receded Smith in the evolution of economic theory, contended that agricultural labor was ôthe creator of wealthö (Marx, 1858, 1978, p. 240). Smith (1776, 1978) rejected the limitations of the PhysiocratsÆ concept of wealth and its creation. Smith (1776, 1978) conceived of value as being determined by either the creation of one type of good for another, or the exchange of money for goods.
Value determination, according to Smith (1776, 1978), must be considered in two contexts ù utility and exchange, although he was not referring to marginal utility. Specifically, according to Smith (1776, 1978, pp. 131-132):
The word VALUE, it is to be observed, has two different meanings, and sometimes expresses the utility of some particular object, and sometimes the power of purchasing other goods which the possession of that object conveys. The one may be called ævalue in useÆ; the other ôvalue in exchange.ö The things which have the greatest value in use have frequently little or no value in exchange; and, on the contrary, those which have the greatest value in exchange have frequently little or no value in use. Nothing is more useful than water: but it will purchase scarce anything; scarce anything can be had in exchange for it. A diamond, on the contrary, has scarce any value in use; but a very great quantity of other goods may frequently be had in exchange for it.
Smith (1776, 1978), in The Wealth of Nations, was concerned with value in the exchange context. He postulated that value, in an exchange context, derived from considerations of both the division of labor, and the use of money. In one context, he held that the division of labor arises from a propensity in human nature to exchange, for which each trader must have a surplus over his immediate needs with which to trade. In another context, he held that money enters the picture because it makes trade more convenient insofar as it is generally acceptable and portable....