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1: The Basis of the Value of Things - Étienne Bonnot, Abbé de Condillac, Commerce and Government Considered in their Mutual Relationship [1776]

Edition used:

Commerce and Government Considered in their Mutual Relationship, translated by Shelagh Eltis, with an Introduction to His Life and Contribution to Economics by Shelagh Eltis and Walter Eltis (Indianapolis: Liberty Fund, 2008).

About Liberty Fund:

Liberty Fund, Inc. is a private, educational foundation established to encourage the study of the ideal of a society of free and responsible individuals.


1

The Basis of the Value of Things

Let us assume a small tribe which has just been established, which has brought in its first harvest, and which, since it is isolated, can only subsist on the product of the land it cultivates.

Let us also assume that after setting aside the necessary seed corn, they have a hundred muids left; and that with this quantity, they can wait for a second crop without fear of scarcity.

Carrying on with our assumption, for this amount to remove all fear of scarcity, it must be enough not only for their needs, but also to relieve their fears. Now, that can only be found in a certain degree of abundance. Indeed, when people judge in line with their apprehensions, what would suffice at a pinch is not enough; and they only believe they have enough in what is to a certain extent abundant.

The quantity which remains for our tribe, once the seed corn has been deducted, therefore makes, for this year, what we call abundance. Consequently if they have some muids more, they are in surplus and they would be in dearth if they had some less.

If a people could judge, exactly, the relationship between the quantity of corn it has, with the amount needed for its consumption, this known relationship would cause it always to know, with the same precision, whether it was in abundance, surplus, or dearth.

But it cannot judge this relationship precisely: because it has no way of informing itself exactly, either of the amount of corn it has, or of what it will consume. It is all the less able to do so, as it could not store the corn without waste, and the exact amount of this waste is by its nature unpredictable. If it estimates it then it is only roughly, and on the experience of several years.

However, in whatever way it judges the relationship, it is always true to say that the tribe believes that it is in abundance, when it thinks it has a sufficient amount of grain to set aside all fear of running out of it; that it believes it is in surplus, when it thinks it has more than enough to meet all its fears; and that it believes itself in dearth, when it thinks it only has a quantity which is inadequate to set aside its fears.

It is therefore in the opinion that is held of the quantities, rather than in the quantities themselves, that abundance, surplus or dearth are found: but they only rest on opinion because the amounts are assumed.

If, instead of a hundred muids, our tribe, after deducting seed corn, had two hundred, it would have a hundred which would be of no use for its consumption between one crop and another; and if it took no care over storing this surplus grain, the corn would ferment and go bad, and what was left of it would be useless for the following years.

Several consecutive years of a large harvest would do nothing but embarrass our tribe with a useless surplus, and it would soon happen that they sowed less land.

But harvests which are inadequate for the needs of the tribe will create awareness of the need to store the corn when there is a surplus. A way to do this will be sought, and when it is found, the corn that is useless in years of surplus will become useful in years of dearth. The hundred muids which the tribe has not consumed, and which it has known how to store, will make up the shortfall in several years when all that is left for its consumption, after seed corn has been deducted, is sixty or eighty muids.

Properly speaking there will no longer be a corn surplus, once it is known how to preserve it, because what is not consumed in one year can be consumed in another.

If our tribe was surrounded by other tribes, cultivators like itself, it would not have the same need to keep corn in granaries; because, by giving the surplus that it had in some other commodity, it could obtain for itself surplus corn from another tribe. But we have assumed it to be completely isolated.

We have two kinds of needs. One set follows from our makeup: we are created to need food, or to be unable to live without nourishment.

The other kind follows from our customs. Something which we could do without, because our constitution does not make it a need for us, becomes necessary by custom, and sometimes as necessary as if we had been constituted to need it.

I call natural the needs which follow from our constitution, and artificial those which we owe to habit formed by the use of things.

A wandering horde lives on the fruits which the land produces naturally: on the fish it catches, on the animals it kills hunting; and when the area it covers no longer provides its subsistence, it moves elsewhere. In this form of life we only see natural needs.

Our tribe can no longer wander. It has created for itself the need to live in its chosen place. It has made itself a need of the abundance which it finds in the fields it cultivates, and the bounty of the fruits it owes to its labour. It is not satisfied with hunting the animals which can provide its food and clothing, it raises them, and tries to increase their number to meet its consumption.

There you have a type of life in which we notice artificial needs, that is to say, needs which arise from the habit we have formed of satisfying natural needs by chosen methods.

You can see that these first artificial needs separate themselves as little as may be from natural ones. But you can also foresee that the tribe will form others which will move ever further from natural needs. That is what will happen when our tribe, having made progress in the arts, wants to satisfy its natural needs through more multifarious and re fined ways. There will even come a time when the artificial needs, by dint of moving away from nature, will end up changing it completely and corrupting it.

The first needs which our tribe creates for itself are of the essence of the social order, and this would cease if these needs themselves ended. So one is thus justified in considering them as natural. Because if they are not so for the wandering savage, they become so for man in society, for whom they are absolutely necessary. That is why I shall from now on call natural not only the needs which follow from our makeup, but also those which are a consequence of the constitution of civil societies; and I shall understand by artificial those which are not essential to the social order, and without which, in consequence, civil societies could continue to exist.

We say that a thing is useful when it supplies some of our needs; and that it is useless when it meets none of them, or when we can do nothing with it. Its utility is therefore founded on the need we have for it.

Following this utility, we esteem it more or less, that is to say we judge whether it is more or less adapted to the uses to which we want to put it. Now this estimation is what we call value. To say that a thing has value is to say that it is, or that we think it is, good for some purpose.

The value of things is thus founded on their utility, or, which comes to the same, on the need we have of them, or, which again comes back to the same, on the use we can make of them.

As our tribe creates new needs for itself, it will learn to use for its tasks things of which it made nothing previously. It will therefore give in one time period value to things to which it gave none in another.

In abundance, need is felt less because people do not fear being without. For the opposite reason, people feel need more in scarcity and in dearth.

Now, because the value of things is based on need, it is natural that a more strongly felt need gives things a greater value, and that a less pressing need gives them less value. The value of things therefore grows with scarcity and decreases with abundance.

Value can even diminish in abundance to vanishing point. For instance, a surplus good will be without value every time one can do nothing with it, since then it would be completely useless.

Such would be a surplus in corn, if one considered it with reference to the year in which it does not contribute to the quantity needed for consumption. But if one considers it with reference to the following years, when the harvest may not be adequate, the surplus will have a value, because one judges that it could be part of the quantity required for the need one will have of it.

This need is distant. For that reason it does not give a good the same value as a present need. The latter makes one feel that the good is absolutely necessary now, and the other simply makes one judge that it could become so. One flatters oneself that it will not become necessary; and with that prejudice, as one is led not to foresee the need, one is also led to give less value to the good.

Greater or lesser value, the utility being the same, would be based simply on the degree of scarcity or of abundance, if this degree could always be known precisely; and then one would have the true value of each good.

But this degree can never be known. It is therefore chiefly on the estimation that we have of it that greater or lesser value is based.

If one assumes that a tenth of the corn needed for the tribe’s consumption is lacking, nine-tenths would only have the value of ten if one estimated the scarcity accurately, and if one saw for certain that it really was only of a tenth.

That is just what one does not do. Just as people are complacent in abundance, so they are fearful in scarcity. In place of the tenth which is the shortfall, they judge that there are two-tenths, three-tenths or more deficient. They believe themselves to be at the point where corn will be completely unavailable; and the shortfall of a tenth will produce the same terror as if it were of a third or a half.

Once opinion has exaggerated the dearth, it is natural that those who have corn think to keep it for themselves; in fear of running out, they will set aside more of it than they need. It will therefore happen that the dearth will be really total, or near enough, for some of the tribe. In this state of affairs it is clear that the value of corn will grow in proportion to the exaggerated opinion of the dearth.

If the value of things is based on their utility, their greater or lesser value is thus based, the utility staying the same, on their scarcity or their abundance, or rather on the opinion we have of their scarcity and their abundance.

I say “the utility staying the same” because one has enough appreciation that, in supposing them equally rare or equally abundant, one judges them of more or less value, depending on whether one judges them more or less useful.

There are things which are so common that although they are very necessary, they seem to have no value. Such is water, it is found everywhere, people say, “It costs nothing to get it for oneself, and the value which it can gain through transport is not its value but only the value of the carriage costs.”

It would be amazing if one paid carriage costs to get oneself something valueless.

A good does not have a value because it has a price, as people suppose, but it has a price because it has a value.

I say therefore that, even on the banks of a river, water has value, but the smallest possible, because there it is in finitely surplus to our needs. In an arid place by contrast it has a huge value, which one assesses according to how far away it is and the difficulty of getting hold of it. In such a case a thirsty traveller would give a hundred louis for a glass of water, and that glass of water would be worth a hundred louis. For value is not so much in the object as in how we esteem it, and this estimation is relative to our needs: it grows and diminishes, just as our need itself grows and diminishes.

As one judges that things have no value when one has assumed they cost nothing, one judges that they cost nothing when they cost no money. We have much difficulty in seeing the light. Let us try to put some precision in our ideas.

Even if one gives no money to obtain a thing it has a cost if it costs work.

Now what is work?

It is an action, or series of actions, with the aim to gain from them. One can act without working: that is the case with idle men who act without making anything. To work is therefore to act to obtain a thing one needs. A day labourer whom I employ in my garden works to gain the wage I have promised him; and one must state that his work begins with the first blow of the spade: because if it did not begin with the first, one could not say where it began.

Following these preliminary reflections, I say that when I am far from the river, water costs me the action of going to get it; action which is work, since it is accomplished to get me something I need; and when I am at the river edge, water costs me the action of leaning over to get it; I agree that the action is very little work: it is even less than the first blow of the spade. But then again does not the water have only the smallest possible value at that time?

The water therefore has the value of the effort I make to get it. If I do not go to get it myself, I will pay for the work of the man who brings it to me; it is then valued at the wage I will give; and consequently the carriage costs give it a value. I give it this value myself, since I judge that it is worth these carriage costs.

You would be astounded if I said that air has a value; and yet I must say so, if I reason consistently. But what does it cost me? It costs me every effort I make to breathe it, to change it, to renew it. I open my window, I go out. Now each of these actions is work, very light work in truth, since the air, even more abundant than water, can only have a minute value.

I can say the same of light, of those rays which the sun spreads so profusely on the surface of the land: for it certainly costs us an effort or money to turn it to all our uses.

Those whom I contest consider it a great error to base value on utility, and they say that a thing cannot have value unless it has a certain degree of scarcity. A certain degree of scarcity! Now that I do not understand. I can conceive that a thing is scarce, when we judge that we do not have as much of it as we need for our use; that it is abundant, when we judge that we have all we need of it, and that it is in surplus, when we judge that we possess it beyond our needs. Finally I can conceive that a thing of which one makes nothing, and of which nothing can be made, has no value, and that on the other hand a thing has value when it has utility; and that if it did not have a value by its utility alone, it would not have a greater value in scarcity, and a lesser in abundance.

But one is led to regard value as an absolute quality, which is inherent in things independently of the judgements we bring to bear, and this confused notion is the source of bad reasoning. We must therefore remember that, although things only have a value because they have qualities which make them fitted to our use, they would have no value for us if we did not judge that they do indeed have these qualities. Their value therefore lies principally in the judgement we have of their utility; and they only have more or less value because we judge them more or less useful, or that, with the same utility, we judge them scarcer or more abundant. I have only rested so firmly on this point because it will provide the basis of this whole work.

[In the 1798 edition, the final sentence of Chapter 1 is omitted, and the following passage is added:

Value being based on the opinion we hold of the utility of things, and the utility of things itself resting on the need we have of them, we must distinguish a natural value which only assumes natural needs, and an artificial value which only assumes artificial needs. Corn, for example, has a natural value among our tribe, because we assume that all the citizens have naturally the same need of it. But diamonds, if their use should be introduced among them, would only have an artificial value, since such a need, useless at least to society, could only be that of some individuals.

Natural value is directly the same for all, because it is the value of things absolutely essential to the support of society. On the other hand, artificial value, which is very great for some people, would not be in itself worthless for the others; but, because wealthy people will only get goods of an artificial value in so far as they give in exchange goods of natural value, it is a consequence that artificial value becomes, at least indirectly, a real value for everybody. So it is that things which are useless to the vast number of people end up being of general utility when they are considered the equivalent of something essential to all.

Value, of whatever kind, natural or artificial, thus exists principally in the opinions we hold of the utility of things; and one should not say with the économiste writers, that it consists in the exchange relationship of one thing and another: that would be to suppose, with them, that the exchange preceded the value; this would reverse the order of ideas. Indeed, I should not make any exchange with you, if I did not judge that the article you were handing over had a value; and you would make no exchange with me, if you did not judge likewise that what I was selling you has a value. The économiste writers have, if I may use a saying, thus put the cart before the horse.

This misconception seems a very small matter since it comes down to taking the second idea for the first. But it took no more to spread confusion. So the right value for an exchange relationship is a vague notion that people could not determine; and one may reckon that in dealing with economic science along these lines one will not be understood at all wherever value counts for something, that is, almost everywhere.

The object of a science is properly a problem which, like every problem to resolve, has as givens [données] knowns and unknowns. In Economic Science, the knowns are the means which we understand to be appropriate for obtaining abundance in certain forms, the unknowns are the means we still need to discover to obtain abundance in every way; and it is clear that, if the problem can be resolved, it is for the knowns to make the unknowns known to us.

This very complex problem comprises a large number of others each of which will give us new difficulties if we do not analyse them methodically; and we shall find ourselves, as has happened to all governments, falling into gross errors with each solution we think it right to proffer.

But the order that analysis prescribes is, firstly, to concern ourselves with the knowns, because, if we do not begin by determining them, it will be impossible to determine the value of the unknowns. Secondly, it requires us to look, among the knowns, for that which must be the principal one; because, if the principal known is not determined, one will not determine the others. Therefore let us look for it.

Among the means of obtaining abundance, I see first the cultivation of the land. But, if agriculture seems to begin before trade, it is certain that it cannot improve itself except in so far as trade establishes itself and spreads. Perfected agriculture, that is to say, agriculture which is bound to procure the greatest abundance, thus assumes trade. Trade assumes exchanges, or, as is basically the same thing, purchases and sales: the purchases and sales assume that things have a price and the price assumes that they have a value.

So there are the knowns; however confused they still are, I can at least see clearly in what order they initially present themselves; and that order, which I had to start by revealing, shows me the value of things as the first idea which needs to be determined and developed. From that point, the further forward I go, the more clearly I see my goal; because, from one chapter to the next, I shall always clear some unknowns, and one problem solved will bring forward the solution of a new problem. I may have carried out this plan badly: but it is none the less true that you will only deal properly with Economic Science in so far as you use my language, or correct it following my method, which is the only one.

This chapter will act as a basis for this work, which is why I have drawn it out perhaps to excess. However, I must allow myself another observation: it is essential.

In the current prejudice that definitions are the sole principles which can spread enlightenment, people think that they understand a word when they have seen what is called the definition; and, because they suppose that I myself am also making definitions, they will think they understand, for example, the word value, as soon as they have read what I say about it, at the very moment that I begin to analyse it. They will therefore rush to make objections which they would not have made if they had waited until the analysis was completed. That is what happened to those writers who thought they were refuting me, and who did not understand me at all.

If, in making definitions, one has the advantage of saying everything one wishes to say in just one proposition, it is that one is not saying everything necessary, and often one would be better to remain silent. Analysis does not pride itself on such brevity; as its aim is to develop an idea which must be grasped from different viewpoints, it can only succeed in so far as it has the word scrutinised in all the senses which show up all the concomitant ideas. We shall require several more chapters before we have finished analysing the word value, or at least before we have removed from it all the vague ideas that are attached to it, and which often make the language of Economic Science unintelligible.]