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• George B. De Huszar, Preface to the English-language Edition
• F. A. Hayek, Introduction
• 1: What Is Seen and What Is Not Seen 1
• 1. the Broken Window
• 2. the Demobilization
• 3. Taxes
• 4. Theaters and Fine Arts
• 5. Public Works
• 6. Middlemen
• 7. Restraint of Trade
• 8. Machines
• 9. Credit
• 10. Algeria
• 11. Thrift and Luxury
• 12. the Right to Employment and the Right to Profit
• 2: The Law 1
• 3: Property and Law 1
• 4: Justice and Fraternity 1
• 5: The State 1
• 6: Property and Plunder *
• First Letter 1
• Second Letter
• Third Letter
• Fourth Letter
• Fifth Letter
• Protest of M. Considérant and Reply of F. Bastiat. 14
• 7.: Protectionism and Communism
• 8.: Plunder and Law 1
• 9.: Academic Degrees and Socialism
• 10: Declaration of War Against the Professors of Political Economy 1
• 11: Speech On the Suppression of Industrial Combinations 1
• 12: To the Democrats
• 13: The Balance of Trade 1
• About the Publisher
• Additional Books By Frédéric Bastiat
• The Law
• Economic Harmonies
• Economic Sophisms

second letter

How inflexible is the power of logic!

Ruthless conquerors divide up an island; they live on rents in leisure and pomp, in the midst of the poor, hard-working conquered people. There is, then, says economic science, a source of values other than labor.

Then it sets about analyzing land rent and announces this theory to the world:

“Rent is, in part, the interest on capital expended. The other part is the monopoly of natural resources which have been usurped and confiscated.”

Very soon this political economy of the English school crosses the Channel. Socialist logic gets hold of it and says to the workers: “Beware! Three elements enter into the price of the bread that you eat. There is the work of the farmer—which you are obliged to pay for; there is the work of the landowner—for which you are obliged to pay as well; and there is the work of Nature—for which you do not owe anybody anything. What is taken from you on this ground is a monopoly, as Scrope says; it is a tax deducted from the gifts that God gave you, as Senior says.”

Economic science sees the danger of its distinction. Still, it does not retract it, but explains it: “It is true,” it says, “that the role of the landowner in the social mechanism is agreeable, but it is indispensable. People work for him, and he pays them with the warmth of the sun and the freshness of the dew. Things have to be this way, because otherwise the soil would never be tilled.”

“Never mind that,” logic replies. “I have a thousand organizations in reserve to wipe out injustice. We do not have to put up with it.”

Thus, thanks to a false principle, picked up in the English school, logic attacks landed property. Will it stop there? Don't you believe it. It would not be logic if it did.

As it has already said to the farmer: “The laws of plant life cannot be private property and yield you a profit"; so it will say to the manufacturer of cloth: “The law of gravitation cannot be private property and yield you a profit"; to the manufacturer of linen: “The law of the expansion of steam cannot be private property and yield you a profit"; to the ironmaster: “The laws of combustion cannot be private property and yield you a profit"; to the shipowner: “The laws of hydrostatics cannot be private property and yield you a profit"; to the carpenter, to the joiner, to the woodcutter: “You use saws, axes, and hammers; thus, you make your work depend on the hardness of bodies and the resistance of materials. These laws belong to everyone and should not give rise to a profit.”

Yes, logic will go that far, at the risk of overthrowing the whole of society. After having rejected landed property, it will deny the productivity of capital, always basing itself on the assumption that the landowner and the capitalist are paid for the use of the forces of Nature. For this reason it is important to prove that this logic starts from a false premise, that it is not true in any art, in any profession, in any industry, that the forces of Nature are charged for, and that in this respect agriculture is no exception.

There are things that are useful without requiring the intervention of labor: land, air, water, the light and the warmth of the sun—the raw materials and the forces that Nature provides us with.

There are others that become useful only because labor is exerted on raw materials and takes advantage of these forces.

Utility, then, is sometimes due to Nature alone, sometimes to labor alone, but nearly always to the combined action of both labor and Nature.

Let others lose themselves in definitions. For my part, I understand by utility what everyone understands by this word, whose etymology indicates its meaning very exactly. All that is serviceable, whether it be by nature, by labor, or by both, is useful.

I call value only that portion of utility that labor imparts or adds to things, so that two things have value when those who have labored over them exchange them freely for one another. Here are my reasons:

What makes a man refuse an exchange? It is his knowledge that to produce the thing that is offered to him would require less labor from him than what is demanded of him for it. It would be futile to tell him: “I have worked less than you, but gravitation helped me and I have included its value in my reckoning.” He will reply: “I too can make use of gravitation, with labor equal to your own.”

When two men are isolated, if they work, it is in order to render service to themselves; if exchange intervenes, each renders service to the other and receives an equivalent service from him. If one of them has the aid of a natural resource that is also at the disposition of the other, that natural resource will not count in the price. The right to refuse renders such a consideration impossible.

Robinson Crusoe hunts, and Friday fishes. It is clear that the quantity of fish exchanged for game will be determined by the labor involved. If Robinson said to Friday: “Nature takes greater pains to make a bird than to make a fish; hence, give me more of your labor than I give you of mine, since I am turning over to you, in compensation, a greater effort on the part of Nature,” Friday would not fail to reply: “It is not given to you, any more than to me, to evaluate the efforts of Nature. What must be compared is your labor against mine, and if you want to establish our relations on such a footing that I shall always have to work more than you, I am going to take up hunting, and you may fish, if you like.”

We see that Nature's bounty, on this hypothesis, cannot become a monopoly save by violence. We see further that, if it counts for a great deal in utility, it counts for nothing in value.

I have elsewhere pointed to the metaphor as an enemy of political economy; now I accuse metonymy of the same crime.6

Are we using very precise language when we say: “Water is worth two sous"?

It is said that a famous astronomer could not bring himself to say: “Ah, what a beautiful sunset!” Even in the presence of ladies he cried out, in his strange enthusiasm: “Ah, what a beautiful spectacle is the rotation of the earth when the rays of the sun strike it at a tangent!”

That astronomer was precise, but ridiculous. An economist would be no less so who said. “The labor that it takes to fetch water from the spring is worth two sous.”

However, the oddness of the circumlocution does not detract from its exactness.

In point of fact, the water is worth nothing. It does not have value, although it has utility. If we all always had a spring right at our feet, evidently water would not have any value, since there would be no occasion to exchange it. But if it is half a mile away, we must go and get it; that is work, and there is the origin of its value. If it is a mile away, that is double work, and hence double value, although the utility remains the same. Water for me is a gratuitous gift of Nature, on condition that I go and get it. If I do so myself, I render myself a service by taking some pains. If I entrust this task to another, I put him to some trouble and owe him a service. Thus, there are two pains, two services, to compare and discuss. The gift of Nature always remains free of charge. In fact, it seems to me that the value resides in the labor, and not in the water, and that it is just as much by metonymy that we say, “Water is worth two sous,” as that we say, “I have drunk a bottle.”

Air is a gratuitous gift of Nature; it has no value. The economists say, “It does not have value in exchange, but it has value in use.” What language! Oh, sirs, are you deliberately trying to make economics boring? Why not simply say, “It has no value, but it has utility”? It has utility because it is useful. It does not have value because Nature has done everything and labor nothing. If labor counts for nothing here, then no one has to render, receive, or remunerate any service in this regard. No one has to go to any trouble or to make an exchange; there is nothing to compare; there is no value.

But if you enter a diving bell and have a man send down air to you with a pump for two hours, he will be put to some trouble; he will render you a service; you will have to repay him. Will you pay for the air? No, for the labor. Has the air, then, acquired value? You can say so, if you want to be brief, but do not forget that this mode of speech is an example of metonymy, that the air remains free of charge; that no value can be assigned to it; that, if it has any value, this is measured by the pains taken, compared with what is given in exchange.

A laundryman is obliged to dry linen in a large establishment by the heat of a fire. Another is content to expose it to the sun. The latter takes less pains; he cannot and does not demand as much. He does not, then, charge me for the warmth of the sun's rays, and it is I, the consumer, who benefit from it.

Thus, the great economic law is this:

Services are exchanged for services.

Do ut des; do ut facias; facio ut des; facio ut facias. Do this for me, and I will do that for you. It is very trivial, very commonplace; it is, nonetheless, the beginning, the middle, and the end of economic science.7

We may draw from these three examples this general conclusion: The consumer pays for all the services that are rendered him, all the trouble that he is spared, all the labor that he occasions; but he enjoys, without paying for them, the gratuitous gifts of Nature as well as the forces of Nature that the producer has put to work.

These three men put at my disposal air, water, and heat, without charging me for anything except their pains.

What, then, can lead us to believe that the farmer, who also makes use of air, water, and heat, charges me for the so-called intrinsic value of these natural resources? That he presents me with a bill for created and uncreated utility? That, for example, the price of wheat sold at 18 francs is broken down thus:

Why do all the economists of the English school believe that this latter element has been covertly introduced into the value of wheat?

[6.][See the Conclusion to the first series of Economic Sophisms.—Editor.]

[7.]“It is not enough that value does not reside in matter or in the forces of Nature. It is not enough that it resides exclusively in services. It is also necessary that the services themselves should not have an exaggerated value. For what does it matter to a wretched worker who pays dearly for wheat whether the landowner is being paid for the productive powers of the soil or is being paid inordinately for his own industry?

“It is the task of competition to equalize services on the basis of justice. It works at it unceasingly.” [Unpublished note by the author.]

[For developments of the ideas of value and of competition, see chaps. 5 and 10 of Economic Harmonies.

See further the examples cited in Economic Sophisms, chap. 4, First Series.—Editor.]