[O]f the acquired and useful abilities of all the inhabitants or members of the society. The acquisition of such talents, by the maintenance of the acquirer during his education, study, or apprenticeship, always costs a real expence, which is a capital fixed and realized, as it were, in his person. Those talents, as they make a part of his fortune, so do they likewise of that of the society to which he belongs. The improved dexterity of a workman may be considered in the same light as a machine or instrument of trade which facilitates and abridges labour, and which, though it costs a certain expence, repays that expence with a profit.--Adam Smith, WN 2; emphasis added.)
The vivid paragraph above is a familiar passage from An Inquiry Concerning the Nature and Causes of the Wealth of Nations (WN) for those interested in the history of the so-called "human capital" concept. (Wikipedia quotes it in the background section; see here for more scholarly treatment.) Smith does not shy away from likening the skilled laborer to a machine. What is less remarked upon is that Smith is adamant that the "capital fixed and realized" consequent education (apprenticeship, etc.) also is part of the society to which the laborer belongs. This is not a slip of the pen in Smith. It's the point of his book to help explain what causes the "wealth of nations," after all.
For Smith, all modern exchange has a social-political context. Consider one of the most quoted passages in WN: "It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self–love, and never talk to them of our own necessities but of their advantages." It is at the core of most Smith-as-individualist readings, and nobody would deny, of course, that in economic transactions self-love matters a lot. But Sam Fleischacker has done nice work noting the significance of mutual persuasion that Smith presupposes here. Moreover, as Fleischacker notes, Smith adds in the very next line: "Nobody but a beggar chuses to depend chiefly upon the benevolence of his fellow–citizens. Even a beggar does not depend upon it entirely." Beggars (who were denied the franchise in Smith's time) are fellow citizens, too.
This is not the place to offer a full defense of the claim that for Smith exchange takes places in political context. But once alerted to it, some of Smith's most surprising passages (to modern eyes) make a lot more sense. Consider this passage:
Every tax, however, is to the person who pays it a badge, not of slavery, but of liberty. It denotes that he is subject to government, indeed, but that, as he has some property, he cannot himself be the property of a master. (WN V)
As free people, we recognize that the size of and the right to our (derived) property is the product of our shared activities. Even when we enjoy perfect liberty (that is we can switch occupations freely), we are subject to government. So none of us can claim an inviolable, absolute right to all of it. One can see in this, as Steve Darwall has urged on me, a reflective endorsement from the perspective of having an equal authority to make claims and demands on one another at all. (See here for a fuller argument.) Let me stop here today.
PS. Note, by the way, that all my quotes are from WN not the The Theory of Moral Sentiments(TMS). There is despite Fleischacker's important book, a deplorable tendency to think that important philosophy, if any, in Smith must be in TMS.