It is […] from indivisibilities that the division of labor takes its start, and the basic indivisibility is that of the individual. […] For our purpose we may regard an individual as a coordinated complex of activities. The indivisibility of the individual consists in the fact that, although it may be capable of a great many different activities, it can perform only few activities simultaneously because most activities utilize the same resources and more particularly that coordinating resource which is known as the brain. The larger the number of simultaneous activities, the greater the difficulty of coordinating them and of carrying out each one properly, and the smaller therefore the output from each activity. This applies not only to simultaneous activities, but also to activities that are spread out over time. In the first place some shorter or longer interval is usually needed to switch from one activity to another; in the second place it is usually easier to perform activities that are known from previous experience than to perform them for the first time.
All this, the economist will note at once, can be put in terms of increasing returns. We have increasing returns to the extent that, if several activities are replaced by a single one, there is less need for [internal] coordination and switching time and more scope for acquiring experience. The output of the single activity may thus be raised above the combined outputs of the several activities.
Subject: Economics
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