THE ‘MATERIAL EXPENSES’ APPROACH TO THE THEORY OF VALUE AND DISTRIBUTION IN THE WEALTH OF NATIONS

The paper discusses the influence of physiocratic ideas on Adam Smith’s approach to the theory of value and distribution in The Wealth of Nations (WN). It is shown that Smith attempted to elaborate on the contributions of the Physiocrats by adopting elements of two different approaches to the theory of value and distribution which he found in their writings: A material-based approach and a labor-based one. While tentatively proposing a labor theory of value, Smith also retained elements of the material expenses approach which he had inherited from his precursors. The paper specifically draws attention to some tensions and inconsistencies that arise from the simultaneous presence of the two different approaches to the theory of value and distribution in the WN.