Several years ago I was informed by a doctor that I had to get an MRI. I was having severe back trouble and an MRI, claimed the doctor, was the only way he could appropriately diagnose me. Not wanting to pay the exorbitant costs associated with this test, I pathetically tried to plead with him. Unfortunately, he explained, I had no choice.
After leaving his office, I found the imaging center, walked to the desk, and blurted out, “Hi. How much is an MRI?” Confused, as if she had never been asked this before, the woman behind the counter retrieved a dusty manual, found the right page, and proceeded to tell me that it would cost around $3600 (with a few extra hundred for Physician’s comments).
Fortunately, after some searching, my wife found an alternative. She discovered a company that did one thing and one thing only: MRIs. They did not have doctors, ambulances, medicine cabinets, wheelchairs, cafeterias, or anything else typically associated with hospitals. Yet because they specialized in the MRI procedure, they performed it very efficiently and effectively. I was in and out of the building in 15 minutes. Further, I was handed a CD of the MRI images and they emailed a digital copy my doctor. The final cost: $420 (over $3,000 less than the hospital quote).
My MRI experience is an example of what Adam Smith claimed would bring about the “Wealth of Nations” nearly a quarter century ago: specialization. To understand why specialization is so important for economic growth and development, you need to understand two other economic concepts: opportunity cost and comparative advantage.
An opportunity cost is the cost that you incur when you give up your next best alternative. Sound confusing? Remember, we are all subject to scarcity in some way, shape, or form. This means that you can’t have it all; you must prioritize your activities, purchases, use of time, etc.
So, for example, my students must choose when it comes to attending my 8am class or staying in their warm beds. If they stay in bed, they miss the content of the class, have points deducted, and may fall behind. If they come to the class, they miss out on blissful sleep.
How do they evaluate what they should do? If they are rational, they will make the choice that minimizes their costs (their opportunity costs). Most likely, that will mean that they choose to come to class, since the costs would be greater if they stayed in bed.
This leads us to a second concept related to specialization—what is called comparative advantage. We all have various skills, talents, and abilities endowed unto us by God. Moreover, the development of our creative capacities allows us to specialize in certain productive work (medicine, art, teaching, agriculture, etc.). When we maximize our skills and use them to their best and most productive potential, we are said to have what economists call comparative advantage.
To have comparative advantage for a specific skill or trade does not necessarily mean that I can do it better than anyone else. Rather, it means that my costs for doing it are less than someone else trying to do it.
To provide an example, imagine that I have a passion and skill for producing chairs, while my neighbor’s giftedness concerns their ability to fish. Both of us can make chairs, and both of us can fish. Yet in one day’s work, the number of fish I catch is far less than the number of chairs I can produce. My neighbor is the opposite: the number of fish they catch is far greater than the number of chairs they can produce. We can each try to do both (since we both value chairs and fish)—but we each have comparative advantage in our respective areas.
Further, as long as comparative advantage exists—that is, as long as specialization in productive activity differs among people in society—we can gain by trading from one another. In the example above, if I focus specifically on making chairs, and my neighbor devotes all of their time and attention on catching fish—we can trade with one another and gain much more of the chairs and fish we desire than we could if we tried to produce both ourselves.
Application: Gifts for the Common Good
Here’s the point: specialization, coupled with trade, leads to growth. If we focus on doing the activity that minimizes our opportunity cost, then we can be made better off if we trade. I have given individual examples, but this also applies to organizations (i.e., MRI center), firms, and even countries (Belgium specializes in chocolate; Columbia specializes in coffee production, etc.).
Christians have long recognized that we are gifted in various ways. Moreover, from Paul to John Wesley to contemporary theologians, we are invited to think carefully about how our gifts can serve the common good. Specialization is not simply about doing the thing that reduces your opportunity costs (the thing you are most good at)—it is about offering your gifts in a wider context so that you can be of service and value to others.
This view also recognizes that humans are heterogeneous in our makeup, so not only is community (“the body”) mutually beneficial; it is necessary! Harvard’s Jennifer Hochschild makes what I think is a profoundly spiritual comment when she says, “[S]carce abilities or unconventional traits make people unique and of value to the community.”
History has certainly proved Adam Smith right: specialization, and the dividing up of our work, has led to great wealth. However, if we have the eyes to see it, the idea of specialization has also allowed us to find prosperity and progress outside of ourselves—a redemptive notion among those in the faith community.