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I was inclined to agree with Mr. Perelman, however, when I looked, Smith 
does pair utility with value in use, at the end of book I, Ch. 4, 
leading into the water and diamonds story.  It seems clear to me that 
this is an intentionally limited definition of utility.  Money, for 
example, has very limited "value in use" if one excludes exchange as a 
use.  As Smith no doubt understood, it does not follow that money has 
limited utility, except if one limits the meaning of utility. 
 
The discussion of "value in use" VS "value in exchange" is particularly 
interesting to me since until recently, I worked in real estate 
appraisal, where the two concepts are distinct, although related and 
sometimes confused.  Value in use is directly related to, although not 
necessarily equivalent to, production cost.  In an ideal situation, this 
applies also to value in exchange.  Numerous examples of the contrary 
situation exist however. In real estate, for example, a highly 
specialized building may fully justify its cost only to one party. 
 
To me, the interesting case with regard to Smith is with the "Labor 
theory of value" in relation to the above types of value.  From my 
reading of Smith, labor is the ultimate measure of value, rather than 
source.  The beginning of Bk. I Chapter V, is my most prominent source, 
but the theme exists elsewhere. 
 
Mike Robison  
Michigan State University 
http://www.msu.edu/user/robiso12/index.htm 
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