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23: Corn Considered as a Measure of Value - Étienne Bonnot, Abbé de Condillac, Commerce and Government Considered in their Mutual Relationship [1776]

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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.


23

Corn Considered as a Measure of Value

Of all goods metals are the best suited to serve as a common measure of value; we have seen why. But because, from one century to another, they are scarcer or more plentiful, and, in consequence, have more or less value, they cannot be taken as a fit measure to determine the relationship a good has held in one age with the value of the same merchandise in a different age. For instance, I assume that in the twelfth century when silver was scarce, an ounce was the price of an ell of cloth; nowadays, when silver is much more plentiful, to pay for that same cloth one would need two or three ounces, or perhaps four.

The value of silver is thus itself too variable to serve as a measure of all values in every time. We have also noted that in a century when at one time it is scarcer, one is as rich with an income of fifty ounces as one would be with an income of a hundred ounces in a century when at one time it is more plentiful.

Not only is silver not a precise measure for all ages, it is not even an exact measure for all places. That is, it does not have the same value everywhere.

As we are drawn by habit to judge prices according to the amount of silver that things cost us, we rush to assume that when we pay two ounces of silver for something in a large market town, it is a price double that for which we pay one ounce in a province, where commerce has few outlets. But, in such a case, the difference between the prices cannot be exactly like the difference between more or less silver. This metal is then a false measure. It has greater value in a province without trade where it is scarcer; it has lower value in a market town where it is more plentiful. How then could it measure the relationship between the prices which are current in the one with those which are current in the other?

The circulation of money slows down from country area to country area, because of their distance from the main towns; and, if we assume the distance to be the same, it again slows down because of obstacles which make the transport of goods more expensive. Once money circulates less, it is scarcer; once it is scarcer, it is worth more; once it is worth more, one gives less of it for the things one buys; and, consequently, these things seem cheaper than they are.

So to judge incomes by the amount of money one receives each year, one seems richer in a town than one is, and one is richer in a country area than one appears to be. The position is that since metals have been taken as the common measure of values, one is drawn to see wealth only where one sees a lot of gold and silver; and this misconception began in the towns, where silver constitutes all the wealth. But our way of seeing does not change the nature of things. Indeed, what does the greater or smaller quantity of silver matter, when the smaller amount is worth the greater? If I can make the same consumption in a rural area with a hundred ounces of silver as you make in a town with three or four hundred, am I not as rich as you?

A good would always have a stable value if, always equally essential, it was in all ages and in every place in the same quantity in relation to need. Then it would be a measure with which one could assess the value of silver in every century and in every place. Corn is this good.

It would be superfluous to prove that corn is always equally necessary: it is enough to prove that there is always a similar quantity of it in relation to demand. That is easy because this question, like all those one makes on political economy, resolves itself.

In a time when the population is larger, more corn is eaten, and it is reproduced in a larger amount.

In a time when the population is smaller, one eats less corn, and it is reproduced in a smaller quantity. That has been proved.

Thus in normal years, production is always in proportion with consumption; and, in consequence, the quantity in relation to the demand is always the same, in normal years. Now it is according to the quantity in relation to the demand that corn is valued. So it always has the same value, a fixed and permanent value.

It would not be the same for a foodstuff for which one could substitute others; and which, consequently, would be a lesser necessity. For example, wine cannot have a fixed and invariable value.

However, we must note that corn itself cannot have a fixed and invariable value unless we assume that trade in this article is carried on with complete and lasting freedom. If it is hampered by duties, prohibitions, monopolies, it cannot place itself at its true price; and if it cannot be at its true price, it will have a constantly shifting value. When, at intervals, the people are forced to chew grass, it is not possible to determine the amount of corn in relation to need, and consequently, it is no longer possible to fix its value. I leave you to judge if Europe has a measure to reckon values in every age and in every place.

In the normal practice of leasing lands for money, there is damage for the farmer if corn falls to a low price; and if it rises to a high price, there is damage for the landowners. This custom is all the more harmful, in that the farmers, all being obliged to pay in the same quarters, and in consequence to put everything on sale at the same time, cause the price of corn to fall every year in the same months to their great loss and to the benefit of monopolists. It would thus be beneficial for the landowners, for the farmers, and for the state, if the price of leases were paid in foodstuffs. There would be benefit not only when the grain trade is shackled, there would also be benefit when it is unrestricted, because it would be made freer; because farmers would no longer be forced to sell at one time rather than another.