Principium Volume II, Book 7, Quote 797

797. (5-1-2010) Equal quantities of labour [sic], at all times and places, may be said to be of equal value to the labourer. In his ordinary state of health, strength and spirits; in the ordinary degree of his skill and dexterity, he must always lay down the same portion of his ease, his liberty, and his happiness. The price he pays must always be the same, whatever may be the quantity of goods which he receives in return for it. Of these, indeed, it may sometimes purchase a greater and sometimes a smaller quantity; but it is their value which varies, not that of the labour which purchases them. At all times and places that is dear which it is difficult to come at, or which it costs much labour to acquire; and that cheap which is to be had easily, or with very little labour. Labour alone, therefore, never varying in its own value, is alone the ultimate and real standard by which the value of all commodities can at all times and places be estimated and compared. It is their real price; money is their nominal price only.

- Adam Smith – Wealth of Nations, 1776

(With this thought of the value of “labour” and wealth being the command of which one has over labour, consider being an employee. An employee has the command over his own self, and can offer his labour at a certain price, but always limited by time. When I was young, I traded my one hour of labour for $3.35. At my age now of 40 years, I trade my one hour of labour for $55.00. However, I still can only give or have command over myself giving one hour of labour at a time. Now consider a business owner who commands the labour of several employees during an hour. He may then trade that hour of labour in the production of a product or the provision of a service and if the market is willing he may receive much more for his one hour than I received for mine. If, through prudence and thrift, he can avoid too much expense, than he can have a profit with which to invest into more labour.)ATJ

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