[4. Adam Smith’s Analysis of the Variations in the Prices of Products of the Land]
In this section, Smith's mixing up of his labour theory of value with his cost of production theory of value, and also his use of the value of corn as a proxy for wages, and thereby of value, is evident. Smith's use of the value of corn, as a proxy for wages may be thought of as an equivalent of Marx's explanation that gold, as the general commodity, comes to act as a proxy for abstract labour. But, here the situation is reversed. Gold producing labour acts as a proxy for abstract labour, and thereby as a measure of value, but corn here acts as a proxy for wages, as the main foodstuff required for the reproduction of labour-power. Because Smith confuses labour-power with labour, he also, thereby, confuses wages with value, and so falsely arrives at a measure of value in corn, as a proxy for wages/labour.
So, Smith writes,
““Upon all these accounts, therefore, we may rest assured, that equal quantities of corn will in every state of society, in every state of improvement, more nearly represent, or be equivalent to, equal quantities of labour, than equal quantities of any other part of the rude produce of land. Corn, accordingly … is, in all the different stages of wealth and improvement, a more accurate measure of value than any other commodity or set of commodities… Corn, besides, or whatever else is the common and favourite vegetable food of the people, constitutes, in every civilised country, the principal part of the subsistence of the labourer… The money price of labour, therefore, depends much more upon the average money price of corn, the subsistence of the labour, than upon that of butcher’s meat, or of any other part of the rude produce of land. The real value of gold and silver, therefore, the real quantity of labour which they can purchase or command, depends much more upon the quantity of corn which they can purchase or command, than upon that of butcher’s meat, or any other part of the rude produce of land” ([O.U.P., Vol. I, pp. 213-14; Garnier,] l.c., pp. 26-28).” (p 366-7)
Smith, discussing gold and silver, and precious stones, again argues that the sufficient price excludes rent.
““A commodity may be said to be dear or cheap not only according to the absolute greatness or smallness of its usual price, but according as that price is more or less above the lowest for which it is possible to bring it to market for any considerable time together. This lowest price is that which barely replaces, with a moderate profit, the stock which must be employed in bringing the commodity thither. It is the price which affords nothing to the landlord, of which rent makes not any component part, but which resolves itself altogether into wages and profit” ([O.U.P., Vol. I, p. 243; Garnier,] Vol. II, p. 81).
“The price of diamonds and other precious stones may, perhaps, be still nearer to the lowest price at which it is possible to bring them to market, than even the price of gold” ([O.U.P., Vol. I, p. 244; Garnier,] Vol. II, p. 83).” (p 367)
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