Middlemen add to the expenses of buyers without providing a benefit to sellers. Our economy would work just as well without middlemen since they do not expand the availability of physical goods. Middlemen reduce the number of transactions since they increase the buyer's price and reduce the seller's net receipts. Middlemen create value by arranging trades and providing information to buyers and sellers. Exchange creates value by moving goods from parties who value them less to parties who value them more.
Exchange reduces value since it consumes resources without adding to the physical supply of goods.
It reveals the maximum amount of any two products that can be produced from a fixed quantity of resources. It reveals the ideal level of technology with which alternative output levels can be produced. It assumes that the prices of the two products are equal. It assumes higher wage rates will encourage individuals to work harder. The most important source of gain from the division of labor is the repeal of the law of comparative advantage.