Adam Smith's Concept of Labour: Value or Measure?

The terminology employed by Smith to refer to value and measure of value is used in his time with imprecision, which has led to different interpretations about his position on these issues. It is no coincidence that Smith is considered the father of the labour theory of value developed by David Ricardo and Karl Marx and simultaneously of the cost-of-production theory of value developed by John Stuart Mill and Alfred Marshall. This paper reviews the concepts developed by Smith to formulate his theory of value –value, real price and exchangeable value– and the criticism made by Ricardo and Marx on Smith’s position about the role of labour as measure of value. According to these authors, Smith is not consistent in proposing that the value of a commodity is defined or measured as the amount of labour necessary to produce it and simultaneously as the amount of labour that can be purchased by this commodity. After demonstrating that the interpretation made by Ricardo and Marx on Smith’s arguments could be wrong, and that the criticized inconsistency of Smith’s reasoning could not really exist, I will argue that Smith proposes labour as a measure of value because he conceives it as a source of value, so that it can be said that Smith holds a labour theory of value that substantially corresponds to the one later developed by Ricardo and Marx.