The basic ideas of the later vulgar economic doctrines, and of neoclassical economics, already, therefore, begin to appear in Smith's theory alongside his scientific discoveries. On the basis here that the value of the commodity is determined on the basis of this compounding of revenues – wages, profit, rent – each of which are determined by their own natural price, we arrive at the notion that wages are determined by labour, but that profit and rent are not, but are the natural prices of capital and land.
“Having first resolved value into wages, profits, rents, he then on the contrary compounds value out of wages, profit and rent, whose magnitudes are determined independently of value. Since Adam Smith has thus forgotten the origin of profit and rent correctly explained by himself, he is able to say:
“Wages, profit, and rent, are the three original sources of all revenue, as well as of all exchangeable value” ([O.U.P., Vol. I, p. 57; Garnier,] l. I, ch. VI, p. 105).” (p 347)
What Smith should have said was,
“The value of a commodity arises exclusively out of the labour (the amount of labour) which is embodied in this commodity. This value resolves itself into wages, profit and rent. Wages, profit and rent are the original forms in which the worker, the capitalist and the landlord participate in the value created by the labour of the worker. In this sense they are the three original sources of all revenue, although none of these so-called sources enters into the formation of the value.” (p 347-8)
So, here, in Chapter VI and VII, Smith identifies the value of a commodity as being comprised of these three different revenues, or costs of production – wages, profit and rent. Whether profit and rent arise on Smith's basis, here depends upon whether capital and land is employed as well as labour. However, where they are, those costs of production enter into the value of the commodity in the same way as wages.
Marx quotes Smith to this effect from Chapter VII.
““When the price of any commodity is neither more nor less than what is sufficient to pay the rent of the land, the wages of the labour, and the profits of the stock employed in raising, preparing, and bringing it to market, according to their natural rates, the commodity is then sold for what may he called its natural price.”” (p 348)
The value of the commodity is identified by Smith, in these passages, with its natural price. The market price, he goes on, depends upon the state of demand and supply. If the demand for a commodity at its natural price is greater than the quantity of it supplied at its natural price, then the market price will rise above the natural price, and vice versa.
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