Labour Not the Sole Source of Exchange Value in Wealth Of Nations
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Following the theme of Adam Smith's baptism (see previous post) the tourist bureau offers its service via Walk Talk Tours Blog (HERE):
"The famous Scottish economist, Adam Smith, was born on 5 June, 285 years ago. Smith is buried in Canongate Kirkyard on the Canongate in Edinburgh. He is regarded to be the father of classical economics. Visitors to the Scottish capital can discover the rich history of the Royal Mile with The Royal Mile & More audio walking tour. To hear an audio sample from the Royal Mile & More Edinburgh travel guide, featuring some of Smith's wise words please visit [the link]
Smith's most famous work, An Inquiry into the Nature and the Causes of the Wealth of Nations, was published in 1776. He felt foreign trade should be encouraged, as the domestic market was too weak to support solely by a nation's own produce. Smith recognised that no nation could exist in isolation.
Unlike earlier theorists, Smith felt a nation's wealth was based chiefly on the productivity of its labour force and the amount of labour productivity employed.
Wealth was defined by Adam Smith as the annual output of the necessaries and conveniences of life, which in commercial societies was created by the combination of land, labour and capital stock, and not by labour alone.
His remarks about 'labour alone' being the 'original' source of exchange value referred exclusively to 'rude' hunter-gatherer societies, then only common outside Europe among the 'Indian' tribes of America, and native tribes in Africa and Australasia.
His analysis of the division of labour (not original to him - and he never claimed it was) saw its roots in the 'propensity to truck, barter, and exchange'. He certainly noted the increases possible in productivity from the increase in dexterity of every workman, from the saving of time when a labourers cocnetnrates on one task rather than several tasks, and from the invention of machines 'which facilitate and abridge labour' (WN I.i.5: p 17)
'Machines' in mid-18th century Scotland were truly 'manufacturing' by hand, and not power driven. These came later in the 19th century (he died in 1790), and it was with these machines that it became possible not just to 'abridge' labour but to substitute for it, which changed the productivity component considerably.