Human life and well-being depend on the production of wealth. The production of wealth vitally depends on the division of labor, that is, a system of production in which the labor required to support human life and well-being is broken down into separate, distinct occupations. As we have seen, under a system of division of labor, the individual lives by producing, or helping to produce, just one thing or at most a very few things, and is supplied by the labor of others for the far greater part of his needs.

The division of labor raises the productivity of labor in six major ways, and thereby achieves a radical increase in the efficiency with which man is able to apply his mind, his body, and his nature-given environment to production.

It increases the amount of knowledge used in production by a multiple that corresponds to the number of distinct specializations and subspecializations of employment. This makes possible the production of products and the adoption of methods of production that would otherwise be impossible. It makes it possible for geniuses to specialize in science, invention, and the organization and direction of the productive activity of others, thereby further and progressively increasing the knowledge used in production. It enables individuals at all levels of ability to concentrate on the kind of work for which they are best suited on the basis of differences in their intellectual and bodily endowments. It enables the various regions of the world to concentrate on producing the crops and minerals for which they are best suited on the basis of differing conditions of climate and geology. It increases the efficiency of the processes of learning and motion that are entailed in production. It underlies the use of machinery in production.

To understand how the division of labor represents a multiplication of the knowledge used in production, it is only necessary to realize that in a division-of-labor society, such as our own, there are as many distinct bodies of knowledge used in production as there are distinct specializations and subspecializations of employment. Steel producers, for example, have a different body of knowledge from that of auto producers. Wheat farmers have a different body of knowledge from both of these and even from that of other farmers, such as vegetable growers or dairy farmers. The bodies of knowledge of all such specializations enter into the process of production in a division-of-labor society, and each individual is enabled to obtain products reflecting the total of such knowledge. Thus, steel producers give the benefit of their knowledge to the whole rest of society; in return, they are able to receive from the rest of society the benefit of the specialized knowledge held by all other categories of producers. And so it is with the members of every specialization.