56
The Wealth of Nations
ducing them, may not be sufficient to supply the effectual de-
mand. The whole quantity brought to market, therefore, may be
disposed of to those who are willing to give more than what is
sufficient to pay the rent of the land which produced them, to-
gether with the wages of the labour and the profits of the stock
which were employed in preparing and bringing them to market,
according to their natural rates. Such commodities may continue
for whole centuries together to be sold at this high price; and that
part of it which resolves itself into the rent of land, is in this case
the part which is generally paid above its natural rate. The rent of
the land which affords such singular and esteemed productions,
like the rent of some vineyards in France of a peculiarly happy soil
and situation, bears no regular proportion to the rent of other
equally fertile and equally well cultivated land in its neighbourhood.
The wages of the labour, and the profits of the stock employed in
bringing such commodities to market, on the contrary, are sel-
dom out of their natural proportion to those of the other employ-
ments of labour and stock in their neighbourhood.
Such enhancements of the market price are evidently the effect
of natural causes, which may hinder the effectual demand from
ever being fully supplied, and which may continue, therefore, to
operate for ever.
A monopoly granted either to an individual or to a trading com-
pany, has the same effect as a secret in trade or manufactures. The
monopolists, by keeping the market constantly understocked by
never fully supplying the effectual demand, sell their commodi-
ties much above the natural price, and raise their emoluments,
whether they consist in wages or profit, greatly above their natural
rate.
The price of monopoly is upon every occasion the highest which
can be got. The natural price, or the price of free competition, on
the contrary, is the lowest which can be taken, not upon every
occasion indeed, but for any considerable time together. The one
is upon every occasion the highest which can be squeezed out of
the buyers, or which it is supposed they will consent to give; the
other is the lowest which the sellers can commonly afford to take,
and at the same time continue their business.
The exclusive privileges of corporations, statutes of apprentice-
ship, and all those laws which restrain in particular employments,
the competition to a smaller number than might otherwise go
into them, have the same tendency, though in a less degree. They
are a sort of enlarged monopolies, and may frequently, for ages
together, and in whole classes of employments, keep up the mar-
ket price of particular commodities above the natural price, and
maintain both the wages of the labour and the profits of the stock
employed about them somewhat above their natural rate.
57
Adam Smith
Such enhancements of the market price may last as long as the
regulations of policy which give occasion to them.
The market price of any particular commodity, though it may
continue long above, can seldom continue long below, its natural
price. Whatever part of it was paid below the natural rate, the
persons whose interest it affected would immediately feel the loss,
and would immediately withdraw either so much land or no much
labour, or so much stock, from being employed about it, that the
quantity brought to market would soon be no more than suffi-
cient to supply the effectual demand. Its market price, therefore,
would soon rise to the natural price; this at least would be the case
where there was perfect liberty.
The same statutes of apprenticeship and other corporation laws,
indeed, which, when a manufacture is in prosperity, enable the
workman to raise his wages a good deal above their natural rate,
sometimes oblige him, when it decays, to let them down a good
deal below it. As in the one case they exclude many people from
his employment, so in the other they exclude him from many
employments. The effect of such regulations, however, is not near
so durable in sinking the workman’s wages below, as in raising
them above their natural rate. Their operation in the one way may
endure for many centuries, but in the other it can last no longer
than the lives of some of the workmen who were bred to the busi-
ness in the time of its prosperity. When they are gone, the number
of those who are afterwards educated to the trade will naturally
suit itself to the effectual demand. The policy must be as violent as
that of Indostan or ancient Egypt (where every man was bound by
a principle of religion to follow the occupation of his father, and
was supposed to commit the most horrid sacrilege if he changed it
for another), which can in any particular employment, and for
several generations together, sink either the wages of labour or the
profits of stock below their natural rate.
This is all that I think necessary to be observed at present con-
cerning the deviations, whether occasional or permanent, of the
market price of commodities from the natural price.
The natural price itself varies with the natural rate of each of its
component parts, of wages, profit, and rent; and in every society
this rate varies according to their circumstances, according to their
riches or poverty, their advancing, stationary, or declining condi-
tion. I shall, in the four following chapters, endeavour to explain,
as fully and distinctly as I can, the causes of those different varia-
tions.
First, I shall endeavour to explain
what are the circumstances
which naturally determine the rate of wages, and in what manner
those circumstances are affected by the riches or poverty, by the
advancing, stationary, or declining state of the society.