50
The Wealth of Nations
greater part of them, their own estates: and accordingly we sel-
dom hear of the rent of a plantation, but frequently of its profit.
Common farmers seldom employ any overseer to direct the gen-
eral operations of the farm. They generally, too, work a good deal
with their own hands, as ploughmen, harrowers, etc. What re-
mains of the crop, after paying the rent, therefore, should not
only replace to them their stock employed in cultivation, together
with its ordinary profits, but pay them the wages which are due to
them, both as labourers and overseers. Whatever remains, how-
ever, after paying the rent and keeping up the stock, is called profit.
But wages evidently make a part of it. The farmer, by saving these
wages, must necessarily gain them. Wages, therefore, are in this
case confounded with profit.
An independent manufacturer, who has stock enough both to
purchase materials, and to maintain himself till he can carry his
work to market, should gain both the wages of a journeyman who
works under a master, and the profit which that master makes by
the sale of that journeyman’s work. His whole gains, however, are
commonly called profit, and wages are, in this case, too, con-
founded with profit.
A gardener who cultivates his own garden with his own hands,
unites in his own person the three different characters, of land-
lord, farmer, and labourer. His produce, therefore, should pay him
the rent of the first, the profit of the second, and the wages of the
third. The whole, however, is commonly considered as the earn-
ings of his labour. Both rent and profit are, in this case, confounded
with wages.
As in a civilized country there are but few commodities of which
the exchangeable value arises from labour only, rent and profit
contributing largely to that of the far greater part of them, so the
annual produce of its labour will always be sufficient to purchase
or command a much greater quantity of labour than what was
employed in raising, preparing, and bringing that produce to
market. If the society were annually to employ all the labour which
it can annually purchase, as the quantity of labour would increase
greatly every year, so the produce of every succeeding year would
be of vastly greater value than that of the foregoing. But there is
no country in which the whole annual produce is employed in
maintaining the industrious. The idle everywhere consume a great
part of it; and, according to the different proportions in which it
is annually divided between those two different orders of people,
its ordinary or average value must either annually increase or di-
minish, or continue the same from one year to another.
51
Adam Smith
CHAPTER
CHAPTER
CHAPTER
CHAPTER
CHAPTER VII
VII
VII
VII
VII
OF
OF
OF
OF
OF THE NA
THE NA
THE NA
THE NA
THE NATURAL AND MARKET PRICE
TURAL AND MARKET PRICE
TURAL AND MARKET PRICE
TURAL AND MARKET PRICE
TURAL AND MARKET PRICE
OF COMMODITIES
OF COMMODITIES
OF COMMODITIES
OF COMMODITIES
OF COMMODITIES
T
HERE
IS
IN
EVERY
SOCIETY
or neighbourhood an ordinary or aver-
age rate, both of wages and profit, in every different employment
of labour and stock. This rate is naturally regulated, as I shall shew
hereafter, partly by the general circumstances of the society, their
riches or poverty, their advancing, stationary, or declining condi-
tion, and partly by the particular nature of each employment.
There is likewise in every society or neighbourhood an ordinary
or average rate of rent, which is regulated, too, as I shall shew
hereafter, partly by the general circumstances of the society or
neighbourhood in which the land is situated, and partly by the
natural or improved fertility of the land.
These ordinary or average rates may be called the natural rates
of wages, profit and rent, at the time and place in which they
commonly prevail.
When the price of any commodity is neither more nor less than
what is sufficient to pay the rent of the land, the wages of the
labour, and the profits of the stock employed in raising, prepar-
ing, and bringing it to market, according to their natural rates, the
commodity is then sold for what may be called its natural price.
The commodity is then sold precisely for what it is worth, or for
what it really costs the person who brings it to market; for though,
in common language, what is called the prime cost of any com-
modity does not comprehend the profit of the person who is to sell
it again, yet, if he sells it at a price which does not allow him the
ordinary rate of profit in his neighbourhood, he is evidently a loser
by the trade; since, by employing his stock in some other way, he
might have made that profit. His profit, besides, is his revenue, the
proper fund of his subsistence. As, while he is preparing and bring-
ing the goods to market, he advances to his workmen their wages,
or their subsistence; so he advances to himself, in the same manner,
his own subsistence, which is generally suitable to the profit which
he may reasonably expect from the sale of his goods. Unless they
yield him this profit, therefore, they do not repay him what they
may very properly be said to have really cost him.
Though the price, therefore, which leaves him this profit, is not
always the lowest at which a dealer may sometimes sell his goods,
it is the lowest at which he is likely to sell them for any consider-
able time; at least where there is perfect liberty, or where he may
change his trade as often as he pleases.
The actual price at which any commodity is commonly sold, is
called its market price. It may either be above, or below, or exactly