“A writer is a productive labourer not in so far as he produces ideas, but in so far as he enriches the publisher who publishes his works, or if he is a wage-labourer for a capitalist.
The use-value of the commodity in which the labour of a productive worker is embodied may be of the most futile kind. The material characteristics are in no way linked with its nature which on the contrary is only the expression of a definite social relation of production. It is a definition of labour which is derived not from its content or its result, but from its particular social form.” (p 158)
There is a material basis for Smith's confusion of this correct definition of productive labour, and his incorrect definition, based upon whether it is labour that adds value. It arises because, as capitalism develops, more and more commodity production falls into its realm. By contrast, fewer and fewer commodities are produced outside of capitalist production. As a consequence, it is increasingly only the performance of direct labour services which are provided outside the realm of capitalist production.
The confusion arises, therefore, that it is only physical commodities that have value, and only the labour involved in such production which can, therefore, add value or create surplus value.
“... then revenue must be exchanged either against commodities which capital alone produces and sells, or against labour, which just like those commodities is bought in order to be consumed; that is, only for the sake of its particular material characteristics, its use-value—for the sake of the services which, through its particular material characteristics, it renders to its buyer and consumer.” (p 158)
But, for the provider of these services, be it those of a prostitute or of a gardener, the service they provide is a commodity, and it does have a value equal to the labour-time expended on its production. Just as for the peasant producer, the value of this commodity may realise for them a surplus value in the sense that it realises a greater sum of value than is required to reproduce their labour-power, but it does not realise surplus value in the specifically capitalist sense that a greater sum of value has been obtained compared to the value advanced.
A prostitute may only require £60 per day in order to reproduce their labour-power. That may require them to work for three hours. If they work instead for five hours they will earn £100, and thereby create a surplus value of £40. But, it is not a surplus value in the capitalist sense of something for nothing. They will have obtained £100 of value, but only in exchange for advancing £100 of their labour.