ADAM SMITH'S THEORY OF VALUE AND DISTRIBUTION

Transcription

1 ADAM SMITH'S THEORY OF VALUE AND DISTRIBUTION

2 Adam Smith's Theory of Value and Distribution A Reappraisal Rory O'Donnell Economist National Economic and Sodal Council, Dublin Palgrave Macmillan

3 ISBN ISBN (ebook) DOI / Rory O'Donnell, 1990 Softcover reprint of the hardcover 1st edition 1990 All rights reserved. For infonnation, write: Scholarly and Reference Division, St. Martin's Press, Inc., 175 Fifth Avenue, New York, N.Y First published in the United States of America in 1990 ISBN Library of Congress Cataloging-in-Publication Data O'Donnell, Rory. Adam Smith's theory of value and distribution/rory O'Donnell. p. cm. Inc1udes bibliographical references. ISBN Smith, Adam, Value. 3. Distribution (Economic theory) I. Title. HB 103.S '3~c CIP

4 Contents Acknowledgements viii 1 Introduction 1.1 Contemporary interpretations of Smith 1.2 The approach to interpretation 1.3 Outline of the argument 2 Theories of Value and Distribution 2.1 Classical or surplus theory 2.2 Neoclassical theory 2.3 Analytical themes in the study of Smith PART I SMITH'S CONTRIBUTION 3 Surplus 3.1 Surplus and accumulation 3.2 'Annual produce' in the Wealth 0/ Nations 3.3 Gross and net revenue 3.4 A surplus theory of the non-wage share? 3.5 Conclusion Competition 4.1 Natural price and the uniform rate of profit Features of Smithian competition Competition and equilibrium of supply and demand The concept of a capitalist economic system The Measure of Value 5.1 Smith's labour command measure 5.2 Smith's key assumptions 5.3 The operation of Smith's measure 5.4 Contrast with existing interpretations v

5 vi Contents 5.5 Further evidence of Smith's intentions Conclusions 80 6 Value and Distribution The 'component parts of price' Distribution Assessment Taxes The corn export bounty Observations on actual price changes 110 Appendix: absence of reduction of means of production to labour in Smith's work 113 PART 11 INTERPRETATIONS 7 Ricardo's Development of Smitb's Tbeory The new theory of profits Assumptions and their consequences The relation of wage changes to prices Va1ue and riches Supply and demand Conclusion Marx on Smitb Marx's 'two streams' proposition? Smith as a surplus theorist The labour theory of value Labour command The resolution of price into wages, profit and rent Assessment Smith as 'General Equilibrium' Tbeorist Hollander's argument in outline A 'supply and demand' explanation of value Distribution 'Formal analysis' and 'practical applications' A theorist of resource allocation determined by 193 factor endowments

6 Contents vii 10 Smith as 'Cost 01 Production' Theorist 'Cost of production' interpretations Dobb's 'two streams' proposition Ricardo's criticism of Smith's theory The 'cost of production tradition' Smith's contribution to surplus theory Dobb and Schumpeter: a clarification Conclusion Smith and the surplus theory Smith and the neoclassical theory 224 Notes and References 231 Bibliography 260 Index 271

7 Acknowledgements It is a pleasure to acknowledge my great debt to John Eatwell for his valuable guidance and support during the research for this book. Without his keen theoretical comments and considerable patience this work would not have been possible. I am grateful also to Prue Kerr, GeofTrey Harcourt and Murray Milgate for helpful comments. At an earlier stage of my studies I received a valuable intellectual stimulus from Patrick Lynch and Cormac O'Grada, and encouragement from Paul Andrews. A special debt is owed to my parents who provided continuing support and encouragement. I am extremely grateful to Jacqueline O'Connor for her first-ciass secretarial work and immense patience. The research for this work was funded by the Economic and Social Research Institute, Dublin, the Robert Gardiner Memorial Foundation, and Trinity Hall, Cambridge. RORY O'DONNELL Vlll