Adam Smith:wealth Of Nations

ADAM SMITH:wealth of nations
THE division of labour has been the chief cause of improvement in the productiveness of labour. For instance, the making of a single pin involves eighteen separate operations, which are entrusted to eighteen separate workmen; and the result is, that whereas one man working alone could make perhaps only twenty pins in a day, several men working together, on the principle of division of labour, can make several thousands of pins per man in one day. Division of labour, in a highly developed state of society, is carried into almost every practical art; and its great benefits depend upon the increase of dexterity in each workman, upon the saving of time otherwise lost in passing from one kind of work to another and, finally, upon the use of many labour-saving machines.
This division of labour, from which so many advantages are derived, is not originally the effect of any human wisdom which foresees and intends the wealth to which it gives rise; it is rather the gradual result of the inclination in human nature to barter and exchange one thing for another. The power of exchanging their respective product makes it possible for one man to produce only bread, and for another to produce only clothing.
The extent to which the division of labour can be carried is, therefore, limited by the extent of the market. There are some sorts of industry, even of the lowest kind, which can be carried on nowhere but in a great town--a porter, for example, cannot find employment and subsistence in a village. In the highlands of Scotland every farmer must be butcher, baker and brewer for his own family.
When division of labour is well established, every man becomes in some measure a merchant and the society becomes a commercial society, and the continual process of exchange leads inevitably to the origin of money. In the absence of money, or a general medium of exchange, society would be restricted to the cumbersome method of barter. Every man, therefore, would early endeavor to keep by him, besides the produce of his own industry, a certain quantity of some commodity such as other people will be likely to take in exchange for the produce of their particular industries
But labour is the real measure of the exchangeable value of all commodities; the value of any commodity to the person who possesses it is equal to the quantity of labour which it enables him to purchase or to command. What is bought with money or with goods is purchased by labour as much as what we require by the toil of our own body. Labour alone, never varying in its own value, is alone the ultimate and real standard by which the value of all commodities can at all times, and in all places, be estimated and compared. It is their real price; money is their nominal price only Equal quantities of labour will at distant times be purchased more nearly with equal quantities of corn--the subsistence of the labourer--than with equal quantities of gold, or of any other commodity.