Labor Value

What is value?
What is richness?

The word “Value” has 2 different meanings:

    1. Value in use: Utility of particular object – e.g.Water
    2. Value in exchange: Power of purchasing other goods – e.g. Diamond
      1. The real measure of the exchangeable value of all commodities is Labor
      2. Equal to the quantity of labor which it enables you to purchase or command

The real price of everything is the toil and trouble of acquiring it with the human body. In the early days(Before seizing lands, and developing stocks) the proportions between quantities of labor necessary for acquiring objects, are the only circumstance that can afford any rule for exchanging. (If it takes you 2X more trouble to hunt a bear than a deer, the price of the bear will also naturally be 2X the price of a deer.)

The division of labor is a necessary consequence of the faculties of reason and speech of human nature. 
The extent of the division is limited by the extent of the market. Some sorts of an industry can only be found in great towns, with extended markets – such as a porter(carrier).
If the market is small, there is no encouragement for a person to dedicate himself to one employment – in a small isolated village, for example, each individual is forced to know many little occupations, from fixing keylocks to baking bread. 

Extending the market is posterior to the improvement of the country, for after the extension the industry naturally begins to subdivide and improve. That’s why the first improvements should be in extending the markets, where it would open the world for a market to produce every sort of labor.

Richness is the degree to which an individual can enjoy human life: Neccassries, conveniences, and amusements- The far greater part must be derived from the labor of other people.
As almost every animal in maturity is entirely independent, on the other hand, humans have constant occasion for the help of others.
The most dissimilar geniuses are of use one from another talent and it is in vain to expect help from benevolence but is better to address others’ self-love and others’ advantages of assisting you.
The difference between men, however, is much less of our awareness – most differences of most dissimilar characters (Philosopher to a porter), come from habit, custom, and education.

From The wealth of nations

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