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Confusions and difficulties regarding Adam Smith's Labour(ish) Theory of Value

 

Confusions and difficulties regarding Adam Smith’s Labour(ish)1 Theory of Value2

The possibility of determining precisely and accurately value of labour as well as the value of commodities was among the most commonly investigated questions of political economy, especially at the eve of the industrial revolution. The labour theory of value has enormously rich and long tradition. Its beginning might be traced back to the Aristotelean concept of reciprocity. Aristotle discussed the subject of value almost exclusively in connection with exchange between men. Exchange, as he explains, is due to the needs of men, and arises from the circumstance “that some have too little, and others too much.”3. He returned to thisconcept in his Nichomachean Ethics4 . Then the preliminary concepts of labour theory of value repetitively returned in the writings of sir William Petty5, John Locke6, Richard Cantillon7, François Quesnay8. Then the concept was further explored in the works of key figures of early Scottish enlightenment: Francis Hutcheson9 and David Hume10, and finally it found more mature form in Adam Smith’s An Inquiry Into the Nature and Causes of the Wealth of Nations. Adam Smith offered highly acclaimed and widely discussed statement that each labour has the equitable value, claiming that “Labour, therefore, is the real measure of the exchangeable value of all commodities.”

There is no doubt that the attempts to connect labour, value and price offered by Smith are one of his most far reaching concepts. Smith’s labour theory of value has been popularised by the polemic writings of David Ricardo and then reinterpreted by the Karl Marx’ interpretation. The main aim of this paper is to trace the original Smith’s meaning and refine it from anachronistic associations caused by the Marxist intellectual residue. Therefore, the paper tries to answer the question what Smith meant by his famous quote that “[la]bour, therefore, is the real measure of the exchangeable value of all commodities.” The attempt to decipher Adam Smith’s labour theory of value is highly challenging task. In order to do this, one should pose the most fundamental questions while avoiding taking some compelling but oversimplified answers for granted: Did Adam Smith have coherent theory of value? What did he really mean? Was it just one coherent theory or rather Smith presented multiple theories of value? Analysis of Smith’s writing might provide more questions than the answers.

UNANIMITY ABOUT OBSCURITY

The position of Adam Smith as the founding father of contemporary economy is undisputable among scholars. James Bonar in Dictionary of Political Economy appraised Wealth of Nation, and wrote that this “is the book that has probably secured its author as near an approach to immortality as can fall to any economic writer”11. The admiration and appraisal of Smith’s work provoked opulent writing and analyses. But, if scholars, who have been researching labour theory of value, agreed upon anything, it has been the fact that Adam Smith’s theory is blurred and challenging concept. For over a century they expressed their despondency with Labour theory of value, and sometimes difficulties with the entire Smith’s oeuvre. One of the first scholars who observed this obscurity was Albert C. Whitaker, who wrote: “[t]here is a veritable multiplicity of explanations of value in the Wealth of Nations, which makes a history of Adam Smith’s views on this subject extremely difficult writing. Many a wise or philosophical sort of observation may be correct in a general way, or largely true, and yet not be precisely true.”12

Gideon Rosebluth wrote that: “Adam Smith's confusing account of the theory of value has given rise to such a variety of interpretations and commentaries that it seems hard to justify a further contribution”13 Dennis Patrick O’Brien wrote in his book Classical Economists in 1975 and repeated this in 2004 that “Chapter v ‘Of the Real and Nominal Price of Commodities, or of their Price in Labour and their Price in Money’ (…) is arguably (...) one of the most convoluted chapters ever to emerge from the pen of a great economist” 14 . Phyllis Deane identified main reasons why the labour theory of value is so controversial and hard to work on. According to her both: concept of value and the use made of it evolve to match ideological and axiological principles adopted by ones. Therefore, “[w]hatever the philosophical or methodological approach economists have taken to their discipline, whatever view they have taken of its scope, objectives and analytical techniques, the theory of value - with its associated theory of distribution - has been a key feature of the disciplinary matrix or paradigm to which they have chosen to conform.”15

Labour Value theory has been one of the most controversial and obscure concepts and many scholars dedicated to proving its incomprehensibility not only opulent passages but even entire papers, among them should be noticed Glenn Hueckel16, Jerry Evensky17 and Murray Rothbard18.The list of those who criticized the Smith’s lack of consistency should also include James Bonar and Fernando Meacci. Bonar in his classical book Philosophy and political economy: in some of their historical relations noticed with regrets that unfortunately Smith is not always coherent 19. Meacci pointed out that the common pattern among those that criticized Smith mainly concentrated on labour theory of value, because it provided easy target for the critic: “Indeed, it was not by chance that the economists who came soon after Smith, and whose aim was to single out the shortcomings of his system, eventually focused on what they believed to be Smith’s ambiguities and confusions on the issue of value and wealth”20.

At the same time there is also a substantial body of literature that touched the problem of value and labour in Smith’s work, just to name: Paul H Douglas 21 H. M. Robertson and W.L. Taylor22, Mark Blaug23, Hla Myint24, Ronald Lindley Meek25, Maurice Hebert Dobb26, Vincent Bladen27, Samuel Hollander28, S. Kaushil29 , Rory O’Donnell30, Terry Peach31, Denis Patrick O’Brien32. All those researchers were driven to analyse the Smith’s labour theory of value and by their actions to do so, they implicitly were confirming that Smith has any theory of such kind.

Ironically, as Samuel Fleischaker observed “[b]y comparison with most philosophers, Adam Smith is easy to read. There is no abstract jargon, as in Kant or Hegel, no stilted syntax, as in Locke, and there are few passages with the subtle argumentation to be found in Descartes or Hume. Smith the economist is also easier to read than many other social scientists, abjuring technical coinages and mathematical algorithms in favor of historical narrative and explanations, laced with vivid examples drawn from ordinary life. (…) The clarity of these quotations can be misleading, however. This is partly because Smith is, even on the surface, a more complex writer than might appear from such famous lines as the one about appealing to the self-interest of butchers and bakers”33 When we consider fluidity of notions used by Smith then Fleischaker diagnosis was right in stating that this simple language, intriguing narration and lack of precise economic terminology is the main source of confusion over the key concepts of Adam Smith.

ADAM SMITH IN HIS OWN WORDS

One of the reason for many confusions that Smith created is the fact that his attitude toward the labour is marked by the dichotomy. On the one hand Smith is treated labour as a unique feature of human existence. Labour is perceived as the entitlement to wealth, what is deeply grounded in religious tradition, it is visible proof of god’s grace. Additionally, to this religious or axiological aspect Smith emphasized psychological one when conceived of an hour’s labor as requiring at all times and in all places the same amount of psychological cost in pain, or so-called disutility. In his words, the laborer “must always lay down the same portion of his ease, his liberty or his happiness” 34. On the other hand, Smith is treating labour as any other commodity, that is subdued to the law of supply and demand. Even though individual “toils and troubles” per hour are the same the differences in monetary remuneration as between occupations are caused, he holds, by differences in the agreeableness of the employments, the relative difficulty in learning them, the degree of regularity of employment, the relative trust im-posed on those employed, and the relative possibility of success. In early writing Smith is more preoccupied with the uniqueness and universality of labour, in the Wealth of Nation he is more concentrated in situating it within the landscape of market processes.

Early Adam Smith

Having noticed the misleading simplicity of Smith’s work, it is essential to analyse Smith’s work diligently, and pay special attention to the meaning that particular words and expressions have, depending on the context in which Smith’s situated them. As Fleischecker observed “[b]y demanding patience and close attention of his reader in both TMS and WN, Smith teaches us that ethics and political economy are nuanced matters, in which one needs to qualify one’s evidence carefully and be willing to draw fine analytic, legal, and historical distinctions.”35

It is essential to look at the Wealth of Nation, not separately, but as the element of evolution of Smith’s ideas starting from Glasgow lectures and Theory of Moral Sentiments, and more maturely developed in the Wealth of Nation. Only then one can obtain fuller and more accurate picture. The labour theory of value was built up on the correlation of few elements; value of labour and value of commodities (divided by Smith to two elements: real price and natural price). However, for Smith labour theory of value is not only how Smith defined those notions, but their constant variations of and correlations between those notions.

For the first time, Adam Smith discussed the theory of value in so called the Glasgow Lectures. Smith gave the series of lectures on Justice, Police, Revenue and Arms while he was a professor at Glasgow University. A student’s notes of these lectures, taken down in 1763, were discovered over a century later and published by Edwin Cannan in 1896. In the Glasgow Lectures, in the section entitled “What Circumstances regulate the Price of Commodities”, Smith observed the difference between the “natural price” and the “market price”. “Of every commodity there are two different prices, which though apparently independent, will be found to have a necessary connexion, viz. the natural price and the market price. Both of these are regulated by certain circumstances. When men are induced to a certain species of industry, rather than any other, they must make as much by the employment as will maintain them while they are employed.”36

As Ronald L. Meek pointed out in his classical piece Studies in Labour theory of Value: “Smith linked the natural price of a commodity, not to the actual price of the labour employed to make it (i.e., not to the actual reward paid to the direct producer, whatever this might happen to be in any particular instance), but to what he called the natural price of labour.”37 Therefore the question that one should raise is what Smith meant by the natural price of labour. Smith in the next paragraph of his lecture more precisely stated that “A man then has the natural price of his labour, when it is sufficient to maintain him during the time of labour, to defray the expense of education, and to compensate the risk of not living long enough, and of not succeeding in the business. When a man has this, there is sufficient encouragement to the labourer, and the commodity will be cultivated in proportion to the demand.”38. This might at the first moment create a false impression that the natural price of commodity should be equivalent to the natural price of the labour by which it was produced. But after examining this passage minutely, it is evident, that the price of the commodity must be sufficiently high to “encourage the labourer”— i.e., to yield to the direct producer, after all his paid-out costs had been met, a reward at least equivalent to the natural price of his labour as so defined.” 39

At the same time Adam Smith believed that “'We are not to judge whether labour be cheap or dear by the money price of it, but by the quantity of the necessaries of life which may be got by the fruits of it.”40. When we consider what Smith wrote about the proper reward for labour the most crucial question will be the broad context of Smith’s assumptions about the economy. “Smith has tacitly assumed that the direction of production is in the hands not of capitalist employers who expect to receive the natural rate of profit on their capital, but of more or less independent workmen who expect to receive the natural price of their labour.”41 This vision, from the early Smith’s work, divulges economy of the pre-industrial revolution. When one examines the examples that Smith used to elaborate his theory, his world will be full of blacksmiths, weavers, tailors, watchmakers and carpenters. Therefore, one must conclude that in Smith’s world the production was carried by more or less independent craftsmen and labourers who still owned their own means of production. The economy that Smith in his early works analysed was based on productive units “where several individuals (…) seem to be looked upon rather as co-operative establishments consisting of workmen who still retain a certain measure of independence and a ‘master’ who is virtually one of themselves”42 Only with this assumption producers would expect the natural price of their labour. Otherwise, those that owned the capital but are not directly engaged into and responsible for the production process would seek to obtain the natural rate of profit on their capital.

Also, majority of Smith’s considerations about the value are pertinent to the economy at the early stage of development. Therefore, the “direction of production is in the hands not of capitalist employers who expect to receive the natural rate of profit on their capital” as Meek has argued about. But rather the situation analysed by Smith in Glasgow lectures is based on the economy where the production and the exchange process was based on much labour and very little capital. So, to some extent Smith’s describes reality of economy based on barter exchange and the minimal flow of capital. The exchange will be functioning as long as the “labourer thinks what he thus obtains repays him for his labour. And the same thing goes on down to the end of civilisation in a subordinate way”43.

Refined concept as presented in Wealth of Nation

In The Wealth of Nation it is visible that Smith attempted to inquire subject of value in a more systematic way. At the end of Chapter IV, Smith presented his famous “diamond-water” paradox, observing that “[t]he word VALUE (…) has two different meanings, and sometimes expresses the utility of some particular object, and sometimes the power of purchasing other goods which the possession of that object conveys. The one may be called ‘value in use;’ the other, 'value in exchange.'” 44 Then he identifies areas of investigation for the upcoming Fifth chapter “Of the real and nominal price” to find principles which regulate the exchangeable value of commodities: “First, what is the real measure of this exchangeable value; or, wherein consists the real price of all commodities. Secondly, what are the different parts of which this real price is composed or made up. And, lastly, what are the different circumstances which sometimes raise some or all of these different parts of price above, and sometimes sink them below their natural or ordinary rate; or, what are the causes which sometimes hinder the market price, that is, the actual price of commodities, from coinciding exactly with what may be called their natural price.”45

The greatest transition between the Glasgow Lectures and the Wealth of Nation was the change toward more post-industrial revolution perspective. Smith understood that the British economy not any longer would be based on the craftsman and artisan, therefore capital and investment would play more crucial role. Such distinction was not so visible in earlier Smith’s writing: between stock and capital, between profits and wages and between two classes: one who lived by profits and other that lived on wages become more essential. The best illustration of this transition is Smith’s passage where he stated that “the person who employs his stock in maintaining labour, necessarily wishes to employ it in such a manner as to produce as great a quantity of work as possible. He endeavours, therefore, both to make among his workmen the most proper distribution of employment, and to furnish them with the best machines which he can either invent or afford to purchase. His abilities in both these respects are generally in proportion to the extent of his stock, or to the number of people whom it can employ”46

As the Meek accurately points out, “Smith’s concept of commandable labour as the ‘real measure’ of value may have been in large part a product of his concern with the analysis of the particular problem of accumulation under capitalism”.47 But Smith expressed this concept in the Wealth of Nations in the general form that might be useful to all types of societies that reached “division of labour” stage in the process of their economic development. In that case: “Every man is rich or poor according to the degree in which he can afford to enjoy the necessaries, conveniences, and amusements of human life. But after the division of labour has once thoroughly taken place, it is but a very small part of these with which a man's own labour can supply him. The far greater part of them he must derive from the labour of other people, and he must be rich or poor according to the quantity of that labour which he can command, or which he can afford to purchase. The value of any commodity, therefore, to the person who possesses it, and who means not to use or consume it himself, but to exchange it for other commodities, is equal to the quantity of labour which it enables him to purchase or command. Labour, therefore, is the real measure of the exchangeable value of all commodities”48. The last sentence generates the greatest confusion. Those that are determined to find in Smith writings labour theory of value are tempted to read this passage and interpret it as the labour which is not the real but the only measure of value.

One who analyse the next paragraph find such interpretation inaccurate. Smith develops his idea emphasizing more firmly the fact that “The real price of everything, what everything really costs to the man who wants to acquire it, is the toil and trouble of acquiring it. What everything is really worth to the man who has acquired it, and who wants to dispose of it or exchange it for something else, is the toil and trouble which it can save to himself, and which it can impose upon other people. What is bought with money or with goods is purchased by labour as much as what we acquire by the toil of our own body. That money or those goods indeed save us this toil. They contain the value of a certain quantity of labour which we exchange for what is supposed at the time to contain the value of an equal quantity. Labour was the first price, the original purchase-money that was paid for all things. It was not by gold or by silver, but by labour, that all the wealth of the world was originally purchased; and its value, to those who possess it, and who want to exchange it for some new productions, is precisely equal to the quantity of labour which it can enable them to purchase or command.”49.

Even if Smith’s conclude with statement that “though labour be the real measure of the exchangeable value of all commodities”50, he was aware of possible shortcomings of his claim, stating in the same sentence that “it is not that by which their value is commonly estimated.” And continuing: “It is often difficult to ascertain the proportion between two different quantities of labour. The time spent in two different sorts of work will not always alone determine this proportion. The different degrees of hardship endured, and of ingenuity exercised, must likewise be taken into account. There may be more labour in an hour’s hard work than in two hours easy business; or in an hour's application to a trade which it cost ten years labour to learn, than in a month’s industry at an ordinary and obvious employment. But it is not easy to find any accurate measure either of hardship or ingenuity (…) In exchanging indeed the different productions of different sorts of labour for one another, some allowance is commonly made for both. It is adjusted, however, not by an accurate measure, but by the higgling and bargaining of the market, according to that sort of rough equality which, though not exact, is sufficient for carrying on the business of common life”51. At this point Mark Blaug stated that Smith “had no labour theory of value” and in the next paragraph more vigorously argued that “There is no suggestion in the Wealth of Nations that the different factors of production can be assimilated in terms of some common denominator other than money and, in particular, there is no suggestion that the value of capital goods can be reduced to labour expended on their production in the past”52

No matter what labourer thinks about his toil and troubles, and whether the labour is the first price, or real measure, “[i]t is often difficult to ascertain the proportion between two different quantities of labour. ”53 Smith in his Wealth of Nation put more emphasis on the market mechanist of bargaining therefore, “[e]very commodity besides, is more frequently exchanged for, and thereby compared with, other commodities than with labour. It is more natural, therefore, to estimate its exchangeable value by the quantity of some other commodity than by that of the labour which it can purchase. The greater part of people too understand better what is meant by a quantity of a particular commodity, than by a quantity of labour. (…) But when barter ceases, and money has become the common instrument of commerce, every particular commodity is more frequently exchanged for money than for any other commodity.”54

The next important transition point in Smith’s philosophy was reflected in Smith’s claims that laws of supply and demand apply also to the work itself. “But though equal quantities of labour are always of equal value to the labourer, yet to the person who employs him they appear sometimes to be of greater and sometimes of smaller value. He purchases them sometimes with a greater and sometimes with a smaller quantity of goods, and to him the price of labour seems to vary like that of all other things. It appears to him dear in the one case, and cheap in the other. In reality, however, it is the goods which are cheap in the one case, and dear in the other. In this popular sense, therefore, labour, like commodities, may be said to have a real and a nominal price. Its real price may be said to consist in the quantity of the necessaries and conveniencies of life which are given for it; its nominal price, in the quantity of money. The labourer is rich or poor, is well or ill rewarded, in proportion to the real, not to the nominal price of his labour. ”55

So in the Wealth of Nation Smith does not fall prey to the danger of explaining the cost of commodities in terms of the cost of labour.

Even though for Smith “Labour (…) appears evidently, is the only universal, as well as the only accurate measure of value, or the only standard by which we can compare the values of different commodities at all times and at all places” 56, we still cannot estimate the real value of different commodities from century to century by the quantities of monetary reward given for it but according to Smith we can estimate it from year to year by the quantities of labour57. But even at that moment when Smith looks at the value as something universal it still remains just one of the component of real price of commodities: “The real value of all the different component parts of price, it must be observed, is measured by the quantity of labour which they can, each of them, purchase or command. Labour measures the value not only of that part of price which resolves itself into labour, but of that which resolves itself into rent, and of that which resolves itself into profit.”58 Then Smith observing that in “the most improved societies, however, there are always a few commodities of which the price resolves itself into two parts only, the wages of labour, and the profits of stock; and a still smaller number in which it consists altogether in the wages of labour.”59

REASONS FOR MISINTERPRETATIONS OF SMITH

Even the brief overview of Smith’s understanding and explanation of labour and value proves the inconsistency of his concepts. But among his various statements it is barely possible to find the labour theory of value in classical sense. Therefore, the main question one should pose is why so many researchers have been associated Smith with Labour theory of value. And there are few good reasons.

The first of them is looking at Smith through the David Ricardo’s lenses. Ricardo, who undoubtedly provided a strong labour theory of value, partially built it up opposite to Smith’s framework. Those elements of Ricardian critique of Smith might have created among scholars and followers’ false impression that Smith himself also had some labour theory of value60.

The second might be popularization and adoption of Marxist perspective. As Fleischeker observed, labour theory of value has strong ideological component. Therefore, those who applied Marxist approach attempted to look for such elements of Smith’s philosophy that were criticized by Marx.

The third reason for misreading Adam Smith is the fact, that he, as the forerunner of modern economy, provided one of the very first writings dedicated to this subject. Therefore, establishing a new discipline he ascribed definitions to the notions. Unfortunately, sometimes his language lacks precision and thus the system is not consistent, but this is perfectly understandable in this situation. Smith himself was aware of the difficulties arisen by subject of value and labour and admitted that “perhaps, after the fullest explication which I am capable of giving of it, appear still in some degree obscure. I am always willing to run some hazard of being tedious in order to be sure that I am perspicuous; and after taking the utmost pains that I can to be perspicuous, some obscurity may still appear to remain upon a subject in its own nature extremely abstracted”61.

The fourth reason is the religious and axiological aspect. Smith’s economy was grounded in moral context of puritan tradition. “The theory of value which emerged from Scottish enlightenment thought was prompted by moral concerns with commercialisation as well as the more practical considerations of exchange; what was a fair price given the effort and resources which went into a product and the nature and degree of its usefulness? Influenced by Hutcheson and natural law philosophy, Smith developed the notion of a natural price around which actual prices would fluctuate with changes in demand. The natural price was measured by the labour embodied in a product; by the same token, welfare was measured by labour commanded”62.

Last of the reasons that might provide space for misinterpretation is the fact that many researchers applied anachronistic approach and contemporary understanding of various notions that Smith used in 18th century context, forgetting that the market and economic exchange at the eve of market revolution was fundamentally different from modern capitalism. That might be perceived as the element of greater post-structural reinterpretation of Smith, and restoration of the original 18th century meaning. 63

What is not explicitly stated by Smith, but reading Smith through the lenses of those that seek to find there classical theory of value would be plausible only if we adopt the following assumptions:

(a) Natural resources come free from nature;

(b) Adding labour to natural resources creates raw materials;

(c) Adding labour to raw materials created machines and other commodities; (d) Adding labour to machines and other commodities created goods;

(e) The whole value of the product comes from efforts of an individual to make it.

As we can see from this line of arguments: rent, capital and interests has been eliminated. Also, the labour is the only invariable element. Nothing of such can be traced in Smith’s work.

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  1. I coined this term during the discussion to more accurately describe distinctiveness of Smith’s theory from those created by Ricardo or Marx.↩

  2. Working paper, first draft, please do not quote. I hope that this piece provokes the discussion and stimulate many questions. Because this is preliminary version and result of less than four weeks of work, using Smith’s expression, I call upon your “sense of sympathy”. Some elements of reasoning presented in the last part of this paper has been developed in my paper “Adam Smith’s concept of value of labour. Anglo-American perspective till mid 19th century” which has been just published in Horyzonty Polityki. ↩

  3. Aristotle, Politics, book I, ch. 9.↩

  4. Aristotle Nichomachean Ethics (Book V).↩

  5. William Petty, The Economic Writings of Sir William Petty, together with The Observations upon Bills of Mortality, more probably by Captain John Graunt, ed. Charles Henry Hull (Cambridge University Press, 1899),vol. 1, (especially chapter IV from the Treaties of Taxes and Contributions); c.f. Peter C. Dooley, Labour Theory of Value, Routledge 2005, pp. 17-33.↩

  6. John Locke, “Some considerations of the consequences of the lowering of interest, and raising the Value of Money in a Letter sent to a Member of Parliament” [in :] The Works of John Locke in Nine Volumes, (London: Rivington, 1824 12th ed.). Vol. 4; as well as the well-known chapter V “On property” from the Second treaties about the Government. As Meek pointed out “The chapter on Property, from which the quotations in the text are taken, was intended to supply a set of moral title-deeds to the property of the farmers, master-craftsmen and merchant- manufacturers who then formed the nucleus of the British bourgeoisie. These classes, Locke was implicitly asserting, had a right to the undisturbed enjoyment of the fruits of their ‘labour’— a right which was just as well if not better founded than that of those classes whose property had formerly been protected by feudal regulations.” Meek, Studies in the Labour theory of value, p. 22; c.f. Peter C. Dooley, Labour Theory of Value, Routledge 2005, pp. 34-50.↩

  7. Richard Cantillon, Essai sur la Nature du Commerce en General, edited with an English translation and other material by Henry Higgs, C.B. Reissued for The Royal Economic Society by Frank Cass and Co., LTD., London, 1959; Cantillon pointed out that “'The Land is the Source of Matter from whence all Wealth is produced. The Labour of man is the Form which produces it: and Wealth in itself is nothing but the Maintenance, Conveniences, and Superfluities of Life.” (Essai, p. 1) c.f. Peter C. Dooley, Labour Theory of Value, Routledge 2005, pp. 51-63.↩

  8. Francis Quinsay, Tableau Economique, c.f. Peter C. Dooley, Labour Theory of Value, Routledge 2005, pp. 64-79.↩

  9. Francis Hutcheson, A System of Moral Philosophy (1755) Glasgow, Vol. II, p. 52 -54; Peter C. Dooley, Labour Theory of Value, Routledge 2005, pp. 80-94.↩

  10. Hume, Essays (1889 edn.), Vol. I, pp. 293-4, 315; Peter C. Dooley, Labour Theory of Value, Routledge 2005, pp. 95-108.↩

  11. James Bonar, Adam Smith [in:] Dictionary of political economy, ed. R.H. Inglis, 1894, vol. 3, p. 413↩

  12. Albert C. Whitaker (1904). History and criticism of the labor theory of value in english political economy. New- York: Columbia U.P, p. 16.↩

  13. G. Rosebbluth, A note on Labour, Wages, and Rent in Smith’s Theory of Value, Canadian Journal of Economics, 2 (May 1969): 308↩

  14. D.P. O’Brien (1975). The classical economists. Oxford: Clarendon Press., p. 82; D. P. O'Brien (2004). The classical economist reviseted. Princeton, N.J: Princeton University Press. p. 95↩

  15. P. Deane (1978) The Evolution of Economic Ideas. Cambridge: Cambridge University Press., p. 20.↩

  16. G. Hueckel (2000), “On the ‘Insurmountable Difficulties, Obscurity, and Embarassment’ of Smith’s Fifth Chapter, History of Political Economy, Vol. 32, pp.317-345.↩

  17. J. Evensky, (2009). Adam Smith's moral philosophy: A historical and contemporary perspective on markets, law, ethics, and culture. Cambridge, England: Cambridge University Press., pp. 118-120.↩

  18. Rothbard, M. N. (2006). Economic thought before Adam Smith. Auburn: Ludwig von Mises Institute.p. 452-455.↩

  19. J. Bonar, Philosophy and political economy, p. 157↩

  20. F. Meacci (January 01, 2012). On Adam Smith’s Ambiguities on Value and Wealth. History of Political Economy, 44, 4, 664.↩

  21. P.H. Douglas (January 01, 1927). Smith’s Theory of Value and Distribution. The University Journal of Business, 5, 1, 53-87.↩

  22. M. Robertson and W. L. Taylor, Adam Smith’s Approach to the Theory of Value The Economic Journal, Vol. 67, No. 266 (Jun., 1957), pp. 181-198↩

  23. M. Blaug, (1997). Economic Theory in Retrospect. 5th ed. Cambridge: Cambridge University Press chaps. 4 and 14).↩

  24. H. Myint, (1962). Theories of Welfare Economics. New York: Kelley., especially chapter 2.↩

  25. R.L. Meek, (1973) Studies in the Labour Theory of Value. London: Lawrence & Wishart.↩

  26. M. Dobb (1975) “Ricardo and Adam Smith.” In Skinner, A. S., and T. Wilson, eds. 1975. Essays on Adam Smith. Oxford: Clarendon Press.1975, 324–35.↩

  27. V. Bladen (1975) “Command over Labour: A Study in Misinterpretation.” Canadian Journal of Economics 8:504–19.; Bladen, From Adam Smith to Mayneard Keynes, Toronto University Press, 1975, pp. 29-33.↩

  28. S. Hollander, (1973). The Economics of Adam Smith. Toronto: University of Toronto Press. 1973, chap 4; Hollander, 1977. “The Reception of Ricardian Economics.” Oxford Economic Papers 29:221–57; Hollander, 1979. The Economics of David Ricardo. London: Heinemann chap. 5 and pp. 632–37.↩

  29. S. Kaushil (1973) “The Case of Adam Smith’s Value Analysis.” Oxford Economic Papers 25:60–71.↩

  30. R. O’Donnell (1990) Adam Smith’s Theory of Value and Distribution: A Reappraisal. London: Macmillan, chapter 7.↩

  31. T. Peach, (1993) Interpreting Ricardo. Cambridge: Cambridge University Press. Chapter 6; Peach T. 2008. “A Note of Dissent on the ‘Index Number’ Interpretation of Adam Smith’s Real Measure of Exchangeable Value.” Cambridge Journal of Economics 32:821–26; Peach T., 2009. “Adam Smith and the Labor Theory of (Real) Value: A Reconsideration.” HOPE 41:383–406.↩

  32. D. P. O’Brien (2004) The Classical Economists Revisited. Princeton: Princeton University Press.↩

  33. S. Fleischacker, On Adam Smith’s the Wealth of Nation, p. 3.↩

  34. W.N. I, p. 50.↩

  35. S. Fleischacker, On Adam Smith’s the Wealth of Nation, p. 8.↩

  36. Smith, 1896, p. 173-174.↩

  37. Meek, 1979, p. 48.↩

  38. Smith, 1896, p. 176.↩

  39. Meek, 1979, p. 49.↩

  40. A. Smith, Lecture on Jurisprudence 1763-64, quoted by Ronald L. Meek and Andrew S. Skinner The Development of Adam Smith’s Ideas on the Division of Labour, The Economic Journal, Vol. 83, No. 332 (Dec., 1973), p. 1098. Skinner in his comment to the Wealth of Nation pointed out after this passage similarities with Cantillion, who seek claimed that “Gold and Silver, like other merchandise and raw product, can only be produced at costs roughly proportionate to the value that one imputes on them; and whatever Man produces by labour, this labour must furnish his maintenance. This is the great principle that one hears every day from the mouths of the Humble Classes who have no part in our speculations, and who live by their labour or by their undertakings. Everybody must live” Cantillon, Essai, p. 149-150, Higgs ed., p. 113. But Cantillon, as Smith does not fall prey to the danger of explaining the cost of commodities in terms of the cost of labour.↩

  41. Meek,1979, p. 49↩

  42. Meek, 1979, p. 47↩

  43. Baghot, Economic studies, 1888, p. 111-112.↩

  44. WN, I, 44. Then he stated the paradox: “Nothing is more useful than water: but it will purchase scarce any thing; scarce any thing can be had in exchange for it. A diamond, on the contrary, has scarce any value in use; but a very great quantity of other goods may frequently be had in exchange for it”. WN, I, 45.↩

  45. WN, I, 46.↩

  46. WN, I, p. 277.↩

  47. Meek, 1979 p. 66.↩

  48. WN, I, p. 47.↩

  49. WN, I, p. 47.↩

  50. WN, I, p. 48.↩

  51. WN, I, p. 48.↩

  52. M. Blaug, (1997) Economic Theory in Retrospect. 5th ed. Cambridge: Cambridge University Press, p. 38.↩

  53. WN, I p. 48.↩

  54. WN, I p. 49.↩

  55. WN, I, p. 50-51.↩

  56. WN, I, p. 54.↩

  57. WN. I, p. 54.↩

  58. WN. I, p. 67-68.↩

  59. WN. I, p. 69.↩

  60. To some extent there is correlation between the revival of analysis about the LABOUR THEORY OF VALUE itself and in context of Smith’s philosophy happened at the same time as the monumental edition of Ricardo’s Works and Correspondence by Piero Sraffa. In his introduction to the first volume, Sraffa put forward an interpretation of Ricardo’s early approach to the theory of the rate of profits, which became known as the “corn-ratio” theory of profits or the “corn model”. The starting point of this interpretation is the conclusion arrived at by Ricardo in his Essay on the Influence of a Low Price of Corn on the Profits of Stock that “it is the profits of the farmer that regulate the profits of all other trades”. This trigged a large literature both on modern formulations of his thought and on the historical interpretation of his thought. Sraffa argued convincingly that Ricardo’s (and, more generally, the ‘classical economists’) approach to the theory of value and distribution differs fundamentally from the neoclassical one and that Marshall's interpretation of the classical economists as early demand and supply theorists, with the demand side still in its infancy, cannot be sustained.↩

  61. WN, I, p. 46.↩

  62. Routledge Handbook of the History of Global Economic Thought, Vincent Barnett ed., Taylor and Francis, 2014, 42-43.↩

  63. Vigo, . L. I., & Guizzo, D. (January 01, 2015). An Archaeology of Adam Smith's Epistemic Context. Review of Political Economy, 27, 4, 585-605.↩