1. In the splendid chapters on the “Component Parts of Price,” and the “Natural and Market Price of Commodities,” Adam Smith flees the more speculative questions of the philosophical essence of value, and turns to that most important, but relatively proximate, principle of exchange value in the modern market, which we now call the law of entrepreneur’s costs. It is beyond the scope of this history to follow him through his analysis of the component parts of this cost, called by him the “component parts of price,” into wages, profits and rent. The “natural” or “necessary price” is the sum of these components, and is the center toward which actual market-price is always tending. With Cairnes, we now call this by the better term, “normal market value.” Nor can we trace the thought into the subsequent separate chapters on “Wages,” “Profits,” and “Rent of Land,” where Adam Smith presents what is probably the earliest attempt at a systematic theory of distribution. We are concerned only with the fact that in the “empirical account” Adam Smith shifts his ground on the question of the relation of labor to value. While dwelling upon the hypothetical primitive conditions under which the essence of value is supposed to be laid bare, he proposed the _labor-cost_ and the _labor-command_ standards without a word as to their mutual relations. But as he approaches the problem of value under advanced conditions, he both explains his view of the relation of these two standards, and abandons the first one, that of labor cost. In the primitive state of society, the labor cost of a commodity _determines_ the amount of labor commanded by it in exchange. The two amounts of labor must “naturally” be the same. The “whole produce of labour,” then, belongs to the laborer, and no profits or rent exist to destroy the proportionality between labor-cost and value. But in society as now constituted, it is different. “The whole produce of labour does not always belong to the labourer. He must in most cases share it with the owner of the stock which employs him. Neither is the quantity of labour commonly employed in acquiring or producing any commodity the only circumstance which can regulate the quantity which it ought commonly to purchase, command, or exchange for. An additional quantity, it is evident, must be due for the profits of stock,” (and the rent of land.)[33] 2. In a word, value in exchange is no longer proportionate to labor-cost, because the value of a commodity must now contain elements which remunerate not only the labor, but also the capital and land employed in its production. Nevertheless, the “real value” of such a commodity produced in advanced society is measured by the labor which that commodity will command in exchange.