--- MAPPING: ordinary-or-average-rate-to-S3-Control ---

# ordinary-or-average-rate -> S3 Control / Operational Management

## Economic Entity Reference

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

**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.

## VSM Concept Reference

### System 3: Control / Operational Management

**Definition:** The structures and controls that establish the rules, resources, rights, and responsibilities of System 1 and provide an interface between Systems 1 and Systems 4/5. System 3 represents the day-to-day control of the organisation. It optimises the internal environment.

**Key Functions:**
- Internal regulation of operational units
- Resource allocation and management
- Establishing rules and constraints
- Performance monitoring and optimisation
- Balancing internal efficiency with external demands

**In economic terms:** Government regulation of trade, taxation policy, labour laws, enforcement of contracts, the "invisible hand" as emergent internal regulation, guilds and corporations governing members.

## Mapping Rationale

The ordinary or average rate functions as an emergent regulatory mechanism that System 3 would establish and maintain in a VSM framework. These rates represent the "rules and constraints" that govern economic activity within a society, setting the parameters within which System 1 (individual economic actors) operate. Just as System 3 optimises the internal environment by establishing resource allocation rules and performance standards, the ordinary rates establish the compensation framework that regulates how value is distributed among different economic activities. The rates are "naturally regulated" by broader social conditions, mirroring how System 3 balances internal optimisation with external environmental factors.

## Mapping Strength

**Strong**

This mapping is strong because the ordinary or average rate directly performs the core function of System 3: establishing the regulatory framework that governs internal operations. The rates serve as the "rules and responsibilities" that determine how different economic activities are compensated, functioning as the internal control mechanism that System 3 would implement to optimise the economic system's performance. The natural regulation of these rates by both general societal circumstances and the particular nature of each employment mirrors System 3's balancing function between internal optimisation and external adaptation.