Key Arguments

• Smith reiterates his earlier doctrine that labour is the real measure of value, now extending it explicitly to rent and profit as well as wages.
• He states that labour measures the value not only of the part of price that resolves into labour, but also of the parts that resolve into rent and profit.
• He generalizes that in every society the price of every commodity finally resolves into some one or other, or all, of these three parts.
• In every improved society, all three components enter, more or less, into the price of the far greater part of commodities, showing the ubiquity of this tripartite structure.
• The example of corn shows how the price divides into rent to the landlord, wages or maintenance of labourers and labouring cattle, and profit of the farmer, which together appear to make up the whole price.
• He further explains that what might appear as a fourth component—replacement of capital and wear and tear—ultimately also resolves into the same three parts when one looks at the price of the instruments themselves.

Source Quotes

This portion, or, what comes to the same thing, the price of this portion, constitutes the rent of land, and in the price of the greater part of commodities, makes a third component part. The real value of all the different component parts of price, it must be observed, is measured by the quantity of labour which they can, each of them, purchase or command. Labour measures the value, not only of that part of price which resolves itself into labour, but of that which resolves itself into rent, and of that which resolves itself into profit.

The real value of all the different component parts of price, it must be observed, is measured by the quantity of labour which they can, each of them, purchase or command. Labour measures the value, not only of that part of price which resolves itself into labour, but of that which resolves itself into rent, and of that which resolves itself into profit. In every society, the price of every commodity finally resolves itself into some one or other, or all of those three parts; and in every improved society, all the three enter, more or less, as component parts, into the price of the far greater part of commodities.

Labour measures the value, not only of that part of price which resolves itself into labour, but of that which resolves itself into rent, and of that which resolves itself into profit. In every society, the price of every commodity finally resolves itself into some one or other, or all of those three parts; and in every improved society, all the three enter, more or less, as component parts, into the price of the far greater part of commodities. In the price of corn, for example, one part pays the rent of the landlord, another pays the wages or maintenance of the labourers and labouring cattle employed in producing it, and the third pays the profit of the farmer.

In every society, the price of every commodity finally resolves itself into some one or other, or all of those three parts; and in every improved society, all the three enter, more or less, as component parts, into the price of the far greater part of commodities. In the price of corn, for example, one part pays the rent of the landlord, another pays the wages or maintenance of the labourers and labouring cattle employed in producing it, and the third pays the profit of the farmer. These three parts seem either immediately or ultimately to make up the whole price of corn.

In the price of corn, for example, one part pays the rent of the landlord, another pays the wages or maintenance of the labourers and labouring cattle employed in producing it, and the third pays the profit of the farmer. These three parts seem either immediately or ultimately to make up the whole price of corn. A fourth part, it may perhaps be thought is necessary for replacing the stock of the farmer, or for compensating the wear and tear of his labouring cattle, and other instruments of husbandry.

Key Concepts

• The real value of all the different component parts of price, it must be observed, is measured by the quantity of labour which they can, each of them, purchase or command.
• Labour measures the value, not only of that part of price which resolves itself into labour, but of that which resolves itself into rent, and of that which resolves itself into profit.
• In every society, the price of every commodity finally resolves itself into some one or other, or all of those three parts;
• and in every improved society, all the three enter, more or less, as component parts, into the price of the far greater part of commodities.
• In the price of corn, for example, one part pays the rent of the landlord, another pays the wages or maintenance of the labourers and labouring cattle employed in producing it, and the third pays the profit of the farmer.
• These three parts seem either immediately or ultimately to make up the whole price of corn.

Context

Transition from the introduction of rent to a general schema of price composition, where Smith explicitly unifies his labour‑measure theory with the threefold decomposition of price into wages, profit, and rent.