The Measure of Value

Hollander is undoubtedly correct when he says that in recent years there has emerged a remarkable consensus concerning Adam Smith’s measure of value. Smith’s labour command measure is seen as an index of purchasing power designed to measure welfare; and the relationships between labour commanded and labour embodied, given so much attention by earlier commentators on Smith, are dismissed as having played no significant part in his thought. Yet there is a striking contradiction between the conventional view, as expressed by Hollander, and Smith’s emphatic statement, quoted above, that the labour commanded (and labour embodied) value of a given commodity is not an index of its general purchasing power. In view of this, a reexamination of Smith’s measure of value seems warranted.