Adam Smith's Absurd Dogma - Part 5 of 52

Marx – Capital II, Chapter 19 

“Adam Smith’s dogma that the price, or “exchangeable value,” of any single commodity — and therefore of all commodities in the aggregate constituting the annual product of society (he rightly assumes capitalist production everywhere) — is made up of three “component parts,” or “resolves itself into” wages, profit, and rent, can be reduced to this: that the commodity-value is equal to v + s, i.e., equal to the value of the advanced variable capital plus the surplus-value. And we may undertake this reduction of profit and rent to a common unit called s with the express permission of Adam Smith, as shown by the following quotations, in which we at first leave aside all minor points, i.e., any apparent or real deviation from the dogma that commodity-value consists exclusively of those elements which we call v + s.”

(Capital II, Chapter 19, p 374)

Marx then quotes Smith's Book 2, Chapter 3, p 221 to that effect. The value of he wages, Smith says, is reproduced by the worker, in the labour they undertake for the capitalist, along with the profit of the capitalist.

“Though the manufacturer (worker AB) has his wages advanced to him by his master, he, in reality, costs him no expense, the value of those wages being generally restored, together with a profit, in the improved value of the subject upon which his labour is bestowed.” (p 374)

In agriculture, Smith says the labourer besides

“the reproduction of a value equal to their own consumption, or to the [variable] capital which employs them, together with its owners’ profits ...” — furthermore, “over and above the capital of the farmer and all its profits regularly occasion the reproduction of the rent of the landlord.” (Book II, Ch. 5, p. 243.)” (p 374)

But, Marx points out that, before the rent passes to the landlord, it is first appropriated by the capitalist farmer, and so the basic division of the new value created by labour remains that into v + s. And, it is this division that Adam Smith claims characterises the division of the entire product of society.

“The dogma that the price of all commodities (hence also of the annual commodity-product) resolves itself into wages plus profit plus ground-rent, assumes even in the intermittent esoteric constituents of Smith’s work the form that the value of every commodity, hence also that of society’s annual commodity-product, is equal to v + s, or equal to the capital-value laid out in labour-power and continually reproduced by the labourers, plus the surplus-value added by the labourers through their work.

This final result of Adam Smith reveals to us at the same time — see further down — the source of his one-sided analysis of the component parts into which the value of a commodity resolves sources of revenue for different classes engaged in production has nothing to do with the determination of the magnitude of each of these component parts and of the sum of their values.” (p 376)

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