Exchange
Exchange is political economy. It is society itself, for it is impossible to conceive of society without exchange, or exchange without society. Therefore, I do not expect to exhaust in this one chapter so vast a subject. The whole book will hardly present more than a rough outline of it.If men, like snails, lived in complete isolation from one another, if they did not exchange their work and their ideas, if they did not engage in transactions with one another, there could be multitudes, human units, juxtapositions of individuals, but there could not be a society.
Indeed, there would not even be individuals. For man, isolation means death. Now, if he cannot live outside society, it is strictly logical to conclude that his natural state is the social state.
All sciences arrive at this same truth, so much misunderstood in the eighteenth century, which founded its moral and political systems on the contrary assumption. Men of that time, not content with merely contrasting the state of nature with the social state, gave the former marked superiority over the latter. “Happy are men,” said Montaigne,∗ “when they live without ties, without laws, without language, without religion!” We know that Rousseau's system, which once had, as it still has, so great an influence over men's opinions and actions, rests entirely on the hypothesis that one day men, to their undoing, agreed to abandon the innocent state of nature for the stormy state of society.
It is not the intent of this chapter to assemble all the refutations that could be made against this fundamental error, the most virulent that ever infected the social sciences; for, if society is simply contrived and artificially agreed upon, it follows that every man may invent a new social order, and such has been, since Rousseau, the direction taken by many minds. I could easily prove, I feel sure, that isolation precludes language, just as the absence of language precludes thought. And certainly man without thought, far from being man in the state of nature, is not even man.
But an unanswerable refutation of the idea on which Rousseau's doctrine rests will come directly, without our seeking it, from a few considerations on the subject of exchange.
Want, effort, satisfaction: such is man, from the point of view of economics.
We have seen that the two extremes are essentially nontransferable, for they occur in the realm of sensation; they are themselves sensation, which is the most personal thing in the world: the want that precedes the effort and calls it forth is a sensation, as is the satisfaction that follows the effort and rewards it.
Effort, then, is the element that is exchanged; and it cannot be otherwise, since exchange implies activity, and our activity displays itself only in terms of effort. We cannot suffer or enjoy for one another, however sensitive we may be to others' pains and pleasures. But we can help one another, work for one another, render reciprocal services, put our faculties, or the product of our faculties, at the service of others, subject to payment in return. This is society. The causes, the effects, the laws of these exchanges constitute political and social economy.
We not only can aid one another in all these ways, but we do so of necessity. What I affirm is this: We are so constituted that we are obliged to work for one another under penalty of immediate death. If this is true, society is our natural state, since it is the only state in which we can live at all.
There is one observation that I have to make concerning the equilibrium between our wants and our productive capacities, an observation that has always filled me with admiration for the providential plan that rules our destiny.
In the state of isolation, our wants exceed our productive capacities.
In society, our productive capacities exceed our wants.
Hence, man in the state of isolation cannot survive; whereas, with man in society, the most elemental wants give way to desires of a higher order, and this process, tending always toward a more perfect condition, goes on without interruption or assignable limits.
This is not mere oratory, but a statement that can be fully proved by reason and analogy, if not by experience. And why not by experience, by direct observation? Simply because the statement is true; simply because, since man cannot live in a state of isolation, it is impossible to demonstrate the effects of absolute solitude on living human nature. Our senses cannot grasp something that does not exist. You can prove to my mind that a triangle never has four sides; you cannot, in support of your argument, place before my eyes a tetragonal triangle. If you did, you would destroy your assertion by your own evidence. Similarly, to ask me for a proof based on experiment, to demand that I study the effects of isolation on living human nature, would be to force upon me a logical contradiction, since, isolation and life being mutually incompatible for man, no one has ever seen, no one will ever see, men without human contacts.
There may be animals, for all I know, destined by their bodily structure to live out their span of life in absolute isolation; if so, it is very clear that Nature must have established an exact balance between their wants and their productive capacities. We could also conceive of their productive capacities as superior to their wants, in which case they would be perfectible and capable of progress. Exact balance makes them static creatures, but a preponderance of wants cannot be conceived of: from their birth on, from their first appearance on the scene of life, their productive capacities would have to be fully adequate to satisfy the wants for which they would have to provide, or, at least, the two would have to develop side by side at the same rate. Otherwise the species would die at birth and would not be available for observation.
Of all the species of living creatures about us, not one, certainly, is subject to as many wants as man. In not one is the period of immaturity so long and so helpless, maturity so loaded with responsibility, old age so feeble and ailing. And, as if his wants were not enough for him, man also has tastes whose satisfaction taxes his faculties quite as much as his wants. Hardly has he learned to satisfy his hunger when he seeks to tickle his palate; to cover his nakedness, when he seeks adornment; to shelter himself from the elements, when he dreams of beautifying his dwelling. His mind is as restless as his body is demanding. He seeks to penetrate the mysteries of Nature, to tame the animals, to harness the elements, to delve into the bowels of the earth, to cross the boundless oceans, to soar above the winds, to annihilate time and space; he seeks to know the inner workings, the springs, the laws, of his own will and heart, to rule over his passions, to achieve immortality, to merge his being in his Creator, to place everything under his dominion—Nature, his fellows, himself; in a word, his desires reach out endlessly toward the infinite.
Hence, in no other species are faculties to be found capable of such great development as in man. He alone appears able to compare and to judge; he alone reasons and speaks; he alone looks ahead; he alone sacrifices the present for the future; he alone transmits from one generation to another his works, his thoughts, the treasures of his experience; he alone, in a word, is capable of forging the countless links of a chain of progress seemingly stretching beyond the limits of this earth.
Let us make a purely economic observation here. However extensive our productive capacities may be, they cannot go so far as to enable us to create. It is not given to man, in fact, to add to or subtract from the existing number of molecules. His role is confined to modifying or combining for his use the substances he finds everywhere about him. (J. B. Say.)
To modify substances in such a way as to increase their utility for us is to produce, or rather it is one way of producing. I conclude that value, as we shall see later, can never reside in these substances themselves, but in the effort which is exerted in order to modify them and to which exchange gives a relative appraisal based on other comparable efforts. For this reason, value is merely the appraisal of the services exchanged, whether a material commodity is or is not involved in the transaction. As regards the notion of value, it is a matter of complete indifference whether I render my fellow man a direct service—for example, by performing a surgical operation—or an indirect service by making him some medicinal preparation; in the latter case the utility is in the substance, but thevalue is in the service, in the intellectual and material effort made by one man for the benefit of another. It is pure metonymy to attribute value to the material commodity itself, and in this case, as in so many others, the metaphor leads science astray.
I return to the subject of the way man is constituted. If we stopped at the notions we have already presented, man would be different from other animals only in the greater range of his wants and the superiority of his capacities. All are subject to the former and endowed with the latter. Birds undertake long migrations in search of the proper temperature; beavers cross streams on dams that they have built; hawks attack their prey in full view; cats stalk theirs patiently; spiders set up snares; all work in order to live and increase.
But, while Nature has set up an exact balance between the wants of animals and their productive capacities, she has treated man more grandly and munificently. If, in order to force him to be sociable, she has decreed that in the state of isolation his wants should exceed his productive capacities, whereas in society his productive capacities, superior to his wants, should open up boundless vistas for his nobler enjoyments; we must also recognize that, even as man in his relation to his Creator is raised above the beasts by his religious feeling, in his dealings with his fellow men by his sense of justice, in his dealings with himself by his morality, so, in finding his means of survival and increase, he is distinguished from them by a remarkable phenomenon, namely, exchange.
Shall I try to portray the state of poverty, barrenness, and ignorance in which, without the faculty of exchange, the human species would have wallowed eternally, if indeed, it would not have disappeared altogether from the face of the earth?
One of the most popular of philosophers, in a novel that has had the good fortune to charm generation after generation of children, shows us how a man can rise above the hardships of absolute solitude by his energy, his initiative, and his intelligence. Desiring to show all the resources possessed by this noble creature, our author imagines him accidentally cut off, so to speak, from civilization. It was, therefore, Daniel Defoe's original plan to cast Robinson Crusoe ashore on the Isle of Despair alone, naked, deprived of all that can be added to one man's strength by united effort, specialized skills, exchange, and society.
Nevertheless, and despite the fact that the obstacles are purely fictitious, Defoe would have deprived his novel of every trace of verisimilitude if, overfaithful to the thought he wished to develop, he had not made necessary social concessions by allowing his hero to save from the shipwreck a few indispensable objects, such as provisions, gunpowder, a rifle, an ax, a knife, rope, boards, iron, etc.—decisive evidence that society is man's necessary milieu, since even a novelist cannot make him live outside it.
And note that Robinson Crusoe took with him into solitude another social treasure worth a thousand times more, one that the waves could not swallow up: I mean his ideas, his memories, his experience, and especially his language, without which he could not have communicated with himself or formed his thoughts.
We have the distressing and unreasonable habit of attributing to society the suffering that we see about us. Up to a point we are right, if we mean to compare society with itself, taken at two different stages of its progress; but we are wrong, if we compare the social state, even in its imperfection, with the state of isolation. To be able to assert that even the most unfortunate of men are worse off in society than out of it, we should have to begin by proving that the poorest of our fellow men has to bear, in the social state, a heavier burden of privations and suffering than would have been his lot in solitude. Now, consider the life of the humblest day laborer. Consider, in all their detail, the articles of his daily consumption. He wears a few coarse pieces of clothing; he eats a little black bread; at night he has a roof over his head and at the very worst some bare planks to sleep on. Now, ask yourself whether this man in isolation, without the resources of exchange, would have the remotest possibility of obtaining this coarse clothing, this black bread, this crude cot, this humble shelter. The most impassioned advocate of the state of nature, Rousseau himself, admitted that this was completely impossible. Men did without everything, he said; they went naked, they slept in the open air. Thus, Rousseau himself, in order to present the state of nature favorably, was obliged to make happiness consist in privation. But I affirm that even this negative happiness is a delusion, and that man in the state of isolation would surely die in a very few hours. Perhaps Rousseau would have gone so far as to say that that would be the true perfection. He would have been consistent, for if happiness lies in privation, then perfection lies in annihilation.
I trust that the reader will not conclude from the preceding remarks that we are insensible to the social suffering of our fellow men. Although the suffering is less in the present imperfect state of our society than in the state of isolation, it does not follow that we do not seek wholeheartedly for further progress to make it less and less; but if the state of isolation is worse than the worst in the social state, then I was right in saying that isolation makes our wants, to mention only the most elemental of them, far exceed our productive capacities.
How does exchange reverse this order to our advantage and make our productive capacities exceed our wants?
First of all, this is proved by the very fact of civilization. If our wants exceeded our productive capacities, we should be irremediably retrogressive creatures; if the two were in complete balance, we should be irremediably static. However, we advance; hence, every period in the life of society, compared to a previous period, frees for other purposes, in relation to a given number of satisfactions, a certain part of our productive capacities.
Let us try to explain this marvelous phenomenon.
The explanation we owe to Condillac∗ seems to me entirely insufficient and empirical, or rather it fails to explain anything at all. “The very fact that an exchange takes place,” he says, “is proof that there must necessarily be profit in it for both the contracting parties; otherwise it would not be made. Hence, every exchange represents two gains for humanity.”
Even granting that the proposition is true, we see in it only a statement of fact, not an explanation. It was thus that the hypochondriac explained the narcotic power of opium:
- Quia est in eo
- Virtus dormitiva
- Quae facit dormire.†
Others attribute the benefit to the fact that we give from what we have in excess to receive what we lack. Exchange, they say, is the barter of the surplus for the necessary. Aside from the fact that this is contrary to what we see happening before our own eyes—who would dare say that the peasant, who parts with the grain he has grown and will never eat, is giving from his surplus?—I see from it how two men happen to strike a bargain, but I do not see any explanation of progress.
Observation will give us a more satisfactory explanation of the power of exchange.
Exchange produces two phenomena: the joining of men's forces and the diversification of their occupations, or the division of labor.
It is very clear that in many cases the combined force of several men is superior to the sum of their individual separate forces. In moving a heavy object, for example, a thousand men taking successive turns would fail where four men by uniting their efforts could succeed. Try to imagine the things that would never have been done in the world without this kind of joint action.
And yet the co-operative use of muscle power for a common goal is a mere nothing. Nature has given us highly varied physical, moral, and intellectual faculties. There are inexhaustible combinations in the co-operative union of these faculties. Do we need to carry out a useful project, like building a road or defending our country? One places his strength at the disposal of the community; another, his agility; another, his daring; still another, his experience, his foresight, his imagination, even his renown. It is easy to understand that the same men, working separately, could never have accomplished, or even contemplated, such an undertaking.
Now, the joining of men's forces implies exchange. To gain their co-operation, they must have good reason to anticipate sharing in the satisfaction to be obtained. Each one by his efforts benefits the others and in turn benefits by their efforts according to the terms of the bargain, which is exchange.
We see how exchange, in this form, adds to our satisfactions. By the mere fact of their union, efforts equal in intensity produce superior results. Here there is no trace of the so-called barter of the superfluous for the necessary, nor of the double and empirical profit alleged by Condillac.
We may make the same observation concerning the division of labor. Indeed, if we look closely at the matter, we see that the diversification of occupations is only another, more permanent, way of joining forces, of co-operating, of forming an association; and it is altogether accurate to say, as will be shown later, that the present social organization, provided the principle of free exchange is recognized, is the most beautiful, most stupendous of associations—a marvelous association, but very different from the associations dreamed up by the socialists, since in it, by an admirable arrangement, the principle of individual liberty is recognized. All men, at all times, may join or leave it at their pleasure. They contribute what they will; they receive in return a constantly increasing degree of satisfaction, which is determined, according to the laws of justice, by the nature of things, not by the arbitrary will of a chief. But I should not anticipate what I shall say later. All that I have to do at the moment is to explain how the division of labor adds to our strength.
Without dwelling on this subject, one of the few that has not provoked controversy, I do have something to say that is not without value. Perhaps, indeed, its importance has been minimized. To demonstrate the power of the division of labor, writers have been content to point out the marvelous things it accomplishes in certain industries, pin manufacture, for example. The question can be given broader and more philosophical significance. Moreover, habit has the peculiar power of making us shut our eyes and lose sight of the things around us. There is no truer word than that of Rousseau: “It takes a great deal of scientific insight to observe what we see every day.”∗ It is not superfluous, then, to call to men's attention what they owe to exchange without being aware of it.
How has the power of exchange raised humanity to its present heights? By its influence on labor, on the harnessing of the forces of Nature, on the capacities of man, and on capital.
Adam Smith has well shown this influence on labor.
“The increase in the quantity of labor that can be performed by the same number of men as a result of the division of labor is due to three factors,” said the celebrated economist: “(1) the level of skill acquired by each worker; (2) the saving of time normally lost by moving from one occupation to another; (3) the increased opportunity each man has of discovering easy and efficient ways of attaining an object when his attention is centered on it, rather than diverted to many other things.”∗
Those who, like Adam Smith, see in labor the sole source of wealth, confine themselves to the question of how division improves its efficiency. But we have seen in the preceding chapter that labor is not the only agent for procuring our satisfactions. Natural forcesalso contribute. This is not open to question.
Thus, in agriculture, the action of the sun and the rain, the moisture in the soil, the gases in the atmosphere, are certainly resources that co-operate with human labor in the growing of vegetables.
Industry owes similar services to the chemical qualities of certain substances: to the power generated by waterfalls, to the pressure of steam, to gravitation, to electricity.
Commerce has learned to turn to man's profit the strength and instincts of certain animals, the power of the wind for sailing boats, the laws of magnetism, which, acting on the compass, guide ships over great oceans.
There are two great incontrovertible truths. The first is: The better man exploits the forces of Nature, the better he provides himself with all that he needs.
It is self-evident that we get more wheat, for the same amount of effort, from good, rich soil than from dry sand or barren rocks.
The second truth is: The resources of Nature are unequally distributed over the earth.
Who would dare maintain that all lands are equally favorable for growing the same crops, all countries for producing the same goods?
Now, if it is true that natural resources vary from one part of the globe to another, and if, on the other hand, the more men use them, the richer they are, it follows that the power of exchange increases immeasurably the usefulness of these resources.
Here once again we encounter gratuitous utility and onerous utility, the first replacing the second by virtue of exchange. Is it not clear, in fact, that if, deprived of the power of exchange, men were reduced to producing ice at the equator and sugar at the poles, they would have to do with great effort what heat and cold today do for them gratis, and that, as far as they were concerned, a great percentage of natural resources would remain idle? Thanks to exchange, these resources are put to use wherever they are found. Wheat land is sown with wheat; land suitable for the production of grapes is planted with vineyards; there are fishermen on the sea coasts, and woodcutters in the mountains. Here water, there wind, is directed against a wheel, replacing ten men. Nature becomes a slave whom we neither have to clothe nor feed, whose services require no payment, who costs neither our purse nor our conscience anything.1 The same sum of human efforts, that is to say, the same service—the same value—produces a constantly increasing sum of utility. For every project completed, only a part of human activity is expended; the rest, through the instrumentality of Nature, is made available and is turned to new problems, satisfies new desires, creates new utilities.
The effects of exchange on our intellectual faculties are such that even the most ingenious imagination would be unable to gauge their extent.
“Our knowledge,” says M. de Tracy∗ “is our most precious possession, since it is knowledge, in proportion to its soundness and breadth, which guides our efforts and makes them productive. Now, no man is in a position to see everything, and it is much easier to learn than to invent. But when several men are in communication, what one observes is soon known by all, and only one of them needs to be especially ingenious for all of them soon to be in possession of valuable discoveries. The sum total of knowledge, therefore, grows much more rapidly than in the state of isolation, not to mention that it can be preserved and, therefore, passed on from generation to generation.”
If Nature has distributed unequally the resources she places at man's disposal, she has been no more uniform in her distribution of human endowments. We are not all blessed with the same degree of strength, courage, intelligence, patience, or artistic, literary, and industrial talents. If it were not for exchange, this diversity, far from being turned to our well-being, would contribute to our wretchedness, each one being more aware of the talents he lacked than of the advantages of the talents he had. Thanks to exchange, the strong man can, up to a point, do without genius; the intelligent man, without brawn; for, by the admirable pooling of gifts that exchange establishes among men, each one shares in the distinctive talents of his fellows.
To satisfy our wants and our tastes, it is not enough to work, to use our faculties on or through the resources of Nature. We also need tools, instruments, machines, provisions—in a word, capital. Let us imagine a tiny community of ten families, each one of which, working solely for itself, is obliged to engage in ten different occupations. Each head of a family would need the equipment for ten different industrial units. There would be, then, in the community ten plows, ten teams of oxen, ten forges, ten carpenter's shops, ten looms, etc.; with exchange a single plow, a single team of oxen, a single forge, a single loom would suffice. The capital savings due to exchange surpass one's imagination.
The reader can now well perceive the true power of exchange. It does not imply, as Condillac says, two gains, because each of the contracting parties sets more store by what he receives than by what he gives. No more is it a matter of each giving from his surplus to acquire what is necessary. It is simply that, when one man says to another, “You do only this, and I will do only that, and we'll share,” there is better employment of labor, talents, natural resources, capital, and, consequently, there is more to share. So much the better if three, ten, a hundred, a thousand, a million men join the association.
The two propositions that I have advanced are therefore strictly correct, namely:
In the state of isolation, our wants exceed our productive capacities.
In society, our productive capacities exceed our wants.
The first is true because the entire area of France could not for long keep alive a single man in the state of absolute isolation.
The second is true because, in fact, the population of this same area is growing in numbers and prosperity.
Progress in Exchange
The primitive form of exchange is barter. Two persons, each of whom feels a want and possesses the object that can satisfy the other's want, either exchange objects or agree to work separately at different things and share, to the extent stipulated, in the finished product. This is barter, which is, as the socialists would say, exchange, business, commerce in embryo. We note here two wants as the motivating force, two efforts as the means, two satisfactions as the result, or as the termination of the entire process, and nothing in it differs essentially from the same process as carried out in the state of isolation, except that only the wants and satisfactions have remained nontransferable, as is their nature, while the efforts have been exchanged; in other words, two persons have worked for each other and have rendered reciprocal services.It is at this point, therefore, that political economy really begins, for it is here that we can first observe the appearance of value. Barter occurs only after an agreement, a discussion. Each of the contracting parties makes his decision after considering his self-interest. Each one calculates in this fashion: “I shall barter if the trade brings me the satisfaction of my want with less effort on my part.” It is certainly a striking phenomenon that exchange makes it possible to give men's wants the same satisfaction at the cost of less effort, and it is explained by the considerations I presented in the first paragraph of this chapter. When two products or two services are bartered, we may say that they are of equal value. Later we shall have occasion to go more deeply into the question of value. For the moment this vague definition will suffice.
We can conceive of roundabout barter, involving three contracting parties. Paul renders a service to Peter, who renders an equivalent service to James, who in turn renders an equivalent service to Paul, thereby completing the cycle. I need not say that this rotation does not take place unless it satisfies all parties, and it changes in no wise either the nature or the result of a simple barter.
The fundamental character of barter would not in any way be affected if the number of contracting parties should be further increased. In my parish the winegrower uses his wine to pay for the services of the blacksmith, the barber, the tailor, the beadle, the vicar, the grocer. The blacksmith, the barber, the tailor, in turn, deliver to the grocer the wine they receive from the wine-grower as payment for the commodities they consume during the year.
This roundabout barter, I cannot repeat too often, does not in any way alter the original concepts set forth in the preceding chapter. When the process is completed, each participant has presented this triple phenomenon: want, effort, satisfaction. Only one thing has been added: the exchange of efforts, which means the transfer of services and the division of labor. The results are advantageous to all parties; for otherwise the bargain would not have been agreed to, and each would have preferred his own isolated, individual effort, which is always a possible alternative.
It is easy to understand that roundabout barter in kind cannot be greatly expanded, and there is no need to dwell on the obstacles that prevent its further development. If a man wished to barter his house for the thousand and one items he would use in the course of the year, how would he go about it? In any case, barter cannot go beyond a small circle of persons acquainted with one another. Humanity would soon have reached the limits of the division of labor, the limits of progress, if a means of facilitating exchange had not been found.
That is why, since the beginnings of society, men have employed in their transactions some intermediate article, such as grain, wine, animals, and, almost always, metals. These articles perform their function as a medium of exchange, some more, some less satisfactorily; but all are acceptable, provided they represent effort in terms of value, which is the thing to be transmitted.
When this type of intermediate commodity is resorted to, two economic phenomena appear, which are called sale and purchase. It is clear that the idea of sale and purchase is not included in simple barter or even in roundabout barter. When one man gives another something to drink in return for something to eat, we have a simple act that cannot be further broken down into component parts. Now, at the outset of our study of political economy, we must notice that the exchange that is transacted through an intermediate commodity loses nothing of the nature, essence, or character of barter; it is simply a form of indirect barter. As Jean-Baptiste Say very wisely and profoundly observed, it is barter with two factors added, one called sale, the other purchase, which together are indispensable to complete a barter transaction.
In fact, the appearance in the world of a convenient medium of barter does not change the nature of men or of things. There remain for every man the want that prompts the effort, and the satisfaction that rewards it. Exchange is not complete until the man who has made an effort for another man receives in return an equivalent service, that is, a satisfaction. For this purpose, he sells his service for the intermediate commodity; then with it he buys equivalent services, and thus the two factors reconstitute for him a simple barter transaction.
Take the case of a doctor, for example. For some years he has devoted his time and his faculties to the study of diseases and their cure. He has called on his patients, he has given them medical care—in a word, he has rendered services. Instead of receiving from his patients, in payment, direct services, which would have constituted simple barter, he has received an intermediate commodity, pieces of metal, with which he has procured the satisfactions that were his objective. His patients have not supplied him with bread, wine, or furniture, but they have supplied him with value to that amount. They have been able to give him pieces of money because they themselves had rendered services. There is, therefore, a balance of services for them as well as for the doctor; and, if it were possible to trace this circulation of money in our imaginations to its very end, we should see that exchange through the medium of money breaks down into a multitude of simple acts of barter.
Under the system of simple barter, value is the appraisal of the worth of the two services exchanged, arrived at through direct comparison. Under the system of indirect exchange, the two services are also appraised, but in comparison with the middle factor, the intermediate commodity, which is called money. We shall see elsewhere what difficulties, what errors, have arisen from this complication. It is enough to observe here that the presence of this intermediate commodity does not in any way alter the fundamental notion of value.
Once it is admitted that exchange is both the cause and the effect of the division of labor, once it is admitted that the division of labor multiplies satisfactions in relation to effort, for the reasons presented at the beginning of this chapter, the reader will readily understand the services money has rendered humanity by the mere fact that it facilitates the act of making an exchange. Thanks to money, exchange has truly been able to expand indefinitely. Each one turns his services over to society, without knowing who will receive the satisfactions they are intended to give. Likewise each one receives from society, not immediate services, but pieces of money, with which he will buy particular services where, when, and how he wills. In this way the ultimate transactions are carried on across time and space between persons unknown to one another, and no one knows, at least in most instances, by whose effort hiswants will be satisfied, or to whose wants his own efforts will bring satisfaction. Exchange, through the intermediary of money, breaks down into countless acts of barter between parties unacquainted with each other.
Yet exchange is so great a benefit to society (indeed, is it not society itself?) that society, to encourage and expand it, has done more than introduce money. In logical order, after want and satisfaction brought together in the same individual by isolated effort, after direct barter, after indirect barter, in which the exchange consists of purchase and sale, come other transactions, extended over time and space by credit: mortgages, bills of exchange, bank notes, etc. Thanks to this marvelous device, which is the result of civilization, which perfects civilization, and which at the same time is perfected along with civilization, an effort exerted in Paris today will cross the oceans and the centuries to satisfy a person unknown; and the one making the effort nevertheless receives his remuneration now, through persons who advance it and are willing to go to distant lands to ask for their compensation, or to await it from the far-off future—an amazingly intricate piece of machinery, which, when submitted to exact analysis, shows us, after all, the soundness of the economic process, want, effort, satisfaction, functioning for each individual in keeping with the laws of justice.
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