output should be limited only by the size of markets or demand. The key element in the process of developing a market, in Smith's perception, was the accumulation of capital. Smith thought that the accumulation of capital permitted, within an economy (1) the creation of plant and equipment to assist human labor, and (2) the full employment of labor. Smith contended that free competition was also essential for the development of an efficient economy. Free competition, according to Smith, was translated into a minimum of government regulation of economic activities.
Adam Smith postulated that the relative value of labor provided a basis for the determination of commodity values. Adam Smith thought that the factors of supply and demand were major determinants of commodity prices, although the value of labor consumed in their production provided a basis for the determination of value. Smith considered the proposition that the exchange value of labor determined commodity prices, and that these prices were both fundamenta
...