A requirement for division of labour in society is a sufficiently large and dense population, which requires the growth of towns. Only then is it worthwhile for individual producers to specialise.
“The development of the division of labour in the workshop depends even more on this density of population. This latter division is, to a certain extent, a pre-condition for the former and in turn intensifies it still further. It does this by splitting formerly correlated occupations into separate and independent ones, also by differentiating and increasing the indirect preliminary work they require; and as a result of the increase in both production and the population and the freeing of capital and labour it creates new wants and new modes of satisfying them.” (p 269)
This is also another expression of Marx's concept of The Civilising Mission of Capital.
Variable-capital, or, as Hodgskin terms it, circulating capital, exists as a stock of commodities, therefore, precisely because, the division of labour, in society, has proceeded over a long period, stretching back thousands of years, to turn products into commodities. The independent labourer no longer produced products, mostly for their own consumption, so as to reproduce their labour-power, but, instead, produced commodities, representing a certain amount of exchange-value, so as thereby to reproduce their own labour-power.
“If, however, “previous accumulation of capital” is being discussed from an economic standpoint (see Turgot, Smith, etc.) as a condition for the division of labour, then what is understood by this is the previous concentration of a stock of commodities as capital in the possession of the buyer of labour, since the kind of co-operation characteristic of the division of labour presupposes a conglomeration of workers—consequently, accumulation of the means of subsistence necessary for them while they are working—increased productivity of labour—consequently, increase in the amount of raw materials, tools and auxiliary materials which must be available in order that labour proceeds continuously, since it constantly requires large amounts of these things—in short, of the objective conditions of production on a large scale.” (p 270)
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