CHAP. VI.
OF THE COMPONENT PART OF THE PRICE OF
COMMODITIES.
In that early and rude state of society which
precedes both the accumulation of stock and
the appropriation of land, the proportion between
the quantities of labour necessary for
acquiring different objects, seems to be the
only circumstance which can afford any rule
for exchanging them for one another. If
among a nation of hunters, for example, it
usually costs twice the labour to kill a beaver
which it does to kill a deer, one beaver should
naturally exchange for or be worth two deer.
It is natural that what is usually the produce
of two days or two hours labour, should be
worth double of what is usually the produce
of one day's or one hour's labour.
If the one species of labour should be more
severe than the other, some allowance will naturally
be made for this superior hardship;
and the produce of one hour's labour in the
one way may frequently exchange for that of
two hour's labour in the other.
Or if the one species of labour requires an
uncommon degree of dexterity and ingenuity,
the esteem which men have for such talents,
will naturally give a value to their produce,
superior to what would be due to the time
employed about it. Such talents can seldom
be acquired but in consequence of long application,
and the superior value of their produce
may frequently be no more than a reasonable
compensation for the time and labour
which must be spent in acquiring them. In
the advanced state of society, allowances of
this kind, for superior hardship and superior
skill, are commonly made in the wages of labour;
and something of the same kind must
probably have taken place in its earliest and
rudest period.
In this state of things, the whole produce
of labour belongs to the labourer; and the
quantity of labour commonly employed in acquiring
or producing any commodity, is the
only circumstance which can regulate the
quantity of labour which it ought commonly
to purchase, command, or exchange for.
As soon as stock has accumulated in the
hands of particular persons, some of them will
naturally employ it in setting to work industrious
people, whom they will supply with materials
and subsistence, in order to make a
profit by the sale of their work, or by what
their labour adds to the value of the materials.
In exchanging the complete manufacture
either for money, for labour, or for other
goods, over and above what may be sufficient
to pay the price of the materials, and the
wages of the workmen, something must be
given for the profits of the undertaker of the
work, who hazards his stock in this adventure.
The value which the workmen add to the materials,
therefore, resolves itself in this case
into two parts of which the one pays their
wages, the other the profits of their employer
upon the whole stock of materials and wages
which he advanced. He could have no interest
to employ them, unless he expected from
the sale of their work something more than
what was sufficient to replace his stock to
him; and he could have no interest to employ
a great stock rather than a small one, unless
his profits were to bear some proportion to
the extent of his stock.
The profits of stock, it may perhaps be
thought, are only a different name for the
wages of a particular sort of labour, the labour
of inspection and direction. They are,
however, altogether different, are regulated
by quite different principles, and bear no proportion
to the quantity, the hardship, or the
ingenuity of this supposed labour of inspection
and direction. They are regulated altogether
by the value of the stock employed,
and are greater or smaller in proportion to the
extent of this stock. Let us suppose, for example,
that in some particular place, where
the common annual profits of manufacturing
stock are ten per cent. there are two different
manufactures, in each of which twenty workmen
are employed, at the rate of fifteen
pounds a year each, or at the expense of three
hundred a-year in each manufactory. Let
us suppose, too, that the coarse materials
annually wrought up in the one cost only
seven hundred pounds, while the finer materials
in the other cost seven thousand. The
capital annually employed in the one will, in
this case, amount only to one thousand
pounds; whereas that employed in the other
will amount to seven thousand three hundred
pounds. At the rate of ten per cent. therefore,
the undertaker of the one will expect a
yearly profit of about one hundred pounds
only; while that of the other will expect
about seven hundred and thirty pounds. But
though their profits are so very different, their
labour of inspection and direction may be
either altogether or very nearly the same. In
many great works, almost the whole labour
of this kind is committed to some principal
clerk. His wages properly express the value
of this labour of inspection and direction.
Though in settling them some regard is had
commonly, not only to his labour and skill,
but to the trust which is reposed in him, yet
they never bear any regular proportion to the
capital of which he oversees the management;
and the owner of this capital, though he is
thus discharged of almost all labour, still expects
that his profit should bear a regular proportion
to his capital. In the price of commodities,
therefore, the profits of stock constitute