“The real value of all the different component parts of price, it must be observed, is measured by the quantity of labour, which they can, each of them, purchase or command. Labour measures the value not only of that part of price which resolves itself into labour, but of that which resolves itself into rent, and of that which resolves itself into profits.”[34] The inaccuracy of expression in this passage is gross. Without scrutiny of the context one would certainly fail to get an idea from the astonishing words that “_labour_ measures the _value_ of that part of _price_ which resolves itself into _labour_.” In the first place, for the last word “labour,” _wages_ should be substituted. Labor is neither a share in distribution nor a “component part of price.” The meaning of the passage is that the “real value” of a commodity, even in advanced society, is measured by the amount of labor which can be had in exchange for it, in spite of the fact that its value in exchange is no longer in proportion to its _cost_ of production in labor. In the above citation, Adam Smith means to assert that the “real value” of any concrete income as a share in distribution is measured by the amount of labor it will command. Thus the “real value” of the rent of a plot of ground would vary through time, according to the number of days of labor that could be purchased by it in the different years. As a theory of value to apply to actual life, Adam Smith left us an early form of the law of entrepreneur’s cost and a labor-command _measure of value_. But he disowns what is naturally thought of as the genuine classical labor theory of value, that labor-cost regulates market-value. This theory was Ricardo’s, and really his alone.[35] CHAPTER IV CRITICISM OF THE THEORIES OF ADAM SMITH. 1. In this chapter it is the intention to examine more fully the reasoning by which Adam Smith sought to establish his main contentions concerning the relation of labor to value. As for a proof that, under “philosophical” primitive conditions, goods would exchange in proportion to their costs in labor, none is given. It is considered obvious that this would be true: “It is natural that what is usually the produce of two days’ or two hours’ labour, should be worth double of what is usually the produce of one day’s or one hour’s labour.”[36] In support of the theorem of the _labor-command standard_, however, in contrast with that of labor-cost, he makes a show of argument, which is contained in the following quotation: