Business Quote by Adam Smith
“In regards to the price of commodities, the rise of wages operates as simple interest does, the rise of profit operates like compound interest. Our merchants and masters complain much of the bad effects of high wages in raising the price and lessening the sale of goods. They say nothing concerning the bad effects of high profits. They are silent with regard to the pernicious effects of their own gains. They complain only of those of other people.”
About This Quote
Source Book: The Wealth of Nations, 1776
Wages increase prices like simple interest, while profit grows like compound interest, showing merchants ignore their own profit impacts.
In simple terms: Wages raise prices simply; profit compounds.
Key Takeaway
Recognize both wage and profit effects.
Themes
economics
price theory
profit
wages
market dynamics
Mood
analytical
critical
Type
economic
observational
When to use this quote
- business planning
- policy making
- price setting
- profit analysis
Key Concepts
simple interest
compound interest
market externalities
Questions to Reflect On
- How do wages and profits differently affect prices?
- What policies could balance wage and profit effects?
A Different Perspective
Merchants may underestimate profit’s broader impact.
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