Division of Labor and Trade Issues

It is important to note that bartering made sense 200 years ago because the markets were small, and there was no product diversity. The simplicity of such a structure did not require money to make the transactions easier since it would be an unnecessary and additional step in the exchange process. However, now, the markets are massive, and products count in millions with different sub-product differentiations, such as brands, which is why having a universal exchange system is critical for proper and fair functioning of exchange.

The division of labor increases efficiency due to specialization since one can master a specific task quickly. In addition, the expansion and enlargement of markets make specialization even more efficient since one can perform the task on a massive scale. The introduction of machinery and automation allows building highly specialized instruments for specific and simple tasks, which can be done repeatedly. For example, it is easier to code an AI that focuses on the efficient performance of one task than a general AI, which can do everything. The technologies supporting global trade include the internet, software programs, robots, GPS, and transportation technologies.

In conclusion, specialization and market size are critical in order to make the former worthwhile. The complex process of trade is comprised of a multitude of simple tasks, which means such tasks are repeatable. Scaling this repeatability in all tasks scales the entire process, but each task needs to be performed by one party focused on making it more efficient. With small markets, scaling is not as important as with large markets, which makes specialization also unimportant. Therefore, the size of the market is in a positive relationship with specialization efficiency.