that it is in the interest of both individuals and the web itself for websites to have only one function. I call this term the ‘division of web function’.
First I need to establish the parallels between the market described by Smith and the market of the web. Smith’s examples refer to the manufacture and trade of basic products, which in a small market are traded for other such products. As this market grows, physical currency is introduced in order to establish a common valued product to trade with. Before I can do on, we must decide on a common currency for the web, as websites do not trade functions in return for others. It would be useless to select actual currency, as the web is a world-wide market, and considering the number of business models in use it would not simplify matters at all. Therefore I will use the currency of web traffic as the parallel to that used in the “Wealth of Nations”. This means that the websites in question will be those which benefit from increased traffic.
Second, we need to establish that the web is a large enough market for the division of web function to be effective. Smith writes:
“…but in those trifling manufactures which are destined to supply the small wants of but a small number of people, the whole number of workmen must necessarily be small; and those employed in every different branch of the work can often be collected into the same workhouse, and placed at once under the view of the spectator.” 2
That is to say, when the market is small there is only need for a few workmen, who each could carry out several functions. The division of labor would not prove effective in this circumstance. No one could argue that the internet is such a market. The internet consists of tens of millions of websites 3, and each one carries out some function, whether it is an internet application, educational site, advertisement, etc. The total number of these functions is much smaller than the tens of millions of websites which exist, so one must conclude that in each function there are a large number of sites which are in competition. Thus, the market can be considered large, and in such a market websites compete for the traffic aimed at that function.
Benefits of the Division of Function
Smith’s main argument for the division of labor is that individual laborers increase their productivity as a result, which leads to individual benefit and consequently market benefit. On the internet we do not have laborers mending shoes or baking bread, but we do have websites performing specific functions and discrete groups of individuals working on these sites. I argue that increasing the efficiency of these individuals will result in increased in web traffic (our currency). We must show that the division of function leads to the largest possible increase in the efficiency of these individuals, and that this leads to the largest possible increase in web traffic. And we must finally show how this individual gain benefits the web market.
Regarding why the division of labor increases individual efficiency, Smith writes:
“This great increase of the quantity of work which, in consequence of the division of labour, the same number of people are capable of performing, is owing to three different circumstances; first, to the increase of dexterity in every particular workman; secondly, to the saving of the time which is commonly lost in passing from one species of work to another; and lastly, to the invention of a great number of machines which facilitate and abridge labour, and enable one man to do the work of many.” 4
I – Smith’s first reason for the increase in productivity is ‘…to the increase of dexterity in every particular workman’. Recall that we defined a website as ‘a published group of documents which carry out one or more functions, which are worked on by a discrete group of people’. In working on only one function as opposed to several, this discrete group of people would become increasingly proficient in their roles of maintaining that function.
II – Smith’s second reason for the increase in productivity is ‘…to the saving of time which is commonly lost in passing from one species of work to another’. This is in reference to an individual worker who loses time in switching from one role to another, which can also be paralleled to the individuals working on a website. By maintaining only one function, an individual working on a website will spend more time completing one type of task, and will not lose as much time in switching between other types.
III – Smith’s third reason for the increase in productivity is ‘…to the invention of a great number of machines which facilitate and abridge labour, and enable one man to do the work of many.’ If a group of individuals focuses their work on just one function of a website, they naturally will begin to seek out and develop tools to aid them in this function.
Since there are three reasons for a productivity increase as a result of the division of web function, I argue that this increase is exponential. Thus, having a website which focuses on only one function will lead to the exponential increase in efficiency of the group of individuals working on it.
The question is: how does this increase in efficiency lead to an increase in web traffic? An increase in efficiency will lead to the improvement of the function of a website, thereby increasing its value. Website value is, arguably, the primary factor in determining rank in search engines as well as within social networking groups (Digg, etc), as opposed to other factors (SEO, etc) *. Therefore, web traffic will increase as a result of the increased efficiency of the individuals working on a website.
One may ask whether a website with more than one function will receive the same overall increase in web traffic (divided over that number of functions) due to the effects described in I through III. Since I argued that the increase in efficiency cause by I through III is exponential, the answer is no. If only one of the effects described in I through III were true, then I would be wrong.
Finally, how does this increase in efficiency lead to an improved web market? As stated in the last paragraph, the increase in value of websites due to increased worker efficiency due to the division of function is exponential, and therefore if all websites focused on just one function the web would see a more rapid improvement of web-based technologies.
Thus, the division of function on the web leads to the greatest increase in efficiency of the groups working on websites, which leads to the greatest increase in function value, which leads to the greatest increase in web traffic for that site, which leads to the most rapid advances in the development of web technology.
* – This is a topic of much debate, and I will address it a later article. For the sake of simplicity, I will go with this assumption.
Practical Summary
For the greatest return on an investment of resources (time, money, etc), a group of individuals working on a website should focus on only one function. For example, if a website host an email client, the team behind it should focus all energy on increasing the value of that email client, and should not branch out into other areas (news, blogging, etc). If they stick to one function, they will see an exponential increase in the value of their email client (and thus a proportional increase in their web traffic) as opposed to if they focused on several functions. This is contrary to the models of the web’s leading companies (Google, Yahoo, MSN, etc), and I will wait until another article to explain these anomalies.
Footnotes:
1 Smith, Adam, An Inquiry into the Nature and Causes of THE WEALTH OF NATIONS (London: The Electric Book Co, 1998) pg 17
2 Ibid, pg 17
3 Walton, Marsha, Web reaches new milestone: 100 million sites; [ accessed Oct 26th 2008
4 Smith, Adam, An Inquiry into the Nature and Causes of THE WEALTH OF NATIONS (London: The Electric Book Co, 1998) pg 21