the constancy or inconstancy of employment in them; fourthly, the small or great trust which must be reposed in those who exercise them; and, fifthly, the probability or improbability of success in them. Differences in the rate of pro-
fit seem to be occasioned, chiefly from the risk to which capital is exposed, being greater in some employments than in others.
One of the most important inquiries in political economy, is the investigation of the laws which regulate the exchangeable value of the different productions of industry; and the disquisitions of Dr Smith on this subject, are extremely valuable. He has shown, in opposition to the opinion commonly before entertained on the subject, that the price of commodities, the quantity of which may be indefinitely increased, does not depend upon their scarcity or abundance, but upon the cost of their production; that although variations in the supply of any article, or in the demand for it, may occasion temporary variations in its exchangeable value, the market price is permanently regulated by the natural price, and on an average corresponds with it. In estimating the elements, however, which form the necessary price of commodities, he has fallen into some very important errors, particularly with regard to rent, which, from being unacquainted with the causes that produce it, he considered to be one of the "component parta of price. It was subsequently suggested by Dr Anderson, and more specifically laid down by Ricardo and others, that rent is the difference between the product of the fruitful soil of a country, (in comparison with the amount of labour and capital expended on it,) and the product of such less fruitful soil, as the pressure of population renders it necessary to bring into cultivation; and that rent being the difference between returns from an equal amount of capital applied to superior soils, and to that which is the most unproductive, is the effect, and not the cause, of the dearness of agricultural products; and cannot, therefore, form an element in their natural price.
The error which Dr Smith has fallen into, with regard to rent, is certainly the most important mistake in the "Wealth of Nations," and has vitiated a considerable part of the work.[1] Among other mistakes, it has led him into error, in regard to the ultimate incidence of different taxes, and the circumstances which determine the rate of wages and profits. Had the illustrious author, too, been acquainted with the true theory of rent, he would not have contended that corn, upon an average, was the most invariable of all commodities in its value.
Many other important subjects, besides those we have so briefly noticed, are discussed by Dr Smith; but we cannot farther extend our remarks. With all its defects, the "Wealth of Nations" will ever remain a great standard work in the science of political economy, and an illustrious monument of the genius and talents of its author. The publication raised him to the highest rank in the literary world; and he enjoyed, during fifteen years, the fame which he had so justly acquired. His work soon after being published, was translated into all the languages of Europe; his opinions were referred to in the house of commons, and he himself consulted by the minister. Before his death, too, he had the satisfaction of seeing that the principles of commercial freedom, which he had so ably advocated, were beginning to influence the councils of Great Britain, and other European states.
A few months after the publication of the "Wealth of Nations," Dr Smith lost his highly esteemed friend, Mr Hume, who died upon the 25th of August, 1776. Dr Smith was most assiduous in his attentions during the last illness of this illustrious man; and gives an interesting account, in a letter to Mr Strahan
- ↑ Dr Smith's theory of rent, however, is not without its defenders. See, in particular, the Westminster Review.
