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Show ON THE NATURE AND [ CH. IT. distinction absolutely called for, -vv he never we are comparing the wealth of t\V"O nations together, or whenever 've are estimating the value of the precious tnetals in different states and at different periods of time. Atid till it has been shewn that son1e other interpretation of the term real value in exchange, either agrees better with the sense in which the words al}e generally applied, or is dec. idedly n1ore useful in an inquiry into the nature and causes of the wealth of nations, I shall continue to think, that the n1ost proper definition of real value in exchange, in contradistinction to nominal value in exchange, is, the power of cornmanding the necessaries and conveniences of life, including labour, as distinguished fron1 the power of commanding the precious metals. . If then we continue to apply the term value in the first sense mentioned, we shall have three sorts ofvalue- 1. Value in use; which may be defined to be the intrinsic utility of an object. 2. Nominal value in exchange ; ,vbich may be defined to be the value of commodities in the pre-cious metals. ' 3. Real value in exchange ; which n1ay be defined to be the power of an object to comtnand in exchange the necessaries and conveniences of life including labour. ' The distinctions here made bet,veen the different. kinds of value are, in the main, those of Adam Smtth; though it n1ust be acknowledo-ed that he has not been sufficiently careful to ke~p them al- I • ., SEC. II.] :MEASURES OF VALUE. ways separate. In speaking of the value of corn, he has sometimes left us in doubt whether he means value in use, or real value in exchano-e · * 0 ' and he sometimes, as I shall have occasion to no-tice further on, confounds the cost of a commodity in labour with its value in comrnandino- labour h. h 0 ' w tc are essentially different.t .. These instances however may, perhaps, be fairly considered in the light of inadvertences. At the end of the third chapter of his first book he has explained value in use in the same manner as it has been explained here ; and in part of the succeeding. c?apter, on the real and nominal prices tif commodztzes, he has made exactly the same distinction between real and nominal value, the propriety of which, as it has been controverted, it has been my endeavour to establish~ To these distinctions he has, in the main, adhered ; they properly belong to his system; and he has only deviated fron1 them when, frotn some cause or other he was not fully aware of the inconsistency of such deviation. I ; SECTION II. Of Demand aud Supply, as they affect Exchangeable T~"alue. I THE terms Demand and Supply are so familiar to the ear of every reader, and their application in • Wealth of Nations, Book IV. Chap. v. p. 278. 6th Edit t I d. Book I. Chap. v. |
