Wealth of Nations, Notes #1


“The value of any quantity…is equal to the quantity of labor” (Smith 41).

The above statement might surprise some people, but that is a very un-capitalist thing to say. Marx and Smith did not fundamentally disagree on this point.

Interest: It is compensation which the borrower pays to the lender (74). The law can only prohibit interest.  It cannot prevent it.  I don’t think Smith is saying anything so trite as “you can’t make bad people obey the law.”  Interest, rather, is a reflection of time preference.  People prefer present goods to future goods.


Actual price: the price at which any commodity is commonly sold.  Also called “market price” (79). Commodities commonly gravitate towards this price (82).

Profits of Stock

Axiom: wherever a great deal can be made by the use of money, a great deal will commonly be given for the use of it (123).  “When you have a little, you can easily get more.  The difficulty is to get that little.”

Speculation is inevitable in a free economy.  If you have new agriculture or commerce or technology, then you have speculation.


The law can prohibit usury, but that only shifts it elsewhere. People have to borrow, and lenders won’t lend flat out to people who are at risk of not paying it back.  Money then becomes more expensive, so to speak, and that expense is shifted to other costs.


Any new investment or product requires speculation.

Incorporated Trade

Incorporated trade restrains competition (164).  Union laws are oppressive at root.  They restrict my right to work. My core property is my labor.  Union laws restrict my right to work at what price I believe I am worth, and they restrict the employer from hiring me at what price he is willing to pay.  From this Smith attacks the idea of long apprenticeships; they do nothing to encourage the love of labour.  The better thing to do is get the young man interested in labor early on, letting him taste the fruits of it, and then he will be hooked.


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