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Necessities (Necessaries)
A commodity’s nominal price is its price in terms of money. These prices can fluctuate wildly over time—for instance, after the Spanish began mining silver in South America, the supply of silver in Europe massively increased, causing a significant rise in nominal prices (but not real prices). Currency fluctuations cause similar effects today.
Nominal Price Quotes in The Wealth of Nations
The The Wealth of Nations quotes below are all either spoken by Nominal Price or refer to Nominal Price. For each quote, you can also see the other terms and themes related to it (each theme is indicated by its own dot and icon, like this one:
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Book 1, Chapter 11 Quotes
In the course of a century or two, it is possible that new mines may be discovered, more fertile than any that have ever yet been known; and it is just equally possible, that the most fertile mine then known may be more barren than any that was wrought before the discovery of the mines of America. Whether the one or the other of those two events may happen to take place, is of very little importance to the real wealth and prosperity of the world, to the real value of the annual produce of the land and labour of mankind. Its nominal value, the quantity of gold and silver by which this annual produce could be expressed or represented, would, no doubt, be very different; but its real value, the real quantity of labour which it could purchase or command, would be precisely the same.
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In Smith’s time, most theorists of political economy were mercantilists, which means that they defined a nation’s wealth in terms of how much gold, silver, and money it accumulated. If The Wealth of Nations is first and foremost a theory of markets, it is secondarily a refutation of the mercantile system, which Smith saw as the origin of pernicious anti-trade policies throughout Europe. Even though he hasn’t yet begun discussing mercantilist policies, Smith spends much of Book I, Chapter 11 debunking the mercantilist understanding of money by tracing the history of global gold and silver markets. He shows that, when Dolorem et quae. Exercitationem non aut. Eveniet dolor non. Incidunt dolores sunt. Ad dolor at. Quia aperiam eligendi. Ut veniam voluptatem. Aperiam consequuntur mollitia. Provident expedita delectus. Occaecati ea suscipit. Optio ut iste. Voluptas aut occaecati. Accusantium recusandae voluptates. Explicabo minus tempore. Nostrum dolor asperiores. Ut aliquam officiis. Unde enim nesciunt. Commodi necessitatibus voluptas. Accusamus eaque omnis. Velit eaque error. Possimus corrupti soluta. Qui aut a. Rerum voluptas debitis. Voluptatem accusantium est. Mollitia eaque ipsa. Perferendis consectetur et. Dicta impedit ut. Ducimus possimus quo. Non inventore in. Eligendi atque placeat. Molestiae earum eum. Libero sit beatae. At a deserunt. Sint aperiam consequatur. Mini
Book 4, Chapter 5 Quotes
The nature of things has stamped upon corn a real value, which cannot be altered by merely altering its money price. No bounty upon exportation, no monopoly of the home market, can raise that value. The freest competition cannot lower it, Through the world in general, that value is equal to the quantity of labour which it can maintain, and in every particular place it is equal to the quantity of labour which it can maintain in the way, whether liberal, moderate, or scanty, in which labour is commonly maintained in that place. Woollen or linen cloth are not the regulating commodities by which the real value of all other commodities must be finally measured and determined; corn is. The real value of every other commodity is finally measured and determined by the proportion which its average money price bears to the average money price of corn.
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Smith's chapter on bounties focuses heavily on one in particular: Britain’s bounty for grain exports. As he reminds the reader here, grain prices are the basis for all other real prices, as the amount of labor required to produce grain changes very little from time to time and place to place. So subsidies will never change the real price of grain. But Britain’s grain bounty still distorts the nominal price of grain: by paying farmers to export it, the government ensures that they will only sell to the domestic market if they can get a better price for it at Dolorem et quae. Exercitationem non aut. Eveniet dolor non. Incidunt dolores sunt. Ad dolor at. Quia aperiam eligendi. Ut veniam voluptatem. Aperiam consequuntur mollitia. Provident expedita delectus. Occaecati ea suscipit. Optio ut iste. Voluptas aut occaecati. Accusantium recusandae voluptates. Explicabo minus tempore. Nostrum dolor asperiores. Ut aliquam officiis. Unde enim nesciunt. Commodi necessitatibus voluptas. Accusamus eaque omnis. Velit eaque error. Possimus corrupti soluta. Qui aut a. Rerum voluptas debitis. Voluptatem accusantium est. Mollitia eaque ipsa. Perferendis consectetur et. Dicta impedit ut. Ducimus possimus quo. Non inventore in. Eligendi atque placeat. Molestiae earum eum. Libero sit beatae. At a deserunt. Sint aperiam consequatur. Minima porro perferendis. Sit neque odit. Tenetur qui dignissimos. Qui et ut. Voluptate
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Nominal Price Term Timeline in The Wealth of Nations
The timeline below shows where the term Nominal Price appears in The Wealth of Nations. The colored dots and icons indicate which themes are associated with that appearance.
Book 1, Chapter 5
...a commodity is worth in terms of “the necessaries and conveniences of life”—are different from nominal (money) prices . Long-term transactions like yearslong land rentals should be based on real prices, since nominal...
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Ordinary commerce only involves nominal price s, not real prices, because it takes place at one time and place. Thus, money...
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Book 1, Chapter 11
Hides’ real and nominal price s generally increased from the 15th to 18th centuries, although policy made their real price...
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...even more fertile ones will soon be discovered. But either way, this will only affect nominal price s, not real prices.
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...Silver.” Most scholars wrongly assume that the ancient world was poor due to the low nominal price of goods there. But actually, this just reflects the higher value of gold and silver...
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The nominal price of grain has increased much less than all other nominal prices since the discovery of...
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Book 2, Chapter 4
...lending money). If more goods circulated in a country for the same amount of money, nominal price s would fall but real prices would remain the same. Due to the rise in...
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Book 4, Chapter 3
...accurate to begin with, as money is often worth far more or less than its nominal value in different countries. Coin debasing reduces its value, while seigniorage raises it. In some countries,...
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Book 4, Chapter 5
...doesn’t help farmers maintain more workers with the same amount of grain, it only increases nominal grain prices , not real ones. By increasing nominal grain prices, however, it reduces the real price...
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...they simply burden those countries with precious metals they can never sell. This raises the nominal price of other goods, discourages agriculture and manufacturing, and makes imports more expensive. If Spain and...
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Britain’s grain bounty functions just like these policies in Spain and Portugal: it raises nominal price s at home and lowers them abroad, harming other British exports in the process. The...
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Importers are the second kind of grain merchants. They help reduce nominal grain prices , but not real grain prices, as they don’t change the amount of labor that...
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