Fifteen years after the Global Financial Crisis: Recessions and Business Cycles in the History of Economic Thought

Language, number and exchange in Adam Smith’s analysis of the “rude stage”: reconsidering the labour theory of value

Dal Degan Francesca, University of Pisa
Guidi Marco Enrico Luigi, University of Pisa

In the rude stage of society imaginary negotiation precedes exchange, as Smith clarifies in Considerations Concerning the First Formation of Languages (1761). The idea of “number” comes later in the process of the formation of languages since its conception requires a high degree of “abstraction”. The level of language including only singular, dual and plural notions is sufficient to allow the exchange of goods in proportion to labour, consistently with the logic expressed in Smith’s example: “If among a nation of hunters, for example, it usually costs twice the labour to kill a beaver which it does to kill a deer, one beaver should naturally exchange for or be worth two deer. It is natural that what is usually the produce of two days' or two hours' labour, should be worth double of what is usually the produce of one day's or one hour's labour”. At the same time, the absence of the idea of number makes the measure of value imprecise when it comes to a plurality of objects and costs of production. What is more, the unit of measure itself, canonised after Ricardo as embodied labour, appears at this stage more as the less imperfect available alternative for an interpersonal and impartial recognition of what is due to another, than as an objective material standard (the Ricardian “difficulty of production”) consistent with the primitive state of technology. The questions addressed in our work are thus the following ones: is the analysis of the rude stage consistent with the way in which Smith, in his later works, described exchange and value? How does this kind of negotiation relate to that allowed by “enlarged experience” and interaction among individuals and the evolution of social institutions as it occurs “without any intention or foresight” in the natural progress of society? Does Smith’s rude stage analysis allow a re-contextualisation of the labour theory of value as reformulated by Ricardo’s narrative of the Smithian legacy?

Area: Eshet Conference

Keywords: adam smith, language, theory of value

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