# ordinary-or-average-rate

## Definition

The standard or typical level of wages, profit, or rent that prevails in a particular society or neighbourhood for different employments of labour and stock. This rate is naturally regulated by both general circumstances of the society (such as its riches, poverty, and condition of advancement or decline) and the particular nature of each employment.

## Source Chapter

*Book 1, Chapter 7: "OF THE NATURAL AND MARKET PRICE OF COMMODITIES"*

## Context

Smith introduces this concept early in his discussion of natural and market prices, establishing that every society has standard rates for wages and profit in different employments, as well as a standard rate for rent. These ordinary rates form the foundation for understanding how prices are determined in different markets and how they relate to natural prices.

## Economic Domain

Distribution

## Smith's Original Wording

"There is in every society or neighbourhood an ordinary or average rate, both of wages and profit, in every different employment of labour and stock."

## Modern Interpretation

The ordinary or average rate represents the equilibrium levels of compensation that tend to prevail in different economic activities within a given society. These rates are not fixed but are influenced by broader economic conditions and the specific characteristics of each type of work or investment.
