Tuesday, April 3, 2012

On Value - Frédéric Bastiat - 1

On Value

A long discourse is always boring, and a long discourse on value must be doubly so.

Therefore, naturally enough, every inexperienced writer, when confronted with a problem in economics, tries to solve it without involving himself in a definition of value.

But inevitably it does not take him long to discover how very inadequate such a procedure is. The theory of value is to political economy what a numerical system is to arithmetic. How hopelessly confusing Bezout would have become if, to spare his students tedium, he had tried to teach them the four fundamental operations of arithmetic—addition, subtraction, multiplication, and division—and the theory of proportions without first explaining to them how the ten digits by their shape and position represent numerical values!

If only the reader could foresee the fascinating conclusions to be deduced from the theory of value, he would accept the tiresome explanation of the basic principles, just as he resigns himself to the dull chore of learning the elementary principles of geometry by keeping in mind the exciting prospect of things to come.

But in the field of political economy one does not intuitively anticipate anything of this sort. The more pains I shall take to make clear the distinctions between value and utility, and between value and labor, in order to explain how natural it was for early economic theory to have run aground on these treacherous shoals, the more surely the reader will find in my careful analysis mere sterile and idle subtleties, of no possible interest to anyone, except perhaps professionals in the field.

You are laboriously considering, he will say to me, whether wealth resides in the utility of things or in their value or in their scarcity. Is not this like the question asked by the Scholastics: Does form reside in the substance or in the accident? Are you not afraid of being parodied in a vaudeville skit by some would-be Molière?

And yet I must say: From the viewpoint of political economy society is exchange. The primary element of exchange is the notion of value, and consequently the connotations that we give to this word, whether true or erroneous, lead us to truth or error in all our social thinking.

I have undertaken in this work to show the harmony of the providential laws that govern human society. These laws are harmonious rather than discordant because all the elements, all the motive forces, all the springs of action, all the self-regarding impulses within man, work together toward attaining a great final result that he will never completely reach, because of his innate imperfection, but which he will constantly approach because of his indomitable capacity for improvement; and this result will be the progressive merging of all classes at a higher and higher level—in other words, the equalizing of all individuals in the general enjoyment of ahigher standard of living.

But, to succeed in my effort, I must explain two things, namely:

  • 1)Utility—that is, the service a thing renders tends to cost less and less, to become more generally available, as it gradually passes outside the domain of individual ownership.
  • 2)Value, on the contrary, which alone can be claimed as a possession, which alone, in law and in fact, constitutes property, tends to decrease in proportion to the amount of utility it represents.

Consequently, if I base my demonstration both on private ownership, but exclusively on private ownership of value, and on public ownership, but exclusively on public ownership of utility, I should be able, provided my reasoning is valid, to satisfy and reconcile all schools, since I recognize that all have had a glimmering of the truth, but only of a part of the truth seen from different points of view.

Economists, you defend private ownership. In the social order no private ownership exists save the ownership of value, and it cannot be called into question.

Socialists, you dream of public ownership. You have it. The social order makes all utilities common to all, provided the exchange of privately owned values remains free.

You are like architects arguing over a building of which each one has seen only one side. They do not see poorly, but they do not seeall. To reach an agreement, they need only to walk around the entire edifice.

But how can I reconstruct this social edifice and present it to the public in all its beautiful harmony if I reject its twin cornerstones—utility and value? How could I effect the much-to-be-desired reconciliation of all schools of thought on the common ground of truth if I should yield to my reluctance to analyze these two ideas, whose confused interpretations have unfortunately given rise to so much disagreement?

A preamble of this kind has been necessary to persuade the reader, if possible, to arm himself for a short while with the concentration and the patience to endure some degree of tiresomeness, and alas! of boredom. Unless I am much mistaken, the beauty of the conclusions will richly compensate for the dullness of the premises. If Newton had allowed himself, in the beginning, to be deterred from the study of mathematics by his distaste for its elementary principles, his heart would never have quickened with admiration at the vision of the harmonies of the celestial universe; and I insist that we have only to work our way manfully through a few elementary notions of political economy to realize that God has not been less lavish in bestowing touching goodness, admirable simplicity, and magnificent splendor upon the social universe.

In the first chapter we saw that man is both passive and active; that wants and satisfactions, being concerned exclusively withsensation, are, by their nature, personal, intimate, and nontransferable; that effort, on the contrary, the link between want and satisfaction, the mean between the extremes of motive cause and end result, stemming as it does from our activity, our impulse, our will, can be transmitted by mutual agreement from one individual to another. I know that this assertion could be challenged on metaphysical grounds, and that it could be maintained that effort also is personal and individual. I have no desire to become involved in any such ideological debate, and I hope that my thought will be accepted without controversy when expressed in this nontechnical form: We cannot feel another persons' wants; we cannot feel another person's satisfactions; but we can render services to one another.

This transmission of effort, this exchange of services, forms the subject matter of political economy; and since, on the other hand, political economy can be summed up in the word value, which is the thing it seeks to explain in all its detail, it follows that our notion of value will be an imperfect one, an erroneous one, if, neglecting the mean, we base it on the extremes, which are phenomena of our sensations—wants and satisfactions, which are intimate, nontransferable, not subject to measurement from one individual to another—instead of founding it on our activity, our effort, our exchange of reciprocal services, since these are capable of comparison, appraisal, evaluation, and can indeed be evaluated for the very reason that they are exchanged.

In the same chapter we arrived at these conclusions:

Utility (the ability of certain acts or things to serve us), is composite, one part of it being due to the action of Nature, the other part to the action of man. The more Nature has done to effect a given result, the less there is for human labor to do. Nature's contribution is essentially gratuitous; man's contribution, whether intellectual or physical, exchanged or not exchanged, collective or individual, is essentially onerous, as is implied by the very word “effort.”

And since what is gratuitous cannot have value, the notion of value implying acquisition through effort, it follows that value too will be misunderstood if we extend its meaning to include, in whole or in part, those things that are received as gifts from Nature, instead of restricting its meaning to the human contribution only.

Thus, from two points of view, from two different approaches, we reach the conclusion that value must have reference to the effortsmade by men in order to secure the satisfaction of their wants.

In chapter 3 we noted that man cannot live in the state of isolation. But if, in our thinking, we conjure up this imaginary case, this state contrary to nature, to which the eighteenth century paid homage under the name of the state of nature, we realize at once that, although it exhibits the active phenomenon that we have named effort, it still does not reveal the notion of value. The reason is simple: value implies comparison, a rating, an evaluation, a measure. For two things to be measured, they must be commensurate; and to be commensurate, they must be of the same kind. In the state of isolation, to what can effort be compared? To wants? To satisfactions? This can lead us only to grant to effort a greater or a lesser degree of timeliness, of appropriateness. In the social state we compare the effort of one man with the effort of another man (and from this comparison arises the idea of value), two phenomena of the same kind, and hence measurable.

Thus, the definition of the word “value,” to be accurate, must have reference not only to human efforts, but also to efforts that are exchanged or exchangeable. Exchange does more than take note of values or measure them; it creates them. I do not mean that it creates the acts or the things that are exchanged, but it imparts the idea of value to them.

So, when two men exchange their present effort, or the fruits of their past effort, they are serving each other; they are rendering each other mutual service.

I therefore say: Value is the relationship existing between two services that have been exchanged.

The idea of value first entered the world when a man said to his brother, “Do this for me, and I will do that for you,” and the brother agreed; for then, for the first time, men were able to say, “Two services that are exchanged are equal to each other.”

It is curious to note that the true theory of value, which is to be sought in vain in many a thick volume, is found in the delightful little fable of Florian, the Blind Man and the Paralytic:

  • Aidons-nous mutuellement,
  • La charge des malheurs en sera plus légère.
  • . . . . . . . . . à nous deux
  • Nous possédons le bien à chacun nécessaire.
  • J'ai des jambes, et vous des yeux.
  • Moi, je vais vous porter; vous, vous serez mon guide:
  • Ainsi, sans que jamais notre amitié décide
  • Qui de nous deux remplit le plus utile emploi,
  • Je marcherai pour vous, vous y verrez pour moi.

This is value identified and defined with rigorous economic accuracy, except for the touching reference to friendship, which takes us into another realm. We can well understand how two handicapped persons can render each other mutual service without undue concern as to which one performs the more useful function. The special circumstances invented by the fabler produce a strong sense of sympathy that prevents the two men from trying to assess the relative importance of the services they exchange, although this assessment is indispensable in order to bring completely into focus the notion of value in this transaction. This idea would become fully apparent if all men, or most men, were stricken with paralysis or blindness; for then the inexorable law of supply and demand would take over, and, eliminating the element of voluntary sacrifice on the part of the one performing the more useful function, would re-establish the transaction on the solid ground of justice.

We are all halt or blind in some respect; and we readily understand that by mutual aid the burden of our ills will be the lighter. Henceexchange. We work to provide food, clothing, lodging, light, health, defense, education for one another. Hence reciprocity ofservices. These services we compare, we discuss, we evaluate. Hence value.

A host of circumstances can increase the relative importance of a service. We find it greater or less in proportion to its usefulness to us; to the number of persons ready to perform it for us; to the amount of labor, pains, skill, time, preparation it requires, to the degree to which it relieves us of the necessity of providing these same things for ourselves. Value depends not only on these circumstances but also on the estimate we make of them; for it can happen, and often does, that we rate a given service very highly, because we judge it to be very useful, whereas in reality it is detrimental. For this reason, vanity, ignorance, error play their part in influencing this essentially elastic and fluctuating relationship that we call “value”; and one could say that the evaluation of services tends to come closer to absolute truth and justice as men progress in knowledge and morality.

Up to now the principle of value has been sought in those circumstances that increase or lessen it, in material quality, wear, usefulness, scarcity, labor, inaccessibility, subjective judgment, etc.—things that from the very beginning have given the science of political economy a wrong direction, for the accident that modifies the phenomenon is not the phenomenon itself. Moreover, every writer has set himself up as the godfather, so to speak, of the particular one of these circumstances that he considered the most significant—the inevitable outcome of the tendency to generalize; for the whole universe is in everything, and there is nothing that a word cannot be made to include if only its meaning is sufficiently broadened. Thus, the principle of value for Adam Smith is in material quality and wear (durability); for Say, in utility; for Ricardo, in labor; for Senior, in scarcity; for Storch, in subjective judgment; etc.

What happened, inevitably, was that these writers in all innocence weakened the authority and dignity of the science of political economy by giving the impression of contradicting one another, whereas in reality each one was correct from his own point of view. Furthermore, they enmeshed the primary notion of political economy in a maze of inextricable difficulties, since the same words did not connote for all of them the same meaning; and, although one set of circumstances might be declared fundamental, they also noted other factors at work that were too important to be neglected, and thus their definitions became more and more involved.

This book is not designed to add to the controversy, but to be an exposition of principles. I point out what I see, not what others have seen. I cannot, however, refrain from calling the reader's attention to the circumstances on which the idea of value has been based. But before proceeding with this topic, I shall turn to a series of concrete illustrations of the nature of value, for it is through different applications of it that we grasp the meaning of a theory.

I shall show how every transaction can be reduced to a bartering of services. But the reader must keep in mind what was said about barter in the previous chapter. It is rarely a simple transaction; sometimes it is accomplished through products or commodities circulated among several contracting parties; more often it is accomplished by means of money, in which case it can be broken down into two factors, sale and purchase; but, since this complicating feature does not in any way alter the nature of the transaction, let me assume, for the sake of simplicity, an immediate and direct barter between two parties. In this way we may avoid any misconception as to the nature of value.

We are all born with one overwhelming physical want, which must be satisfied on pain of death: the need to breathe. On the other hand, we are all placed in an environment that provides for this want, generally speaking, without requiring any effort from us. Air, then, has utility, but no value. It has no value, because, since it occasions no effort, it calls for no service. Rendering a service implies sparing someone pains; and when no pains are required to achieve a satisfaction, there are none to be spared.

But if a man goes down to the bottom of a river in a diving bell, a foreign body is introduced between the air and his lungs; to re-establish connections, the pump must be set in motion; then there is effort to be exerted, pains to be taken; and certainly the man will be ready to co-operate, for his life is at stake, and no service to him could be greater.

Instead of making this effort himself, he requests me to make it; and, in order to induce me to do so, he promises in his turn to take pains that will procure me satisfaction. We discuss the matter, and we come to an agreement. What do we have here? Two wants, two satisfactions, that are not mutually exclusive; two efforts that are the subject of a voluntary transaction; two services that are exchanged—and value makes its appearance.

Now, it is said that utility is the basis of value; and as utility is inherent in air, we are to assume that this is likewise true of value. There is obvious confusion here. Air, by its composition, has physical properties that are adapted to one of our bodily organs, the lungs. What I take out of the atmosphere to fill the diving bell is not changed in any way; it is still oxygen and nitrogen. There is no combining to form a new physical quality; no reagent brings forth a new element called value. The fact is that value comes only from the service that has been rendered.

When someone states the axiom that utility is the basis of value, I have no quarrel with him if he means that service has value because it is useful to the one who receives it and pays for it. This is a truism that adds nothing new to the idea of the word “service.”

But we must not confuse utility of the type provided by the air with the utility of a service. These two are distinct, of different orders and natures, and do not necessarily have any common denominator or relationship. Under certain conditions, I can do someone a service that is trifling, as far as the effort it costs me or saves him is concerned, and yet, by so doing, I can place at his disposal something of very great intrinsic utility.

Let us see how the two contracting parties would go about evaluating the service that the one renders the other in sending air down to him. There must be a common ground for comparison, and it can only be in the service that the diver has promised to give in return. What they demand will depend on their respective situations, the urgency of their wants, the relative ease with which one can get along without the other, and many other circumstances that demonstrate that value is in the service, since both increase in the same ratio.

If the reader so desires, he can easily think up for himself other examples of this kind that will convince him that value is not necessarily commensurate with the amount of effort expended. This is a remark that I throw out here in anticipation of later discussion, for I expect to prove that value no more resides in labor than it does in utility.

Nature has seen fit to make me in such a way that I should die if I did not quench my thirst from time to time; and the spring to which I must go for water is two miles from my village. Therefore, every morning I must take the trouble of going after my little supply of water, for I find in water those useful qualities that have the power to assuage that type of suffering known as thirst. Want, effort, satisfaction—they are all there. I am familiar with the utility I derive from this act; I do not yet know its value.

However, suppose my neighbor also goes to the spring, and I say to him, “Spare me the trouble of making this trip; do me the serviceof bringing me some water. While you are so engaged, I will do something for you; I will teach your child to spell.” It happens that this suits both of us. This is the exchange of two services, and we can say that the one is equal to the other. Note that what is compared here are the two efforts, not the two wants or the two satisfactions; for on what basis can we compare the relative merits of having a drink of water and learning how to spell?

Soon I say to my neighbor, “Teaching your child is becoming a bore; I prefer to do something else for you. You will continue to bring me water, and I will give you five sous.” If the offer is accepted, the economist may say without fear of error: The service is worth five sous.

After a while my neighbor no longer waits for me to ask him. He knows, by experience, that I need to drink every day. He anticipates my want. And while he is at it, he provides water for other villagers. In a word, he becomes a water-seller. Then we begin to put it this way: Water is worth five sous.

But has the water really changed? Has the value, which so recently was in the service, now become a material thing, a new chemical element added to the water? Has a slight change that my neighbor and I made in our arrangements been powerful enough to upset the principle of value and alter its nature? I am not so pedantic as to object to saying that water is worth five sous, any more than to saying that the sun sets. But we must realize that both are examples of metonymy; that metaphors do not alter facts; that scientifically, since, after all, we are dealing with a science, it is no more true that value is contained in water than that the sun sets in the sea.

Let us therefore assign to things the qualities that are proper to them: to water, to air, utility; to services, value. Let us say: Water hasutility because it has the property of quenching thirst; the service is the thing that has value, because it is the subject of the agreement. This truth is apparent when we reflect that whatever may be our distance from the spring, the utility of the water remains constant, but its value varies. Why? Because the service becomes greater or smaller. Value, then, is in the service, since value changes as the service does and in the same degree.

The diamond plays an important role in the books written by economists. They use it to elucidate the laws of value or to indicate the so-called disturbances of these laws. It is a shining weapon that all schools use in their combat. The English school says: “Value consists in labor.” The French school produces a diamond and says: “Here is a product that requires no labor and is yet of immense value.” Then, if the French school affirms that value resides in utility, the English school cites the diamond, along with air, light, and water, as proof to the contrary. “Air is very useful and has no value; the diamond's utility is highly questionable, and yet it is worthmore than the whole atmosphere.” And the reader can only say with Henry IV, “On my word, they're both right.” Eventually they reach common agreement in the following error, which is worse than the other two: We must admit that the handiwork of God hasvalue, and that value, then, is material.

These anomalies disappear, it seems to me, on the basis of my definition, which is corroborated rather than invalidated by the example in question.

I take a stroll along the seashore. A stroke of good luck puts a superb diamond into my hand. I have come into possession of a considerable amount of value. Why? Am I going to contribute something great to humanity? Have I toiled long and arduously? Neither the one nor the other. Why, then, does the diamond have such value? Because the person to whom I give it believes that I am rendering him a great service, all the greater because many rich people would like to have it, and I alone can render it. Their judgment is open to question, granted. It is based on vanity and love of display, granted again. But the judgment exists in the mind of a man ready to act in accordance with it, and that is enough.

We could say that this judgment is far from being based on a reasonable evaluation of the diamond's utility; indeed, it is quite the contrary. But making great sacrifices for the useless is the very nature and purpose of ostentation.

Value, far from having any necessary relation to the labor performed by the person rendering the service, is more likely to be proportionate, we may say, to the amount of labor spared the person receiving the service; and this is the law of values. It is a general law and universally accepted in practice, although, as far as I know, not taken into account by the theorists. We shall describe later the admirable mechanism that tends to keep value and labor in balance when the latter is free; but it is nonetheless true that value is determined less by the effort expended by the person serving than by the effort spared the person served.

The transaction relating to the diamond may be supposed to give rise to a dialogue of this nature:

“Let me have your diamond, please.”

“I am quite willing; give me your whole year's labor in exchange.”

“But, my dear sir, getting it didn't cost you a minute's time.”

“Well, then, the way is open to you to find that kind of minute.”

“But, in all justice, we ought to exchange on terms of equal labor.”

“No, in all justice, you set a price on your services, and I set one on mine. I am not forcing you; why should you force me? Give me a whole year's labor, or go find your own diamond.”

“But that would entail ten years of painful search, and probable disappointment at the end. I find it wiser and more profitable to spend ten years in some other way.”

“And that is just why I feel that I am still doing you a service when I ask only for one year. I am saving you nine years, and for that reason I consider this service of great value. If I appear demanding to you, it is because you consider only the labor I have performed; but consider also the labor that I save you, and you will find that I am almost too easy.”

“Nevertheless, you are making a profit from what is a work of Nature.”

“And if I let you have my lucky find for nothing or next to nothing, you would be the one to make the profit. Besides, if this diamond has great value, it is not because Nature has been toiling away on it since the beginning of time; Nature does as much for a dewdrop.”

“Yes, but if diamonds were as plentiful as dewdrops, you would not be laying down the law to me.”

“Certainly, because in that case you would not be appealing to me, or you would not be disposed to pay me a high price for a service that you could easily perform for yourself.”

We see from this dialogue that value resides no more in the diamond than it does in water or in air; it resides entirely in the servicesperformed and received in connection with these things and is determined after free discussion by the contracting parties.

Go through what the economists have to say; read, compare their definitions. If any one of them can account for air and the diamond, two cases apparently so opposite, then throw this book of mine into the fire. But if my definition, simple as it is, resolves the difficulty, or rather, eliminates it, then, reader, in all good conscience, you are bound to read me through to the end; for so good an introduction to the science we are studying cannot fail to hold promise for the rest.

I ask indulgence to cite other examples, in order both to clarify my thought and to familiarize the reader with a new definition. Besides, this attention to the principle of value, showing it in all its aspects, will pave the way for my conclusions, which will prove to be, I venture to predict, no less important than unexpected.

Among the wants to which we are subject because of our physical nature is the need for food; and one of the best commodities for satisfying it is bread.

Naturally, since it is I who experience the need to eat, it is I who should perform all the operations that will produce the amount of bread I require. I cannot ask my fellow men to perform this service for me gratis, since they too are subject to the same want and are obliged to make the same effort.

If I were to make my own bread, I should have to perform a series of tasks much like those involved in getting water from the well, but much more complicated. The elements of which bread is composed exist, of course, everywhere in Nature. As Jean-Baptiste Say so wisely observed, man has neither the need nor the ability to create anything. Gases, minerals, electricity, plant life all exist about me; I need only bring them together, help them along, combine and transport them, with the aid of that great laboratory which we call the earth, so full of mysterious things that science has barely begun to discover. Even though the sum total of all the operations I must go through in pursuit of my objective is quite complicated, each individual operation is as simple as drawing water from the spring where Nature has placed it. Each one of my efforts, therefore, is merely a service that I perform for myself; and if, through an agreement freely arrived at, other persons spare me some or all of these efforts, I have received that amount of services. The sum of these services, in comparison with those that I perform in return, constitutes and determines the value of my bread.

A convenient intermediate agent is introduced to facilitate this exchange of services and to measure their relative importance, viz., money. But the fundamental nature of things remains the same, even as in mechanics power is transmitted in accordance with the same laws, whether it be passed through one or several sets of gears.

We can see the truth of all this in the following illustration. If a good accountant were to analyze the elements entering into the valueof my loaf of bread costing, say, four sous, he would eventually identify, in the course of searching through many complicated transactions, all the individuals whose services had contributed to determining this value, all who had saved trouble for the person who, in the last analysis, pays for the bread because he is the consumer. First, there would be the baker, who keeps a twentieth part, and out of his twentieth pays the mason who built his oven, the woodcutter who prepared his firewood, etc.; then, there would be the miller, who would receive not only enough to pay for his own labor but also something for the quarryman who made his millstone, the workman who built the banks for his millrace, etc. Other parts of the total value would go to the thresher, the harvester, the cultivator, the planter, until the account was complete to the last centime. But no part of it, none whatsoever, would go to pay God or Nature. Such an assumption is absurd, on the face of it, and yet logically it is implicit in the theories of those economists who attribute to matter or the forces of Nature any part of the value of a product. No, once again, what has value here is not the loaf of bread, but the series of services that made the bread available to me.

It is quite true that, among the constituent parts of the loaf's value, our bookkeeper will find one part that he will have trouble itemizing as a service, at least as a service requiring effort. He will find that out of his twenty centimes, which make up his total of four sous, one or two go to the owner of the land, to the possessor of the field of operations. This small part of the bread's value constitutes what is called the land rent; and, confused by the expression, by the metonymy that we again encounter here, our accountant will perhaps be tempted to list this as the share due the forces of Nature, due, that is, to the land itself.

I maintain, however, that if he is a good accountant, he will realize that even this item is actually the cost of true services like all the others. This fact will be conclusively demonstrated when we study real property. For the moment, I shall simply remind the reader that here I am dealing, not with property, but with value. I am not inquiring whether all services are valid and legitimate, or whether some men have succeeded in receiving payment for services they did not render. After all, the world is full of injustices of this sort, but rent should not be included among them.

All that I am seeking to demonstrate here is that the so-called value of things is, in fact, only the value of the services, real or fancied, that are transmitted through the medium of things; that value does not reside in the things themselves, and is no more to be found in bread than in diamonds, in water, or in air; that Nature receives no payment for value; that the entire amount, paid by the ultimate consumer, is distributed among men; and that the consumer is willing to make them this payment only because they have rendered him services, cases of fraud and violence excepted.

Two men think that ice is a good thing in summer, and that coal is a better thing in winter. The one cools us, and the other warms us, both thus answering to two of our wants. I cannot insist too much that the utility of these objects consists in certain physical properties that are adapted to our physical organs. Let us note that neither value nor anything like it is included among these properties, which physics or chemistry could isolate. How, then, could anyone have reached the conclusion that value resides in matter and is itself material?

If these two men wish to satisfy their wants independently, each one will have to labor at storing up his own supply of both ice and coal. If they come to an understanding, one will go to the mines to get enough coal for both of them, the other to the mountains for enough ice for both. But in that case an agreement has to be reached. The two services exchanged must be carefully evaluated and compared. All the circumstances must be taken into account: the difficulties to be overcome, the dangers to be faced, the time to be lost, the pains to be taken, the skill required, the risks to be run, the possibility of satisfying the want in some other way, etc., etc. When the two men reach agreement, the economist will say that the two services that are exchanged are equivalent; but the common way of putting it, by metonymy, will be: So much coal is worth so much ice, as though value has passed physically into these objects. Though it is easy to realize that the common expression indicates the result well enough, only the scientific statement gives a true idea of the cause.

Instead of two services and two persons, the agreement may include a great number of services and persons, substituting indirect or roundabout exchange for direct barter. In that case money will be introduced to facilitate the act of exchange. Need I say that the principle of value will not be displaced or altered in the process?

But I do need to add a comment about the coal. It might well be that there is only one mine in the region, and that one man has got possession of it. In that case, this man will make his own terms, that is to say, he will set a high price on his services or his so-calledservices.

We have not yet come to the question of law and justice, of distinguishing between real services and fraudulent services. For the moment, what concerns us is to elucidate the true theory of value and rid it of the error from which the science of economics has suffered. When we say, “What Nature has done, or given, it has done, or given, gratis; consequently these things have no value,” people answer by giving us a cost analysis of coal or any other natural product. They admit readily enough that the price, in most cases, includes human services. One man has dug the earth; another has drained off the water; this man has brought the coal up from the mine; another one has delivered it; and the sum total of all these actions constitutes, they say, almost all the value of the coal. Yet there still remains a part of the value that does not correspond to any labor, to any service. That is the price of the coal lying underground, still untouched, as they say, by human labor. This is the owner's share; and since this part of the value is not created by man, it must indeed be created by Nature.

I reject this conclusion, and I warn the reader that if he accepts it in any guise whatsoever, he will make no further progress in the science of political economy. No, value is no more created by an act of Nature than matter is created by the action of man. One of two things must be true: either the owner has contributed to the final result and has performed real services, in which case the part of the value that he has set on the coal falls rightly within my definition; or else he has entered the transaction as a parasite and, in that case, has been sharp enough to receive payment for services that he did not perform; the price of the coal is improperly raised. This situation proves that injustice has crept in; but it cannot upset the theory to the point of warranting the assertion that that portion of value is material, that it has combined, like a physical element, with the gratuitous gifts of Providence. And here is the proof: Put an end to the injustice, if there is injustice, and the corresponding amount of value will disappear. Such would not be the case, certainly, if value were inherent in matter and created by Nature.

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