Wages of Labour

Profit of Capital

Rent of Land

[II. 1.]
....The sudden and random fluctuations in market price hit ground rent less than that part of the price which is resolved into profit and wages, but they hit profit less than wages. For every wage that rises, usually one remains stationary and another falls.
....The worker need not necessarily gain when the capitalist does, but he necessarily loses with him. For example, the worker does not gain if the capitalist keeps the market price above the natural price by means of a manufacturing or trading secret, by virtue of a monopoly or a favourably situated property.
....Moreover, the prices of labour are much more constant than the prices of provisions. They are often in inverse proportion. In a dear year, wages drop because of a drop in demand and rise because of an increase in the price of provisions. They, therefore, balance. In any case, some workers are left without bread. In cheap years, wages rise on account of the rise in demand, and fall on account of the fall in the price of provisions. So they balance. [Smith, I, pp. 76-7.]
....Another disadvantage for the worker:
....The price of the labour of different kinds of workers varies much more than the profits of the various branches in which capital is put to use. In the case of labour, all the natural, spiritual, and social variations in individual activity are manifested and variously rewarded, whereas dead capital behaves in a uniform way and is indifferent to real individual activity.
....In general, we should note that in the cases where worker and capitalist both suffer, the worker suffers in his very existence, the capitalist in the profit on his dead mammon.
....The worker has not only to struggle for his physical means of subsistence; he must also struggle for work -- i.e., for the possibility and the means of realizing his activity. Let us consider the three main conditions which can occur in society and their effect on the worker.
....(1) If the wealth of society is decreasing, the worker suffers most of all, and this is why: although the working class cannot gain as much as the property owners when society is prospering, none suffers more cruelly from its decline than the working class. [Smith, I, p. 230.]

[III. 1.]

[II. 2.]
capital of which he oversees the management. And the owner of this capital, though he is thus discharged of almost all labour, still expects that his profits should bear a regular proportion to his capital."
[Smith, p. 43]

....Why does the capitalist demand this proportion between profit and capital?
...."He could have no interest in employing these workers, unless he expected from the sale of their work something more than was sufficient to replace the stock advanced by him as wages; and he could have no interest to employ a great stock rather than a small one, unless his profits were to bear some proportion to the extent of his stock."
[Smith, p. 42]

....The capitalist thus makes a profit, first, on the wages, and secondly on the raw materials advanced by him.
What proportion, then, does profit bear to capital?

...."It is not easy to work out what the average wages of labour are even in a particular place and at a particular time, and it is still more difficult to determine the profit on capital. Variations of price in commodities which the capitalist deals in, the good or bad fortune, both of his rivals and of his customers, a thousand other accidents to which his goods are liable in transit and in warehouses, all produce a daily, almost hourly, variation in profits."
[Smith, pp. 78-9]
...."But although it may be impossible to determine, with any degree of precision, the average profits of capital, some notion may be formed of them from the interest of money. Wherever a great deal can be made by the use of money, a great deal will be given for the use of it; wherever little can be made, little will be given." [Smith, p. 79]
...."The proportion which the usual market rate of interest ought to bear to the ordinary rate of clear profit, necessarily varies as profit rises or falls. Double interest is in Great Britain reckoned what the merchants call a good, moderate, reasonable profit, terms which... mean no more than a common and usual profit." [ Smith, p. 87 ]

....What is the lowest rate of profit? And what the highest?
...."The lowest rate of ordinary profit on capitals must always be something more than that sufficient to compensate the occassional losses to which every employment of capital is exposed. It is this surplus value only which is the neat or clear profit. The same holds for the lowest rate of interest." [Smith, p. 86]
[III. 2.]

[II. 3.]
....But in order to profit by the produce of the water, they must have a habitation on the neighboring land. The rent of the landlord is in proportion, not to what the farmer can make by the land, but by what he can make both by the land and by the water."
[Smith I. p.131.]
...."This rent may be considered as the produce of those powers of nature, the use of which the landlord lends to the farmer. It is greater or smaller according to the supposed extent of those powers, or in other words, according to the supposed natural or improved fertility of the land. It is the work of nature which remains after deducting or compensating everything which can be regarded as the work of man."
[ Smith, I, pp. 324-5 ]

...."The rent of land, therefore, considered as the price paid for the use of land, is naturally a monopoly price. It is not at all proportioned to what the landlord may have laid out upon the improvement of the land, or to what he can afford to take; but to what the farmer can afford to give."
[ Smith, I, p. 131 ]
...."They [landlords] are the only ones of the three orders whose revenue costs them neither labour nor care, but comes to them, as it were, of its own accord, and independent of any plan or project of their own.
[Smith, I, p. 230 ]

....We have already seen how the volume of rent depends upon the degree of fertility of the land.
Another element in its determination is its situation.
...."The rent of land not only varies with its fertility, whatever be its produce, but with its situation, whatever be its fertility."
[Smith, I, p. 133 ]
...."The produce of lands, mines, and fisheries, when their natural fertility is equal, is in proportion to the extent and proper

[III. 3.]















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