“The nominal value of all sorts of goods would be greater, but their real value would be precisely the same as before.”

This is of course true; but it’s true to some extent because the value of silver was not based on it having any industrial use.

If the amount of, let us say, titanium on the market increases, then, yes, the price of titanium will drop, but the overall value of the economy may increase, because more cheap titanium applications are possible than before, and those applications may lead to increased production or productivity elsewhere.

The same thing applies even more directly to energy considered as a commodity. If cheap fusion power becomes available, then the price of electricity will drop, but the overall wealth of nations will increase, as increased energy availability and lower energy costs result in increased industrial production as well as improved living conditions (for example making desalinization more cost-effective, making fertilizer more widely available, powering irrigation, etc).

So not all commodities are created equal in terms of the industrial and capital consequences of increasing supply. While labor is a principal component of value, for this reason I think it’s not the sole component.

In your example, the value of boron has not changed. The price might, temporarily, be higher, but according to Smith, the increase in demand does not change the value.

Maybe the answer is that this definition — “the value of a commodity consists in the labor embodied by it” — applies only when supply and demand for that commodity are in equilibrium?

Here’s why I ask. Boron has some value today — leave aside for a moment how that value is arrived at. Tomorrow some scientist publishes a breakthrough new use for boron. After publication, has the value of boron changed? In my ordinary understanding of term “value”, it has — certainly, as someone not owning boron, boron seems of higher value to me once I know of its new use than it did prior — even though the process of producing boron and so the labor involved in its production has not changed.

I can tell what I think of as the “orthodox microeconomics” story of consequences from that publication: with the new use, demand for boron increases. And it’s not just that more people want boron at its current price: some of them will now pay more than its current price. That in turn means that there are new profits to be made in supplying boron, which draws in new producers, some of which are less efficient than the old ones. Eventually the quantity of boron supplied settles out somewhere higher than it was before publication, with a somewhat higher price as well (the price that’s the economic breakeven for the least efficient supplier). I can also recount some of the caveats that ought to accompany that story, but this is already a tediously long comment.

My point here is that for all its flaws, I kinda maybe understand how “price” in the ortho micro story corresponds to “value” in the ordinary usage of “how much it matters to me to have something”. What I don’t understand is how either of those maps to “value” in the sense of “the labor embodied in something”.