Book I: Chapter 7

CHAPTER VII.

OF THE NATURAL AND MARKET PRICE OF COMMODITIES.

There is in every society or neighbourhood an ordinary or average rate, both
of wages and profit, in every different employment of labour and stock. This
rate is naturally regulated, as I shall shew hereafter, partly by the
general circumstances of the society, their riches or poverty, their
advancing, stationary, or declining condition, and partly by the particular
nature of each employment.

There is likewise in every society or neighbourhood an ordinary or average
rate of rent, which is regulated, too, as I shall shew hereafter, partly by
the general circumstances of the society or neighbourhood in which the land
is situated, and partly by the natural or improved fertility of the land.

These ordinary or average rates may be called the natural rates of wages,
profit and rent, at the time and place in which they commonly prevail.

When the price of any commodity is neither more nor less than what is
sufficient to pay the rent of the land, the wages of the labour, and the
profits of the stock employed in raising, preparing, and bringing it to
market, according to their natural rates, the commodity is then sold for
what may be called its natural price.

The commodity is then sold precisely for what it is worth, or for what it
really costs the person who brings it to market; for though, in common
language, what is called the prime cost of any commodity does not comprehend
the profit of the person who is to sell it again, yet, if he sells it at a
price which does not allow him the ordinary rate of profit in his
neighbourhood, he is evidently a loser by the trade; since, by employing his
stock in some other way, he might have made that profit. His profit,
besides, is his revenue, the proper fund of his subsistence. As, while he is
preparing and bringing the goods to market, he advances to his workmen their
wages, or their subsistence ; so he advances to himself, in the same manner,
his own subsistence, which is generally suitable to the profit which he may
reasonably expect from the sale of his goods. Unless they yield him this
profit, therefore, they do not repay him what they may very properly be said
to have really cost him.

Though the price, therefore, which leaves him this profit, is not always the
lowest at which a dealer may sometimes sell his goods, it is the lowest at
which he is likely to sell them for any considerable time; at least where
there is perfect liberty, or where he may change his trade as often as he
pleases.

The actual price at which any commodity is commonly sold, is called its
market price. It may either be above, or below, or exactly the same with its
natural price.

The market