An Inquiry into the Nature and Causes of the Wealth of Nations, Adam Smith [e book reader pdf TXT] 📗
- Author: Adam Smith
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price, is the effect of something in the state of the coin, which, at that time, renders a certain
quantity of coin either of more value or of less value than the precise quantity of bullion
which it ought to contain. The constancy and steadiness of the effect supposes a
proportionable constancy and steadiness in the cause.
The money of any particular country is, at any particular time and place, more or less an
accurate measure or value, according as the current coin is more or less exactly agreeable to
its standard, or contains more or less exactly the precise quantity of pure gold or pure silver
which it ought to contain. If in England, for example, fortyfour guineas and a half contained
exactly a pound weight of standard gold, or eleven ounces of fine gold, and one ounce of
alloy, the gold coin of England would be as accurate a measure of the actual value of goods at
any particular time and place as the nature of the thing would admit. But if, by rubbing and
wearing, fortyfour guineas and a half generally contain less than a pound weight of standard
gold, the diminution, however, being greater in some pieces than in others, the measure of
value comes to be liable to the same sort of uncertainty to which all other weights and
measures are commonly exposed. As it rarely happens that these are exactly agreeable to their
standard, the merchant adjusts the price of his goods as well as he can, not to what those
weights and measures ought to be, but to what, upon an average, he finds, by experience, they
actually are. In consequence of a like disorder in the coin, the price of goods comes, in the
same manner, to be adjusted, not to the quantity of pure gold or silver which the coin ought to
contain, but to that which, upon an average, it is found, by experience, it actually does
contain.
By the money price of goods, it is to be observed, I understand always the quantity of pure
gold or silver for which they are sold, without any regard to the denomination of the coin. Six
shillings and eight pence, for example, in the time of Edward I., I consider as the same money
price with a pound sterling in the present times, because it contained, as nearly as we can
judge, the same quantity of pure silver.
CHAPTER VI.
OF THE COMPONENT PART OF THE PRICE OF COMMODITIES.
In that early and rude state of society which precedes both the accumulation
of stock and the appropriation of land, the proportion between the
quantities of labour necessary for acquiring different objects, seems to be
the only circumstance which can afford any rule for exchanging them for one
another. If among a nation of hunters, for example, it usually costs twice
the labour to kill a beaver which it does to kill a deer, one beaver should
naturally exchange for or be worth two deer. It is natural that what is
usually the produce of two days or two hours labour, should be worth double
of what is usually the produce of one day’s or one hour’s labour.
If the one species of labour should be more severe than the other, some
allowance will naturally be made for this superior hardship; and the produce
of one hour’s labour in the one way may frequently exchange for that of two
hour’s labour in the other.
Or if the one species of labour requires an uncommon degree of dexterity
and ingenuity, the esteem which men have for such talents, will naturally
give a value to their produce, superior to what would be due to the time
employed about it. Such talents can seldom be acquired but in consequence of
long application, and the superior value of their produce may frequently be
no more than a reasonable compensation for the time and labour which must be
spent in acquiring them. In the advanced state of society, allowances of
this kind, for superior hardship and superior skill, are commonly made in
the wages of labour ; and something of the same kind must probably have
taken place in its earliest and rudest period.
In this state of things, the whole produce of labour belongs to the
labourer; and the quantity of labour commonly employed in acquiring or
producing any commodity, is the only circumstance which can regulate the
quantity of labour which it ought commonly to purchase, command, or exchange
for.
As soon as stock has accumulated in the hands of particular persons, some of
them will naturally employ it in setting to work industrious people, whom
they will supply with materials and subsistence, in order to make a profit
by the sale of their work, or by what their labour adds to the value of the
materials. In exchanging the complete manufacture either for money, for
labour, or for other goods, over and above what may be sufficient to pay the
price of the materials, and the wages of the workmen, something must be given
for the profits of the undertaker of the work, who hazards his stock in this
adventure. The value which the workmen add to the materials, therefore,
resolves itself in this case into two parts, of which the one pays their
wages, the other the profits of their employer upon the whole stock of
materials and wages which he advanced. He could have no interest to employ
them, unless he expected from the sale of their work something more than
what was sufficient to replace his stock to him ; and he could have no
interest to employ a great stock rather than a small one, unless his profits
were to bear some proportion to the extent of his stock.
The profits of stock, it may perhaps be thought, are only a different name
for the wages of a particular sort of labour, the labour of inspection and
direction. They are, however, altogether different, are regulated by quite
different principles, and bear no proportion to the quantity, the hardship,
or the ingenuity of this supposed labour of inspection and direction. They
are regulated altogether by the value of the stock employed, and are greater
or smaller in proportion to the extent of this stock. Let us suppose, for
example, that in some particular place, where the common annual profits of
manufacturing stock are ten per cent. there are two different manufactures,
in each of which twenty workmen are employed, at the rate of fifteen pounds
a year each, or at the expense of three hundred a-year in each manufactory.
Let us suppose, too, that the coarse materials annually wrought up in the
one cost only seven hundred pounds, while the finer materials in the other
cost seven thousand. The capital annually employed in the one will, in this
case, amount only to one thousand pounds; whereas that employed in the other
will amount to seven thousand three hundred pounds. At the rate of ten per
cent. therefore, the undertaker of the one will expect a yearly profit of
about one hundred pounds only; while that of the other will expect about
seven hundred and thirty pounds. But though their profits are so very
different, their labour of inspection and direction may be either altogether
or very nearly the same. In many great works, almost the whole labour of
this kind is committed to some principal clerk. His wages properly express
the value of this labour of inspection and direction. Though in settling
them some regard is had commonly, not only to his labour and skill, but to
the trust which is reposed in him, yet they never bear any regular
proportion to the capital of which he oversees the management ; and the
owner of this capital, though he is thus discharged of almost all labour,
still expects that his profit should bear a regular proportion to his
capital. In the price of commodities, therefore, the profits of stock
constitute a component part altogether different from the wages of labour, and
regulated by quite different principles.
In this state of things, the whole produce of labour does not always belong
to the labourer. He must in most cases share it with the owner of the stock
which employs him. Neither is the quantity of labour commonly employed in
acquiring or producing any commodity, the only circumstance which can
regulate the quantity which it ought commonly to purchase, command or
exchange for. An additional quantity, it is evident, must be due for the
profits of the stock which advanced the wages and furnished the materials of
that labour.
As soon as the land of any country has all become private property, the
landlords, like all other men, love to reap where they never sowed, and
demand a rent even for its natural produce. The wood of the forest, the
grass of the field, and all the natural fruits of the earth, which, when
land was in common, cost the labourer only the trouble of gathering them,
come, even to him, to have an additional price fixed upon them. He must then
pay for the licence to gather them, and must give up to the landlord a
portion of what his labour either collects or produces. This portion, or,
what comes to the same thing, the price of this portion, constitutes the
rent of land, and in the price of the greater part of commodities, makes a
third component part.
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.
In every society, the price of every commodity finally resolves itself into
some one or other, or all of those three parts ; and in every improved
society, all the three enter, more or less, as component parts, into the
price of the far greater part of commodities.
In the price of corn, for example, one part pays the rent of the landlord,
another pays the wages or maintenance of the labourers and labouring cattle
employed in producing it, and the third pays the profit of the farmer. These
three parts seem either immediately or ultimately to make up the whole price
of corn. A fourth part, it may perhaps be thought is necessary for replacing
the stock of the farmer, or for compensating the wear and tear of his
labouring cattle, and other instruments of husbandry. But it must be
considered, that the price of any instrument of husbandry, such as a
labouring horse, is itself made up of the same time parts ; the rent of the
land upon which he is reared, the labour of tending and rearing him, and the
profits of the farmer, who advances both the rent of this land, and the
wages of this labour. Though the price of the corn, therefore, may pay the
price as well as the maintenance of the horse, the whole price still
resolves itself, either immediately or ultimately, into the same three parts
of rent, labour, and profit.
In the price of flour or meal, we must add to the price of the corn, the
profits of the miller, and the wages of his servants ; in the price of
bread, the profits of the baker, and the wages of his servants; and in the
price of both, the labour of transporting the corn from the house of the
farmer to that of the miller, and from that of the miller to that of the
baker,
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