Key Arguments

• After the division of labour, a man can supply only a very small part of his own necessaries, conveniencies, and amusements; ‘the far greater part of them he must derive from the labour of other people’, so his being rich or poor depends on ‘the quantity of that labour which he can command, or which he can afford to purchase’.
• For a person who holds a commodity not to use it but to exchange it, its value ‘is equal to the quantity of labour which it enables him to purchase or command’; hence ‘Labour therefore, is the real measure of the exchangeable value of all commodities.’
• Smith defines the ‘real price of every thing’ as ‘the toil and trouble of acquiring it’, and what a thing ‘is really worth’ to its possessor as ‘the toil and trouble which it can save to himself, and which it can impose upon other people.’
• Even what is bought with money or goods is ultimately purchased by labour just as much as what we produce by our own toil, because money and goods ‘contain the value of a certain quantity of labour’ which we exchange for an equivalent quantity embodied in what we buy.
• He insists that ‘Labour was the first price, the original purchase money that was paid for all things’; it was by labour, not by gold or silver, that ‘all the wealth of the world was originally purchased’, and its value to the owner is ‘precisely equal to the quantity of labour which it can enable them to purchase or command.’
• Adapting Hobbes’s dictum that ‘Wealth … is power’, Smith clarifies that the immediate and direct power conveyed by a fortune is ‘the power of purchasing a certain command over all the labour, or over all the produce of labour which is then in the market’, so a person’s fortune is greater or less exactly in proportion to the extent of this power.
• He concludes that ‘The exchangeable value of every thing must always be precisely equal to the extent of this power which it conveys to its owner’, reinforcing the identification of value with command over labour.

Source Quotes

But after the division of labour has once thoroughly taken place, it is but a very small part of these with which a man’s own labour can supply him. The far greater part of them he must derive from the labour of other people, and he must be rich or poor according to the quantity of that labour which he can command, or which he can afford to purchase. The value of any commodity, therefore, to the person who possesses it, and who means not to use or consume it himself, but to exchange it for other commodities, is equal to the quantity of labour which it enables him to purchase or command.

The far greater part of them he must derive from the labour of other people, and he must be rich or poor according to the quantity of that labour which he can command, or which he can afford to purchase. The value of any commodity, therefore, to the person who possesses it, and who means not to use or consume it himself, but to exchange it for other commodities, is equal to the quantity of labour which it enables him to purchase or command. Labour therefore, is the real measure of the exchangeable value of all commodities.

The value of any commodity, therefore, to the person who possesses it, and who means not to use or consume it himself, but to exchange it for other commodities, is equal to the quantity of labour which it enables him to purchase or command. Labour therefore, is the real measure of the exchangeable value of all commodities. The real price of every thing, what every thing really costs to the man who wants to acquire it, is the toil and trouble of acquiring it.

Labour therefore, is the real measure of the exchangeable value of all commodities. The real price of every thing, what every thing really costs to the man who wants to acquire it, is the toil and trouble of acquiring it. What every thing is really worth to the man who has acquired it and who wants to dispose of it, or exchange it for something else, is the toil and trouble which it can save to himself, and which it can impose upon other people.

The real price of every thing, what every thing really costs to the man who wants to acquire it, is the toil and trouble of acquiring it. What every thing is really worth to the man who has acquired it and who wants to dispose of it, or exchange it for something else, is the toil and trouble which it can save to himself, and which it can impose upon other people. What is bought with money, or with goods, is purchased by labour, as much as what we acquire by the toil of our own body.

They contain the value of a certain quantity of labour, which we exchange for what is supposed at the time to contain the value of an equal quantity. Labour was the first price, the original purchase money that was paid for all things. It was not by gold or by silver, but by labour, that all the wealth of the world was originally purchased; and its value, to those who possess it, and who want to exchange it for some new productions, is precisely equal to the quantity of labour which it can enable them to purchase or command.

Labour was the first price, the original purchase money that was paid for all things. It was not by gold or by silver, but by labour, that all the wealth of the world was originally purchased; and its value, to those who possess it, and who want to exchange it for some new productions, is precisely equal to the quantity of labour which it can enable them to purchase or command. Wealth, as Mr Hobbes says, is power.

The power which that possession immediately and directly conveys to him, is the power of purchasing a certain command over all the labour, or over all the produce of labour which is then in the market. His fortune is greater or less, precisely in proportion to the extent of this power, or to the quantity either of other men’s labour, or, what is the same thing, of the produce of other men’s labour, which it enables him to purchase or command. The exchangeable value of every thing must always be precisely equal to the extent of this power which it conveys to its owner.

His fortune is greater or less, precisely in proportion to the extent of this power, or to the quantity either of other men’s labour, or, what is the same thing, of the produce of other men’s labour, which it enables him to purchase or command. The exchangeable value of every thing must always be precisely equal to the extent of this power which it conveys to its owner. But though labour be the real measure of the exchangeable value of all commodities, it is not that by which their value is commonly estimated.

Key Concepts

• he must be rich or poor according to the quantity of that labour which he can command, or which he can afford to purchase.
• The value of any commodity, therefore, to the person who possesses it, and who means not to use or consume it himself, but to exchange it for other commodities, is equal to the quantity of labour which it enables him to purchase or command.
• Labour therefore, is the real measure of the exchangeable value of all commodities.
• The real price of every thing, what every thing really costs to the man who wants to acquire it, is the toil and trouble of acquiring it.
• What every thing is really worth to the man who has acquired it and who wants to dispose of it, or exchange it for something else, is the toil and trouble which it can save to himself, and which it can impose upon other people.
• Labour was the first price, the original purchase money that was paid for all things.
• it was not by gold or by silver, but by labour, that all the wealth of the world was originally purchased;
• His fortune is greater or less, precisely in proportion to the extent of this power, or to the quantity either of other men’s labour, or, what is the same thing, of the produce of other men’s labour, which it enables him to purchase or command.
• The exchangeable value of every thing must always be precisely equal to the extent of this power which it conveys to its owner.

Context

Opening section of Chapter V, where Smith moves from defining value in exchange to introducing labour as the real measure and real price of commodities, and interprets wealth as command over the labour of others.