amond, on the contrary, has scarce any value in use; but a very great quantity of other goods may frequently be had in exchange for it (Smith 131-132).
Smith (132), in The Wealth of Nations, was concerned with value in the exchange context. He postulated that value, in an exchange context, derived from considerations of both the division of labor, and the use of money. On the one hand, he held that the division of labor arises from a propensity in human nature to exchange, for which each trader must have a surplus over his immediate needs with which to trade (Ekelund and Hebert 90). On the other hand, he held that money enters the picture because it makes trade more convenient insofar as it is generally acceptable and portable (Ekelund and Hebert 90). From this basis, he concluded that value is determined by rules observed in the exchange of goods for money.
Labor was the central factor in Smith's determination of value. In what he referred to as an early and rude society, value was determined through the process of barter, w
...