ADAM SMITH'S THEORY OF ECONOMIC DEVELOPMENT : A THEORETICAL AND HISTORICAL REINTERPRETATION OF TEH WEALTH OF NATIONS

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Three points can be cited as the result of three years research work on reinterpretation of Adam Smith's Theory of Economic Development in The Wealth of Nations.First, although Smith's basic concept of the natural balance of industry already appeares clearly even in Letures on Jurisprudence (A), he still has a very static understanding of the relation between the price and the volume of things ; the high price of things is the result of their much volume, and vice versa.Second, Smith's labor theory of value and price must have a triplicated structure, because the measure of value, the foundation of the value and price theory consists of three different terms ; labor, money (silber) and corn. Labor is the only universal measure of value at all times and places, but it is too abstract for ordinary people to understand. Money (silber) is the accurate measure or value only at the same time and place, and corn is the better measure of value than money (silber) at long distant times and places because the same quantities of corn can maintain at every time and place the nearly equal quantities of labor.Third, the volume of fund for economic growth ultimately depends on the margin of quantities of labor which can be maintaind by the produce that the maintained labor brings to the market. The fastest and most certain road to economic growth, therefore, is to employ capital and labor in growing corn, whose efficiency of energy conversion is the highest among all rude produce of land. It is hard to believe that the Physiocrats had an idea of corn's efficiency of energy conversion as deeply and clearly as Smith.