Of the Component Parts of the Price of Commodities
- Why do some jobs pay more than others? For Adam Smith, there are several reasons, but one of the most obvious reasons is the fact that some jobs are tougher than others. Some jobs require more skill and expertise than others, which is another reason they're paid differently.
- In the first societies, workers got to keep all the profit of their own labors. But as some people started to build up stockpiles of stuff (which today we call "wealth"), they used this extra stuff to pay other people to work for them. That's when bosses started existing and taking a cut of the workers' profits. Then when private property gets invented, some people start charging other people rent to live on their land or in their buildings. And that's when you get landlords.
- When all is said and done, there are three things that make up the price of every product: the labor it took to make the product, the profit that the company wants to make, and the rent that the company gets charged on its buildings or its machines. The rent and labor (wages) make up a lot of the price, but anything beyond that is the company's profit.
- When you look at the big picture, the wealth of a country can also be broken into labor, profit, and rent.