Page 43: “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 division of labor has once thoroughly taken place, it is but a very small part of these with which a man’s own labor can supply him. The far greater part of them he must derive from the labor of other people, and he must be rich or poor according to the quantity of that labor which 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 labor which it enables him to purchase or command. Labor, therefore, is the real measure of the exchangable value of all commodities.”
And, immediately thereafter: “The real price of every thing, what every thing really costs to the man who wants to acquire it, is the toil and trouble of acquiring it.”
Labor is the real measure of exchange value, and, in the last analysis, the price of all things is labor. The argument is strong. The first implication that comes to my mind, then, is that if labor is the measure of all things, in what is labor measured? This was before the important distinction between labor and labor-power was discovered, and so there is some danger of confusion here. But there’s no point in getting ahead of myself. I’m going to just go with Smith and see where that leads.
Page 44: “…with money or with goods is purchased by labor as much as what we acquire by the toil of our own body. That money or those goods indeed save us this toil. The contain the value of a certain quantity of labor which we exchange…It was not by gold or by silver, but by labor, that all the wealther of the world 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 labor which it can enable them to purchase or command.” Based on earlier chapters, the measure of labor is time. Yet Smith says that all labor-time isn’t equal. This would imply to me that there is some multiplier, or, putting it another way, that there is or ought to be the concept of simple labor-time, in which exchange value is expressed. Other forms of labor (ie, with a machine that multiplies the efficiency of labor, or with highly skilled labor) could then be expressed in terms of simple labor-time.
Page 45: “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.”
The value of labor is adjusted “not by any accurate measure, but by the higgling and bargaining of the market.” It remains to point out (which Smith implies but doesn’t say) that this is a social question. The executive who leaves or threatens to leave his job for a higher-paying one, or the combination of workers striking or threatening to strike, or the employer moving or threatening to move his factory to a place where labor is cheaper, are all engaged in this “higgling and bargaining of the market.”
Here is an important point: “The greater part of people too understand better what is meant by a quantity of of a particular commodity, than by a quantity of labor. The one is a plain, palpable object; the other an abstract notion, which, though it can be made sufficiently intelligible, is not altogether so natural and obvious.” Or, in other words, while what is being exchanged in the market is the product of labor, and thus, in fact, labort; in a market economy this process is concealed. This is an important distinction between capitalism and earlier economic forms. The relationship between master and slave, or between fuedal lord and serf, is clear and obvious; the market, while permitting far more efficient use of labor, also makes it harder to see.
Page 47: “Equal quantities of labor, at all times and places, may be said to be of equal value to the laborer. In his ordinary state of health, strength and spirits; in the ordinary dgree of his skill and dexterity, he must always lay down the same portion of his ease, his liberty, and his happiness. The price which he pays must always be the same, whatever may be the quantity of goods which he receives in return for it….labor alone, therefore, never varying its own value, is alone the ultimate and real standard by which the value of all commodities can at all times and places be estimated and compared. It is their real price; money is their nominal price only.”
Page 48: “…therefore labor, like commodities, may be said to have a real and a nominal price.” This is very striking in that he says labor is LIKE a commodity, which clearly implies that, to Smith, it is NOT a commodity. This hints at a dilemma that was to trouble political economists for the next half century or more.
Later he begins to go into the whole subject of ground rents. Page 51: “But a rent reserved in any other commodity is liable, not only to the variations in the quantity of labor which any particular quantity of corn can purchase, but to the variations in the quantity of corn which be purchased by any particular quantity of that commodity.” He then speaks of the fluctuation periods of corn (ie, any grain) and silver, warning away from accepting rent in coin because of the tendency of coin to debase. This is interesting, but I look forward to seeing how he will analyze ground rent in terms of labor and the market; I imagine that will be later in the book.
Page 52: “Labor, therefore, it appears evidentally, is the only universal, as well as the only accurate measurement of value, or the only standard by which we can compare the values of different commodities at all times and at all places.”