Page 33: “Every man thus lives by exchanging, or becomes in some measure a merchant.” This is worth some time to look at.
1. Leave it to a theoretician of capitalism to see everyone as a merchant. A theoretician of a feudal monarchical society might just as well have said, “By having control over his home, every man becomes in some measure a lord.”
2. What distinguishes a merchant from other trades, is that he makes his livelihood from the profit of exchanging of goods none of which he has produced or contributed toward producing; yet according to Smith, exchanges are made of equal value for equal value, hence according to his own laws, not only is every man not a merchant, but merchants cannot exist.
3. Nethertheless, there is a powerful truth here, and I think the truth outweighs the quibbles I listed above: In a market economy, exchange is the foundation of existence for everyone. The capitalist must exchange or he has no incentive to produce; the worker must exchange his ability to labor for the goods owned by the capitalist or he will not be able to feed himself to return tomorrow.
He follows this with a brief history of the development of money from 1. something that everything else can be exchanged with 2. metals being useful for this. 3. Coins as an easy form of metal, originally marked to indicate a set weight and purity 4. The inevitable debasement of coins
Page 41: “The word VALUE, it is to be observed, has two different meanings, and sometimes expresses the uility of some particular object, and sometimes the power of purchasing other goods which the possession of that object conveys. The one may be called ‘value in use;’ the other, ‘value in exchange.'” If this discovery–that double meaning of “value”–was originally discovered by Smith, it ranks as one of his most profound and important achievements.