Tuesday, April 24, 2012

The Clos-Vougeot - Frédéric Bastiat

The Clos-Vougeot

Services are exchanged for services. Often services prepared in advance are exchanged for present or future services.

Services have value, not according to the labor they demand or have demanded, but according to the labor they save.

Now, it is a fact that human labor is becoming more efficient.

From these two premises is deduced a very important phenomenon for social economy: In general, labor previously performed loses value when exchanged for current labor.2

Twenty years ago, let us say, I made something that cost me a hundred days' work. I propose an exchange and say to my prospective buyer: Give me something that costs you likewise a hundred days. Probably he will be able to reply: In the last twenty years great progress has been made. What cost you a hundred days can now be made with seventy days' labor. Now, I measure your service, not by the time it cost you, but by the service it renders me. This service of yours is worth seventy days, since with that amount of time I can perform it for myself or find someone to perform it for me.

Consequently, the value of capital falls constantly, and capital, or previous labor, is not in as favorable a position as superficial economists believe.

There is no machine not completely new that has not lost some of its value, exclusive of deterioration resulting from use, from the very fact that better ones are made now.

This is true also of land. There are very few farms that have not cost more labor to bring them to their present state of fertility than it would cost today with the more efficient means we have at our disposal.

Such is the general, but not inevitable, trend.

Labor performed in the past may render greater service today than it did previously. This is rare, but it does happen. For example, I have kept some wine that represents twenty days' labor. If I had sold it immediately, my labor would have received a certain remuneration. I have kept my wine; it has improved; the next crop was a failure; in short, the price has gone up, and my return is greater. Why? Because I render more service, because the buyer would have to take more pains to get this wine than I took, because I satisfy a want that has become greater, of higher value, etc.

This is the question that must always be considered.

There are a thousand of us. We each have our acre of land, which we clear. Time goes by, and we sell it. Now, it happens that out of the thousand of us nine hundred and ninety-eight do not receive, or never will receive, as many days of current labor for our land as it has cost us; and that is because our past labor, which was less skillful, performs relatively less service than current labor. But there are two landowners whose labor has been more intelligent or, if you will, more successful. When they offer it for sale, it is found to represent inimitable services. Everyone says: It would cost me much more to perform this service for myself; hence, I shall pay a high price; and, provided I am not coerced, I am still very sure that it will not cost me as much as if I performed this service by any other means.

This is the story of the Clos-Vougeot. It is the same as the case of the man who finds a diamond or who has a beautiful voice or a figure to exhibit for five sous, etc.

In my native province there is much uncultivated land. The stranger never fails to ask: Why do you not cultivate this land? The answer is: Because the soil is poor. But, it may be objected, right beside it is absolutely similar land, and it is cultivated. To this objection the native finds no reply.

Is it because he was wrong to answer in the first place: The soil is poor?

No, the reason why new land is not cleared is not that the soil is poor; for some of it is excellent, and still it is not cleared. This is the reason: to bring this uncultivated land to a state of fertility equal to that of the adjacent cultivated land would cost more than to buy the adjacent land itself.

Now, to any man capable of reflection this proves incontestably that the land has no value in itself.

(Develop all the implications of this idea.)3


[][The famous Burgundy vineyard possessing a particular quality of soil enabling it to produce correspondingly superior grapes (and wine). Bastiat uses it, along with the diamond, as an illustration of a commodity having—apparently, but not actually—value derived from “the gratuitous gifts of Nature.”—Translator.]

[1.][The author has left only two or three short fragments on this important chapter. The reason is that he intended, as he said, to rely principally on the works of Mr. Carey of Philadelphia to refute Ricardo's theory.—Editor.]

[2.][The same idea is presented at the end of the supplement to chap. 5.—Editor.]

[3.][Of these proposed developments not one, unfortunately, exists; but we may be permitted to present here, in brief form, the two main conclusions to be drawn from the phenomenon that the author describes:
  • 1. Suppose two fields, one, A, cultivated; the other, B, uncultivated. Assuming them to be of identical quality, the amount of labor previously required to clear A may be taken as the amount necessary to clearB. We can even say that because of our better knowledge, implements, means of communication, etc., it would take fewer days to put B into cultivation than it took for A. If the land had value in itself, A would be worth all that it cost to put it into cultivation, plus something for its natural productive powers; that is, much more than the sum now necessary to put B into comparable condition. Now, the opposite is true: A is worth less, since people buy it rather than cultivate B. When they buy A, they therefore pay nothing for its natural productive powers, since they do not pay even as much for the labor of cultivating it as this originally cost.
  • 2. If field A yields 1,000 measures of wheat per year, field B when cultivated would yield the same quantity:A has been cultivated because, in the past, 1,000 measures of wheat fully compensated for the labor required both for its original clearance and its annual cultivation. B is not under cultivation because now 1,000 measures of wheat would not pay for an identical amount of labor—or even less, as we noted above.
What does this mean? Obviously that the value of human labor has risen as compared with the value of wheat; that a day's labor of a worker is worth more and receives more wheat in wages. In other words, wheat is produced for less effort and is exchanged for less labor, and the theory of the rising costs of foodstuffs is false. 

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