4. Adam Smith states that since under the division of labor any man must derive almost all his necessaries, conveniences and luxuries from the labor of other people, he must be rich, in the sense of possessing things of value, in proportion to the quantity of this labor which he can command. The assumption implicit in this is that the quantity of labor expended upon the production of things for this man, _as labor-cost_, determines their values. For if the economic goods obtained by him from the labor of others, which he is enabled to command, should have values out of proportion to the quantity of labor so commanded, namely, their labor-cost, this man would not be rich or poor merely in proportion to the labor which he commands. Since, therefore, the labor-command standard of value is made to depend upon labor-cost regulation of value, according to the principal argument advanced by Smith, it follows that Smith is really estopped from applying the labor-command standard as he does under the conditions of advanced society. For he himself has stated that labor-cost regulation of value fails under these conditions. Adam Smith’s _empirical_ account of value by no means made future improvement of statement impossible, but it was an excellent theory of proximate principles. His _philosophical_ account was an unsystematic body of suggestions, so filled with difficulties that it is doubtful if the present writer has been able to keep his interpretation and criticism of this account free from fallacy. The carrying over of the labor-command standard of value from the philosophical to the empirical account seems only to introduce an impurity into the latter. CHAPTER V RICARDO AND THE TRUE CLASSICAL LABOR THEORY