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Division of Labor According to Manuel Ayau Essay

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According to Ayau, trade and cooperation is beneficial to all parties despite differences among them in terms of capacity and talent. He states that everyone is made wealthier through cooperation, and how it is that the market economy leads to the benefit of everyone. In our world today, people base their decisions on the comparison of alternative opportunity costs at the margin, so naturally, they choose the least costly option. However, a person can only get rich by enriching others torpedoes claims to the moral high ground of those who propose that government redistribution of wealth is a means to alleviate poverty (Ayau 32). Ayau explains the workings of the free enterprise system, based on the benefits from mutual gains from trade arising from the creative productivity of a market-based and profit-guided system of division of labor.

In addition, he explains that the division of labor through comparative advantage, satisfying society’s needs, trading with and by enriching others is the way someone gain wealth. He says people intuitively do what goes by the name of cost/benefit analysis, for they are quite conscious of what they are quite conscious of what they must forgo to acquire whatever they get in exchange. In his example, he explains it through simple diagrams and illustrations, with the same expenditure of time and without increasing individual productivity, the productivity of the combined effort increases the wealth of the group, creating the opportunity for exchange with mutual gain (Ayau 37-41). In the end, Manuel showed how when two participants have different opportunity costs, when trading; this is the key to understanding his attribute of increase in total wealth even when there is no increase in skill, resources, new technology, and etc. In the eyes of Ayau, people subjectively valve what they receive more than what they give and that wealth is made through comparative advantage.

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Works Cited
Ayau, F., M., Not a zero-sum game. The Paradox of Exchange. 2007. Part 1, pp.23-50.

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