Why did Smith suggest a labor theory of value?

John A. Robinson and J. Robert Subrick

Journal of Economic Behavior & Organization, 2021, vol. 184, issue C, 781-787

Abstract: Many commentators claim Adam Smith failed to realize that no objective standard of value exists. Instead, he adhered to the labor theory of value. Like others, we argue that in the The Wealth of Nations Smith discussed the “early and rude state” in which the labor theory of value made some sense since labor and human circumstances were relatively simple and knowable. However, because the labor theory of value is only sensible in that special case, his description of the theory suggests its own insufficiency. With the emergence of the division of labor, labor heterogeneity and the waning knowability of circumstances render the earlier analysis moot, but that is only implicit in the Wealth of Nations. So why does Smith exposit an analytically weak position? We suggest that Smith thought that his rhetorical use of the labor theory of value would advance his “liberal plan of equality, liberty, and justice.” The labor theory of value served as a rhetorical device to underpin his claims that the movement toward an economic system based on an extensive division of labor was a movement toward a better society without any systemic injustice in labor remuneration.

Keywords: Labor theory of value; Liberal plan; Esotericism; Justice; Remuneration; Wages (search for similar items in EconPapers)
JEL-codes: B12 B14 B31 B53 J24 J3 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:184:y:2021:i:c:p:781-787

DOI: 10.1016/j.jebo.2020.08.040

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