Jeffrey T. Young, Adam Smith’s Theory of Value and Distribution: Economics as a Moral Science Once Again (London and New York: Routledge, 2024), pp. 214, $190 (hardcover). ISBN: 9781032373010.
Year: 2025
Type: book-review
Abstract: Once Again not to to offer a comprehensive interpretation of Adam Smith's work.But, in practice, he does, even if his goal is to reinterpret Smith's theory of value as an application of the theory of supply and demand, thus offering an alternative to the Ricardian, Marxian, and Sraffian interpretation of Smith having a labor theory of value.But this supply-and-demand explanation is not quite the standard textbook one.Here, agents are engaged in price discovery rather than being price takers; and the economic agents are moral beings rather than utility maximizers.The book opens with three "Preliminaries" chapters.Here, the tone is set: Adam Smith and Karl Marx do not share a common philosophical background and "are not philosophically compatible" (p. 7).Marx is claimed to be working within an ancient metaphysics, which Smith rejects in favor of a Newtonian science.Marx looks for essences; Smith wants to describe how things work instead.Young sees Smith as working in a moral framework.Economics was, after all, a moral science.This is why, for him, Smith understands justice, property rights, and the division of labor and exchange as emerging spontaneously from natural sentiments of ordinary people.They cannot be explained by an ex ante knowledge of their benefits.The implication, for Young, is that Smith is not a utilitarian but rather a consequentialist.In the central part of the book, the part on "Value," Young usefully explains the difference he sees in Smith's use of rules and principles.Rules emerge contextually, while principles are philosophical constructs: "Ordinary people create rules, philosophers create principles as they reflect upon those rules" (p.63).From this, it follows that value theory is about the rules that people establish to exchange.And the rules of supply and demand, as Francis Hutcheson taught Smith, express the interaction between scarcity and utility, within a natural law framework.Young goes on to explain that, for Smith, the nominal price is a price expressed in money, while the real price is a price expressed in labor, which makes labor a standard of value, not necessarily a cause of it.Exchange value is a power, and that "power ultimately derives from wants" (p.74).Wants and toils are universal human experiences, which allows for a sympathetic exchange.The toil and trouble will thus give rise to a just claim to receive compensation: "Cost for Smith always seems to carry the notion of just claim to be compensated" (p.112).This will also include the opportunity cost of using both capital and land, as Young explains in later chapters.Smith's value theory is thus not following the Marxian problem of determination of value, but it is imbedded in justice.
Author: Maria Pia Paganelli
Institution: Trinity University
Language: English
Field: Social Sciences
Domain: Social Sciences
Open Access status: bronze
OpenAlex ID: W4408768555