Theories of Surplus Value, Part I, Chapter 3 - Part 3

Large parts of Smith's work, Marx says, are simply Physiocratic, and in contradiction to the rest of his theory. As Marx is concerned only with a critique of Smith's particular theory, he omits, for now, those Physiocratic elements, which he will return to later.

Marx points out that, in A Contribution To The Critique of Political Economy, he had already dealt with the contradiction in Smith's determination of exchange value, in relation to the commodity.

“In particular, [I have shown] how he sometimes confuses, and at other times substitutes, the determination of the value of commodities by the quantity of labour required for their production, with its determination by the quantity of living labour with which commodities can be bought, or, what is the same thing, the quantity of commodities with which a definite quantity of living labour can be bought. Here he makes the exchange-value of labour the measure for the value of commodities. In fact, he makes wages the measure; for wages are equal to the quantity of commodities bought with a definite quantity of living labour, or to the quantity of labour that can be bought by a definite quantity of commodities. The value of labour, or rather of labour-power, changes, like that of any other commodity, and is in no way specifically different from the value of other commodities. Here value is made the measuring rod and the basis for the explanation of value—so we have a vicious circle.” (p 70-1)

When Smith is investigating surplus value, however, Marx says, fortunately, he always sticks with the correct determination of value based on labour-time. In fact, this basis of the determination of value is central to Smith's analysis – as opposed to that of the Physiocrats, whose theory of value was based upon use value rather than labour – for example, in relation to the division of labour, and consequent reduction in values, as the required labour-time is reduced.

“In ch. XI, l. I Adam Smith speaks of the cheapening of many manufactured goods in his time, as compared with earlier centuries, and he concludes with the words: 

“It cost a greater quantity of labour to bring the goods to market. When they were brought thither, therefore, they must have purchased, or exchanged for the price, of a greater quantity.” ([Wealth of Nations, O.U.P. edition, Vol. I, p. 284], [Garnier] t. II, p. 156).” (p 71)

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