Adam Smith reading questions
2) What were the limits that firms have faced when introducing “division of labor”? Are they still valid in the present-
day markets? Give examples for at least two industries. The extent of the market, lack of quality and variety of
products, stoppage of the entire factory in case of machine rupture, incapacity of workers to find alternative job if they
get out of work. Yes they are still valid nowadays but less than decades ago. Examples: chairs production, crates for
dogs.
3)Explain what Adam Smith understood behind private co-partnery and joint stock company. Search for the case of the
South Sea Company and relate his comments to the company. He explained which are the differences between these 2
types of companies and understood that many people chase joint stock company because it has less risks, troubles
with debts and obligations. Adam Smith says that the directors of such a big joint stock companies as South Sea
Company are less responsible and less organized because in reality they don't manage their own money. As a result
these companies usually don't success.