Chapter

A Conceptual Sytem 

Andrew Stewart Skinner

in A System of Social Science

Second edition

Published in print March 1996 | ISBN: 9780198233343
Published online October 2011 | e-ISBN: 9780191678974 | DOI: http://dx.doi.org/10.1093/acprof:oso/9780198233343.003.0008
A Conceptual Sytem 

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Although Adam Smith's model, in its post-physiocratic form, has several distinct elements, the feature on which he continued to place most emphasis was the division of labour, which is implied in the existence of distinct sectors or types of productive activity. However, Smith also emphasized the fact that there was specialization by types of employment, and even within each employment. He pointed out that the division of labour (by process) helped to explain the relatively high labour productivity in modern times. As regards the rate of exchange, Smith isolated two relevant factors: the usefulness of the good to be acquired, and the ‘cost’ incurred in creating the commodity to be given up. The first of the relevant relationships is obviously that existing between ‘usefulness’ and value. It will be apparent from the previous argument that Smith regarded rent, wages, and profit as the types of return payable to the three ‘great constituent orders’ of society and as the price paid for the use of the factors of production.

Keywords: Adam Smith; division of labour; specialization; rate of exchange; usefulness; value; rent; wages; profit; price

Chapter.  17693 words. 

Subjects: Economic History

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