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• Preface
• The Life and Contribution to Economics of the AbbÉ De Condillac
• 1: Étienne Bonnot, Abbé De Condillac, 1714–1780
• 2: The Economics of the Abbé De Condillac
• 3: The Editions of Commerce and Government
• Annex:: a Note On French Currency, Monetary Values, and Weights and Measures 100
• Commerce and Government
• The Aim of This Work
• First Part: Elementary Propositions On Commerce, Determined According to the Assumptions Or Principles of Economic Science
• 1: The Basis of the Value of Things
• 2: The Basis of the Price of Things
• 3: Of Price Variations
• 4: Of Markets Or Places Where Those Who Need to Make Exchanges Congregate
• 5: What Is Meant By Trade
• 6: How Trade Increases the Mass of Wealth
• 7: How Needs, In Multiplying, Give Birth to the Arts, and How the Arts Increase the Mass of Wealth
• 8: Of Wages
• 9: Of Wealth From Land and Movable Wealth
• 10: Through What Types of Labour Wealth Is Produced, Distributed and Preserved
• 11: The Origin of Towns
• 12: Of the Right of Ownership
• 13: Of Metals Considered As Merchandise
• 14: Of Metals Considered As Coinage
• 15: That Silver, Used As a Measure of Value, Has Brought Misunderstanding About the Value of Things
• 16: Of the Circulation of Money
• 17: Of Exchange
• 18: Of Lending At Interest
• 19: Of the Comparative Value of the Metals From Which Coins Are Made
• 20: Of the True Price of Things
• 21: Of Monopoly
• 22: Of the Circulation of Grain
• 23: Corn Considered As a Measure of Value
• 24: How Production Regulates Itself According to Consumption
• 25: Of the Use of Land
• 26: Of the Employment of Men In a Society Which Has Simple Tastes
• 27: Of Luxury
• 28: Of Taxation, the Source of Public Income
• 29: Of the Respective Wealth of Nations
• 30: A Concise Recapitulation of the First Part
• Second Part: Commerce and Government Considered In Relation to Each Other Following Some Assumptions
• 1: The Distribution of Wealth, When Trade Enjoys Complete and Permanent Freedom
• 2: The Circulation of Wealth When Trade Enjoys Complete Freedom
• 3: The Simple Ways of an Isolated Nation Within Which Trade Enjoys Complete Freedom
• 4: Blows Directed Against Commerce: Wars
• 5: Blows Directed Against Commerce: Customs Dues, Tolls
• 6: Blows Directed Against Commerce: Taxes On Industry
• 7: Blows Directed Against Commerce: Privileged and Exclusive Companies
• 8: Blows Directed Against Commerce: Taxes On Consumption
• 9: Blows Directed Against Commerce: Variation In Coinage
• 10: Blows Directed Against Commerce: the Exploitation of Mines
• 11: Blows Directed Against Commerce: Every Type of Government Borrowing
• 12: Blows Directed Against Commerce: the Policing of Grain Import and Export
• 13: Blows Directed Against Commerce: the Policing of the Internal Circulation of Grain
• 14: Blows Directed Against Commerce: the Manoeuvres of Monopolists
• 15: Blows Directed Against Commerce: Obstacles to the Circulation of Grain, When the Government Wishes to Restore to Trade the Freedom It Took From It
• 16: Blows Directed Against Commerce: the Luxury of a Great Capital City
• 17: Blows Directed Against Commerce: the Rivalry of Nations
• 18: Blows Directed Against Commerce: How Traders’ Speculations Have As Their Outcome the Ruin of Trade
• 19: Conclusion of the First Two Parts

2

The Basis of the Price of Things

I have a surplus of corn and I am without wine: you, on the other hand, have a surplus of wine and are without corn. The surplus corn, which is useless to me, is thus needed by you; and I myself should need the wine which is surplus and useless for you. In this position we think of making an exchange: I offer you corn for wine, and you offer me wine for corn.

If my surplus is what is needed for your consumption, and yours is what is needed for mine, by exchanging one for the other, we both make an advantageous exchange, because we both give up something that is useless to us for something which we need. In this case, I reckon that my corn has the same value for you as your wine has for me, and you reckon that your wine has the same value for me as my corn has for you.

But if my surplus meets your consumption, and your surplus is inadequate for mine, then I will not give all my surplus for yours: because what I would yield to you would be worth more to you than what you would yield to me would be worth to me.

I would not give you all my surplus corn therefore; I would want to hold some of it back, so as to obtain for myself elsewhere the quantity of wine which you cannot yield to me, and which I need.

You, on your side, have to be sure to get all the corn necessary for your consumption with your wine surplus. You will therefore refuse to leave me all that surplus, if the corn I can yield to you is not sufficient.

In this haggling, you will offer me as little wine as you can for a lot of corn; and as for me, I will offer you as little corn as I can for a lot of wine.

However, necessity will force us to strike a bargain; because you need corn, and I need wine.

So, as you neither want nor are able to give me all the wine I need, I shall resolve to consume less of it; and you, on your side, will take the road of cutting back on the consumption of corn you had counted on making. That way our paths will come closer. I shall offer you a little more corn, you will offer me a little more wine; and, after several reciprocal offers, we shall settle. We shall agree for example to exchange a cask of wine for a septier of corn.

When we make each other reciprocal offers, we are dealing: when we agree, the deal is made. So we reckon that to you a septier of corn is worth what a cask of wine is worth to me.

This reckoning that we make of the corn vis-à-vis the wine, and of the wine vis-à-vis the corn, is what we call price. Thus your cask of wine is for me the price of my septier of corn, and my septier of corn is for you the price of your cask of wine.

So we know what the value of the corn and the wine is between you and me, because we have calculated the values which follow from the need we have of each; a need which is known to us. We know too that both have a value for other people, because we know that other people need them. But, because this need can be greater or less than we think, we cannot judge exactly the value which other people give them, until they themselves have informed us. Now that is what they will teach us by the exchanges they make with us or between themselves. When everyone in general is agreed to give so much wine for so much corn, then the corn vis-à-vis the wine and the wine vis-à-vis the corn will each have a value, which will be generally known by all. Now, this relative value, widely known in exchanges, is the basis of the price of things. Price is therefore only the estimated value of a good vis-à-vis the estimated value of another; estimated, I say, in general by all those who exchange the goods.

In exchange, goods do not have an absolute price; they only have a price in relation to the estimation we make of them when we conclude a deal, and they are the reciprocal prices of each other.

In the first place, the price of things is relative to the estimation we make of them; or rather it is only the estimation we make of one vis-à-vis another. And that is not surprising, since, in their origin, price and estimation are perfect synonyms, and the idea which the first originally signified is identical with the idea which the second expresses today.

In the second place, they make each other’s prices reciprocally. My corn is the price of your wine, and your wine is the price of my corn; because the deal concluded between us is an agreement by which we estimate that my corn has the same value for you as your wine has for me.

We must not confuse these words price and value and use them indiscriminately for each other.

As soon as we need a good, it has a value; it has a value by virtue of that need alone, and before there is any question of making an exchange.

On the other hand, it is only in our exchanges that it has a price, because we only estimate it in comparison with another good, in so far as we need to exchange it; and its price, as I have said, is the estimation we make of its value, when, in exchange, we compare it with the value of another good.

Price therefore assumes value; that is why one is so strongly driven to confuse these two words. It is true that there are occasions when one can use them indifferently for each other. However, they express two ideas which it is important not to confuse, if we do not want to obscure the remaining development of the argument.