Textos para Discussão 013 | 2015

Discussion Paper 013 | 2015

The objective of this paper is to present Adam Smith’s theory of value and distribution as coherent with the idea that the wage, profit and rent of land rates distribute a given physical produce. Therefore, each social class cannot receive a greater quantity of commodities unless the other classes’ losses are of the exact same amount. This affirmative directly contradicts Marx’s “adding-up interpretation”, whereby Smith would have independently determined the rates of wages, profits and rents of land before adding them up to determine the natural prices of the commodities. The adding-up interpretation fails to acknowledge the residual explanation of the rent of land rate, determined by technology and the rates of wages and profits. I will show that the residual determination of the rent of land rate set forth in the eleventh chapter of WN resulted also in a residual determination of the share of rent in total produce. In fact, Smith’s theory of value is re-interpreted as the theoretical linkage among physical production and monetary revenues, allowing Smith to subordinate the later to the former. Therefore, the theory of value does not deny the binding constraint on distribution. The article is composed of six sections: 1) Introduction; 2) The "adding up theory of value” interpretation; 3) The residual determination of the rent of land rate; 4) Distributive changes and natural prices; 5) The interpretation of Smith’s theory of value and distribution; 6) Conclusion.

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