Common Innovation

Common Innovation

How We Create the Wealth of Nations

G. M.P. Swann

Common innovation is the contribution of ordinary people to innovation and the wealth of nations. Innovation and wealth creation are not merely the monopoly of business. While Schumpeter described business innovation as a, ‘perennial gale of creative destruction’, common innovation is more a, ‘gentle and benign breeze’. This book analyses some illustrations of the destructive side of business innovation, and provides numerous examples of the ‘benign breeze’ of common innovation. It builds on the pioneering work of von Hippel, but takes that a step further. In common innovation, the ordinary citizen is centre stage and business can be quite peripheral

Chapter 8: The Division of Labour

G. M.P. Swann

Subjects: business and management, organisational innovation, economics and finance, economics of innovation, innovation and technology, economics of innovation, organisational innovation


Adam Smith did not discuss the idea of creative destruction as such. That did not come until the work of Sombart and Schumpeter. Nonetheless, Smith’s Wealth of Nations does indeed contain a discussion of what we could now describe as the creative destruction caused by the division of labour. Book I contains his well known discussion of the creative side of the division of labour, while Book V contains the less well known discussion of the destructive side. Smith discusses this contrast with such care that it is worthy of a short chapter here. PRODUCTIVE POWER Adam Smith put the division of labour at the heart of his theory of wealth creation. In Book I of the Wealth of Nations, he analyses in detail how the division of labour can lead to massively increased productivity. I quote him at length because he explains all this with such clarity (Smith, 1776/1904a, pp. 5–6): The greatest improvement in the productive powers of labour, and the greater part of the skill, dexterity, and judgment with which it is anywhere directed, or applied, seem to have been the effects of the division of labour …

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