Smith said that, working with own means of production and on the earth, the producer of goods receives a full product of the work. But since means of production and the earth are in property of capitalists and landowners, and the independent producer turned into the hired worker, the last does not receive the cost of all product of the work in the form of a salary. Smith noted a tendency to disappearance of independence of a small-scale production, to general distribution of wage labor.
Smith wrote:" The person always has to have opportunity to exist the work, and its salary has to be, at least, sufficient for its existence" He considered that the cost of a subsistence necessary for life of the worker and education of children who will replace it in labor market is the cornerstone of the size of a salary. He noted that its lowest border is the physical minimum. If labor cost (normal wage payments of hired workers falls below this minimum, it threatens with extinction of" race of these workers". It is possible only in society, Smith where there is an economic regress believed: as an example of such country it called the territories in India which were under the domination of the English East Indian company and China where the salary only the little exceeded a physical minimum, and the economy was in a condition of stagnation. However in the countries where went moderated and the more so fast development of economy, the salary included a certain surplus which sizes were defined by the developed norms of consumption, traditions, cultural level besides a physical minimum. Smith noted that, for example, in America the salary is higher, than in England as the economy of the first developed especially roughly.
Smith characterized a rent, along with profit, as an unearned income, as a deduction in favor of the land owner from goods cost. Land owners, Smith specified, want to reap where they did not sow. They appropriate that is made by others work.
Besides the main determination of cost the number of work concluded in goods Smith entered the second concept where cost is defined by number of work which can be bought for these goods. In the conditions of simple commodity production when there was no wage labor and producers of goods worked at the means of production belonging to them, this same. The weaver, for example, exchanged a piece of the cloth made by it for boots. It is possible to tell that the piece of cloth costs pairs of boots or that it stands up work of the shoemaker for that time while it produced boots. But, in essence, this not so same that becomes clear for conditions of capitalist production. If the shoemaker works on hiring for the capitalist, the cost of the boots made by it and" cost of its work", that is that he receives for the work - absolutely different things. The piece of cloth still costs pairs of boots, but it costs more, than work of the shoemaker as the surplus value appropriated by the capitalist is put into costs of boots now.
Smith noted a tendency of rate of return to decrease, specified that the profit is lower in the developed capitalist countries. He considered direct calculation of rate of return almost impossible, but suggested to replace comparison of rate of return in time and space with comparison of rates of loan percent. In England, he wrote, usually it is considered that the percent can make about a half of profit. Smith offers the following explanation of a tendency of decrease of percent and rate of return: in the rich countries and with the course of economic development surplus of the capital which causes growth of the competition of the capitals and decline in yield is formed. And rate of return Smith considered the low level of percent as manifestation of economic development and health of the nation.
Smith called profit all difference between the cost added by work and a salary and in these cases meant a surplus value. In other cases Smith understood as profit the rest after payment of a rent, and also percent, and then profit called, the enterprise income of the capitalist.