Karl Marx Vs Adam Smith

One place where both Smith and Marx agree is on the value of labor, and to a lesser degree, wages. Their reasoning behind the justification of wages is similar, but they diverge when it comes to the actual amount to be earned by the worker. Adam Smith believed that the value of any good or commodity was best measured in labor. “The real price of everything, what everything really costs to the man who wants to acquire it, is the toil and trouble of acquiring it...Labour was the first price, the original purchase-money that was paid for all things. It was not by gold or by silver, but by labor, that all the wealth of the world was originally purchased” (Smith, 28). The concept of using labor as a unit of measurement makes sense,
The nominal value is the price paid in a given currency, like gold, silver, dollars, or pounds. The nominal value is subject to fluctuations, sometimes even extreme ones, due to the laws of supply and demand. QUOTE FROM PAGE 168? It is for this reason that it is important to consider both values of a good, as neither value alone tells the whole story.
Marx agreed with Smith’s assessment of the nominal value, in that he acknowledged it. He didn’t agree with the concept of fluctuating prices. As introduced earlier, Marx also used labor as a criterion for determining the value of goods, but to him, it was incomplete. As seen above, Smith considered the direct amount of trouble to obtain a good to be its real value. What Marx adds is the secondary cost in that the actual (physical) labor is just one of the factors that needs to be considered. “What, then, is the cost of production of labor-power? It is the cost required for the maintenance of the laborer as a laborer, and for his education and training as a laborer” (Marx, Chapter 4). Marx raises a valid point, that more than just the labor needs to be considered. Labor alone doesn’t accurately depict the real value, because according to Marx, more than just raw labor was needed to create the good. Raw labor without any training or education is essentially useless, and laborers need sustenance to be able to provide
“If a machine costs him, for example, 1,000 shillings, and this machine is used up in 10 years, he adds 100 shillings annually to the price of the commodities, in order to be able after 10 years to replace the worn-out machine with a new one” (Marx, Chapter 4). While a machine allows one to manufacture goods at little to no cost (outside of raw materials and operating expenses), the machine had to be purchased. Without the machine, no goods could be produced, so the value of the goods needs to offset the cost of the machine. Some form of education is also necessary to produce goods, and typically, it is not free. With this in mind, why should the cost of education for a worker be treated any differently than the cost of a machine? Marx feels they should be treated the same, with their total cost divided among the number of goods they are expected to produce. Similarly, just as a machine needs electricity (or some form of power), a worker needs food, so both should be accounted for in the value of a given