Discover How To Analyze A Business Process

Generating ideas for class 6

A. Smith defined and differentiated consumer and exchange value of goods. "The word "cost", - he wrote, - has two various values: sometimes it designates usefulness of any subject, and sometimes chance of acquisition of other subjects which gives possession of this subject. It is possible to call the first consumer cost, the second - exchange value".

The understanding became rational grain in the concept of cost of A. Smith that the size of cost is defined not by the actual expenses of work of a separate producer, and those expenses which are on average necessary for this condition of production. He noted also that the qualified and difficult work creates in unit of time more than a cost, than unqualified and simple, and can be reduced to the last by means of coefficients.

As a result the economic system of A. Smith inherited all contradictions of his method of research. And a striking example to that is the duality of treatment of cost. The influence on economic views of A. Smith will render also insufficient understanding to them historical processes of replacement of one economic relations by others.

A. Smith called profit all difference between the cost added by work and a salary and in this option meant a surplus value. In other treatment he understood as profit the rest after payment of a rent, and also percent, and then profit called, in effect, the enterprise income.

A. Smith sought to find out, what types of work promote growth of richness of the nation. This problem keeps the value up to now. For its decision it divided work on productive and unproductive.

Division of labor takes a key place in economic system of A. Smith. A. Smith motivated fundamental value of this element, first, with that division of labor is the reason stimulating productivity. He considered that division of labor increases productivity in three ways: