 All right, ladies and gentlemen, boys and girls, children of all ages, it is time to convene. We're going to spend 45 minutes talking about the division of labor and the social order. And those two topics are aptly put. A few years ago, I happened upon a new book by Erwin Decker called The Viennese Students of Civilization. And I thought his main argument in that book is that the Austrian, especially the Viennese Austrians, Mbawwerk, but especially Mises and Hayek, if we consider them only as economists, we consider them too narrow. And really, their life's pursuit was a study in defense of liberal civilization. When I first picked up the book, I thought that it's perhaps too big of a net to cast, to call them students of civilization. But Decker has a point, because if you look through Mises' writings, regularly he links the division of labor and civilization together. In fact, for Mises and Hayek, but especially Mises, you cannot have civilization without the division of labor. And so we will be moving in that direction throughout the lecture. And just to get the ball rolling, I think it'd be helpful to consider a couple of contrasting views. One is from a political economist from Australia named Herb Thompson. And he wrote in an article, Conflict in the Social Relations of Capitalism, quote, rather than seeing conflict as an anomaly, it is concluded that conflict is an essential and inherent component of the social relations found in capitalism. So where we have capitalism, there's conflict. We're not all going to get along. Can't we just not get along? That's sort of his vision of capitalism. And this sort of mimics of Frederick Engels in his book Anti-During, where he talks about the individual struggle for existence based upon the present anarchy of production. Well, of course, he's talking about the free market, where we have decentralized unplanned production, at least not planned centrally. And he said that in that anarchy of production, there are collisions and excesses that arise from the struggle. And so capitalism and the free market in the eyes of these people is a world, is sort of a Darwinian struggle, where dog eat dog and cat eat cat. And amoeba eat amoeba, I suppose. But Mises says no. He says the greater productivity of work under the division of labor is a unifying influence. It leads men to regard each other as comrades in a joint struggle for welfare, rather than as competitors in a struggle for existence. It makes friends out of enemies, peace out of war, society out of individuals. And it's the division of labor that does this. And this is in his book Socialism. And so we're gonna talk about, well, how does Mises come up with this idea? Why does Mises think this? That the division of labor is something that is socially productive, that doesn't cause these conflicts. Now to understand how the division of labor contributes to society and the social order, we need to understand, first of all, the nature of production. We know that the act of production is an action. And you heard about the basics of action in Dr. Herbner's lecture and earlier from Dr. Salerno as well. Action is applying means according to ideas to achieve an end. It's purposeful behavior. And all the laws of human action because production is an action, all the laws of human action apply to production as well as to the act of consumption. Why do people act to attain their end? Why do producers produce? To attain the end that they have to earn a profit, to engage in productive activity. To do so, just like consumers need to economize in their consumer goods, producers need to economize on their factors of production. They need to economize and use the goods that they have in their most highly valued uses to produce goods that are gonna best satisfy their end of reaping a profit. And so we want to remember that producers don't just produce for production's sake. They have purposes as well and they economize as well. Now, as we think about production, we can talk about two different modes of production. Milton Shapiro talks about two basic ways or thinking ways we can conceive of production. The versus direct use production. And as the name implies, people produce in direct use production to produce goods. They produce goods that they are gonna use directly themselves. None of the production in direct use production is exchanged in the market. It's not sold to anybody. People produce, they grow a garden to eat the vegetables that they grow. They build a hut or a lean to because they want to live in it. They raise a cow so they can use milk from the cow. They raise a steer so they can slaughter the steer and eat the meat. People make a few items of rudimentary clothing so that they can wear it. So that is production for use. It's production for self-sufficiency. And, incidentally, this mode of production is found mainly in poorer, less developed societies. But then there's also production for exchange. And production for exchange is not production for use. It'd be silly to call it production for exchange if it was production for direct use. Production for exchange to produce goods that you're gonna sell, that you're gonna trade in the market. Production is oriented towards what can be sold in the market. People produce goods not because they want to consume them, but because they think they can trade those goods to other people to get the goods that other people have that they can use. And this, then, is production in the Market Division of Labor. It's production in the Market Division of Labor. And it is the primary mode of production in developed, wealthier societies. And, in fact, as the Division of Labor proceeds, the society can be wealthy enough that there can be those individuals that, if they wanna take time off of the Division of Labor, can try to be self-sufficient because they just think it's more fun, more morally pure, what have you, and they can get along a little better because of the global Division of Labor has created so much wealth. So what is the Division of Labor? We can define Division of Labor as specialization of production according to efficiency. Specialization of production according to efficiency. And there are two important words in that definition. One, specialization, and two, efficiency. Specialization simply means that each person produces a particular good or a set of goods in excess of his personal consumption. It is pretty exciting, by the way. Whenever I talk about the Division of Labor, sirens usually go off. And it's kinda hard to keep everybody under control, but you're right to be excited about this, and we'll see why in just a little bit. But specializations where each person produces a particular good or set of goods in excess of their own consumption. So I don't, I, my wife will tell you that I enjoy hearing my self-talk, but I don't enjoy hearing my self-talk so much that I just walk around the house all the time, my t-shirt and dungarees, lecturing economics because I just like to hear myself lecturing economics. No, I do it for other people. I do it for a college. I do it for the Mises Institute so that they, then I can get something to return. I am producing for exchange. Jim Snee, Jim Snee is an interesting man. He is the chairman and CEO of Hormel. Now Hormel is a processed food producer. And Jim Snee oversees every year the production of approximately 94 million cans of Spam. You've heard of Spam, no doubt. Spam, Spam, Spam, Spam, Spam. Yeah, you know Spam. It's an interesting product. Now I venture to guess that he did not oversee 94 million cans of Spam production last year because he wanted to eat 94 million cans of Spam. In fact, I submit to you that if he did, he would no longer be with us. He would have died of a stroke. His blood pressure, there's lots of sodium in that Spam and his blood pressure would have went off the charts and he would have keeled over. But he's still with us, why? Because he didn't eat all that Spam. Well, why did he produce it? He produced it for exchange. He wanted to, so he's making way more Spam that he wants to eat. Now at the same time in the Division of Labor, the consumptive ends of the producers, Mr. Snee's consumptive ends, for instance, are met by others. Other people produce what he wants to consume and people trade in exchange. Now with this specialization, people have to decide, okay, what am I gonna specialize in? Who's gonna produce what? Well, that is determined by efficiency. Who produces what within the Division of Labor will be determined by efficiency? The different tasks are taken up by the efficient producers. Mr. Snee produces Spam because Hormel is relatively efficient at producing Spam. You cannot produce 94 million cans of Spam if you're not relatively efficient at it. I could not do that. I don't know the first thing of even canning a Spam, whatever that is, right? I couldn't do it, but he can, right? Or at least the people he has working for him can, right? So the different tasks are taken up by the efficient producers. Now, economists call this principle Division of Labor, but it's important that this principle actually applies to all factors of production, right? So there's a Division of Labor, according to efficiency for sure, but there's also a Division of Capital Goods, according to efficiency. And there's a Division of Land, according to efficiency. Some land is more efficient at producing cattle. Other parts of land are more efficient at producing king crabs, right? And so there's a difference of efficiency for all factors of production. Now, Mises called the Division of Labor the fundamental social phenomena. The fundamental social phenomenon is a Division of Labor and human cooperation. What did he mean by this? Why is it the social fundamental social phenomena? Well, I suspect there's two reasons for this. One has been here since the beginning of human history. As far as we have human recorded history, as far back as we have written history, we find evidence that there has been some Division of Labor wherever human civilization is developed. We can go and look back at the ancient Near East, Mesopotamia, Greece, Rome, wherever human civilization has developed way back in time, we find the Division of Labor. You can go back even to the biblical literature, right? The earliest chapters of the earliest humans mentioned in the Bible were identified by specific tasks, right? Abel was a shepherd, Cain was a farmer. The descendants of Cain, Jable had cattle, Jubal was a musician, Tubal Cain was a metalsmith. He sounded like a heavy metal kind of guy. So we have the Division of Labor going way, way back. It seems like it's fundamental to human nature. So in that sense, it's a fundamental social phenomena. But also, and this is Mises' main point, the Division of Labor is the great impetus for the formation of society. People form and move to certain communities so they can integrate with that reason's Division of Labor, right? I mean, what's the number one reason why people move? It's because they find a new job there, right? And they go to plug into that regions or that locale, that community's Division of Labor. So society forms as people participate in the Division of Labor. And in fact, Mises goes on to note that society is only possible because of two, two sort of fundamental facts. One, the greater productivity of the Division of Labor. There has to be a reason why people participate in it. It's not as if they just sort of woke up one day, got hit in the head and say, oh, must divide my labor, must specialize, yeah. There's a purpose, right? And that purpose is the greater productivity of the Division of Labor. By participating in the Division of Labor, people can achieve more of their ends, right? But then people have to recognize this fact, right? So there has to be, there's the truthfulness of the more productivity or the increased productivity of the Division of Labor. And then there is the people's recognition of this fact, right? I mean, the Division of Labor could be exceedingly productive and more productive than production for direct use. But if people don't understand that, they're not going to participate in the Division of Labor because this doesn't just be lost to them, right? Just like for instance, you know, the oil under Saudi Arabia was sitting there for centuries, but was not perceived as a economic resource, as a valuable economic good, because people just didn't recognize it, didn't know it was there, it had no use for it, right? So it's people's perception of the Division of Labor that leads people to form the increased productivity, the greater productivity of the Division of Labor as opposed to direct use production, it's people's perception of that fact that leads them to participate in the Division of Labor. So people can find it in their interest to specializing in those goods at which they are most efficient. And so we're going to use a little numerical example here of two of my favorite people, Groucho and Harpo. And here we have a Groucho and Harpo who can produce two different goods, mangoes and beef. And we have noted here that, no, there's different quantities of mangoes and beef that they can produce each day. Groucho's talent, skills, time, capital goods, natural resources allow him to produce 200 bushels of mangoes per day or 100 pounds of beef per day. Harpo, on the other hand, if he takes all of his time and resources and capital goods and devotes them to producing mangoes, he can produce 80 bushels of mangoes a day. On the other hand, if he does the same thing for beef, he can produce 80 pounds of beef per day. So we can ask the question, who is more proficient at each good? Who can produce more of what? Who has an absolute advantage, if we want to call it that, in the production of beef and mangoes? Well, we can see that in terms of proficiency, the comparative advantage is in Groucho's camp. Groucho wins. Groucho can produce 200 bushels of mangoes per day, Harpo only 80, and 200 is greater than 80. I think even in outcomes-based education, I think that's the case. On the beef side, Groucho produces 100 pounds of beef and Harpo can only produce 80 pounds of beef. So Groucho can produce both more mangoes and more beef. And so he has an absolute advantage or he's more proficient in producing both. And this is what they call the hard case. If, for instance, Groucho was better at producing mangoes but Harpo was better at producing beef, it's easy to see how specialization according to proficiency, according to absolute advantage, can yield increased productivity and can leave society better off. But this is sort of a harder case because we have a situation where Groucho is better at both. So what about that, professor? What do we do there? Well, it turns out that even in a situation like this, both parties Groucho, the more proficient and Harpo, the less proficient, both parties can benefit from specialization and exchange according to efficiency, right? So let's talk about efficiency. Who's efficient in what? Who is the efficient producer in what? When we talk about production according to efficiency, another way we can put it is production according to comparative advantage. Who's proficient in what, or who is efficient in what and how do we know? Well, to find out who's efficient and what we look at their opportunity cost, who is the low-cost producer? And the opportunity cost, remember, is what you give up. And in this case, the opportunities that we're talking about is the opportunity to produce mangoes or the opportunity to produce beef. And so if we look at the production of mangoes, if Groucho produces mangoes, he can produce 200 mangoes, bushes of mangoes a day, but he gives up the opportunity, if he does that, if he produces only mangoes, he gives up the opportunity of producing 100 pounds of beef. So he, to produce 200 bushels of mangoes, he gives up 100 pounds of beef, or we could say to produce two bushels of mangoes, he gives up a pound of beef, or we could say if he produces one bushels of mangoes, he gives up a half pound of beef. And so the cost to him of producing a bushel of mangoes is a half pound of beef, which would be eight ounces for the computationally challenged. How much does it cost Harpo to produce one bushel of mangoes? Well, if he specializes in mango production, he can produce 80, but then he gives up the opportunity to produce 80 pounds of beef, right? So 80 divided by 80 is one, so he gives up a pound of beef, or a pound of meat, or a pound of beef to make one bushel of mangoes. So who's the low opportunity cost producer? Well, it's Groucho, right? One half is less than one. And so Groucho would then be efficient. He would have a comparative advantage in mango production. What about beef? Who has a comparative advantage producing beef? Well, again, we look at opportunity cost, but now we say, well, how much does it cost Groucho to produce a pound of beef? Well, it turns out that if he produces 100 pounds of beef, he has to give up 200 bushels of mangoes, or two to one, and so it costs Groucho two bushels of mangoes to produce a pound of beef. The ratio for harpo, again, was one to one. If he produces 80 pounds of beef, he has to give up 80 bushels of mangoes, and so his opportunity cost of producing beef is one bushel of mangoes per pound of beef, and one is less than two, and so the low opportunity cost producer is harpo. So we say harpo then has efficiency in beef production while Groucho has efficiency in mango production. Now, it is important that we note, by the way, that we're gonna find that as we specialize, these things are gonna become, there's gonna be an increase in production. I'm gonna hit it myself. Production for a six-day work week. We can look and say, okay, how does this gonna work out self in production? How do we know the specialize is more productive? Well, let's look at the six-day work week. Six days did they labor, and so they work for six days, and they both like, say, a balanced diet, right? I mean, Groucho likes mangoes, he likes simple carbohydrates as much as the next person, but he likes a little beef, right? He, that's what's for dinner. He appreciates the music of Aaron Copeland, just like anybody, and so he is going to want to consume some beef as well, so he divides his time, three days producing mangoes, three days producing beef, and so with three days, he can produce 600 bushels of mangoes, like three days times 200 mangoes, bushels of mangoes a day, and he can produce 300 pounds of beef. Harpel on the other hand, when he splits his time, remember, he could do 80 pounds of beef a day, 80 bushels of mangoes a day, so if he spends three days producing mangoes, he can produce 240 bushels of mangoes. If he spends three days producing beef, he can produce 240 pounds of beef, so we sum them all up, right? In this isolated two-person direct use production, it's not really a society, I don't know what you want to call it, just a region, right? They're not engaged in society yet, they're just living and doing their own thing. The total of 840 bushels of mangoes produced and 540 pounds of beef. Now, if the parties recognize, well, wait a minute, if we specialize according to efficiency that'll increase productivity, we can say, well, what would happen? And so let's suppose that they do, and let's suppose that Groucho perceives that while I have a comparative advantage, I'm relatively efficient in mango production, and Harpo says, well, I'm relatively efficient at beef production, and Harpo specializes completely in beef production. That means he directs none of his six days to the production of mangoes, and so he produces zero, right? Zero times 80 is zero, and then he spends all six days producing beef, and he gets 480 pounds of beef at the end of his week. Groucho, it turns out, partially specializes, right? He spends five days, he's partially specialized, he spends five days producing mangoes and one day producing beef, and when he does that, he can produce 1,000 bushels of mangoes in a week and 100 pounds of beef in a week, and if they specialize according to efficiency in that way, the total amount that's produced is 1,000 bushels of mangoes and 580 pounds of beef, and so we get gains in both, right? That's what we mean when we say specialization according to efficiency is more productive. We get more of both goods as a result of people specializing in the production where they are the most efficient. Now, as I said before, however, people aren't producing just for production's sake. They're not just sort of, you know, Groucho's not saying, oh, I just love mangoes. I don't even love mangoes, I just love producing mangoes. I like the idea that there is now 1,000 mangoes around so that I can just sort of just be in their presence. It's not even that. It's not like a Pavlov dog. He gets up and he's just bang, must make mangoes. Mangoes, because he's compelled. No, he's producing mangoes because it's gonna help him achieve his end. Harpo is producing beef because it helps him achieve his end. What is their end? Well, their end, why do people produce food? They're gonna get their money to help them get other things. In this case, they want to consume, right? Harpo wants to consume beef and mangoes. Groucho wants to consume beef and mangoes. And so the goal, you know, being more productive, the end result of being more productive is so that both parties can have more goods that they can use to satisfy their subjective ends. It's not production for production's sake. In this case, it's production for consumption's sake. And it could be consumption in a number of ways. I mean, it is possible, right, that maybe Harpo finds the mango beautiful to look at. You know, he just thinks it's a beautiful thing. And so he might trade for some mangoes, eat some, and just gaze upon others, right? It's possible, right? Groucho maybe finds raw beef attractive. Maybe he's a little bit odd, you know? He doesn't wear it in a dress. That was somebody else. We won't mention who that was. But the point is that, you know, consumption can take very different forms, right? They can consume them and eat the beef and the mangoes, or they can use them for other consumptive purposes. But the point is that they're not producing for production's sake. They are producing for consumption's sake. And so it turns out that both parties don't just benefit and be more productive. They benefit in consumption. Groucho and Harpo, it turns out, are able to exchange mangoes at a ratio of three bushels of mangoes for two pounds of beef. Or one and a half bushels of mangoes for one pound of beef. And so let's suppose, right, that they specialize according to efficiency in production, and we have the numbers that they had produced. And then they exchange. Harpo trades 230 pounds of beef to Groucho for 345 bushels of mangoes. And this, again, is at that ratio of three to two. And so Groucho starts out with 1,000 bushels of mangoes that he produced, and he trades 345 of them to Harpo. So he has 655 bushels of mangoes left to consume. At the same time, he produced, remember he only partially specialized, he produced 100 pounds of beef. And then through exchange, he received 230 additional pounds of beef from Harpo, so he has 330 pounds of beef that he's able to consume. And so Groucho was able to consume 55 more bushels of mangoes and 30 more pounds of beef than he could if he was producing for direct use. Harpo, his situation is similar. He didn't produce any mangoes, but he traded away some beef to get 345 bushels of mangoes. So he has 345 bushels of mangoes that he can consume. At the same time, he produced 480 pounds of beef, he traded away 230 so that he has 250 pounds of beef that he's able to consume. And so as a result of specialization and exchange, Harpo also can consume more. He can consume 105 more bushels of mangoes and 10 more pounds of beef than he could in direct use production. And so note here already, we find one of the beauties of the division of labor. The beauty of the division of labor is not merely that the one who is more proficient, who has an absolute advantage in producing all goods can do better. The beauty of the division of labor is that it allows people that are less proficient in all goods, less absolutely productive in all goods to also benefit through specialization and exchange. In other words, the division of labor doesn't leave anybody behind. As long as people are able to engage in exchange and participate in the division of labor, they have ability, they have an ability to improve their level of human flourishing. As they find their niche, they find their comparative advantage, specialize at it and then trade for other goods that other people are better at producing to their benefit. Now, it's important to note that the increased productivity and hence consumption is not the result merely of specialization per se. It's not to say, well, I know specialization is better, so let's just spin the wheel. And oh, okay, for Groucho it came up mangoes and for Harpo it came up beef. It could have been the other way around. If specialization per se just leads to more production, it could be the other way around, right? Harpo said, well, you know what? I'm tired of this beef business. I'm gonna specialize in mango production. And Groucho might say, oh, I'm gonna specialize in beef production. You can look at the numbers and see that, well, that would have been a mistake if the goal is to have more goods that we can use to satisfy our ends. Because if they specialized according to inefficiency, then they would have less of both goods that they could produce and less of both goods to trade. So specialization per se is not what leads to the increased productivity of the division of labor. Certain aspects of specialization might increase productivity. It's possible, for instance, that if one specializes in producing a particular thing, then as you do that particular thing, you can get better and better and better at it. My dad used to work, he worked for 20 years as a meat packer. And he worked first in the beef plant and then transferred to a pork plant. He got to the pork plant, it was on a chain, fairly high, fast-paced chain. And he was the low, you know, low guy in the totem pole in the new plant. And so he got the, he got the kush job, which was the tongue trimmer. Yeah, it was right. The tongue trimmer is the person who stands at a table for eight hours a day taking pork tongues and trimming off the spit glands, the pork tongues, to toss so that you have the pork tongue to go into the tongue box and the spit glands to go down the trash chute. And my dad told me that when he first got the job, he was not as good at it. And the pork tongues would start to pile up. He was getting a pork tongue at the rate of one tongue every four and a half seconds was coming at him. And so he's having to trim as fast as he can and they were piling up. And so when the break bell came, it was time for everybody else to go to break, but he had to stand there and make up his, you know, get through his pile. After a while, he got good enough with his knife, trim the tongues, he was able to not have to worry about a pile up. He would go to break and then the whistle came on for people to get back to work. He could have another half cup of coffee for two minutes, go back to the table and then work through the tongues that would already piled up because the chain has started. And by the end of the day, the pile's gone. And so it is possible, if you specialize in something, you develop certain skills and you get better and better, but it's also possible that dad could have, you know, got incredibly bored with it and just started sort of, you know, daydreaming or spacing off and actually got more productive or maybe even endangered himself by slicing a key, you know, appendage or something. That is not the way to become more productive. So it is possible that certain aspects of specialization per se can lead to increased productivity, but not necessarily, right? Not necessarily. If specialization fosters tedium or boredom, that might even work the opposite direction. The point is, it's differences in efficiency that leads to the benefits of the division of labor. So what accounts for these differences? Enrollment of costs, production for different people. Well, you've got differences in the suitability of natural resources, right? One things that explain why certain people specialize in certain things is the natural resources at hand, right? For instance, there is not a lot of harvesting and fishing for king crabs in the sandhills of Western Nebraska. There's not a lot of that. It's not one of the big industries. Primarily because there are no king crabs in the sandhills of Western Nebraska. There's rolling, grassy plains that are highly suited for cattle ranching. So there's a lot of cattle ranching. Nebraska is the number two state in cattle ranching in the United States because of the grasslands that are in the sandhills, right? Likewise, in Alaska, not a big cattle ranching state, but a lot of king crabs are harvested in Alaska, in Alaskan waters, right? And so the natural resources play a role. Differences in given capital, right? Also play a role. For instance, if someone has been ranching for a while, they accumulate certain capital goods that are suitable for ranching, you know, like barbed wire fence, trucks, quarter horses that are useful for rounding up and driving cattle. Branding equipment, certain fences and whatnot, right? Certain, you know, feeding stations and whatnot, right? Those can make somebody more suitable, relatively more efficient at producing cattle than somebody else. Finally, of course, differences in the skill and desirability of labor, right? Some people just have a knack in animal husbandry, right? Other people don't like animals at all. They don't know how to raise animals, but they're good fishermen, right? Some people don't know how to do either. They don't hardly do anything. And thankfully, you know, the profession of being an economist is right there for them. So I'm very thankful for that, right? And so the differences in the skill and desirability of labor is another key reason why, essentially, people are different. And here again, we've got the beauty of the division of labor, where people, no matter how different and disparate they are, can find their own niche. And in fact, it's precisely because of the differences of people that they can be relatively differently efficient, more efficient different things. And then it's because people have differences in skills, differences in capital endowments, differences in natural resources that then provide the ipetus for the increased productivity of the division of labor and hence for the formation of society. So we say all the above is an illustration of what Mises calls a law of association. Mises took Ricardo's law of comparative advantage and developed it and universalized it into the law of association. The law of association says essentially that each factor of production is efficient in some line of production. That's what we're getting at. Each factor of production is efficient in some line of production. So again, this law applies not only to labor, although we call it the division of labor, but applies to land. It applies to capital goods. And one implication of this law is that employment can be expanded indefinitely. That in general, it is not, it is not the case in general that we have persistent mass unemployment. That's not true. I don't care what the general, I don't know what you call the general theory, it's not true. Keynes was wrong that an economy left to a voluntary exchange produces a persistent mass unemployment. Employment can be expanded indefinitely as long as people are unable to engage in voluntary exchange. People can find their niche in the division of labor according to productivity and according to efficiency rather, and they'll find a place to be employed that is beneficial for them. The only technical limitation on this is if the population increased so much, we just have so many people that every square inch of land is taken up by production, and then there's still some people left over. In other words, we're super abundant in population, and that's just frankly not the case. As long as we don't have that situation, there's gonna be a place where somebody can specialize according to efficiency and productively contribute to society by producing that good, and then we'll also benefit from the production of other people as they engage in exchange. And that's the main lesson of the law of association. Now, Mises notes in human action that there are social effects of the division of labor. In other words, as people, they recognize that the division of labor is more efficient, so they begin to participate in it, their participation in it then results in other social effects. And Mises notes that the initial differences that led to the division of labor become even more pronounced. So the economic geography gets altered as people specialize in production, as I noted before. As people specialize, say, in ranching, they begin to accumulate capital goods that are suited for ranching, and they begin making changes in the geography to make that place even more suitable for cattle ranching. And as that happens, that increases their efficiency in cattle ranching all the more. Specialization also, Mises argues, can increase the inequality of labor skills over time. Like I mentioned with my dad, it is true that as people specialize, if they keep at it, they can become more proficient at certain things. As they practice certain things, they get better at it. As people spend more time doing the same task, they can become more skillful in that task. And as that happens, that again will further cause more differences in efficiency and make the division of labor even more productive. Finally, one of the social consequences or social effects of the division of labor is the ability to sustain a larger population. Again, it doesn't force people to reproduce more, but it allows for the sustainment of an increased population because the division of labor is more productive. And that's what Mises was getting at when he said that the increased productivity resulting from the market division of labor is the key factor that allows us to escape this barbaric Darwinian struggle for survival. When Mises says that the division of labor the division of labor leads us to regard one another as competitors, as competitors, rather, as comrades. That's a good word for socialism, don't you think? You know, I mean, it's the English translation, but you're kind of wondering if was he tweaking. I don't know, but it allows us to regard each other as comrades in a joint struggle for welfare. In other words, where teammates struggling to better each other rather than as competitors in a struggle for existence. And so, because of the division of labor being more productive, we're not fighting one another. We're not engaging in social conflict. We are helping one another out. We're helping one another out. Now, there are some limits to the division of labor we can identify. Probably the most important, oh, not the most important, but the most well-known, I should say, was by Adam Smith, one of the most famous chapters in all of Smith's Wealth of Nations was a chapter that began. The division of labor is limited by the extent of the market. And what that means, of course, is that as people think about where they wanna specialize, it's only gonna be beneficial to specialize in the production of something that they can sell, that they can trade, something for which there is a market. So let's suppose you have this very primitive two-person society, Groucho and Harpo. Groucho producing mangoes, Harpo producing beef, and along comes Chico. And Chico is a smart cookie. And he has devoted a fair amount of study to become a rocket scientist. And he knows rocket science like the back of his hand. And so he comes into the society, he says, hey, guys, I like mangoes and beef just as much as the next person, I tell you what, if you're willing, I would like to give you some lectures in rocket science. And can I get some mangoes and beef? Now if this is a very primitive society, I mean, it's really primitive, right? Think about it, we've got one guy producing mangoes, we have another guy producing beef, who's making the clothes? So you've got a couple of people without clothes trading food items, they're probably thinking, you know what, Chico? Rocket science is not the thing we need the most right now. Perhaps if you could make us some clothing or even some shoes, right? Or perhaps they are rudimentarily clothed, but maybe you could produce, I don't know, some butter, right? So we could saute the mangoes and saute the beef. So Chico and I, well, you know, I'm really good at rocket science, but I can say, I can say, I'm not gonna force it upon you, it's a voluntary exchange, I'm not the state. So I can tell you what, I'm a pretty good tailor, I'll make you some clothes, right? Now, so what that means is Chico specializes in cloth production, not rocket science, because there's no market for rocket science in that primitive economy. And so as people specialize in producing those goods that are tradable, right? Voluntary exchange is the prerequisite for the division of labor, they have to be able to exchange. And so to extend the division of labor, all we need to do is bring others into the market. As we bring others into the nexus of voluntary exchange, that allows, that extends the market, that increases the extent of the market, and that allows for more division of labor. And in that, we have the first germ seed of a theory of economic expansion development. As people are able to extend the market that allows for more specialization, as people specialize more according to their efficiency, they become more productive, as they become more productive, they have more goods with which to exchange, that means that they can begin to satisfy other ends, so the extent of the market grows even more, and as the extent of the market expands even more, people can specialize even more finally according to their efficiency, and as they do that, they become even more productive, so their wealth increases even more, which opens up the demands for even more goods, which allows even more people to specialize and the extent of the market expands, and so the extent of the market expands, the division of labor expands, productivity expands, the extent of the market expands, and economic prosperity goes on, right, goes on. And what has to happen for this to occur? What has to happen for exchange and the extent of the market to expand? We need to keep the market free. We need people to be secure in their property. We need people to be able to exchange, engage in voluntary exchange, so the law of association has implications even for what institutions best allow for human flourishing, and the short answer is private property in the free society, and I'm out of time, so we'll close out the hour. Thank you very much.