On Value
Materiality
When the service consists of the transfer of a material object, there is no reason for not saying, by metonymy, that the object has value. But we must not lose sight of the fact that this is a mere trope, or figure of speech, by which we attribute to the object the value arising from the services connected with it.Durability
Whether having materiality or not, value lasts until the want is satisfied, and no longer. Its nature is not changed by any time gap, great or small, arising between the exerting of the effort and the satisfying of the want, nor by the kind of service, whether personal or including material commodities.Accumulation
What can be accumulated by saving, in the social order, is not things, but value, or services.3Utility
I agree with Say that utility is the basis of value, provided that we mean the relative utility of services, not the utility that resides in things.Labor
I agree with Ricardo that labor is the basis of value, provided first that we take the word “labor” in its most general sense, and, second, that we do not give it a ratio to value out of keeping with all the facts; in other words, provided we substitute the word “service” for the word “labor.”Scarcity
I agree with Senior that scarcity influences value. But why? Because it makes service all the more valuable.Judgment
I agree with Storch that value results from an act of judgment, provided that we mean the judgment that we pass on the utility ofservices, not on the utility of things.Thus, economists of all persuasions should own themselves satisfied. I say that all are right, because all have glimpsed one side of the truth. Error, to be sure, lay on the other side. The reader must decide whether my definition takes into account the whole truth and rejects all the errors.
I must not conclude without saying a word about that economic equivalent of the squaring of a circle: the measure of value; and here I shall repeat, even more emphatically, the observation that ends the preceding chapters.
I said that our wants, our desires, our tastes, have no limits or exact measure.
I said that our means of satisfying them, the gifts of Nature, our faculties, our activity, foresight, discernment, have no exact measure. Each one of these elements is itself a variable quantity; it differs from man to man, and within each individual it differs from minute to minute, thus forming in its entirety what is the very essence of variability.
If, now, we consider what the circumstances are that influence value, such as utility, labor, scarcity, judgment, and if we realize that there is not one of these that does not vary infinitely, how can we stubbornly persist in seeking a fixed measure of value?
It would be strange indeed if we should find fixity in a mean term composed of variable elements, in a mean term that is merely a relation between two extremes more variable still!
Economists who seek an absolute measure of value are therefore pursuing a will-o'-the-wisp, and, not only that, something entirely useless. By universal practice gold and silver have been adopted as this measure, even though their variability has not gone unrecognized. But of what importance is the variability of the measure, if, since it affects in like manner the two objects that are exchanged, it does not alter the fairness of the exchange? It is a mean proportional, which can rise or fall, without on that account failing in its purpose, which is to register exactly the relation that exists between the two extremes.
The science of political economy does not, like exchange, have as its goal the establishment of the current ratio between two services, for in that case money would suffice. What it does seek to establish is the ratio of effort to satisfaction; and, in this respect, a measure of value, even if it existed, would tell us nothing; for effort, in attaining its satisfaction, always employs a variable amount of gratuitous utility that has no value. It is because this element of social well-being has been lost sight of that writers have deplored the absence of a measure of value. They have failed to realize that the measure would in no wise answer the question propounded: What is the relative wealth, or prosperity, of two classes, two nations, two generations?
To solve this question, political economy needs a measure capable of showing, not the relation between two services, which can serve as the vehicle for transmitting greatly varying amounts of gratuitous utility, but the relation between effort and satisfaction; and this measure could only be effort, or labor, itself.
But how can labor serve as a measure? Is it not itself one of the most variable of elements? Is it not characterized by varying degrees of skill, physical exertion, uncertainty, danger, distastefulness? Does it not have to be complemented by certain intellectual faculties and moral virtues? Does it not, by reason of all these circumstances, lead to infinitely varied amounts of remuneration?
There is one kind of labor that in all times, in all places, is identical with itself, and this is the one that must serve as the norm. It is the simplest, the crudest, the most primitive, the most muscular, the one most lacking in help from Nature's resources, the one every man can perform, which renders those services that each can render to himself, which requires neither exceptional strength nor skill nor apprenticeship—work of the kind performed by the first members of the human race, that, in a word, of the simple day laborer. This kind of work is always the most plentiful, the least specialized, the most uniform, and the least well paid. All wages are scaled and graded with this as a base; when circumstances are favorable to day labor, the rate of other wages increases also.
If, then, we wish to compare two societies, we must not turn to a measure of value, for two most logical reasons: first, because none exists; second, because if one did exist, it would give us only a wrong answer to our question, an answer that would ignore an important factor contributing to progress in human well-being: gratuitous utility.
What we must do, on the contrary, is to forget value completely, especially money, and ask: In a given country, at a given time, how much special utility of every category is there, and how does the sum total of all these utilities relate to a given amount of unskilled labor? In other words: How much comfort and well-being can the ordinary day laborer obtain in exchange for his services?
We may say that the natural social order is perfectible and harmonious if, on the one hand, the number of men engaged in unskilled labor and receiving the lowest possible wages is continually decreasing, and if, on the other, these wages, measured, not in value or in money, but in material satisfactions, are continually increasing.4
The ancients well described all the possible combinations of exchange: Do ut des (product exchanged for product), do ut facias(product for service), facio ut des (service for product), facio ut facias (service for service).∗
Since products and services are interchanged, they must necessarily have something in common, something against which they can be compared and appraised, namely, value.
But value is always identical with itself. Whether in a product or in a service, it has the same origin, the same cause.
This being the case, does value exist originally, essentially, in the product, and is the notion that it exists also in the service an extension, by analogy, of its meaning?
Or rather, on the contrary, does value reside in the service, and is it incorporated in the product solely and precisely because the service itself is incorporated in the product?
Some persons seem to think that this question is merely a quibble. We shall see about that presently. For the time being I shall say only that it would be strange if in political economy a good or a bad definition of value were a matter of indifference.
It appears indubitable that originally political economists believed that value resided in the product, and, more than that, in thematerial of the product. The physiocrats attributed value exclusively to the land and called all classes sterile that added nothing to matter; so closely in their eyes were matter and value linked together.
It would seem that Adam Smith should have refuted this notion, since he derived value from labor. Do not nonmaterial services require labor, and therefore do they not imply value? Though so near the truth, Smith did not grasp it; for, in addition to saying emphatically that, for labor to have value, it must be applied to matter, something physically tangible and capable of accumulation, we all know that, like the physiocrats, he puts on the unproductive list all those classes of society whose activity is limited to services.
Smith does, in fact, devote a great deal of attention to these classes in his treatise on wealth (The Wealth of Nations). But does this not merely prove that, after formulating his definition, he found it cramping, and, that consequently, his definition was wrong? Smith would not have won his great and just renown if he had not written his magnificent chapters on education, the clergy, public services, and if, in writing on wealth, he had confined himself within the limits of his definition. Happily he escaped, by being inconsistent, from the yoke of his own premises. This is the way it always happens. A man of genius, when he starts from a false premise, never escapes the charge of inconsistency; without it, his views would become increasingly absurd, and, far from being a man of genius, he would not even be a man of ordinary intelligence.
Just as Smith went a step beyond the physiocrats, so Say went a step farther than Smith. Little by little, Say came to recognize that value resides in services, but only by analogy, by extension. He attributed value in its true essence to products, and nothing proves this better than the bizarre heading under which he listed services: “nonmaterial products,” two words that clash stridently when put together. Say started from Smith's premises, as is proved by the fact that the full theory of the master is found related in the first ten lines of the works of the disciple.5 But he thought deeply, and his thinking progressed during the next thirty years. Thus, he came nearer the truth, but he never reached it.
Moreover, we could well believe that he fulfilled his mission as an economist, enlarging, as he did, the notion of value so as to include services as well as products, and tracing its transmission through services to products, if the socialists' propaganda, which was founded on his own deductions, had not come to reveal the shortcomings and dangers of his fundamental hypothesis.
Suppose, then, that I were asked this question: Since certain products have value, since certain services also have value, and since value, being always identical wherever found, can have only one origin, one cause, one identical explanation; is this origin, this explanation, to be found in products or in services?
I declare confidently, the answer is not for an instant doubtful, and for this irrefutable reason: for a product to have value, a service is implied; whereas a service does not necessarily imply a product.
This answer seems to me conclusive, as certain as a demonstration in mathematics.
Whether or not a service has material form, it has value, since it is a service.
If a material object renders a service for someone, it has value; if it renders no service, it has no value.
Hence, value is not transmitted from the material object to the service, but from the service to the material object.
Nor is this all. Nothing is more easily explained than this preeminence, this priority, where value is concerned, of services over products. We shall see that it is due to a circumstance which it was easy to observe, but which was not observed, for the very reason that it was so obvious. The circumstance is none other than man's natural foresight, which disposes him not to stop at performing the services that are asked of him, but to ready himself in advance to perform the services that he anticipates will be asked of him. Thus, while the facio ut facias type of exchange remains the key factor, the dominant factor, in any transaction, it tends to be transformed into the do ut des type.
John says to Peter, “I want a mug. I should make it; but if you are willing to make it for me, you will be doing me a service, and I will do you an equivalent service in return.”
Peter accepts. He goes in search of the proper kinds of clay, he mixes them, he kneads them; in a word, he does what John would have had to do.
It is quite evident here that it is the service that determines the value. The key word in the transaction is facio. And if later value is incorporated in the product, it is only because it is the outcome of the service, which is the combination of the labor performed by Peter and of the labor that John has been spared.
Now, it can happen that John often makes the same proposal to Peter, and other persons may make it also, so that Peter may foresee that he is certain to be asked to perform services of this kind and may get ready to perform them. He can say to himself: I have acquired a certain skill in making mugs. Experience tells me that the mugs correspond to a want that craves satisfaction. I can therefore manufacture them in advance.
Henceforth John will have to say to Peter, not facio ut facias, but facio ut des. If he, likewise, has foreseen Peter's wants and has worked at providing them in advance, he will say, do ut des.
But, I ask, in what respect does this progress, which stems from man's foresight, change the origin and nature of value? Does not service still remain its cause and its measure? What difference does it make, as far as the true idea of value is concerned, whether Peter waits to be asked before he makes a mug, or whether he makes it ahead of time, anticipating that he will be asked?
Please bear this in mind: In the history of mankind, inexperience and improvidence precede experience and foresight. Only in the course of time have men come to anticipate their mutual wants fully enough to prepare for them. Logically, the facio ut facias pattern had to precede the do ut des. The latter is both the result and the outward sign of some growth of knowledge, of a certain amount of experience, of political security, of faith in the future—in a word, of some degree of civilization. This foresight on the part of society, this faith in the demand that induces men to prepare the supply, this kind of intuitive statistical sense, to be found in all men, which establishes such a surprising balance between wants and the means of satisfying them, is one of the most powerful stimulants to human progress. Thanks to it, we have the division of labor, or at least as far as trades and professions are concerned. Thanks to it, we have one of the blessings men most ardently desire: fixed rewards for services, in the form of wages for labor and interest on capital. Thanks to it, we have credit, long-range financing, projects involving shared risks, etc. It is surprising that foresight, that noble attribute of man, has been so much neglected by the economists. It is due, as Rousseau said, to the difficulty we have in observing the environment in which we are immersed and which forms our natural habitat. Only unusual phenomena strike us, and we allow to pass unnoticed those that, constantly at work around us, upon us, and within us, modify us and our society so profoundly.
To return to our subject: It may be that man's foresight, in its infinite ramifications, tends more and more to substitute the do ut desfor the facio ut facias; but let us, nevertheless, remember that it is in the primitive and necessary form of exchange that the notion of value is first found, that this form is that of reciprocal service, and that, after all, from the point of view of exchange, a product is only a service that has been anticipated.
Having once established that value is not inherent in matter and cannot be classified among its attributes, I am far from denying that value passes from the service into the product, or commodity, in such a way as to become incorporated, so to speak, in it. I beg those who disagree with me to realize that I am not such a pedant that I would exclude from our language such familiar expressions as: “Gold has value,” “Wheat has value,” and “Land has value.” I believe only that I am within my rights in asking for a scientific explanation; and if the answer is “Because gold, wheat, land, have an intrinsic value,” then I believe I have the right to say: “You are wrong, and your error is dangerous. You are wrong, because there is gold, and there is land, that is valueless—the gold and the land that has not yet been the occasion of any human service. Your error is dangerous because it leads to classifying as a usurpation of God's gratuitous gifts to men what is actually man's simple right to exchange his services with other men.”
I am therefore ready to admit that products have value, provided others will admit with me that value has no necessary connection with products, that, on the contrary, it is related to and derived from services.
From this truth there follows a very important (in political economy a fundamentally important) conclusion, which heretofore has not been and could not be drawn, namely: When value has passed from the service to the product, it still remains subject to all the vicissitudes that can affect the value of any service. It is not fixed in the product, as would be the case if it were one of the product's intrinsic elements; no, it is essentially variable. It can keep rising indefinitely, or it can fall to zero, according to the type of service from which it originated.
The man who makes a mug now to be sold a year from now imparts value to it undoubtedly; and this value is determined by the value of the service—not by the present value of the service, but by the value it will have in a year. If, at the moment of sale, this kind of service is more in demand, the mug will be worth more; it will depreciate if the contrary is true.
That is why man is constantly stimulated to exercise foresight, to put it to good advantage. He always expects, through the appreciation or depreciation of his service, to be rewarded for what he has correctly anticipated and to be punished for his miscalculations. And note that his successes or his failures will coincide with the general prosperity. If he has calculated properly, he is prepared in advance to offer society services more sought after, more highly thought of, more efficient, which satisfy more keenly felt wants; he has contributed to reducing scarcity, to increasing the supply of services of this type, to placing them within the reach of a larger number of persons with less economic hardship. If, on the contrary, he is mistaken in his estimate of the future, he depresses still further the value of services for which the demand is already weak; he makes, at some cost to himself, a merely negative contribution, that of warning the public that services of a certain type do not at the present time require a great amount of its activity, that effort directed into this channel will yield poor returns.
This significant fact—that value incorporated in a product, if I may so describe it, continues to be identical with the value of the service to which it gives rise—is of the greatest importance, not only because it confirms the theory that the principle of value resides in the service, but also because it readily explains phenomena that other systems classify as abnormal.
Is there a general human tendency to lower rather than to raise the value of a product once it is placed on the world market? This is another way of asking whether the type of services that has created the particular value tends to receive better or poorer remuneration. Both are equally possible, and the fact that this is so offers limitless opportunities to men's foresight.
We may note, however, that for beings endowed with a capacity for experimenting, learning, and improving, progress is the general law. The probability is, therefore, that at a given moment in history a given expenditure of time and effort will obtain better results than at a previous moment in history; hence, we may conclude that the prevailing trend is toward a decrease in the value incorporated in a product. For example, if the mug that I just used as a symbol for products was made several years ago, it most probably has undergone depreciation. The fact is that today, for the production of an identical mug, we have more skill, more resources, better tools, more readily available capital, and more highly specialized labor. Therefore, the prospective purchaser of the mug does not say to the seller, “Tell me what the labor on this mug cost you in quantity and quality, and I will pay accordingly.” No. He says, “Today, thanks to the progress of this art, I can make for myself or procure through exchange a similar mug for a certain amount of labor of a certain quality, and that is the limit that I will agree to pay you.”
The end result of this is that all value attached to a commodity, that is to say, all accumulated labor, all capital, tends to depreciate as it encounters services that are naturally perfectible and increasingly productive; and that, in an exchange between current labor and previous labor, the advantage is generally on the side of current labor, as it should be, since it renders the greater services.
And this shows how empty are the tirades we constantly hear against the value of real property. This value is no different from any other in its origin or in its nature or in its obedience to the general law of slow depreciation. It represents services performed a long time ago: drainage, clearing, stonework, grading, fencing, additions to vegetable gardens, building, etc.; and its function is to collect payment for them. But the amount to be collected is not determined out of consideration for the work that went into them. The real-estate owner does not say, “Give me in exchange for this land as much labor as went into its development.” (This is how he would have expressed himself if value came from labor, as Adam Smith theorized, and were proportional to it.) Even less does he say, as Ricardo and a number of other economists suppose, “Give me first as much labor as went into this ground, then a certain additional amount as the equivalent of all its natural resources.” No, the owner of the property, speaking for all the previous owners, as far back as the one who originally cleared it, is reduced to this humble statement:
“We have prepared services, and we ask to exchange them for equivalent services. In times past we worked hard; for in our day your powerful modern devices were unknown: there were no highways; we were compelled to do everything with the strength of our own arms. Beneath these furrows lie buried the toil performed by the sweat of many brows, the effort of many human lives. But we do not demand toil for toil; we should have no means of obtaining such terms. We know that labor on the land as it is performed today, whether in France or elsewhere, is much more efficient and more productive. What we ask and what obviously cannot be denied us, is for our past labor to be exchanged for present labor on a basis proportional, not to their duration or their intensity, but to their results, so that we may receive the same remuneration for the same service. By this arrangement we are the losers from the point of view of our labor, since, to perform the same service, it takes two or perhaps three times as much of our labor as of yours. But it is an arrangement that perforce we must accept; for we no more have the means of imposing other terms than you do of refusing these.”
And, in point of fact, this is the way things are done. If we could make an exact accounting of the amount of incessant effort, drudgery, toil, and sweat that were required to bring every acre of the soil of France to its present level of productivity, we should be thoroughly convinced that the purchaser does not pay at the rate of equivalent amounts of labor—at least in ninety-nine cases out of a hundred.
I add this reservation, for we must not lose sight of the fact that a service incorporated in a commodity can acquire value as well as lose it. And although the general trend is toward depreciation, yet the contrary phenomenon does occur occasionally, in exceptional circumstances, involving land as well as other things, without, however, doing violence to the laws of justice or warranting any hue and cry against monopoly.
In fact, services are always at hand to reveal the presence of value. It can generally be assumed that past labor renders less service than present labor; but this is not an absolute law. If past labor renders less service, which is almost always the case, than present labor, it takes more of the former than of the latter to establish a balance, since, I repeat, equivalence is determined by services. But, on the other hand, when it happens that it is the past labor that renders the greater service, then a greater amount of the present service will be required in payment.
- Let us aid each other ....
- The burden of our ills will be the lighter ....
- Together we have all that fate to each denies.
- I have legs, and you have eyes.
- I shall carry you, and you will be my guide.
- Thus, without our friendship ever having to decide
- Which of us of greater use can be,
- I shall walk for you, and you will see for me.
Because, under a regime of liberty, individual services enter into competition with one another, their remuneration tends to become approximately proportionate to the intensity of the labor involved. But, I repeat, this balance, this proportionality, is not inherent in the notion of value. Proof of this can be found in the fact that where there is no competition, there is no proportionality either. In this case no relationship is to be observed between the nature of the labor and the amount of its remuneration.
The absence of competition can arise from the nature of things or from the perversity of mankind.
If it arises from the nature of things, we may see a relatively modest expenditure of effort producing great value without anyone's having just cause for complaint. This is the case of the person finding a diamond; this is also the case of Rubini,∗ of Malibran, of Taglioni,† of the fashionable tailor of the moment, of the proprietor of the Clos-Vougeot,‡ etc., etc. Circumstances have given them extraordinary means of rendering service; they have no rivals, and their prices are high. The very fact of the extreme scarcity of the service is proof that it is not essential to the well-being and progress of mankind. It is, therefore, a luxury item, an object of ostentation available to the wealthy. Is it not natural that every man, before indulging in satisfactions of this nature, should wait until he is able to provide for his more basic and reasonable wants?
If competition is absent because some human agency has done violence to the natural balance, the same effects are produced, but with this tremendous difference, that they are produced in places and at times where and when they should not be produced. Then we see a relatively minor piece of work creating great value; but how? By stifling violently the competition whose function it is to relate remuneration to service. Then, even as Rubini can say to a music-lover, “I want a very high honorarium, or I will not sing for your guests”—acting on the principle that the service here is one that only he can render—so can a baker, a butcher, a landlord, a banker say, “I want exorbitant payment, or else you will not receive my wheat, my bread, my meat, my gold; and I have taken precautions: I have lined up rows of bayonets so that you cannot procure these things elsewhere, so that no one else may render you services analogous to mine.”
People who class together artificial monopoly and what they call natural monopoly, because both have in common the power of increasing the value of labor, are either quite blind or quite superficial.
Artificial monopoly is downright plunder. It produces evils that otherwise would not exist. It inflicts hardship on a considerable part of society, because it often includes the most vital articles. In addition it gives rise to resentments, hatred, reprisals, all the fruits of injustice.
The favors bestowed by Nature do no harm to society. At the very most we could say that they bring to light an evil that already existed and can in no way be imputed to them. It is too bad, perhaps, that tokay wine is not as plentiful, and therefore not as cheap, as ordinary red wine. But this is not a social evil; it was imposed on us by Nature. There is, then, between the favors bestowed by Nature and artificial monopoly this profound difference: the former are the result of pre-existent and inevitable scarcity; the latter is the cause of artificial and unnatural scarcity.
In the first case it is not the absence of competition that creates the scarcity; it is the scarcity that explains the absence of competition. Mankind would be childish indeed if it became upset, or if it rebelled, because there is only one Jenny Lind, one Clos-Vougeot, or one Regent.
In the second case quite the contrary is true. It is not because of a providentially created scarcity that competition is impossible, but because force has stifled competition, because a scarcity has been created that should never have been. [Note taken from the author's manuscripts.—Editor.]
The absence of competition can arise from the nature of things or from the perversity of mankind.
If it arises from the nature of things, we may see a relatively modest expenditure of effort producing great value without anyone's having just cause for complaint. This is the case of the person finding a diamond; this is also the case of Rubini,∗ of Malibran, of Taglioni,† of the fashionable tailor of the moment, of the proprietor of the Clos-Vougeot,‡ etc., etc. Circumstances have given them extraordinary means of rendering service; they have no rivals, and their prices are high. The very fact of the extreme scarcity of the service is proof that it is not essential to the well-being and progress of mankind. It is, therefore, a luxury item, an object of ostentation available to the wealthy. Is it not natural that every man, before indulging in satisfactions of this nature, should wait until he is able to provide for his more basic and reasonable wants?
If competition is absent because some human agency has done violence to the natural balance, the same effects are produced, but with this tremendous difference, that they are produced in places and at times where and when they should not be produced. Then we see a relatively minor piece of work creating great value; but how? By stifling violently the competition whose function it is to relate remuneration to service. Then, even as Rubini can say to a music-lover, “I want a very high honorarium, or I will not sing for your guests”—acting on the principle that the service here is one that only he can render—so can a baker, a butcher, a landlord, a banker say, “I want exorbitant payment, or else you will not receive my wheat, my bread, my meat, my gold; and I have taken precautions: I have lined up rows of bayonets so that you cannot procure these things elsewhere, so that no one else may render you services analogous to mine.”
People who class together artificial monopoly and what they call natural monopoly, because both have in common the power of increasing the value of labor, are either quite blind or quite superficial.
Artificial monopoly is downright plunder. It produces evils that otherwise would not exist. It inflicts hardship on a considerable part of society, because it often includes the most vital articles. In addition it gives rise to resentments, hatred, reprisals, all the fruits of injustice.
The favors bestowed by Nature do no harm to society. At the very most we could say that they bring to light an evil that already existed and can in no way be imputed to them. It is too bad, perhaps, that tokay wine is not as plentiful, and therefore not as cheap, as ordinary red wine. But this is not a social evil; it was imposed on us by Nature. There is, then, between the favors bestowed by Nature and artificial monopoly this profound difference: the former are the result of pre-existent and inevitable scarcity; the latter is the cause of artificial and unnatural scarcity.
In the first case it is not the absence of competition that creates the scarcity; it is the scarcity that explains the absence of competition. Mankind would be childish indeed if it became upset, or if it rebelled, because there is only one Jenny Lind, one Clos-Vougeot, or one Regent.
In the second case quite the contrary is true. It is not because of a providentially created scarcity that competition is impossible, but because force has stifled competition, because a scarcity has been created that should never have been. [Note taken from the author's manuscripts.—Editor.]
[3.]See chap. 15. Accumulation is a circumstance of no consequence in political economy. Whether satisfaction is immediate or delayed, whether it can be postponed or separated from the effort that produces it, in no way changes the nature of things.
I am disposed to make a sacrifice for the pleasure of hearing a beautiful voice. I go to the theater and I pay; the satisfaction is immediate. If I had used my money to buy a dish of strawberries, I should have been able to postpone my satisfaction until the next day; that is all.
It can be said, of course, that the strawberries represent wealth, because I can still exchange them. That is true. Once the effort has been exerted, as long as the satisfaction remains unfulfilled, the wealth still exists. It is the satisfaction that destroys the wealth. When the dish of strawberries is eaten, this satisfaction will go the way of the other that brought me Alboni's∗ voice.
Service received, service rendered; such is political economy. Because, under a regime of liberty, individual services enter into competition with one another, their remuneration tends to become approximately proportionate to the intensity of the labor involved. But, I repeat, this balance, this proportionality, is not inherent in the notion of value. Proof of this can be found in the fact that where there is no competition, there is no proportionality either. In this case no relationship is to be observed between the nature of the labor and the amount of its remuneration.
I am disposed to make a sacrifice for the pleasure of hearing a beautiful voice. I go to the theater and I pay; the satisfaction is immediate. If I had used my money to buy a dish of strawberries, I should have been able to postpone my satisfaction until the next day; that is all.
It can be said, of course, that the strawberries represent wealth, because I can still exchange them. That is true. Once the effort has been exerted, as long as the satisfaction remains unfulfilled, the wealth still exists. It is the satisfaction that destroys the wealth. When the dish of strawberries is eaten, this satisfaction will go the way of the other that brought me Alboni's∗ voice.
Service received, service rendered; such is political economy. Because, under a regime of liberty, individual services enter into competition with one another, their remuneration tends to become approximately proportionate to the intensity of the labor involved. But, I repeat, this balance, this proportionality, is not inherent in the notion of value. Proof of this can be found in the fact that where there is no competition, there is no proportionality either. In this case no relationship is to be observed between the nature of the labor and the amount of its remuneration.
The absence of competition can arise from the nature of things or from the perversity of mankind.
If it arises from the nature of things, we may see a relatively modest expenditure of effort producing great value without anyone's having just cause for complaint. This is the case of the person finding a diamond; this is also the case of Rubini,∗ of Malibran, of Taglioni,† of the fashionable tailor of the moment, of the proprietor of the Clos-Vougeot,‡ etc., etc. Circumstances have given them extraordinary means of rendering service; they have no rivals, and their prices are high. The very fact of the extreme scarcity of the service is proof that it is not essential to the well-being and progress of mankind. It is, therefore, a luxury item, an object of ostentation available to the wealthy. Is it not natural that every man, before indulging in satisfactions of this nature, should wait until he is able to provide for his more basic and reasonable wants?
If competition is absent because some human agency has done violence to the natural balance, the same effects are produced, but with this tremendous difference, that they are produced in places and at times where and when they should not be produced. Then we see a relatively minor piece of work creating great value; but how? By stifling violently the competition whose function it is to relate remuneration to service. Then, even as Rubini can say to a music-lover, “I want a very high honorarium, or I will not sing for your guests”—acting on the principle that the service here is one that only he can render—so can a baker, a butcher, a landlord, a banker say, “I want exorbitant payment, or else you will not receive my wheat, my bread, my meat, my gold; and I have taken precautions: I have lined up rows of bayonets so that you cannot procure these things elsewhere, so that no one else may render you services analogous to mine.”
People who class together artificial monopoly and what they call natural monopoly, because both have in common the power of increasing the value of labor, are either quite blind or quite superficial.
Artificial monopoly is downright plunder. It produces evils that otherwise would not exist. It inflicts hardship on a considerable part of society, because it often includes the most vital articles. In addition it gives rise to resentments, hatred, reprisals, all the fruits of injustice.
The favors bestowed by Nature do no harm to society. At the very most we could say that they bring to light an evil that already existed and can in no way be imputed to them. It is too bad, perhaps, that tokay wine is not as plentiful, and therefore not as cheap, as ordinary red wine. But this is not a social evil; it was imposed on us by Nature. There is, then, between the favors bestowed by Nature and artificial monopoly this profound difference: the former are the result of pre-existent and inevitable scarcity; the latter is the cause of artificial and unnatural scarcity.
In the first case it is not the absence of competition that creates the scarcity; it is the scarcity that explains the absence of competition. Mankind would be childish indeed if it became upset, or if it rebelled, because there is only one Jenny Lind, one Clos-Vougeot, or one Regent.
In the second case quite the contrary is true. It is not because of a providentially created scarcity that competition is impossible, but because force has stifled competition, because a scarcity has been created that should never have been.
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