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Frédéric Bastiat, Economic Harmonies (Boyers trans.) [1850]

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Frédéric Bastiat, Economic Harmonies, trans by W. Hayden Boyers, ed. George B. de Huszar, introduction by Dean Russell (Irvington-on-Hudson: Foundation for Economic Education, 1996). http://oll.libertyfund.org/titles/79

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About this Title:

An English translation of Bastiat’s longest and best known work Economic Harmonies.

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Table of Contents:

Edition: current; Page: [i]
ECONOMIC
HARMONIES
Edition: current; Page: [none] Edition: current; Page: [iii]
ECONOMIC
HARMONIES
Frédéric
Bastiat
Translated from the French by
W. HAYDEN BOYERS
Edited by
GEORGE B. de HUSZAR
Introduction by
DEAN RUSSELL
Foundation for Economic Education
Irvington-on-Hudsom
New York
Edition: current; Page: [iv]

Economic Harmonies

Copyright © 1996 by the Foundation for Economic Education.

All rights reserved. No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval systems without permission in writing from the publisher, except by a reviewer, who may quote brief passages in a review.

Foundation for Economic Education
30 South Broadway
Irvington-on-Hudson, NY 10533
(914) 591-7230 'www.fee.org / fee@fee.org

Publisher's Cataloging in Publication
(Prepared by Quality Books Inc.)

Bastiat, Frederic, 1801–1850.
[Harmonies économiques, English]
Economic harmonies / Frédéric Bastiat
p.-cnn.
Includes bibliographical references and index.
ISBN 0-910614-13-X
1 Economics. 2. Social structure. 3. Commerce. I. Title
II. Title: Economic harmonies / Frédéric Bastiat

HB163.B38 1996 330
QBI96-20426

Library of Congress Catalog Card Number 96-85212

First edition, 1964
Second printing, 1968
Third printing, 1979
Fourth printing. 1996
Fifth printing, 2001

Manufactured in the United States of America

Edition: current; Page: [v]

About the Author

Frédéric Bastiat (1801–1850) was a French economist, statesman, and author. He was the leader of the free-trade movement in France from its inception in 1840 until his untimely death in 1850. The first 45 years of his life were spent in preparation for five tremendously productive years writing in favor of freedom. Bastiat was the founder of the weekly newspaper, Le Libre Échange, a contributor to numerous periodicals, and the author of sundry pamphlets and speeches dealing with the pressing issues of his day. Most of his writing was done in the years directly before and after the Revolution of 1848—a time when France was rapidly embracing socialism. As a deputy in the Legislative Assembly, Bastiat fought valiantly for the private property order, but unfortunately the majority of his colleagues chose to ignore him. Frédéric Bastiat remains one of the great champions of freedom whose writings retain their relevance today.

Edition: current; Page: [none] Edition: current; Page: [vii]

Preface to the English-Language Edition

Frédéric Bastiat has said that the Harmonies is a counterpart to Economic Sophisms, and, while the latter pulls down, the Harmonies builds up. Charles Gide and Charles Rist in a standard treatise, A History of Economic Doctrines, have referred to “the beautiful unity of conception of the Harmonies,” and added, “we are by no means certain that the Harmonies and the Pamphlets are not still the best books that a young student of political economy can possibly read.”

Unfortunately the Harmonies after chapter 10 are unfinished fragments and therefore are filled with repetitions which Bastiat would have corrected had he lived. It is also important to keep in mind that parts of the Harmonies were first given as speeches.

This translation follows as faithfully as possible the original French standard edition of the complete works of Bastiat. Cross references have been included among the three volumes of the present translation.

Three types of notes are included: Translator's notes are directed at the general reader and are mainly about persons and terms. Editor's notes refer to notes by the editor of the French edition; Bastiat's notes stand without such notations. Only the Translator's notes are at the bottom of the page; the Editor's notes and Bastiat's notes are at the end of the volume. The latter two are more important but were put in the back to avoid cluttering the pages and to promote readability. Where the French editor has indicated a cross reference to a chapter or passage in Economic Sophisms or to any of the pamphlets or speeches included in Selected Essays on Political Economy, the original reference to the Edition: current; Page: [viii] French edition has been replaced by one directing the reader to the English translation.

Although these three volumes of English translations of Bastiat are published simultaneously, there is some repetition of the Translator's notes and the editorial Prefaces. This is necessary because some may obtain only one volume of this three-volume series, and therefore each volume has been made as self-sufficient as possible.

The Editor wishes to express his appreciation to W. Hayden Boyers, to Dean Russell for writing the Introduction, to Arthur Goddard, and to the William Volker Fund.

George B. de Huszar
Edition: current; Page: [ix]

Bibliographical Notice

Les Harmonies économiques, par Frédéric Bastiat, Paris, Guillaumin, 1850, 463 pp.

This was the first edition. It was published just a few months before Bastiat died, and was incomplete, containing only the first ten chapters.

Les Harmonies économiques, par Frédéric Bastiat, 2ème édition augmentée des manuscrits laissés par l'auteur, publiée par la Société des Amis de Bastiat (sous la direction de P. Paillottet et R. de Fontenay), Paris, Guillaumin, 1851, xi, 567 pp.

This was the first complete edition, and no changes of any importance were subsequently made in it. Paillottet brought back from Rome (where Bastiat had died) the manuscript of the Harmonies and had Bastiat's commission to edit and publish the entire work.

Oeuvres complètes de Frédéric Bastiat, mises en ordre, revues et annotées d'après les manuscrits de l'auteur (par P. Paillottet et R. de Fontenay), Paris, Guillaumin, 1854–55, 6 vols.

The Harmonies were incorporated into this as Volume VI.

Oeuvres complètes, etc., 2ème édition, in the series “La Bibliothèque des sciences morales et politiques,” Paris, Guillaumin, 1862–64, 7 vols.

The Harmonies remains the sixth volume, and a seventh (Mèlanges) is added. This has remained the standard edition. Reprints of various volumes, given special “edition” numbers, and sometimes with slight differences in pagination, appeared at various times through 1893.

The edition of the Harmonies used by the translator is Les Harmonies économiques, par Frédéric Bastiat, 6ème édition, Edition: current; Page: [x] Paris, Guillaumin, 1870. It is still listed as Volume VI in the Oeuvres complètes, 2ème edition. The translator also consulted the 1862 and 1884 editions of the Harmonies and found no significant variants. The Appendix letter, entitled “A Tentative Preface to the Harmonies,” was consulted in the Oeuvres complètes, 2ème edition, Vol. VII, 1861, pp. 303 ff.

W. Hayden Boyers
Edition: current; Page: [xi]

Introduction

Frédéric Bastiat, 1801–1850, is generally classified as an economist. But, as I showed in my book on his life, works, and influence, his real claim to fame properly belongs in the field of government—both in its organization and in its philosophy. Even so, his contribution to the field of economics was considerable, especially in the area of free trade.

Bastiat was a contemporary of Richard Cobden, the man most responsible for bringing free trade to Great Britain in 1846. The two men became close friends when Bastiat attempted to do in France what Cobden had accomplished in England. While Bastiat was unsuccessful in bringing free trade to France during his lifetime, his disciple, Michel Chevalier, was the co-author with Cobden of the Anglo-French Treaty of Commerce that finally accomplished the objective in 1860.

Bastiat's interest in free trade, however, was still incidental to his passion for freedom in general. As he wrote in one of his numerous letters to Cobden, “Rather than the fact of free trade alone, I desire for my country the general philosophy of free trade. While free trade itself will bring more wealth to us, the acceptance of the general philosophy that underlies free trade will inspire all needed reforms.”

Bastiat spelled out that philosophy in considerable detail in his major work, Principles of Political Economy. In the Introduction to that book, he made the statement, “It would be nonsense for me to say that socialists have never advanced a truth, and that economists [those who advocate a free market] have never supported an error.” As we shall see, one of Bastiat's major ideas Edition: current; Page: [xii] in his Harmonies—his theory and definition of value, of which he was especially proud—is now generally held to be somewhat pointless. That fact, of course, does not deny the soundness of his fundamental principle that the interests of mankind are essentially harmonious and can best be realized in a free society where government confines its actions merely to suppressing the robbers, murderers, falsifiers, and others who wish to live at the expense of their fellow men.

The first economic harmony that Bastiat illustrated was the idea that, as the capital employed in a nation increases, the share of the resulting production going to the workers tends to increase both in percentage and in total amount. The share going to the owners of the capital tends to increase in total amount but to decrease percentagewise. Bastiat used hypothetical figures merely to indicate the direction of this relationship that occurs when capital accumulation increases, with its resulting increase in production.

Distribution of Shares of Increased Production
TO OWNERS TO EMPLOYEES
Total Units Per Cent Units Per Cent Units
When total national product is 50 20 10 80 40
When total national product is 75 15 12 85 63
When total national product is 100 14 14 86 86

That theory was offered to refute the gloomy “iron law of wages” advanced by Ricardo, as well as Malthus' equally horrible prediction that an increasing population must necessarily face starvation. Bastiat recognized the fact that, in this division of national income, the amounts and percentages going to capital and labor would, for a variety of reasons, vary widely from industry to industry, from country to country, and from time to time. But he was quite positive that the tendency would be in the direction indicated by his figures for the nation that encourages the private accumulation of capital.

This trend that Bastiat predicted in the division of the total production of the nation is just what did happen under increased Edition: current; Page: [xiii] capital formation in the United States and other countries that more or less follow the concepts of a market economy.

Bastiat arrived at his theory by observing that new tools and new methods are more productive than older tools and former methods, and that competition tends to cause most of the resulting benefits to be passed along in higher wages or lower prices, or both. In either instance, real wages are thereby increased. Like many of his predecessors, Bastiat also noted that interest on capital is likely to decline as capital becomes more plentiful. (History does not record the first person who discovered this primary law of supply and demand.) At any rate, the verdict of the Twentieth Century to date refutes the gloomy predictions of Ricardo, who argued that wages always tend toward the lowest level needed to sustain the required working force at a minimum standard of health. Bastiat's optimistic theory that real wages tend to rise constantly in a free market is more in accord with reality.

Thus, according to Bastiat, the interests of capital and labor are harmonious, not antagonistic. Each is dependent on the other. Both gain by working harmoniously together to increase both capital and production, even though the employees tend to get the lion's share of the increased production. Government interference in the long run will injure the interests of both owners and workers, but most especially the workers.

In his major work, Bastiat discussed the “harmony of capital” in almost every chapter, and from various viewpoints. His treatment of the subject is, by far, the most convincing part of his book. While it is doubtless correct to observe that Bastiat contributed nothing new to the actual theory of capital, it is perhaps equally correct to suggest that his presentation and development of several facets of the subject are superior to those of his predecessors and teachers—Smith, Say, and others.

We have already noted one of his “harmonies of capital” above. Here is another. If the market is free, said Bastiat, no one can accumulate capital (excluding gifts) unless he renders a service to someone else. The people who have the capital (including the person who has only one dollar) won't part with it unless they are offered a product or service that they value as highly as the capital. Edition: current; Page: [xiv] In reality, said Bastiat, capital is always put at the service of other people who do not own it, and it is always used to satisfy a desire (good or bad) that other people want satisfied. In that important sense, all capital is truly owned in common by the entire community—and the greater the accumulation of capital, the more its benefits are shared in common.

“Here is a worker whose daily wages is four francs. With two of them, he can purchase a pair of stockings. If he alone had to manufacture those stockings completely—from the growing of the cotton to the transporting of it to the factory and to the spinning of the threads into material of the proper quality and shape—I suspect that he would never accomplish the task in a lifetime.” Bastiat offered several other similar stories and parables based on that same idea of the benefits that come to all from the increasing division of labor that automatically follows the accumulation of capital.

Contrary to most of his classical predecessors, Bastiat was almost totally concerned with the interests of the consumer. While he wished to render justice to the producer (the capitalist and the entrepreneur), he seemed concerned with him only in passing. Perhaps that can be explained by the fact that the socialists of Bastiat's day were in the ascendancy—and Bastiat desired to beat them at their own game by showing that the workers and consumers (rather than the owners of capital) are the chief beneficiaries of private ownership, competition, free trade, interest, profits, rent, capital accumulation, and so on.

The harmony that Bastiat found in all this was the same as that demonstrated by Adam Smith and the physiocrats: In serving his own selfish interests, the producer has no choice but to serve first the interests of the consumer, if the market is free. Each person may be working only to benefit himself but, doubtless unknown to himself, he is really working primarily to satisfy the needs and desires of others.

By both observation and reason, Bastiat was led to the conclusion that man tends to satisfy his wants with the least possible effort. That would seem self-evident, but Bastiat used that simple axiom to show that a popular way to satisfy one's wants with minimum effort is to vote for subsidies and protection. Bastiat Edition: current; Page: [xv] pointed out the awkward fact that such a solution is contrary to the wants and actions of the persons who must pay the resulting higher taxes and higher prices. This government path to satisfying one's wants is antagonistic, rather than harmonious, and is thus self-defeating in the long run. It will result in less than maximum production by both those who must pay the subsidy and those who receive it. When the government interferes, said Bastiat, the natural harmony of the free and productive market is destroyed, and the people waste their energies in attempting to win political power in order to exploit each other. “Everybody wishes to live at the expense of the state, but they forget that the state lives at the expense of everybody.” In another book, Bastiat also stated that idea in this way: “The state is the great fiction by which everybody tries to live at the expense of everybody else.”

In his Harmonies, Bastiat felt that he had made a major contribution to political economy by his definition of value. He felt that his concept should reconcile the conflicting opinions of all economists—including even the socialists and communists! He introduced the subject by making a sharp distinction between utility and value. Under utility, he listed the sun, water, and undeveloped land. According to him, none of the gifts of Nature have any value—until human effort has been applied to them. While he specifically rejected the labor theory of value, he may well have endorsed it unknowingly under another name—service.

According to Bastiat, service is the source of all value, and any exchange implies equal value. Water has no value in its native state. But the building of a well and the hauling of the water to the consumers (services) have value. And the purchaser pays for it with equal services, even though it may be in the intermediate form of money that facilitates the transferring of past, present, and future services.

Bastiat felt compelled to defend the rightness and justice of every voluntary exchange. Thus, he was most happy with his idea that the service supplied by the man who accidentally discovers a valuable diamond is worth a large price (other services) because it saves the purchaser from the effort that is usually connected with the securing of such a gem.

Bastiat just ignored the fact that the value to the purchaser Edition: current; Page: [xvi] would be the same, whether the seller had found the diamond, inherited it, or worked for several years digging it out of the ground. Thus, the value of an article is clearly not directly related to the “service” supplied by the seller himself, and Bastiat's effort to reconcile that fact with his general theory led him completely astray in this area.

In his chapters on “Exchange” and “Value,” Bastiat quoted two men who clearly (and perhaps first) saw the true relationship between exchange and value—and he then scoffed at both of them. The first was Étienne Bonnot de Condillac, 1714–1780: “From the very fact that an exchange is made, it follows that there must be a profit for each of the contracting parties; otherwise the exchange would not take place. Thus, each exchange represents two gains for humanity.”

The second quotation cited by Bastiat was by Heinrich Friedrich von Storch, 1766–1835: “Our judgment enables us to discover the relation that exists between our wants and the utility of things. The determination that our judgment forms upon the utility of things also determines their value.”

These two statements combined are perhaps the basic concepts of exchange and value later developed so brilliantly by the Austrian school of economists. That is, the value of a product or service is purely subjective on the part of the purchaser; neither seller nor buyer will make the exchange unless each values what he receives more than what he gives up; there is no automatic relationship between value and the labor or capital that goes into the product or service; no one can determine the value of any product or service for another person.

Thus, Bastiat had full opportunity to make a vital contribution to economic thought by developing these two ideas, with which he was obviously familiar. Most unfortunately, he missed the opportunity.

Even so, perhaps Bastiat supplies the connecting link between the English classicists, with their objective theory of value, and the Austrians, with their subjective theory based on the universal actions of men in real life. At least, the following series of quotations extracted from various pages of his Harmonies indicates Edition: current; Page: [xvii] clearly that he had advanced far beyond the former and was making excellent progress toward the latter.

“The subject of political economy is MAN.... [who is] endowed with the ability to compare, judge, choose, and act; which implies that men may form right and wrong judgments, and make good and bad choices..... This faculty, given to men and to men alone, to work for each other, to transmit their efforts, and to exchange their services through time and space, with all the infinite and varied combinations thereby involved, is precisely what constitutes economic science, identifies its origin, and determines its limits..... The objects of political economy [the actions of men in the exchange of their goods and services] cannot be weighed or measured..... Exchange is necessary in order to determine value..... Owing to ignorance, what one man values may be despised by another..... A man's happiness and well-being are not measured by his efforts, but by his satisfactions, and this also holds true for society at large..... It may happen, and frequently does, that the service we esteem highly is in reality harmful to us; value depends on the judgment we form of it..... In an exchange society, man seeks to realize value irrespective of utility. The commodity he produces is not intended to satisfy his own wants, and he has little interest in how useful it may be. It is for the purchaser to judge that. What concerns the producer is that it should have maximum value in the market..... It is in vain that we attempt to separate choice and responsibility.”

In addition to the ideas expressed above, Bastiat also developed in great detail the theory that competition will cause all of the gifts of Nature to become widespread—including, of course, land and all other natural resources.

Like almost all economists of his time, Bastiat was obsessed with this problem of rent on land. If it could not be justified and harmonized, he said, then the question asked by the socialist Proudhon was correct: “Who is entitled to the rent on land? Why, of course, the one who made the land. Then who made it? God. In that case, would-be owner, get off.”

Bastiat's defense of rent covers many pages, but it adds up to this: Land rent is justified because the owners of the land (current Edition: current; Page: [xviii] and past) have rendered a valuable service. They have cleared the land, drained it, and made it suitable for planting. They have paid taxes to have roads built to it. If the amount of labor and capital that has been expended on the agricultural lands of France were capitalized, Bastiat contended, the current return in the form of rent would be considered a most unattractive investment today. Therefore, the owners of land do not enjoy an unearned income—or, at least, they would not if the market were free. Bastiat argued that any “unearned” rent was, like protected prices for manufactured products, the result of government interference with domestic and foreign trade. On the subject of rent, Bastiat was a physiocrat, pure and simple. He also used this same idea to defend the necessity and justice of a return on capital in general; all current capital, he said, merely represents past labor that has been saved and is rendering a service today.

While Bastiat's arguments on land rent are most persuasive—and were doubtless true in the context presented—they were too carefully selected to prove any over-all principle. For it is undeniably true that land (like other products and services) can and does vary widely in price for a variety of reasons, and that the owner of the land can reap a profit (or suffer a loss) even though he has done no work at all on it. But, once again, it does not follow that Bastiat was wrong in imagining that harmony can be found in the private ownership of land and the charging of a free-market rent for its use.

Bastiat was particularly anxious to refute the gloomy theories of Ricardo and Malthus in regard to wages, rent, population, and starvation. He felt that his theory that labor receives an increasing share from additional capital accumulation was an answer to Ricardo on wages and to Malthus on starvation. He answered Ricardo directly on the subject of land and rent. Finally, he offered the opinion that if man were free—truly free—with God's help he would discover harmonious ways to keep the population from increasing beyond the ability of science to discover new ways to feed it.

Bastiat has no great standing among leading economists as an innovator or an original thinker in the field of economic theory. That verdict may be justified. But his development of his central Edition: current; Page: [xix] idea of a universal harmony in all areas of human relationships led Gide and Rist to write, “The fundamental doctrines of [the liberal or optimistic school] were definitely formulated about the same time, though in very different fashion of course, in the Principles of Stuart Mill in England and the Harmonies of Bastiat in France.”

Dean Russell
Edition: current; Page: [none] Edition: current; Page: [xxi]

To the Youth of France

Eagerness to learn, the need to believe in something, minds still immune to age-old prejudices, hearts untouched by hatred, zeal for worthy causes, ardent affections, unselfishness, loyalty, good faith, enthusiasm for all that is good, beautiful, sincere, great, wholesome, and spiritual—such are the priceless gifts of youth. That is why I dedicate this book to the youth of France. The seed that I now propose to sow must be sterile indeed if it fails to quicken into life upon soil as propitious as this.

My young friends, I had intended to present you with a finished painting; I give you instead only a rough sketch. Forgive me. For who in these times can complete a work of any great scope? Here is the outline. Seeing it, may some one of you exclaim, like the great artist: Anch'io son pittore, and, taking up the brush, impart to my unfinished canvas color and flesh, light and shade, feeling and life.

You will think that the title of this work, Economic Harmonies, is very ambitious. Have I been presumptuous enough to propose to reveal the providential plan within the social order and the mechanism of all the forces with which Providence has endowed humanity to assure its progress?

Certainly not; but I have proposed to put you on the road to this truth: All men's impulses, when motivated by legitimate self-interest, fall into a harmonious social pattern. This is the central idea of this work, and its importance cannot be overemphasized.

It was fashionable, at one time, to laugh at what is called the social problem; and, it must be admitted, certain of the proposed solutions were only too deserving of derision. But there is surely nothing laughable about the problem itself; it haunts us like Banquo's ghost at Macbeth's banquet, except that, far from being silent, it cries aloud to terror-stricken society: Find a solution or die!

Edition: current; Page: [xxii]

Now the nature of this solution, as you readily understand, will depend greatly upon whether men's interests are, in fact, harmonious or antagonistic to one another.

If they are harmonious, the answer to our problem is to be found in liberty; if they are antagonistic, in coercion. In the first case, it is enough not to interfere; in the second, we must, inevitably, interfere.

But liberty can assume only one form. When we are certain that each one of the molecules composing a liquid has within it everything that is needed to determine the general level, we conclude that the simplest and surest way to obtain this level is not to interfere with the molecules. All those who accept as their starting point the thesis that men's interests are harmonious will agree that the practical solution to the social problem is simply not to thwart these interests or to try to redirect them.

Coercion, on the other hand, can assume countless forms in response to countless points of view. Therefore, those schools of thought that start with the assumption that men's interests are antagonistic to one another have never yet done anything to solve the problem except to eliminate liberty. They are still trying to ascertain which, out of all the infinite forms that coercion can assume, is the right one, or indeed if there is any right one. And, if they ever do reach any agreement as to which form of coercion they prefer, there will still remain the final difficulty of getting all men everywhere to accept it freely.

But, if we accept the hypothesis that men's interests are by their very nature inevitably bound to clash, that this conflict can be averted only by the capricious invention of an artificial social order, then the condition of mankind is indeed precarious, and we must fearfully ask ourselves:

  • 1. Shall we be able to find someone who has invented a satisfactory form of coercion?
  • 2. Will this man be able to win over to his plan the countless schools of thought that have conceived of other forms?
  • 3. Will mankind submit to this form, which, according to our hypothesis, must run counter to every man's self-interest?
  • 4. Assuming that humanity will consent to being trigged out in this garment, what will happen if another inventor arrives Edition: current; Page: [xxiii] with a better garment? Are men to preserve a bad social order, knowing that it is bad; or are they to change their social order every morning, according to the whims of fashion and the ingeniousness of the inventors?
  • 5. Will not all the inventors whose plans have been rejected now unite against the accepted plan with all the better chance of destroying it because, by its very nature and design, it runs counter to every man's self-interest?
  • 6. And, in the last analysis, is there any one human force capable of overcoming the fundamental antagonism which is assumed to be characteristic of all human forces?

I could go on indefinitely asking such questions and could, for example, bring up this difficulty: If you consider individual self-interest as antagonistic to the general interest, where do you propose to establish the acting principle of coercion? Where will you put its fulcrum? Will it be outside of humanity? It would have to be, in order to escape the consequences of your law. For if you entrust men with arbitrary power, you must first prove that these men are molded of a different clay from the rest of us; that they, unlike us, will never be moved by the inevitable principle of self-interest; and that when they are placed in a situation where there can be no possible restraint upon them or any resistance to them, their minds will be exempt from error, their hands from greed, and their hearts from covetousness.

What makes the various socialist schools (I mean here those schools that look to an artificial social order for the solution of the social problem) radically different from the economist school is not some minor detail in viewpoint or in preferred form of government; it is to be found in their respective points of departure, in their answers to this primary and central question: Are men's interests, when left to themselves, harmonious or antagonistic?

Edition: current; Page: [xxiv]

It is evident that the socialists set out in quest of an artificial social order only because they deemed the natural order to be either bad or inadequate; and they deemed it bad or inadequate only because they felt that men's interests are fundamentally antagonistic, for otherwise they would not have had recourse to coercion. It is not necesary to force into harmony things that are inherently harmonious.

Therefore they have found fundamental antagonisms everywhere:

  • Between the property owner and the worker.
  • Between capital and labor.
  • Between the common people and the bourgeoisie.
  • Between agriculture and industry.
  • Between the farmer and the city-dweller.
  • Between the native-born and the foreigner.
  • Between the producer and the consumer.
  • Between civilization and the social order.
  • And, to sum it all up in a single phrase:
  • Between personal liberty and a harmonious social order.

And this explains how it happens that, although they have a kind of sentimental love for humanity in their hearts, hate flows from their lips. Each of them reserves all his love for the society that he has dreamed up; but the natural society in which it is our lot to live cannot be destroyed soon enough to suit them, so that from its ruins may rise the New Jerusalem.

I have already stated that the economist school, on the contrary, starting from the assumption that there is a natural harmony among men's interests, reaches a conclusion in favor of personal liberty.

Still, I must admit, if economists, generally speaking, do advocate personal liberty, it is not, unfortunately, equally true that their principles firmly establish their initial premise that men's interests are harmonious.

Before going further, and in order to forewarn you against the conclusions that will inevitably be drawn from this admission, I must say a word regarding the respective positions of the socialists and the political economists.

It would be senseless for me to say that the socialists have never Edition: current; Page: [xxv] discovered truth, and that the political economists have never fallen into error.

What makes the great division between the two schools is the difference in their methods. Socialism, like astrology and alchemy, proceeds by way of the imagination; political economy, like astronomy and chemistry, proceeds by way of observation.

Two astronomers observing the same phenomenon may not reach the same conclusion. Despite this temporary disagreement they feel the bond of a common method that sooner or later will bring them together. They recognize that they belong to the same communion. But between the astronomer who observes and the astrologer who imagines, there stretches an unbridgeable gulf, although at times some common understanding may perchance be reached.

The same is true of political economy and socialism.

The economists observe man, the laws of his nature and the social relations that derive from these laws. The socialists conjure up a society out of their imagination and then conceive of a human heart to fit this society.

Now, if science cannot be wrong, scientists can be. I therefore do not deny that the economists can make faulty observations, and I shall even add that in the beginning they inevitably did.

But note what happens. If men's interests are actually harmonious, it follows that any observation that would lead logically to the opposite conclusion—namely, that they are antagonistic—has been faulty. What then are the socialists' tactics? They collect a few faulty observations from the economists' works, deduce all the conclusions to be derived from them, and then prove that they are disastrous. Up to this point they are within their rights. Next, they raise their voices in protest against the observer—Malthus or Ricardo, for example. They are still within their rights. But they do not stop here. They turn against the science of political economy itself; they accuse it of being heartless and of Edition: current; Page: [xxvi] desiring evil. In so doing, they go against reason and justice; for science is not responsible for the scientist's faulty observations. Finally, they go even farther yet. They even accuse society itself and threaten to destroy it and remake it. And why? Because, they say, science proves that our present society is on the road to disaster. In this they outrage good sense; for, either science is not mistaken—and in that case why attack it?—or else it is mistaken, and in that case they had best leave society alone, since it is in no danger.

But these tactics, however illogical, can nonetheless be most harmful to the science of political economy, particularly should those who espouse it give way to the understandable but unfortunate impulse of blindly supporting the opinions of one another and of their predecessors on all points. Science is a queen whose court etiquette should be based on a free and easy give-and-take. An atmosphere of bias and partisanship is fatal to it.

As I have already said, in political economy every erroneous proposition unfailingly leads to the conclusion that there are antagonistic elements in the social order. On the other hand, the numerous writings of the economists, including even the most eminent, cannot fail to contain a few false propositions. In the interest of our science and of society it is our duty to point these out and to correct them. To continue obstinately to defend them for the sake of preserving the prestige of the whole school would mean exposing not only ourselves, which is unimportant, but the truth itself, which is of greater consequence, to the attacks of the socialists.

To continue, then: I state that the political economists advocate liberty. But for the idea of liberty to win men's minds and hearts, it must be firmly based on the premise that men's interests, when left to themselves, tend to form harmonious combinations and to work together for progress and the general good.

Now, some of the economists, and among them some who carry considerable authority, have advanced propositions that step by step lead logically to the opposite conclusion, that absolute evil exists, that injustice is inevitable, that inequality will necessarily increase, that pauperism is unavoidable, etc.

For example, there are, to my knowledge, very few political Edition: current; Page: [xxvii] economists who have not attributed value to natural resources, to the gifts that God has lavished without cost on his creature, man. The word “value” implies that we surrender the things possessing it only in return for payment. Therefore, we see men, especially the landowners, selling God's bounty in return for other men's toil, and receiving payment for utilities, that is, for the means of satisfying human wants, without contributing any of their own labor in return—an obvious, but necessary, injustice, say these writers.

Then there is the famous theory of Ricardo. It can be summarized in this fashion: The price of foodstuffs is based on the amount of labor required to produce them on the poorest soils under cultivation. Now, as population increases, it is necessary to turn to less and less fertile soils. Hence, all humanity (except the landowner) is forced to exchange a constantly increasing amount of labor for the same quantity of foodstuffs; or, what comes to the same thing, to receive a constantly decreasing quantity of foodstuffs for the same amount of labor; whereas the owners of the soil see their income rising with each new acre of inferior land that is put into cultivation. Conclusion: increasing wealth for the leisure classes; increasing poverty for the laborers: or, inevitable inequality.

Then there is the even more famous theory of Malthus. Population tends to increase more rapidly than the means of subsistence, and this trend is to be observed at any given moment in the history of mankind. Now, men cannot live in peace and happiness unless they have enough to eat. There are only two checks to this constant threat of excess population: a decrease in the birth rate or an increase in the mortality rate, with all its attendant horrors. Moral restraint, in order to be effective, must be observed everywhere, which is more than can be expected. There remains, then, only the positive check of vice, poverty, war, pestilence, famine, and death; that is, inevitable pauperism.

I shall not mention other systems of less general import that also lead to desperately discouraging conclusions. For example, M. de Tocqueville and many others like him declare that Edition: current; Page: [xxviii] if we admit the right of primogeniture, we end with a very small and rigid aristocracy; if we do not admit it, we end with the country divided into tiny, unproductive individual holdings.

And the remarkable thing is that these four melancholy theories do not in any way come into direct conflict with one another. If they did, we could find consolation in the fact that they are mutually destructive. But such is not the case; they agree, they fit into the same general theory, which, supported by numerous and plausible facts, apparently explains the convulsive state of modern society and, since it is endorsed by a number of eminent authorities, presents itself to our discouraged and bewildered minds with terrifying conviction.

It remains to be seen how the exponents of this gloomy theory have at the same time been able to maintain the harmony of men's interests as their premise and deduce personal liberty as their conclusion. For certainly, if humanity is inevitably impelled toward injustice by the laws of value, toward inequality by the laws of rent, toward poverty by the laws of population, and toward sterilization by the laws of heredity, we cannot say that God's handiwork is harmonious in the social order, as it is in the physical universe; we must instead admit, with heads bowed in grief, that He has seen fit to establish His social order on revolting and irremediable discord.

You must not believe, my young friends, that the socialists have refuted and rejected the theory that, in order to avoid offending anyone, I shall call the theory of discord. On the contrary: despite their protests, they have accepted it as true; and, for the very reason that they accept it as true, they propose to substitute coercion for freedom, an artificial social order for the natural social order, and a work of their own contrivance for the handiwork of God. They say to their opponents (than whom, in this respect, I am not sure that they are not more logical): If, as you have declared, men's interests when left to themselves did tend to combine harmoniously, we could only welcome and extol freedom as you do. But you have proved irrefutably that these interests, if allowed to develop freely, lead mankind toward injustice, inequality, pauperism, and sterility. Therefore, we react against your theory precisely because it is true. We wish to destroy society as it now is precisely because it does obey the Edition: current; Page: [xxix] inevitable laws that you have described; we wish to try what we can do, since God's power has failed.

Thus, there is agreement in regard to the premises. Only in regard to the conclusion is there disagreement.

The economists to whom I have referred say: The great laws of Providence are hastening society along the road to disaster; but we must be careful not to interfere with their action, for they are fortunately counteracted by other secondary laws that postpone the final catastrophe, and any arbitrary interference on our part would only weaken the dike without lowering the great tidal wave that will eventually engulf us.

The socialists say: The great laws of Providence are hastening society along the road to disaster; we must abolish them and choose in their place other laws from our inexhaustible arsenal.

The Catholics say: The great laws of Providence are hastening society along the road to disaster; we must escape them by renouncing worldly desires, taking refuge in self-abnegation, sacrifice, asceticism, and resignation.

And, amid the tumult, the cries of anguish and distress, the appeals to revolt or to the resignation of despair, I raise my voice to make men hear these words, which, if true, must silence all protesting voices: It is not true that the great laws of Providence are hastening society along the road to disaster.

Thus, while all schools stand divided on the conclusions they draw from their common premise, I deny their premise. Is not this the best means of ending the division and the controversy?

The central idea of this work, the harmony of men's interests, is a simple one. And is not simplicity the touchstone of truth? The laws governing light, sound, motion, seem to us all the more true because they are simple. Why should the same thing not be true of the law of men's interests?

It is conciliatory. For what can be more conciliatory than to point out the ties that bind together industries, classes, nations, and even doctrines?

It is reassuring, since it exposes what is false in those systems that would have us believe that evil must spread and increase.

It is religious, for it tells us that it is not only the celestial but also the social mechanism that reveals the wisdom and declares the glory of God.

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It is practical, for certainly no maxim is easier to put into practice than this: Let men labor, exchange, learn, band together, act, and react upon one another, since in this way, according to the laws of Providence, there can result from their free and intelligent activity only order, harmony, progress, and all things that are good, and increasingly good, and still better, and better yet, to infinite degree.

Now there, you will say, is the optimism of the economists for you! They are so completely the slaves of their own systems that they shut their eyes to the facts for fear of seeing them. In the face of all the poverty, injustice, and oppression that desolate the human race, they go on imperturbably denying the existence of evil. The smell of the gunpowder burned in insurrections does not reach their indifferent senses; for them the barricades in the streets are mute; and though society should crumble and fall, they will continue to repeat: “All is for the best in the best of all possible worlds.”

Certainly not. We do not think that all is for the best.

I have complete faith in the wisdom of the laws of Providence, and for that reason I have faith in liberty.

The question is whether or not we have liberty.

The question to determine is whether these laws act with full force, or whether their action is not profoundly disrupted by the contrary action of institutions of human origin.

Deny evil! Deny pain! Who could? We should have to forget that we are talking about mankind. We should have to forget that we ourselves are men. For the laws of Providence to be considered as harmonious, it is not necessary that they exclude evil. It is enough that evil have its explanation and purpose, that it be self-limiting, and that every pain be the means of preventing greater pain by eliminating whatever causes it.

Society is composed of men, and every man is a free agent. Since man is free, he can choose; since he can choose, he can err; since he can err, he can suffer.

I go further: He must err and he must suffer; for his starting point is ignorance, and in his ignorance he sees before him an infinite number of unknown roads, all of which save one lead to error.

Now, all error breeds suffering. And this suffering either falls Edition: current; Page: [xxxi] upon the one who has erred, in which case it sets in operation the law of responsibility; or else it strikes innocent parties, in which case it sets in motion the marvelous reagent that is the law of solidarity.

The action of these laws, combined with the ability that has been given us of seeing the connection between cause and effect, must bring us back, by the very fact of suffering, to the path of righteousness and truth.

Thus, we not only do not deny that evil exists; we recognize that it has its purpose in the social order even as in the physical universe.

But if evil is to fulfill this purpose, the law of solidarity must not be made to encroach artificially upon the law of responsibility; in other words, the freedom of the individual must be respected.

Now, if man-made institutions intervene in these matters to nullify divine law, evil nonetheless follows upon error, but it falls upon the wrong person. It strikes him whom it should not strike; it no longer serves as a warning or a lesson; it is no longer self-limiting; it is no longer destroyed by its own action; it persists, it grows worse, as would happen in the biological world if the imprudent acts and excesses committed by the inhabitants of one hemisphere took their toll only upon the inhabitants of the other hemisphere.

Now, this is exactly the tendency not only of most of our governmental institutions but also and to an even greater degree of those institutions that are designed to serve as remedies for the evils that afflict us. Under the philanthropic pretext of fostering among men an artificial kind of solidarity, the individual's sense of responsibility becomes more and more apathetic and ineffectual. Through improper use of the public apparatus of law enforcement, the relation between labor and wages is impaired, the operation of the laws of industry and exchange is disturbed, the natural development of education is distorted, capital and manpower are misdirected, minds are warped, absurd demands are inflamed, wild hopes are dangled before men's eyes, unheard of quantities of human energy are wasted, centers of population are relocated, experience itself is made ineffective; in brief, all interests are given artificial foundations, they clash, Edition: current; Page: [xxxii] and the people cry: You see, all men's interests are antagonistic. Personal liberty causes all the trouble. Let us execrate and stifle personal liberty.

And so, since liberty is still a sacred word and still has the power to stir men's hearts, her enemies would strip her of her name and her prestige and, rechristening her competition, would lead her forth to sacrifice while the applauding multitudes extend their hands to receive their chains of slavery.

It is not enough, then, to set forth the natural laws of the social order in all their majestic harmony; it is also necessary to show the disturbing factors that nullify their action. That is the task I have undertaken in the second part of this work.

I have tried to avoid controversy. In so doing, I have undoubtedly missed the opportunity of presenting my principles with the comprehensiveness that comes from thorough discussion. But by drawing the reader's attention to the many details of my digressions, would I not have run the risk of confusing his view of the whole? If I present the edifice as it actually is, what does it matter how it has appeared to others, even to those who taught me how to view it?

And now I confidently appeal to those men of all persuasions who place justice, truth, and the general welfare above their own particular systems.

Economists, my conclusion, like yours, is in favor of individual liberty; and if I undermine some of the premises that have saddened your generous hearts, yet you will perhaps discover in my work additional reason for loving and serving our sacred cause.

Socialists, you place your faith in association. I call upon you, Edition: current; Page: [xxxiii] after you have read this work, to say whether the present social order, freed from its abuses and the obstacles that have been put in its way—enjoying, in other words, the condition of freedom—is not the most admirable, the most complete, the most lasting, the most universal, and the most equitable of all associations.

Egalitarians, you recognize only one principle, the reciprocity of services. Let human transactions once be free, and I declare that they are, or can be, nothing more nor less than a reciprocal exchange of services, constantly decreasing in cost, or value, constantly increasing in utility.

Communists, you desire that men, as brothers, may enjoy in common the benefits that Providence has lavished upon them all. I propose to demonstrate that the present social order has only to achieve freedom in order to realize and go beyond your fondest hopes and prayers; for in this social order all things are common to all, provided only that every man either himself go to the trouble to gather in God's gifts (which is only natural), or else that he render equivalent service to those who go to this trouble for him (which is only just).

Christians of all communions, unless you alone of all mankind doubt the divine wisdom as manifested in the most magnificent of God's works that it is given us to know, you will not find one word in this book that contravenes the strictest tenet of your moral code or the most mystical of your dogmas.

Property owners, however vast may be your possessions, if I prove that your rights, which people today so vehemently contest, are confined, as are those of the simplest manual worker, to receiving services in return for real services performed by you or your forefathers, then these rights of yours will henceforth be beyond challenge.

Workers, I promise to prove that you do enjoy the fruits of the land that you do not own, and with less pain and effort on your part than you could cultivate them by your own labor on land given you in its original state, unimproved by other men's labor.

Capitalists and laborers, I believe that I can establish this law: “In proportion as capital accumulates, the absolute share of Edition: current; Page: [xxxiv] capital in the total returns of production increases, and its relative share decreases; labor also finds that its relative share increases and that its absolute share increases even more sharply. The opposite effect is observed when capital is frittered away.”1 If this law can be established, it is clear that we may conclude that the interests of workers and employers are harmonious.

Disciples of Malthus, sincere but misjudged lovers of your fellow man, you whose only fault is your desire to protect humanity against the fatal effects of a law that you consider inevitable, I have a more reassuring law to offer you in its place: “Other things being equal, increased population means increased efficiency in the means of production.” If such is the case, you will certainly not be the ones to complain that the crown of thorns has dropped from the brow of our beloved science.

Predatory men, you who, by force or fraud, in spite of the law or through the agency of the law, grow fat on the people's substance; you who live by the errors you disseminate, by the ignorance you foster, by the wars you foment, by the restraints you impose on trade; you who tax the labor you have made unproductive, making it lose even more than you snatch away; you who charge for the obstacles you set up, so as to charge again for those you subsequently take down; you who are the living embodiment of selfishness in its bad sense; parasitical excrescences of faulty policies, prepare the corrosive ink of your critique: to you alone I can make no appeal, for the purpose of this book is to eliminate you, or rather to eliminate your unjust claims. However much we may admire compromise, there are two principles between which there can be no compromise: liberty and coercion.

If the laws of Providence are harmonious, they can be so only when they operate under conditions of freedom, for otherwise harmony is lacking. Therefore, when we perceive something inharmonious in the world, it cannot fail to correspond to some lack of freedom or justice. Oppressors, plunderers, you who hold justice in contempt, you cannot take your place in the universal harmony, for you are the ones who disrupt it.

Does this mean that the effect of this book would be to weaken the power of government, endanger its stability, lessen its authority? The goal I have in view is precisely the opposite. But let us understand one another.

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The function of political science is to determine what should and what should not fall under government control; and in making this important distinction, we must not lose sight of the fact that the state always acts through the instrumentality of force. Both the services it renders us and those it makes us render in return are imposed upon us in the form of taxes.

The question then amounts to this: What are the things that men have the right to impose upon one another by force? Now, I know of only one, and that is justice. I have no right to force anyone to be religious, charitable, well educated, or industrious; but I have the right to force him to be just: this is a case of legitimate self-defense.

Now, there cannot exist for a group of individuals any new rights over and above those that they already possessed as individuals. If, therefore, the use of force by the individual is justified solely on grounds of legitimate self-defense, we need only recognize that government action always takes the form of force to conclude that by its very nature it can be exerted solely for the maintenance of order, security, and justice.

All government action beyond this limit is an encroachment upon the individual's conscience, intelligence, and industry—in a word, upon human liberty.

Accordingly, we must set ourselves unceasingly and relentlessly to the task of freeing the whole domain of private activity from the encroachments of government. Only on this condition shall we succeed in winning our liberty or assuring the free play of the harmonious laws that God has decreed for the development and progress of the human race.

Will the power of government be weakened by these restrictions? Will it lose stability as it loses some of its vastness? Will it have less authority because it will have fewer functions? Will it be the object of less respect because it will be the object of fewer grievances? Will it become more the puppet of special interests when it has reduced the enormous budgets and the coveted patronage that are the special interests' lure? Will it be exposed to greater dangers when it has less responsibility?

On the contrary: it seems evident to me that to restrict the public police force to its one and only rightful function, but a function that is essential, unchallenged, constructive, desired Edition: current; Page: [xxxvi] and accepted by all, is the way to win it universal respect and co-operation. Once this is accomplished, I cannot see from what source could come all our present ills of systematic obstructionism, parliamentary bickering, street insurrections, revolutions, crises, factions, wild notions, demands advanced by all men to govern under all possible forms, new systems, as dangerous as they are absurd, which teach the people to look to the government for everything. We should have an end also to compromising diplomacy, to the constant threat of war, and the armed peace that is nearly as disastrous, to crushing and inevitably inequitable taxation, to the ever increasing and unnatural meddling of politics in all things, and to that large-scale and wholly artificial redistribution of capital and labor which is the source of needless irritation, of constant ups and downs, of economic crises and setbacks. All these and a thousand other causes of disturbances, friction, disaffection, envy, and disorder would no longer exist; and those entrusted with the responsibility of governing would work together for, and not against, the universal harmony. Harmony does not exclude evil, but it reduces evil to the smaller and smaller area left open to it by the ignorance and perversity of our human frailty, which it is the function of harmony to prevent or chastise.

Young men, in these times when a lamentable skepticism appears to be the effect and the punishment of our intellectual anarchy, I should deem myself happy if the reading of this book would stir you to utter those reassuring words, so sweet to the lips, which are not only a refuge from despair but a positive force, strong enough, we are told, to remove mountains, those words that begin the Christian's profession of faith: I believe. I believe, not with blind and submissive faith, for we are not here concerned with the mysteries of revelation; but with reasoned scientific faith, as is proper in matters left to man's own inquiry and investigation. I believe that He who designed the physical world has not seen fit to remain a stranger to the social world. I believe that His wisdom extends to human agents possessed of free will, that He has been able to bring them together and cause them to move in harmony, even as He has done with inert molecules. I believe that His providence shines forth at least as clearly Edition: current; Page: [xxxvii] in the laws to which men's wills and men's interests are subject as in the laws that He has decreed for mass or velocity. I believe that everything in society, even that which inflicts pain, is a source of improvement and progress. I believe that evil ends in good and hastens its coming, whereas the good can never end in evil, and therefore must eventually triumph. I believe that the inevitable trend of society is toward a constantly rising physical, intellectual, and moral level shared by all mankind. I believe, if only man can win back his freedom of action and be allowed to follow his natural bent without interference, that his gradual, peaceful development is assured. I believe these things, not because I desire them or because they satisfy the longings of my heart, but because after mature reflection my intellect gives them its full consent.

Ah! if ever you utter these words, I believe, you will be eager to carry them to others, and the social problem will soon be solved, for despite all that is said, its solution is simple. Men's interests are harmonious; therefore, the answer lies entirely in this one word: freedom.

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Table of Contents

  • Preface to the English-Language Edition
    by George B. de Huszar vii
  • Bibliographical Notice
    by W. Hayden Boyers ix
  • Introduction
    by Dean Russell xi
  • To the Youth of France xxi
  • 1 Natural and Artificial Order 1
  • 2 Wants, Efforts, Satisfactions 20
  • 3 Man's Wants 34
  • 4 Exchange 59
  • 5 On Value 99
  • 6 Wealth 156
  • 7 Capital 174
  • 8 Private Property and Common Wealth 199
  • 9 Landed Property 236
  • 10 Competition 284
  • Conclusion to the Original Edition 317
  • 11 Producer and Consumer 325
  • 12 The Two Mottoes 344
  • 13 Rent 353
  • 14 Wages 361
  • 15 Saving 407
  • 16 Population 412
  • 17 Private and Public Services 443
  • 18 Disturbing Factors 466
  • 19 War 475
  • 20 Responsibility 487
  • 21 Solidarity 512
  • 22 The Motive Force of Society 519
  • Edition: current; Page: [xl] 23 Evil 529
  • 24 Perfectibility 533
  • 25 Relations of Political Economy with Ethics, Politics, Legislation, and Religion 539
  • Appendix: A Tentative Preface to the Harmonies 543
  • Notes 550
  • Index of Names 573
  • Index of Subjects 579
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1: Natural and Artificial Social Order1

Are we really certain that the mechanism of society, like the mechanism of the heavenly bodies or the mechanism of the human body, is subject to general laws? Are we really certain that it is a harmoniously organized whole? Or is it not true that what is most notable in society is the absence of all order? And is it not true that a social order is the very thing that all men of good will and concern for the future are searching for most avidly, the thing most in the minds of all forward-looking commentators on public affairs, and of all the pioneers of the intellectual world? Are we not but a mere confused aggregation of individuals acting disconcertedly in response to the caprices of our anarchical liberty? Are our countless masses, now that they have painfully recovered their liberties one by one, not expecting some great genius to come and arrange them into a harmonious whole? Now that we have torn down, must we not begin to build anew?

If the import of these questions were simply whether society can dispense with written laws, with regulations, with repressive measures, whether each man can make unlimited use of his faculties, even when he might infringe on another's liberties or do damage to the community as a whole—whether, in a word, Edition: current; Page: [2] we must see in the doctrine of laissez faire, laissez passer, the absolute formula of political economy; the answer could be doubtful to no one. Political economists do not say that a man may kill, pillage, burn, that society has only to let him alone; they say that society's resistance to such acts would manifest itself in fact even if specific laws against them were lacking; that, consequently, this resistance is a general law of humanity. They say that civil or criminal laws must regularize, not contravene, these general laws on which they are predicated. It is a far cry from a social order founded on the general laws of humanity to an artificial, contrived, and invented order that does not take these laws into account or denies them or scorns them—an order, in a word, such as some of our modern schools of thought would, it seems, impose upon us.

For if there are general laws that act independently of written laws, and whose action needs merely to be regularized by the latter, we must study these general laws; they can be the object of scientific investigation, and therefore there is such a thing as the science of political economy. If, on the contrary, society is a human invention, if men are only inert matter to which a great genius, as Rousseau says, must impart feeling and will, movement and life, then there is no such science as political economy: there is only an indefinite number of possible and contingent arrangements, and the fate of nations depends on the founding father to whom chance has entrusted their destiny.

I shall not indulge in lengthy dissertations to prove that society is subject to general laws. I shall confine myself to pointing out certain facts that, though somewhat commonplace, are nonetheless important.

Rousseau said, “It requires a great deal of scientific insight to discern the facts that are close to us.”

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Such is the case with the social phenomena in the midst of which we live and move. Habit has so familiarized us with these phenomena that we never notice them until, so to speak, something sharply discordant and abnormal about them forces them to our attention.

Let us take a man belonging to a modest class in society, a village cabinetmaker, for example, and let us observe the services he renders to society and receives in return. This man spends his day planing boards, making tables and cabinets; he complains of his status in society, and yet what, in fact, does he receive from this society in exchange for his labor? The disproportion between the two is tremendous.

Every day, when he gets up, he dresses; and he has not himself made any of the numerous articles he puts on. Now, for all these articles of clothing, simple as they are, to be available to him, an enormous amount of labor, industry, transportation, and ingenious invention has been necessary. Americans have had to produce the cotton; Indians, the dye; Frenchmen, the wool and the flax; Brazilians, the leather; and all these materials have had to be shipped to various cities to be processed, spun, woven, dyed, etc.

Next, he breakfasts. For his bread to arrive every morning, farm lands have had to be cleared, fenced in, ploughed, fertilized, planted; the crops have had to be protected from theft; a certain degree of law and order has had to reign over a vast multitude of people; wheat has had to be harvested, ground, kneaded, and prepared; iron, steel, wood, stone have had to be converted by industry into tools of production; certain men have had to exploit the strength of animals, others the power of a waterfall, etc.—all things of which each one by itself alone presupposes an incalculable output of labor not only in space, but in time as well.

In the course of the day this man consumes a little sugar and a little olive oil, and uses a few utensils.

He sends his son to school to receive instruction, which, though limited, still presupposes on the part of his teachers research, previous study, and a store of knowledge that startles one's imagination.

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He leaves his house: he finds his street paved and lighted.

His ownership of a piece of property is contested: he finds lawyers to plead his rights, judges to reaffirm them, officers of the law to execute the judgment. These men, too, have had to acquire extensive and costly knowledge in order to defend and protect him.

He goes to church: it is a prodigious monument, and the book that he brings with him is perhaps an even more prodigious monument of human intelligence. He is taught morals, his mind is enlightened, his soul is elevated; and for all this to be done, still another man has had to have professional training, to have frequented libraries and seminaries, to have drawn knowledge from all the sources of human tradition, and to have lived the while without concerning himself directly with his bodily needs.

If our artisan takes a trip, he finds that, to save him time and lessen his discomfort, other men have smoothed and leveled the ground, filled in the valleys, lowered the mountains, spanned the rivers, and, to reduce their friction, placed wheeled cars on blocks of sandstone or iron rails, tamed horses or steam, etc.

It is impossible not to be struck by the disproportion, truly incommensurable, that exists between the satisfactions this man derives from society and the satisfactions that he could provide for himself if he were reduced to his own resources. I make bold to say that in one day he consumes more things than he could produce himself in ten centuries.

What makes the phenomenon stranger still is that the same thing holds true for all other men. Every one of the members of society has consumed a million times more than he could have produced; yet no one has robbed anyone else. If we examine matters closely, we perceive that our cabinetmaker has paid in services for all the services he has received. He has, in fact, received nothing that he did not pay for out of his modest industry; all those ever employed in serving him, at any time or in any place, have received or will receive their remuneration.

So ingenious, so powerful, then, is the social mechanism that every man, even the humblest, obtains in one day more satisfactions than he could produce for himself in several centuries.

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Nor is this all. This social mechanism will seem still more ingenious if the reader will consider his own case.

I shall assume that he is simply a student. What is he doing in Paris? How does he live? No one can deny that society puts at his disposal food, clothing, lodging, amusements, books, instruction—such a host of things, in a word, that it would take a long time just to tell how they were produced, to say nothing of actually producing them. And in return for all these things that have demanded so much work, the sweat of so many brows, so much painful toil, so much physical or mental effort, such prodigies of transportation, so many inventions, transactions, what services has our student rendered society? None; but he is getting ready to render them. How, then, can these millions of men who are engaged in positive, effective, and productive work turn over to him the fruit of their labor? Here is the explanation: This student's father, who was a doctor or a lawyer or a businessman, had already rendered services—perhaps to Chinese society—and had received in return, not immediate services, but certificates for services due him on which he could demand payment at the time and place and in the form that he saw fit. Today society is paying for those distant and past services; and, amazingly, if we were to follow in our minds the chain of endless transactions that had to take place before the final result was reached, we should see that each one was paid for his pains; that these certificates passed from hand to hand, sometimes split up into fractions, sometimes combined into larger sums, until by our student's consumption the full account was balanced. Is not this indeed a most remarkable phenomenon?

We should be shutting our eyes to the facts if we refused to recognize that society cannot present such complicated combinations in which civil and criminal law play so little part without being subject to a prodigiously ingenious mechanism. This mechanism is the object of study of political economy.

One other thing worthy of notice is that in this really incalculable number of transactions that have resulted in maintaining a student for a day, not one millionth part, perhaps, was done directly. The things he has enjoyed today, and they are innumerable, Edition: current; Page: [6] are the work of men many of whom have long since disappeared from the face of the earth. And yet they have been paid as they intended to be, although the one who profits from their work today did nothing for them. He did not know them; he will never know them. The person who is reading this page, at the very moment he reads it, has the power, though perhaps he is unaware of it, to set in motion men of all lands, all races, and, I could almost say, of all times, whites, blacks, redskins, men of the yellow race; he makes generations dead and gone and generations still unborn work for his present satisfactions; and this extraordinary power he owes to the fact that his father once rendered services to other men who apparently have nothing in common with those whose labor is being performed today. Yet such balance was effected in time and space that each was remunerated, and each received what he had calculated he should receive.

In truth, could all this have happened, could such extraordinary phenomena have occurred, unless there were in society a natural and wise order that operates without our knowledge?

In our day people talk a great deal about inventing a new order. Is it certain that any thinker, regardless of the genius we grant him and the authority we give him, could invent and operate successfully an order superior to the one whose results I have just described?

What would it be in terms of its moving parts, its springs, and its motive forces?

The moving parts are men, that is, beings capable of learning, reflecting, reasoning, of making errors and of correcting them, and consequently of making the mechanism itself better or worse. They are capable of pain and pleasure, and in that respect they are not only the wheels, but the springs of the machine. They are also the motive forces, for the source of the power is in them. They are more than that, for they are the ultimate object and raison d'être of the mechanism, since in the last analysis the problems of its operation must be solved in terms of their individual pain or pleasure.

Now, it has been observed, and, alas, the observation has not Edition: current; Page: [7] been a difficult one to make, that in the operation, the evolution, and even the progress (by those who accept the idea that there has been progress) of this powerful mechanism, many moving parts were inevitably, fatally, crushed; that, for a great number of human beings, the sum of unmerited sufferings far exceeded the sum of enjoyments.

Faced with this fact, many sincere and generous-hearted men have lost faith in the mechanism itself. They have repudiated it; they have refused to study it; they have attacked, often violently, those who have investigated and expounded its laws; they have risen up against the nature of things; and, in a word, they have proposed to organize society according to a new plan in which injustice, suffering, and error could have no place.

Heaven forbid that I should raise my voice against intentions so manifestly philanthropic and pure! But I should be going back on my own convictions, I should be turning a deaf ear to the voice of my own conscience, if I did not say that, in my opinion, they are on the wrong track.

In the first place, they are reduced by the very nature of their propaganda to the unfortunate necessity of underestimating the good that society has produced, of denying its progress, of imputing every evil to it, and of almost avidly seeking out evils and exaggerating them beyond measure.

When a man feels that he has discovered a social order different from the one that has come into being through the natural tendencies of mankind, he must, perforce, in order to have his invention accepted, paint in the most somber colors the results of the order he seeks to abolish. Therefore, the political theorists to whom I refer, while enthusiastically and perhaps exaggeratedly proclaiming the perfectibility of mankind, fall into the strange contradiction of saying that society is constantly deteriorating. According to them, men are today a thousand times more wretched than they were in ancient times, under the feudal system and the yoke of slavery; the world has become a hell. If it were possible to conjure up the Paris of the tenth century, I confidently believe that such a thesis would prove untenable.

Secondly, they are led to condemn even the basic motive power Edition: current; Page: [8] of human actions—I mean self-interest—since it has brought about such a state of affairs. Let us note that man is made in such a way that he seeks pleasure and shuns pain. From this source, I agree, come all the evils of society: war, slavery, monopoly, privilege; but from this source also come all the good things of life, since the satisfaction of wants and the avoidance of suffering are the motives of human action. The question, then, is to determine whether this motivating force which, though individual, is so universal that it becomes a social phenomenon, is not in itself a basic principle of progress.

In any case, do not the social planners realize that this principle, inherent in man's very nature, will follow them into their new orders, and that, once there, it will wreak more serious havoc than in our natural order, in which one individual's excessive claims and self-interest are at least held in bounds by the resistance of all the others? These writers always assume two inadmissible premises: that society, as they conceive it, will be led by infallible men completely immune to the motive of self-interest; and that the masses will allow such men to lead them.

Finally, our social planners do not seem in the least concerned about the implementation of their program. How will they gain acceptance for their systems? How will they persuade all other men simultaneously to give up the basic motive for all their actions: the impulse to satisfy their wants and to avoid suffering? To do so it would be necessary, as Rousseau said, to change the moral and physical nature of man.

To induce all men, simultaneously, to cast off, like an ill-fitting garment, the present social order in which mankind has evolved since its beginning and adopt, instead, a contrived system, becoming docile cogs in the new machine, only two means, it seems to me, are available: force or universal consent.

Either the social planner must have at his disposal force capable of crushing all resistance, so that human beings become mere wax between his fingers to be molded and fashioned to his whim; or he must gain by persuasion consent so complete, so exclusive, so blind even, that the use of force is made unnecessary.

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I defy anyone to show me a third means of setting up and putting into operation a phalanstery or any other artificial social order.

Now, if there are only two means, and we demonstrate that they are both equally impracticable, we have proved by that very fact that the social planners are wasting their time and trouble.

Visionaries though they are, they have never dreamed of having at their disposal the necessary material force to subjugate to their bidding all the kings and all the peoples of the earth. King Alfonso had the presumption to say, “If God had taken me into His confidence, the solar system would have been better arranged.” But if he set his wisdom above the Creator's, he was not mad enough to challenge God's power; and history does not record that he tried to make the stars turn in accord with the laws of his own invention. Descartes likewise was content to construct a little world of dice and strings, recognizing that he was not strong enough to move the universe. We know of no one but Xerxes who was so intoxicated with his power as to say to the waves, “Thus far shall ye come, and no farther.” The waves, however, did not retreat from Xerxes, but Xerxes from the waves, and, if not for this wise but humiliating precaution, he would have been drowned.

The social planners, therefore, lack the force to subject humanity to their experiments. Even though they should win over to their cause the Czar of Russia, the Shah of Persia, and the Khan of the Tartars, and all the rulers who hold absolute power over their subjects, they still would not have sufficient force to Edition: current; Page: [10] distribute mankind into groups and categories and abolish the general laws of property, exchange, heredity and family, for even in Russia, even in Persia and Tartary, men must to some extent be taken into account. If the Czar of Russia took it into his head to alter the moral and physical nature of his subjects, he probably would soon have a successor, and the successor would not be tempted to continue the experiment.

Since force is a means quite beyond the reach of our numerous social planners, they have no other resource open to them than to try to win universal consent.

This can be done in two ways: by persuasion or by imposture.

Persuasion! But not even two minds have ever been known to reach perfect agreement on every point within even a single field of knowledge. How, then, can all mankind, diverse in language, race, customs, spread over the face of the whole earth, for the most part illiterate, destined to die without ever hearing the reformer's name, be expected to accept unanimously the new universal science? What is involved? Changing the pattern of work, trade, of domestic, civil, religious relations—in a word, altering man's physical and moral nature; and people talk of rallying all humanity to the cause by conviction!

Truly, the task appears an arduous one.

When a man comes and says to his fellow men:

“For five thousand years there has been a misunderstanding between God and man. From Adam's time until now the human race has been on the wrong road, and if it will but listen to me, I shall put it back on the right track. God intended mankind to take a different route; mankind refused, and that is why evil entered the world. Let mankind hearken to my voice, and turn about; let it proceed in the opposite direction; then will the light of happiness shine upon all men.”

When, I say, a man begins like this, he is doing well if he gets five or six disciples to believe him; and from five or six to a billion men is a far, far cry, so far in fact that the distance is incalculable!

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And then, reflect that the number of social inventions is as limitless as man's own imagination; that there is not a single planner who, after a few hours alone in his study, cannot think up a new scheme; that the inventions of Fourier, Saint-Simon, Owen, Cabet, Blanc, etc., bear no resemblance whatsoever to one another; that not a day passes without still others burgeoning forth; that, indeed, humanity has some reason for drawing back and hesitating before rejecting the order God has given it in favor of deciding definitely and irrevocably on one of the countless social inventions available. For what would happen if, after one of these schemes had been selected, a better one should present itself? Can the human race establish a new basis for property, family, labor, and exchange every day in the year? Can it risk changing the social order every morning?

“Thus,” as Rousseau says, “since the lawgiver cannot use either force or reason, he must have recourse to a different manner of authority that can win support without violence and persuade without convincing.”

What is that authority? Imposture. Rousseau does not dare utter the word; but, as is his invariable custom in such cases, he puts it behind the transparent veil of a purple passage:

“This,” he says, “is what, in all times, forced the founding fathers of nations to have recourse to the intervention of Heaven and to give credit to the gods for their own wisdom, so that the people, submitting to the laws of the state as if to the laws of Edition: current; Page: [12] Nature, and recognizing the selfsame power as the creator of men and as the creator of their commonwealth, might obey with liberty and bear docilely the yoke of their public felicity. The decrees of sublime reason, which is above the reach of the common herd, are imputed by the lawgiver to the immortal gods, so as to win by divine authority the support of those whom human wisdom could not move. But it is not for every man to make the gods speak....”

And so, lest anyone be deceived, he completes his thought in the words of Machiavelli: Mai non fu alcuno ordinatore di leggi STRAORDINARIE in un popolo che non ricorresse a Dio.

Why does Machiavelli recommend invoking God's authority, and Rousseau the authority of the gods, and the immortals? I leave the answer to the reader.

Certainly I do not accuse the modern founding fathers of stooping to such unworthy subterfuge. Yet, considering the problem from their point of view, we readily appreciate how easily they can be carried away by their desire for success. When a sincere and philanthropic man is firmly convinced that he possesses a social secret by means of which his fellow men may enjoy boundless bliss in this world; when he clearly sees that he cannot win acceptance of his idea either by force or by reason, and that guile is his only recourse; his temptation is bound to be great. We know that even the ministers of the religion that professes the greatest horror of untruth have not recoiled from the use of pious fraud; and we observe (witness the case of Rousseau, that austere writer who inscribed at the head of all his works the motto: Vitam impendere vero) that even proud philosophy herself can be seduced by the enticements of a very different motto: The end justifies the means. Why, then, be surprised if the modern social planners should likewise think in terms of “giving credit to the gods for their own wisdom, of putting their own decrees in the mouths of the immortal gods, Edition: current; Page: [13] of winning support without violence and persuading without convincing”?

We know that, like Moses, Fourier had his Deuteronomy following his Genesis. Saint-Simon and his disciples had gone even further in their apostolic nonsense. Others, more shrewd, lay hold of religion in its broadest sense, modifying it to their views under the name of neo-Christianity. No one can fail to be struck by the tone of mystic affectation that nearly all the modern reformers put into their preachings.

But the efforts in this direction have proved only one thing, which has, to be sure, its importance, namely, that in our day not everyone who wills may become a prophet. In vain he proclaims himself God; nobody believes him, not the public, not his peers, not even he himself.

Since I have mentioned Rousseau, I shall venture to make a few observations about this social planner, particularly as they will be helpful in showing in what respects artificial social orders differ from the natural order. This digression, moreover, is not inopportune, since for some time now the Social Contract has been hailed as a miraculous prophecy of things to come.

Rousseau was convinced that isolation was man's natural state, and, consequently, that society was a human invention. “The social order,” he says at the outset, “does not come from Nature; it is therefore founded on convention.”

Furthermore, our philosopher, though loving liberty passionately, had a low opinion of men. He considered them completely incapable of creating for themselves the institutions of good government. The intervention of a lawgiver, a founding father, was therefore indispensable.

“The people being subject to the law should be the authors of the law,” he says. “Only those who associate together have the right to regulate the conditions of their association. But how shall they regulate them? Shall it be by common agreement or by Edition: current; Page: [14] a sudden inspiration? How is a blind multitude of men, who often do not know what they want, since they rarely know what is good for them, to accomplish of themselves such a vast and difficult enterprise as that of devising a system of legislation? .... Individuals see the good and reject it; the public seeks the good and cannot find it: both are equally in need of guides..... Hence the necessity of a lawgiver.”

This lawgiver, as we have seen, “being unable to use either force or reason, must of necessity have recourse to a different manner of authority,” namely, in plain words, to guile and duplicity.

Nothing can adequately convey the idea of the dizzy heights above other men on which Rousseau places his lawgiver:

“We should have gods to give laws to men..... He who dares to institute a society must feel himself capable, so to speak, of changing human nature itself.... of altering man's essential constitution, so that he may strengthen it..... He must deprive man of his own powers that he may give him others that are alien to him..... The lawgiver is, in every respect, an extraordinary man in the state.... his function is a unique and superior one, which has nothing in common with the ordinary human status..... If it is true that the great prince is a very special man, what should one say of the great lawgiver? The former has only to follow the ideal, whereas it is the latter's role to create it. The lawgiver is the inventor of the machine; the prince, merely the operator.”

And what, then, is mankind in all this? The mere raw material out of which the machine is constructed.

Truly, what is this but arrogance raised to the point of monomania? Men, then, are the raw materials of a machine that the prince operates and the lawgiver designs; and the philosopher rules the lawgiver, placing himself immeasurably above the common herd, the prince, and the lawgiver himself; he soars above the human race, stirs it to action, transforms it, molds it, or rather teaches the founding fathers how to go about the task of stirring, transforming, and molding it.

However, the founder of a nation must set a goal for himself. He has human raw material to put to work, and he must shape it Edition: current; Page: [15] to a purpose. Since the people are without initiative and everything depends on the lawgiver, he must decide whether his nation is to be commercial or agricultural, or a society of barbarians and fisheaters, etc.; but it is to be hoped that the lawgiver makes no mistake and does not do too much violence to the nature of things.

The people, by agreeing to form an association, or rather by forming an association at the will of the lawgiver, have, then, a very definite end and purpose. “Thus it is,” says Rousseau, “that the Hebrews and more recently the Arabs, had religion as their principal object; the Athenians, letters; Carthage and Tyre, commerce; Rhodes, shipping; Sparta, war; and Rome, civic virtue.”

What will be the national objective that will persuade us French to abandon the isolation of the state of nature in order to form a new society? Or rather (for we are only inert matter, the raw material for the machine), toward what end shall our great lawgiver direct us?

According to the ideas of Rousseau, it could hardly be toward letters, commerce, or shipping. War is a nobler goal, and civic virtue is nobler still. Yet there is one goal above all others, one which “should be the end and purpose of all systems of legislation, and that is liberty and equality.”

But we must know what Rousseau meant by liberty. To enjoy liberty, according to him, is not to be free, but to cast our vote, even in case we should be “swept along without violence and persuaded without being convinced, for then we obey with liberty and bear docilely the yoke of public felicity.”

“Among the Greeks,” he said, “all that the populace had to do it did for itself; the people were constantly assembled in the market place, their climate was mild, they were not avaricious, slaves did all their work, and their great concern was their liberty.”

“The English people,” he says elsewhere, “believe that they are free. They are very much mistaken. They are free only while they are electing their members of parliament. Once they have elected them, they are slaves, they are nothing.”

The people, then, must do for themselves everything that Edition: current; Page: [16] relates to the public service if they are to be free, for it is in this that liberty consists. They must be constantly carrying on elections, constantly in the market place. Woe to them if they think of working for their livelihood! The instant a single citizen decides to take care of his own affairs, that very instant (to use a favorite phrase of Rousseau) everything is lost.

But surely this is no minor difficulty. What is to be done? For, obviously, in order to practice virtue, even to enjoy the right to liberty, we must first stay alive.

We have already noted the rhetorical verbiage that Rousseau uses to conceal the word “imposture.” Now we see him resort to flights of oratory to gloss over the logical conclusion of his whole work, which is slavery.

“Your harsh climate imposes special wants. For six months in the year your market place cannot be frequented, your muted tongues cannot make themselves heard in the open air, and you fear slavery less than poverty.

“Truly you see that you cannot be free.

“What! Liberty can be preserved only if supported by slavery? Perhaps.”

If Rousseau had ended with this horrible word, the reader would have been revolted. Recourse to impressive declamation is in order. Rousseau responds nobly.

“Everything that is unnatural [he is speaking of society] has its inconveniences, and civil society even more than anything else. There are unfortunate situations in which one man's liberty can be preserved only at the expense of another's, and where the citizen can be perfectly free only on condition that the slave be abjectly a slave. You nations of the modern world have no slaves, but you yourselves are slaves; you purchase their freedom at the price of your own..... I am unmoved by the noble motives you attribute to your choice; I find you more cowardly than humane.”

Does not this simply mean: Modern nations, you would do better not to be slaves yourselves but, instead, to own slaves?

I beg the reader to forgive this long digression, which, I trust, has not been without value. For some time we have had Rousseau Edition: current; Page: [17] and his disciples of the Convention held up to us as the apostles of the doctrine of the brotherhood of man. Men as the raw material, the prince as the operator of a machine, the founding father as the designer, the philosopher high and mighty above them all, fraud as the means, and slavery as the end—is this the brotherhood of man that was promised?

It also seemed to me that this analysis of the Social Contract was useful in showing what characterizes artificial social orders. Start with the idea that society is contrary to Nature; devise contrivances to which humanity can be subjected; lose sight of the fact that humanity has its motive force within itself; consider men as base raw materials; propose to impart to them movement and will, feeling and life; set oneself up apart, immeasurably above the human race—these are the common practices of the social planners. The plans differ; the planners are all alike.

Among the new arrangements that poor weak mortals are invited to consider, there is one that is presented in terms worthy of our attention. Its formula is: progressive and voluntary association.

But political economy is based on this very assumption, that society is purely an association of the kind described in the foregoing formula; a very imperfect association, to be sure, because man is imperfect, but capable of improvement as man himself improves; in other words, progressive. Is it a question of a closer association among labor, capital, and talent, which should result in more wealth for the human family and its better distribution? Provided the association remains voluntary, that force and constraint do not intervene, that the parties to the association do not propose to make others who refuse to enter foot the bill, in what way are these associations contrary to the idea of political economy? Is not political economy, as a science, committed to the examination of the various forms under which men see fit to join Edition: current; Page: [18] their forces and to apportion their tasks, with a view to greater and more widely diffused prosperity? Does not the business world frequently furnish us with examples of two, three, four persons forming such associations? Is not the métayage, for all its imperfections, a kind of association of capital and labor? Have we not recently seen stock companies formed that permit even the smallest investors to participate in the largest enterprises? Are there not in our country some factories that have established profit-sharing associations for their workers? Does political economy condemn these efforts of men to receive a better return for their labor? Does it declare anywhere that mankind has gone as far as it can? Quite the contrary, for I am convinced that no science proves more clearly that society is in its infancy.

But, whatever hopes we may entertain for the future, whatever ideas we may have of the forms man may discover for the improvement of his relations with his fellow man, for the more equitable distribution of wealth, and for the dissemination of knowledge and morality, we must nonetheless recognize that the social order is composed of elements that are endowed with intelligence, morality, free will, and perfectibility. If you deprive them of liberty, you have nothing left but a crude and sorry piece of machinery.

Liberty! Today, apparently, we are no longer interested. In this land of ours, this France, where fashion reigns as queen, liberty seems to have gone out of style. Yet, for myself, I say: Whoever rejects liberty has no faith in mankind. Recently, it is alleged, the distressing discovery has been made that liberty leads inevitably to monopoly.2 No, this monstrous linking, this unnatural joining together of freedom and monopoly is nonexistent; it is a figment of the imagination that the clear light of political economy quickly dissipates. Liberty begets monopoly! Oppression is born of freedom! But, make no mistake about it, to affirm this is to affirm that man's tendencies are inherently evil, evil in their nature, evil in their essence; it is to affirm that his natural bent is toward his deterioration and that his mind is attracted Edition: current; Page: [19] irresistibly toward error. What good, then, are our schools, our study, our research, our discussions, except to add momentum to our descent down the fatal slope; since, for man, to learn to choose is to learn to commit suicide? And if man's tendencies are perverse, where will the social planners seek to place their fulcrum? According to their premises, it will have to be outside of humanity. Will they seek it within themselves, in their own intelligence, in their own hearts? But they are not yet gods: they too are men and hence, along with all humanity, careening down toward the fatal abyss. Will they call upon the state to intervene? But the state is composed of men; and we should have to prove that the men who form the state constitute a class apart, to whom the general laws of society are not applicable, since they are called upon to make the laws. Unless this be proved, the facing of the dilemma is not even postponed.

Let us not thus condemn mankind until we have studied its laws, forces, energies, and tendencies. Newton, after he had discovered the law of gravity, never spoke the name of God without uncovering his head. As far as intellect is above matter, so far is the social world above the physical universe that Newton revered; for the celestial mechanism is unaware of the laws it obeys. How much more reason, then, do we have to bow before the Eternal Wisdom as we contemplate the mechanism of the social world in which the universal mind of God also resides (mens agitat molem), but with the difference that the social world presents an additional and stupendous phenomenon: its every atom is an animate, thinking being endowed with that marvelous energy, that source of all morality, of all dignity, of all progress, that exclusive attribute of man—freedom!

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2: Wants, Efforts, Satisfactions1

What a profoundly appalling spectacle France presents! It would be difficult to say whether anarchy has passed from a theory to a fact or from a fact to a theory, but it is certain that it has spread everywhere.

The poor have risen against the rich; the proletariat against the capitalists; agriculture against industry; the country against the city; the provinces against the capital; the native-born against the foreigners.

And now the theorists who seek to build a system out of all this division and conflict step forward. “It is the inevitable result,” they say, “of the nature of things, that is, of freedom. Man is possessed of self-love, and this is the cause of all the evil; for, since he is possessed of self-love, he strives for his own well-being and can find it only at the expense of his brothers' misfortune. Let us, then, prevent him from following his impulses; let us stifle liberty; let us change the human heart; let us find another motivating force to replace the one that God gave him; let us invent an artificial society and direct it as it should go!”

When the theorist reaches this point, he sees an endless vista arising to challenge his logic or his imagination. If his mind runs to dialectics and his temperament to melancholy, he devotes himself wholly to the analysis of evil; he dissects it, he puts it in the test tube, he probes it, he goes back to its very beginnings, he follows it forward to its ultimate consequences; and since, in Edition: current; Page: [21] view of our innate imperfection, there is nothing in which evil is not present, there is nothing at which he fails to carp bitterly. He presents only one side of the question when he examines property, the family, capital, industry, competition, freedom, self-interest—the damaging and destructive side. He reduces human biology, so to speak, to a clinical post-mortem. He defies God to reconcile what has been said of His infinite goodness with the existence of evil. He defiles everything, he makes everything distasteful, he denies everything; nevertheless, he does succeed in winning a certain sullen and dangerous following among those classes whose suffering has made them only too vulnerable to despair.

If, on the other hand, our theorist has a heart open to benevolence and a mind that delights in illusions, he takes off for the happy land of dreams. He dreams of Oceanas, Atlantises, Salentes, Spensones, Icarias, Utopias, and Phalansteries; he peoples them with docile, loving, devoted beings who would never impede the dreamer's flights of fancy. He complacently sets himself up in his role of Providence. He arranges, he disposes, he creates men to his own taste. Nothing stops him; no disappointment overtakes him. He is like the Roman preacher who, pretending that his square cap was Rousseau, refuted vigorously the Social Contract and then triumphantly declared that he had reduced his adversary to silence. In just this way the reformer dangles before the eyes of people in misery a seductive picture of ideal bliss well fitted to make them lose their taste for the harsh necessities of real life.

But the utopian is rarely content to stop at these innocent dreams. As soon as he tries to win mankind over to them, he discovers that people do not readily lend themselves to transformation. Men resist; they grow bitter. In order to win them over, he speaks not merely of the good things that they are rejecting; he Edition: current; Page: [22] speaks especially of the evils from which he proposes to deliver them. He cannot paint these too strikingly. He grows accustomed to increasing the intensity of the colors on his palette. He seeks out the evil in present-day society as passionately as another would seek out the good. He sees only suffering, rags, emaciated bodies, starvation, pain, oppression. He is amazed, he is exasperated, by the fact that society is not sufficiently aware of all its misery. He neglects nothing as he tries to make it shake off its apathy, and, after beginning with benevolence, he, too, ends with misanthropy.2

God forbid that I should question any man's sincerity! But I really cannot understand how those political theorists who see a fundamental antagonism at the foundation of the natural order of society can enjoy a moment's calm and repose. It seems to me that discouragement and despair must be their unhappy lot. For if nature erred in making self-interest the mainspring of human society (and her error is evident as soon as we admit that men's interests are inherently antagonistic), how can they fail to see that the evil is beyond repair? Not being able to go beyond men, for we are men ourselves, where shall we find a fulcrum for our lever with which to change human tendencies? Shall we call upon law and order, the magistrates, the state, the legislator? But to do so is to appeal to men, that is, to beings subject to the common infirmity. Shall we resort to universal suffrage? But this is only giving the freest rein of all to the universal tendency.

Only one recourse, then, remains open to these social planners. They must pass themselves off as the possessors of a special revelation, as prophets, molded from a different clay, drawing their inspiration from a different source from that of the rest of mankind; and this is doubtless the reason that we often see them enveloping their systems and their admonitions in mystical phraseology. But if they are sent from God, let them prove their high calling. In the last analysis, what they desire is supreme authority, the most absolute, despotic power that ever existed. They not only desire to control our actions; they even go so far as to propose to alter the very nature of our feelings. The least Edition: current; Page: [23] that can be asked is that they show their credentials. Do they expect that humanity will take them at their word, especially when they can come to no agreement among themselves?

But, before we examine their blueprints for artificial societies, is there not something we should make sure of, namely: Are they not on the wrong track from the very outset? Is it, indeed, certain that men's interests are inherently antagonistic, that inequality develops inevitably and irremediably in the natural order of human society, under the influence of self-interest, and that God, therefore, was obviously wrong when He told man to pursue his own happiness?

This is what I propose to investigate.

Taking man as God saw fit to make him, capable of anticipating the future and of learning from the past, hence perfectible, given to self-love admittedly, but kindly disposed toward others and invariably quick to respond to their kindly affections, I seek to learn what social order necessarily results from the combination of these elements if their free play is not interfered with.

If we find that the resulting order leads progressively toward the general welfare, improvement and equality; toward the physical, intellectual, and moral leveling of all classes, and that this level is constantly raised; then God's ways will be vindicated. We shall learn to our joy that there are no gaps in the creation, and that the social order, like all the others, bears witness to the existence of the harmonious laws before which Newton bowed in reverence, and which moved the psalmist to cry out: Coeli enarrant gloriam Dei.

Rousseau said: “If I were a prince or a lawgiver, I should not waste my time saying what must be done; I should do it, or hold my tongue.”

I am not a prince, but the confidence of my fellow citizens in me has made me a lawgiver. Perhaps they will tell me that it is time for me to act and not to write.

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I ask their pardon. Whether it is the truth itself that urges me on, or whether I am the victim of an illusion, the fact remains that I feel the need of putting together into a single volume ideas for which, to date, I have failed to win acceptance because I have presented them separately, as scattered fragments. It seems to me that I perceive in the interplay of the natural laws of society sublime and reassuring harmonies. What I see, or think I see, must I not try to show to others, in order to rally together around an ideal of peace and brotherhood men whose minds have been misled, whose hearts have become embittered? If, when our beloved ship of state is tossed by the storm, I appear sometimes to withdraw, in order to get my bearings, from the post to which I have been called, the reason is that my feeble hands are unavailing at the helm. And besides, am I betraying my trust when I reflect on the causes of the storm and strive to act accordingly? And who knows whether it would be granted to me to do tomorrow what I should fail to do today?

I shall begin by setting down a few general ideas about economics. Using the works of my predecessors, I shall try to sum up the science of political economy in a single, simple, true, and constructive principle, one that political economists from the very beginning have been dimly aware of and have come closer and closer to comprehending. Perhaps the time has now come to give it expression in a definitive formula. Then, in the light of this clear knowledge, I shall try to resolve a few of the problems still controversial, such as competition, the role of the machine, foreign trade, luxury, capital, income from investments, etc. I shall point out some of the relationships, or rather, the harmonies, that exist between political economy and the other moral and social sciences, with a glance at the important topics designated by the words “self-interest,” “property,” “public ownership,” “liberty,” “equality,” “responsibility,” “solidarity,” “brotherhood,” “unity.” Finally, I shall call the reader's attention to the artificial obstacles that beset the peaceful, orderly, and progressive development of human society. From these two ideas—natural, harmonious laws, on the one hand, and artificial, disruptive Edition: current; Page: [25] elements on the other—will be deduced the solution of the social problem.

It would be difficult to fail to see the pitfalls that threaten this undertaking from two sides. In the midst of the hurricane that is sweeping us along, if our book is too abstruse, it will not be read; if it succeeds in winning readers, it will be because the questions it poses have been touched upon only lightly. How can we reconcile scientific integrity with the demands of the reader? To satisfy all the requirements of form and content, we should have to weigh each word and study its context. It is thus that the crystal is formed drop by drop in silence and obscurity. Silence, retirement, time, peace of mind—I have none of these: and I am compelled to appeal to the good sense of the public and to beg its indulgence.

The subject of political economy is man.

But it does not embrace the whole man. Religious sentiment, paternal and maternal affection, filial devotion, love, friendship, patriotism, charity, politeness—these belong to the moral realm, which embraces all the appealing regions of human sympathy, leaving for the sister science of political economy only the cold domain of self-interest. This fact is unfairly forgotten when we reproach political economy with lacking the charm and grace of moral philosophy. How could it be otherwise? Let us challenge the right of political economy to exist as a science, but let us not force it to pretend to be what it is not. If human transactions whose object is wealth are vast enough and complicated enough to constitute a special science, let us grant it its own special appeal, and not reduce it to talking of self-interest in the language of sentiment. I am personally convinced that recently we have done it no service by demanding from it a tone of enthusiastic sentimentality that from its lips can sound only like hollow declamation. What does it deal with? With transactions carried on between people who do not know each other, who owe each other nothing beyond simple justice, who are defending and seeking to advance their own self-interest. It deals with claims that are Edition: current; Page: [26] restricted and limited by other claims, where self-sacrifice and unselfish dedication have no place. Take up the poet's lyre, then, to speak of these things. I would as soon see Lamartine consult a table of logarithms to sing his odes.3

This is not to say that political economy does not have its own special poetry. Whenever there is order and harmony, there is poetry. But it is to be found in the results, not in the demonstrations. It is revealed; it is not created by the demonstrator. Kepler did not set himself up as a poet; yet certainly the laws he discovered are the true poetry of the mind.

Thus, political economy regards man from one side only, and our first concern must be to study him from this point of view. For this reason we cannot avoid going back to the primary phenomena of human sensation and activity. Let me reassure the reader, however. Our stay in the cloudy regions of metaphysics will not be a long one, and we shall borrow from this science only a few simple, clear, and, if possible, incontestable ideas.

The soul (or, not to become involved in spiritual questions, man) is endowed with the faculty of sense perception. Whether sense perception resides in the body or in the soul, the fact remains that as a passive being he experiences sensations that are painful or pleasurable. As an active being he strives to banish the former and multiply the latter. The result, which affects him again as a passive being, can be called satisfaction.

From the general idea of sensation come the more definite ideas of pain, wants, desires, tastes, appetites, on the one hand; and, on the other, of pleasure, enjoyment, fulfillment, and well-being.

Between these extremes is interposed a mean, and from the general idea of activity come the more definite ideas of pain, effort, fatigue, labor, and production.

An analysis of sensation and activity shows one word common Edition: current; Page: [27] to both domains, the word pain. It is painful to experience certain sensations, and we can stop them only by an effort that we call taking pains. Thus, we are apprised that here below we have little else than the choice of two evils.

Everything in this complex of phenomena is on the personal level, the sensation that precedes the effort as well as the satisfaction that follows it.

We cannot doubt that self-interest is the mainspring of human nature. It must be clearly understood that this word is used here to designate a universal, incontestable fact, resulting from the nature of man, and not an adverse judgment, as would be the word selfishness. The moral sciences would be impossible if we perverted at the outset the terms that the subject demands.

Human effort does not always and inevitably intervene between sensation and satisfaction. Sometimes satisfaction is obtained by itself. More often effort is exerted on material objects, through the agency of forces that Nature has without cost placed at man's disposal.

If we give the name of utility to everything that effects the satisfaction of wants, then there are two kinds of utility. One kind is given us by Providence without cost to ourselves; the other kind insists, so to speak, on being purchased through effort.

Thus, the complete cycle embraces, or can embrace, these four ideas:

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Man is endowed with a faculty for improvement. He compares, he looks ahead, he learns, he profits by experience. If want is a pain, and effort too entails pains, there is no reason for him not to seek to reduce the pains of the effort if he can do so without impairing the satisfaction that is its goal. This is what he accomplishes when he succeeds in replacing onerous utility by gratuitous utility, which is the constant object of his search.

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Our self-interest is such that we constantly seek to increase the sum of our satisfactions in relation to our efforts; and our intelligence is such—in the cases where our attempt is successful—that we reach our goal through increasing the amount of gratuitous utility in relation to onerous utility.

Every time progress of this type is achieved, a part of our efforts is freed to be placed on the available list, so to speak; and we have the option either of enjoying more rest or of working for the satisfaction of new desires if these are keen enough to stir us to action.

Such is the source of all progress in the economic order. It is also, as we easily comprehend, the source of all miscalculations, for progress and miscalculation both have their roots in that marvelous and special gift that God has bestowed upon man: free will.

We are endowed with the faculty of comparing, of judging, of choosing, and of acting accordingly. This implies that we can arrive at a good or a bad judgment, make a good or a bad choice—a fact that it is never idle to remind men of when we speak to them of liberty.

We are not, to be sure, mistaken about our own sensations, and we discern with an infallible instinct whether they are painful or pleasurable. But how many different forms our errors of judgment can take! We can mistake the cause and pursue eagerly, as something sure to give us pleasure, what can give us only pain; or we can fail to see the relation of cause and effect and be unaware that an immediate pleasure will be followed ultimately by greater pain; or again, we can be mistaken as to the relative importance of our wants and our desires.

We can give a wrong direction to our efforts not only through ignorance, but also through the perversity of our will. “Man,” said de Bonald, is an intellect served by bodily organs.” Indeed! Do we have nothing else? Do we not have passions?

When we speak, then, of harmony, we do not mean that the natural arrangement of the social world is such that error and Edition: current; Page: [29] vice have been excluded. To advance such a thesis in the face of the facts would be carrying the love of system to the point of madness. For this harmony to be without any discordant note, man would have to be without free will, or else infallible. We say only this: Man's principal social tendencies are harmonious in that, as every error leads to disillusionment and every vice to punishment, the discords tend constantly to disappear.

A first and vague notion of the nature of property can be deduced from these premises. Since it is the individual who experiences the sensation, the desire, the want; since it is the individual who exerts the effort; the satisfactions also must have their end in him, for otherwise the effort would be meaningless.

The same holds true of inheritance. No theory, no flights of oratory can succeed in keeping fathers from loving their children. The people who delight in setting up imaginary societies may consider this regrettable, but it is a fact. A father will expend as much effort, perhaps more, for his children's satisfactions as for his own. If, then, a new law contrary to Nature should forbid the bequest of private property, it would not only in itself do violence to the rights of private property, but it would also prevent the creation of new private property by paralyzing a full half of human effort.

Self-interest, private property, inheritance—we shall have occasion to come back to these topics. Let us first, however, try to establish the limits of the science with which we are concerned.

I am not one of those who believe that a science has inherently its own natural and immutable boundaries. In the realm of ideas, as in the realm of material objects, everything is linked together, everything is connected; all truths merge into one another, and every science, to be complete, must embrace all others. It has been well said that for an infinite intelligence there would be only one single truth. It is only our human frailty, therefore, that reduces us to study a certain order of phenomena as though isolated, and the resulting classifications cannot avoid a certain arbitrariness.

The true merit consists in the exact exposition of the facts, their causes and their effects. There is also merit, but a purely Edition: current; Page: [30] minor and relative one, in determining, not rigorously, which is impossible, but rationally, the type of facts to be considered.

I say this so that it may not be supposed that I wish to criticize my predecessors if I happen to give to political economy somewhat different limits from those that they have assigned to it.

In recent years economists have frequently been reproached for too great a preoccupation with the question of wealth. It has been felt that they should have included as part of political economy everything that contributes, directly or indirectly, to human happiness or suffering; and it has even been alleged that they denied the existence of everything that they did not discuss, for example, the manifestations of altruism, as natural to the heart of man as self-interest. This is like accusing the mineralogist of denying the existence of the animal kingdom. Is not wealth—i.e., the laws of its production, distribution, and consumption—sufficiently vast and important a subject to constitute a special field of science? If the conclusions of the economist were in contradiction to those in the fields of government or ethics, I could understand the accusation. We could say to him, “By limiting yourself, you have lost your way, for it is not possible for two truths to be in conflict.” Perhaps one result of the work that I am submitting to the public may be that the science of wealth will be seen to be in perfect harmony with all the other sciences.

Of the three terms that encompass the human condition—sensation, effort, satisfaction—the first and the last are always, and inevitably, merged in the same individual. It is impossible to think of them as separated. We can conceive of a sensation that is not satisfied, a want that is not fulfilled, but never can we conceive of a want felt by one man and its satisfaction experienced by another.

If the same held true of the middle term, effort, man would be a completely solitary creature. The economic phenomenon would occur in its entirety within an isolated individual. There could be a juxtaposition of persons; there could not be a society. There could be a personal economy; there could not be a political economy.

But such is not the case. It is quite possible, and indeed it frequently happens, that one person's want owes its satisfaction to Edition: current; Page: [31] another person's effort. The fact is that if we think of all the satisfactions that come to us, we shall all recognize that we derive most of them from efforts we have not made; and likewise, that the labor that we perform, each in our own calling, almost always goes to satisfy desires that are not ours.

Thus, we realize that it is not in wants or in satisfactions, which are essentially personal and intransmissible phenomena, but in the nature of the middle term, human effort, that we must seek the social principle, the origin of political economy. It is, in fact, precisely this faculty of working for one another, which is given to mankind and only to mankind, this transfer of efforts, this exchange of services, with all the infinitely complicated combinations of which it is susceptible in time and space, that constitutes the science of economics, demonstrates its origins, and determines its limits.

I therefore say: Political economy has as its special field all those efforts of men that are capable of satisfying, subject to services in return, the wants of persons other than the one making the effort, and, consequently, those wants and satisfactions that are related to efforts of this kind.

Thus, to cite an example, the act of breathing, although containing the three elements that make up the economic phenomenon, does not belong to the science of economics, and the reason is apparent: we are concerned here with a set of facts in which not only the two extremes—want and satisfaction—are nontransferable (as they always are), but the middle element, effort, as well. We ask no one's help in order to breathe; no giving or receiving is involved. By its very nature it is an individual act and a nonsocial one, which cannot be included in a science that, as its very name implies, deals entirely with interrelations.

But let special circumstances arise that require men to help one another to breathe, as when a workman goes down in a diving bell, or a doctor operates a pulmotor, or the police take steps to purify the air; then we have a want satisfied by a person other than the one experiencing it, we have a service rendered, and breathing itself, at least on the score of assistance and remuneration, comes within the scope of political economy.

It is not necessary that the transaction be actually completed. Edition: current; Page: [32] Provided only a transaction is possible, the labor involved becomes economic in character. The farmer who raises wheat for his own use performs an economic act in that the wheat is exchangeable.

To make an effort in order to satisfy another person's want is to perform a service for him. If a service is stipulated in return, there is an exchange of services; and, since this is the most common situation, political economy may be defined as the theory of exchange.

However keen may be the want of one of the contracting parties, however great the effort of the other, if the exchange is freely made, the two services are of equal value. Value, then, consists in the comparative estimation of reciprocal services, and political economy may also be defined as the theory of value.

I have just defined political economy and marked out the area it covers, without mentioning one essential element: gratuitous utility, or utility without effort.

All authors have commented on the fact that we derive countless satisfactions from this source. They have termed these utilities, such as air, water, sunlight, etc., natural wealth, in contrast to social wealth, and then dismissed them; and, in fact, since they lead to no effort, no exchange, no service, and, being without value, figure in no inventory, it would seem that they should not be included within the scope of political economy.

This exclusion would be logical if gratuitous utility were a fixed, invariable quantity always distinct from onerous utility, that is, utility created by effort; but the two are constantly intermingled and in inverse ratio. Man strives ceaselessly to substitute the one for the other, that is, to obtain, with the help of natural and gratuitous utilities, the same results with less effort. He makes wind, gravity, heat, gas do for him what originally he accomplished only by the strength of his own muscles.

Now, what happens? Although the result is the same, the effort is less. Less effort implies less service, and less service implies less value. All progress, therefore, destroys some degree of value, but how? Not at all by impairing the usefulness of the result, but by substituting gratuitous utility for onerous utility, natural wealth for social wealth. From one point of view, the part of value thus Edition: current; Page: [33] destroyed no longer belongs in the field of political economy, since it does not figure in our inventories; for it can no longer be exchanged, i.e., bought or sold, and humanity enjoys it without effort, almost without being aware of it. It can no longer be counted as relative wealth; it takes its place among the blessings of God. But, on the other hand, political economy would certainly be in error in not taking account of it. To fail to do so would be to lose sight of the essential, the main consideration of all: the final outcome, the useful result; it would be to misunderstand the strongest forces working for sharing in common and equality; it would be to see everything in the social order except the existing harmony. If this book is destined to advance political economy a single step, it will be through keeping constantly before the reader's eyes that part of value which is successively destroyed and then reclaimed in the form of gratuitous utility for all humanity.

I shall here make an observation that will prove how much the various sciences overlap and how close they are to merging into one.

I have just defined service. It is effort on the part of one man, whereas the want and the satisfaction are another's. Sometimes the service is rendered gratis, without payment, without any service exacted in return. It springs from altruism rather than from self-interest. It constitutes a gift and not an exchange. Consequently, it seems to belong, not to political economy (which is the theory of exchange), but to moral philosophy. In fact, acts of this nature are, because of their motivation, moral rather than economic phenomena. Nevertheless, we shall see that, by reason of their results, they pertain to the science with which we are here concerned. On the other hand, services rendered in return for effort, requiring payment, and, for this reason, essentially economic, do not on that account remain, in their results, outside the realm of ethics.

Accordingly, these two fields of knowledge have countless points in common; and, since two truths cannot be contradictory, when the economist views with alarm a phenomenon that the moralist hails as beneficial, we can be sure that one or the other is wrong. Thus do the various sciences hold one another to the path of truth.

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3: Man's Wants

It is perhaps impossible and, in any case, not very useful to present a complete and methodical catalogue of all of man's wants. Almost all those of real importance are included in the following list:

Breathing (I keep this want here as marking the absolute limit where the transfer of labor or the exchange of services begins), food, clothing, housing, the preservation or recovery of health, transportation, security, education, amusement, enjoyment of the beautiful.

Wants exist. This is a fact. It would be childish to inquire whether it would be better if they did not exist and why God has made us subject to them.

It is certain that man suffers and even dies when he cannot satisfy the wants that it is his nature as a human being to feel. It is certain that he suffers and can die when he satisfies certain of them overmuch.

We can satisfy most of our wants only by taking pains, which can themselves be considered suffering. The same is true of the act by which, exercising a noble restraint over our appetites, we deprive ourselves of something.

Thus, suffering is unavoidable, and we have little more than a choice of evils. Furthermore, suffering is the most personal, intimate thing in the world; consequently, self-interest, the impulse that today is branded as selfish and individualistic, is indestructible. Edition: current; Page: [35] Nature has placed feeling at the ends of our nerves, at all the approaches to our hearts and our minds, like an outpost, to warn us where there is a lack or an excess of satisfaction. Pain, then, has a purpose, a mission. It has often been asked if the existence of evil can be reconciled with the infinite goodness of the Creator—an awesome problem that philosophy will always grapple with and will probably never solve. As far as political economy is concerned, man must be taken as he is, inasmuch as it has not been vouchsafed to the imagination to picture—and to reason even less to conceive of—an animate and mortal being exempt from pain. All our efforts to understand feeling without pain or man without feeling would be vain.

Today, some sentimentalist schools reject as false any social science that has not succeeded in devising a system by means of which pain will disappear from the world. They pass a harsh judgment on political economy because it recognizes what cannot be denied: the existence of suffering. They go further; they hold political economy responsible for it. This is like attributing the frailty of our organs to the physiologist who studies them.

Of course, a man can make himself momentarily popular, can attract to himself men who are suffering, and can arouse them against the natural order of society by telling them that he has in mind a plan for the artificial arrangement of society that will exclude pain in any form. He can even say that he has stolen God's secret and has interpreted His supposed will by banishing evil from the face of the earth. And yet the sentimentalist schools call irreverent the science that refuses to make such claims, accusing it of misunderstanding or denying the foresight or omnipotence of the Author of all things!

At the same time, these schools paint a frightening picture of present-day society, and they do not perceive that, if it is irreverent to predict suffering for the future, it is no less irreverent to note its existence in the past or in the present. For the Infinite admits of no limits; and if, since Creation, even one man has suffered in this world, that is reason enough to admit, without irreverence, that pain has entered into the plan of Providence.

It is certainly more scientific and more manly to recognize Edition: current; Page: [36] the existence of the great facts of Nature, which not only do exist, but without which mankind could not be imagined.

Thus, man is subject to suffering, and, consequently, society is also.

Suffering has a role to play in the life of the individual and, consequently, in that of society as well.

The study of the natural laws of society will reveal that the role of suffering is gradually to destroy its own causes, to restrict itself to narrower and narrower limits, and, finally, to guarantee us, by making us earn and deserve it, a preponderance of the good and the beautiful over the evil.

The catalogue presented above puts material needs first.

We live in times that force me to warn the reader once again against the sentimental affectation so very much in vogue.

There are people who hold very cheap what they disdainfully call material needs, material satisfactions. They will doubtless say to me, as Bélise says to Chrysale:

  • Is the body, this rag, of sufficient importance,
  • Of sufficient worth, that we should give it the slightest heed?

And these people, though generally well provided for in every respect (on which I sincerely congratulate them), will blame me for having listed food, for example, as coming first.

Certainly I recognize that moral improvement belongs to a higher order of things than the preservation of the body. But, after all, are we so beset by this mania for cant and affectation that we are no longer permitted to say that in order to attain moral improvement we must keep soul and body together? Let us avoid these childish attitudes, which stand in the way of science. By trying to pass ourselves off as philanthropic, we cease to be truthful; for it is contrary to logic and to the facts that moral progress, the concern for personal dignity, the cultivation of refined sentiments should have priority over the simple needs of preserving Edition: current; Page: [37] the body. This type of prudery is quite recent. Rousseau, that enthusiastic panegyrist of the state of nature, did not indulge in it; and a man endowed with exquisite delicacy, with appealing gentleness of heart, with a spirituality that led him to embrace quietism, and withal a stoic in his own mode of life, Fénelon, said, “In the final analysis, soundness of mind consists in seeking to learn how those things are done that are the basis of human life. All the matters of great importance turn upon them.”

Without professing, then, to classify human wants in a rigorously methodical order, we may say that man cannot direct his efforts toward the satisfaction of his highest and noblest moral wants until he has provided for those that concern the preservation of his life. Hence, we can already conclude that any legislative measure that makes material life difficult is harmful to the moral life of nations, a harmony that I call to the reader's attention in passing.

And, since the opportunity has arisen, I shall point out another one.

Since the inexorable necessities of material life are an obstacle to moral and intellectual development, it follows that more virtue will be found in the more affluent nations and classes. Good Heavens! What have I said, and what an uproar assails my ears! Today there is a veritable mania for attributing to the poorer classes a monopoly of all the devotion, all the self-sacrifice, all the noble qualities that constitute in man moral grandeur and beauty; and this mania has recently spread further under the influence of a revolution that, by bringing these classes to the surface of society, has not failed to raise up about them a horde of adulators.

I do not deny that wealth, and especially opulence, particularly when unjustly distributed, tends to develop certain special vices.

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But is it possible to admit as a general proposition that virtue is the privilege of the poverty-stricken, and that vice is the unlovely and unfailing companion of the well-to-do? This would be to affirm that moral and intellectual development, which is compatible only with a certain degree of leisure and comfort, works to the detriment of intelligence and morality.

And I appeal to the honest judgment of the unfortunate classes themselves. To what horrible discords would such a paradox not lead?

We should therefore have to say that humanity is faced with the terrible alternatives of either remaining eternally poverty-stricken or of moving toward ever increasing immorality. In accordance with this logic, all the forces that lead to wealth, such as enterprise, thrift, orderliness, skill, honesty, are the seeds of vice; whereas those that hold us back in poverty, like improvidence, idleness, dissipation, negligence, are the precious buds of virtue. Could a more discouraging discord be imagined in the moral world? And if such were the case, who would dare speak to the people or proffer any advice? You complain of your sufferings, we should have to say, and you are anxious to see them end. You groan under the yoke of the most pressing material wants, and you long for the hour of deliverance; for you, too, desire a measure of leisure to develop your intellectual and emotional capacities. For this reason you seek to make your voice heard in the political arena and to protect your interests. But learn the nature of what you desire, and realize that the granting of your wishes would be fatal to you. Solvency, easy circumstances, wealth engender vice. Cling lovingly, then, to your poverty and your virtue.

The flatterers of the people thus fall into an obvious contradiction when they point to wealth as a vile cesspool of selfishness and vice, and at the same time urge the people—and often, in their haste, by the most illegal of means—toward that region which they consider so abominable.

No, such discord is not to be found in the natural order of society. It is not possible that all men should aspire to live in Edition: current; Page: [39] comfortable circumstances, that the natural way to attain it should be through the exercise of the strictest virtue, and that on reaching it, they should, nevertheless, fall again under the yoke of vice. Such rantings are fit only to kindle and keep alive the fires of class hatred. Were they true, they would give humanity only the choice between dire poverty and immorality. Being false, they make lies serve the cause of disorder, and, by their deceit, set against each other classes that should mutually love and assist each other.

Yes, unnatural inequality, inequality that the law creates by disturbing the natural and orderly development of the various classes of society, is, for all, a prolific source of resentments, jealousies, and vices. For this reason we must make sure whether or not this natural order leads to the progressive equalization and improvement of all classes; and we should be stopped short in this study by what is known in law as a peremptory exception if this twofold material progress inevitably entailed a twofold moral deterioration.

On the subject of human wants I have an observation to make that is important, even fundamental, for political economy: they are not a fixed, immutable quantity. By nature they are not static, but progressive.

This characteristic is to be noted even in the most material of our wants; it becomes more marked as we advance to those intellectual tastes and yearnings that distinguish man from beast.

It would seem that, if there is any one thing in which men must resemble one another, it is in their need for food; for, except for abnormalities, all stomachs are about the same. Nevertheless, foods that would have been a delicacy in one era have become coarse fare for another, and the diet which suits a lazzarone would cause a Dutchman anguish. Thus, this want, the most immediate, the most elemental, and, consequently, the most uniform of all, still varies according to age, sex, temperament, climate, and habit.

The same is true of all other wants. Hardly has man got himself a shelter when he wants a house; hardly has he clothed himself Edition: current; Page: [40] when he wants adornment; hardly has he satisfied the needs of his body when study, knowledge, art open to his desires a new and endless vista.

It is quite worth while to note the speed with which, through continued satisfaction, what was only a vague desire becomes a taste, and what was only a taste becomes a want and even a want that will not be denied.

Take, for example, a rough and industrious artisan. Accustomed to coarse fare, humble clothing, mediocre lodging, he thinks that he would be the happiest of men, that he would want nothing more, if he could mount to the rung of the ladder that he sees immediately above him. He is amazed that those who have got there are still tormenting themselves. Let the modest fortune he has dreamed of come his way, and he is happy; happy—alas! for a few days.

For soon he becomes familiar with his new position, and little by little he ceases to be aware of his longed-for good fortune. He dons with indifference the garment he had once coveted. He has created a new environment for himself, he associates with different people, from time to time he touches his lips to a different goblet, he aspires to climb another rung; and, if he will but look into his own heart, he will be well aware that, if his fortune has changed, his soul has remained what it was, an inexhaustible well of desires.

It would appear that Nature has given habit this peculiar power in order that it should be in us what the ratchet wheel is in mechanics, and that humanity, ever urged on toward higher and higher regions, should never stop at any level of civilization.

The sense of one's own worth acts, perhaps, even more powerfully in the same direction. The Stoic philosopher has often blamed man for wanting to appear rather than to be. But, if he take a broader view of things, is it quite certain that appearing is not for mankind one of the forms of being?

When, through industry, orderliness, and thrift, a family rises step by step toward those social regions where tastes are more and more refined, relations more polite, sentiments more delicate, minds more cultivated, who does not know the poignant grief Edition: current; Page: [41] that accompanies a reversal of fortune? In that case it is not the body alone that suffers. The descent breaks habits that have become, as we say, second nature; it impairs the sense of one's own worth and with it all the faculties of the soul. Therefore, it is not unusual, in such cases, to see the victim give way to despair and fall at once into a state of brutish degradation. As with the air we breathe, so with the social milieu. The mountaineer, accustomed to his pure air, soon wastes away in the narrow streets of our cities.

I hear a voice crying: Economist, already you falter. You had announced that your science was in harmony with ethics, and here you are justifying sybarite luxury.

Philosopher, I shall say in my turn, divest yourself of those garments you wear, which were never those of primitive man, break your furniture, burn your books, feed yourself on the raw meat of animals, and I shall reply to your objection. It is too easy to challenge the force of habit while readily consenting to be the living proof of what it can do.

It is possible to criticize this inclination that Nature has given the organs of our body, but criticism will not prevent it from being universal. We note its presence among all peoples, ancient and modern, savage and civilized, in the antipodes as in France. Without it, it is impossible to account for civilization. Now, when an inclination of the human heart is universal and indestructible, has social science the right not to take it into account?

Objection will be raised by the political theorists who claim the honor of being disciples of Rousseau. But Rousseau never denied the phenomenon of which I speak. He comments positively on the elasticity of our wants, on the force of habit, and even on the role that I assign to it of preventing humanity from taking any backward step. But what I admire, he deplores, and it could not be otherwise. Rousseau conjectures that there was a time when men had neither rights nor duties nor contacts with other men nor affections nor language, and that was the time when they were happy and perfect. He could not fail to abhor, therefore, the complicated social machinery that is ceaselessly moving mankind away from its earlier perfection. Those who believe, on the contrary, that perfection is to be found, not at the beginning, Edition: current; Page: [42] but at the end, of the evolutionary cycle, marvel at the driving force that impels us forward. But in regard to the existence of this driving force and the way it works, we are in agreement.

“Men,” he said, “enjoying much leisure, used it to procure for themselves various types of commodities unknown to their fathers, and this was the first yoke that they unconsciously placed about their necks and the beginning of the woes that they prepared for their descendants; for, in addition to the fact that they thus softened their bodies and their minds, these commodities having, through habit, lost nearly all their charm, and having at the same time degenerated into real wants, their loss became much more cruel than their possession had been sweet, and men were miserable at losing them without ever being happy at possessing them.”

Rousseau was convinced that God, nature, and man were wrong. I know that this opinion still sways many minds, but mine is not one of them.

After all, God forbid that I should attack man's noblest portion, his fairest virtue, dominion over himself, control over his passions, moderation in his desires, scorn of ostentatious luxury! I do not say that he should let himself become the slave of any artificial want. I do say that, generally speaking, his wants, such as both his physical and his immaterial nature makes them, combined with force of habit and his sense of his own worth, are capable of being indefinitely multiplied, because they stem from an inexhaustible source—desire. Who will censure a man merely because he is wealthy, if he is sober, restrained in his dress, not given to ostentation and soft living? But are there not loftier desires that he is permitted to gratify? Are there any limits to his longing for knowledge? Are his efforts to serve his country, to encourage the arts, to disseminate valuable information, to aid his less fortunate brethren, in any way incompatible with the proper use of wealth?

Furthermore, whether or not the philosopher approves, human Edition: current; Page: [43] wants are not a fixed and unchangeable quantity. This is a fact, certain, not to be gainsaid, universal. In no category, whether food, lodging, or education, were the wants of the fourteenth century as great as ours, and we may well predict that ours do not equal those to which our descendants will become accustomed.

This is an observation that holds good for all the elements that have a place in political economy: wealth, labor, value, services, etc., all of which share the extreme variability of their source, man. Political economy does not have, like geometry or physics, the advantage of speculating about objects that can be weighed or measured; and this is one of its initial difficulties and, subsequently, a perpetual source of error; for, when the human mind applies itself to a certain order of phenomena, it is naturally disposed to seek a criterion, a common measure to which it may refer everything, in order to give to the particular field of knowledge the character of an exact science. Thus, we note that most authors seek fixity, some in value, others in money, another in grain, still another in labor, that is to say, in measures exhibiting the very fluctuation they seek to avoid.

Many economic errors are due to the fact that human wants are considered as a fixed quantity; and for that reason I have felt obliged to enlarge on this subject. At the risk of anticipating what I shall say later I shall now describe briefly this mode of reasoning. All the chief satisfactions of the age in which one happens to live are taken into account, and it is presumed that humanity admits of no others. Then, if the bounty of Nature or the productivity of machinery or habits of temperance and moderation result for a time in rendering idle a certain part of human labor, this progress is viewed with alarm, it is considered a disaster, and the theorists take refuge behind absurd but plausible formulas, like: We are suffering from overproduction; we are dying of a surfeit; production has outstripped consumer buying power, etc.

It is impossible to find a good solution to the problem of the machine, foreign competition, and luxury, as long as wants are considered as an invariable quantity, or their capacity for indefinite multiplication is not taken into account.

But if man's wants are not fixed quantities, but progressive, Edition: current; Page: [44] capable of growth like the inexhaustible desires on which they constantly feed, we must conclude, granting that a balance between the means and the end is the first law of all harmony, that Nature has placed in man and about him unlimited and constantly increasing means of satisfaction. This is what we shall now examine.

I said, at the beginning of this work, that political economy has for its subject man, considered from the point of view of his wants and the means whereby he is able to satisfy them.

It is thus natural to have begun by studying man and his nature.

But we have also seen that he is not a solitary being. If his wants and his satisfactions—in virtue of the nature of his senses—are inseparable from his being, the same is not true of his efforts, which are part of his dynamic constitution. These are transferable. In a word, men work for one another.

Now a very strange thing happens.

When we consider man from a general and, so to speak, abstract point of view—his wants, his efforts, his satisfactions, his constitution, his inclinations, his tendencies—we arrive at a series of observations that seem clear beyond all doubt and strikingly self-evident, for each one of us finds their proof within himself. So obvious and commonplace are these truths that the writer fears the public's derision if he presents them. He feels, with some reason, that he can see the angry reader throwing away the book and crying out, “I will not waste my time learning anything so trivial.”

Nevertheless, these truths, held to be so incontestable—as long as they are presented in a general way—that we can hardly bear to be reminded of them, are no longer regarded as anything but ridiculous errors, absurd theories, as soon as we view man in his social surroundings. Who, contemplating man in his isolated state, would ever think of saying: We have overproduction; consumption cannot keep pace with production; luxury and artificial tastes are the source of wealth; mechanical inventions destroy labor; and other aphorisms of the same import, which, when Edition: current; Page: [45] applied to the mass of mankind, are nevertheless accepted as so axiomatic that they are made the foundation of our industrial and commercial laws? Exchange produces in this respect an illusion capable of beguiling even the best minds, and I affirm that political economy will have gained its objective and fulfilled its mission when it has conclusively proved this fact: What holds true for one man holds true for society. Man in a state of isolation is at once producer and consumer, inventor and entrepreneur, capitalist and worker; all the economic phenomena are performed in him, and he is, as it were, a society in miniature. In the same way, humanity, viewed in its totality, is like a single man, immense, composite, many-sided, to whom are applicable exactly the same truths observable in a single individual.

I felt the need to make this remark, which, I hope, will be better justified later, before continuing my studies on man. Had I not made it, I should have feared that the reader would reject as superfluous the deductions, the veritable truisms, that are to follow.

I have just spoken of man's wants, and, after an approximate enumeration of them, I have observed that they are not static, but progressive. This is true whether they are considered by themselves alone or included altogether in the physical, intellectual, or moral order. How could it be otherwise? There are certain wants of our bodies that must be satisfied, or we die; and, up to a certain point, we could maintain that these wants are fixed quantities, though this statement is not strictly accurate. For, however little we may desire to overlook an essential element—the force of habit—and to condescend to subject ourselves to honest self-examination, we are constrained to admit that our wants, even the most elemental, like eating, are unquestionably modified by habit. Anyone who would take exception to this remark, as smacking of materialism or epicureanism, would be most unhappy if we took him at his word and reduced him to the black broth of the Spartans or to the pittance of an anchorite. But, in any case, when these wants are satisfied once and for all, there are others that spring from the most elastic of all our faculties—desire. Can we imagine a moment in man's life when he is incapable Edition: current; Page: [46] of new desires, even reasonable desires? Let us not forget that a desire that is unreasonable at a certain point in civilization, when all human resources are absorbed in the satisfaction of lesser desires, ceases to be unreasonable when the improvement of these resources has cleared the way. Thus, a desire to go thirty miles an hour would have been unreasonable two centuries ago but is not so today. To assert that the wants and desires of man are fixed and static quantities is to misunderstand the nature of the soul, to deny the facts, to make civilization inexplicable.

It would be still more inexplicable if the unlimited formation of new wants were not accompanied by the potentially unlimited development of new means to satisfy them. As far as progress is concerned, what good would the indefinitely elastic nature of our wants do us if, at a certain definite point, our faculties could advance no further, if they encountered an immovable barrier? Therefore, unless Nature, Providence, or whatever may be the power that rules our fate, has fallen into the most cruel and shocking contradiction, we must presume, since our desires are without limit, that our means of satisfying them are likewise without limit.

I say “without limit,” and not “infinite,” for nothing that relates to man is infinite. Because our desires and our faculties go on developing endlessly, they have no assignable limits, although they do have absolute limits. We can mention countless points above and beyond humanity that humanity can never reach, yet we cannot for that reason determine an exact instant when progress toward them will come to a halt.1

I do not mean that desire and the means of satisfying it keep pace with one another. Desire runs ahead, while the means limps along behind. The nature of our desire, so quick and adventurous compared with the slowness of our faculties, reminds us that at every step of civilization, on every rung of the ladder of progress, a certain degree of suffering is and always will be man's lot. But it teaches us also that suffering has a mission, since it would be impossible to comprehend the role of desire as a goad to our faculties if it lagged behind them, instead of rushing along ahead, as it does. Yet let us not accuse Nature of cruelty Edition: current; Page: [47] for having built this mechanism, for it is to be noted that desire does not become a real want, that is, a painful desire, unless habit has turned it into a permanent satisfaction; in other words, unless the means of gratifying it has been discovered and placed permanently and irrevocably within our reach.2

We must now consider this question: What means are available to us to satisfy our wants?

It seems clear to me that there are two: Nature and labor, the gifts of God and the fruits of our efforts, or, if you will, the application of our faculties to the things that Nature has placed at our disposal.

No school of thought, as far as I know, has attributed to Nature alone the satisfaction of our wants. Such an assertion is obviously refuted by experience, and we do not have to study political economy to perceive that the intervention of our faculties is necessary.

But there are schools that have attributed this distinction to labor alone. Their axiom is: All wealth comes from labor; labor is wealth.

I cannot refrain from observing here that these formulas, taken literally, have led to gross errors of principle and, consequently, to deplorable legislative measures. I shall speak of this subject elsewhere.

I confine myself here to maintaining that, in point of fact, Nature and labor function together for the satisfaction of our wants and our desires.

Let us look at the facts.

The first want, which we have placed at the head of our list, is that of breathing. On this score we have already noted that, generally, Nature foots the whole bill, and that human labor intervenes only in certain exceptional cases as, for example, when it is necessary to purify the air.

The want of quenching our thirst is satisfied by Nature, to a greater or lesser degree, according to the availability and quality of the water provided; and the role of labor is to compensate by wells and cisterns for Nature's deficiencies.

Nature is no more uniformly liberal toward us in the matter of Edition: current; Page: [48] food; for who will say that the amount of labor we must perform is always the same whether the land is fertile or barren, the forest filled with game, the river with fish, or the contrary is the case?

As for lighting, there is certainly less for human labor to do in places where the night is short than where it has pleased the sun to run a briefer course.

I dare not state this as an absolute rule, but it seems to me that as we rise on the scale of our wants, Nature's co-operation diminishes, and more is left to our own faculties. The painter, the sculptor, even the writer, are forced to use materials and instruments that Nature alone furnishes; but we must admit that they must draw upon their own genius for the qualities that make for the charm, the merit, the usefulness, and the value of their works. Learning is a want that is satisfied almost entirely by the use of our intellectual faculties. Nevertheless, could we not say that here too Nature aids us by offering to us, in different degrees, objects for observation and comparison? For an equal amount of work can an equal amount of progress in botany, geology, or biology be made everywhere in the world?

It would be superfluous to cite other examples. We can already state as a fact that Nature gives us means of satisfaction that have greater or lesser degrees of utility. (This word is used in its etymological sense, i.e., the property of rendering a service.) In many cases, in almost every case, something remains for labor to do before this utility is complete; and we recognize that this contribution by labor will be greater or less, in each individual case, in accordance with the extent to which Nature herself has furthered the operation.

We can therefore lay down these two formulas:

  • 1. Utility is transmitted sometimes by Nature, sometimes by labor alone, almost always by the conjunction of Nature and labor.
  • 2. To bring a thing to its complete state of utility, the contribution of labor is in inverse ratio to the contribution of Nature.

From these two propositions, combined with what we have said about the indefinite elasticity of our wants, allow me to draw a conclusion whose importance will be demonstrated later. If Edition: current; Page: [49] we imagine two men without means of mutual communication placed in unequal situations, with Nature generous to one and parsimonious to the other, the first one will obviously have less work to do for each given satisfaction. Does it follow that that part of his energies thus left, so to speak, available, will necessarily be stricken with inertia, and that this man, because of Nature's liberality, will be reduced to enforced idleness? No, what happens is that he will be able, if he so desires, to employ his energies to enlarge the circle of his enjoyments; that for an equal amount of labor he will obtain two satisfactions instead of one; in a word, progress will be easier for him.

Perhaps I am deluding myself, but it does not seem to me that any science, not even geometry, presents, at its outset, truths more unassailable. If, nevertheless, someone were to prove to me that all these truths are so many errors, he would have destroyed in me not only the confidence that they inspire, but the bases of all certainty and all faith in evidence of any kind whatsoever, for what logic could be more convincing than the logic that he would thus have overturned? On the day when an axiom will be found to contradict the axiom that a straight line is the shortest distance between two points, the human mind will have no other refuge than absolute skepticism, if that can be called a refuge.

Therefore, I feel a real embarrassment in insisting on primary truths so clear that they seem childish. Nevertheless, I must say, in the midst of the complications of human transactions, these truths have been misunderstood; and, to justify myself in the eyes of the reader for delaying him so long on what the English call truisms, I shall point out the singular aberration that has misled some very excellent minds. Setting aside, neglecting entirely, the co-operation of Nature, in relation to the satisfaction of our wants, they have laid down this absolute principle: All wealth comes from labor. On this premise they have constructed the following syllogism:

  • “All wealth comes from labor.
  • “Hence, wealth is in proportion to labor.
  • ”But labor is in inverse ratio to the bounty of Nature.
  • “Hence, wealth is in inverse ratio to the bounty of Nature.”
Edition: current; Page: [50]

And, whether we like it or not, many of our economic laws have been inspired by this singular logic. These laws can be only detrimental to the creation and distribution of wealth. For this reason I am justified in setting down these apparently very trivial truths as a preliminary step toward refuting the errors and deplorable misconceptions under which present-day society is laboring.

Let us now analyze this question of the contribution of Nature.

Nature puts two things at our disposal: materials and forces.

Most material objects that contribute to the satisfaction of our wants and our desires are brought to the state of utility, which adapts them to our use through the intervention of labor, by the application of human faculties. But, in any case, the elements, the atoms, if you wish, of which these objects are composed, are gifts, and I add, gratuitous gifts, of Nature. This observation is of the greatest importance, and, I am convinced, will shed a new light on the theory of wealth.

I beg the reader to be good enough to remember that I am studying here in a general way the physical and moral constitution of man, his wants, his faculties, and his relations with Nature, with the exception of exchange, which I shall take up in the next chapter; we shall then see in what areas and in what way social transactions modify the phenomena.

It is obvious that if man in the state of isolation must, so to speak, purchase most of his satisfactions by labor, by effort, it is strictly accurate to say that before any labor, any effort, of his has come into play, the materials he finds available are the gratuitous gifts of Nature. After the first effort, however slight, they cease to be gratuitous; and if the terminology of political economy had always been exact, the name raw materials would have been reserved for material objects in this state, prior to any human activity.

I say again at this point that the gratuitousness of these gifts of Nature, before the intervention of labor, is of the highest importance. In fact, I said in the second chapter that political economy was the theory of value. I add now, anticipating, that things begin to have value only when labor gives it to them. I Edition: current; Page: [51] propose to demonstrate, later, that all that is gratis to man in the state of isolation remains gratis to man in society, and that the gratuitous gifts of Nature, however great their utility, have no value. I say that a man receiving directly and without effort a benefit from Nature cannot be considered as having rendered himself an onerous service, and that, consequently, he cannot render any service to another in regard to things that are common to all. So, when there are no services rendered or received, there is no value.

All that I say of materials applies also to the forces supplied us by Nature. Gravitation, volatile gases, the power of the wind, the laws of equilibrium, plant and animal life—these are so many forces that we learn to turn to our advantage. The pains, the mental energy, we expend to accomplish this are subject to payment, for we cannot be required to devote our efforts gratis to another's advantage. But these natural forces, considered in themselves alone, and without reference to any intellectual or physical labor, are gratuitous gifts from Providence; and, as such, remain without value through all the complications of human transactions. Such is the central idea of this work.

This observation, I admit, would have little importance if the co-operation of Nature were entirely uniform, if every man, at all times, in all places, under all circumstances, invariably received exactly the same assistance from Nature. In that case science could be excused for not taking into account an element that, remaining always and everywhere the same, would affect the exchange of services to the same extent in all areas. Just as in geometry the segments of lines common to two figures under comparison are eliminated, so in political economy we could disregard this ever-present co-operation and be content to say, as has been said until now: Natural wealth does exist; political economy notes the fact once and for all and is no longer concerned with it.

But this is not the way things happen. The irresistible tendency of the human intellect, stimulated by self-interest and aided by previous discoveries, is to substitute the gratuitous contribution of Nature for the onerous contribution of man; so that any given Edition: current; Page: [52] utility, although remaining the same in its result, in the satisfaction it gives, represents a continually decreasing amount of labor. Certainly we cannot fail to see the tremendous influence of this marvelous phenomenon on our idea of value. For what is the result? In every product the tendency is for gratuitous utility to replace onerous utility. Since utility is the result of two contributions, one requiring payment in terms of effort, the other not, value that is determined only by the former decreases for an identical amount of utility from both sources in proportion as Nature's share is made more effective. Thus, we can say that humanity enjoys greater satisfactions, or wealth, in proportion as value decreases. Now, since most authors have given a kind of synonymous meaning to the three expressions—“utility,” “wealth,” “value”—they have formulated a theory that is not only incorrect, but the exact opposite of the truth. I sincerely believe that a more exact description of this combination of natural and human forces in the work of production or, putting it another way, a more accurate definition of value, will put an end to inextricable theoretical confusions and will reconcile schools of thought now divergent; and if I anticipate here some of the findings of this inquiry, I do so to justify myself to the reader for dwelling on notions whose importance would otherwise be difficult to appreciate.

After this digression I resume my study of man considered solely from the economic point of view.

Another observation by Jean-Baptiste Say which is obvious enough, although too often neglected by other authors, is that man creates neither the materials nor the forces of Nature, if we understand the word “create” in its strict sense. These materials, these forces, exist independently of man. Man can only combine them, move them about for his own or others' advantage. If he does so for his own advantage, he renders a service to himself; if for the advantage of others, he renders a service to his fellow men, and it is his right to exact an equivalent service in return. Edition: current; Page: [53] Hence, it follows also that value is in proportion to the service rendered, and not at all in proportion to the absolute utility of the thing. For this utility can be, in large part, the result of a gratuitous act of Nature, in which case the human service, the service involving labor and remuneration, is of little value. This results from the axiom stated above: In bringing a thing to the highest degree of utility, man's share in the action is in inverse ratio to Nature's.

This observation overturns the doctrine that places value in the materiality of things. The contrary is true. Materiality is a quality that is given by Nature and is, therefore, gratuitous, possessing no value, although of incontestable utility. Human action, which can never succeed in creating matter, alone constitutes the service that man in a state of isolation renders to himself or that men in society render one another, and it is the free appraisal of these services that is the basis of value. Value cannot be thought of as residing only in matter, as Adam Smith would have put it; rather, between matter and value there is no possible connection.

From this erroneous doctrine, rigorously adhered to, came the conclusion that those classes alone are productive that work directly with matter. Smith thus prepared the way for the error of the modern socialists, who always represent as unproductive parasites those whom they call the middlemen between the producer and the consumer, such as the businessman, the merchant, etc. Do they render services? Do they spare us pains by taking pains for us? In that case, they create value, even though they do not create matter. And, indeed, since nobody creates matter, since we are all limited to rendering reciprocal services, it is altogether accurate to say that all of us, including farmers and artisans, are middlemen in our relations with one another.

For the moment, this is what I have to say about the contribution of Nature. Nature places at our disposal, in varying amounts according to climate, seasons, and our own degree of enlightenment, but always gratis, materials and forces. Therefore, these materials and these forces do not have value; it would be very strange if they did. In accordance with what criterion would we estimate it? How can we understand Nature being paid, recompensed, Edition: current; Page: [54] remunerated? We shall see later that exchange is necessary to determine value. We do not buy Nature's goods; we gather them in, and if, to gather them in, an effort of some sort has to be made, it is in this effort, not in the gift of Nature, that the value consists.

Let us pass, now, to man's action, designated in a general way under the name of labor.

The word “labor,” like nearly all those used in political economy, is very vague; the breadth of its connotations varies from author to author. Political economy has not had, like most sciences—chemistry for example—the advantage of being able to create its own vocabulary. Dealing with things with which men have been occupied since the beginning of the world, and which they have made the habitual subject of their conversation, political economists have found their terms ready-made and have been forced to use them. The sense of the word “labor” is frequently restricted to the muscular activity of men working with material things. Thus, we speak of the “working classes” when we mean those who carry out the mechanical part of production.

The reader will understand that I give this a broader sense. By labor I mean the use of our faculties for the satisfaction of our wants. Want, effort, satisfaction—this is the orbit of political economy. Effort can be physical, intellectual, or even moral, as we shall see.

It is unnecessary to demonstrate here that all our powers, all or nearly all our faculties, can and in fact do contribute to production. Concentration, sagacity, intelligence, imagination have their part to play in it.

M. Dunoyer, in his admirable book on The Freedom of Labor, has included, and with full scientific accuracy, our moral faculties among the factors to which we owe our wealth. This is a new idea and as stimulating as it is sound; it is destined to add scope and luster to the field of political economy.

I shall dwell on this idea here only in so far as it gives me the opportunity to shed a little light on the origin of a powerful Edition: current; Page: [55] agent of production about which I have not yet spoken: capital.

If we examine successively the material objects that serve to satisfy our wants, we shall recognize that all or nearly all of them require for their production more time, a greater part of our lives, than we can expend without renewing our strength, that is to say, without satisfying our wants. Hence, the men who produced such things were first required, presumably, to reserve, to set aside, to accumulate, their means of livelihood during the operation.

The same is true for satisfactions of a nonmaterial order. A priest could not devote himself to his preaching, a professor to his teaching, a magistrate to the maintenance of law and order, unless by their own devices or with the help of others they had at their disposal previously produced means of subsistence.

Let us go back and imagine a man in the state of isolation reduced to earning a living by hunting. It is easy to see that if, every evening, he ate all the game he had caught during the day, he would never be able to undertake any other type of work, such as building a hut or repairing his weapons; all progress would be out of the question for him.

This is not the place to define the nature and function of capital. My only purpose is to show how, even if we do not go beyond mere considerations of wealth, certain moral virtues such as orderliness, foresight, self-control, thrift, contribute directly to the improvement of our way of life.

Foresight is one of man's noblest privileges, and it is hardly necessary to say that, in almost all the circumstances of life, the odds are all in favor of the man who best knows the consequences of his decisions and his acts.

Restraint of one's appetites, control of one's passions, acceptance of present privation for the sake of future, though distant, gain—these are the essential conditions for the building up of capital; and capital, as we have seen, is itself the essential prerequisite for all undertakings that are at all complicated or extensive. All the evidence suggests that if two men were placed in completely identical situations, if we supposed them to possess the same degree of intelligence and initiative, the one making the Edition: current; Page: [56] greater progress would be he who, by storing up his resources, would be able to carry on long-range operations, improve his tools, and thus enlist the forces of Nature in accomplishing his ends.

I shall not dwell on this. We need only look about us to realize that all our strength, all our faculties, all our virtues, work together for the advancement of man and society.

By the same token there is not one of our vices that does not contribute directly or indirectly to poverty. Idleness paralyzes the very sinews of production. Ignorance and error give it false direction. Lack of foresight opens the way to miscalculations. Yielding to the appetites of the moment prevents the building up of capital. Vanity leads to dissipating our energies on illusory satisfactions, at the expense of real ones. Violence, fraud, provoking violence and fraud in return, force us to surround ourselves with burdensome protective measures, to the great depletion of our energies.

I shall end this preliminary study of man with an observation that I have already made concerning wants. The factors enumerated in this chapter that enter into the science of economics and constitute it are essentially variable and diverse. Wants, desires, materials and forces supplied by Nature, muscular strength, bodily organs, intellectual faculties, moral qualities—all vary according to the individual, the time, and the place. No two men are alike in any one of these respects and even less alike in all of them taken together. Furthermore, no man is exactly like himself for two hours running. What one man knows, another does not; what one man treasures, another despises; here Nature has been lavish, there miserly; a virtue that is difficult to practice at one degree of temperature becomes easy in a different climate. The science of economics, therefore, does not have the advantage, as do the so-called exact sciences, of possessing a measure, a yardstick, enabling it to determine the precise intensity of desires, efforts, and satisfactions. If we were called upon to work in solitude, like certain animals, our circumstances would differ to some degree, and even if these outside circumstances were similar, and our milieu identical, we should still differ in our desires, our wants, our ideas, our judgment, our energy, our values, our foresight, Edition: current; Page: [57] our activity; so that a great and inevitable inequality would be manifested among men. Certainly, absolute isolation, the absence of all contacts among men, is only a flight of fancy born in the imagination of Rousseau. But, supposing that this antisocial state, the so-called state of nature, ever existed, I wonder how Rousseau and his faithful followers ever managed to attribute equality to it. We shall see later that equality, like wealth, like liberty, like brotherhood, like unity, is an end, and not a point of departure. It arises from the natural and orderly development of society. Humanity does not move away from equality, but toward it. This thought is more reassuring than what Rousseau would have us believe, and far truer.

Having spoken of our wants and the means we possess to satisfy them, I have a word to say about our satisfactions. They are the result of the whole mechanism. According to the degree of physical, moral, and intellectual satisfactions enjoyed by humanity, we know whether the machine is functioning well or badly. Hence, the word consommation (taken over in French by the economists to mean consumption) would have profound meaning, if, keeping its etymological sense, it were used as a synonym of end, achievement. Unfortunately, in common usage and even in the scientific language, it suggests to the mind a coarse and material connotation, accurate undoubtedly for physical wants, but not for wants of a higher order. The raising of wheat, the spinning of wool are concluded by an act of consumption. Can the word consumption be also applied to the works of the artist, the songs of the poet, the deliberations of the jurist, the sermons of the priest? Here again we encounter the difficulties of the basic error that led Adam Smith to confine political economy to material values; and the reader will pardon me if I often use the word satisfaction to apply to all our wants and to all our desires, since I think it better corresponds to the wider scope that I feel justified in giving to political economy.

Economists have often been reproached for concerning themselves exclusively with the interests of the consumer. “You forget the producer,” people say. But satisfaction being the goal, the end of all efforts, and, as it were, the final consummation of Edition: current; Page: [58] economic phenomena, is it not evident that it is the touchstone of all progress? A man's well-being is not measured by his efforts, but by his satisfactions. This observation also holds true for men taken collectively. This again is one of those truths accepted by everybody when it is applied to the individual, but disputed endlessly when applied to society as a whole. The expression so much attacked means only this: The value of every economic activity is determined, not by the labor it entails, but by the positive effect it produces, which in turn results in increasing or decreasing the general welfare.

We have said, apropos of wants and desires, that no two men are alike. The same is true of our satisfactions. They are not equally esteemed by all; which is tantamount to the trite observation: tastes differ. But it is the intensity of our desires and the variety of our tastes that determine the direction of our efforts. Here the influence of morality on habits of work becomes clear. We can imagine an individual man as a slave to idle, childish, immoral tastes. In that case, it is obvious that his strength, which is limited, will satisfy his depraved desires only at the expense of more intelligent and reasonable desires. But when society as a whole is considered, this obvious axiom appears erroneous. We tend to believe that idle tastes, illusory satisfactions, which we recognize as a cause of poverty for the individual, are nevertheless a source of national wealth because they create an outlet for a multitude of industries. If such were the case, we should arrive at a very distressing conclusion: Man in the social state has the choice of poverty or immorality. Once again, it is political economy that can resolve these seeming contradictions in the most satisfactory and conclusive way.

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4: Exchange

Exchange is political economy. It is society itself, for it is impossible to conceive of society without exchange, or exchange without society. Therefore, I do not expect to exhaust in this one chapter so vast a subject. The whole book will hardly present more than a rough outline of it.

If men, like snails, lived in complete isolation from one another, if they did not exchange their work and their ideas, if they did not engage in transactions with one another, there could be multitudes, human units, juxtapositions of individuals, but there could not be a society.

Indeed, there would not even be individuals. For man, isolation means death. Now, if he cannot live outside society, it is strictly logical to conclude that his natural state is the social state.

All sciences arrive at this same truth, so much misunderstood in the eighteenth century, which founded its moral and political systems on the contrary assumption. Men of that time, not content with merely contrasting the state of nature with the social state, gave the former marked superiority over the latter. “Happy are men,” said Montaigne, “when they live without ties, without laws, without language, without religion!” We know that Rousseau's system, which once had, as it still has, so great an influence over men's opinions and actions, rests entirely on the hypothesis that one day men, to their undoing, agreed to abandon the innocent state of nature for the stormy state of society.

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It is not the intent of this chapter to assemble all the refutations that could be made against this fundamental error, the most virulent that ever infected the social sciences; for, if society is simply contrived and artificially agreed upon, it follows that every man may invent a new social order, and such has been, since Rousseau, the direction taken by many minds. I could easily prove, I feel sure, that isolation precludes language, just as the absence of language precludes thought. And certainly man without thought, far from being man in the state of nature, is not even man.

But an unanswerable refutation of the idea on which Rousseau's doctrine rests will come directly, without our seeking it, from a few considerations on the subject of exchange.

Want, effort, satisfaction: such is man, from the point of view of economics.

We have seen that the two extremes are essentially nontransferable, for they occur in the realm of sensation; they are themselves sensation, which is the most personal thing in the world: the want that precedes the effort and calls it forth is a sensation, as is the satisfaction that follows the effort and rewards it.

Effort, then, is the element that is exchanged; and it cannot be otherwise, since exchange implies activity, and our activity displays itself only in terms of effort. We cannot suffer or enjoy for one another, however sensitive we may be to others' pains and pleasures. But we can help one another, work for one another, render reciprocal services, put our faculties, or the product of our faculties, at the service of others, subject to payment in return. This is society. The causes, the effects, the laws of these exchanges constitute political and social economy.

We not only can aid one another in all these ways, but we do so of necessity. What I affirm is this: We are so constituted that we are obliged to work for one another under penalty of immediate death. If this is true, society is our natural state, since it is the only state in which we can live at all.

There is one observation that I have to make concerning the equilibrium between our wants and our productive capacities, Edition: current; Page: [61] an observation that has always filled me with admiration for the providential plan that rules our destiny.

In the state of isolation, our wants exceed our productive capacities.

In society, our productive capacities exceed our wants.

Hence, man in the state of isolation cannot survive; whereas, with man in society, the most elemental wants give way to desires of a higher order, and this process, tending always toward a more perfect condition, goes on without interruption or assignable limits.

This is not mere oratory, but a statement that can be fully proved by reason and analogy, if not by experience. And why not by experience, by direct observation? Simply because the statement is true; simply because, since man cannot live in a state of isolation, it is impossible to demonstrate the effects of absolute solitude on living human nature. Our senses cannot grasp something that does not exist. You can prove to my mind that a triangle never has four sides; you cannot, in support of your argument, place before my eyes a tetragonal triangle. If you did, you would destroy your assertion by your own evidence. Similarly, to ask me for a proof based on experiment, to demand that I study the effects of isolation on living human nature, would be to force upon me a logical contradiction, since, isolation and life being mutually incompatible for man, no one has ever seen, no one will ever see, men without human contacts.

There may be animals, for all I know, destined by their bodily structure to live out their span of life in absolute isolation; if so, it is very clear that Nature must have established an exact balance between their wants and their productive capacities. We could also conceive of their productive capacities as superior to their wants, in which case they would be perfectible and capable of progress. Exact balance makes them static creatures, but a preponderance of wants cannot be conceived of: from their birth on, from their first appearance on the scene of life, their productive capacities would have to be fully adequate to satisfy the wants for which they would have to provide, or, at least, the two would Edition: current; Page: [62] have to develop side by side at the same rate. Otherwise the species would die at birth and would not be available for observation.

Of all the species of living creatures about us, not one, certainly, is subject to as many wants as man. In not one is the period of immaturity so long and so helpless, maturity so loaded with responsibility, old age so feeble and ailing. And, as if his wants were not enough for him, man also has tastes whose satisfaction taxes his faculties quite as much as his wants. Hardly has he learned to satisfy his hunger when he seeks to tickle his palate; to cover his nakedness, when he seeks adornment; to shelter himself from the elements, when he dreams of beautifying his dwelling. His mind is as restless as his body is demanding. He seeks to penetrate the mysteries of Nature, to tame the animals, to harness the elements, to delve into the bowels of the earth, to cross the boundless oceans, to soar above the winds, to annihilate time and space; he seeks to know the inner workings, the springs, the laws, of his own will and heart, to rule over his passions, to achieve immortality, to merge his being in his Creator, to place everything under his dominion—Nature, his fellows, himself; in a word, his desires reach out endlessly toward the infinite.

Hence, in no other species are faculties to be found capable of such great development as in man. He alone appears able to compare and to judge; he alone reasons and speaks; he alone looks ahead; he alone sacrifices the present for the future; he alone transmits from one generation to another his works, his thoughts, the treasures of his experience; he alone, in a word, is capable of forging the countless links of a chain of progress seemingly stretching beyond the limits of this earth.

Let us make a purely economic observation here. However extensive our productive capacities may be, they cannot go so far as to enable us to create. It is not given to man, in fact, to add to or subtract from the existing number of molecules. His role is confined to modifying or combining for his use the substances he finds everywhere about him. (J. B. Say.)

To modify substances in such a way as to increase their utility Edition: current; Page: [63] for us is to produce, or rather it is one way of producing. I conclude that value, as we shall see later, can never reside in these substances themselves, but in the effort which is exerted in order to modify them and to which exchange gives a relative appraisal based on other comparable efforts. For this reason, value is merely the appraisal of the services exchanged, whether a material commodity is or is not involved in the transaction. As regards the notion of value, it is a matter of complete indifference whether I render my fellow man a direct service—for example, by performing a surgical operation—or an indirect service by making him some medicinal preparation; in the latter case the utility is in the substance, but the value is in the service, in the intellectual and material effort made by one man for the benefit of another. It is pure metonymy to attribute value to the material commodity itself, and in this case, as in so many others, the metaphor leads science astray.

I return to the subject of the way man is constituted. If we stopped at the notions we have already presented, man would be different from other animals only in the greater range of his wants and the superiority of his capacities. All are subject to the former and endowed with the latter. Birds undertake long migrations in search of the proper temperature; beavers cross streams on dams that they have built; hawks attack their prey in full view; cats stalk theirs patiently; spiders set up snares; all work in order to live and increase.

But, while Nature has set up an exact balance between the wants of animals and their productive capacities, she has treated man more grandly and munificently. If, in order to force him to be sociable, she has decreed that in the state of isolation his wants should exceed his productive capacities, whereas in society his productive capacities, superior to his wants, should open up boundless vistas for his nobler enjoyments; we must also recognize that, even as man in his relation to his Creator is raised above the beasts by his religious feeling, in his dealings with his fellow men by his sense of justice, in his dealings with himself by his morality, so, in finding his means of survival and increase, he is Edition: current; Page: [64] distinguished from them by a remarkable phenomenon, namely, exchange.

Shall I try to portray the state of poverty, barrenness, and ignorance in which, without the faculty of exchange, the human species would have wallowed eternally, if indeed, it would not have disappeared altogether from the face of the earth?

One of the most popular of philosophers, in a novel that has had the good fortune to charm generation after generation of children, shows us how a man can rise above the hardships of absolute solitude by his energy, his initiative, and his intelligence. Desiring to show all the resources possessed by this noble creature, our author imagines him accidentally cut off, so to speak, from civilization. It was, therefore, Daniel Defoe's original plan to cast Robinson Crusoe ashore on the Isle of Despair alone, naked, deprived of all that can be added to one man's strength by united effort, specialized skills, exchange, and society.

Nevertheless, and despite the fact that the obstacles are purely fictitious, Defoe would have deprived his novel of every trace of verisimilitude if, overfaithful to the thought he wished to develop, he had not made necessary social concessions by allowing his hero to save from the shipwreck a few indispensable objects, such as provisions, gunpowder, a rifle, an ax, a knife, rope, boards, iron, etc.—decisive evidence that society is man's necessary milieu, since even a novelist cannot make him live outside it.

And note that Robinson Crusoe took with him into solitude another social treasure worth a thousand times more, one that the waves could not swallow up: I mean his ideas, his memories, his experience, and especially his language, without which he could not have communicated with himself or formed his thoughts.

We have the distressing and unreasonable habit of attributing to society the suffering that we see about us. Up to a point we are right, if we mean to compare society with itself, taken at two different stages of its progress; but we are wrong, if we compare the social state, even in its imperfection, with the state of isolation. To be able to assert that even the most unfortunate of men are worse off in society than out of it, we should have to Edition: current; Page: [65] begin by proving that the poorest of our fellow men has to bear, in the social state, a heavier burden of privations and suffering than would have been his lot in solitude. Now, consider the life of the humblest day laborer. Consider, in all their detail, the articles of his daily consumption. He wears a few coarse pieces of clothing; he eats a little black bread; at night he has a roof over his head and at the very worst some bare planks to sleep on. Now, ask yourself whether this man in isolation, without the resources of exchange, would have the remotest possibility of obtaining this coarse clothing, this black bread, this crude cot, this humble shelter. The most impassioned advocate of the state of nature, Rousseau himself, admitted that this was completely impossible. Men did without everything, he said; they went naked, they slept in the open air. Thus, Rousseau himself, in order to present the state of nature favorably, was obliged to make happiness consist in privation. But I affirm that even this negative happiness is a delusion, and that man in the state of isolation would surely die in a very few hours. Perhaps Rousseau would have gone so far as to say that that would be the true perfection. He would have been consistent, for if happiness lies in privation, then perfection lies in annihilation.

I trust that the reader will not conclude from the preceding remarks that we are insensible to the social suffering of our fellow men. Although the suffering is less in the present imperfect state of our society than in the state of isolation, it does not follow that we do not seek wholeheartedly for further progress to make it less and less; but if the state of isolation is worse than the worst in the social state, then I was right in saying that isolation makes our wants, to mention only the most elemental of them, far exceed our productive capacities.

How does exchange reverse this order to our advantage and make our productive capacities exceed our wants?

First of all, this is proved by the very fact of civilization. If our wants exceeded our productive capacities, we should be irremediably retrogressive creatures; if the two were in complete balance, we should be irremediably static. However, we advance; hence, Edition: current; Page: [66] every period in the life of society, compared to a previous period, frees for other purposes, in relation to a given number of satisfactions, a certain part of our productive capacities.

Let us try to explain this marvelous phenomenon.

The explanation we owe to Condillac seems to me entirely insufficient and empirical, or rather it fails to explain anything at all. “The very fact that an exchange takes place,” he says, “is proof that there must necessarily be profit in it for both the contracting parties; otherwise it would not be made. Hence, every exchange represents two gains for humanity.”

Even granting that the proposition is true, we see in it only a statement of fact, not an explanation. It was thus that the hypochondriac explained the narcotic power of opium:

  • Quia est in eo
  • Virtus dormitiva
  • Quae facit dormire.

The exchange represents two gains, you say. The question is: Why and how? It results from the very fact that it takes place. But why does it take place? What motives have induced the two men to make it take place? Does the exchange have in it a mysterious virtue, inherently beneficial and incapable of explanation?

Others attribute the benefit to the fact that we give from what we have in excess to receive what we lack. Exchange, they say, is the barter of the surplus for the necessary. Aside from the fact that this is contrary to what we see happening before our own eyes—who would dare say that the peasant, who parts with the grain he has grown and will never eat, is giving from his surplus?—I see from it how two men happen to strike a bargain, but I do not see any explanation of progress.

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Observation will give us a more satisfactory explanation of the power of exchange.

Exchange produces two phenomena: the joining of men's forces and the diversification of their occupations, or the division of labor.

It is very clear that in many cases the combined force of several men is superior to the sum of their individual separate forces. In moving a heavy object, for example, a thousand men taking successive turns would fail where four men by uniting their efforts could succeed. Try to imagine the things that would never have been done in the world without this kind of joint action.

And yet the co-operative use of muscle power for a common goal is a mere nothing. Nature has given us highly varied physical, moral, and intellectual faculties. There are inexhaustible combinations in the co-operative union of these faculties. Do we need to carry out a useful project, like building a road or defending our country? One places his strength at the disposal of the community; another, his agility; another, his daring; still another, his experience, his foresight, his imagination, even his renown. It is easy to understand that the same men, working separately, could never have accomplished, or even contemplated, such an undertaking.

Now, the joining of men's forces implies exchange. To gain their co-operation, they must have good reason to anticipate sharing in the satisfaction to be obtained. Each one by his efforts benefits the others and in turn benefits by their efforts according to the terms of the bargain, which is exchange.

We see how exchange, in this form, adds to our satisfactions. By the mere fact of their union, efforts equal in intensity produce superior results. Here there is no trace of the so-called barter of the superfluous for the necessary, nor of the double and empirical profit alleged by Condillac.

We may make the same observation concerning the division of labor. Indeed, if we look closely at the matter, we see that the diversification of occupations is only another, more permanent, way of joining forces, of co-operating, of forming an association; and it is altogether accurate to say, as will be shown later, that the Edition: current; Page: [68] present social organization, provided the principle of free exchange is recognized, is the most beautiful, most stupendous of associations—a marvelous association, but very different from the associations dreamed up by the socialists, since in it, by an admirable arrangement, the principle of individual liberty is recognized. All men, at all times, may join or leave it at their pleasure. They contribute what they will; they receive in return a constantly increasing degree of satisfaction, which is determined, according to the laws of justice, by the nature of things, not by the arbitrary will of a chief. But I should not anticipate what I shall say later. All that I have to do at the moment is to explain how the division of labor adds to our strength.

Without dwelling on this subject, one of the few that has not provoked controversy, I do have something to say that is not without value. Perhaps, indeed, its importance has been minimized. To demonstrate the power of the division of labor, writers have been content to point out the marvelous things it accomplishes in certain industries, pin manufacture, for example. The question can be given broader and more philosophical significance. Moreover, habit has the peculiar power of making us shut our eyes and lose sight of the things around us. There is no truer word than that of Rousseau: “It takes a great deal of scientific insight to observe what we see every day.” It is not superfluous, then, to call to men's attention what they owe to exchange without being aware of it.

How has the power of exchange raised humanity to its present heights? By its influence on labor, on the harnessing of the forces of Nature, on the capacities of man, and on capital.

Adam Smith has well shown this influence on labor.

“The increase in the quantity of labor that can be performed by the same number of men as a result of the division of labor is due to three factors,” said the celebrated economist: “(1) the level of skill acquired by each worker; (2) the saving of time normally lost by moving from one occupation to another; (3) the increased opportunity each man has of discovering easy and efficient ways Edition: current; Page: [69] of attaining an object when his attention is centered on it, rather than diverted to many other things.”

Those who, like Adam Smith, see in labor the sole source of wealth, confine themselves to the question of how division improves its efficiency. But we have seen in the preceding chapter that labor is not the only agent for procuring our satisfactions. Natural forces also contribute. This is not open to question.

Thus, in agriculture, the action of the sun and the rain, the moisture in the soil, the gases in the atmosphere, are certainly resources that co-operate with human labor in the growing of vegetables.

Industry owes similar services to the chemical qualities of certain substances: to the power generated by waterfalls, to the pressure of steam, to gravitation, to electricity.

Commerce has learned to turn to man's profit the strength and instincts of certain animals, the power of the wind for sailing boats, the laws of magnetism, which, acting on the compass, guide ships over great oceans.

There are two great incontrovertible truths. The first is: The better man exploits the forces of Nature, the better he provides himself with all that he needs.

It is self-evident that we get more wheat, for the same amount of effort, from good, rich soil than from dry sand or barren rocks.

The second truth is: The resources of Nature are unequally distributed over the earth.

Who would dare maintain that all lands are equally favorable Edition: current; Page: [70] for growing the same crops, all countries for producing the same goods?

Now, if it is true that natural resources vary from one part of the globe to another, and if, on the other hand, the more men use them, the richer they are, it follows that the power of exchange increases immeasurably the usefulness of these resources.

Here once again we encounter gratuitous utility and onerous utility, the first replacing the second by virtue of exchange. Is it not clear, in fact, that if, deprived of the power of exchange, men were reduced to producing ice at the equator and sugar at the poles, they would have to do with great effort what heat and cold today do for them gratis, and that, as far as they were concerned, a great percentage of natural resources would remain idle? Thanks to exchange, these resources are put to use wherever they are found. Wheat land is sown with wheat; land suitable for the production of grapes is planted with vineyards; there are fishermen on the sea coasts, and woodcutters in the mountains. Here water, there wind, is directed against a wheel, replacing ten men. Nature becomes a slave whom we neither have to clothe nor feed, whose services require no payment, who costs neither our purse nor our conscience anything.1 The same sum of human efforts, that is to say, the same service—the same value—produces a constantly increasing sum of utility. For every project completed, only a part of human activity is expended; the rest, through the instrumentality of Nature, is made available and is turned to new problems, satisfies new desires, creates new utilities.

The effects of exchange on our intellectual faculties are such that even the most ingenious imagination would be unable to gauge their extent.

“Our knowledge,” says M. de Tracy “is our most precious possession, since it is knowledge, in proportion to its soundness and breadth, which guides our efforts and makes them productive. Now, no man is in a position to see everything, and it is much easier to learn than to invent. But when several men are in communication, Edition: current; Page: [71] what one observes is soon known by all, and only one of them needs to be especially ingenious for all of them soon to be in possession of valuable discoveries. The sum total of knowledge, therefore, grows much more rapidly than in the state of isolation, not to mention that it can be preserved and, therefore, passed on from generation to generation.”

If Nature has distributed unequally the resources she places at man's disposal, she has been no more uniform in her distribution of human endowments. We are not all blessed with the same degree of strength, courage, intelligence, patience, or artistic, literary, and industrial talents. If it were not for exchange, this diversity, far from being turned to our well-being, would contribute to our wretchedness, each one being more aware of the talents he lacked than of the advantages of the talents he had. Thanks to exchange, the strong man can, up to a point, do without genius; the intelligent man, without brawn; for, by the admirable pooling of gifts that exchange establishes among men, each one shares in the distinctive talents of his fellows.

To satisfy our wants and our tastes, it is not enough to work, to use our faculties on or through the resources of Nature. We also need tools, instruments, machines, provisions—in a word, capital. Let us imagine a tiny community of ten families, each one of which, working solely for itself, is obliged to engage in ten different occupations. Each head of a family would need the equipment for ten different industrial units. There would be, then, in the community ten plows, ten teams of oxen, ten forges, ten carpenter's shops, ten looms, etc.; with exchange a single plow, a single team of oxen, a single forge, a single loom would suffice. The capital savings due to exchange surpass one's imagination.

The reader can now well perceive the true power of exchange. It does not imply, as Condillac says, two gains, because each of the contracting parties sets more store by what he receives than by what he gives. No more is it a matter of each giving from his surplus to acquire what is necessary. It is simply that, when one man says to another, “You do only this, and I will do only that, and we'll share,” there is better employment of labor, talents, Edition: current; Page: [72] natural resources, capital, and, consequently, there is more to share. So much the better if three, ten, a hundred, a thousand, a million men join the association.

The two propositions that I have advanced are therefore strictly correct, namely:

In the state of isolation, our wants exceed our productive capacities.

In society, our productive capacities exceed our wants.

The first is true because the entire area of France could not for long keep alive a single man in the state of absolute isolation.

The second is true because, in fact, the population of this same area is growing in numbers and prosperity.

Progress in Exchange

The primitive form of exchange is barter. Two persons, each of whom feels a want and possesses the object that can satisfy the other's want, either exchange objects or agree to work separately at different things and share, to the extent stipulated, in the finished product. This is barter, which is, as the socialists would say, exchange, business, commerce in embryo. We note here two wants as the motivating force, two efforts as the means, two satisfactions as the result, or as the termination of the entire process, and nothing in it differs essentially from the same process as carried out in the state of isolation, except that only the wants and satisfactions have remained nontransferable, as is their nature, while the efforts have been exchanged; in other words, two persons have worked for each other and have rendered reciprocal services.

It is at this point, therefore, that political economy really begins, for it is here that we can first observe the appearance of value. Barter occurs only after an agreement, a discussion. Each of the contracting parties makes his decision after considering his self-interest. Each one calculates in this fashion: “I shall barter if the trade brings me the satisfaction of my want with less effort on my part.” It is certainly a striking phenomenon that exchange makes it possible to give men's wants the same satisfaction at the Edition: current; Page: [73] cost of less effort, and it is explained by the considerations I presented in the first paragraph of this chapter. When two products or two services are bartered, we may say that they are of equal value. Later we shall have occasion to go more deeply into the question of value. For the moment this vague definition will suffice.

We can conceive of roundabout barter, involving three contracting parties. Paul renders a service to Peter, who renders an equivalent service to James, who in turn renders an equivalent service to Paul, thereby completing the cycle. I need not say that this rotation does not take place unless it satisfies all parties, and it changes in no wise either the nature or the result of a simple barter.

The fundamental character of barter would not in any way be affected if the number of contracting parties should be further increased. In my parish the winegrower uses his wine to pay for the services of the blacksmith, the barber, the tailor, the beadle, the vicar, the grocer. The blacksmith, the barber, the tailor, in turn, deliver to the grocer the wine they receive from the wine-grower as payment for the commodities they consume during the year.

This roundabout barter, I cannot repeat too often, does not in any way alter the original concepts set forth in the preceding chapter. When the process is completed, each participant has presented this triple phenomenon: want, effort, satisfaction. Only one thing has been added: the exchange of efforts, which means the transfer of services and the division of labor. The results are advantageous to all parties; for otherwise the bargain would not have been agreed to, and each would have preferred his own isolated, individual effort, which is always a possible alternative.

It is easy to understand that roundabout barter in kind cannot be greatly expanded, and there is no need to dwell on the obstacles that prevent its further development. If a man wished to barter his house for the thousand and one items he would use in the course of the year, how would he go about it? In any case, barter cannot go beyond a small circle of persons acquainted with one another. Humanity would soon have reached the limits of the Edition: current; Page: [74] division of labor, the limits of progress, if a means of facilitating exchange had not been found.

That is why, since the beginnings of society, men have employed in their transactions some intermediate article, such as grain, wine, animals, and, almost always, metals. These articles perform their function as a medium of exchange, some more, some less satisfactorily; but all are acceptable, provided they represent effort in terms of value, which is the thing to be transmitted.

When this type of intermediate commodity is resorted to, two economic phenomena appear, which are called sale and purchase. It is clear that the idea of sale and purchase is not included in simple barter or even in roundabout barter. When one man gives another something to drink in return for something to eat, we have a simple act that cannot be further broken down into component parts. Now, at the outset of our study of political economy, we must notice that the exchange that is transacted through an intermediate commodity loses nothing of the nature, essence, or character of barter; it is simply a form of indirect barter. As Jean-Baptiste Say very wisely and profoundly observed, it is barter with two factors added, one called sale, the other purchase, which together are indispensable to complete a barter transaction.

In fact, the appearance in the world of a convenient medium of barter does not change the nature of men or of things. There remain for every man the want that prompts the effort, and the satisfaction that rewards it. Exchange is not complete until the man who has made an effort for another man receives in return an equivalent service, that is, a satisfaction. For this purpose, he sells his service for the intermediate commodity; then with it he buys equivalent services, and thus the two factors reconstitute for him a simple barter transaction.

Take the case of a doctor, for example. For some years he has devoted his time and his faculties to the study of diseases and their cure. He has called on his patients, he has given them medical care—in a word, he has rendered services. Instead of receiving from his patients, in payment, direct services, which would have constituted simple barter, he has received an intermediate commodity, pieces of metal, with which he has procured the satisfactions Edition: current; Page: [75] that were his objective. His patients have not supplied him with bread, wine, or furniture, but they have supplied him with value to that amount. They have been able to give him pieces of money because they themselves had rendered services. There is, therefore, a balance of services for them as well as for the doctor; and, if it were possible to trace this circulation of money in our imaginations to its very end, we should see that exchange through the medium of money breaks down into a multitude of simple acts of barter.

Under the system of simple barter, value is the appraisal of the worth of the two services exchanged, arrived at through direct comparison. Under the system of indirect exchange, the two services are also appraised, but in comparison with the middle factor, the intermediate commodity, which is called money. We shall see elsewhere what difficulties, what errors, have arisen from this complication. It is enough to observe here that the presence of this intermediate commodity does not in any way alter the fundamental notion of value.

Once it is admitted that exchange is both the cause and the effect of the division of labor, once it is admitted that the division of labor multiplies satisfactions in relation to effort, for the reasons presented at the beginning of this chapter, the reader will readily understand the services money has rendered humanity by the mere fact that it facilitates the act of making an exchange. Thanks to money, exchange has truly been able to expand indefinitely. Each one turns his services over to society, without knowing who will receive the satisfactions they are intended to give. Likewise each one receives from society, not immediate services, but pieces of money, with which he will buy particular services where, when, and how he wills. In this way the ultimate transactions are carried on across time and space between persons unknown to one another, and no one knows, at least in most instances, by whose effort his wants will be satisfied, or to whose wants his own efforts will bring satisfaction. Exchange, through the intermediary of money, breaks down into countless acts of barter between parties unacquainted with each other.

Yet exchange is so great a benefit to society (indeed, is it not Edition: current; Page: [76] society itself?) that society, to encourage and expand it, has done more than introduce money. In logical order, after want and satisfaction brought together in the same individual by isolated effort, after direct barter, after indirect barter, in which the exchange consists of purchase and sale, come other transactions, extended over time and space by credit: mortgages, bills of exchange, bank notes, etc. Thanks to this marvelous device, which is the result of civilization, which perfects civilization, and which at the same time is perfected along with civilization, an effort exerted in Paris today will cross the oceans and the centuries to satisfy a person unknown; and the one making the effort nevertheless receives his remuneration now, through persons who advance it and are willing to go to distant lands to ask for their compensation, or to await it from the far-off future—an amazingly intricate piece of machinery, which, when submitted to exact analysis, shows us, after all, the soundness of the economic process, want, effort, satisfaction, functioning for each individual in keeping with the laws of justice.

Limits of Exchange

The general nature of exchange is to lessen the amount of effort in relation to the satisfaction. Between our wants and our satisfactions there are interposed obstacles that we succeed in lessening by joining our forces or dividing our labor, that is, by exchange. But exchange too encounters obstacles and demands effort. Proof of this is to be found in the great mass of human labor that exchange brings into play. Precious metals, roads, canals, railways, coaches, ships—all these things absorb a considerable part of human activity. And just think of how many men are employed solely in expediting acts of exchange, how many bankers, businessmen, shopkeepers, brokers, coachmen, sailors! This vast and costly assemblage of men and things proves better than any argument the tremendous power in the faculty of exchange; otherwise, why would humanity have consented to burden itself with it?

Since it is in the nature of exchange both to save effort and to Edition: current; Page: [77] demand effort, it is easy to understand what its natural limitations are. By virtue of that force within man that always impels him to choose the lesser of two evils, exchange will expand indefinitely as long as the effort it requires is less than the effort it saves. And it will halt, naturally, when, in the aggregate, the sum total of satisfactions obtained by the division of labor reaches the point where it is less, by reason of the difficulties of exchange, than the satisfactions that could be procured by direct, individual action.

Consider a small community, for example. If it desires a certain satisfaction, it will have to make the necessary effort. It can say to another such community: “Make this effort for us, and we shall make another one for you.” The arrangement can satisfy everybody, if, for example, the second community is able, through its situation, to bring to bear on the task a larger proportion of gratuitous natural resources than the first. In that case it will accomplish what it wants with an effort equal to, say, eight, while the first community could not do so for an effort of less than twelve. Since only eight is required, there is a saving of four for the first community. But then come the cost of transportation, the remuneration of middlemen—in short, the effort required by the machinery of the exchange. Evidently the figure of eight will have to be added to. The exchange will continue in effect as long as it itself does not cost four. Once that figure is reached, the exchange comes to a halt. It is not necessary to legislate on this matter. For either the law intervenes before this level has been reached, and then the law is harmful, since it thwarts the economizing of effort; or it comes afterwards, and then it is superfluous, like a law forbidding the lighting of lamps at noonday.

When exchange thus comes to a halt because it ceases to be advantageous, the least improvement in the commercial machinery gives it a new impetus. A certain number of transactions are carried on between Orléans and Angoulême. These two towns exchange whenever this procedure brings more satisfactions than direct production could. They stop exchanging when production by exchange, aggravated by the costs of the exchange itself, reaches or exceeds the level of effort required by direct production. Under Edition: current; Page: [78] these circumstances, if the machinery of exchange is improved, if the middlemen lower their costs, if a mountain is tunneled, if a bridge is thrown over a river, if a road is paved, if obstacles are reduced, exchange will increase, because the inhabitants wish to avail themselves of all the advantages we have noted in exchange, because they desire to obtain gratuitous utility. The improvement of the commercial machinery, therefore, is equivalent to moving the two towns closer together. Hence, it follows that bringing men closer together is equivalent to improving the machinery of exchange. And this is very important, for it is the solution of the problem of population; here in this great problem is the element that Malthus has neglected. Where Malthus saw discord, this element will enable us to see harmony.

By means of exchange, men attain the same satisfaction with less effort, because the mutual services they render one another yield them a larger proportion of gratuitous utility.

Therefore, the fewer obstacles an exchange encounters, the less effort it requires, the more readily men exchange.

And the closer men are together, the fewer the obstacles, the smaller the effort. A greater density of population is, therefore, necessarily accompanied by a greater proportion of gratuitous utility. It transmits greater power to the machinery of exchange; it makes available a greater part of human effort; it is a source of progress.

And now let us, if you please, leave off generalities and look at the facts.

Does not a street of equal length render more service in Paris than in a small town? Does not a railroad a kilometer long in the Department of the Seine render more service than one in the Department of Landes? Cannot a merchant in London be satisfied with a smaller profit per sale because of his volume? In everything we shall see that two mechanisms of exchange, though Edition: current; Page: [79] identical, render very different services according to their location, depending on whether they function in areas with a dense or a sparse population.

Density of population enables us not only to get a better return from the apparatus of exchange but also to enlarge and perfect this apparatus itself. Certain improvements that are desirable in a densely populated area, because they will save more effort than they will cost, are not feasible in a sparsely populated area, because they would require more effort than they would save.

When one leaves Paris for a short stay in a little town in the provinces, one is astonished at the number of occasions when certain little services can be secured only at excessive cost of time and money and with great difficulty.

It is not only the physical side of the commercial mechanism that is put to use and improved by the mere fact of the density of the population, but the moral and cultural side as well. Men living in close proximity are better able to divide their labor, join forces, work together to found schools and museums, build churches, provide for their security, establish banks and insurance companies—in a word, to enjoy mutual advantages with the expenditure of much less effort per person.

These considerations will again become apparent when we reach the question of population. Let us confine ourselves here to this observation: Exchange is a means given to men to enable them to make better use of their productive capacities, to economize their capital, to exploit more effectively the gratuitous resources of Nature, to increase the ratio of gratuitous utility to onerous utility, to decrease, therefore, the ratio of effort to result, to free more and more of their energy from the business of providing for their more urgent and elemental wants, in order to use it instead for enjoyments of a higher and higher order.

If exchange saves effort, it also requires effort. It expands, increases, multiplies to the point where the effort it requires equals the effort it saves, and then it comes to a halt until, through improvement in the commercial machinery, through the mere fact of increased population, of more men living closer together, it encounters the conditions necessary to resume its forward march. Edition: current; Page: [80] Consequently, laws that limit exchange are always either harmful or unnecessary.

Governments, which are always disposed to believe that nothing can be done without them, refuse to understand this law of harmony.

Exchange develops naturally to the point where further development would be more onerous than useful, and stops of its own accord at this limit.

Consequently, we see governments everywhere greatly preoccupied either with giving exchange special favors or with restricting it. To carry it beyond its natural limits, they seek after new outlets and colonies. To hold it within these limits, they think up all kinds of restrictions and checks.

This intervention of force in human transactions is always accompanied by countless evils.

The very increase in its size is already a primary evil; for it is very evident that a state cannot make conquests, place distant countries under its domination, divert the natural flow of commerce by means of tariffs, without multiplying greatly the number of its agents.

The diverting of the agencies of law and order from their natural function is an even greater evil than adding unduly to their size. Their rational function was to protect all liberty and all property, and instead we see them bent on doing violence to the liberty and the property of the citizens. Thus, governments seem to be dedicated to the task of removing from men's minds all notions of equity and principle. As soon as it is admitted that oppression and plunder are legitimate provided they are legal, provided they are practiced on the people only through the authority of the law and its powers of enforcement, we see each class little by little demanding that all other classes be sacrificed to it.

Whether this intervention of force in the process of exchange creates exchanges that otherwise would not be made or prevents others from being made, it cannot fail to result in the waste and misuse of labor and capital, and consequently in the disturbance of the natural distribution of population. Natural interests disappear Edition: current; Page: [81] at one point, artificial interests are created at another, and men are compelled to follow the course of these interests. Thus, great industries are established where they have no right to be. France makes sugar; England spins cotton brought from the plains of India. It took centuries of war, torrents of spilled blood, the frittering away of immense treasure, to arrive at this result: substituting in Europe precarious industries for vigorous ones, and thus opening the door to panics, unemployment, instability, and, in the last analysis, pauperism.

But I see that I am anticipating. We must first know the laws of the free and natural development of human society. We may then study the disturbances.

The Moral Force of Exchange

We must repeat, at the risk of distressing modern sentimentalists: Political economy is restricted to the area that we call business, and business is under the influence of self-interest. Let the puritans of socialism cry out as much as they will: “This is horrible; we shall change all this”; their rantings on this subject constitute their own conclusive refutation. Try to buy a printed copy of their publications on the Quai Voltaire, using brotherly love as payment!

It would be falling into another kind of empty oratory to attribute morality to acts determined and governed by self-interest. But surely Nature, in her ingenuity, has been able so to arrange the social order that these same acts, though they have no moral motivation, nevertheless achieve moral results. Is this not true of labor? So I say that exchange, whether in the form of direct barter or grown into a vast industry, develops in society tendencies more noble than its motives.

God forbid that I should try to attribute to but a single aspect of human energy all the grandeur, glory, and charm of our existence. As there are two forces in the physical universe, centripetal force and centrifugal force, so there are two principles in the Edition: current; Page: [82] social world: self-interest and altruism. Who is unfortunate enough not to know the benefits and the joys that come from altruistic impulses, manifested by love, filial devotion, parental affection, charity, patriotism, religion, enthusiasm for the good and the beautiful? There are those who say that altruism is only a glorified form of self-love, and that, in reality, loving others is only an intelligent way of loving oneself. This is not the place to delve into the profundities of this question. Whether our two motivating forces be distinct or merged, it is enough to know that, far from clashing, as is so often said, they combine and work together for the same common end: the general welfare.

I have established these two propositions:

In the state of isolation, our wants exceed our productive capacities.

By virtue of exchange, our productive capacities exceed our wants.

They explain the reason for the existence of society. Here are two others that assure unlimited progress:

In the state of isolation, one man's prosperity is inimical to that of all others.

Is there need to prove that, if Nature had destined men for a solitary existence, the prosperity of one would be an obstacle to the prosperity of another? The more numerous they were, the less chance they would have of attaining well-being. In any case, we can well see how their numbers could be harmful to them; we cannot see how they could be beneficial. And then, I ask, under what form would altruism manifest itself? What would bring it into being? How could we even conceive of it?

But men exchange. Implicit in exchange, as we have seen, is the division of labor. It gives rise to the professions and trades. Each one applies himself to conquering one set of obstacles for the benefit of the community. Each one devotes himself to rendering one kind of service. Now, a complete analysis of value demonstrates that the worth of every service is dependent first on its intrinsic utility, and then on the fact that it is offered for sale in a Edition: current; Page: [83] richer locality, that is, in a community more inclined to demand it, more able to pay for it. Actual experience—which shows us the artisan, the doctor, the lawyer, the businessman, the coach-maker, the teacher, the scholar, receiving a better return for their services in Paris, London, or New York, than in the moors of Gascony, the mountains of Wales, or the prairies of the Far West—confirms us in this truth:

The more prosperous the place in which he is situated, the better the chances a man has to prosper.

Of all the harmonies about which I have written, this one is certainly the most important, the finest, the most decisive, the most productive. It implies and sums up all the others. For this reason I can give it here only a very incomplete demonstration. I should consider it fortunate, indeed, if it emanates from the spirit of this book and more fortunate still if it appears sufficiently probable to induce the reader to proceed on his own from probability to certainty!

For, beyond all shadow of doubt, this is the reason why we must decide between the natural social order and all artificial social orders; here, and here alone, is the solution to the social problem. If the prosperity of all is requisite for the prosperity of one, we may place our trust not only in the economic power of free exchange, but also in its moral force. Once men know what their true interests are, then all the restrictions, all the industrial jealousies, the commercial wars, the monopolies, will fall before the protest of public opinion; then they will ask, before demanding the passage of any legislation, not: “What good will it do me?” but: “What good will it do the community?” I admit that we sometimes ask ourselves this second question at the prompting of our altruism; but as the light of understanding comes to prevail, we shall ask it also out of self-interest. Then, indeed, it will be possible to say that the two motive forces of our nature work together for the same result—the general good; and it will be impossible to deny that in self-interest, and likewise in the transactions that stem from it, at least as far as their results are concerned, there resides a source of moral power.

Whether we consider the relations of man to man, family to Edition: current; Page: [84] family, province to province, nation to nation, hemisphere to hemisphere, capitalist to worker, or property owner to proletarian, it is evident, I believe, that we cannot solve or even approach the social problem from any of these points of view without first choosing between these two maxims:

  • The profit of the one is the loss of the other.
  • The profit of the one is the profit of the other.

For, if Nature has arranged things in such a way that antagonism is the law of free transactions, our only recourse is to conquer Nature and to stifle liberty. If, on the contrary, these free transactions are harmonious, that is, if they tend to improve and equalize conditions, we must confine our efforts to allowing Nature to act and to maintaining the rights of human liberty.

And that is why I urge the young men to whom this book is dedicated to scrutinize carefully the doctrines it contains and to analyze the inner nature and the results of exchange. Yes, I am confident that there will be one among them who will finally adduce a rigorously logical demonstration of this proposition: The good of each is favorable to the good of all, even as the good of all is favorable to the good of each; who will be able to plant this truth deeply in all minds, making it simple, crystal-clear, irrefutable. This young man will have solved the social problem; he will be the benefactor of the human race.

Let us, then, bear this in mind: According to the truth or falsity of this axiom, the natural laws of society are harmonious or antagonistic; and according to their harmony or antagonism, it is to our interest to conform to them or to deviate from them. If, then, it were once clearly demonstrated that, under liberty, each man's self-interest is in accord with that of every other, and those of all are mutually favorable, all the efforts that we now see governments making to disrupt the action of these natural laws of society would better be devoted to leaving to them their full power; or rather no effort would be needed at all, except the effort it takes not to interfere. In what does the interference by governments consist? This can be deduced from the end they have in view. What is that? To remedy the inequality that is thought to spring from liberty. Now there is only one way to re-establish the balance: Edition: current; Page: [85] to take from some to give to others. Such is, in fact, the mandate that governments have given themselves or have received, and it is the logical deduction from the proposition: The profit of the one is the loss of the other. This axiom being held as true, force must indeed repair the damage done by liberty. Thus, governments, which we thought were instituted to guarantee every man his liberty and his property, have taken it upon themselves to violate all liberty and all property rights, and with good reason, if in liberty and property resides the very principle of evil. Thus, everywhere we see them busy changing artificially the existing distribution of labor, capital, and responsibility.

On the other hand, a truly incalculable amount of intellectual energy is being wasted in the pursuit of contrived social organizations. To take from some to give to others, to violate both liberty and property rights—this is a very simple objective; but the ways of going about it can vary to infinity. Hence these multitudes of systems, which throw all classes of workers into consternation, since, by the very nature of their goal, they menace all existing interests.

Therefore, arbitrary and complicated governments, the denial of liberty and property rights, the antagonism of classes and nations—all this is the logical outgrowth of the axiom: The profit of the one is the loss of the other. And, for the same reason, simplicity in government administration, respect for individual dignity, freedom of labor and exchange, peace among nations, protection of person and property—all this is the outgrowth of this truth: All interests are harmonious, provided, however, only that this truth be generally accepted.

Such is far from the case. Many persons, reading the above, are prompted to say to me: You are breaking down an open door. Who has ever thought seriously of challenging the superiority of exchange over isolation? In what book, except perhaps Rousseau's, have you encountered this strange paradox?

Those who stop me with this observation forget only two things, two symptoms, or rather two aspects, of our modern society: the doctrines with which the theorists flood us, and the practices that governments foist upon us. No, it must indeed be Edition: current; Page: [86] that the harmony of interests is not universally recognized, since, on the one hand, the force of government is constantly intervening to disrupt their natural combinations; and, on the other, the reproach is everywhere made that government does not intervene enough.

This is the question: Is evil (it is clear that I here refer to evil that is not the necessary consequence of our original infirmity) traceable to the action of the natural laws of society or to our penchant for disturbing this action?

Now, two facts are coexistent: evil, and the force of government directed against the natural laws of society. Is the first of these two facts the consequence of the second? Personally, I believe it is; I will even say that I am sure of it. But at the same time I attest to this: as evil spreads, governments seek the remedy in new interferences with the action of these laws; and the theorists complain that they still do not interfere enough. Am I not, then, justified in concluding that there is little confidence in the natural laws of society?

Yes, without a doubt, if the question is posed as a choice between isolation or exchange, there is agreement. But if the choice is between free exchange and forced exchange, is there likewise agreement? Is there nothing artificial, forced, restrained or constrained, in France, in the exchange of services relative to commerce, credit, transportation, arts, education, religion? Are labor and capital naturally distributed between agriculture and industry? When men are moved out of their normal channels, are they still allowed to follow the natural direction of their own self-interest? Do we not find obstructions everywhere? Are there not a hundred vocations that are closed to most of us? Is the Catholic not obliged to pay for the services of the Jewish rabbi, and the Jew for the services of the Catholic priest? Is there one man in France who has had the education his parents would have given him if they had been free? Are not our minds, our way of life, our ideas, our industry, fashioned under the rule of the arbitrary or at least of the artificial? Now, I ask, is not such disturbing Edition: current; Page: [87] of the free exchange of services a way of denying the harmony of interests? On what pretext am I deprived of my liberty if not that my liberty is judged to be harmful to others? It can hardly be said to be harmful to me, for that would be adding but one antagonism the more. And where on earth are we, in Heaven's name, if Nature has placed in every man's heart a permanent, indomitable drive that impels him to harm both others and himself?

We have tried so many things; when shall we try the simplest of all: freedom? Freedom in all our acts that do not offend justice; freedom to live, to develop, to improve; the free exercise of our faculties; the free exchange of our services. What a fine and solemn spectacle it would have been had the government brought to power by the February Revolution spoken thus to the citizens:

“You have invested me with the power of authority. I shall use it only in cases where the intervention of force is permissible. But there is only one such case, and that is for the cause of justice. I shall require every man to remain within the limits set by his rights. Every one of you may work in freedom by day and sleep in peace at night. I take upon myself the safety of your persons and property. That is my mandate; I shall fulfill it, but I accept no other. Let there be no misunderstanding between us. Henceforth you will pay only the slight assessment indispensable for the maintenance of order and the enforcement of justice. But also, please note, each one of you is responsible to himself for his own subsistence and advancement. Turn your eyes toward me no longer. Do not ask me to give you wealth, work, credit, education, religion, morality. Do not forget that the motive power by which you advance is within yourselves; that I myself can act only through the instrumentality of force. All that I have, absolutely all, comes from you; consequently, I cannot grant the slightest advantage to one except at the expense of others. Cultivate your fields, then, manufacture and export your products, conduct your business affairs, make your credit arrangements, give and receive your services freely, educate your children, find them a calling, cultivate the arts, improve your minds, refine your sentiments, Edition: current; Page: [88] strengthen your bonds with one another, establish industrial or charitable associations, unite your efforts for your individual good as well as for the general good; follow your inclinations, fulfill your individual destinies according to your endowments, your values, your foresight. Expect from me only two things: freedom and security, and know that you cannot ask for a third without losing these two.”

Yes, I am convinced, if the February Revolution had proclaimed these principles, we should not have had another revolution. Can we imagine citizens, otherwise completely free, moving to overthrow their government when its activity is limited to satisfying the most vital, the most keenly felt of all social wants, the need for justice?

But, unfortunately, it was impossible for the National Assembly to follow this course or to speak these words. These utterances were not in accord with the Assembly's thinking or with the public's expectations. They would have spread as much consternation throughout society, perhaps, as would the proclaiming of a socialist state. Be responsible for ourselves! they would have said. Look to the state for nothing beyond law and order! Count on it for no wealth, no enlightenment! No more holding it responsible for our faults, our negligence, our improvidence! Count only on ourselves for our subsistence, our physical, intellectual, and moral progress! Merciful heavens! What is going to become of us? Won't society give way to poverty, ignorance, error, irreligion, and perversity?

Such, you will agree, would have been the fears, voiced on all sides, if the February Revolution had proclaimed liberty, that is, the reign of the natural laws of society. Hence, either we do not know these laws, or we do not trust them. We cannot help thinking that the motive forces that God implanted in man are essentially perverse; that there is integrity only in the intentions and designs of government; that the tendencies of mankind lead to disorder, to anarchy; in a word, we believe in the inevitable mutual antagonism of men's interests.

Therefore, French society during the February Revolution, far from showing the slightest desire for a natural organization, never, Edition: current; Page: [89] perhaps, turned its thoughts and its hopes so ardently toward artificial contrivances. What were they? We know only too well. It was proposed, according to the language of the time, to give it a try: Faciamus experimentum in corpore vili. And the social planners seemed to have such contempt for human personality, to identify man so completely with inert matter, that they spoke of conducting social experiments with mankind as one would speak of making chemical experiments with alkalis or acids. An initial experiment was begun at the Luxembourg, we know with what success. Soon the Constituent Assembly formed a Committee on Labor which was deluged with a thousand social plans. A Fourier spokesman, in all seriousness, asked for land and money (he undoubtedly would not have been slow to ask for men as well) to implement his model society. Another spokesman, an egalitarian, offered his recipe, which was rejected. The manufacturers, more fortunate, succeeded in having theirs accepted. Finally, at this juncture, the legislative assembly named a commission to set up a public relief program.

What is surprising in all this is that those in power, simply to stay in power, did not now and then protest: “You are leading thirty-six million citizens to imagine that we are responsible for everything, good or bad, that happens to them in this world. On these terms, no government is possible.”

In any case, however much these various proposals, glorified as social planning, may differ from one another in their methods, they are all predicated on the same proposition: Take from some to give to others. Now, it is very clear that such a proposition could meet with so sympathetic a response from the whole nation only because of the general conviction that men's interests are naturally antagonistic and human inclinations are essentially perverse.

Edition: current; Page: [90]

Take from some to give to others! I know that this is the way things have been going for a long time. But, before contriving, in our effort to banish poverty, various means of putting this outlandish principle into effect, ought we not rather to ask ourselves whether poverty is not due to the very fact that this principle has already been put into effect in one way or another? Before seeking the remedy in the further disturbance of the natural law of society, ought we not first to make sure that these disturbances are not themselves the very cause of the social ills that we wish to cure?

Take from some to give to others! Permit me to point out the danger and the absurdity of the economic thinking in this so-called social aspiration, which welled up in the hearts of the masses and finally burst forth so violently during the February Revolution.

When there are a number of strata in society, it is understandable that the uppermost one should enjoy privileges at the expense of the others. This is hateful, but it is not illogical.

Then the second stratum from the top will not fail to batter down these privileges; and, with the help of the masses, will sooner or later stage a revolution. In that case, as power passes into its hands, we can understand that it too creates privileges for itself. This is always detestable, but it is not illogical; at least it is not unfeasible, for privilege is possible so long as it has the great mass of the people under it to support it. If the third and the fourth strata also stage their revolutions, they too will arrange, if they can, to exploit the masses through carefully contrived privileges. But now the great masses of the people, downtrodden, oppressed, exhausted, stage their revolution too. Why? What do they propose to do? You think perhaps they are going to abolish all privilege, inaugurate the reign of universal justice? Do you think that they are going to say: “An end to restrictions; an end to restraints; an end to monopoly; an end to government interference for the benefit of one class; an end to heavy taxation; an end to diplomatic and political intrigue”? No, their aim is very different. They become a pressure group; they too insist on becoming privileged. They, the masses of the people, imitating Edition: current; Page: [91] the upper classes, cry in their turn for privileges. They demand their right to employment, their right to credit, their right to education, their right to pensions. But at whose expense? That is a question they never stop to ask. They know only that being assured of employment, credit, education, security for their old age, would be very pleasant indeed, and no one would deny it. But is it possible? Alas, no, and at this point, I say, it is no longer detestable, but illogical to the highest degree.

Privileges for the masses! People of the lower classes, think of the vicious circle you are placing yourselves in. Privilege implies someone to profit from it and someone to pay for it. We can conceive of a privileged man or a privileged class; but can we conceive of a whole nation of privileged people? Is there another social stratum under you that you can make carry the load? Will you never understand the weird hocus pocus of which you are the dupes? Will you never understand that the state cannot give you something with one hand without taking that something, and a little more, away from you with the other? Do you not see that, far from there being any possible increase of well-being in this process for you, its end result is bound to be an arbitrary government, more galling, more meddling, more extravagant, more precarious, with heavier taxes, more frequent injustices, more shocking cases of favoritism, less liberty, more lost effort, with interests, labor, and capital all misdirected, greed stimulated, discontent fomented, and individual initiative stifled?

The upper classes become alarmed, and not without reason, at this disturbing attitude on the part of the masses. They sense in it the germ of constant revolution, for what government can endure when it has had the misfortune to say: “I have the force, and I shall use it to make everybody live at the expense of everybody else. I take upon myself the responsibility for the happiness of all”? But is not the consternation these classes feel a just punishment? Have they themselves not set the baneful example of the attitude of mind of which they now complain? Have they not always had their eyes fixed on favors from the state? Have they ever failed to bestow any privilege, great or small, on industry, banking, mining, landed property, the arts, Edition: current; Page: [92] and even their means of relaxation and amusement, like dancing and music—everything, indeed, except on the toil of the people and the work of their hands? Have they not endlessly multiplied public services in order to increase, at the people's expense, their means of livelihood; and is there today the father of a family among them who is not taking steps to assure his son a government job? Have they ever voluntarily taken a single step to correct the admitted inequalities of taxation? Have they not for a long time even exploited their electoral privileges? And now they are amazed and distressed that the people follow in the same direction! But when the spirit of mendicancy has prevailed for so long among the rich, how can we expect it not to have penetrated to the less privileged classes?

However, a great revolution has taken place. Political power, the law-making ability, the enforcement of the law, have all passed, virtually, if not yet completely in fact, into the hands of the people, along with universal suffrage. Thus, the people, who raise the problem, will be called upon to resolve it; and woe to the nation if, following the example that has been given them, they seek the solution in privilege, which is always the violation of the rights of others! Certainly it will result in great disillusionment, and also in a great lesson; for, though it is possible to violate the rights of the many for the benefit of the few, how can we violate the rights of all for the benefit of all? But at what price will this lesson be bought? What should the upper classes do to warn against this frightful danger? Two things: give up their privileges of their own accord, and enlighten the masses; for there are but two things that can save society: justice and enlightenment. They should examine carefully whether they are not enjoying some monopoly—if so, let them renounce it; whether they are not benefiting by some artificial inequities—if so, let them eradicate them; whether pauperism is not due, in part at least, to their disturbance of the natural law of society—if so, let them make an end of it in order that they may show their hands to the people and say: These hands are not empty, Edition: current; Page: [93] but they are clean. Is this what they actually do? Unless I am completely blind, they do the exact opposite. They begin by keeping their monopolies and have even been seen to take advantage of the Revolution to increase them. After thus putting themselves in the position where they cannot tell the truth and cannot invoke any principles without appearing inconsistent, they promise to treat the people as the people would treat themselves, and dangle before their eyes the lure of privilege. But they feel that they are being very wily in that today they grant the people only a small privilege—the right to pensions—in the hope that they may avoid any request for a great privilege—the right to employment. And they do not see that by extending and systematizing more and more the axiom: Take from some to give to others, they are encouraging the error that creates the difficulties of the present and dangers for the future.

Let us not exaggerate, however. When the upper classes seek in the extension of privilege the remedy for the ills that privilege has caused, they act in good faith, and, I feel sure, more through ignorance than from a desire to commit injustice. The fact that successive governments in France have always blocked the teaching of political economy has done irreparable harm. Even greater is the harm done by our university system, which fills all our heads with Roman prejudices, that is, with everything most incompatible with social truth. This is what leads the upper classes astray. It is fashionable today to declaim against them. For my part, I believe that their intentions have never been more benevolent in any age. I believe that they earnestly desire to solve the problems of society. I believe that they would go further than give up their privileges and would willingly turn over to charitable works a part of the property they have acquired, if, by so doing, they felt that they could definitely end the hardships of the working classes. People will say, doubtless, that they are motivated by self-interest or fear, and that there is no great generosity in giving up a part of one's goods in order to save the rest. It is the commonplace prudence of a man who keeps a fire within bounds. Let us not thus abuse human nature. Why Edition: current; Page: [94] refuse to admit any less selfish motive? Is it not quite natural for the democratic attitudes that prevail in our country to make men sensitive to the suffering of their fellows? But, whatever may be the motive, what cannot be denied is that everything that reveals public opinion—philosophy, literature, poetry, the drama, the pulpit, parliamentary debate, the press—indicates in the wealthy class more than a desire, an ardent longing, to solve the great problem. Why, then, does nothing come from our legislative assemblies? Because of their ignorance. Political economy offers them this solution: Legal justice, private charity. But they are off on a wrong scent and, without realizing it, follow the socialist influence; they want to incorporate charity into the law, that is, to banish justice from the law, a course likely to destroy private charity, which is always quick to give way before legal charity.

Why do our legislators thus contravene all sound notions of political economy? Why do they not leave things in their proper place: altruism in its natural realm, which is liberty; and justice in its, which is law? Why do they not use the law exclusively to further justice? It is not that they do not love justice, but that they have no confidence in it. Justice is liberty and property. But they are socialists without knowing it; for achieving the progressive reduction of poverty and the progressive increase in wealth, they have no faith, whatever they may say, in liberty or in property or, consequently, in justice. And that is why we see them in all good faith seeking to achieve the good by the constant violation of the right.

We can call the natural laws of society that body of phenomena, considered from the standpoint of their motivations and their results, which govern the free transactions of men.

Once this is postulated, the question is: Must we permit these laws to function, or must we prevent them from functioning?

This question is tantamount to asking:

Must we recognize the right of every man to his property, his freedom to work and to exchange on his own responsibility, whether to his profit or his loss, invoking the law, which is force, Edition: current; Page: [95] only for the protection of his rights; or can we reach a higher plane of social well-being by violating property rights and liberty, regulating labor, disrupting exchange, and shifting responsibility away from the individual?

In other words:

Must the law enforce strict justice, or be the instrument of organized confiscation administered more or less intelligently?

It is quite evident that the answer to these questions is dependent on the study and knowledge of the laws of society. We cannot make any reasonable pronouncement until we know whether property, liberty, the varied pattern of services freely exchanged, lead men forward toward their improvement, as economists assert, or backward toward their debasement, as the socialists affirm. In the first case, the ills of society must be attributed to interference with the operation of natural laws, to the legalized violation of the right to liberty and property. It is this interference and violation, then, that must be stopped, and the political economists are right. In the second case, we do not yet have enough government interference. Forced and artificial patterns of exchange have not yet sufficiently replaced the free and natural pattern; too much respect is still paid to justice, property, and liberty. Our lawmakers have not yet attacked them violently enough. We are not yet taking enough from some to give to others. So far we have taken only from the many to give to the few. Now we must take from all to give to all. In a word, we must organize confiscation, and from socialism will come our salvation.2

Disastrous Fallacies Derived from Exchange

Exchange is society. Consequently economic truth is the complete view, and economic error is the partial view, of exchange.

If man did not exchange, every part of the economic process would take place in the individual, and it would be very easy for us to set down from observation its good and bad effects.

But exchange has brought about a division of labor, or, to Edition: current; Page: [96] speak less learnedly, the establishment of professions and trades. Every service (or every product) involves two persons, the one who provides it, and the one who receives it.

Undoubtedly, at the end of the evolutionary process, man in society, like man in isolation, is at once producer and consumer. But the difference must be clearly noted. Man in isolation is always the producer of what he consumes. This is almost never true of man in society. It is an incontestable point of fact that everyone can verify from his own experience. This is so because society is simply an exchange of services.

We are all producers and consumers, not of the thing, but of the value that we have produced. While we exchange things, we always remain the owners of their value.

From this circumstance are derived all economic misconceptions and fallacies. It is certainly not superfluous to indicate here the course of men's thinking on this subject.

We can give the general name of obstacle to everything that, coming between our wants and our satisfactions, calls forth our efforts.

The interrelations of these four elements—want, obstacle, effort, satisfaction—are perfectly evident and understandable in the case of man in a state of isolation. Never, never in the world, would it occur to us to say:

“It is too bad that Robinson Crusoe does not encounter more obstacles; for, in that case, he would have more outlets for his efforts; he would be richer.

“It is too bad that the sea has cast up on the shore of the Isle of Despair useful articles, boards, provisions, arms, books; for it deprives Robinson Crusoe of an outlet for his efforts; he is poorer.

“It is too bad that Robinson Crusoe has invented nets to catch fish or game; for it lessens by that much the efforts he exerts for a given result; he is less rich.

“It is too bad that Robinson Crusoe is not sick oftener. It would give him the chance to practice medicine on himself, which is a form of labor; and, since all wealth comes from labor, he would be richer.

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“It is too bad that Robinson Crusoe succeeded in putting out the fire that endangered his cabin. He has lost an invaluable opportunity for labor; he is less rich.

“It is too bad that the land on the Isle of Despair is not more barren, the spring not farther away, the sun not below the horizon more of the time. Robinson Crusoe would have more trouble providing himself with food, drink, light; he would be richer.”

Never, I say, would people advance such absurd propositions as oracles of truth. It would be too completely evident that wealth does not consist in the amount of effort required for each satisfaction obtained, but that the exact opposite is true. We should understand that value does not consist in the want or the obstacle or the effort, but in the satisfaction; and we should readily admit that although Robinson Crusoe is both producer and consumer, in order to gauge his progress, we must look, not at his labor, but at its results. In brief, in stating the axiom that the paramount interest is that of the consumer, we should feel that we were simply stating a veritable truism.

How happy will nations be when they see clearly how and why what we find false and what we find true of man in isolation continue to be false or true of man in society!

Yet it is certainly a fact that the five or six propositions that appeared so absurd when we applied them to the Isle of Despair seem so incontestably true when applied to France that they serve as the basis of all our economic legislation. And, on the contrary, the axiom that seemed truth itself when applied to the individual is never mentioned without provoking a disdainful smile.

Could it be true, then, that exchange so alters us that what makes for the poverty of the individual makes for the wealth of society?

No, this is not true. But, it must be said, it is plausible, very plausible indeed, since it is generally believed.

Society consists in the fact that we work for one another. We receive more services either as we give more or as those we give are assigned greater value, are more in demand, that is to say, are better paid. On the other hand, the division of labor causes each Edition: current; Page: [98] one of us to apply his efforts to conquering obstacles that block the satisfactions of others. The farmer attacks the obstacle called hunger; the doctor, the obstacle called illness; the priest, the obstacle called vice; the writer, the obstacle called ignorance; the miner, the obstacle called cold; etc., etc.

And, since the more keenly all those about us are aware of the obstacles that stand in their way, the more generously they are inclined to remunerate our efforts, it follows that we are all disposed, from this point of view, as producers, to dedicate ourselves almost religiously to exaggerating the importance of the obstacles that it is our business to combat. We consider ourselves richer if these obstacles are increased, and we immediately conclude that what is to our personal gain is for the general good.3

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5: On Value

A long discourse is always boring, and a long discourse on value must be doubly so.

Therefore, naturally enough, every inexperienced writer, when confronted with a problem in economics, tries to solve it without involving himself in a definition of value.

But inevitably it does not take him long to discover how very inadequate such a procedure is. The theory of value is to political economy what a numerical system is to arithmetic. How hopelessly confusing Bezout would have become if, to spare his students tedium, he had tried to teach them the four fundamental operations of arithmetic—addition, subtraction, multiplication, and division—and the theory of proportions without first explaining to them how the ten digits by their shape and position represent numerical values!

If only the reader could foresee the fascinating conclusions to be deduced from the theory of value, he would accept the tiresome explanation of the basic principles, just as he resigns himself to the dull chore of learning the elementary principles of geometry by keeping in mind the exciting prospect of things to come.

But in the field of political economy one does not intuitively anticipate anything of this sort. The more pains I shall take to make clear the distinctions between value and utility, and between value and labor, in order to explain how natural it was for early economic theory to have run aground on these treacherous shoals, Edition: current; Page: [100] the more surely the reader will find in my careful analysis mere sterile and idle subtleties, of no possible interest to anyone, except perhaps professionals in the field.

You are laboriously considering, he will say to me, whether wealth resides in the utility of things or in their value or in their scarcity. Is not this like the question asked by the Scholastics: Does form reside in the substance or in the accident? Are you not afraid of being parodied in a vaudeville skit by some would-be Molière?

And yet I must say: From the viewpoint of political economy society is exchange. The primary element of exchange is the notion of value, and consequently the connotations that we give to this word, whether true or erroneous, lead us to truth or error in all our social thinking.

I have undertaken in this work to show the harmony of the providential laws that govern human society. These laws are harmonious rather than discordant because all the elements, all the motive forces, all the springs of action, all the self-regarding impulses within man, work together toward attaining a great final result that he will never completely reach, because of his innate imperfection, but which he will constantly approach because of his indomitable capacity for improvement; and this result will be the progressive merging of all classes at a higher and higher level—in other words, the equalizing of all individuals in the general enjoyment of a higher standard of living.

But, to succeed in my effort, I must explain two things, namely:

  • 1) Utility—that is, the service a thing renders tends to cost less and less, to become more generally available, as it gradually passes outside the domain of individual ownership.
  • 2) Value, on the contrary, which alone can be claimed as a possession, which alone, in law and in fact, constitutes property, tends to decrease in proportion to the amount of utility it represents.

Consequently, if I base my demonstration both on private ownership, but exclusively on private ownership of value, and on public ownership, but exclusively on public ownership of utility, I should be able, provided my reasoning is valid, to satisfy and Edition: current; Page: [101] reconcile all schools, since I recognize that all have had a glimmering of the truth, but only of a part of the truth seen from different points of view.

Economists, you defend private ownership. In the social order no private ownership exists save the ownership of value, and it cannot be called into question.

Socialists, you dream of public ownership. You have it. The social order makes all utilities common to all, provided the exchange of privately owned values remains free.

You are like architects arguing over a building of which each one has seen only one side. They do not see poorly, but they do not see all. To reach an agreement, they need only to walk around the entire edifice.

But how can I reconstruct this social edifice and present it to the public in all its beautiful harmony if I reject its twin cornerstones—utility and value? How could I effect the much-to-be-desired reconciliation of all schools of thought on the common ground of truth if I should yield to my reluctance to analyze these two ideas, whose confused interpretations have unfortunately given rise to so much disagreement?

A preamble of this kind has been necessary to persuade the reader, if possible, to arm himself for a short while with the concentration and the patience to endure some degree of tiresomeness, and alas! of boredom. Unless I am much mistaken, the beauty of the conclusions will richly compensate for the dullness of the premises. If Newton had allowed himself, in the beginning, to be deterred from the study of mathematics by his distaste for its elementary principles, his heart would never have quickened with admiration at the vision of the harmonies of the celestial universe; and I insist that we have only to work our way manfully through a few elementary notions of political economy to realize that God has not been less lavish in bestowing touching goodness, admirable simplicity, and magnificent splendor upon the social universe.

In the first chapter we saw that man is both passive and active; that wants and satisfactions, being concerned exclusively with sensation, are, by their nature, personal, intimate, and nontransferable; Edition: current; Page: [102] that effort, on the contrary, the link between want and satisfaction, the mean between the extremes of motive cause and end result, stemming as it does from our activity, our impulse, our will, can be transmitted by mutual agreement from one individual to another. I know that this assertion could be challenged on metaphysical grounds, and that it could be maintained that effort also is personal and individual. I have no desire to become involved in any such ideological debate, and I hope that my thought will be accepted without controversy when expressed in this nontechnical form: We cannot feel another persons' wants; we cannot feel another person's satisfactions; but we can render services to one another.

This transmission of effort, this exchange of services, forms the subject matter of political economy; and since, on the other hand, political economy can be summed up in the word value, which is the thing it seeks to explain in all its detail, it follows that our notion of value will be an imperfect one, an erroneous one, if, neglecting the mean, we base it on the extremes, which are phenomena of our sensations—wants and satisfactions, which are intimate, nontransferable, not subject to measurement from one individual to another—instead of founding it on our activity, our effort, our exchange of reciprocal services, since these are capable of comparison, appraisal, evaluation, and can indeed be evaluated for the very reason that they are exchanged.

In the same chapter we arrived at these conclusions:

Utility (the ability of certain acts or things to serve us), is composite, one part of it being due to the action of Nature, the other part to the action of man. The more Nature has done to effect a given result, the less there is for human labor to do. Nature's contribution is essentially gratuitous; man's contribution, whether intellectual or physical, exchanged or not exchanged, collective or individual, is essentially onerous, as is implied by the very word “effort.”

And since what is gratuitous cannot have value, the notion of value implying acquisition through effort, it follows that value too will be misunderstood if we extend its meaning to include, in whole or in part, those things that are received as gifts from Edition: current; Page: [103] Nature, instead of restricting its meaning to the human contribution only.

Thus, from two points of view, from two different approaches, we reach the conclusion that value must have reference to the efforts made by men in order to secure the satisfaction of their wants.

In chapter 3 we noted that man cannot live in the state of isolation. But if, in our thinking, we conjure up this imaginary case, this state contrary to nature, to which the eighteenth century paid homage under the name of the state of nature, we realize at once that, although it exhibits the active phenomenon that we have named effort, it still does not reveal the notion of value. The reason is simple: value implies comparison, a rating, an evaluation, a measure. For two things to be measured, they must be commensurate; and to be commensurate, they must be of the same kind. In the state of isolation, to what can effort be compared? To wants? To satisfactions? This can lead us only to grant to effort a greater or a lesser degree of timeliness, of appropriateness. In the social state we compare the effort of one man with the effort of another man (and from this comparison arises the idea of value), two phenomena of the same kind, and hence measurable.

Thus, the definition of the word “value,” to be accurate, must have reference not only to human efforts, but also to efforts that are exchanged or exchangeable. Exchange does more than take note of values or measure them; it creates them. I do not mean that it creates the acts or the things that are exchanged, but it imparts the idea of value to them.

So, when two men exchange their present effort, or the fruits of their past effort, they are serving each other; they are rendering each other mutual service.

I therefore say: Value is the relationship existing between two services that have been exchanged.

The idea of value first entered the world when a man said to his brother, “Do this for me, and I will do that for you,” and the brother agreed; for then, for the first time, men were able to say, “Two services that are exchanged are equal to each other.”

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It is curious to note that the true theory of value, which is to be sought in vain in many a thick volume, is found in the delightful little fable of Florian, the Blind Man and the Paralytic:

  • Aidons-nous mutuellement,
  • La charge des malheurs en sera plus légère.
  • . . . . . . . . . à nous deux
  • Nous possédons le bien à chacun nécessaire.
  • J'ai des jambes, et vous des yeux.
  • Moi, je vais vous porter; vous, vous serez mon guide:
  • Ainsi, sans que jamais notre amitié décide
  • Qui de nous deux remplit le plus utile emploi,
  • Je marcherai pour vous, vous y verrez pour moi.

This is value identified and defined with rigorous economic accuracy, except for the touching reference to friendship, which takes us into another realm. We can well understand how two handicapped persons can render each other mutual service without undue concern as to which one performs the more useful function. The special circumstances invented by the fabler produce a strong sense of sympathy that prevents the two men from trying to assess the relative importance of the services they exchange, although this assessment is indispensable in order to bring completely into focus the notion of value in this transaction. This idea would become fully apparent if all men, or most men, were stricken with paralysis or blindness; for then the inexorable law of supply and demand would take over, and, eliminating the Edition: current; Page: [105] element of voluntary sacrifice on the part of the one performing the more useful function, would re-establish the transaction on the solid ground of justice.

We are all halt or blind in some respect; and we readily understand that by mutual aid the burden of our ills will be the lighter. Hence exchange. We work to provide food, clothing, lodging, light, health, defense, education for one another. Hence reciprocity of services. These services we compare, we discuss, we evaluate. Hence value.

A host of circumstances can increase the relative importance of a service. We find it greater or less in proportion to its usefulness to us; to the number of persons ready to perform it for us; to the amount of labor, pains, skill, time, preparation it requires, to the degree to which it relieves us of the necessity of providing these same things for ourselves. Value depends not only on these circumstances but also on the estimate we make of them; for it can happen, and often does, that we rate a given service very highly, because we judge it to be very useful, whereas in reality it is detrimental. For this reason, vanity, ignorance, error play their part in influencing this essentially elastic and fluctuating relationship that we call “value”; and one could say that the evaluation of services tends to come closer to absolute truth and justice as men progress in knowledge and morality.

Up to now the principle of value has been sought in those circumstances that increase or lessen it, in material quality, wear, usefulness, scarcity, labor, inaccessibility, subjective judgment, etc.—things that from the very beginning have given the science of political economy a wrong direction, for the accident that modifies the phenomenon is not the phenomenon itself. Moreover, every writer has set himself up as the godfather, so to speak, of the particular one of these circumstances that he considered the most significant—the inevitable outcome of the tendency to generalize; for the whole universe is in everything, and there is nothing that a word cannot be made to include if only its meaning is sufficiently broadened. Thus, the principle of value for Adam Smith is in material quality and wear (durability); for Say, in utility; Edition: current; Page: [106] for Ricardo, in labor; for Senior, in scarcity; for Storch, in subjective judgment; etc.

What happened, inevitably, was that these writers in all innocence weakened the authority and dignity of the science of political economy by giving the impression of contradicting one another, whereas in reality each one was correct from his own point of view. Furthermore, they enmeshed the primary notion of political economy in a maze of inextricable difficulties, since the same words did not connote for all of them the same meaning; and, although one set of circumstances might be declared fundamental, they also noted other factors at work that were too important to be neglected, and thus their definitions became more and more involved.

This book is not designed to add to the controversy, but to be an exposition of principles. I point out what I see, not what others have seen. I cannot, however, refrain from calling the reader's attention to the circumstances on which the idea of value has been based. But before proceeding with this topic, I shall turn to a series of concrete illustrations of the nature of value, for it is through different applications of it that we grasp the meaning of a theory.

I shall show how every transaction can be reduced to a bartering of services. But the reader must keep in mind what was said about barter in the previous chapter. It is rarely a simple transaction; sometimes it is accomplished through products or commodities circulated among several contracting parties; more often it is accomplished by means of money, in which case it can be broken down into two factors, sale and purchase; but, since this complicating feature does not in any way alter the nature of the transaction, let me assume, for the sake of simplicity, an immediate and direct barter between two parties. In this way we may avoid any misconception as to the nature of value.

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We are all born with one overwhelming physical want, which must be satisfied on pain of death: the need to breathe. On the other hand, we are all placed in an environment that provides for this want, generally speaking, without requiring any effort from us. Air, then, has utility, but no value. It has no value, because, since it occasions no effort, it calls for no service. Rendering a service implies sparing someone pains; and when no pains are required to achieve a satisfaction, there are none to be spared.

But if a man goes down to the bottom of a river in a diving bell, a foreign body is introduced between the air and his lungs; to re-establish connections, the pump must be set in motion; then there is effort to be exerted, pains to be taken; and certainly the man will be ready to co-operate, for his life is at stake, and no service to him could be greater.

Instead of making this effort himself, he requests me to make it; and, in order to induce me to do so, he promises in his turn to take pains that will procure me satisfaction. We discuss the matter, and we come to an agreement. What do we have here? Two wants, two satisfactions, that are not mutually exclusive; two efforts that are the subject of a voluntary transaction; two services that are exchanged—and value makes its appearance.

Now, it is said that utility is the basis of value; and as utility is inherent in air, we are to assume that this is likewise true of value. There is obvious confusion here. Air, by its composition, has physical properties that are adapted to one of our bodily organs, the lungs. What I take out of the atmosphere to fill the diving bell is not changed in any way; it is still oxygen and nitrogen. There is no combining to form a new physical quality; no reagent brings forth a new element called value. The fact is that value comes only from the service that has been rendered.

When someone states the axiom that utility is the basis of value, I have no quarrel with him if he means that service has value because it is useful to the one who receives it and pays for it. This is a truism that adds nothing new to the idea of the word “service.”

But we must not confuse utility of the type provided by the air Edition: current; Page: [108] with the utility of a service. These two are distinct, of different orders and natures, and do not necessarily have any common denominator or relationship. Under certain conditions, I can do someone a service that is trifling, as far as the effort it costs me or saves him is concerned, and yet, by so doing, I can place at his disposal something of very great intrinsic utility.

Let us see how the two contracting parties would go about evaluating the service that the one renders the other in sending air down to him. There must be a common ground for comparison, and it can only be in the service that the diver has promised to give in return. What they demand will depend on their respective situations, the urgency of their wants, the relative ease with which one can get along without the other, and many other circumstances that demonstrate that value is in the service, since both increase in the same ratio.

If the reader so desires, he can easily think up for himself other examples of this kind that will convince him that value is not necessarily commensurate with the amount of effort expended. This is a remark that I throw out here in anticipation of later discussion, for I expect to prove that value no more resides in labor than it does in utility.

Nature has seen fit to make me in such a way that I should die if I did not quench my thirst from time to time; and the spring to which I must go for water is two miles from my village. Therefore, every morning I must take the trouble of going after my little supply of water, for I find in water those useful qualities that have the power to assuage that type of suffering known as thirst. Want, effort, satisfaction—they are all there. I am familiar with the utility I derive from this act; I do not yet know its value.

However, suppose my neighbor also goes to the spring, and I say to him, “Spare me the trouble of making this trip; do me the service of bringing me some water. While you are so engaged, I will do something for you; I will teach your child to spell.” It happens that this suits both of us. This is the exchange of two services, and we can say that the one is equal to the other. Note that what is compared here are the two efforts, not the two wants Edition: current; Page: [109] or the two satisfactions; for on what basis can we compare the relative merits of having a drink of water and learning how to spell?

Soon I say to my neighbor, “Teaching your child is becoming a bore; I prefer to do something else for you. You will continue to bring me water, and I will give you five sous.” If the offer is accepted, the economist may say without fear of error: The service is worth five sous.

After a while my neighbor no longer waits for me to ask him. He knows, by experience, that I need to drink every day. He anticipates my want. And while he is at it, he provides water for other villagers. In a word, he becomes a water-seller. Then we begin to put it this way: Water is worth five sous.

But has the water really changed? Has the value, which so recently was in the service, now become a material thing, a new chemical element added to the water? Has a slight change that my neighbor and I made in our arrangements been powerful enough to upset the principle of value and alter its nature? I am not so pedantic as to object to saying that water is worth five sous, any more than to saying that the sun sets. But we must realize that both are examples of metonymy; that metaphors do not alter facts; that scientifically, since, after all, we are dealing with a science, it is no more true that value is contained in water than that the sun sets in the sea.

Let us therefore assign to things the qualities that are proper to them: to water, to air, utility; to services, value. Let us say: Water has utility because it has the property of quenching thirst; the service is the thing that has value, because it is the subject of the agreement. This truth is apparent when we reflect that whatever may be our distance from the spring, the utility of the water remains constant, but its value varies. Why? Because the service becomes greater or smaller. Value, then, is in the service, since value changes as the service does and in the same degree.

The diamond plays an important role in the books written by economists. They use it to elucidate the laws of value or to indicate the so-called disturbances of these laws. It is a shining Edition: current; Page: [110] weapon that all schools use in their combat. The English school says: “Value consists in labor.” The French school produces a diamond and says: “Here is a product that requires no labor and is yet of immense value.” Then, if the French school affirms that value resides in utility, the English school cites the diamond, along with air, light, and water, as proof to the contrary. “Air is very useful and has no value; the diamond's utility is highly questionable, and yet it is worth more than the whole atmosphere.” And the reader can only say with Henry IV, “On my word, they're both right.” Eventually they reach common agreement in the following error, which is worse than the other two: We must admit that the handiwork of God has value, and that value, then, is material.

These anomalies disappear, it seems to me, on the basis of my definition, which is corroborated rather than invalidated by the example in question.

I take a stroll along the seashore. A stroke of good luck puts a superb diamond into my hand. I have come into possession of a considerable amount of value. Why? Am I going to contribute something great to humanity? Have I toiled long and arduously? Neither the one nor the other. Why, then, does the diamond have such value? Because the person to whom I give it believes that I am rendering him a great service, all the greater because many rich people would like to have it, and I alone can render it. Their judgment is open to question, granted. It is based on vanity and love of display, granted again. But the judgment exists in the mind of a man ready to act in accordance with it, and that is enough.

We could say that this judgment is far from being based on a reasonable evaluation of the diamond's utility; indeed, it is quite the contrary. But making great sacrifices for the useless is the very nature and purpose of ostentation.

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Value, far from having any necessary relation to the labor performed by the person rendering the service, is more likely to be proportionate, we may say, to the amount of labor spared the person receiving the service; and this is the law of values. It is a general law and universally accepted in practice, although, as far as I know, not taken into account by the theorists. We shall describe later the admirable mechanism that tends to keep value and labor in balance when the latter is free; but it is nonetheless true that value is determined less by the effort expended by the person serving than by the effort spared the person served.

The transaction relating to the diamond may be supposed to give rise to a dialogue of this nature:

“Let me have your diamond, please.”

“I am quite willing; give me your whole year's labor in exchange.”

“But, my dear sir, getting it didn't cost you a minute's time.”

“Well, then, the way is open to you to find that kind of minute.”

“But, in all justice, we ought to exchange on terms of equal labor.”

“No, in all justice, you set a price on your services, and I set one on mine. I am not forcing you; why should you force me? Give me a whole year's labor, or go find your own diamond.”

“But that would entail ten years of painful search, and probable disappointment at the end. I find it wiser and more profitable to spend ten years in some other way.”

“And that is just why I feel that I am still doing you a service when I ask only for one year. I am saving you nine years, and for that reason I consider this service of great value. If I appear demanding to you, it is because you consider only the labor I have performed; but consider also the labor that I save you, and you will find that I am almost too easy.”

“Nevertheless, you are making a profit from what is a work of Nature.”

“And if I let you have my lucky find for nothing or next to nothing, you would be the one to make the profit. Besides, if this Edition: current; Page: [112] diamond has great value, it is not because Nature has been toiling away on it since the beginning of time; Nature does as much for a dewdrop.”

“Yes, but if diamonds were as plentiful as dewdrops, you would not be laying down the law to me.”

“Certainly, because in that case you would not be appealing to me, or you would not be disposed to pay me a high price for a service that you could easily perform for yourself.”

We see from this dialogue that value resides no more in the diamond than it does in water or in air; it resides entirely in the services performed and received in connection with these things and is determined after free discussion by the contracting parties.

Go through what the economists have to say; read, compare their definitions. If any one of them can account for air and the diamond, two cases apparently so opposite, then throw this book of mine into the fire. But if my definition, simple as it is, resolves the difficulty, or rather, eliminates it, then, reader, in all good conscience, you are bound to read me through to the end; for so good an introduction to the science we are studying cannot fail to hold promise for the rest.

I ask indulgence to cite other examples, in order both to clarify my thought and to familiarize the reader with a new definition. Besides, this attention to the principle of value, showing it in all its aspects, will pave the way for my conclusions, which will prove to be, I venture to predict, no less important than unexpected.

Among the wants to which we are subject because of our physical nature is the need for food; and one of the best commodities for satisfying it is bread.

Naturally, since it is I who experience the need to eat, it is I who should perform all the operations that will produce the amount of bread I require. I cannot ask my fellow men to perform this service for me gratis, since they too are subject to the same want and are obliged to make the same effort.

If I were to make my own bread, I should have to perform a series of tasks much like those involved in getting water from the well, but much more complicated. The elements of which bread Edition: current; Page: [113] is composed exist, of course, everywhere in Nature. As Jean-Baptiste Say so wisely observed, man has neither the need nor the ability to create anything. Gases, minerals, electricity, plant life all exist about me; I need only bring them together, help them along, combine and transport them, with the aid of that great laboratory which we call the earth, so full of mysterious things that science has barely begun to discover. Even though the sum total of all the operations I must go through in pursuit of my objective is quite complicated, each individual operation is as simple as drawing water from the spring where Nature has placed it. Each one of my efforts, therefore, is merely a service that I perform for myself; and if, through an agreement freely arrived at, other persons spare me some or all of these efforts, I have received that amount of services. The sum of these services, in comparison with those that I perform in return, constitutes and determines the value of my bread.

A convenient intermediate agent is introduced to facilitate this exchange of services and to measure their relative importance, viz., money. But the fundamental nature of things remains the same, even as in mechanics power is transmitted in accordance with the same laws, whether it be passed through one or several sets of gears.

We can see the truth of all this in the following illustration. If a good accountant were to analyze the elements entering into the value of my loaf of bread costing, say, four sous, he would eventually identify, in the course of searching through many complicated transactions, all the individuals whose services had contributed to determining this value, all who had saved trouble for the person who, in the last analysis, pays for the bread because he is the consumer. First, there would be the baker, who keeps a twentieth part, and out of his twentieth pays the mason who built his oven, the woodcutter who prepared his firewood, etc.; then, there would be the miller, who would receive not only enough to pay for his own labor but also something for the quarryman who made his millstone, the workman who built the banks for his millrace, etc. Other parts of the total value would go to the thresher, the harvester, Edition: current; Page: [114] the cultivator, the planter, until the account was complete to the last centime. But no part of it, none whatsoever, would go to pay God or Nature. Such an assumption is absurd, on the face of it, and yet logically it is implicit in the theories of those economists who attribute to matter or the forces of Nature any part of the value of a product. No, once again, what has value here is not the loaf of bread, but the series of services that made the bread available to me.

It is quite true that, among the constituent parts of the loaf's value, our bookkeeper will find one part that he will have trouble itemizing as a service, at least as a service requiring effort. He will find that out of his twenty centimes, which make up his total of four sous, one or two go to the owner of the land, to the possessor of the field of operations. This small part of the bread's value constitutes what is called the land rent; and, confused by the expression, by the metonymy that we again encounter here, our accountant will perhaps be tempted to list this as the share due the forces of Nature, due, that is, to the land itself.

I maintain, however, that if he is a good accountant, he will realize that even this item is actually the cost of true services like all the others. This fact will be conclusively demonstrated when we study real property. For the moment, I shall simply remind the reader that here I am dealing, not with property, but with value. I am not inquiring whether all services are valid and legitimate, or whether some men have succeeded in receiving payment for services they did not render. After all, the world is full of injustices of this sort, but rent should not be included among them.

All that I am seeking to demonstrate here is that the so-called value of things is, in fact, only the value of the services, real or fancied, that are transmitted through the medium of things; that value does not reside in the things themselves, and is no more to be found in bread than in diamonds, in water, or in air; that Nature receives no payment for value; that the entire amount, paid by the ultimate consumer, is distributed among men; and that the consumer is willing to make them this payment only because they have rendered him services, cases of fraud and violence excepted.

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Two men think that ice is a good thing in summer, and that coal is a better thing in winter. The one cools us, and the other warms us, both thus answering to two of our wants. I cannot insist too much that the utility of these objects consists in certain physical properties that are adapted to our physical organs. Let us note that neither value nor anything like it is included among these properties, which physics or chemistry could isolate. How, then, could anyone have reached the conclusion that value resides in matter and is itself material?

If these two men wish to satisfy their wants independently, each one will have to labor at storing up his own supply of both ice and coal. If they come to an understanding, one will go to the mines to get enough coal for both of them, the other to the mountains for enough ice for both. But in that case an agreement has to be reached. The two services exchanged must be carefully evaluated and compared. All the circumstances must be taken into account: the difficulties to be overcome, the dangers to be faced, the time to be lost, the pains to be taken, the skill required, the risks to be run, the possibility of satisfying the want in some other way, etc., etc. When the two men reach agreement, the economist will say that the two services that are exchanged are equivalent; but the common way of putting it, by metonymy, will be: So much coal is worth so much ice, as though value has passed physically into these objects. Though it is easy to realize that the common expression indicates the result well enough, only the scientific statement gives a true idea of the cause.

Instead of two services and two persons, the agreement may include a great number of services and persons, substituting indirect or roundabout exchange for direct barter. In that case money will be introduced to facilitate the act of exchange. Need I say that the principle of value will not be displaced or altered in the process?

But I do need to add a comment about the coal. It might well be that there is only one mine in the region, and that one man has got possession of it. In that case, this man will make his own terms, that is to say, he will set a high price on his services or his so-called services.

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We have not yet come to the question of law and justice, of distinguishing between real services and fraudulent services. For the moment, what concerns us is to elucidate the true theory of value and rid it of the error from which the science of economics has suffered. When we say, “What Nature has done, or given, it has done, or given, gratis; consequently these things have no value,” people answer by giving us a cost analysis of coal or any other natural product. They admit readily enough that the price, in most cases, includes human services. One man has dug the earth; another has drained off the water; this man has brought the coal up from the mine; another one has delivered it; and the sum total of all these actions constitutes, they say, almost all the value of the coal. Yet there still remains a part of the value that does not correspond to any labor, to any service. That is the price of the coal lying underground, still untouched, as they say, by human labor. This is the owner's share; and since this part of the value is not created by man, it must indeed be created by Nature.

I reject this conclusion, and I warn the reader that if he accepts it in any guise whatsoever, he will make no further progress in the science of political economy. No, value is no more created by an act of Nature than matter is created by the action of man. One of two things must be true: either the owner has contributed to the final result and has performed real services, in which case the part of the value that he has set on the coal falls rightly within my definition; or else he has entered the transaction as a parasite and, in that case, has been sharp enough to receive payment for services that he did not perform; the price of the coal is improperly raised. This situation proves that injustice has crept in; but it cannot upset the theory to the point of warranting the assertion that that portion of value is material, that it has combined, like a physical element, with the gratuitous gifts of Providence. And here is the proof: Put an end to the injustice, if there is injustice, and the corresponding amount of value will disappear. Such would not be the case, certainly, if value were inherent in matter and created by Nature.

Let us now pass to the second of our most elemental wants: security.

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A certain number of men land on an inhospitable shore. They set to work. But not one of them ever knows at what moment he will have to stop his work to defend himself against savage beasts or men more savage still. Beyond the time and effort spent directly in defending themselves, more is required to provide arms and munitions. They finally realize that the total loss in effort would be infinitely less if some of them gave up their other work and devoted themselves entirely to this service. They would assign to it those with the most skill, courage, and strength. These latter would perfect themselves in an art that would be their constant occupation; and while they watched over the safety of the community, the others would bring in from their labors more satisfactions for everybody than would have been possible if ten of their number had not been removed from the general working force. Consequently, the arrangement is carried out. What can we see in this except more progress in the direction of the division of labor, introducing and requiring an exchange of services?

Are the services of these troops, soldiers, militiamen, guards—call them what you will—productive? Undoubtedly, since the arrangement is made solely in order to increase the ratio of total satisfactions to the general effort.

Do these services have value? They do indeed, since they are appraised, assigned a price, evaluated, and, after all, paid for by other services against which they are compared.

The form under which the remuneration is stipulated, the manner of assessment, the procedure whereby the terms of the arrangement are discussed and agreed upon, all this in no wise alters the principle. Do some save the others effort? Do some procure satisfactions for the others? If so, then there is exchange, comparison, evaluation of services, and there is value.

Services of this type, in a complex society, often lead to terrible consequences. Since the very nature of the services demanded from this class of workers requires that force be placed in their hands, and enough force to overcome all resistance, those to whom it has been entrusted may abuse it and turn it against the community itself. It can also happen, since they receive from the community services that are proportionate to the community's need for security, that they foment a sense of insecurity and, Edition: current; Page: [118] through overcunning diplomacy, involve their fellow citizens in continual warfare.

All this has been known to happen and still happens. It results, I admit, in upsetting frightfully the just balance of reciprocal services. But it does not result in altering in any way the fundamental principle or the scientific theory of value.

One or two more examples. I beg the reader to believe that I am just as aware as he is of the wearisomeness and dullness of this series of hypothetical cases, all presenting the same proofs, all reaching the same conclusions, all couched in the same terms. I am sure that it will be realized that this procedure, if not the most entertaining in the world, is the surest way to establish the true theory of value and thus open the road that we must travel.

We are in Paris. This vast metropolis seethes with countless desires; it also abounds with the means of satisfying them. A host of men, wealthy or well-off, turn their energies to industry, the arts, politics; and, when evening comes, they are eager for an hour's diversion and relaxation. First among the pleasures so avidly sought after is that of hearing Mme. Malibran sing Rossini's beautiful music or Rachel interpret Racine's admirable poetry. Only two women in all the world can provide such noble and exquisite pleasure; and, unless recourse could be had to violence or torture, which probably would not succeed, they will perform only on their own terms. Thus, the services requested from Malibran and Rachel will have great value. This explanation is prosaic enough, but nonetheless true.

Let a wealthy banker decide that, to gratify his vanity, he will have one of these great artists appear at his home, and he will discover, through personal experience, that my theory is correct in all respects. He seeks a great satisfaction; he desires it keenly; a single person in the world can provide it. The only means of Edition: current; Page: [119] inducing the person to accept is by offering a very considerable remuneration.

What are the extreme limits within which the transaction will be conducted? The banker will go to the point of preferring to do without the satisfaction rather than pay the price demanded for it; the diva, to the point of preferring the price offered to not being paid at all. The point of balance between these two extremes will determine the value of this special service, as it does all others. In many cases it happens that usage may have fixed this delicate point. People in high society have too much good taste to haggle over certain services. It may even happen that the remuneration will be gallantly disguised to mitigate the crassness of economic law. Yet economic law presides over this transaction just as surely as it does over the most commonplace transactions, and the nature of value is not changed because the experience or urbanity of the contracting parties enables them to dispense with certain details of the bargaining.

Thus are explained the vast fortunes earned by great artists of exceptional talent. Another circumstance favors them. The nature of their services is such that they can be rendered, for the same effort, before a great multitude of persons. However large may be the auditorium, provided Rachel's voice can fill it, every spectator there receives the full impact of her inimitable rendition. This, we can see, forms the basis of a new arrangement. Three or four thousand persons sharing the same desire can settle upon a certain amount to be contributed by each one; and the sum total of their combined services represented by this contribution, which is offered as a tribute to the great tragic actress, exactly balances the unique services that she renders simultaneously to all her listeners. This is value.

Just as a great number of auditors may reach an agreement to listen, so a group of actors may reach an agreement to sing in an opera or present a play. Agents may be called in to spare the contracting parties countless petty details of production. Value is multiplied, is made more complex, is ramified, is distributed more widely; but its nature does not change.

Let us end with what are called exceptional cases. They are Edition: current; Page: [120] the acid test of good theories. When a rule is correct, the exception does not weaken it, but confirms it.

Here is an old priest walking along, pensive, a staff in his hand, a breviary under his arm. How serene his features! How expressive his countenance! How rapt his look! Where is he going? Do you not see the church spire on the horizon? The young village vicar does not yet trust his own prowess; he has called the old missionary to his aid. But, before he could do so, a number of arrangements had to be made. The elderly preacher will indeed find bread and board at the rectory. But between one Lent and another, one has to live; it is the common law. Therefore the young vicar has taken up a collection, modest, but sufficient, from the rich of the village; for the old pastor was not demanding, and in response to the letter he had been written he replied: “My daily bread, that is my necessary expense; a sou to give as alms to the poor, that is my luxury.”

Thus, the economic prerequisites are duly satisfied; for political economy insists on slipping in everywhere and is involved in everything, and I really believe that to it should be attributed the quotation: Nil humani a me alienum puto.

Let us pursue this illustration a little further, from the economic point of view, naturally.

This is a true exchange of services. On the one hand, an old man agrees to devote his time, his energies, his talents, his health, to bring some degree of enlightenment to the minds of a small number of villagers, to raise their moral level. On the other hand, bread for a few days, a superb bombazine cassock, and a new broad-brimmed hat are guaranteed the man who preaches the word of God.

But there is something else here. There is a veritable bombardment of sacrifices. The old priest refuses everything that is not absolutely indispensable to him. Of this poor pittance half is taken care of by the vicar; and the other half is raised by the Croesuses of the village, relieving the other villagers of the cost Edition: current; Page: [121] of providing their share, who nevertheless will be edified by the sermons.

Do these sacrifices invalidate our definition of value? Not in the least. Every man is free to render his services on his own terms. If the terms are extremely easy, or indeed gratis, what is the result? The service retains its utility, but loses its value. The old priest is convinced that his efforts will receive their reward in another world. He does not expect it here below. He knows, doubtless, that he renders his auditors a service by speaking to them; but he also thinks that they render him a service by listening to him. It follows that the transaction is made on a basis advantageous to one of the contracting parties, and with the consent of the other. That is all. In general, exchanges of services are motivated and evaluated by considerations of self-interest, but sometimes, thank Heaven, by the promptings of altruism. In such cases either we surrender to others satisfactions that we had the right to keep for ourselves, or we exert for them efforts that we could have devoted to ourselves. Generosity, loyalty, self-sacrifice are impulses of our nature that, like many other factors, influence the current value of a service contracted for, but do not change the general law of value.

In contrast to this reassuring example, I could introduce another of a quite different character. For a service to have value in the economic sense of the word, that is, actual value, it is not obligatory that the service be real, conscientiously rendered, or useful; all that is necessary is that it be accepted and paid for by a service in return. The world is full of people who foist upon the public and receive from it payment for services of highly questionable worth. Everything depends on the judgment passed on the services, and for that reason morality will always be the best auxiliary of political economy.

Some rogues succeed in spreading a false belief. They are, they say, the special emissaries of Heaven. They can open as they choose the gates of Paradise or of Hell. When this belief has taken root, they say, “Here are some little images to which we have given such power that they can make those who wear them happy through all eternity. Giving you one of these images is Edition: current; Page: [122] rendering you an immense service; give us, therefore, services in return.”

This is a created value. It is based on an erroneous appraisal, you will say; that is true. The same can be said of many material things whose value is indisputable, for they would find purchasers if they were put up for auction. The science of economics would be impossible if it recognized as values only those values that are judiciously appraised. At every step it would be necessary to repeat a course in physics or the moral sciences. In the state of isolation, a man may, by reason of depraved desires or poor judgment, pursue with great effort an unreal satisfaction, a delusion. Similarly, in society, it happens, as a philosopher said, that sometimes we purchase our regrets at a very high price. If it is in the nature of human intelligence to be more disposed to truth than to error, all these frauds are destined to disappear, these false services to be refused, to lose their value. Civilization in the long run will put all things and all men in their proper place.

I must, however, terminate this overlengthy analysis. The wants of breathing, drinking, eating; the wants of vanity, of the mind, of the heart, of public opinion, of well-founded or groundless hopes—we have sought value in all of them, and we have discovered it wherever services are exchanged. We have found it to be everywhere of identical nature, based on a clear, simple, absolute principle, although affected by a multitude of varying circumstances. If we had passed all our other wants in review—if we had summoned the cabinetmaker, the mason, the manufacturer, the tailor, the doctor, the doorman, the lawyer, the businessman, the painter, the judge, the President of the Republic—we should have discovered nothing more: sometimes material things, sometimes forces furnished gratis by Nature, but always human services exchanged for other human services, being measured, estimated, appraised, evaluated by comparison with one another, and alone evidencing the result of this evaluation, that is, value.

There is, nevertheless, one of our wants of a very special nature, which binds our society together, which is both the cause and the effect of all our transactions and the perennial problem of Edition: current; Page: [123] political economy. I wish to say a few words about it. I mean the want of exchanging.

In the preceding chapter we described the marvelous effects of exchange. They are such that men are naturally disposed to facilitate exchange even at the price of great sacrifice. For that reason there are highways, canals, railroads, wagons, ships, businessmen, merchants, bankers; and it is impossible to believe that humanity, in order to facilitate exchange, would have subjected itself to such a tremendous levy on its energies if it had not found a large measure of compensation in the act of exchange.

We have also seen that simple barter could make possible nothing more than very inconvenient and limited transactions.

For this reason men thought of the idea of breaking up barter into two factors, buying and selling, through the medium of an intermediate commodity, easily divisible and, above all, possessing value, so that it would in its own right commend itself to the public's confidence. This commodity is money.

What I wish to note here is that what we call, by ellipsis or metonymy, the value of gold and silver, rests on the same principle as the value of air, water, the diamond, the sermons of our old missionary, or the trills of Mme. Malibran; that is, on services rendered or received.

Gold, which is widely distributed along the favored banks of the Sacramento, does indeed derive from Nature many of its desirable qualities: malleability, weight, beauty, brilliance, even utility, if you wish. But one thing Nature did not give gold, because Nature is not concerned with it, and that is value. A man knows that gold corresponds to a much felt want, that it is greatly desired. He goes to California to look for gold, just as my neighbor a little while ago went to the well to get water. He exerts strenuous efforts, he digs, he shovels, he washes away gravel, he melts the ore, and then comes to me and says, “I will do you the service of turning this gold over to you; what service will you render me in return?”

We discuss the matter; each one ponders over the factors that enter into the decision; at last we come to an agreement; and there we have value made manifest and definite. Deceived by the Edition: current; Page: [124] abbreviated expression, “Gold has value,” we might well believe that gold contains value just as it does weight or malleability, and that Nature took the pains to place it there. I trust that the reader is now convinced that this is a misapprehension. He will become convinced later that it is a deplorable misapprehension.

There is also another error involving gold, or rather money. Since it is customarily the intermediate agent in all transactions, the mean term between the two extremes in roundabout or indirect barter, since its value is always the standard of comparison when two services are to be exchanged, it has become the measure of value. Practically, it cannot be otherwise. But our science should never lose sight of the fact that money, as far as value is concerned, is subject to the same fluctuations as any other product or service. Science does lose sight of this fact frequently, and it is not surprising. Everything seems to conspire to cause money to be considered the measure of value in the same sense that the litre is a measure of capacity. It plays an analogous role in transactions. We are not conscious of its fluctuations because the franc, along with its larger and smaller components, always retains the same denomination. And even arithmetical tables conspire to encourage the confusion by listing the franc, like a measure, alongside the metre, the litre, the are, the stere, the gramme, etc.

I have defined value, at least as I conceive it. I have subjected my definition to the test of various and sundry cases; no one of them, it seems to me, has disproved it. Finally, the scientific sense that I have given the word is in accord with common usage, a fact that constitutes no negligible advantage or trifling guarantee; for what is science except experience viewed in the light of reason? What is theory except the methodical presentation of universal practice?

The reader must permit me now to glance rapidly at the systems that have been accepted up to the present time. It is not in a spirit of controversy, and even less of criticism, that I undertake this survey, and I should gladly abandon it if I were not convinced that it can cast new light on the central thought of this book.

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We have seen that writers on the subject have sought to locate the principle of value in one or more of the accidental phenomena that influence it greatly—physical composition (materiality), durability, utility, scarcity, labor, etc.—as a physiologist might seek to locate the principle of life in one or more of the external phenomena that encourage its development: air, water, sunlight, electricity, etc.

Physical Composition (Materiality) of Value

“Man,” says M. de Bonald, “is an intellect served by bodily organs.” If the economists of the materialistic school had merely tried to say that men can render one another services only through a physical medium, in order to conclude that there is always a material element in these services, and consequently in value, I should carry the matter no further, since I have always had a horror of those quibblings and subtleties in which our minds are only too prone to delight.

But this is not what they meant. They believed that value was communicated to matter, either by men's labor or by the action of Nature. In a word, deceived by the elliptical expressions, “Gold is worth so much,” “wheat is worth so much,” etc., they were led to see in matter a quality called value, as the physicist finds in it density and weight—and even these attributes have been questioned.

However that may be, I most positively question the attribution of value to it.

At the outset we must admit that matter and value are rarely separated. When we say to a man, “Deliver this letter,” “Fetch me some water,” “Teach me this science or that technique,” “Give me advice on my illness or my lawsuit,” “Guard my safety while I work or sleep,” what we ask for is a service, and in this service we recognize, before the whole world, that there is value, since we willingly pay for it with an equivalent service. It would be strange if we should refuse to admit in theory what universal assent admits in practice.

It is true that our transactions often involve material objects; Edition: current; Page: [126] but what does this prove? It proves that men, by exercising foresight, often get ready to render services that they know will be asked of them. Whether I buy a suit ready-made or bring in a tailor to work at my house by the day, in what respect does this change the principle of value, particularly to the extent of making it reside at one time in the suit and at another time in the service?

Here we could ask a subtle question: Must we see the principle of value in the material object, and therefore, by analogy, attribute it to the service? I maintain that it is just the contrary; we must recognize that it is in the services, and then attribute it, if you will, by metonymy, to the material object.

Besides, the numerous examples that I have presented to the reader relieve me of the necessity of carrying this discussion further. But I cannot refrain from trying to justify myself for having brought it up, by showing to what dangerous conclusions we can be led by an error, or, if you prefer, by a half-truth, that we encounter at the beginning of our scientific study.

The least of the drawbacks to the definition that I am assailing is that it has mutilated and stunted political economy. If value is attributed to matter, then, where there is no matter there is no value. Thus, the physiocrats used the term “sterile” classes to designate three-fourths of the population, while Adam Smith softened it to “unproductive” classes.

And yet, since in the last analysis facts are stronger than definitions, these classes simply had to be brought back, by some route or other, into the orbit of economic study. The materialists did it by way of analogy; but their scientific language, created for other data, was already so materialistic in tone that the analogies they used resulted in a shocking extension of the meaning of their terms. What do such phrases as these mean: To consume an immaterial product? Man is accumulated capital? Security is a commodity?

They not only made their language a materialistic jargon, but they were also reduced to overloading it with subtle distinctions in their attempt to reconcile ideas that they had erroneously separated. They invented value in use in contrast to value in exchange.

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Finally, and this is a serious error indeed, the concepts of the two great social phenomena, private property and the communal domain, were so confused that the former could not be justified, and the latter could not be discerned.

In point of fact, if value resides in matter, then it is mixed with those other physical qualities of an object that constitute its usefulness to man. Now, these qualities are often placed in the object by Nature. Therefore, Nature helps to create value, and hence we must attribute value to those things that in essence are free of charge and common to all. Where, then, is the basis of property to be found? When the payment that I make to acquire a material product, wheat, for example, is distributed to all the workers who, in its production, have rendered me services, who should receive the share corresponding to the amount of value that is due to Nature and that man had nothing to do with? Should it be paid to God? Nobody supports this idea, and God has never been known to claim His wages. Should it be paid to a man? On what grounds, since, according to the hypothesis that value resides in matter, he has done nothing to earn it?

Let no one think that I am exaggerating, that in the interest of my own definition I am trying to force the economists' definition to its rigorously logical conclusions. On the contrary: they themselves very explicitly have drawn these conclusions under the pressure of logic.

Thus, Senior has gone so far as to say: “Those who have appropriated the resources of Nature receive compensation in the form of rent without having made any sacrifices. Their role consists merely of holding out their hands for contributions from the rest of the community.” Scrope asserts: “Ownership of land is an artificial restriction placed on the enjoyment of the gifts that God had intended to be used for the satisfaction of the wants of all men.” Say affirms: “It would seem that arable land should be counted as natural wealth, since it is not of human creation but is given gratis to man by Nature. But as this wealth is not fugitive Edition: current; Page: [128] like air or water, since a field is a fixed and circumscribed area that certain men have managed to appropriate to themselves, excluding all other men who have given assent to the appropriation, land, which was a gratuitous asset of Nature, has become social wealth, which must be paid for if used.”

Certainly, if this is true, Proudhon was right in asking this terrible question, to which he gives an answer more terrible yet:

“To whom should the rent of the land be paid? To the one who produced the land, of course. Who made the land? God. In that case, landowner, withdraw.”

Yes, through a faulty definition, political economy has put logic on the side of the socialists. It is a terrible weapon, but I shall break it in their hands, or rather, they shall gladly surrender it to me. Nothing will remain of their conclusions after I have destroyed their original principle. And I propose to prove that, while Nature combines with man's acts to produce wealth, yet what Nature does remains free of charge and common to all by its very essence, and only what man does represents services, value; it alone requires payment; it alone is the foundation, the explanation, and the justification of private property. In a word, I maintain that, in their relation to one another, men are owners only of the value of things; and that, as they pass products from hand to hand, what they bargain for is only value, that is, reciprocal services, adding as a gratuitous gift, into the bargain, all the qualities, properties, and utilities imparted to these products by Nature.

If political economists, by misunderstanding this fundamental consideration, have weakened the theoretical basis of the defense of the right to private property, representing it as an unnatural institution, necessary, but unjust, they have at the same time neglected and left completely unnoticed another admirable phenomenon, the most moving evidence of God's bountiful Providence Edition: current; Page: [129] toward His creature, man, namely, the phenomenon of the progressive trend toward more and more gratuitous and common utility.

Wealth (taking this word in its generally accepted sense) stems from the combination of two kinds of operations, those of Nature and those of man. The former are free of charge and common to all, by divine gift, and never cease to be so. The latter alone possess value, and consequently they alone can be claimed as private property. But in the course of the development of human intelligence and the progress of civilization, the action of Nature plays a larger and larger role in the creation of any given utility, and the action of man, a proportionately smaller one. Hence, it follows that the area of gratuitous and common utility constantly increases among men at the expense of the area of value and private property—a fruitful and reassuring observation that is entirely lost sight of as long as political economists attribute any value to the action of Nature.

In all religions God is thanked for His bounty. The father blesses the bread that he breaks and gives to his children—a moving tradition that would not be justified if the blessings of Providence were not given gratis.

Durability of Value

Durability, that so-called sine qua non of value, is connected with what I have just discussed. For value to exist, Adam Smith believed, it must be fixed in some object that can be exchanged, accumulated, preserved—consequently in something material.

“There is one kind of labor,” he says, “that increases1 the value of the object on which it is expended. There is another kind that does not have this effect.”

“The labor that goes into manufactured goods,” Smith adds, “is fixed and takes concrete form in some salable article of merchandise, which lasts at least for some time after the work is completed. The work of servants, on the contrary [and the author lists soldiers, magistrates, musicians, teachers, etc., under this Edition: current; Page: [130] heading] is not fixed in any salable merchandise. The services disappear as rapidly as they are performed and leave no trace of value behind them.”

We see that it is implied here that value refers to the modification of things rather than to men's satisfactions. This is a colossal error; for if it is good that the form of things be modified, it is solely in order to attain the satisfaction that is the goal, the end, the consummation of all effort. If, then, we achieve the satisfaction by immediate and direct effort, the result is the same; if, moreover, the effort can be transferred, exchanged, evaluated, it contains the principle of value.

As for the time interval between the effort and the satisfaction, Smith gives it too much importance when he says that the existence or nonexistence of value depends on it. “The value of an article of salable merchandise,” he says, “lasts at least for some time.”

Yes, indubitably, it lasts until the article has fulfilled its function, i.e., to satisfy a want, which is exactly the case with a service. As long as this dish of strawberries stays on the side table, it will retain its value. But why? Because it is the result of a service I decided to render myself or that others rendered me in consideration of payment, and a service of which I have not yet availed myself. As soon as I avail myself of it, by eating the strawberries, the value will disappear. The service will have vanished, leaving no trace of value behind it. Exactly the same thing holds true of a personal service. The consumer causes the value to vanish, because it was created for this end. It makes little difference to the notion of value whether the pains taken today satisfy a want immediately or tomorrow or next year.

Suppose I am afflicted with a cataract. I call an oculist. The instrument he uses has value, because it is durable, but not the operation, although I pay for it, argue about the fee, and even compare it with the fees of other oculists! But such an assumption is contrary to the most ordinary facts, the most widely accepted notions; and what kind of theory is it that, when it cannot explain universal practice, dismisses it as of no account?

I beg the reader to believe that I am not allowing myself to be Edition: current; Page: [131] carried away by undue love of controversy. If I dwell on certain elementary ideas, I do so in order to prepare the way for most important conclusions that will be evident later. I do not know whether or not I am violating the laws of method by anticipating these conclusions, but in any case I permit myself this minor infraction for fear of trying the reader's patience. For this reason at an earlier point in my book I referred in an anticipatory way to private property and common utility. For the same reason I shall now say a word about capital.

Adam Smith, who made wealth an attribute of matter, could conceive of capital only as an accumulation of material objects. How, then, can value be assigned to services that cannot be accumulated or turned into capital?

Among those things called capital goods we place tools, machines, industrial equipment, at the head of the list. They serve to apply the forces of Nature to the work of production, and since the power of creating value was attributed to these forces, economists were led to believe that these tools of production, in themselves, possessed the same faculty, independently of any human service. Thus, the spade, the plow, the steam engine, were supposed to work together simultaneously with natural resources and human forces in creating not only utility, but value as well. But all value is paid for in exchange. Who, then, was to be paid for that part of value which is independent of human service?

It is for this reason that Proudhon's school, after questioning the legitimacy of land rent, is led to question interest on capital as well—a broader concept, since it embraces the first. I maintain that the Proudhon fallacy, from the scientific point of view, has its origins in Smith's. I shall show that capital, like natural resources, taken by itself and in reference to its own action, creates utility, but never value. Value, in its essence, is the product of a legitimate service. I shall show also that, in the social order, capital is not an accumulation of material objects, dependent on the durability of matter, but an accumulation of values, that is, of services. Hence, this recent attack on the idea of the productivity of capital will be repulsed—virtually at least, by destroying its foundation—and, moreover, in a way that should fully satisfy the very Edition: current; Page: [132] people who instigated it; for if I prove that the phenomenon of exchange is nothing but a system of mutual services, M. Proudhon must own himself beaten by the very triumph of his own principle.

Labor

Adam Smith and his disciples have ascribed value to labor under the condition of materiality. This is contradictory to their other theory that the forces of Nature have some share in the production of value. I have no need here to refute the contradictions that are evident in all their unfortunate conclusions when these authors speak of land rent or of interest on capital.

However this may be, in finding the principle of value in labor, they would be coming quite close to the truth if they did not make reference to manual labor. I said, in fact, at the beginning of this chapter that value must be related to effort, an expression that I preferred to “labor,” since it is more general and includes the whole area of human activity. But I hastened to add that it could have its source only in efforts that were exchanged, or reciprocal services, because it is not something existing by itself, but solely as an expression of a relationship.

There are, then, strictly speaking, two flaws in Smith's definition. The first is that it does not take exchange into account, without which value can neither be created nor conceived of; the second, that it uses a word, “labor,” which is too narrow in its meaning, unless that meaning is extended beyond its normal limits to include not only the degree of intensity and the length of time expended, but also the skill and sagacity of the worker, and even the good or bad fortune he happens to encounter.

Note that the word “service,” which I substitute in the definition, eliminates these two flaws. It necessarily implies the idea of transmission, since a service cannot be rendered unless it is received; and it also implies the idea of an effort without assuming a corresponding amount of value.

Here is where the English economists' definition fails most seriously. To say that value resides in labor is to suggest that Edition: current; Page: [133] the two are in a reciprocal relation, that there is a direct proportion between them. In this respect, the definition is contrary to the facts, and a definition contrary to the facts is a faulty one.

Very frequently a piece of work that is considered insignificant in itself is accepted by the world as having tremendous value (examples: the diamond, a prima donna's singing, a few strokes of a banker's pen, a shipper's lucky speculation, the lines of a Raphael's brush, a papal bull of indulgence, the easy duties of a queen of England, etc.); even more frequently a slow, exhausting task ends in disappointment, in a nonvalue. If such is the case, how can we establish a correlation, a fixed ratio, between value and labor?

My definition eliminates the difficulty. It is obvious that there are circumstances under which one may render a great service that does not require great pains; others under which, after taking great pains, one finds that no service has been rendered to anyone, and therefore it is more exact, from this point of view also, to say that value resides in service rather than in labor, since it exists in direct proportion to the former and not to the latter.

I go further. I maintain that value is appraised at least as much in consideration of the labor it can spare the user as of the labor it has cost the producer. I ask the reader to be good enough to recall the dialogue between the two contracting parties in the negotiations over the diamond. It was not prompted by exceptional circumstances, and I venture to say that in substance it is at the heart of all transactions. It must not be forgotten that we are assuming that the two contracting parties have complete freedom to exercise their will and judgment. Each of them is induced to agree to the exchange for various reasons, first among them, certainly, being the difficulty that the recipient of the diamond would experience in obtaining directly the satisfaction that the other offers him. This difficulty is taken into account by both parties, making the one more or less conciliatory and the other more or less exacting. The pains that the one offering the diamond went to also influence the negotiation; it is one of the elements, but not the only one. Therefore, it is not exactly correct to say that value is determined by labor. Value is determined by Edition: current; Page: [134] a great many considerations, all included in the word “service.”

It is very true that, under the influence of competition, values tend to be related efforts, or the rewards to the deserts. This is one of the beautiful harmonies of the social order. But, as far as value is concerned, this leveling tendency exerted by competition is entirely extraneous; and sound logic does not permit us to confuse the influence exerted on a phenomenon by an extraneous element with the phenomenon itself.2

Utility

Jean-Baptiste Say, unless I am mistaken, was the first writer to shake off the yoke of the concept of the materiality of value. Very explicitly he made value a moral quality—an expression that perhaps overshoots the mark, for value is neither physical nor moral; it is simply a relationship.

But the great French economist had himself said, “It is not granted to any man to arrive at the outermost limits of knowledge. Scholars climb upon one another's shoulders to explore a horizon that keeps on extending farther and farther.” Perhaps Say's glory (as far as the present question is concerned, for in other respects his claims to fame are as numerous as they are imperishable) is to have passed on to his successors a fruitful insight into the subject.

Say's axiom was this: The basis of value is utility.

If it were a question here of utility as related to human services, I should have no argument with him. At the very most I could say that the axiom is so self-evident as to be superfluous. It is quite clear that no one consents to pay for a service unless, rightly or wrongly, he considers it useful. The word service is so completely included in the idea of utility that it is simply the translation, and even the literal carrying over, of the Latin word uti, to serve.

But, unfortunately, this is not the way Say meant it. He found the principle of value not only in human services rendered through the medium of things, but also in the useful qualities that Nature imparts to things. By so doing, he again placed Edition: current; Page: [135] upon his neck the yoke of materiality, and, we must add, he did nothing to tear away the harmful veil that the English economists had thrown over the question of private property.

Before discussing Say's axiom on its own merits, I must indicate what its logical implications are, so as to avoid the reproach that I involved myself and the reader in a tedious dissertation.

There can be no doubt that the utility Say speaks of is the utility that resides in material things. If wheat, wood, coal, cloth have value, it is because these products have qualities that fit them for our use, to satisfy our need to be fed, warmed, clothed.

This being the case, since Nature creates utility, it also creates value—a most harmful confusion of ideas that the enemies of private property have forged into a terrible weapon.

Suppose I buy a product—wheat, for example—at the market for sixteen francs. A large part of the sixteen francs is distributed, through countless ramifications, through an inestimable maze of advances and repayments, among all the men, far and near, who have helped to put the wheat at my disposal. There is something for the man who plowed the field, the man who sowed the seed, who reaped the crop, who threshed the grain, who carted it away, as well as for the smith and the wagoner who made the equipment. Up to this point there is no disagreement, whether one is an economist or a communist.

But I perceive that four of my sixteen francs go to the owner of the land, and I have every right to ask whether this man, like all the others, has rendered me a service assuring him, like all the others, an unquestioned right to compensation.

According to the doctrine that it is the purpose of this book to establish, the answer is categorical. It is a very emphatic yes. Yes, the owner has rendered me a service. What is it? It consists in the fact that he or his ancestor has cleared the land and fenced it off; he has cleared out the weeds and drained off the stagnant water; he has fertilized the vegetable garden; he has built a house, barns, and stables. All this represents long hours of labor that he has performed himself or, what amounts to the same thing, paid others to perform for him. These are certainly services for which, by virtue of the just law of reciprocity, he Edition: current; Page: [136] should be reimbursed. Now, this owner has never been remunerated, at least to the full extent. Nor could he be, since he could not charge the whole amount to the first man who came along and bought a bushel of wheat. What, then, is the arrangement that has been worked out? Truly, the most ingenious, the most legitimate, and the most equitable in the world. It is this: Whoever wishes to buy a sack of wheat will pay not only for the services of the workers we have just enumerated but also for a small part of the services rendered by the owner; in other words, the value of the owner's services will be distributed over all the sacks of wheat that come from this field.

Now, we may ask whether this remuneration, set here at four francs, is too much or too little. I reply: This question does not concern the science of political economy, which notes that the value of the services of the owner of real property is governed by exactly the same laws as all other services; and that is sufficient.

Some may object that this system of piecemeal reimbursement would eventually result in the complete amortization of the owner's outlay, and consequently should lead to the cancelation of his property rights. Those who make this objection are not aware that it is the nature of capital to produce perpetual income, as we shall learn later.

For the moment, however, I must not stray longer from the subject, and I shall observe (for this is the gist of the matter) that out of my sixteen francs there is not a centime that is not used to pay for human services, that there is not one that corresponds to the so-called value that Nature is supposed to have imparted to the wheat by giving it utility.

But, if, basing your argument on the axiom of Say and the English economists, you assert, “Out of the sixteen francs, twelve go to the plowmen, sowers, reapers, wagon-drivers, etc.; two to pay for the owner's personal services; then two others represent a value that has as its basis the utility created by God, by natural resources, without any human co-operation”; do you not see that you will at once be asked, “Who is to profit from this part of value? Who has a right to this remuneration? God does not come forward to claim it. Who will dare stand in His place?”

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The more Say tries to explain private property according to this hypothesis, the more vulnerable his position becomes. First, quite properly, he compares the land to a laboratory where chemical experiments are conducted with results useful to mankind. “The land,” he adds, “is therefore the producer of a utility, and when it [the land] exacts payment in the form of a profit or a rent for the owner, it has indeed given something to the consumer in return for what the consumer gives it. It has given him a utility that it has produced, and because it has produced this utility, the land is just as productive as labor is.”

Thus, the assertion is clear-cut. Here are two claimants who come forward to divide the payment the consumer owes for the wheat, namely, land and labor. They have identical rights, for the land, says Say, is just as productive as labor is. Labor demands payment for a service, the land for a utility; yet the land does not request the payment for itself (under what form could it be made?), but for its owner.

Whereupon Proudhon summons the owner, who calls himself the land's authorized agent, to produce his credentials.

You tell me to pay you, in other words, to render you a service, says Proudhon, for receiving utility produced by natural resources, without assistance from man, who has already been paid separately.

But I insist on asking: Who will profit from my payment, that is, my services?

Will it be the producer of the utility, that is, the land? That is absurd, and I can bide my time quite easily until the land sends the bailiff after me.

Will it be a man? On what grounds? If it is for having rendered me a service, well and good. But in that case you share my point of view. Human service is the thing that has value, not Nature's; that is the conclusion to which I wished to lead you.

However, that is contrary to your own hypothesis. You say that the human services are paid fourteen francs, and that the two francs that complete the payment for the wheat correspond to the value created by Nature. In that case, I repeat my question: Edition: current; Page: [138] By what right can any man lay claim to them? And is it not unfortunately only too clear that, if you apply specifically the name of landowner to the man who claims the two francs, you are justifying that too-famous maxim: Property is theft?

And let no one think that this confusion between utility and value is limited to undermining the foundations of real property. After questioning the legitimacy of the idea of land rent, it leads also to questioning interest on capital.

Machines, tools of production, are, in fact, like the land, producers of utility. If this utility has value, it must be paid for; for the word “value” implies a right to payment. But to whom is it paid? To the owner of the machine, of course. Is it for a personal service? Then simply say that the value is in the service. But if you say that there must be first a payment for the service, and then a second for the utility produced by the machine, independently of any human action already paid for, we ask you to whom does this second payment go, and how can the man who has already been paid for all his services have the right to demand something more?

The truth is that the utility produced by Nature is free of charge, and therefore common to all, just like the utility produced by the tools of production. It is free of charge and common to all on one condition: that we take the pains, that we perform the service, of helping ourselves to it; or, if we ask someone else to take the pains or perform the service for us, that we render him an equivalent service in return. The value resides in these comparative services, and not at all in the natural utility. The pains can be great or small, a fact that changes the value, but not the utility. When we are near a gushing spring, the water is free to all, provided we are willing to stoop down to get it. If we commission a neighbor to go to this trouble for us, then I see an agreement, a bargain, a value, but the water remains free of charge, nevertheless. If we are an hour's distance from the spring, the terms of the bargain will be different in degree, but not in principle. Value will not on that account have passed into the water or into its utility. The water will continue to be free of charge on condition Edition: current; Page: [139] that we go and get it or pay those who, after free bargaining, consent to spare us this trouble by assuming it themselves.

The same holds true for everything. Utilities are everywhere about us, but we have to stoop to pick them up. This effort, sometimes very simple, is often very complicated. Nothing is easier, in most cases, than helping ourselves to water, whose utility has been prepared by Nature. It is not so easy to gather in wheat, whose utility has also been prepared by Nature. That is why the value of these two efforts differs in degree, but not in principle. The service is more or less exacting; consequently, it is worth more or less. The utility is and always remains free of charge.

Suppose a tool of production is introduced, what then is the result? The utility is more easily made available. Therefore, the service has less value. We certainly pay less for books since the invention of printing. An admirable and misunderstood phenomenon! You say that tools of production produce value. You are wrong. You should rather say that it is utility, and gratuitous utility, that they produce; as for value, far from producing any, they progressively destroy it.

It is true that the maker of the machine has rendered a service. He receives a remuneration that increases the value of the product. It is for this reason that we are inclined to think that we pay for the utility produced by the machine, but this is a delusion. We pay for the services contributed by all those who had a part in making it or operating it. So little value resides in the utility that has been produced that, even after we have paid for the new services, we obtain the utility on better terms than before.

Let us, then, learn to distinguish between utility and value. An understanding of the science of economics comes only at this price. I maintain, without fear of indulging in paradox, that the ideas of utility and value, far from being identical or even reconcilable, are opposites. Want, effort, satisfaction—this, we have said, is man from the economic point of view. Utility is related to want and satisfaction. Value is related to effort. Utility is the good that terminates want with satisfaction. Value is the Edition: current; Page: [140] evil, for it is born of the obstacle that intervenes between want and satisfaction. If it were not for obstacles, there would be no efforts to be made or exchanged; utility would be infinite, unconditionally free of charge and common to all, and the notion of value would never have been brought into the world. Because of the presence of obstacles, utility is free of charge only on condition that there be an exchange of efforts, which, when compared with one another, constitute value. The more obstacles are reduced by the bounty of Nature or the progress of science, the nearer utility comes to being absolutely free of charge and common to all; for the cost in terms of effort and, consequently, the value decrease along with the obstacles. I should consider myself fortunate indeed if, through all these dissertations, which may well appear unnecessarily subtle, which fill me with misgivings because of their length and at the same time because of their conciseness, I should succeed in gaining acceptance for this reassuring truth: Private ownership of value is legitimate; and this other comforting truth: Utility tends constantly to become the gratuitous and common possession of all.

Still another observation: Everything that serves us is useful (uti, “to serve”). Accordingly, it is highly doubtful whether anything exists in the universe, whether force or matter, that is not useful to man.

In any case, we can affirm, without fear of being mistaken, that countless things are useful to us without our being aware of the fact. If the moon were placed higher or lower in the heavens, it is quite possible that the mineral kingdom, consequently the vegetable kingdom, and consequently also the animal kingdom, would be profoundly modified. If it were not for this star shining so brightly in the sky as I write, perhaps the human race could not exist. Nature has surrounded us with utilities. We recognize this quality of being useful in many substances and phenomena; science and experience reveal it to us in others every day; in still others it exists, though completely and perhaps for all time unknown to us.

When these substances and these phenomena exert their useful action upon us, but without our agency, we have no interest in Edition: current; Page: [141] comparing the degree of utility they have for us; and, what is more to the point, we hardly have the means of doing so. We know that oxygen and nitrogen are useful to us, but we do not try, and should probably try in vain, to determine in what proportion. They do not furnish us with the elements necessary for evaluation, for value. I could say the same thing for the salts, the gases, the forces that abound throughout Nature. When all these agents move and combine so as to produce utility for us, but without our contributing to it, we enjoy this utility without evaluating it. When our co-operation is introduced and, above all, is exchanged, then and only then appraisal and value make their appearance, but they are applied to our co-operation, not to the utility of substances or phenomena of which we are frequently ignorant.

That is why I say: Value is the appraisal of services exchanged. These services may be very complex. They may have required vast amounts and various types of labor in times remote or recent. They may be transmitted from one hemisphere or generation to another hemisphere or generation, involving numerous contracting parties, necessitating credits, the advancing of funds, varied arrangements, before the general balance is arrived at. Yet the principle of value always resides in them, and not in the utility of which they are the vehicle, a utility which is essentially free of charge, which passes from hand to hand into the bargain, if I may be permitted the expression.

After all, if anyone persists in attributing the basis of value to utility, I have no quarrel with him; but let it be well understood that we do not mean that utility which is in things and phenomena by the gift of Providence or the power of science, but the utility of human services compared and exchanged.

Scarcity

According to Senior, of all the circumstances that influence value, scarcity is the most decisive. I have no objection to make to this remark, unless it is that by its form it assumes that value is inherent in things—an hypothesis that I will challenge if it is even Edition: current; Page: [142] hinted at. Fundamentally, the word “scarcity,” as used in connection with the subject with which we are dealing, expresses in abridged form this idea: Other things being equal, a service has greater value according to the difficulty we should experience in performing it for ourselves, and consequently, according to the more exacting terms we encounter when we ask someone else to do it for us. Scarcity is one of these difficulties. It is one more obstacle to surmount. The greater it is, the more we pay those who surmount it for us. Scarcity often occasions very high remunerations; and that is why I refused to agree a little earlier in this work with the English economists' position that value is in direct proportion to labor. We must take into account Nature's miserliness toward us in certain respects. The word “service” embraces all these meanings and shades of meaning.

Judgment

Storch attributes value to the judgment that enables us to discern it. Of course, every time we are confronted with a question of the relation between two things, we must compare and judge. Nevertheless, the relation is one thing, and the judgment we pass on it is another. When we compare the height of two trees, their heights and the difference between their heights are distinct from our evaluation of them.

But in determining value, what is the relation that we are to judge? It is the relation between two services that are exchanged. It is a question of knowing, when services are rendered and received, what is the value of the one in respect to the other. It is a question of knowing, when services, involving the transfer of acts or the exchange of things, are rendered and received, what the one is worth in respect to the other, keeping in mind all the circumstances, rather than concerning ourselves with the amount of intrinsic utility these acts or these things may contain; for this utility may fall partially outside the realm of human activity and therefore outside the realm of value.

Storch is not aware of the fundamental error that I am attacking, when he says:

“Our judgment enables us to discern the relation that exists Edition: current; Page: [143] between our wants and the utility of things. The verdict that our judgment pronounces on the utility of things constitutes their value.”

And, further on:

“In order to create value, three circumstances must coincide: (1) Man experiences, or conceives, a want. (2) Something exists that is capable of satisfying the want. (3) His judgment pronounces a favorable verdict on the utility of the thing. Hence, the value of things is their relative utility.”

During the daylight hours I experience the want of seeing clearly. Something exists that is capable of satisfying the want, sunlight. My judgment pronounces a favorable verdict on this thing's utility, and .... it has no value. Why? Because I enjoy it without having to ask a service from anyone.

At night I experience the same want. Something exists that is capable of satisfying it very imperfectly, a candle. My judgment pronounces a verdict on the utility, but on the relatively slight utility of this thing, and it has value. Why? Because the person who took the pains to make the candle is unwilling to render me the service of letting me have it unless I render him an equivalent service.

What we must compare and judge, to determine value, is not, therefore, the relative utility of the things, but the relation between the two services.

Expressed in these terms, I do not reject Storch's definition.

Let us summarize briefly to show that my definition includes all that is true in my predecessors' definitions and corrects all that is erroneous through their inclusion of too much or too little.

The principle of value, as I have said, resides in a human service. It is derived from the appraisal and comparison of two services. Value must be connected to effort. Service implies an effort of some sort. It supposes a comparison of efforts that are exchanged, or at least exchangeable. Service implies the term giving and receiving.

In fact, however, it is not proportional to intensity of effort. Service does not necessarily imply such a proportion.

Many outside circumstances influence value without becoming Edition: current; Page: [144] value themselves. The word “service” takes all these circumstances into account in their proper measure.

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.3

Utility

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.”

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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 of services, 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 Edition: current; Page: [146] 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 Edition: current; Page: [147] 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).

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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 the material 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 Edition: current; Page: [149] 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.

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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 Edition: current; Page: [151] 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 des for 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.

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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 Edition: current; Page: [153] 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 Edition: current; Page: [154] 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 Edition: current; Page: [155] 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.

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6: Wealth

Thus, in everything that is calculated to satisfy our wants and desires, two things must be considered and differentiated: what Nature has done and what man has done, what is free of charge and what is acquired through effort, the gift of God and man's service, utility and value. In the same object one of them can be immense, and the other imperceptible. While utility may remain constant, value can and does decrease steadily as ingenious new devices enable us to achieve an identical result with less effort.

At this point, even as we begin the study of political economy, we can foresee one of the greatest difficulties, one of the most fertile sources of misunderstanding, controversy, and error.

What is wealth?

Are we rich in proportion to the utilities we have at our disposal, that is, according to the wants and desires that we can satisfy? “A man is rich or poor,” wrote Adam Smith, “according to the number of useful things he is able to enjoy.”

Are we rich in proportion to the values we possess, that is, the services we have at our disposal? “Wealth,” said Jean-Baptiste Say, “exists in direct proportion to value. Wealth is great if the total value that it contains is considerable; it is small if the total value is small.”

Uninformed people give two meanings to the word “wealth.” Sometimes we hear them say: “The abundance of water in such and such a country is a source of wealth to it,” when they are thinking only in terms of utility. But when someone of them tries Edition: current; Page: [157] to ascertain his own wealth, he prepares what is called an inventory, in which he reckons value only.

With all due respect for the experts, I believe that, in this instance, the uninformed are right. Wealth, in fact, can be either real or relative. From the former point of view, it is reckoned according to our satisfactions. Mankind's wealth is greater or less according to its level of prosperity, whatever may be the value of the objects that maintain it. But suppose we want to know each man's individual share in the general prosperity, in other words, his relative wealth? This is a simple ratio, which value alone reveals, because value is itself a relative term.

Political economy is a science that concerns itself with men's general prosperity and material comfort, with the ratio of their efforts to their satisfactions, a ratio that is improved by the increase in the amount of gratuitous utility available for the work of production. In political economy, therefore, we cannot exclude this factor from our idea of wealth. Scientifically speaking, real wealth is not to be found in the sum total of values, but in the sum of gratuitous utility or onerous utility contained in these values. From the point of view of our satisfactions, that is, as far as our real wealth is concerned, we are as much enriched by the value that we have lost through progress in the means of production as by the value that we still possess.

In the transactions of everyday life we no longer take utility into account, in so far as, through the decrease in value, it becomes free of charge. Why? Because what is free of charge is common to all, and what is a common possession has no effect on each person's individual share of the total real wealth. No exchange is made of what is held by all in common; and since, in business transactions, we need to know only that proportion which is constituted by value, that is all we concern ourselves with.

A debate arose between Ricardo and Jean-Baptiste Say on this question. Ricardo used “wealth” in the sense of utility; Say, in the sense of “value.” Neither of them could possibly win a complete victory, because the word has both meanings, depending on whether one views wealth as real or relative.

But we must add a word of caution, all the more important Edition: current; Page: [158] because Say's authority is so great in such matters; for if we identify wealth (meaning the real, effective level of our material comforts) with value, if, in particular, we affirm that wealth and value are in direct proportion to each other, we run the risk of putting our economic thinking on the wrong track. The works of second-rate economists and of the socialists prove this only too well. This is an unfortunate starting point, since it loses sight of what is, in fact, humanity's noblest heritage; for we must consider as nonexistent that part of our material well-being which, through progress, has been rendered common to all, and we expose our minds to the greatest of all dangers—that of becoming involved in a petitio principii, in which we assume as true what we are trying to prove, of looking at political economy backwards and constantly confusing the goal that we wish to reach with the obstacle that blocks our way.

In fact, without these obstacles there would be no value. Value is the sign, the symptom, the testimony, the proof of our natural infirmity. It constantly reminds us of the sentence originally pronounced upon us: “In the sweat of thy face shalt thou eat bread.” For the Omnipotent the words effort, service, and, consequently, value, do not exist. As for us, however, we are placed in a world of utilities, of which many are free of charge, but others are to be had only at the price of our toil. Obstacles stand between these utilities and the wants that they can satisfy. We are condemned to doing without the utility or overcoming the obstacle by our efforts. Sweat must indeed fall from our brows, or from the brows of those who toil for our profit.

The more values a society possesses, therefore, the clearer the evidence that it has surmounted obstacles, but the clearer the evidence, also, that it had obstacles to surmount. Shall we go so far as to say that these obstacles create wealth, since without them the values would not exist?

We can imagine the case of two nations. One has more satisfactions than the other, but it has fewer values, because Nature has favored it and placed fewer obstacles in its way. Which nation is the richer?

We can carry this further: Let us take the same nation at two stages in its history. The obstacles to be overcome are the same. Edition: current; Page: [159] But today it overcomes them with such ease, it has become so efficient in its transportation, agriculture, textile production, for example, that the values of these things have been considerably reduced. It has, therefore, been able to choose one of these two courses: either to be content with the same satisfactions as before, translating its improved methods into increased leisure (and in that case shall we say that its wealth has declined because it has fewer values?); or else it can choose to apply the surplus efforts newly made available to it to the task of increasing its satisfactions, and should we be justified in concluding that because its total values remain stationary, its wealth has also remained stationary? This is what comes of identifying value with wealth.

This is indeed a treacherous shoal for the political economist. Is wealth to be measured by the satisfactions achieved or by the values created?

If there were no obstacles between utilities and wants, there would be no efforts, services, values, any more than there are for God; and, while measuring wealth in terms of satisfactions, mankind would be in possession of infinite wealth; yet in terms of value, it would have no wealth at all. Thus, two economists, according to the definition they chose, might say: Mankind is infinitely rich, or Mankind is infinitely poor.

The infinite, it is true, is in no respect an attribute of humanity. But mankind is never static; it always moves in some direction; it exerts efforts; it exhibits tendencies; it gravitates toward steadily increasing wealth or steadily increasing poverty. Now, how can political economists come to a common understanding, if this successive reduction of effort in relation to satisfaction, of pains to be taken or rewarded, that is, value, is considered by some an advance toward wealth and by others a descent into poverty?

Yet if the difficulty merely concerned economists, we could say: Let them have their arguments. But legislators and governments are daily required to take measures that exercise a very real influence over human affairs. And what a plight we are in if these measures are taken in ignorance so complete that wealth cannot be distinguished from poverty!

So, I make this declaration: The theory that defines wealth in Edition: current; Page: [160] terms of value is, in the last analysis, a mere glorification of the role of obstacles. It rests on the following syllogism: Wealth is proportional to value, value to effort, effort to obstacles; therefore, wealth is proportional to obstacles.

I make this further declaration: Because of the division of labor, which assigns every man to a trade or a profession, this illusion is very difficult to destroy. We all live by the services that we render in overcoming obstacles, satisfying wants, or removing pain: the doctor by combatting disease; the farmer, hunger; the textile manufacturer, cold; the carriage-maker, distance; the lawyer, injustice; the soldier, danger to the country; and so complete is the list that there is not a single obstacle whose elimination would not seem most inopportune and most inconvenient to someone, and even disastrous to society at large, since it would appear that a source of services, value, and wealth was to be destroyed. Very few economists have completely resisted this false notion, and, if political economy ever succeeds in dispelling it, on that score alone its practical mission in the world will have been accomplished; for I now make this third declaration: Our public policy is steeped in this notion, and whenever governments feel obliged to make special concessions to some class, profession, or industry, they follow no other procedure than to erect obstacles designed to encourage the development of a certain type of efforts, in order to increase artificially the number of services society will be obliged to call for, and thus to increase value and, supposedly, wealth.

And, in fact, it is very true that this procedure is useful for the class receiving the special favor. We see the ensuing self-congratulation and applause, and what happens? The same special concessions are successively granted all other classes.

First identify utility with value, then value with wealth. What could be more natural? Political economists have never been taken more unawares. For what has happened? At every step along the path of progress, they have reasoned thus: “The obstacle is lessened; therefore, effort is reduced; therefore, value is lowered; therefore, utility is decreased; therefore, our wealth is diminished; therefore, we are the most unfortunate of men for ever Edition: current; Page: [161] having bethought ourselves of inventing and exchanging, for having five fingers instead of three, and two arms instead of one; hence, we must set the government, which has force at its disposal, at correcting these abuses.”

This type of political economy in reverse supports a large number of newspapers and many sessions of our legislative assemblies. It misled the honest and philanthropic Sismondi; it is expounded very logically in M. de Saint-Chamans' book.

“A nation has two kinds of wealth,” he says. “If we consider only useful commodities from the point of view of their quantity, their supply, we deal with wealth that procures society things that it can consume, and this I shall therefore term consumers' wealth.

“If we consider commodities from the point of view of their exchangeable value, or simply their value, we deal with wealth that brings society value, and this I therefore term value wealth.

“Political economy deals primarily with value wealth; and it is with it primarily that government may properly deal.”

This being granted, what can political economy and government do? Political economy can indicate the means of increasing value wealth; and government can put these means into effect.

But value wealth is in proportion to efforts, and efforts are in proportion to obstacles. Political economy must therefore show the way, and government must employ all its resources to multiply the obstacles. This is the logical conclusion, and M. de Saint-Chamans faces it squarely.

Does exchange make it easier for men to acquire more consumers' wealth for less value wealth? Then we must restrain exchange.1

Is there any amount of gratuitous utility that we can replace with onerous utility—for example, by eliminating a tool or a machine? We must not neglect the opportunity, for it is obvious, Edition: current; Page: [162] he says, that if machines increase consumers' wealth, they decrease value wealth. “Let us bless the obstacles that the high cost of fuel in our country puts in the way of the multiplication of steam engines.”2

Has Nature favored us in any way? It is our loss, for, by so doing, she has deprived us of a chance to work. “I admit that it is quite possible for me to desire to see done by hand, sweat and toil, and forced effort, what can be produced spontaneously and without pains.”3

What a shame, therefore, that Nature has not obliged us to manufacture drinking water! It would have been a wonderful opportunity to produce value wealth. Most fortunately, we even the score with wine. “Find the secret of making wine flow as abundantly as water from springs in the earth, and you will discover that this fine system of things will bankrupt one quarter of France.”4

Within the gamut of ideas that our economist so naively runs, there are innumerable means, all very simple, of reducing men to the level where they may create value wealth.

The first is to take it away from them as rapidly as they acquire it: “If taxes confiscate money from areas where it is plentiful, in order to allocate it to areas where it is scarce, they serve a useful purpose, and this action, far from representing a loss to the state, represents a gain.”5

The second is, after taking it, to throw it away. “Luxury and extravagance, so disastrous to the wealth of private individuals, are advantageous to the wealth of the nation. ‘That's a fine moral doctrine you are preaching,’ people will say to me. I make no such claims. We are dealing with political economy, not morals. We are seeking means of making nations richer, and I preach the gospel of luxury.”6

An even faster means is to destroy it by a few good wars. “If you will admit with me that the extravagances of a spendthrift are as productive as any other expenditures; that government spending is equally productive, .... you will not be surprised at England's wealth, after this very costly war of hers.”7

But all these means of encouraging the creation of value wealth Edition: current; Page: [163] —taxes, luxury, war, etc.—must yield the palm to a much more effective device: conflagration.

“Construction is a great source of wealth, because it brings revenue to the sellers of builders' supplies, to workmen, and to various classes of artisans and artists. Melon quotes Sir William Petty who classes as national profit the work done for the rebuilding of London after the famous fire that destroyed two-thirds of the city, and he estimates it [this profit!] at a million pounds sterling (1866 value) per year for four years without injuring other businesses in any way. Without accepting this exact figure as a completely accurate estimate of this profit,” adds M. de Saint-Chamans, “we may be certain at least, that this event did not have an adverse effect on England's wealth at this period..... Sir William Petty's estimate is not impossible, since the need to rebuild London must have created vast sources of new revenue.”8

Economists who start from the premise that wealth is value would inevitably arrive at the same conclusions as M. de Saint-Chamans, if they were logical; but they are not logical, because on the road to absurdity all of us stop short of the final destination, some a little sooner, some a little later, according to the relative reasonableness of our minds. M. de Saint-Chamans himself seems to have drawn back just a shade from the full consequences of his theory when he finds that they lead to praise of conflagration as a road to wealth. We see him hesitate and content himself with perfunctory approval. Logically he should have carried his reasoning to its ultimate conclusion and stated openly what he clearly implies.

Of all economists, M. Sismondi is certainly the one who most distressingly falls afoul of this difficulty. Like M. de Saint-Chamans, he started with the idea that value is one of the component elements of wealth; like him he erected on this foundation a political economy in reverse, deploring everything that reduces Edition: current; Page: [164] value. He too praises obstacles; bans machinery; anathematizes exchange, competition, and freedom; glorifies luxury and taxes; and finally reaches this conclusion, that the more abundantly men have everything, the more completely they have nothing.

Yet M. de Sismondi seems, from beginning to end, to have a subconscious feeling that he is mistaken, and that a veil that he cannot lift may have interposed itself between his mind and the truth. He does not quite dare to draw explicitly, like M. de Saint-Chamans, the ultimate conclusions inherent in his theories; he is disturbed, he hesitates. He wonders sometimes if it is possible for all men, since the beginning of the world, to have been in error and on the road to suicide, in seeking to decrease the ratio of effort to satisfaction, that is, in seeking to decrease value. A friend and yet an enemy of liberty, he fears it, since, by creating the abundance that reduces value, it leads to poverty; and, at the same time, he does not know how to go about destroying this fatal liberty. Thus, he reaches the outer limits of socialism and artificial social orders; he suggests that government and the social sciences must regulate and restrict everything; then he realizes the danger of his advice, retracts, and finally gives way to despair, saying: “Liberty leads to a bottomless pit; restraint is as impossible as it is ineffective; there is no way out.” And there is none, indeed, if value constitutes wealth, that is, if obstacles to our well-being constitute our well-being, that is, if adversity is prosperity.

The latest writer, to my knowledge, to stir up this question is M. Proudhon. It was a windfall for his book, Economic Contradictions. Never was there a finer opportunity to seize an antinomy, a contradiction, by the hair and shout defiance at the science of political economy. Never was there a finer opportunity to ask, “Do you view increase in value as a good thing or as an evil? Quidquid dixeris argumentabor.” I leave it to the reader to imagine what a fine time he must have had!9

“I call upon every responsible economist,” he said, “to tell me, other than by rewording or repeating my question, for what reason value decreases as production increases, and vice versa. Edition: current; Page: [165] .... In technical terms, value in use and value in exchange, although necessary to each other, exist in inverse ratio to each other..... Value in use and value in exchange always remain, then, inextricably linked to each other, although by their nature they always tend to be mutually exclusive.

“There is no assignable cause or possible explanation for this contradiction inherent in the notion of value..... If we grant that man has need of a great variety of commodities that he must obtain through labor, we are necessarily faced with a conflict between value in use and value in exchange, and from this conflict a contradiction arises at the very outset of our study of political economy. No intelligence, no will, either divine or human, can prevent it. Thus, instead of seeking a useless explanation, let us be content to note the fact that the contradiction is inevitable.”

We know that the great discovery with which we can credit M. Proudhon is that everything is both true and false, good and bad, legal and illegal; that there is no principle that is not self-contradictory; and that the contradiction is not in erroneous theories, but in the very essence of things and phenomena: “It is the expression of pure necessity, the inner law of being, etc.”; consequently, it is inevitable, and it would be theoretically irremediable, but for the series of contradictory elements, and practically irremediable but for the banque du peuple. God, a contradiction; liberty, a contradiction; property, a contradiction; value, credit, monopoly, common ownership, contradiction on contradiction! When M. Proudhon made this tremendous discovery, his heart must surely have leaped for joy; for since contradiction is in all things, there is always something to contradict, which for Edition: current; Page: [166] him is the supreme happiness. He once said to me, “I'd be perfectly willing to go to heaven, but I'm afraid that everybody agrees up there, and I couldn't find anyone to argue with.”

It must be admitted that the subject of value gave him an excellent opportunity to indulge in contradiction to his heart's content. But, begging his pardon, the contradictions and the conflicts that this word “value” suggests stem from erroneous theories, and not at all, as he asserts, from the nature of the phenomenon.

Theorists first began by confusing value with utility, that is, by confusing the ills with the benefits (for utility is the means to the end sought—the benefit—and value comes from the obstacle—the ill—that stands between the end and the desire). This was the initial error, and when they saw its consequences, they thought that they could save the situation by thinking up a distinction between value in use and value in exchange, a cumbersome tautology that involved the fallacy of applying the same word, “value,” to two opposite phenomena.

But if, setting aside these subtleties, we keep to the facts, what do we see? Certainly, only something very natural and far from contradictory.

Suppose that a man works exclusively for himself. If he acquires skill, if his capacities and his intelligence develop, if Nature becomes more generous, or he learns to utilize it better for his needs, he has more comforts and well-being and goes to fewer pains. Where do you see any contradiction, and where do you find anything to make such protests about?

Now, instead of being alone, this man has contacts with other men. They exchange, and I repeat my observation: In proportion as they acquire skill, experience, capacity, intelligence, in proportion as Nature, becoming more generous, or being made more amenable, co-operates more effectively, they have more comforts and well-being and go to fewer pains; there is a greater amount of gratuitous utility at their disposal; in their transactions they offer one another a larger proportion of usable results for a given amount of labor. Where, then, is the contradiction?

Ah! if you make the error, like Adam Smith and all his successors, Edition: current; Page: [167] of applying the same term “value” both to results obtained and to trouble taken, then, the antinomy, or the contradiction, appears. But, you may be sure, it lies entirely in your erroneous explanation, and not at all in the facts.

M. Proudhon would, therefore, have had to formulate his proposition in this way: Granted man's need for a great variety of commodities and the necessity of providing them through his labor and his precious gift of learning and improving, nothing in the world is more natural than the steady increase of results in relation to efforts, and it is not at all contradictory that a given value transmits more in the way of available utilities.

For, once again, utility is, for man, the good side of the coin; value, the bad side. Utility relates only to our satisfactions; value, to the pains we take. Utility makes possible our satisfactions and is in proportion to them; value indicates our innate infirmity, is created by obstacles, and is in proportion to them.

By virtue of man's perfectibility, gratuitous utility tends more and more to replace the onerous utility denoted by the word “value.” Such is the phenomenon, and it most certainly presents nothing contradictory.

But there still remains the question of determining whether the word “wealth” is to include both these utilities taken together or the second only.

If we could set up, once and for all, two classes of utility, put on one side all those that are gratuitous, and on the other all that are onerous, we should thus establish two classes of wealth that we should call, with M. Say, natural wealth and social wealth; or else, with M. de Saint-Chamans, consumers' wealth and value wealth. This done, we should, as these writers suggest, concern ourselves no further with the first class.

“The blessings available to all,” says M. Say, “which all may enjoy as they will, without the necessity of procuring them, without fear of exhausting them, such as air, water, sunlight, etc., having been given us gratis by Nature, may be called natural wealth. Since they cannot be produced or distributed or consumed, they do not fall within the scope of political economy.

“That type of wealth which it is the function of political economy Edition: current; Page: [168] to study is composed of those things that we possess having a recognized value. We can call it social wealth, because it exists among men living together in society.”

“It is with value wealth,” says M. de Saint-Chamans, “that political economy is primarily concerned, and every time I shall speak in this book of wealth without specifying the type, it will be to this type only that I refer.”

Almost all economists have considered the matter in this light.

“The most striking distinction that we encounter at the outset,” says Storch, “is that there are some values that are capable of appropriation, and that there are others that are not.10 Only values of the first type belong to the study of political economy, for analysis of the others would furnish no results worthy of the attention of a statesman.”

For my own part, I believe that that portion of utility which, as a result of progress, ceases to be onerous, ceases to have value, but does not on that account cease to be utility, and falls eventually within the domain called common to all and free of charge, is the very one that must constantly attract the attention of the statesman and the economist. Otherwise, instead of viewing with deep and sympathetic understanding the great results of this process that so influence and elevate humanity, all that the political economist will see in it is a mere contingent phenomenon, unstable, tending to decrease, if not to disappear entirely, just a simple relation, or, in a word, nothing but another case of value. Without perceiving what is happening, he will permit himself to be carried along, content merely to consider effects, obstacles, the interests of the producer, and worse yet, to confuse those interests with the public interest. This, in fact, amounts to choosing the ills instead of the benefits, and finally, under the leadership of men like Saint-Chamans and Sismondi, ending with a socialist utopia or in Proudhon's land of contradiction.

Furthermore, is not the line of demarcation between these two utilities entirely a fanciful, arbitrary, and impossible one? How do you propose to dissolve the union of Nature and man, when they are everywhere mingled, combined, fused, and, even more, when one of them tends constantly to replace the other, and in so Edition: current; Page: [169] doing becomes the source of all progress? If the science of economics, so dry in some respects, can, in others, so inspire and enchant our minds, it is precisely because it sets forth the laws governing this association between man and Nature; because it shows how gratuitous utility replaces onerous utility more and more, how man's satisfactions increase as his toil and drudgery decrease, how obstacles are constantly reduced, along with value, how the producer's losses are more than compensated by the consumer's increasing prosperity, how natural wealth, that is, wealth free of charge and common to all, takes the place of wealth that is individual and privately owned. Would you, then, exclude from political economy the very element that constitutes its divine harmony?

Air, water, sunlight are free of charge, you say. That is true, and if we made use of them only in their natural forms, if we did not harness them to any labor of our own, we could exclude them from the domain of political economy, just as we exclude the utility that may, quite possibly, exist in comets. But consider where man started and how far he has come. Originally he had a most imperfect notion of how to make air, water, sunlight, and other natural resources work for him. His every satisfaction was bought at the cost of great personal effort, required a great amount of labor for the result obtained, could be surrendered to another only as a great service—represented, in a word, a great amount of value. Little by little these resources, water, air, light, and others, like gravitation, elasticity, thermodynamics, electricity, the energy of plant life, have emerged from their relative inertia. They have become incorporated more and more into our industry. They have been substituted more and more for human labor. They have accomplished gratis what once cost much in terms of human toil. Without impairing our satisfactions, they have annihilated value. To express it in ordinary terms, what used to cost ten days' work now requires one. All this annihilated value has passed from the domain of private property to the domain of what is free of charge and common to all. A considerable amount of human effort has been freed and made available for other enterprises. Thus, for equal pains, equal Edition: current; Page: [170] services, equal value, mankind has enlarged prodigiously its circle of satisfactions, and you say that I should eliminate from political economy the study of this gratuitous and common utility, which alone can explain progress in all its height and breadth, if I may so express myself, in all it brings in prosperity and equality!

Let us state as a conclusion, then, that we may give, and give legitimately, two meanings to the word “wealth”:

Effective Wealth, real wealth, which produces satisfactions, that is, the sum of the utilities that human labor, with Nature's help, puts at society's disposal.

Relative Wealth, that is, each individual's share in the general wealth, which share is determined by value.

Here, then, is the harmonious law that can be expressed thus:

Through labor the action of man is combined with the action of Nature.

From this co-operation utility results.

Each individual takes from the general store of utility in proportion to the services that he renders—in the last analysis, then, in proportion to the utility he himself represents.11

The Morality of Wealth

We have just studied wealth from the economic point of view. It may be useful also to say something about its moral effects.

In all ages wealth, from the moral standpoint, has been a subject of controversy. Certain philosophers, certain religions have decreed that it is to be despised; others have lauded moderation—aurea mediocritas (“the golden mean”). Very few, if any, have admitted that a burning ambition for the enjoyment of a large fortune is a proper moral attitude.

Who is wrong? Who is right? It does not behoove political economy to treat this subject of individual morality. I say only this: I am always inclined to believe that in matters of common, universal practice, the theorists, the scholars, the philosophers are much more prone to be mistaken than is common practice itself, especially when in this word “practice” we include not Edition: current; Page: [171] only the actions of the great majority of mankind, but their sentiments and their ideas as well.

Now, what does common practice show us? It shows us all men struggling to emerge from poverty, which is their starting point; all preferring the experience of satisfaction to that of want, wealth to privation—all of them, I say, including, with few exceptions, the very ones who declaim so eloquently to the contrary.

The desire for wealth is tremendous, constant, universal, overwhelming. In almost all parts of the world it has triumphed over our instinctive aversion to work. It takes the form, whatever one may say, of even baser greed among savages and barbarians than among civilized peoples. All the voyagers who left Europe imbued with the idea that Rousseau had made popular in the eighteenth century that in the antipodes they would encounter the natural man, the unselfish, generous, hospitable man, were struck with the rapacious avarice by which these primitive men were devoured. In our time, our soldiers have been able to testify as to the opinion we should hold of the much vaunted unselfishness of the Arab tribes.

On the other hand, all men, even those whose conduct is at variance with it, agree in principle that we should honor unselfishness, generosity, self-control, and should castigate that excessive love of wealth which leads us to stoop to any means to secure it. And yet with the same unanimity all men lavish their praise on the person who, whatever his walk of life, strives by honest and persevering toil to better his lot and his family's position in society. From this collection of facts, opinions, and attitudes, we must, it seems to me, arrive at the judgment we should pass on wealth as it affects individual morality.

First of all, we must recognize that the motivating force that drives us toward wealth comes from Nature; it is the creation of Providence and is therefore moral. It has its roots in that original and common state of destitution which would be the lot of all of us were it not for the desire that it creates in us to free ourselves from the chains of want. We must recognize, secondly, that the efforts that all men make to break these chains, provided they remain within the bounds of justice, are respectable and commendable, since they are everywhere commended and respected. Edition: current; Page: [172] Furthermore, no one will deny that there is a moral side to labor itself. This is expressed in the proverb that belongs to all nations: “Idleness is the mother of all vices.” (“Satan still finds work for idle hands to do.”) And we should fall into shocking contradiction if we said, on the one hand, that labor is indispensable to men's morality, and, on the other, that men are immoral when they work to gain wealth.

In the third place, we must recognize that the desire for wealth becomes immoral when it goes beyond the bounds of justice and equity, and that the greater the wealth of the greedy, the more severely is greed itself censured.

Such is the judgment that is pronounced, not by a few philosophers or sects, but by the vast majority of mankind, and I accept it.

I must remark, however, that it is possible, without contradiction, for this judgment not to be the same today as it was in antiquity.

Both the Essenes and the Stoics lived in a society in which wealth was obtained at the price of oppression, pillage, and violence. It was immoral not only in itself, but, by virtue of the immorality of the means by which it was acquired, it revealed the immorality of the men who enjoyed it. A reaction against it, even an exaggerated one, was quite natural. Modern philosophers who declaim against wealth without taking into account the difference in the means of acquiring it liken themselves to Seneca or Christ. They are mere parrots repeating words that they do not understand.

But the question that political economy raises is this: Does wealth represent moral good or moral evil for mankind? Does the steady increase in wealth imply, from the point of view of morality, progress or decadence?

The reader can anticipate my answer, and he realizes that I have already had to say a few words about personal morality in order to avoid the following contradictory, or rather impossible, conclusion: What is immoral for the individual is moral for society at large.

Without having recourse to statistics, without consulting prison records, we may express our problem in these terms:

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Does man degenerate in proportion as he gains greater control over material things and Nature, as he harnesses them to his needs, as he uses them to create greater leisure for himself, and as, freeing himself from the demands of his most pressing bodily needs, he is able to rescue from the inertia where they lay dormant moral and intellectual faculties that undoubtedly were not given him with the intent that he should let them remain in eternal lethargy?

Does man degenerate in proportion as he passes from the most inorganic state, so to speak, and rises toward the most spiritual state of which he is capable?

To pose the problem thus is to solve it.

I grant that when wealth is accumulated by immoral means, its influence is immoral, as was the case with the Romans.

I also agree that when it is amassed and distributed with great inequality, digging deeper and deeper chasms between the social classes, it has an immoral influence and gives rise to subversive passions.

But can the same thing be said for wealth that is the fruit of honest labor and of free transactions, when it is distributed in a uniform manner among all classes? Certainly such a position is not tenable.

Nevertheless, the books of the socialists are full of denunciations of the rich.

I cannot really understand how these schools of thought, so divergent in other respects, but so unanimous on this point, can fail to see the contradiction into which they fall.

On the one hand, wealth, according to the leaders of these schools, has a deleterious, demoralizing influence that withers the soul, hardens the heart, and leaves only a taste for depraved pleasures. The rich have all the vices. The poor have all the virtues. They are just, sensible, generous; such is the line adopted.

And, on the other hand, all the socialists' powers of imagination, all the systems that they invent, all the laws that they try to foist upon us, have the effect, if we are to believe them, of turning poverty into wealth.....

The morality of wealth is proved by this maxim: the profit of one is the profit of the other.....12

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7: Capital

Economic laws act in accordance with the same principle, whether they apply to great masses of men, to two individuals, or even to a single individual condemned by circumstances to live in isolation.

An individual in isolation, provided he could survive for any length of time, would be at once capitalist, entrepreneur, workman, producer, and consumer. The entire economic cycle would run its course in him: want, effort, satisfaction, gratuitous and onerous utility. Observing each of these elements, he would have some notion of the workings of the whole mechanism, even though it would be reduced to its simplest form.

Now, if there is anything in the world that is clear, it is that he could never confuse what is gratis with what requires effort. That would imply a contradiction in terms. He would know full well when materials or forces were provided by Nature, without need for labor on his part, even in those cases where their addition made his own labor more productive.

An individual living in isolation would never dream of obtaining through his own labor something that he could get directly from Nature. He would not walk two miles for water if he had a spring beside his cabin. For the same reason, in every instance where his own labor might be called upon, he would try to substitute Nature's help as much as possible.

That is why, if he were building a boat, he would utilize the lightest wood in order to use to advantage the specific gravity of Edition: current; Page: [175] water. He would try to rig up a sail, so that the wind might spare him the trouble of rowing, etc.

In order thus to harness the forces of Nature, he needs tools and instruments.

At this point we perceive that our isolated man will have to do some calculating. He will ask himself this question: At present I obtain a certain satisfaction for a given amount of effort. When I have the proper tool, will I obtain the same satisfaction for less total effort, counting both the effort still to be exerted to obtain the satisfaction and the effort required to make the tool?

No man is willing to waste his strength for the mere pleasure of wasting it. Our Robinson Crusoe will not, therefore, set about making the tool unless he can foresee, when the work is done, a definite saving of his labor in relation to his satisfaction, or an increase in satisfactions for the same amount of labor.

A circumstance that will greatly influence his calculations is the number of products his tool will help him turn out and the number of times he will be called on to use it during its lifespan. Robinson Crusoe has a standard for his comparison, which is his present effort, the effort he must go to if he tries to obtain the satisfaction directly and without help of any kind. He estimates that the tool will save him effort each time he uses it; but it takes labor to make the tool, and he will mentally distribute this labor over the total number of occasions on which he may use it. The greater the number, the stronger will be his inclination to enlist the aid of the natural resource. It is here, in this distribution of an advance outlay over the total number of products to be made, that we find the principle and the basis of interest.

Once Robinson Crusoe has decided to make a tool, he discovers that his inclination to make it and the uses he can put it to are not enough. It takes tools to make tools; it takes iron to hammer iron, and so on, as he moves from one difficulty to another, until he reaches the first one, which seems to be insoluble. This cycle makes us aware of the extremely slow process by which capital must originally have been formed and of the tremendous amount of human effort that was required for every satisfaction.

Nor is this all. Even if the tools needed to make tools are Edition: current; Page: [176] available, the materials of production are still required. Even though they are furnished gratis by Nature, like stone, they still have to be collected, which involves going to some trouble. But nearly always the possession of these materials presupposes long and complicated earlier labor, as for example, processing wool, linen, iron, lead, etc.

And even this is not all. While a man is working thus for the sole purpose of making his future work easier, he is doing nothing for his present needs. Now, these belong to an order of phenomena in which Nature brooks no interruption. Every day he must feed, clothe, and house himself. Robinson Crusoe will therefore perceive that he can do nothing about harnessing the forces of Nature until he has accumulated provisions. Every day he is hunting he must redouble his efforts; he must lay aside part of his game; then he must impose privations on himself so as to have time to make the tool he has in mind. Under these circumstances, it is more likely that he will content himself with making a very crude and imperfect tool, barely adequate for its intended use.

With time, all his means and facilities will improve. Reflection and experience will have taught our Robinson Crusoe, stranded on his island, better working methods; the first tool itself will furnish him with the means of making others and of gathering his supplies more quickly.

Tools, materials, provisions, all constitute what he will doubtless call his capital, and he will readily grant that the larger this capital, the better the control he will have over the forces of Nature, that the more he harnesses them to his labor, the greater, in a word, will be his satisfactions in relation to his efforts.

Let us pass now to the social order. Here, too, capital will be composed of the tools and instruments of production, of the materials and provisions without which no long-range undertaking is possible either in isolation or in society. The possessors of this capital have it only because they have created it either by their efforts or their privations; and they have exerted their efforts (over and beyond their current wants), they have undergone these privations, only for the sake of future advantage, in order, Edition: current; Page: [177] for example, to turn to their use a large number of natural resources. To surrender this capital would mean for them to give up the advantage they had sought to obtain. It would mean surrendering this advantage to others; it would be rendering a service. Consequently, we must either disregard the simplest considerations of reason and justice, or we must admit that they have a perfect right to turn over this capital only in exchange for some other service freely bargained for and voluntarily agreed to. I do not believe that there is a man on earth who will contest the equity of reciprocity of services, for reciprocity of services means equity in other terms. Will it be said that the transaction cannot possibly be free, because the one who has capital is in a position to impose his own terms on the one who does not? But how should the transaction be carried on? How can an equivalence of services be determined except by an exchange voluntarily agreed to? And is it not clear, moreover, that the borrower, being free to consent or not to consent, will refuse, unless it is to his advantage to accept, and unless the loan can improve his situation? It is clear that this is the question he will ask himself: Will the use of this capital afford me advantages that will more than compensate for the terms that are stipulated? Or else: Is the effort that I am now required to make for a given satisfaction greater or less than the sum total of the efforts to which I shall be obligated by the loan, first to render the services that are asked of me, and then to realize the satisfaction with the aid of the borrowed capital? If, all things considered, there is no advantage, he will not borrow; he will be content with his present situation; and in that case, how has he been wronged? He can be mistaken, someone will say. True enough. We can be mistaken in every imaginable transaction. Does this mean, then, that no transaction can ever be free? Assuming for the moment that such is the case, will someone kindly tell us what should be put in the place of free will and free consent? Shall it be coercion? For, apart from free will, I know of nothing but coercion. No, someone says, it will be the judgment of a third party. I am perfectly willing, on three conditions. First, that the decision of this person, whatever name he be given, not be executed by force. Second, that he be Edition: current; Page: [178] infallible, for it is not worth the trouble to replace one fallible person by another; and the fallible persons whom I distrust the least are the interested parties themselves. Finally, the third condition is that this person receive no pay; for it would be a strange way of showing one's good will toward the borrower to deprive him of his liberty and then place an added burden on his shoulders in compensation for this philanthropic service. But let us forget legal questions and return to political economy.

Capital, whether composed of materials, provisions, or tools, presents two aspects: utility and value. I have explained the theory of value very badly if the reader has not comprehended that the one who surrenders a certain amount of capital demands payment for its value only, that is, for the service he put into producing it, the pains he took, plus the effort saved the recipient. Capital, indeed, is a commodity like any other. It receives its name only from the fact that it is designed for future consumption. It is a great error to believe that capital is in itself a distinct entity. A sack of wheat is a sack of wheat, even though, depending on the point of view, it is revenue for the seller and it is capital for the buyer. Exchange works on this invariable principle: value for value, service for service; and all the gratuitous utility that goes into the transaction is given into the bargain, inasmuch as what is gratis has no value, and transactions are concerned only with value. In this respect, transactions involving capital are no different from any others.

There are some remarkable implications for the social order in all this, though I can refer to them only briefly here. Man in isolation has capital only when he has collected materials, provisions, and tools. Such is not the case with man in society. He needs only to have rendered services in order to have the means of receiving from society, through the mechanism of exchange, equivalent services. What I mean by the mechanism of exchange is money, promissory notes, bank notes, and even bankers themselves. Whoever has rendered a service and has not yet received the corresponding satisfaction is the bearer of a token, which either itself has value, like money, or is fiduciary, like bank notes. This token entitles him to collect from society, when and where Edition: current; Page: [179] he wills, and in whatever form he wills, an equivalent service. These circumstances do not in any way, in principle, in effect, in point of legality, alter the great law that I seek to elucidate: Services are exchanged for services. It is still barter in embryo—developed, grown, and become complex, but without losing its identity.

The bearer of the token may therefore collect from society, at his pleasure, either an immediate satisfaction or an object that, for him, has the character of capital. This is a matter with which the one who surrenders the token has no concern whatsoever. All that matters in any way is that the services be equal. Or, again, he may surrender his token to another person to use it as he pleases, subject to the double condition that it be returned to him along with a service, and at a given date. If we analyze this transaction carefully, we find that in this case the one who surrenders the token deprives himself, in favor of the borrower, either of an immediate satisfaction that he will postpone for a few years or of an instrument of production that would have increased his own resources, harnessed the forces of Nature, and improved the ratio of his efforts to his satisfactions. He deprives himself of these advantages in order to bestow them upon another. This is certainly rendering a service, and it is impossible to deny that in all justice this service is entitled to something in return. The mere return of the thing advanced, at the end of a year, cannot be considered a payment for the special service. Those who maintain such a view fail to understand that this transaction is not a sale, in which, since delivery is immediate, the payment is also immediate. Payment is deferred, and this deferment is itself a special service, since it imposes a sacrifice on the part of the one granting it, and bestows a favor on the one requesting it. There are, therefore, grounds for remuneration; otherwise we should have to negate this supreme law of society: Service for service. This remuneration is called by different names according to circumstances: hire, rent, installments, but its generic name is interest.1

Thus, thanks to the marvelous device of exchange, a remarkable thing takes place, for every service is, or may become, capital. If Edition: current; Page: [180] workmen are to begin a railroad ten years hence, we cannot set aside now the actual wheat that will feed them, the textiles that will clothe them, and the wheelbarrows that they will use during this long-range operation. But we can set aside and deliver to them the equivalent value of these things. To do so, we need only at the present time render society services and receive in return tokens or certificates, which ten years from now we can convert into wheat or textiles. And we are not even forced to let these tokens lie idle and unproductive during this period. There are businessmen and bankers, there is the necessary machinery in society, to render the service, in exchange for services in return, of assuming these sacrifices in our place.

What is still more amazing is that we can reverse this procedure, impossible as this may seem at first glance. We can turn into tools, railroads, and houses, capital that has not yet been produced, utilizing for this purpose services that will not be rendered until the next century. There are bankers who will make the necessary advances on the faith that workers and travelers of the third or fourth generation to come will provide the payment; and these checks drawn on the future are passed from hand to hand and never remain unproductive. I do not believe, frankly, that the inventors of artificial social orders, however numerous they may be, could ever imagine a system at once so simple and so complex, so ingenious, and so just. Surely, they would give up their dull and stupid utopias if they did but know the beautiful harmonies of the dynamic social mechanism instituted by God. There was also once a king of Aragon who wondered what advice he would have given Providence on the running of the celestial mechanism if he had been called into consultation. Such a presumptuous thought would not have occurred to Newton.

But, it must be emphasized, all transmission of services from one point to another, in time or space, rests upon this assumption: To grant a postponement of payment is to render a service; in other words, on the assumption that it is legitimate to charge interest. The man who, in our day, tried to suppress interest Edition: current; Page: [181] did not understand that he was proposing to take exchange back to its primitive, embryonic form of simple, direct barter with no provision for time past or time to come. He did not realize that, while considering himself the most forward-looking of men, he was actually the most backward, since he wished to rebuild society on the crudest and most primitive plan. He desired, so he said, reciprocity of services. But he proposed to begin by refusing to admit as services the very type of services that link, bind together, and unite all times and all places. Of all the socialists he is the one who, despite the boldness of his resounding aphorisms, has best understood and most respected the present social order. His reforms are limited to a single proposal, which is negative. It consists of removing from society the most powerful and most remarkable of its moving parts.

I have explained elsewhere the legitimacy and the perpetuity of interest. I shall limit myself here to reminding the reader that:

  • 1) The legitimacy of interest is based on the fact that the person who grants credit renders a service. Hence, interest is legitimate, by virtue of the principle of service for service.
  • 2) The perpetuity of interest is based on the additional fact that the person who borrows must repay in full at the date of expiration. Now, if the object or the value is returned to its owner, he can relend it. It will be returned a second time; he can lend it a third time; and so on perpetually. What one of the succeeding and voluntary borrowers can have any cause for complaint? But, since the legitimacy of interest has so frequently been contested in these times as to alarm capital and drive it away or into hiding, let me show how senseless all this strange uproar is.

Now, first of all, would it not be quite as absurd as it would be unjust if no interest were charged at all or if the interest payment were the same whether the terms agreed upon were for a period of one year, two years, or ten years? If, under the influence of the so-called egalitarian doctrine, our civil code should, unfortunately, so decree, it would mean the immediate suppression of an entire category of human transactions. There would still be barter transactions and cash sales, but there would no longer be installment buying or loans. The egalitarians would, indeed, Edition: current; Page: [182] lift from the borrowers the burden of interest, but by denying them the loan. On this analogy we can also relieve men of the painful necessity of paying for what they purchase. We have only to forbid them to buy, or, what amounts to the same thing, make the law declare that prices are illegal.

The egalitarian principle does indeed have an egalitarian element in it. First, it would prevent the accumulation of capital; for who would want to lay up savings from which no return could be realized? Secondly, it would reduce wages to zero; for, where there is no capital (tools, materials and provisions), there can be no provision for future labor, and so, no wages. We should therefore soon reach the state of perfect and absolute equality: no one would have anything.

But can any man be so blind as not to see that deferment of payment is in itself an onerous act, and, therefore, subject to remuneration? But even aside from the question of loans, does not everyone in all transactions try to shorten the delays he must experience? It is, in fact, the object of our constant concern. Every entrepreneur looks ahead to the time when the advances he has made will bring a return. We sell at a higher or a lower price with this in view. To be indifferent to this consideration, we should have to be unaware of the fact that capital is a force; for, if we do know it, we naturally desire to have it accomplish as quickly as possible the task to which we have assigned it, so that we may reassign it to still another.

They are poor economists indeed who believe that we pay interest on capital only when we borrow. The general rule, and a just one, is that he who enjoys the satisfaction must pay all that it costs to produce it, the inconveniences of delay included, whether he performs the service himself or has another perform it for him. The man in isolation, who, of course, carries on no transaction with anyone else, would consider as onerous any situation that would deprive him of his weapons for a year. Why, therefore, would not a similar situation be considered onerous in society? If one man voluntarily undergoes this privation for the benefit of another man who voluntarily agrees to compensate him, how can this compensation be considered illegitimate?

Nothing would be done in this world, no enterprise requiring Edition: current; Page: [183] advance outlays would be carried through to completion, men would not plant, sow, or plow, if delays and postponements were not in themselves considered as onerous, to be treated and paid for as such. General agreement is so unanimous on this point that there is no exchange in which it is not the guiding principle. Extensions of time and postponements enter into the appraisal of services, and, consequently, into the amount of value they possess.

Thus, in their crusade against interest, the egalitarians trample underfoot not only the most basic notions of justice, not only their own principle of service for service, but also all human precedent and universal practice. How dare they display, for all to see, such inordinate egotism and presumption? And is it not a strange and sorry sight to see these zealots implicitly and explicitly take as their motto: Since the world began all men have been wrong, except myself. Omnes, ego non.

I ask the reader to forgive me for having so much insisted on the legitimacy of interest, which is based on this axiom: Since postponements cost something, they must be paid for, cost and payment being correlative terms. The fault lies in the spirit of our age. We must, in the face of the attacks made by a few fanatical innovators, take our stand clearly on the side of those vital truths that all humanity accepts. For the writer who seeks to demonstrate the harmony of all economic phenomena, it is a most painful thing, believe me, to be compelled to stop at every step to explain the most elementary concepts. Would Laplace have been able to explain the solar system in all its fundamental simplicity, if there had not been certain areas of common understanding among his readers, if, in order to prove that the earth rotates, he had first been obliged to teach them to count? Such is the cruel dilemma of the economist in our day. If he does not stop to present fully the rudiments of his subject, he is not understood; and if he does explain them, the beauty and simplicity of the whole is swallowed up in a torrent of details.

It is truly fortunate for mankind that interest is legitimate.

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Otherwise man too would face a difficult dilemma: either, by remaining just, to perish; or, through injustice, to prosper.

Every industry represents a union of efforts. But among these efforts there is an essential distinction to be made. Some are directed toward services that are to be performed immediately; others, toward an indefinite series of services of a similar nature. Let me explain.

The pains a watercarrier goes to in the course of a day must be paid for by those who are benefited by them; but the pains he took previously to make his cart and his waterbarrel must be distributed, as regards payment, among an indefinite number of users.

Similarly, weeding, plowing, harrowing, reaping, threshing concern only the present harvest; but fences, clearings, drainage, buildings and improvements concern and facilitate an indefinite number of future harvests.

According to the general law of service for service, those who receive the satisfaction must recompense the efforts exerted for them. In regard to the first type of effort, there is no difficulty. Bargaining and evaluating are carried on between the one who exerts the effort and the one who benefits from it. But how can services of the second type be evaluated? How can a fair proportion of the permanent outlay, general expenses, fixed capital, as the economists call it, be distributed over the entire series of satisfactions that these things are designed to effect? By what method can their weight be made to fall evenly on the shoulders of all those who use the water, until the cart is worn out; on those who consume the wheat, as long as the field remains productive?

I do not know how they would solve this problem in Icaria or in the phalanstery, but I am inclined to believe that the inventors of societies, who are so prolific in their artificial arrangements and so ready to have them foisted on the public by law—which means, whether they admit it or not, by force—could not imagine a more ingenious solution than the entirely natural procedure that men have discovered for themselves (how presumptuous of them!) since time immemorial, the procedure that it is now proposed to forbid them to use, namely, that derived from the law of interest.

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Let us assume that a thousand francs have been spent in real property improvements; let us assume also an interest rate of five per cent and an average harvest of five thousand liters. By this reckoning one franc is to be charged against each hundred liters of wheat.

This franc is evidently the legitimate payment for an actual service rendered by the landowner (who could also be called the worker) just as much to the man who will receive a hundred liters of grain ten years from now as to the man who buys it today. Therefore, the law of strict justice is observed.

Suppose, now, that the property improvements or the cart or the waterbarrel has a lifespan that can be determined only within approximate limits; then, provision for a sinking fund is added to the interest, so that the owner will not suffer a loss but may continue to operate. This is still in accordance with justice.

We must not assume that this one-franc interest charged against each hundred liters of wheat is an invariable amount. On the contrary, it represents value and obeys the general law of value. It increases or decreases according to the fluctuations of supply and demand, that is, according to the particular pressures of the moment and the general prosperity of society.

We are usually inclined to believe that this type of remuneration tends to increase, if not for industrial improvements, at least for agricultural improvements. Even admitting that this rent was originally fair, it is said, it finally becomes exorbitant, for the landowner thereafter stands by in idleness while his rent continues to rise from year to year, simply because the population is increasing, and therefore the demand for wheat also.

This tendency exists, I agree, but it is not confined to land rent; it is common to all types of labor. The value of every kind of labor increases with the density of the population, and the common day laborer earns more in Paris than in Brittany.

But we must also bear in mind that this tendency is counter-balanced, as far as land rent is concerned, by an opposite trend, which is that of progress. Improvements made today by better methods, with less human labor, and at a time when the interest rate has fallen, prevent too high a rent from being asked for previous improvements. The landowner's fixed capital, like the Edition: current; Page: [186] manufacturer's, deteriorates in the long run as more and more efficient labor-saving devices appear. This is a remarkable law, which overturns Ricardo's gloomy theory; it will be analyzed more completely when we discuss real property.

Note that the problem of the distribution of services to be performed in payment for permanent improvements could not be solved without the law of interest. The owner could not distribute his actual capital over an indefinite number of successive users; for where would he stop, since the exact number cannot be determined? The earlier ones would have paid for the later ones, which is not just. Furthermore, a time would have come when the owner would have been in possession of both his capital outlay and his improvements, which is not just either. Let us acknowledge, then, that the natural machinery devised by society is ingenious enough so that we do not have to supplant it with any artificial device.

I have presented the phenomenon in its simplest form in order to give a clear idea of its nature. In practice things do not occur in quite this way.

The landowner does not himself work out the distribution, and he does not decide that a charge of one franc, more or less, will be placed on each hundred liters of wheat. He finds that men have already decided these matters, both the prevailing price of wheat and the rate of interest. On this information he decides how he will invest his capital. He will use it to improve his land if he estimates that the price of wheat will permit him to realize the normal rate of interest. If such is not the case, he will invest it in an industry that promises a better return, and is, fortunately for society, more likely to attract capital for that very reason. This is the way the process really operates in reaching the same result as sketched above, and it offers us still another harmony of economic law.

The reader will understand that I have confined myself to one particular case simply as a means of illustrating a general law that applies to all professions and occupations.

A lawyer, for example, cannot make the first client who comes his way reimburse him for all he has spent on his education, his Edition: current; Page: [187] probation, his law office—perhaps amounting to as much as twenty thousand francs. This would not only be unjust; it would be impossible. The first client would never put in his appearance, and our budding Cujas would be reduced to imitating the host who, when he saw that no one had come to his first ball, declared: “Next year I shall begin by putting on my second ball.”

The same thing applies to the businessman, the doctor, the shipowner, the artist. In every calling these two types of effort are to be found; the second type must, without fail, be distributed over an indeterminate number of consumers, and I defy anyone to contrive a method of distribution other than the mechanism of interest.

In recent times great pains have been taken to stir up public resentment against that infamous, that diabolical thing, capital. It is pictured to the masses as a ravenous and insatiable monster, more deadly than cholera, more terrifying than riots, as a vampire whose insatiable appetite is fed by more and more of the life-blood of the body politic. Vires acquirit eundo. The tongue of this blood-sucking monster is called “rent,” “usury,” “hire,” “service charges,” “interest.” A writer whose great talents could have made him famous had he not preferred to use them to coin the paradoxes that have brought him notoriety has seen fit to cast this paradox before a people already tormented by the fever of revolution. I too have an apparent paradox to offer the reader, and I beg him to decide whether it is not both a great and a reassuring truth.

But, before presenting it, I must say a word about the manner in which M. Proudhon and his school explain what they call the injustice of interest.

Capital goods are tools of production. Tools of production are designed to harness the gratuitous forces of Nature. Through the steam engine we utilize the pressure of volatile gases; through the watch spring, the elasticity of steel; through weights or water-falls, Edition: current; Page: [188] gravitation; through Volta's battery, the speed of the electric spark; through the soil, the chemical and physical combinations that we call vegetation; etc., etc. Now, confusing utility with value, they think of these natural resources as having an inherent value of their own, and consequently assume that those who appropriate these resources receive payment for the privilege of using them, for value implies payment. They assume that commodities are charged with one item for man's services, which is accepted as just, and with another item for Nature's services, which is rejected as unjust. Why, they say, require payment for gravitation, electricity, vegetation, elasticity, etc.?

The answer is found in the theory of value. That class of socialists who take the name of egalitarians confuse the legitimate value of the tool of production, which is produced by human service, with the useful result it accomplishes, which is in fact always gratis, once this legitimate value, or the interest on it, has been deducted. When I pay a farmer, a miller, a railroad company, I give nothing, absolutely nothing, for the properties of vegetation, gravitation, steam pressure. I pay for the human labor that has gone into the tools that have harnessed these forces; or, what is more advantageous for me, I pay the interest on this labor. I pay for service with service, and thereby the useful action of these forces is turned to my profit and without further cost. The whole transaction is like an exchange, like a simple act of barter. The presence of capital does not alter this law, for capital is merely accumulated value, or services whose special function is to enlist the co-operation of Nature.

And now for my paradox:

Of all the elements that make up the total value of any product, the one we should pay for most gladly is that very element called interest on advance outlays or on capital.

And why is that? Because wherever this element makes us pay once, it saves us from paying twice. Because, by its very presence, it serves notice that the forces of Nature have contributed to the final result and are not being paid for their contribution; because, as a result, the same general amount of utility has been made available to us, but with this difference, that, fortunately for us, a Edition: current; Page: [189] certain proportion of gratuitous utility has replaced onerous utility; and, in a word, because the price of the product has gone down. We obtain it for a smaller proportion of our own labor, and what happens to society as a whole is what would happen to a man in isolation if he produced some ingenious invention.

Consider the case of a workingman in modest circumstances who earns four francs per day. For two francs, that is, for a half-day's labor, he buys a pair of cotton socks. If he tried to obtain them directly and by his own labor, I truly believe that his whole life would not be long enough for him to do so. How does it happen, then, that his half-day's labor pays for all the human services that were rendered to him for this commodity? In keeping with the law of service for service, why was he not required to contribute several years of labor?

The reason is that in the making of this pair of socks the proportion of human services has been enormously reduced, thanks to capital, by the use of natural resources. Our workman, nevertheless, pays not only for all the labor now required to perform this task but also for the interest on the capital that enlisted the co-operation of Nature; and we must note that had this last item not been available, or had it been declared illegal, capital would not have been employed in conjunction with natural resources, the commodity would have been produced by onerous utility only, that is, exclusively by human labor, and our workman would still be just where he started, that is, with the choice of either going without the socks or else of paying for them with several years of toil.

If our workman has learned to analyze what he sees, he will certainly make his peace with capital when he perceives how much he owes it. Above all, he will be convinced that God's gratuitous gifts to him are still gratuitous, that they have even been lavished upon him with a generosity that is not due to his own merits, but to the excellent operation of the natural social order. Capital is not the vegetative force of Nature that makes the cotton germinate and bloom, but the pains taken by the planter; capital is not the wind that filled the sails of the ship, nor the magnetic force to which the compass reacted, but the pains taken by the sailmaker and Edition: current; Page: [190] compass-maker; capital is not the compression of the steam that turns the spindles of the mill, but the pains taken by the builder of the mill. Germination, the power of the winds, magnetic attraction, stream pressure—all these things are certainly free of charge, and that is why the value of the socks is so low. As for the combined pains taken by the planter, the sailmaker, the compass-maker, the shipbuilder, the sailor, the manufacturer, the businessman, they are distributed, or rather, in so far as capital is concerned in the operation, the interest on them is distributed, over countless purchasers of socks; and that is why the amount of labor performed by each one of them in return for the socks is so small.

Truly, modern reformers, when I see you trying to replace this admirable order by a contrivance of your own invention, there are two things (or rather two aspects of the same thing) that utterly confound me: your lack of faith in Providence and your great faith in yourselves; your ignorance and your arrogance.

It is clear from the foregoing analysis that the progress of humanity coincides with the rapid formation of capital; for, when new capital is created, obstacles that once were surmounted by labor, that is, onerously, are now overcome by Nature, without effort; and this is done, be it noted, not to the profit of the capitalists, but to the profit of the community.

This being the case, it is the paramount interest of all men (from the economic point of view, of course) that the rapid formation of capital be encouraged. But capital increases of its own accord, spontaneously, so to speak, under the triple influence of a dynamic society, frugality, and security. We can hardly exert direct action on the energy and frugality of our fellow men, except through public opinion, through an intelligent expression of our likes and our dislikes. But we can do a great deal for the creation of security, without which capital, far from expanding, goes into hiding, takes flight, or is destroyed; and consequently we see how almost suicidal is the ardor for disturbing the public peace that the working classes sometimes display. They must learn that capital has from the beginning of time worked to free men from the yoke of ignorance, want, and tyranny. To frighten Edition: current; Page: [191] away capital is to rivet a triple chain around the arms of the human race.

The vires acquirit eundo parallel is completely applicable to capital and the beneficial influence it exerts. The creation of new capital always and necessarily releases both labor and the resources for paying labor and makes them available for other enterprises. Capital, therefore, contains within itself a strong progressive tendency—something like the laws of momentum. And this is a further argument that can be used against the very different kind of progressive tendency that Malthus notes, although political economists, to my knowledge, have neglected it until now. But this is a harmony that cannot be developed here. We reserve it for the chapter on population.

I must arm the reader in advance against a specious objection. If the function of capital, it will be said, is to have Nature perform what was hitherto performed by human labor, regardless of the good it brings to humanity as a whole, it must be harmful to the working classes, especially those who live on wages; for anything that adds to the number of employable workers increases their competition for jobs, and this is doubtless the secret reason for the proletarians' hostility to capitalists. If this objection were well founded, there would indeed be a discordant note in the social harmony.

The misconception here involved consists in losing sight of this truth: For every amount of human effort that capital releases as it extends its operations, it likewise makes available a corresponding amount of money for wages, so that these two elements meet and complement each other. Labor is not made permanently idle; when replaced in one special category by gratuitous energy, it turns its attack against other obstacles on the main road to progress, all the more surely because its remuneration is already available within the community.

And therefore, returning to the illustration given above, we can readily see that the price of socks (like the price of books, transportation, and everything else) goes down, under the influence of capital, only by leaving a part of the former price in the hands of the purchaser. This is so obvious that even to state it is Edition: current; Page: [192] almost childishly redundant; the worker who now pays two francs for what used to cost six has, therefore, four francs left over. Now this is the exact proportion of human labor that has been replaced by the forces of Nature. These forces are, therefore, a pure and simple gain, and the ratio between labor and available remuneration has not been altered at all. I make bold to remind the reader that the answer to this objection was already given2 when, as we were studying man in isolation, or else still dependent on the primitive law of barter, I put the reader on his guard against the widespread fallacy that I am now attempting to refute.

Let us, therefore, have no qualms about allowing capital to form and increase in accord with its own tendencies and those of the human heart. Let us not imagine that, when the rugged workman saves for his old age, when the father plans a career for his son or a dowry for his daughter, by thus exercising man's noble faculty of foresight they are jeopardizing the general welfare. Such would be the case, private virtues would indeed be antagonistic to the public weal, if the interests of capital and labor were incompatible.

We must realize that humanity is far from being subject to this contradiction, rather, this impossibility (for how can we conceive of the constant deterioration of the whole resulting from the constant improvement of all its parts?); that, on the contrary, Providence, in its justice and goodness, has assigned, along the path of progress, a finer role to labor than to capital, more effective incentives, more generous compensations to him who now contributes the sweat of his brow, than to him who lives by the sweat and toil of his fathers.

Therefore, having established that every increase in capital is necessarily accompanied by an increase in the general welfare, I venture to present as incontrovertible the following axiom relating to the distribution of this prosperity:

As capital increases, the capitalists' absolute share in the total production increases and their relative share decreases. On the other hand, the workers' share increases both relatively and absolutely.

I can express my thought more clearly with figures.

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Let us represent society's total production at successive periods in its history by the numbers 1,000, 2,000, 3,000, 4,000, etc.

I state that capital's share will drop successively from 50% to 40%, to 35%, to 30%, and labor's share will consequently rise from 50% to 60%, to 65%, to 70%; but in such a way that capital's absolute share at each period will be larger, although its relative share will be smaller.

Thus, the distribution will be made in the following manner:

Distribution of Shares of Increased Production
TOTAL PRODUCTION CAPITAL'S SHARE LABOR'S SHARE
First period ................... 1,000 500 500
Second period ................ 2,000 800 1,200
Third period ........................ 3,000 1,050 1,950
Fourth period ................ 4,000 1,200 2,800

Such is the great, admirable, reassuring, necessary, and invariable law of capital. By proving it, it seems to me, we can utterly discredit those rantings that have been dinned into our ears for so long against the greed, the tyranny, of the most powerful instrument for civilization and equality that has ever been conceived.

This proof is divided into two parts. First, we must prove that capital's relative share does constantly decrease.

This will not take long, for it amounts to saying: The more plentiful capital is, the lower its interest rate. Now, this point is not open to question, nor has it been questioned. It not only can be explained scientifically; it is self-evident. Even the most unorthodox schools of thought admit it; in fact, the school that has specifically set itself up as the enemy of what it calls diabolical capital makes this fact the basis of its theory; since, from the evident fact of the decline in the rate of interest, it concludes that capital is inevitably doomed. For, this school says, since its extinction is inevitable, since it is sure to happen within a certain period of time, since this day will usher in the reign of unalloyed bliss, we must hasten and encourage its coming. This is not the place to refute these theories and their implications. I call attention only to the fact that all schools of thought—economists, socialists, egalitarians, and others—admit that, in the natural order of society, interest rates do indeed go down as capital increases. And even Edition: current; Page: [194] if they chose not to admit it, the fact would not be the less certain; for it is supported by the authority of the whole of human experience, and the acquiescence, perhaps involuntary, of all the capitalists in the world. It is a fact that the interest rate is lower in Spain than in Mexico, in France than in Spain, in England than in France, and in Holland than in England. Now, when interest goes down from 20% to 15%, then to 10%, to 8%, to 6%, to 4½%, to 4%, to 3½%, to 3%, what does this fact have to do with the question before us? It means that capital, for its contribution, through industry, to the general prosperity, is content with, or if you prefer, is forced to be content with, a share that becomes increasingly smaller as more capital is accumulated. Did capital once receive a third of the value of wheat, homes, linen, ships, canals? In other words, when these things were sold, did one-third go to the capitalists and two-thirds to the workers? Little by little the capitalists receive only a fourth, a fifth, a sixth; their relative share is constantly decreasing; the workers' share is rising proportionately, and thus the first part of my demonstration is proved.

It remains for me to prove that capital's absolute share constantly increases. It is true enough that interest rates tend to go down. But when and why? When and because capital increases. It is, therefore, entirely possible for the total accumulation of capital to increase, but for the percentage to decrease. A man has more income with 200,000 francs at 4% than with 100,000 francs at 5%, even though, in the first case, he charges less for the use of his capital. The same thing holds true for a nation and for all humanity. Now, I maintain that the percentage, in its tendency to decline, cannot and must not be reduced so rapidly that the sum total of interest paid is smaller when capital is plentiful than when it is scarce. I readily admit that if the capital of mankind is represented by 100 and the interest rate at 5, this rate will not be more than 4 when capital reaches 200. Here we see that the two effects are produced simultaneously: a smaller relative share, a larger absolute share. But, on the same hypothesis, I refuse to admit that the increase in capital from 100 to 200 can cause the Edition: current; Page: [195] interest rate to fall from 5% to 2%, for example. For, if such were the case, the capitalist who had 5,000 francs of income on 100,000 francs of capital would now have only 4,000 francs of income on 200,000 francs—a contradictory and impossible result, a strange anomaly that would be corrected by the simplest and least painful remedy imaginable; for in order to raise his income, the capitalist would need only to waste half of his capital. Strange and happy age when we could become rich by pauperizing ourselves!

We must, therefore, not lose sight of the fact that the combined action of these two correlated phenomena—increase of capital, lowering of the rate of interest—takes place necessarily in such a way that the total product constantly rises.

And, it may be remarked in passing, this fact destroys utterly and absolutely the fallacy of those who imagine that, because the interest rate falls, it eventually will disappear entirely. The result of this would be that the time would come when capital would be accumulated in such quantities that it would yield no return to its owners. Let us reassure ourselves; before that time comes, the owners of capital will be quick to dissipate it in order to restore their income.

This, then, is the great law of capital and labor, in so far as it relates to their sharing of what they produce jointly. Each one has a larger and larger absolute share, but capital's proportional share constantly decreases as compared with that of labor.

Therefore, capitalists and workers, cease looking at one another with envy and distrust. Shut your ears to those absurd tirades, as vain as they are ignorant, which, under pretence of brotherly love in the future, begin by sowing the seeds of discord in the present. Recognize that your interests are common, identical; that, whatever may be said to the contrary, they merge, they work together for the common good; that the toil and sweat of our generation mingle with the toil and sweat of generations gone by. Recognize too, that some amount of remuneration must indeed go to all those who have participated in the task, and that the most intelligent as well as the most equitable system of distribution is in Edition: current; Page: [196] operation among you, thanks to the wisdom of the laws of Providence, in a system of free and voluntary transactions. Let no parasitical sentimentalists impose their decrees upon you to the peril of your physical well-being, your liberty, your security, and your self-respect.

Capital has its roots in three attributes of man: foresight, intelligence, and thrift. For him to resolve to lay aside capital funds, he must, in fact, anticipate the needs of the future, sacrifice the present for them, exercise control over himself and his appetites, resist not only the allurements of the pleasures of the moment, but also the prickings of his vanity and the whims of public opinion, which is always so indulgent toward the light-minded and the extravagant. He must also link cause and effect in order to know by what means and by what tools Nature will become docile and will submit to the work of production. Above all, he must be moved by a sense of family devotion, so that he will not draw back before the sacrifices whose benefits will be enjoyed by his loved ones when he is no more. To accumulate capital is to provide for the subsistence, the protection, the shelter, the leisure, the education, the independence, the dignity of generations to come. None of this can be done without putting into practice all our most social virtues, and, what is harder, without making them our daily habit.

It is quite common, however, to attribute to capital a kind of deadly efficiency that would implant selfishness, hardness, and Machiavellian duplicity in the hearts of those who possess it or aspire to possess it. But is this not confused thinking? There are countries where labor is mainly fruitless. The little that is earned must quickly go for taxes. In order to take from you the fruit of your labor, what is called the state loads you with fetters of all kinds. It interferes in all your activities; it meddles in all your dealings; it tyrannizes over your understanding and your faith; it deflects people from their natural pursuits and places them all in precarious and unnatural positions; it paralyzes the activities and the energies of the individual by taking upon itself the direction Edition: current; Page: [197] of all things; it places responsibility for what is done upon those who are not responsible, so that little by little the distinction between what is just and what is unjust becomes blurred; it embroils the nation, through its diplomacy, in all the petty quarrels of the world, and then it brings in the army and the navy; as much as it can, it perverts the intelligence of the masses on economic questions, for it needs to make them believe that its extravagances, its unjust aggressions, its conquests, its colonies, represent a source of wealth for them. In these countries it is difficult for capital to be accumulated in natural ways. Their aim, above all, is by force and by guile to wrest capital from those who have created it. The way to wealth there is through war, bureaucracy, gambling, government contracts, speculation, fraudulent transactions, risky enterprises, public sales, etc. The qualities needed to snatch capital violently from the hands of the men who create it are exactly the opposite of the qualities that are necessary for its creation. It is not surprising, therefore, that in these countries capital connotes ruthless selfishness; and this connotation becomes ineradicable if the moral judgments of the nation are derived from the history of antiquity and the Middle Ages.

But when we turn our attention, not to the violent and fraudulent seizure of capital, but to its creation by intelligence, foresight, and thrift, we cannot fail to see that its acquisition by these means is a benefit for society and an aid to morality.

No less beneficial, socially and morally, than the formation of capital is its action. Its effect is to harness Nature; to spare man all that is most physical, backbreaking, and brutish in the work of production; to make mind master over matter; to provide more and more, I do not say idleness, but leisure; to make our most purely physical wants less imperious by rendering their satisfaction easier; to replace them with pleasures of a higher order, more delicate, more refined, more aesthetic, more spiritual.

Thus, no matter what our point of view, whether we consider capital in its relation to our wants, which it ennobles; to our satisfactions, which it refines; to Nature, which it tames for us; to morality, which it makes habitual in us; to our social consciousness, Edition: current; Page: [198] which it develops; to equality, which it fosters; to liberty, which is its life-blood; to justice, which it guarantees by the most ingenious methods; we shall perceive always and everywhere (provided only that it be created and put to work in a social order that has not been diverted from its natural course) that capital bears that seal and hallmark of all the great laws of Providence: harmony.

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8: Private Property and Common Wealth

While freely granting to the land, to the forces of Nature, and to the tools of production what is their just due—the power of creating utility—I have taken pains to deprive them of what has been attributed erroneously to them—the faculty of creating value—since this faculty resides exclusively in the services that men perform for one another through exchange.

This simple correction will at one and the same time strengthen the role of property by redefining it according to its true character and will reveal to political economists a fact of the greatest importance, which, if I am not mistaken, they still have not noticed, namely, that of common ownership, constituting a real, essential, and progressively increasing communal domain, which develops providentially in any social order that is guided by the principles of liberty. Its manifest destiny is to lead all men, as brothers, from their state of original equality, the equality of privation, want, and ignorance, toward ultimate equality in the possession of prosperity and truth.

If this basic distinction between the utility of things and the value of services is sound in principle as well as in the consequences I have deduced from it, its significance cannot be misunderstood; for it means that the promise of utopia falls within the scope of political economy, and that all conflicting schools of thought will be reconciled in a common faith, to the complete satisfaction of all minds and of all hearts.

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Men of property and of leisure, however high on the social scale your achievements, your honesty, your self-control, your thrift, may have carried you, you are still strangely disturbed. Why? Because the sweet-smelling but deadly perfume of utopia threatens your way of life. There are men who say, who rant, that the competency you have laid aside for the quiet of your old age, for your daily bread, for the education and the future of your children, has been acquired at the expense of your brethren. They say that you have stood between God and His gifts to the poor; that, like the greedy publicans of old, you have exacted a tribute on these gifts in the name of property, of interest, of rent, and hire. They call upon you to make restitution. To add to your dismay, only too often your own advocates make this implicit admission in coming to your defense: The usurpation is indeed flagrant, but it is necessary.

But I say, no, you have not misappropriated the gifts of God. You have received them gratis from the hand of Nature, it is true; but you have also passed them on gratis to your fellow men and have withheld nothing. They have acted similarly toward you, and all that has passed between you has been compensation for mental or physical effort, for sweat and toil expended, for dangers faced, for skills contributed, for sacrifices made, for pains taken, for services rendered and received. You thought only of yourselves, perhaps, but even your own self-interest has become in the hands of an infinitely wise and all-seeing Providence an instrument for making greater abundance available to all men; for, had it not been for your efforts, all the useful effects that Nature at your command has transmitted without payment among men would have remained eternally dormant. I say, without payment; for the payment you received was only the simple return to you of the efforts you had expended, and not at all a price levied on the gifts of God. Live, then, in peace, without fear and without qualms. You have no other property in the world save your claim to services due you for services that you have fairly rendered, and that your fellow men have voluntarily accepted. This property of yours is legitimate, unassailable; no utopia can prevail against it, for it is part and parcel of our very Edition: current; Page: [201] nature. No new ideology will ever shake its foundations or wither its roots.

Men of toil and hardship, you can never shut your eyes to this truth: that the starting point for the human race was a state of complete community, a perfect equality of poverty, want, and ignorance. By the sweat of its brow humanity is regenerated and directs its course toward another state of community, one in which the gifts of God are obtained and shared at the cost of less and less effort; toward equality of another kind, the equality of well-being, of enlightenment, of moral dignity. To be sure, men's steps along this road to a better and better life are not all of equal length, and to the degree that the rapid strides of the advance guard might impede your own, you would have just cause for complaint. But the contrary is the case. No spark of knowledge illumines another's mind without casting some small gleam of light upon your own; no progress is achieved by others, prompted by the desire for property, that does not contribute to your progress; no wealth is created that does not work for your liberation, no capital that does not increase your enjoyments and diminish your toil, no property acquired that does not make it easier for you to acquire property, no property created that is not destined to increase the abundance shared by all men. The social order has been so artfully designed by the Divine Artificer that those who have moved farthest ahead along the road to progress extend a helping hand, wittingly or unwittingly; for He has so contrived that no man can honestly work for himself without at the same time working for all. It is strictly accurate to say that any attack upon this marvelous order would be on your part not only an act of homicide, but of suicide as well. The whole of mankind constitutes a remarkable chain wherein, miraculously, motion imparted to the first link is communicated with ever increasing speed right up to the last.

Men of good will, lovers of equality, blind defenders and dangerous friends of all who suffer, who lag behind on the road to civilization, you who seek to establish the state of community in this world, why do you begin by unsettling men's minds and natural interests? Why, in your pride, do you aspire to bend all wills Edition: current; Page: [202] to the yoke of your social inventions? Do you not see that this community for which you yearn so ardently, and which is to extend the kingdom of God over the whole world, has already been conceived and provided for by God Himself; that He has not awaited your coming to make it the heritage of His children; that He does not need your inventions or your acts of violence; that every day His admirable decrees make it more and more a reality; that He has not turned for guidance to the uncertainties of your childish makeshifts nor even to the increasing expression of altruism manifested by acts of charity, but has entrusted the accomplishment of His plans to the most active, the most personal, the most enduring of our energies, our own self-interest, confident that it is ever alert? Study, therefore, the machinery of society, as it came from the hands of the Great Artificer, and you will be convinced that He evidences a concern for all men that goes far beyond your dreams and fantasies. Then, perhaps, instead of proposing to redo the divine handiwork, you will be content to pay it homage.

This does not mean that there is no room in the world for reforms or reformers. Nor does it mean that humanity must not eagerly recruit and generously encourage devoted researchers and scholars, loyal to the cause of democracy. They are still most necessary, not to subvert the law of society, but, on the contrary, to oppose the artificial obstacles that disturb and pervert its natural action. Truly, it is difficult to understand how people can continue to repeat such trite statements as this: “Political economy is very optimistic toward accomplished fact; it affirms that whatever is, is right; whether confronted with evil or with good, it is content to say laissez faire.” Do they imply that we do not know that humanity began in complete want and ignorance, and under the rule of brute force, or that we are optimists concerning accomplished facts such as these? Do they suggest that we do not know that the motive force of human nature is aversion to all pain, all drudgery; and that, since labor is drudgery, the first manifestation of self-interest was the effort to pass this painful burden along from one to another? Do they mean to say that the words “cannibalism,” “war,” “slavery,” “privilege,” “monopoly,” Edition: current; Page: [203] “fraud,” “plunder,” “imposture,” have never reached our ears, or that we see in these abominations the inevitable rumblings of the machine on the road to progress? But are not they themselves to some extent willfully confusing the issue in order to accuse us of confused thinking? When we admire the providential laws that govern men's transactions, when we say that the self-interest of every man coincides with that of every other man, when we conclude that the natural direction of these coincident interests tends to achieve relative equality and general progress; obviously it is from the operation of these laws, not from interference with their operation, that we anticipate harmony. When we say, laissez faire, obviously we mean: Allow these laws to operate; and not: Allow the operation of these laws to be interfered with. According as these laws are conformed to or violated, good or evil is produced. In other words, men's interests are harmonious, provided every man remains within his rights, provided services are exchanged freely, voluntarily, for services. But does this mean that we are unaware of the perpetual struggle between the wrong and the right? Does this mean that we do not see, or that we approve, the efforts made in all past ages, and still made today, to upset, by force or by fraud, the natural equivalence of services? These are the very things that we reject as breaches of the social laws of Providence, as attacks against the principle of property; for, in our eyes, free exchange of services, justice, property, liberty, security, are all merely different aspects of the same basic concept. It is not the principle of property that must be attacked, but, on the contrary, the principle hostile to it, the principle of spoliation and plunder. Men of property of all ranks, reformers of all schools, this is the mission that must reconcile us and unite us.

It is time, it is high time, that this crusade should begin. The ideological war now being waged against property is neither the most bitter nor the most dangerous that it has had to contend with. Since the beginning of the world there has also been a real war of violence and conspiracy waged against it that gives no sign of abating. War, slavery, imposture, inequitable taxation, monopoly, privilege, unethical practices, colonialism, the right to employment, the right to credit, the right to education, the Edition: current; Page: [204] right to public aid, progressive taxation in direct or inverse ratio to the ability to pay—all are so many battering-rams pounding against the tottering column. Could anyone assure me whether there are many men in France, even among those who consider themselves conservatives, who do not, in one form or another, lend a hand to this work of destruction?

There are people in whose eyes property appears only in the form of a plot of land or a sack of coins. Provided only that the land's sacrosanct boundaries are not moved and that pockets are not literally picked, they are quite content. But is there not also property in men's labor, in their faculties, in their ideas—in a word, is there not property in services? When I throw a service into the social scale, is it not my right that it remain there, suspended, if I may so express myself, until, according to the laws of its own natural equivalence, it can be met and counterbalanced by another service that someone is willing to tender me in exchange? By common consent we have instituted forces of law and order to protect property, so understood. Where are we, then, if these very forces take it upon themselves to upset this natural balance, under the socialistic pretext that freedom begets monopoly, that laissez faire is hateful and merciless? When things reach such a pass, theft by an individual may be rare and severely dealt with, but plunder is organized, legalized, and systematized. Reformers, be of good cheer; your work is not yet done; only try to understand what it really is.

But, before we proceed to the analysis of plunder, public or private, legal or illegal, its role in the world, the extent to which it is a social problem, we must, if possible, come to a clear understanding of what the communal domain and private property are; for as we shall see, private property is bounded on one side by plunder even as it is bounded on the other by the communal domain.

From what has been said in previous chapters, notably the one on utility and value, we may deduce this formula:

Every man enjoys gratis all utilities furnished or produced by Edition: current; Page: [205] Nature on condition that he take the pains to avail himself of them, or that he pay with an equivalent service those who render him the service of taking pains for him.

In this formula two elements are combined and fused together, although they are essentially distinct.

There are, first, the gifts of Nature: gratuitous raw materials and gratuitous forces; these constitute the communal domain.

In addition, there are the human efforts that go into making these materials available, into directing these forces—efforts that are exchanged, evaluated, and paid for; these constitute the domain of private property.

In other words, in our relations with one another, we are not owners of the utility of things, but of their value, and value is the appraisal made of reciprocal services.

Private property and the communal domain are two correlative ideas founded, respectively, on those of effort and freedom from effort.

What is free of effort is held in common, for all men enjoy it and are permitted to enjoy it unconditionally.

What is acquired by effort is private property, because taking pains is prerequisite to its satisfaction, just as the satisfaction is the reason for taking the pains.

If exchange intervenes, it is effected by the evaluation of two sets of pains taken, or two services rendered.

This recourse to pains implies the idea of an obstacle. We may then say that the result sought comes closer and closer to the condition of being gratis and common to all in proportion as the intervening obstacle is reduced, since, according to our premise, the complete absence of obstacles would imply a condition of being completely gratis and common to all.

Now, since human nature is dynamic in its drive toward progress and perfection, an obstacle can never be considered as a fixed and absolute quantity. It is reduced. Hence, the pains it entails are reduced along with it, and the service along with the pains, and the value along with the service, and the property with the value.

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But the utility remains constant. Hence, what is free of charge and common to all is increased at the expense of what formerly required effort and was private property.

To set man to work, a motive is necessary; and that motive is the satisfaction aimed at, or utility. It cannot be denied that he tends always and irresistibly to achieve the greatest possible satisfaction with the least possible amount of work, that is, to make the greatest amount of utility correspond with the least amount of property; consequently, the function of property, or rather of the spirit of property, is continually to enlarge the communal domain.

Since the human race started from the point of greatest poverty, that is, from the point where there were the most obstacles to be overcome, it is clear that all that has been gained from one era to the next has been due to the spirit of property.

This being the case, can anyone be found anywhere in the world who is hostile to the idea of property? Does not everyone see that it is impossible to imagine a force in society that is at once more just and more democratic? The fundamental dogma of Proudhon himself is mutuality of services. On this point we are in agreement. The point on which we differ is this: I call this dogma property, not mutuality of services, because careful analysis assures me that men, if they are free, do not and cannot have any other property than the ownership of value, or their services. Proudhon, on the contrary, like most economists, thinks that certain natural resources have an intrinsic value of their own, and that they are consequently appropriated. But, as for the idea that services constitute property, far from opposing it, he makes it his main article of faith. Does anyone desire to go further yet? As far as to say that a man should not be the owner of the pains he himself takes, that, in exchange, it is not enough to turn over gratis the help received from natural resources, that he must also surrender gratis his own efforts? But let him take care! This would mean glorifying slavery; for, to say that certain men must render services that are not paid for means that other men must receive services that they do not pay for, which is certainly slavery. Now, if he says that this gratuitous gift must be reciprocal, he is merely Edition: current; Page: [207] quibbling; for, either the exchange will be made with a certain degree of justice, in which case the services will be in some way or other evaluated and paid for; or else they will not be evaluated and paid for, and, in that case, some will give much and others little, and we are back to slavery.

It is therefore impossible to argue against the idea that services exchanged on the basis of value for value constitute legitimate property. To explain that this property is legitimate, we do not need to have recourse to philosophy or jurisprudence or metaphysics. Socialists, economists, egalitarians, believers in brotherly love, I defy you one and all to raise even the shadow of an objection against the legitimacy of a voluntary exchange of services, and consequently against property, as I have defined it, and as it exists in the natural order of society.

Of course, I know that in practice the ideal principle of property is far from having full sway. Against it are conflicting factors: there are services that are not voluntary, whose remuneration is not arrived at by free bargaining; there are services whose equivalence is impaired by force or fraud; in a word, plunder exists. The legitimacy of the principle of property is not thereby weakened, but confirmed. The principle is violated; therefore, it exists. We must cease believing in anything in this world, in facts, in justice, in universal consent, in human language; or else we must admit that these two words, “property” and “plunder,” express opposite, irreconcilable ideas that can no more be identified than yes and no, light and dark, good and evil, harmony and discord. Taken literally, the famous formula, property is theft, is therefore absurdity raised to the nth degree. It would be no less outlandish to say that theft is property; that what is legal is illegal; that what is, is not, etc. It is probable that the author of this bizarre aphorism merely desired to catch people's attention with a striking paradox, and that what he really meant to state was this: Certain men succeed in getting paid not only for the work that they do but also for the work that they do not do, appropriating to Edition: current; Page: [208] themselves alone God's gifts, gratuitous utility, the common possession of all. But in that case it would first be necessary to prove the statement, and then to say: Theft is theft.

To steal, in common usage, means to take by force or fraud something of value to the detriment and without the consent of the person who has created it. It is easy to understand how fallacious economic thinking was able to extend the meaning of this melancholy word, “steal.” First, utility was confused with value. Then, since Nature plays a part in the creation of utility, it was concluded that Nature also contributed to the creation of value, and, it was said, since this part of value is the fruit of no one's labor, it belongs to everyone. Finally, noting that value is never surrendered without compensation, the economists added: He steals who exacts payment for value that has been created by Nature, which is not in any way a product of human labor, which is inherent in the nature of things and is, by providential design, one of the intrinsic qualities of material objects, like specific gravity or density, form or color.

A careful analysis of value overturns this elaborate structure of subtleties, from which economists sought to deduce a monstrous identification of plunder with private property.

God put raw materials and the forces of Nature at man's disposal. To gain possession of them, either one has to take pains, or one does not have to take pains. If no pains are required, no man will willingly consent to buy from another man at the cost of effort what he can pluck from the hands of Nature without effort. In this case, no services, exchange, value, or property are possible. If pains must be taken, it is incumbent on the one who would receive the satisfaction to take them; hence, the satisfaction must go to the one who has taken the pains. This is the principle of property. Accordingly, if a man takes pains for his own benefit, he becomes the owner of all the combined utility created by his pains and by Nature. If he takes the pains for the benefit of others, he stipulates that he be given in return a utility representing equal pains, and the resulting transaction presents us with two efforts, two utilities that have changed hands, and two satisfactions. But we must not forget the important fact that the Edition: current; Page: [209] transaction is carried out by the comparison, by the evaluation, not of two utilities (they cannot be evaluated), but of the two services that have been exchanged. It is therefore accurate to say that, from his own individual point of view, man by his labor becomes the owner of the natural utility (this is the only reason that he works), whatever may be the ratio (infinitely variable) of his labor to the utility. But from the social point of View, in regard to the relations of one man with another, men can never be owners of anything except value, which is based, not on the bounty of Nature, but on human services, pains taken, risks run, resourcefulness displayed in availing oneself of that bounty; in a word, as far as gratuitous and natural utility is concerned, the last person to acquire it, the one who ultimately receives the satisfaction, is placed, by way of exchange, in exactly the position of the first worker. The latter happened to come upon the gratuitous utility and went to the trouble of taking possession of it; the ultimate consumer remunerates him by taking an equivalent amount of pains for him in return and thus substitutes his right of possession for the original owner's; the utility becomes his under the same terms, that is to say, gratis, provided he takes the necessary pains. In all this there is neither in semblance nor in fact a usurpation of the gifts of God.

Hence, I confidently advance this proposition as incontrovertible:

In their relation to one another, men are owners only of value, and value represents only services that are compared and voluntarily rendered and received.

I have already shown that, on the one hand, this is the true meaning of the word value; and that, on the other, men never are, never can be, owners of anything except value, a conclusion to be drawn from logic as well as from experience. From logic: for why should I buy from a man, using my pains as payment, what I can obtain from Nature, either without pains or with fewer pains? From universal experience, which is a weighty argument, since nothing can give more support to a theory than the expressed and tacit consent of all men of all times and all places: now, I affirm that universal agreement accepts and approves the Edition: current; Page: [210] meaning that I give here to the word “property.” When a public official makes an inventory following a death, or orders one to be made; when a businessman, a manufacturer, a farmer, makes a similar appraisal on his own initiative; or when the receivers in a bankruptcy case are requested to make one; what is inscribed on the stamped pages of the inventory as each item is presented? Is it the item's utility, its intrinsic worth? No, it is its value; that is, the equivalent amount of effort that any potential purchaser would have to exert in order to obtain a similar item. Do the appraisers concern themselves with deciding whether a given object is more useful than another? Do they take into account the satisfactions that these objects can give? Do they rate a hammer above a piece of bric-a-brac because the hammer can admirably turn the law of gravity to the advantage of its owner? Or do they rate a glass of water above a diamond, because, objectively speaking, the water can render more tangible service? Or a volume of Say above a volume of Fourier, because Say gives more lasting pleasure and solid instruction? No; they evaluate, they seek out the value, rigorously following, please note, my definition. Or rather, my definition follows their practice. They take into account, not the natural advantages, or the gratuitous utility, contained in each item, but the services that anyone acquiring it would have to perform himself or have another perform for him in order to obtain it. They do not appraise—please pardon the rather flip expression—the trouble God went to, but the pains that the purchaser would have to take to obtain it. And when the appraisal is finished, when the public knows the total amount of value listed in the inventory, all say with one voice: This is what the heir owns.

Since property includes only value, and since value indicates only relationships, it follows that property is itself a relation.

When people, on comparing two inventories, declare one man to be richer than another, they do not mean that this comparison applies necessarily to the amounts of absolute wealth or material well-being enjoyed by the two. In satisfactions, in absolute well-being, there is an element of common utility that can greatly affect this ratio. All men, in point of fact, are equal in their access to the light of day, the air they breathe, the warmth of the sun; Edition: current; Page: [211] and any inequality between the two inventories—expressed by the difference in property or value—can apply only to the amount of onerous utility.

And so, as I have already said many times and shall doubtless say many times more (for it is the greatest, the most admirable, and perhaps the most misunderstood of all the social harmonies, since it encompasses all the others), it is characteristic of progress (and, indeed, this is what we mean by progress) to transform onerous utility into gratuitous utility; to decrease value without decreasing utility; and to enable all men, for fewer pains or at smaller cost, to obtain the same satisfactions. Thus, the total number of things owned in common is constantly increased; and their enjoyment, distributed more uniformly to all, gradually eliminates inequalities resulting from differences in the amount of property owned.

Let us never weary of analyzing the result of this social mechanism.

How many times, when considering the phenomena of the social order, have I not had cause to appreciate how profoundly right Rousseau was when he said, “It takes a great deal of scientific insight to observe what we see every day”! Thus it is that habit, that veil which is spread before the eyes of the ordinary man, which even the attentive observer does not always succeed in casting aside, prevents us from seeing the most marvelous of all social phenomena: real wealth constantly passing from the domain of private property into the communal domain.

Let us try, nevertheless, to establish the fact that this democratic evolution does take place, and, if possible, to plot its course.

I have said elsewhere that, if we wished to compare two different eras of a nation's history from the point of view of their actual prosperity, we should have to resort to man-hours of unskilled labor as our measure, asking ourselves this question: What is the difference in the amount of satisfaction that could be obtained in this society, at different stages of its progress, by a given amount, say one day, of unskilled labor?

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This question implies two others:

What was, at the dawn of civilization, the ratio between satisfactions and the simplest kind of labor?

What is this ratio today?

The difference in the two will measure the increase in gratuitous utility in relation to the amount of onerous utility, i.e., the extent of the communal domain in relation to that of private property.

I do not believe that a man interested in public affairs can apply himself to any more interesting or instructive problem. I ask the reader's indulgence if I seem to cite a tediously long list of examples before reaching a satisfactory solution.

At the beginning of this book I made a kind of table of the most general human wants: breathing, food, clothing, shelter, transportation, education, amusement, etc.

Let us follow this list and see what satisfactions a common laborer could obtain for a certain number of days' work at the dawn of society and what he can obtain now.

Breathing

Here the satisfaction is gratis and common to all from the very beginning. Nature, having taken care of everything, leaves us nothing to do. No efforts, services, value, property, progress are possible. From the point of view of utility, Diogenes is as rich as Alexander; from the point of view of value, Alexander is as poor as Diogenes.

Food

In the present state of things, the value of a hundred liters of wheat is worth, in France, fifteen to twenty days of the most unskilled kind of labor. This is a fact and, whether known or not, is worth noting. We can state, therefore, that today humanity, as represented by its most backward element, the day laborer, obtains the satisfactions represented by a hundred liters of wheat for fifteen days of the most unskilled kind of labor. It is estimated that it takes three hundred liters of wheat to feed one man for a Edition: current; Page: [213] year. The unskilled laborer produces, therefore, if not his actual subsistence, at least (what amounts to the same thing) the value of his subsistence with forty-five to sixty days out of his year's labor. If we represent by one the standard of value (which for us is one day of unskilled labor), the value of a hundred liters of wheat is represented by 15, 18, or 20, depending on the yearly fluctuations. The ratio of these two values is one to fifteen.

In order to determine whether or not progress has been achieved and, if so, to measure it, we must ask ourselves what this same ratio was on the day that men first made their appearance. In truth, I would not dare hazard a figure; but there is a way of establishing the unknown x of this equation. When you hear someone declaiming against the social order, against private ownership of the land, against rent, against machines, take him to a virgin forest or confront him with a fetid swamp. Say to him: I wish to free you from the yoke that you complain of; I wish to rescue you from the atrocious struggles of anarchistic competition, from the conflicts of antagonistic interests, from the selfishness of wealth, from the tyranny of property, from the crushing rivalry of machines, from the stifling atmosphere of society. Here is land like that encountered by the men who first cleared the forests and drained the swamps. Take as much of it as you want by tens or hundreds of acres. Cultivate it yourself. All that you make it produce is yours. There is only one condition: you must have no recourse to society, which, you say, has victimized you.

This man, please note, would find himself in the same position, in respect to the land, as mankind itself was originally in. Now, I declare without fear of contradiction that he would not raise one hundred liters of wheat every two years. Therefore, the ratio is fifteen to six hundred.

Thus, progress can be measured. As far as wheat is concerned, and despite the fact that he is obliged to pay rent on his land, interest on capital, and the cost of hiring his tools—or rather, because he does pay for these things—a day laborer obtains for fifteen days' work what he could hardly have secured in six hundred days. The value of wheat, measured in terms of the most unskilled labor, has therefore fallen from six hundred to fifteen, Edition: current; Page: [214] or from forty to one. A hundred liters of wheat has for man exactly the same utility that it would have had the day after the Flood; it contains the same amount of nourishment; it satisfies the same want and to the same degree. It represents the same absolute wealth; it does not represent the same relative wealth. Its production has in large measure been turned over to Nature. It is obtained for less expenditure of human effort; less service is performed as it passes from hand to hand; it has less value; in a word, it has become gratis, not completely, but in the ratio of forty to one.

And it has not only become gratis, but common to all by the same ratio. It is not to the profit of the producer that thirty-nine fortieths of the total effort have been eliminated; but it is to the consumer's profit, whatever may be his own line of work.

Clothing

The same phenomenon occurs in the case of clothing. An ordinary day laborer goes into one of the Marais warehouses and gets a suit that corresponds to twenty days of his work, assumed to be of the most unskilled variety. He could not make the suit himself even if he spent his whole life at it. In the time of Henry IV it would have cost him three or four hundred days' work to buy a similar suit. What has happened to the materials in these two suits to make such a difference in their value in terms of man-hours of unskilled labor? It has been annihilated, because gratuitous forces of Nature have taken over the job; and the annihilation is to the advantage of all mankind.

For we must never lose sight of this fact: every man owes to his fellows services equivalent to those that he receives. If the weaver's art had made no progress, if his work were not now done in part by gratuitous forces of Nature, it would take the weaver two or three hundred days to weave the cloth, and our laborer would have to contribute two or three hundred days of his own labor to obtain it. And, since the weaver cannot, however much he might like to do so, persuade society to pay him two or three hundred days' Edition: current; Page: [215] labor for what is done for nothing by the forces of Nature, that is, to pay him for the progress that mankind has made, it is quite accurate to say that this progress has worked to the advantage of the purchaser, of the consumer, and to the better satisfaction of mankind as a whole.

Transportation

Before the time when any progress had been made, when the human race was still reduced, like our hypothetical day laborer, to primitive and unskilled labor, if a man wanted to have a hundred-pound load transported from Paris to Bayonne, he would have had only this choice: either to put it on his own shoulders and carry it over hill and dale to its destination, which would have taken over a year of slow plodding; or to get someone else to do this hard chore for him. Since, given the conditions we have outlined, the new carrier would have used the same means and required the same time, he would have demanded a year's labor in return. At this period in history, therefore, representing the value of unskilled labor as one, transportation was worth three hundred per hundred-pound weight carried a distance of four hundred fifty miles.

Things have certainly changed. In fact, there is no day laborer in Paris who could not obtain the same result at a cost of two days' labor. The choice is still the same. Either one must do the job oneself or have it done by others and pay them for it. If our laborer does it himself, it will still cost him a year of hard plodding; but if he turns to professional haulers, he will find twenty, any one of whom would be willing to do it for him for three or four francs, that is, for the equivalent of two days' worth of unskilled labor. Thus, the value of unskilled labor being represented as one, transportation that was worth three hundred is now worth only two.

How has this amazing revolution come about? It took many a century. Certain animals had to be tamed, mountains tunneled, valleys filled in, rivers spanned. First sledges were used, then wheels; obstacles that had represented labor, services, value, were Edition: current; Page: [216] lessened; in a word, man reached the point where he could do, for pains equal to two, what originally he could do only for pains equal to three hundred. All this progress was achieved by men who were concerned only with their own self-interest. And yet today who reaps the reward? Our poor day laborer and, along with him, everyone else.

Let no one say that this is not an example of common ownership. I maintain that this is common ownership in the strictest sense of the word. Originally this particular satisfaction was balanced on the scales of the general economy by three hundred days' worth of unskilled labor or by a smaller, but proportional, amount of more highly skilled labor. Now two hundred ninety-eight out of three hundred parts of this effort have been taken over by Nature, and humanity has been correspondingly relieved of it. Now, obviously, all men are equal as regards those obstacles that have been removed, the distance that has been annihilated, the toil that has been eliminated, the value that has been destroyed, since they all enjoy the result without paying for it. They pay only for the quantity of human effort still required, amounting to two, with unskilled labor as the measure. In other words, for the man who is unskilled and has only his physical strength to offer, two days of labor are still required to obtain the satisfaction desired. All other men obtain it for less work than that: a Paris lawyer, earning thirty thousand francs a year, for one twenty-fifth part of a day, etc. By this reasoning, then, we see that men are equal as regards the value that has been destroyed, and that what inequality remains falls within the domain of the surviving value, that is, within the domain of private property.

For political economy, proceeding by way of example can mean walking on dangerous ground. The reader is always inclined to believe that the general phenomenon that it is the author's intention to describe holds true only in the particular case cited. But it is clear that what has been said of wheat, clothing, transportation, is true of everything else. When the author generalizes, it is for the reader to make the concrete application; and when the author performs the dull and uninspiring task of analysis, Edition: current; Page: [217] it is asking little enough that the reader give himself the pleasure of making the synthesis for himself.

Essentially, the basic law can be stated thus:

Value, which is social property, is created by effort and obstacles.

As obstacles decrease, effort and value, or the domain of private property, decreases proportionally.

As satisfactions are achieved, the domain of private property constantly decreases and the communal domain steadily increases.

Must we conclude, as M. Proudhon does, that private property is destined to disappear? Granted that for each specific result obtained, each satisfaction achieved, its role grows less, as the extent of the communal domain increases; does this mean that private property will eventually be completely absorbed and destroyed?

To draw such a conclusion is to misunderstand entirely the very nature of man. We encounter here a fallacy similar to the one that we have already refuted concerning interest on capital. Interest rates tend to fall, it was said; hence, interest is ultimately bound to disappear altogether. Value and the domain of private property decrease, it is now said; therefore, they are ultimately bound to be eliminated entirely.

The whole fallacy consists in overlooking the significance of these three crucial words: for each specific result. Yes, it is quite true that men obtain specific results with less effort. It is because they have this faculty that they are perfectible and capable of progress; and because of this faculty we can state that the relative domain of private property grows smaller and smaller, if we consider its role in achieving a given satisfaction.

But it is not true that the potential results that are still to be obtained are ever exhausted, and therefore it is absurd to think that the absolute domain of private property is impaired by the laws of progress.

We have said many times and in every conceivable way: Every effort, in time, can lead to a greater total amount of gratuitous utility, without justifying us in concluding that men will ever Edition: current; Page: [218] stop making efforts. All that we have the right to conclude is that, as their energies are freed, they will be turned against new obstacles and will achieve, for the same effort, new and hitherto unheard-of satisfactions.

I emphasize this idea the more, in that we must, in times like the present, be permitted to leave no room for fallacious interpretations when we use the terrible words, “private property" and “the communal domain.”

At any given moment in his life man in a state of isolation has only a limited amount of effort at his disposal. This is true also of society.

When man in a state of isolation achieves progress in some field by making the forces of Nature co-operate with his own labor, he reduces correspondingly the total amount of his efforts in relation to the useful effect sought for. He would also reduce his efforts in an absolute sense, if, content with his present lot, he converted his progress into increased leisure, refusing to apply his newly released energies toward procuring other satisfactions. But this assumes that ambition, desire, aspirations, are strictly limited forces; that the human heart is not infinitely capable of experiencing new impulses. Such, of course, is not the case. Hardly has Robinson Crusoe been able to make Nature do part of his work for him when he turns to new projects. The total amount of effort he expends remains the same; but he puts it to better, more fruitful, more productive use, because he avails himself of more of Nature's gratuitous collaboration; and the same thing occurs in society.

Because the plow, the harrow, the hammer, the saw, oxen and horses, the sail, water power, and steam have successively liberated man from a tremendous amount of effort he once had to expend, it does not necessarily follow that the energies thus made available are allowed to atrophy. Let us recall what was said about the indefinite elasticity of human wants and desires. Let us look about us, and we shall not hesitate to admit that every time man has succeeded in overcoming an obstacle by making use of the forces of Nature, he has turned his own powers against new obstacles. Edition: current; Page: [219] We print more easily now than we used to, but we do more printing. Every book represents less human effort, less value, less property; but there are more books, and, in the total reckoning, just as much effort and as much value and property. I could say the same thing for clothing, housing, railroads—for all human commodities. It is not a case of a decrease in the total value, but of an increase in the total utility. The absolute domain of private property has not shrunk, but the absolute domain of what is gratis and common to all has grown larger. Progress has not paralyzed labor; it has distributed prosperity more widely.

Things that are available without cost and are common to all constitute the domain of the forces of Nature, and this domain is steadily growing. This truth is supported by both reason and experience.

Value and private property constitute the domain of human efforts, of reciprocal services; and this domain is growing constantly smaller in relation to any particular satisfaction obtained, but not in relation to the sum total of all satisfactions, because the number of potential satisfactions open to mankind is limitless.

It is as true, therefore, to say that relative property constantly gives way before communal wealth as it is false to say that absolute property tends to disappear entirely. Property, like a pioneer, accomplishes its mission in one area, and then moves on to another. For it to disappear entirely, it would be necessary that there be no more obstacles to challenge human labor; that all effort become vain; that men no longer have need to exchange, to render one another services; that everything be produced spontaneously; that desire be immediately followed by satisfaction; that we all become the equals of the gods. Then, it is true, everything would be gratis and common to all. Effort, service, value, property—none of the things that bear witness to our innate infirmity would have any reason for existence.

But however high man may rise, he is still as far as ever from omnipotence. What does it matter what particular rung is his perch on the ladder of infinity? What characterizes God, so far as it is given us to understand Him, is that no barrier stands between Edition: current; Page: [220] His will and its accomplishment: Fiat lux, et lux facta est. And even this is evidence of man's inability to understand God's omnipotence, for Moses could not avoid placing two words, which had to be pronounced, as an obstacle between the divine will and the coming of the light. But whatever progress is in store for man because of his perfectibility, we can affirm that his progress will never be so complete as to clear away every obstacle on the road to infinite prosperity and to render completely useless the work of his hands and his mind.

The reason is simple enough: as rapidly as certain obstacles are overcome, new desires appear that encounter new obstacles requiring new efforts. We shall always, then, have labor to perform, to exchange, to evaluate. Property will therefore exist until the end of time, always growing in its total amount, as men become more active and more numerous, although each effort, each service, each value, each unit of property, will, in passing from hand to hand, serve as the vehicle of an increasing proportion of gratuitous and common utility.

The reader will note that we use the word “property” in a very extended, but nonetheless exact, sense. Property is the right to enjoy for oneself the fruits of one's own efforts or to surrender them to another only on the condition of equivalent efforts in return. The distinction between property owner and proletarian is therefore fundamentally erroneous, unless we assert that there is a class of men who perform no work or have no rights over their own efforts or over the services that they render or over those that they receive in exchange.

It is erroneous to restrict the term “property” to one of its special forms, like capital or land, something that produces interest or rent; and it is this erroneous definition that is used to divide men into two hostile classes. Analysis shows that interest and rent are the fruit of services rendered and have the same origin, the same nature, and the same rights as manual labor.

The world is a vast workshop upon which Providence has Edition: current; Page: [221] lavished raw materials and forces. Human labor applies itself to these materials and forces. Past efforts, present efforts, and even future efforts or promises of future efforts are exchanged. Their relative worth, established by exchange and independently of raw materials and the gratuitous forces of Nature, determines value; and every man is the owner of the value he has produced.

It may be objected: What difference does it make that a man is the owner, as you say, only of the value or of the acknowledged worth of his service? Ownership of the value carries with it ownership of its concomitant utility. John has two sacks of wheat; Peter, only one. John, you say, is twice as rich in value. Very well, then! He is also twice as rich in utility, and even in natural utility. He can eat twice as much.

True enough, but has he not performed double the amount of work?

But let us get at the roots of the objection.

Actual, absolute wealth, as we have already said, resides in utility. This is what the word itself means. Only utility renders service (uti, “to serve”). Only utility is related to our wants, and man has only utility in mind when he works. At least this is his specific goal; for things do not satisfy our hunger or our thirst because they contain value, but because they contain utility.

But note how this works in society.

In isolation man seeks to obtain utility, with never a thought for value, which, in fact, he could not even conceive of.

In society, on the other hand, man seeks to obtain value, with never a thought for utility. The thing he produces is not intended to satisfy his own wants. Hence, he has little concern with how useful it may be. The person desiring it must be the judge on that score. As far as he, the producer, is concerned, all that counts is that, when it is bargained for, as great a value as possible be assigned to it, for he is sure that the more value he is credited with contributing, the more utility he will receive in return.

The division of labor has brought about a situation in which each one produces what he will not consume and consumes what he has not produced. As producers we are concerned with value; as consumers, with utility. Such is the universal experience. The Edition: current; Page: [222] person who polishes a diamond, embroiders lace, distills brandy, or raises poppies, does not ask himself whether their consumption is reasonable or unreasonable. He does his work, and, provided his work brings him value in return, he is content.

And, we may note in passing, this state of affairs proves that morality or immorality resides not in the work of the producer of a commodity, but in the desire of the consumer; and that the improvement of society, therefore, depends on the morality of the consumer, not of the producer. How often have we cried out against the English for raising opium in India with the express purpose, it was said, of poisoning the Chinese! Such an accusation reveals an ignorance of the nature and scope of morality. Never shall we succeed in preventing the production of something that, since it is in demand, has value. It behooves the person seeking a satisfaction to reckon the effect it will have, and the attempt to separate foresight from responsibility will always be a vain one. Our winegrowers make wine and always will make it as long as it has value, without bothering to find out whether or not it makes people drunk in France or leads them to commit suicide in America. It is the judgment that men pass on their wants and their satisfactions that determines the direction of labor. This is true even in isolation; and if a foolish vanity had spoken more loudly to Robinson Crusoe than hunger, instead of spending his time in hunting, he would have spent it arranging feathers in his headdress. Similarly, a serious population encourages serious industries; and a frivolous population, frivolous industries.1

But, to return to our subject, I make this statement:

The man who works for himself has utility as his objective.

The man who works for others has value as his objective.

Now, property, as I have defined it, is based on value; and, since value is only a relative term, property itself is only a relative term.

If there were only one man on earth, the idea of property would never occur to him. Since he would be free to dispose as he wished of all the utilities about him and would never be confronted with others' rights limiting his own, how could it enter his mind to say: This is mine? These words presuppose the correlative: This is Edition: current; Page: [223] not mine, or This belongs to another. Mine and thine are inseparable; and the word “property,” or “ownership,” necessarily implies a relationship, since it indicates with equal clarity both that a thing is owned by one person, and that it is not owned by another.

“The first man, who, having put a fence around a piece of land,” said Rousseau, “took it into his head to say, ‘This is mine,’ was the true founder of civil society.”

What does this fencing off express except an idea of exclusion and consequently of a relation existing between the owner and others? If its sole purpose were to protect the land from animals, it would be a precaution, not a sign of property; a boundary marker, on the other hand, is a sign of property, and not of precaution.

Thus, men are in reality owners only in relation to one another; and, once this is granted, of what are they owners? Of value, as is clearly evidenced in the exchanges they make with one another.

Let us give, as is our custom, a very simple illustration.

Nature has been at work, through all eternity perhaps, in putting into spring water the qualities that enable it to quench our thirst and, from our point of view, to give it utility. This is certainly not my work, since the process has been completed without my participation or knowledge. In this respect, I can say that water, for me, is a gratuitous gift from God. What is my own is the effort I exerted in order to provide myself with a day's supply of water.

By this act of mine, of what have I become the owner?

In respect to myself, I am the owner, if I may use that term, of all the utility that Nature has placed in this water. I can turn it to my benefit in any way I see fit. It is, indeed, for no other reason that I have gone to the trouble of going after it. To challenge my right to it would be to say that, although men must drink to Edition: current; Page: [224] live, they do not have the right to drink the water they have procured by their own labor. I do not believe that the communists, although they go very far, would go quite that far; and even under the system proposed by Cabet, the lambs of Icaria will be permitted, when they are thirsty, to drink from its streams of pure water.

But in respect to other men, presumably free to do as I have done, I am not, and cannot be, owner of anything more than what, by metonymy, is called the value of the water, that is, the value of the service I render by letting others have it. Since my right to drink it is recognized, it is impossible to contest my right to turn it over to someone else. And since his right to go to the spring to get it, as I did, is recognized, it is impossible to contest his right to accept the water that I fetched. If one man has the right to offer and another to accept, for a price that has been freely arrived at, the former is the owner, as far as the latter is concerned. It is truly discouraging to be writing in an age when it is impossible to take a step in the field of political economy without having to stop for such childishly obvious demonstrations.

But on what basis shall the arrangement be made? This is what, above everything else, we must know if we are to evaluate fully the social significance of this word “property,” so distressing to the partisans of pseudodemocratic sentimentality.

But to continue my illustration: It is clear, since both I and the man who wishes to purchase the water I secured are free, that we shall take into consideration the trouble I went to and the trouble that he will be spared, as well as all other circumstances that create value. We shall haggle over the terms; and, if the bargain is concluded, it can be said without exaggeration or undue subtlety that my neighbor will have acquired gratis, or, if you will, as nearly gratis as I did, all the natural utility of the water. Is any further proof required that human effort, and not intrinsic utility, determines the degree to which the conditions of the transaction are onerous? It will be granted that the utility of this water remains constant, whether the spring be near at hand or far away. It is the pains taken or to be taken that constitute the Edition: current; Page: [225] variable, depending on the distance, and since the remuneration varies accordingly, it is in the pains, and not in the utility, that we find the principle of relative value, i.e., of property.

It is therefore certain that, in relation to others, I am not and cannot be owner of anything except my own efforts and my own services. These have nothing in common with the mysterious and unknown processes by which Nature has communicated utility to the things that I use to render my services. In spite of all further claims I might make, my property will never actually go beyond this limit; for, if I demand more for my service than its value, my neighbor will perform it for himself. This limit is absolute, definite, and impassable. It explains and completely justifies property, which is necessarily restricted to the very natural right of demanding a service in exchange for a service. It makes it evident that to speak of the enjoyment of natural utilities as “property” is to use the word in a very loose and purely nominal sense; that to use expressions like, “The property in an acre of land, in a hundredweight of iron, in a hundred liters of wheat, in a meter of cloth,” is mere metonymy, like the “value” of water, iron, etc.; that, in so far as Nature has placed these things within men's reach, they are enjoyed gratis and by all; that, in a word, the idea of a gratuitous communal domain can be harmoniously reconciled with the idea of private property, since the gifts of God fall into the first category, and human services alone form the legitimate domain of the second.

Merely because I have chosen a very simple illustration to show the line of demarcation between the communal domain and that of private property, we should not hastily conclude that this line is blurred or effaced in more complex transactions. On the contrary; it remains clearly visible and is always to be observed in any free transaction. Going to the spring for water is admittedly a very simple act; but the act of growing wheat, if we consider it carefully, is no more complex, except that it includes a whole series of equally simple acts, in any one of which Nature's contribution and man's are combined. Therefore, the example I chose is completely typical. In the case of water, wheat, dry goods, books, transportation, painting, dance, music, certain circumstances, as Edition: current; Page: [226] we have admitted, can give great value to certain services, but no man can ever claim payment for anything else, and especially for Nature's aid, as long as one of the contracting parties can say to the other: If you ask me more than your service is worth, I shall look elsewhere, or I shall perform it for myself.

Not content with justifying the idea of private property, I should like to make it appealing even to the most rabid partisans of public ownership. To that end what must we do? We must describe its contribution to democracy, progress, and equality; we must make clear, not only that it does not give a monopoly on the gifts of God to a few individuals, but also that its special function is to increase steadily the extent of the communal domain. In this respect, it is far more ingenious than the plans thought up by Plato, More, Fénelon, or Cabet.

That there are certain things that men avail themselves of gratis and on a footing of perfect equality, that there is in the social order, underlying private property, a very real communal domain, is a fact that no one disputes. Whether we are economists or socialists, we have only to open our eyes to see that this is so. In certain respects all of the children of God are treated alike. All are equal before the law of gravitation, which holds them to the earth, and in respect to the air they breathe, the light of day, the rushing water of the torrent. This vast and immeasurable store of common possessions, which has nothing to do with value or property, is called natural wealth by Say, in contrast to social wealth; by Proudhon, natural possessions, as against acquired possessions; by Considérant, natural capital, as against created capital; by Saint-Chamans, consumers' wealth, as against value wealth; we ourselves have called it gratuitous utility, as against onerous utility. Name it what you will, the important thing is that it exists, that we are justified in saying that there exists among men a common store of gratuitous and equal satisfactions.

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And though social wealth, acquired wealth, created wealth, onerous wealth, value wealth—in a word, property—may be unevenly distributed, we cannot say that it is unjustly distributed, since every man's share of it is proportional to his own services, for it is based on them and receives its evaluation from them. Furthermore, it is evident that this inequality is lessened by the existence of the common store of gratuitous utility, in virtue of the following law of mathematics: The relative difference between two unequal numbers is lessened if the same number is added to each. If, then, our inventories show that one man is twice as rich as another, we cannot consider this proportion as accurate when we take into account both men's share of the common gratuitous utility; and even what inequality we do discover would steadily grow less if the common store steadily increased.

The question, therefore, is whether this common store is a fixed and invariable quantity, vouchsafed once and for all to man by Providence at the beginning of time, on which is superimposed a stratum of private property, in such a way that no connection or interaction exists between the two phenomena.

Economists have concluded that the social order has no influence on this natural and common fund of wealth and for that reason have excluded it from the study of political economy.

The socialists go further. They believe that the social order tends to transfer to the domain of private property what is rightfully part of the common store, that it sanctions the usurpation of what belongs to all for the profit of the few; and for that reason they attack political economists for being unaware of this disastrous tendency, and society for passively submitting to it.

In fact, the socialists tax the economists with being inconsistent on this point, and with some reason; for the economists, after declaring that there was no connection between the communal domain and that of private property, went on to weaken their own assertion and open the way for the socialists' grievances when, confusing value with utility, they declared that the forces of Nature, that is, the gifts of God, had intrinsic value, value on their own account, for value always and necessarily connotes Edition: current; Page: [228] private property. On the day the economists made this error they lost the right and the means to justify logically the right to private property.

What I now say, what I declare with conviction as an absolute certainty in my own mind, is this: Yes, there is constant interaction between private property and the communal domain; and in this respect the first assertion, that of the economists, is wrong. But the second assertion, amplified and exploited by the socialists, is even more dangerously erroneous; for this interaction does not cause any part of the communal domain to be appropriated into the domain of private property, but, on the contrary, constantly extends the former at the expense of the latter. Private property, inherently just and legitimate, because it always is proportional to services, tends to convert onerous utility into gratuitous utility. It is the spur that impels the human intellect to realize the latent potential of the forces of Nature. It attacks, to its own profit admittedly, the obstacles that stand in the way of gratuitous utility. And when the obstacle is surmounted to any degree, we find that it results in corresponding benefit to all. Then, tirelessly, property attacks new obstacles, and this process continues with never an interruption, steadily raising the standard of living, bringing the great family of man nearer and nearer the goals of community and equality.

In this consists the truly marvelous harmony of the natural social order. Unfortunately, I cannot describe this harmony without combatting old objections that are always cropping up or without becoming tiresomely repetitious. No matter; I shall set myself to the task, and I beg the reader also to exert himself to some degree.

We must grasp fully this fundamental idea: When no obstacle between desire and satisfaction exists for anyone (for example, there is no obstacle between our eyes and the light of day), there is no effort to be made, no service to be performed for oneself or for others; no value, no property is possible. But when an obstacle exists, the whole series is constituted. First, we find effort coming into play; then, the voluntary exchange of efforts and services; then, the comparative appraisal of services, or value; and finally, Edition: current; Page: [229] the right of each one to enjoy the utilities contained in these values, or property.

If, in this struggle against equal obstacles, the contribution made by Nature and by labor always remained in the same proportion, private property and the communal domain would follow parallel lines with no change in their relative proportions.

But such is not the case. The goal of all men, in all their activities, is to reduce the amount of effort in relation to the end desired and, in order to accomplish this end, to incorporate in their labor a constantly increasing proportion of the forces of Nature. This is the constant preoccupation of every farmer, manufacturer, businessman, workman, shipowner, and artist on earth. All their faculties are directed toward this end; for this reason they invent tools or machines, they enlist the chemical and mechanical forces of the elements, they divide their labors, and they unite their efforts. How to do more with less, is the eternal question asked in all times, in all places, in all situations, in all things. Certainly they are motivated by self-interest; who can deny it? What other stimulant would urge them forward with the same degree of energy? Since every man here below bears the responsibility for his own existence and progress, how could he possibly have within him any lasting motive force except self-interest? You cry out in protest; but bear with me until the end, and you will see that, though each man thinks of himself alone, God is mindful of all.

Our constant concern is, therefore, to decrease our effort in relation to the end we seek. But when effort is diminished—whether by the removal of the obstacle or by the use of machines, the division of labor, joint activity, the harnessing of a force of Nature, etc.—this decreased effort is assigned a proportionately lower rating in relation to other services. We render a smaller service when we perform it for someone else; it has less value, and it is quite accurate to say that the domain of private property has receded. Has the utility of the end result been lost on that account? No, nor can it be by the very nature of our hypothesis. What, then, has happened to the utility? It has passed into the communal domain. As for that part of human effort which is no Edition: current; Page: [230] longer required, it does not on that account become sterile; it is directed toward other conquests. Enough obstacles appear and always will appear to thwart the satisfaction of our ever new and increasing physical, intellectual, and moral wants, so that our labor, when freed in one area, will always find something to challenge it in another. And so, since the domain of private property always remains the same, the communal domain increases like a circle whose radius is constantly lengthened.

Otherwise how could we explain progress and civilization, however imperfect the latter may be? Let us look upon ourselves and consider our weakness; let us compare our strength and our knowledge with the vigor and the knowledge that are presupposed by the countless satisfactions we are privileged to derive from society. Certainly we shall be convinced that, if we were reduced to our own efforts, we should not enjoy one hundred thousandth part of these satisfactions, even though each one of us had millions of acres of uncultivated land at his disposal. It is therefore certain that a given amount of human effort achieves immeasurably greater results today than in the time of the Druids. If this were true of only one individual, the natural inference would be that he lives and prospers at others' expense. But since the same thing happens for all members of the human family, we are led to the comforting conclusion that something outside ourselves has come to our aid; that the gratuitous co-operation of Nature has been progressively added to our own efforts, and that, throughout all our transactions, it has remained gratuitous; for if it were not gratuitous, it would explain nothing.

From the preceding considerations we may deduce the following propositions:

All property is value; all value is property.

What has no value is gratuitous; what is gratuitous is common to all.

A decline in value implies a greater amount of gratuitous utility.

A greater amount of gratuitous utility implies a partial realization of common ownership.

There are times in our history when we cannot utter certain Edition: current; Page: [231] words without running the risk of being misinterpreted. There will be no dearth of people ready to cry out, in praise or in condemnation, according to their economic persuasion: The author speaks of a communal domain; therefore he is a communist. I anticipate it, and I am resigned to it. But though resigned, I cannot refrain from seeking to avoid the imputation.

The reader must indeed have been inattentive (and it is for this reason that the readers most to be feared are those who do not read) if he has not discerned the great divide between the communal domain and communism. These two ideas are separated not only by the great expanse of private property but also by that of law, liberty, justice, and even of human personality.

By the communal domain is meant those things that we enjoy in common, by the design of Providence, without the need of any effort to apply them to our use. They can therefore give rise to no service, no transaction, no property. Property is based on our right to render services to ourselves or to render them to others for a remuneration. What the communist proposes to make common to all is not the gratuitous gifts of God, but human effort, or service. He proposes that each one turn over the fruit of his toil to the common fund and then make the authorities responsible for this fund's equitable distribution.

Now, one of two things will be done: either the distribution will be based on each man's contribution, or it will be made on some other basis.

In the first case, the communist hopes, as far as the result is concerned, to reproduce the existing order, contenting himself with substituting the arbitrary decision of a single individual for the free consent of all.

In the second case, on what basis will the distribution be made? Communism answers: On the basis of equality. What! Equality without reference to any difference in pains taken? We shall all have an equal share, whether we have worked six hours or twelve, mechanically or intellectually! But of all possible types of inequality this is the most shocking; and furthermore, it means the destruction of all initiative, liberty, dignity, and prudence. Edition: current; Page: [232] You propose to kill competition, but take care; you are only redirecting it. Under present conditions we compete to see who works most and best. Under your regime we shall compete to see who works worst and least.

Communism fails to understand even man's nature. Effort is of itself painful. What disposes us to exert it? It can only be a sensation more painful still, a want to be satisfied, a suffering to be avoided, a good thing to be enjoyed. Our motive force is, therefore, self-interest. When we ask communism what it proposes as a substitute, it answers in the words of Louis Blanc: honor, and in the words of M. Cabet: brotherhood. In that case you must at least make me feel other people's sensations, so that I may know to what end I should direct my labor.

And then just what is this code of honor and this sense of brotherhood that is to be put to work in all mankind at the instigation and under the watchful eyes of Messrs. Louis Blanc and Cabet? But it is not necessary for me to refute communism here. All that I desire to state is that it is the exact opposite in every particular of the system that I have sought to establish.

We recognize the right of every man to perform services for himself or to serve others according to conditions arrived at through free bargaining. Communism denies this right, since it places all services in the hands of an arbitrary, central authority.

Our doctrine is based on private property. Communism is based on systematic plunder, since it consists in handing over to one man, without compensation, the labor of another. If it distributed to each one according to his labor, it would, in fact, recognize private property and would no longer be communism.

Our doctrine is based on liberty. In fact, private property and liberty, in our eyes are one and the same; for man is made the owner of his own services by his right and his ability to dispose of them as he sees fit. Communism destroys liberty, for it permits no one to dispose freely of his own labor.

Our doctrine is founded on justice; communism, on injustice. This is the necessary conclusion from what we have just said.

There is, therefore, only one point of contact between the Edition: current; Page: [233] communists and ourselves: a certain similarity in the syllables composing the words “communism” and the “communal” domain.

But I trust that this similarity will not lead the reader astray. Whereas communism is the denial of private property, we see in our doctrine of the communal domain the most explicit affirmation and the most compelling demonstration that can be given in support of private property.

For, if the legitimacy of private property has appeared doubtful and inexplicable, even to those who were not communists, it seemed so because they felt that it concentrated in the hands of some, to the exclusion of others, the gifts of God originally belonging to all. We believe that we have completely dispelled this doubt by proving that what was, by decree of Providence, common to all, remains common in the course of all human transactions, since the domain of private property can never extend beyond the limits of value, beyond the rights laboriously acquired through services rendered.

And, when it is expressed in these terms, who can deny the right to private property? Who but a fool could assert that men have no rights over their own labor, that they may not rightfully receive voluntary services from those to whom they have rendered voluntary services?

There is another expression that requires explanation, for in recent times it has been strangely misused, viz., “gratuitous utility.” Do I need to say that I mean by “gratuitous,” not something that does not cost one man anything because he has taken it from another, but what does not cost anybody anything?

When Diogenes warmed himself in the sun, it could be said that he warmed himself gratis, for he received from the divine bounty a satisfaction that required no labor either from himself or from any of his contemporaries. I may add that this warmth from solar radiation remains gratuitous when a landowner uses it to ripen his wheat and his grapes, since, of course, when he sells his grapes and wheat, he is paid for his own services and not for the sun's. This interpretation may perhaps be fallacious (and if it is, there is nothing left to do but turn communist); but, in any Edition: current; Page: [234] case, such is the sense that the expression “gratuitous utility" obviously has and the sense in which I use it.

Since the establishment of the Republic people have been talking a great deal about interest-free credit and education free of charge. But it is clear that they include a terrible fallacy in this word. Can the state make instruction shine down, like the light of day, on every corner of the land without requiring any effort from anybody? Can it cover France with schools and teachers who do not require payment in any form? All that the state can do is this: Instead of allowing each individual to seek out and pay for services of this type that he wants, the state can, by taxation, forcibly exact this remuneration from the citizens and then distribute the type of instruction it prefers without asking them for a second payment. In this case those who do not learn pay for those who do; those who learn little for those who learn much; those who are preparing for trades for those who will enter the professions. This is communism applied to one branch of human activity. Under this regime, on which I do not propose to pass judgment at this time, one may say, one must say: Education is common to all; but it would be ridiculous to say: Education is free of charge. Free of charge! Yes, for some of those who receive it, but not for those who pay out the money for it, if not to the teacher, at least to the tax collector.

There is nothing that the state cannot give gratis if we follow this line of reasoning; and if this word were not mere hocus-pocus, gratuitous education would not be the only thing we should ask of the state, but gratuitous food as well, and gratuitous clothing, and gratuitous housing, etc. Let us beware. The great mass of our citizens have almost reached this point; at least there is no dearth of agitators demanding, in the name of the common people, interest-free credit, gratuitous tools of production, etc., etc. Deceived by the meaning of a word, we have taken a step toward communism; why should we not take a second, then a third, until all liberty, all property, all justice have passed away? Will it be alleged that education is so universally necessary that we are Edition: current; Page: [235] permitted for its sake to compromise with justice and our principles? But is not food even more important. Primo vivere, deinde philosophari, the common people will say, and, in all truth, I do not know what answer can be given them.

Who knows? Those inclined to accuse me of communistic leanings because I have noted the providential community of God's gifts will perhaps be the very ones to violate the right to learn and to teach, that is, to violate in its essence the right to property. These inconsistencies are more surprising than unusual.

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9: Landed Property

If the central thesis of this work is valid, we must conceive of mankind, in its relation to the world about it, along the lines that I shall now indicate.

God created the world. On the surface and in the bowels of the earth, He placed a host of things that are useful to man in that they are capable of satisfying his wants.

In addition, He imparted to matter various forces: gravitation, elasticity, density, compressibility, heat, light, electricity, crystallization, plant life.

He placed men in the midst of these raw materials and these forces and bestowed them upon him gratis. To them men applied their energies; and in so doing they performed services for themselves. They also worked for one another; and in so doing they rendered reciprocal services. These services, when compared for purposes of exchange, gave rise to the idea of value, and value to the idea of property.

Every man, therefore, became, in proportion to his services, a proprietor. But the forces and the raw materials, originally given gratis to man by God, remained, still are, and always will be, gratis, however much, in the course of human transactions, they may pass from hand to hand; for, in the appraisals that their exchange necessitates, it is human services, and not the gifts of God, that are evaluated.

From this it follows that there is not one among us who, provided only our transactions be carried out in freedom, ever ceases to enjoy these gifts. A single condition is attached: we must Edition: current; Page: [237] ourselves perform the labor necessary to make them available to us, or, if someone else takes this trouble for us, we must pay him the equivalent in other pains that we take for him.

If what I assert is true, then certainly the right to property is unassailable.

The universal instinct of mankind, which is more infallible than the lucubrations of any one individual could ever be, had been to adhere to this principle without analyzing it. Then the theorists came along and set themselves to scrutinizing the concepts underlying the idea of property.

Unfortunately, at the very beginning they made the error of confusing utility with value. They attributed inherent value, independent of any human service, to both raw materials and the forces of Nature. Once this error was made, the right to property could be neither understood nor justified.

For utility represents a relation between things and ourselves. No efforts, transactions, or comparisons are necessarily implied; it can be conceived of as an entity in itself and in relation to man in isolation. Value, on the contrary, represents a relation between one man and another; to exist at all it must exist in twofold form, since there is nothing with which an isolated thing can be compared. Value implies that its possessor surrenders it only for equal value in return. The theorists who confuse these two ideas therefore make the assumption that in exchange a man trades value supposedly created by Nature for value created by other men, that is, utility requiring no labor, for utility that does require labor—in other words, that he profits from the labor of others without contributing labor of his own. The theorists first characterized property so understood as a necessary monopoly, then merely as a monopoly, then as injustice, and finally as theft.

Landed property received the first brunt of this attack. It was inevitable. Not that all industry in its operation does not likewise use the forces of Nature; but in the eyes of the multitude these forces play a much more striking role in the phenomena of plant and animal life, in the production of food and what are improperly called raw materials, both of which are the special province of agriculture.

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Moreover, if there is one monopoly more repugnant to human conscience than any other, it is undoubtedly a monopoly on the things most essential to human life.

This particular confusion—evidently quite scientifically plausible to begin with, since, so far as I know, no theorist avoided falling into it—was rendered even more plausible by existing conditions.

Quite frequently the landowner lived without working, and it was easy to draw the conclusion that he must indeed have found a means of being paid for something other than his labor. And what could this something be except the fertility, the productivity, of the land, the instrument that supplemented his own efforts? Hence, land rent was assailed by various epithets, depending on the times, such as “necessary monopoly,” “privilege,” “injustice,” “theft.”

And it must be admitted that the theorists were in part led astray by the fact that few areas of Europe have escaped conquest and all the abuses that conquest has brought with it. They understandably confused the phenomenon of landed property that had been seized by violence with the phenomenon of property as it would be formed naturally under normal conditions.

But we must not imagine that the erroneous definition of the word “value” did no more than undermine landed property. The power of logic is inexorable and indefatigable, whether it be based on a true or a false premise. Just as the land has light, heat, electricity, plant life, etc., to aid it in producing value, does not capital likewise call upon the wind, elasticity, gravitation to co-operate with it in the work of production? There are, therefore, other men, besides agriculturists, who receive payment for the use of the forces of Nature. This payment comes to them in the form of interest on capital, just as rent comes to the landowner. Therefore, declare war on interest as well as on rent!

Thus, property has been attacked with ever increasing force by economists and egalitarians alike, in the name of this principle, which I maintain is false: The forces of Nature possess or create value. For all schools are agreed that it is true and differ only in Edition: current; Page: [239] the violence of their attack and in the relative timidity or boldness of their conclusions.

The economists have stated: Landed property is a privilege, but it is necessary; it must be maintained.

The socialists: Landed property is a privilege, but it is necessary; it must be maintained, but required to make a reparation, in the form of right-to-employment legislation.

The communists and the egalitarians: Property in general is a privilege; it must be destroyed.

And I say, as emphatically as I know how: Property is not a privilege. Your common premise is false; hence, your three conclusions, though conflicting, are also false. Property is not a privilege; therefore, you cannot say that it must be tolerated, that it must be required to provide a reparation, or that it must be destroyed.

Let us review briefly the opinions voiced on this serious problem by the various schools of thought.

We know that the English economists have advanced this principle, with apparent unanimity: Value comes from labor. They may quite possibly be in agreement with one another, but can their agreement be called consistent with their own reasoning? Let the reader judge for himself whether or not they have attained this greatly-to-be-desired consistency. He will note whether or not they constantly and invariably confuse gratuitous utility, which cannot be paid for, which contains no value, with onerous utility, which comes only from labor, and which alone, as they themselves say, possesses value.

Adam Smith: “In agriculture, too, Nature labours along with man; and though her labour costs no expense, its produce has nonetheless its value, as well as that of the most expensive workmen.”

Here, then, we have Nature producing value. And he who Edition: current; Page: [240] would purchase wheat must pay for this value, although it has not cost anybody anything, even in terms of labor. Who will dare step forward to claim this so-called value? But for this word “value” substitute “utility,” and all becomes clear, and private property is vindicated and justice satisfied.

This rent may be considered as the produce of those powers of Nature, the use of which the landlord lends to the farmer..... It [the rent!] is the work of Nature, which remains after deducting or compensating everything that can be regarded as the work of man. It is seldom less than a fourth and often more than a third of the whole produce. No equal quantity of productive labour employed in manufactures can ever occasion so great a reproduction. In them Nature does nothing; man does all.....

Is it possible to assemble a greater number of dangerous errors in fewer words? On this reckoning, a fourth or a third of the value of food products must be attributed exclusively to the powers of Nature. And yet the landowner charges the tenant, and the tenant the proletarian, for this so-called value, which remains after payment is made for the work of man. And it is on this basis that you propose to justify the right to property! What, then, do you propose to do with the axiom: All value comes from labor?

Furthermore, we have the assertion that Nature does nothing in manufactures! So gravitation, volatile gases, animals do not aid the manufacturer! These forces do the same thing in the factories that they do on the land; they produce gratis, not value, but utility. Otherwise property in capital goods would be as much exposed to communist attacks as landed property.

Buchanan, in his comment, while accepting the theory of the master on rent, is led by the logic of the facts to criticize him for declaring it advantageous.

Smith, in regarding as advantageous to society that portion of the soil's produce which represents profit on farm land [what language!] Edition: current; Page: [241] does not reflect that rent is only the effect of high price, and what the landlord gains in this way he gains only at the expense of the consumer. Society gains nothing by the reproduction of profit on land. It is one class profiting at the expense of the others.

Here we find the logical deduction: rent is injustice.

Ricardo: “Rent is that portion of the produce of the earth which is paid to the landlord for possessing the right to exploit the productive and indestructible powers of the soil.”

And, in order that there be no mistake, the author adds:

Rent is often confounded with the interest and profit of capital..... It is evident that a portion only of the money .... represents the interest of the capital which had been employed in improving the land, and in erecting such buildings as were necessary, etc.; the rest is paid for the use of the original and indestructible powers of the soil. In the future pages of this work, then, whenever I speak of the rent of land, I wish to be understood as speaking of that compensation which the farmer pays to the owner of the land for the use of the original and indestructible powers of the soil.

McCulloch: “What is properly termed Rent is the sum paid for the use of the natural and inherent powers of the soil. It is entirely distinct from the sum paid for the use of buildings, enclosures, Edition: current; Page: [242] roads, or other improvements. Rent is, then, always a monopoly.”

Scrope: “The value of land and its power of yielding Rent are due to two circumstances: first, the appropriation of its natural powers; second, the labor applied to its improvement.”

The conclusion is not long in coming:

“Under the first of these relations rent is a monopoly. It restricts the usufruct of the gifts that God has given to men for the satisfaction of their wants. This restriction is just only in so far as it is necessary for the common good.”

How great must be the perplexity of those good souls who refuse to admit that anything can be necessary which is not just!

Scrope concludes with these words:

“When it goes beyond this point, it must be modified on the same principle that caused it to be established.”

The reader cannot fail to perceive that these authors have led us to the denial of the right to property, and have done so very logically by starting with this proposition: The landowner exacts payment for the gifts of God. Hence, land rent is an injustice that has been legalized under the pressure of necessity; it can be modified or abolished as other necessities dictate. This is what the communists have always said.

Senior: “The instruments of production are labour and natural agents. Natural agents having been appropriated, proprietors charge for their use under the form of Rent, which is the recompense of no sacrifice whatever, and is received by those who have neither laboured nor put by, but who merely hold out their hands to accept the offerings of the rest of the community.”

Having dealt property this heavy blow, Senior explains that a portion of rent corresponds to interest on capital, and then adds:

The surplus is taken by the proprietor of the natural agent, and is his reward, not for having laboured or abstained, but simply for not having withheld when he was able to withhold; for having permitted the gifts of Nature to be accepted.

We see that this is still the same theory. The landowner is presumed to come between the hungry and the food God had intended for them, provided they were willing to work. The owner, Edition: current; Page: [243] who had a share in its production, charges for this labor, as is just, and then he charges a second time for Nature's labor, for the productive forces, for the indestructible powers of the soil, which is unjust.

We are sorry to find this theory, developed by John Stuart Mill, Malthus, et al., also gaining acceptance on the Continent.

“When one franc's worth of seed,” says Scialoja, “yields one hundred franc's worth of wheat, this great increase in value is due in large part to the land.”

This is confusing utility with value. One might as well say: When water, which costs only a sou ten yards from the spring, costs ten sous at a hundred yards, this increase in value is due in large part to the help of Nature.

Florez Estrada: “Rent is that part of the product of agriculture which is left after all the costs of its production have been met.”

Hence, the landowner receives something for nothing.

All the English economists begin by asserting this principle: Value comes from labor. They are therefore merely inconsistent when they thereupon attribute value to forces contained in the soil.

The French economists, for the most part, assign value to utility; but, since they confuse gratuitous utility with onerous utility, the harm they do property is equally great.

Jean-Baptiste Say:

The land is not the only natural agent that is productive; but it is the only one, or almost the only one, that man has been able to appropriate. The waters of the sea and of the rivers, in being able to turn the wheels of our machines, to provide us with fish, to float our ships, likewise have productive power. The wind and even the sun's rays work for us; but, fortunately, no one has yet been able to say: The wind and the sun belong to me, and I must be paid for the service they render.

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Say apparently deplores the fact that anyone can say: The land belongs to me, and I must be paid for its service. Fortunately, I maintain, the landowner can no more charge for the services of the land than for the wind's or the sun's.

The earth is a wondrous chemical workshop wherein many materials and elements are mixed together and worked on, and finally come forth as grain, fruit, flax, etc. Nature has presented this vast workshop to man as a gratuitous gift, and has divided it into many compartments suitable for many different kinds of production. But certain men have come forth, have laid hands on these things, and have declared: This compartment belongs to me; that one also; all that comes from it will be my exclusive property. And, amazingly enough, this usurpation of privilege, far from being disastrous to society, has turned out to be advantageous.

Of course, the arrangement has proved advantageous! And why? Because it is neither privilege nor usurpation; because the one who said, “This compartment is mine,” could not add, “What comes from it will be my exclusive property,” but instead, “What comes from it will be the exclusive property of anyone wishing to buy it, paying me in return for the pains I take, or that I spare him; what Nature did for me without charge will be without charge to him also.”

Say, I beg the reader to note, distinguishes in the value of wheat the shares that belong, respectively, to property, to capital, and to labor. With the best of intentions he goes to great pains to justify this first portion of payment which goes to the landowner and which is not charged against any previous or present labor. But he fails, for, like Scrope, he falls back on the weakest and least satisfactory of all available arguments: necessity.

If it is impossible for production to be carried on not only without land and capital, but also without these means of production becoming property, can we not say that their owners perform a productive function, since without it production could not be carried on? It is, indeed, a convenient function, although in the present state of society it requires an accumulation of capital goods from previous production or savings, etc.

The confusion here is obvious. For the landowner to be a Edition: current; Page: [245] capitalist, there must be an accumulation of capital goods—a fact that is neither questioned nor to the point. But what Say looks on as “convenient” is the role of the landowner as such, as someone charging for the gifts of God. This is the role that must be justified, and it entails neither accumulation nor savings.

If, therefore, property in land and in capital goods [why associate things that are different?] is created by production, I can fittingly liken property to a machine that works and produces while its owner stands idly by, charging for its hire.

Still the same confusion. The man who has made a machine owns capital goods, from which he derives legitimate payment, because he charges, not for the work of the machine, but for the labor he himself has performed in making it. But the soil, which is landed property, is not the product of human labor. On what grounds is a charge made for what it does? The author has here lumped together two different types of property in order to persuade us to exonerate the one for the same reasons that we exonerate the other.

Blanqui:

The farmer who plows, fertilizes, sows, and harvests his field, provides labor without which there would be nothing to reap. But the action of the land in germinating the seed, and of the sun in ripening the crop, are independent of this labor and co-operate with it to form the value represented by the harvest..... Smith and many other economists have asserted that human labor is the only source of value. This is certainly not the case. The farmer's industry is not the only thing that creates the value in a sack of wheat or a bushel of potatoes. His skill will never be so great as to produce germination, any more than the alchemist's patience has discovered the secret of making gold. This is obvious.

It is impossible to confuse more completely, first, utility with value, and, secondly, gratuitous utility with onerous utility.

Joseph Garnier:

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Rent paid to the landowner is fundamentally different from the payments made to the workman for his labor or to the entrepreneur as profit on the outlays made by him, in that these two types of payment represent compensation, to the one for pains taken, to the other for sacrifices or risks he has borne, whereas the landowner receives rent more gratuitously and merely by virtue of a legal convention that guarantees to certain individuals the right to landed property.1

In other words, the workman and the entrepreneur are paid, in the name of justice, for services that they render; the landowner is paid, in the name of the law, for services that he does not render.

The most daring innovators do nothing more than propose to replace private ownership by collective ownership..... They have reason on their side, it seems to me, as regards human rights; but, practically speaking, they are wrong until such time as they can demonstrate the advantages of a better economic system.....2

But for a long time to come, even though admitting that property is a privilege and a monopoly, we must add that it is a useful and natural monopoly.....

In short, it is apparently admitted by political economists [alas! yes, and herein lies the evil] that property does not stem from divine rights, or rights of demesne, or from any other theoretical rights, but simply from its practical advantages. It is merely a monopoly that is tolerated in the interest of all, etc.

This is the identical judgment passed by Scrope and repeated by Say in milder terms.

I believe that I have sufficiently proved that the economists, having started from the false assumption that the forces of Nature possess or create value, went on to the conclusion that private property (in so far as it appropriates and charges for this value that is independent of all human services) is a privilege, a monopoly, a usurpation, but a necessary privilege that must be maintained.

It remains for me to show that the socialists start from the same assumption but change their conclusion to this: Private property is a necessary privilege; it must be maintained, but we must Edition: current; Page: [247] require the property owner to furnish compensation in the form of a guarantee of employment for those who are without property.

After this, I shall summon the communists, who declare, still arguing from the same premise: Private property is a privilege; it must be abolished.

And finally, at the risk of repeating myself, I shall close by refuting, if possible, the common premise from which all three conclusions are derived: The forces of Nature possess or create value. If I succeed, if I demonstrate that the forces of Nature, even when converted into property, do not create value, but utility, which is passed on by the owner in its entirety, reaching the consumer without charge, then economists, socialists, communists will all have to agree to leave the world, in this respect, as it is.

M. Considérant writes:3

In order to see how and under what conditions private property can appear and develop legitimately, we must understand the fundamental Principle of Property rights: Every man OWNS LEGITIMATELY THE THING which his labor, his intelligence, or, more generally, his activity has created.

This principle is incontestable, and it is well to note that implicitly it recognizes the right of all men to the land. In fact, since the land was not created by men, it ensues from the fundamental Principle of Property that the land, the common fund presented to the species, can in no wise be legitimately the absolute and exclusive property of any particular individuals who have not created this value. Let us then formulate the true Theory of Property, establishing it exclusively on the unassailable principle which bases the Legitimacy of Property on the fact of the CREATION of a thing or of the value possessed by it. In order to do this, let us consider the creation of Industry, that is, the origin and development of agriculture, manufacture, the arts, etc., in human society.

Let us imagine that on the land of a remote island, on the soil of a nation, or over the whole earth (the area of the theater of operations changes in no way the significance of the facts), one generation of mankind devotes itself for the first time to industry, that is, for the first time it farms, manufactures, etc. Each generation, by its labor, by its intelligence, by its own industry, creates commodities, develops values, that did not previously exist on the unimproved land. Edition: current; Page: [248] Is it not perfectly evident that in this first industrial generation the possession of Property will be in conformity with Justice, IF the value and wealth produced by the industry of all is distributed among their producers IN PROPORTION TO THE CONTRIBUTION of each one to the creation of the general wealth? This is incontestable.

Now, the results of this labor fall into two categories that must be carefully distinguished.

The first category includes those things coming from the soil that belonged to the first generation by right of use: products increased, refined, or manufactured by the labor and industry of this generation. These products, finished or unfinished, consist either of consumers' goods or of tools of production. It is clear that the products are fully and legitimately the property of those who by their industry have created them. Each one of these persons has, therefore, the right either to consume them immediately or to put them away to be disposed of according to his subsequent convenience, whether it be to use them, exchange them, or give them away or transfer them to whomsoever desired, without need of authorization from anyone. According to this hypothesis, this property is obviously legitimate, respectable, sacred. It cannot be attacked without attacking Justice, Right, and individual Liberty—in a word, without committing an act of plunder.

Second category. But not all the things created by the industrial activity of this first generation fall into the above category. Not only has this generation created the products that we have just designated (consumers' goods and tools of production), but it has also added an additional value to the original value of the soil by cultivating it, building upon it, and adding permanent improvements.

This additional value obviously constitutes a product, a value, due to the first generation's industry. Now, if, by some means or other (we are not concerned here with the question of means), the ownership of this extra value is distributed equitably, that is, in proportion to each one's labor in creating it, each one of these persons will possess legitimately the portion that falls to him. He will therefore be able to dispose of this legitimate private property as he sees fit, exchanging it, giving it away, transferring it, without any of the other individuals, in other words, society, ever having any right or authority whatsoever over these values.

We can understand perfectly well, therefore, that, when the second Edition: current; Page: [249] generation comes along, it will find upon the land capital of two different types:

A. Original or Natural Capital, which has not been created by men of the first generation—that is, the value of the unimproved land.

B. Capital Created by the first generation, including: first, the products, goods, and implements that have not been consumed or worn out by the first generation; second, the extra value that the labor of the first generation may have added to the value of the unimproved land.

It is therefore evident, and the clear and necessary consequence of the basic Principle of Property Rights, which has just been established, that every individual of the second generation has equal rights to the Original or Natural Capital, whereas he has no right to the other capital, the Capital Created by the labor of the first generation. Every individual member of this first generation can therefore dispose of his share of the Created Capital in favor of any person or persons of the second generation he chooses—children, friends, etc.—without any individual or even the State itself, as we have just said, having any claim (in the name of Property Rights) over such disposal made by the donor or testator.

Let us note that, following our hypothesis, a member of the second generation is already favored over a member of the first generation because, in addition to rights to the Original Capital, which have been preserved for him, he may be fortunate enough to receive a share of the Created Capital, that is, value that has been produced not by him, but by previous labor.

Let us assume that Society is so constituted:

  • 1. That the Rights to Original Capital, that is, to the resources of the land in its unimproved form, are preserved or that EQUIVALENT RIGHTS are recognized for every person born into this world in any age whatsoever.
  • 2. That Created Capital is continually distributed among men as rapidly as it is created, in proportion to each person's participation in its creation.

If the machinery of the social order meets these two conditions, property, in such a regime, would be established under conditions of absolute justice. Fact and ideal would then be in complete accord.4

We note that our socialist author makes a distinction here Edition: current; Page: [250] between two kinds of value: created value, which can legitimately be converted into property, and noncreated value, also called the value of unimproved land, original capital, natural capital, which can become private property only by an act of usurpation. Now, according to the theory that I advance, the ideas expressed by the words “noncreated,” “original,” “natural,” completely exclude the ideas of value and capital. This is the error in the premise that leads M. Considérant to the following melancholy conclusion:

Under the System by which Property is established in all civilized nations, the common fund, to whose complete enjoyment all humanity has full rights, has been raided: it is now taken over by a small minority, to the exclusion of the great majority. And truly, if only one man were in fact deprived of his rights to the enjoyment of the common fund, this one exclusion would in itself be a sufficient violation of Justice to brand the system of Property that sanctioned it as unjust and illegitimate.

Yet M. Considérant acknowledges that the land cannot be cultivated except under the system of private property. This is necessary monopoly. How can all these things be reconciled, and the rights of the proletariat to original, natural, noncreated capital, or the value of the unimproved land, be protected?

Very well, let an industrial Society, which has taken over the possession of the Land and has deprived man of the faculty of exercising freely and at will his four natural Rights; let such a Society, I say, grant the individual as reparation for the Rights that it has taken away, the right to employment.

If anything in the world is clear, it is that this theory, except for the conclusion, is exactly the one held by the economists. The person buying a farm product pays for three things: (1) current labor (nothing more legitimate); (2) the additional value imparted to the soil by previous labor (still completely legitimate); (3) finally, original capital or natural or noncreated capital, the gratuitous gift of God, called by Considérant the value of the unimproved land; by Smith, the indestructible powers of the soil; by Edition: current; Page: [251] Ricardo, the productive and indestructible powers of the land; by Say, natural agents. This is what has been usurped, according to M. Considérant; this is what has been usurped, asserts Jean-Baptiste Say. This is what constitutes injustice and plunder in the eyes of the socialists; this is what constitutes monopoly and privilege in the eyes of the economists. They are further agreed as to the necessity, the usefulness, of this arrangement. Without it, the land would not produce, say the disciples of Smith; without it, we should return to the savage state, say the disciples of Fourier.

We see that in theory, at least as regards the great question of equity, there is much more of an entente cordiale between the two schools than might be imagined. They are divided only in regard to the conclusions to be drawn from the fact on which they agree and in regard to the legislative action to be taken. “Since property is tainted with injustice, inasmuch as it assigns to the landowners remuneration that is not their just due, and since, on the other hand, it is necessary, let us respect it but exact reparations from it.”

“No,” say the economists, “although it is a monopoly, let us respect it, since it is necessary, and leave it alone.” Yet they offer even this feeble defense very half-heartedly, for one of their most recent spokesmen, M. Garnier, adds: “You are correct from the point of view of human rights, but you are wrong from the practical standpoint, until you can show what could be done by a better system.”

To which the socialists do not fail to reply: “We have found it. It is the right to employment. Let us try it.”

At this juncture M. Proudhon arrives on the scene. Do you imagine, perhaps, that this celebrated contradictor is going to contradict the fundamental premise of the socialists and the economists? Not at all. He has no need to do so in order to demolish the principle of property. On the contrary: he seizes hold of this premise; he embraces it; he presses it to his bosom, and squeezes from it its most logical conclusion. “Aha,” he says, “you admit that the gifts of God have not only utility but value; you admit that the landowners usurp them and sell them. Therefore, property is theft. Therefore, it is not necessary to maintain it or to exact reparations from it, but to abolish it.”

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M. Proudhon has mustered many arguments against landed property. The one that carries the most weight, the only one that carries any weight, is the one furnished him by those authors who have confused utility with value.

“Who has the right,” he asks,

to charge for the use of the soil, for wealth that was not made by man? To whom is due the rent on the land? To the producer of the land, of course. Who made it? God. In that case, landlord, you may withdraw.

.... But the Creator of the earth does not sell it. He gives it away without charge; and He gives to all alike. How, then, is it that among His children some are treated as eldest sons and others as bastards? How does it happen, if originally man's right was equality of inheritance, that it has posthumously become inequality of status?

Replying to Jean-Baptiste Say, who has compared the land to a tool of production, he says:

I agree that the land is a tool of production; but who wields it? Is it the landowner? Is he the one who by the magic of property rights imparts to it strength and fertility? His monopoly consists of just this, that, though he has not made the implement, he charges for the service it performs. Let its Maker appear and demand His rent, and we will settle with Him; or else let the landowner, who claims to have full title, produce his power of attorney from the Maker.

Evidently these three systems are in fact only one. Economists, socialists, egalitarians, all direct the same reproach against landed property, that of charging for something that it has no right to charge for. Some call this abuse monopoly; others, injustice; and still others, theft. These are merely different degrees of guilt in the same bill of complaint.

Now, I appeal to the attentive reader: Is this complaint well-grounded? Have I not demonstrated that only one thing stands between God's gifts and human hunger, viz., human service?

Economists, you declare: “Rent is what is paid to the landowner for the use of the productive and indestructible powers of the soil.”

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I answer: No. Rent is what is paid the water carrier for the pains he took to make his cart and his wheels, and the water would cost more if he carried it on his back. In the same manner, wheat, flax, wool, wood, meat, fruit would cost us more if the landowner had not improved the instrument that produces them.

Socialists, you say: “Originally the masses enjoyed their right to the land subject to their labor. Now they are excluded and robbed of their natural heritage.”

I reply: No, they are not excluded or robbed; they do enjoy gratis the utility that the land has produced, subject to their labor, that is, on condition that they pay by their own labor those who spare them labor.

Egalitarians, you say: “The monopoly of the landowner consists in the fact that, while he did not make the means of production, he charges for its service.”

I answer: No, the land as a means of production, in so far as it is the work of God, produces utility, and this utility is gratuitous; it is not within the owner's power to charge for it. The land, as a means of production, in so far as the landowner has prepared it, worked on it, enclosed it, drained it, improved it, added other necessary implements to it, produces value, which represents human services made available, and this is the only thing he charges for. Either you must recognize the justice of this demand, or you must reject your own principle of reciprocal services.

In order to learn what the real elements are that constitute the value of the land, let us observe how landed property is created, not through violence or conquest, but according to the laws of labor and exchange. Let us observe what conditions are like in this respect in the United States.

Brother Jonathan, an industrious water carrier in New York, left for the Far West, carrying in his wallet a thousand dollars, the fruit of his labor and thrift.

He passed through many fertile areas in which the soil, the sun, and the rain perform their miracles, yet, in the economic and practical sense, impart no value to them.

As he was something of a philosopher, he kept saying as he went along: “In spite of all that Smith and Ricardo say, value must be Edition: current; Page: [254] something else than the productive, natural, and indestructible power of the soil.”

Finally, he reached the State of Arkansas and saw before him a beautiful farm of about a hundred acres, which the government had put up for sale at a dollar an acre.

“A dollar an acre!” he said to himself. “That's very little, so little, in fact, that it's almost nothing. I'll buy this land, clear it, sell my crops, and, instead of being a water carrier as I once was, I too shall be a landowner!”

Brother Jonathan, who was a ruthlessly logical man, liked to have a reason for everything. He said to himself: “But why is this land worth even a dollar an acre? No one has ever laid a hand on it. It is virgin territory. Could Smith, Ricardo, and all the rest of the theorists down to Proudhon, possibly be right? Could it be that the land does have value independently of any labor, service, or other human intervention? Must it be admitted that the productive and indestructible powers of the soil are worth something? Why, then, are they not valuable in the areas I have just been through? And, besides, since these marvelous powers are so far superior to man's capacity, which will never be able to duplicate the phenomenon of growth, as M. Blanqui has so profoundly observed, why, then, are they worth only a dollar?”

But he was not long in realizing that this value, like all values, is an entirely human and social creation. The American Government did indeed ask the price of a dollar an acre, but, on the other hand, it guaranteed, at least to a certain degree, the safety of the purchaser; it had constructed a road of sorts in the vicinity; it had arranged for the delivery of letters and papers; etc.

“Service for service,” said Jonathan. “The government charges me a dollar, but it fully renders me the equivalent. Henceforth, begging Ricardo's pardon, I shall explain the value of this land in human terms, and its value would be even greater if the highway were nearer, the mail service more convenient, my safety more assured.”

While discoursing thus, Jonathan kept on working; for, in all fairness to him, it must be said that he was a doer as well as a thinker.

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After he had invested the rest of his dollars in buildings, fences, clearings, trenchings, drainage, preparations, etc., after he had dug, plowed, harrowed, sowed, and harvested, came the moment for selling the crop. “Now at last I'll know,” cried Jonathan, still obsessed with the problem of value, “whether in becoming a landowner I have turned into a monopolist, a privileged aristocrat, a despoiler of my fellow men, or a usurper of the divine bounty.”

So he took his grain to market and held converse with a Yankee: “My friend,” he said, “how much will you give me for this corn?”

“The current price,” said the other.

“The current price? But will that give me something beyond the interest on my investment and the compensation for my labor?”

“I'm a merchant,” said the Yankee, “and I have to be satisfied with payment for my past and present labor.”

“And I was satisfied with that when I was a water carrier,” replied Jonathan; “but now I'm an owner of landed property. The English and French economists have assured me that in that capacity, I should receive, in addition to payment for my past and present labor, a profit from the productive and indestructible powers of the soil. I should levy a special tribute on the gifts of God.”

“The gifts of God belong to everyone,” said the merchant. “I certainly use the productive power of the wind to sail my ships, but I don't charge for it.”

“And I propose that you pay me something for these powers, so that Messrs. Senior, Considérant, and Proudhon will not for naught have called me a monopolist and a usurper. If I am to bear the shame, I should at least have the profit.”

“In that case, my friend, I bid you farewell; I'll appeal to other landowners for my corn, and if I find that they feel as you do, I'll grow some for myself.”

Thus, Jonathan learned that, under a system of liberty, not everyone who will may become a monopolist. “As long as there is land to be cleared in the Union,” he said to himself, “I shall be Edition: current; Page: [256] only the one who puts these famous natural and indestructible forces to work. I shall be paid for the pains I take and nothing more, exactly as in the old days, when, as a water carrier, I was paid for the pains I took and not for those that Nature took. I see clearly that the one who enjoys the gifts of God is not the man who raises the grain, but the one who consumes it.”

After several years Jonathan became interested in another venture and looked around for a tenant for his farm. The conversation between the two parties was very interesting and would shed much light on the question if I were to quote it in its entirety.

But we must be content with the following excerpt:

Jonathan: What! You don't want to pay me as rent anything more than the interest, at the current rate, on my capital outlay?

The tenant: Not a penny more.

Jonathan: And why, if you please?

The tenant: Because for that amount of capital I can put another farm in exactly the same condition as yours.

Jonathan: That seems to be a conclusive argument. But consider that, when you begin to farm my land, you will have not only my capital but also the natural and indestructible powers of the soil working for you. You will have at your disposal the marvelous effects of the sun and the moon, of natural affinity and electricity. Must I let you have all these for nothing?

The tenant: Why not, since you paid nothing for them, and derive nothing from them, any more than I shall?

Jonathan: Derive nothing from them? Goodness gracious, what do you mean? I derive everything from them. Without these wonderful phenomena all my industry wouldn't raise a single blade of grass.

The tenant: Of course. But remember the Yankee. He refused to give you a penny for all this help of Nature, just as the New York housewives refused to give you anything for the admirable process by which Nature feeds the spring.

Jonathan: But Ricardo and Proudhon .....

The tenant: What do I care about Ricardo? Let us deal on Edition: current; Page: [257] the terms I have laid down, or else I shall go and clear some land beside yours. The sun and the moon will work for me there for nothing.

It was the same old argument, and Jonathan began to understand that God has taken rather wise precautions so that His gifts should not be easily intercepted.

Having somewhat lost his taste for being a landowner, Jonathan decided to direct his energies elsewhere. He determined to put his farm up for sale.

Needless to say, no one was willing to give him more than he had himself paid. Despite his citation of Ricardo and his allusions to the so-called value inherent in the indestructible powers of the soil, everyone gave him the same answer: “There are other farms besides yours.” And these few words silenced his demands even as they destroyed his illusions.

In this transaction there was, indeed, a fact of great economic importance that has not been sufficiently noted.

Everyone realizes that if a manufacturer wished, after ten or fifteen years, to sell his equipment, even if it were as good as new, the probability is that he would be compelled to suffer a loss. The reason is simple: Ten or fifteen years rarely go by without bringing some mechanical progress. For that reason the person who puts a fifteen-year-old piece of machinery up for sale can hardly expect to be paid for all the work that went into it; because now, thanks to progress, better machines can be obtained for the same amount of labor—and this, let me say in passing, is further proof that value is proportional, not to labor, but to service.

Hence, we can conclude that it is in the nature of tools of production to lose some of their value through the mere action of time, independently of any wear and tear, and we may express this fact in the following proposition: One of the effects of progress is to decrease the value of existing tools of production.

It is clear, of course, that the more rapid the progress, the greater the difficulty of existing implements in keeping pace with new ones.

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I shall not stop here to point out the harmonies suggested by this law. All that I wish to call attention to is the fact that landed property is no exception to it.

Brother Jonathan made this discovery to his personal sorrow and loss. He had this conversation with his prospective buyer:

“The permanent improvements I have put into this land represent a thousand days of labor. I propose, first, that you pay me the equivalent of these thousand days, and then something additional for the inherent value of the soil, which is independent of any human labor.”

The buyer answered:

“In the first place, I shall give you nothing for the value of the soil itself, since this is merely utility, which is as abundant in the surrounding farms as in yours. So, as far as this inherent, extrahuman utility goes, I can get it gratis, which proves that it has no value.

“In the second place, for the thousand days' labor that your accounts show you put into bringing your land to its present condition, I will give you eight hundred, and my reason is that today for eight hundred days' labor I can do on adjoining land what you in the past did on yours in a thousand days. Please bear in mind that in the past fifteen years progress has been made in draining, clearing, building, digging wells, constructing stables, and providing transportation. For every job less labor is needed, and I have no desire to pay you ten for what I can get for eight, especially since the price of grain has gone down proportionately, which is not to your profit or mine, but to that of all mankind.”

Thus, Jonathan had no choice but to keep his land or sell at a loss.

Of course, the value of land is not subject to any one single circumstance. Other factors, like the construction of a canal or the founding of a town, can cause a rise in its value. But the factor that I have mentioned, progress, always works in the direction of a fall in its value.

The conclusion to be drawn from the foregoing observations is this: As long as there is in a country an abundance of land still Edition: current; Page: [259] to be cleared, the landowner, whether he farms it himself, rents it, or sells it, enjoys no privilege, no monopoly, no exceptional advantage, and, most notably, reaps no special windfall from the bounty of Nature. How could he, assuming that men are free? Does not everyone having any capital and the strength of his hands possess the right to follow the calling of his choice—agriculture, manufacturing, commerce, fishing, navigation, the arts, or the professions? And would not men with capital and capacity turn more eagerly toward the careers that offered exceptional returns? And would they not desert those likely to entail losses? Is not this inevitable distribution of human energies sufficient, granted our hypothesis, to maintain in equilibrium the returns yielded in all branches of enterprise? In the United States do we see farmers making their fortunes any more rapidly than businessmen, shipowners, bankers, or doctors, as would inevitably happen if they received both payment for their own labor and also, over and beyond what others receive, a payment, as has been alleged, for the incalculable labor of Nature?

Very well, then, do you really want to know how, even in the United States, a landowner could set up a monopoly for himself? I shall try to explain.

Let us imagine that Jonathan assembles all the landowners in the Union and speaks to them thus:

“I have tried to sell my crops, and I haven't been able to find anyone willing to give me a high enough price for them. I have tried to rent my land, and no one will meet my terms. I have tried to sell it and have met with the same disappointment. My demands have uniformly been cut short with the same answer: There is other land nearby. The result is, unfortunately, that my services in the community are rated, like those of everyone else, at what they are worth, despite all the sweet-sounding promises of the theorists. I am allotted nothing, absolutely nothing, for this productive and indestructible power of the soil, for those forces of Nature, solar and lunar radiations, rain, wind, dew, frost, which I believed were my property, but which, in reality, I own in name only. Is it not an iniquitous thing that I am paid only for my services, and even then only at the rate to which it has Edition: current; Page: [260] pleased my competitors to lower them? You all suffer from this same oppression; you are all victims of anarchistic competition. Things would not be in this state, as you can readily understand, if we were to organize landed property, if we were to act concertedly to prevent anyone from hereafter clearing a square inch of American soil. Then, when the population, because of its growth, would be clamoring for the limited supply of food to be had, we would be in a position to set our own prices and make great fortunes, which, in turn, would be a great boon to the other classes, for, being rich, we would provide them with employment.”

If, on hearing this discourse, the united landlords seized control of the legislature and enacted a statute forbidding all further clearing of the land, they undoubtedly would, for a time, increase their profits. I say, for a time, because the natural laws of society would be lacking in harmony if the punishment did not spring from the crime itself. Out of respect for scientific accuracy, I shall not say that the new statute would impart value to the power of the soil or to the forces of Nature (if that were the case, the statute would work to the harm of no one); but I shall say: The balance of services would be violently upset; one class would exploit the other classes; a system of slavery would be introduced into the country.

Let us move on to another hypothesis, which, in fact, represents actual conditions in the civilized nations of Europe, where the land has already become private property.

We must now consider whether, in this case too, the great mass of consumers, or the community, continues to enjoy gratis the productive power of the soil and the forces of Nature; whether the holders of the land are owners of anything beyond its value, that is, of their honest services evaluated according to the laws of competition; and whether, when they charge for their services, they are not forced, like everybody else, to include gratis the gifts of God.

Suppose, then, the whole territory of Arkansas has been sold by the government, divided into private estates, and put under cultivation. When Jonathan offers his grain or even his land Edition: current; Page: [261] for sale, does he vaunt the productive power of the soil and try to include it as part of the land's value? He can no longer be stopped short, as in the previous case, by the crushing retort: “There are uncleared lands adjoining yours.”

The new situation implies that the population has grown. It is divided into two classes: (1) the class that supplies the community with agricultural services; (2) the class that supplies industrial, intellectual, or other services.

What follows seems to me quite evident. Provided the workers (other than the landowners) who wish to get grain are perfectly free to appeal to Jonathan or to his neighbors or to landowners in neighboring States or even to clear uncultivated land outside of Arkansas, it is absolutely impossible for Jonathan to force an unjust law upon them. The mere existence somewhere of land without value is an insuperable barrier to privilege, and therefore this hypothetical case is the same as our preceding one: Agricultural services are subject to the law of general competition, and it is utterly impossible to charge more for them than they are worth. Let me add that they are worth no more (ceteris paribus) than services of any other kind. Just as the manufacturer, after charging for his time, his pains, his trouble, his risks, his outlay, his skill (all of which constitute human service and are represented by value), can charge nothing for the law of gravitation or the expansibility of steam, of whose aid he has availed himself; so Jonathan can reckon as the aggregate value of his grain only the sum total of his services, past and present, and can include nothing at all for the help he has received from the laws of vegetation. The balance of services is not impaired as long as they are freely exchanged on the market at a mutually agreeable price, and the gifts of God that transmit these services are exchanged gratis along with the services and stay in the communal domain.

It will undoubtedly be pointed out that, as a matter of fact, the value of the soil increases steadily. This is true. As the population increases and becomes richer, as the means of transportation improve, the landowner receives a better price for his services. Is this a special law applicable only to him, or does it Edition: current; Page: [262] not rather apply to all producers? For an equal amount of labor does not a doctor, a lawyer, a singer, a painter, or a day laborer obtain more satisfactions in the nineteenth century than in the fourth, in Paris than in Brittany, in France than in Morocco? But this increase in satisfaction is not obtained at anyone's expense. This much needs to be understood at least. Further discussion must wait until we analyze this law of the value (used here metonymically) of the soil in another part of this work when we reach Ricardo's theory.5

For the present, it is enough to note that Jonathan, under the conditions of this hypothesis, cannot oppress the industrial classes, provided the exchange of services is free, and that labor may, without any legal restraint, be distributed in Arkansas or elsewhere among all types of production. This freedom stands in the way of landowners who would divert to their profit the gratuitous benefits of Nature.

This would no longer be the case, however, if Jonathan and his colleagues took over the legislature and prohibited or hampered the freedom of exchange—if, for example, they decreed that not a kernel of foreign wheat could enter the territory of Arkansas. In that case the value of the services exchanged between landowners and nonlandowners would no longer be determined by justice. The nonlandowners would have no protection against the demands of the landowners. Such legislation would be as iniquitous as the other measure we just referred to. The effect would be precisely the same as if Jonathan, having offered for sale a sack of wheat that would otherwise sell for fifteen francs, drew a pistol from his pocket, pointed it at the buyer, and said, “Give me three francs more, or I will blow your brains out.”

This procedure (which we must call by its right name) is extortion. Whether it be by the exercise of private force or by law, it does not change in character. If by the exercise of private force, as in the case of the pistol, it is an act against property. If by law, as in the case of the ban, it is still an act against property, and beyond that, a denial of the right to property. As we have seen, one has property rights only over values, and value is the estimation of two services that are freely exchanged. Edition: current; Page: [263] Hence, it is not possible to conceive of anything more antagonistic to the fundamental right to property than an alteration, effected in the name of the law, in the equivalence of exchanged services.

It is perhaps not idle to point out that laws of this nature are iniquitous and disastrous, whatever may be the opinion of either oppressed or oppressor toward them. In some countries we see the working classes clamoring for such restraints because they bring wealth to the landowners. They do not perceive that it is at their expense, and, as I know by experience, it is not always prudent to tell them so.

It is indeed strange. The common people listen eagerly to the zealots who preach communism, which is slavery, since not to be master of one's own services is slavery; and yet they disdain those who on all occasions defend liberty, which is the common sharing of God's bounty to man.

We now reach the third hypothetical case, wherein the entire arable surface of the globe has become private property.

Here again we observe two classes: those who possess the soil and those who do not. Will those of the first class be able to oppress the members of the second? And will the second not be forever reduced to offering more and more labor for the same quantity of food?

If I answer this objection, it will be, obviously, for the sake of scientific completeness, for we are still hundreds of centuries away from the time when such a hypothesis could become a reality.

But the fact is that everything indicates that the time must come when the landowners' claims cannot be kept within bounds by the magic words: There is more land to be cleared.

I beg the reader to note that this hypothesis also implies that at that time the population will have reached the extreme limit of the earth's ability to provide sustenance.

This adds a new and important element to the question. It is almost as if I were asked: What will happen when there is not enough air left to fill all the extra lungs in the world?

Whatever theory we may hold on the problem of population, it is at least certain that the population can increase, and even that it tends to increase, since it does increase. The entire economic Edition: current; Page: [264] organization of society is such that it appears to anticipate this trend, with which it is in complete harmony. The landowner always hopes to charge for the use of the natural resources he has at his command, but he is always disappointed in his foolish and unjust demands by the great supply of similar natural resources that do not pass through his hands. Nature's relatively infinite prodigality with her forces keeps him from being anything more than a mere custodian over some of them. Now, what will happen when men will have reached the limits of this bounty? It will no longer be possible for anything more to be hoped for in that direction. Inevitably the trend toward increased population will then come to a halt. No economic system can prevent this from necessarily happening. In the hypothetical case we are considering, any increase in population would be checked by a corresponding rise in the death rate. No proponent of human betterment, however optimistic, can go so far as to assert that the number of human beings can continue to rise when there is no possible chance for a further increase in the supply of food.

Here, then, is a new order; and the laws of the social world would not be harmonious if they had not provided for this contingency, so different from the conditions under which we live today.

The difficulty we foresee can be illustrated in this manner: Imagine a ship in the middle of the ocean with a month to go before reaching land and with only enough food for two weeks. What must be done? Obviously each sailor's ration must be reduced. This is not being hardhearted; it is merely being prudent and just.

Similarly, when the population is extended to the extreme limit of what the earth, with all possible land under cultivation, can support, there will be nothing harsh or unjust about the law that takes the gentlest and most effective means of preventing further multiplication of the species. And once again the solution can be found in the principle of the private ownership of the land. The owner of landed property, under the spur of personal interest, will make the soil produce the most food of which it is capable. By the division of inheritances private ownership of land Edition: current; Page: [265] will make every family aware of the dangers of a rising birth rate. It is very clear that under any other system—communism, for example—there would be no equally strong incentive for greater production nor so firm a brake on increasing population.

In the final analysis, it seems to me that the political economists will have performed their task when they prove that the great and just law of the reciprocity of services works harmoniously as long as further progress is not ruled out for mankind. Is it not reassuring to reflect that, until that time and so long as liberty prevails, it is impossible for one class to oppress another? Are the economists obliged to answer this other question: Granted the tendency of the race to multiply, what will happen when there is no more room on the earth for new inhabitants? Is God holding back, for that epoch, some cataclysm of creation, some marvelous manifestation of His infinite power? Or, in keeping with Christian dogma, must we believe in the destruction of this world? Obviously these are no longer economic problems, but are analogous to the difficulties eventually reached by all sciences. The physicists are well aware that every moving body on earth goes downward and never rises again. Accordingly, the day must come when the mountains will have filled the valleys, when rivers will be as high at their mouth as at their source, when their waters will no longer flow, etc., etc. What will happen then? Should the physical sciences cease to observe and admire the harmony of the world as it now is, because they cannot foresee by what other harmony God will make provision for a state of things that is far in the future but nonetheless inevitable? It seems to me that this is indeed a case in which the economist, like the physicist, should respond by an act of faith, not by an act of idle curiosity. He who has so marvelously arranged the abode where we now dwell will surely be able to prepare a different one for different circumstances.

We judge the soil's fertility and man's skill by the facts that we observe. Is this a reasonable rule to follow? Then, adopting it, we could say: Since it has required six thousand years for a tenth of the surface of the globe to attain a sorry kind of agriculture, how many hundreds of centuries will elapse before its entire surface is turned into a great garden?

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Even in this evaluation, already quite reassuring, we are merely making a supposition based on a scientific generalization, or rather, on our present state of agricultural ignorance. But, I repeat, is this an acceptable rule to follow; and does not analogy suggest that the true potentialities of this art, which are perhaps infinite, are beyond our present knowledge? The savage lives by hunting, and he requires five square miles of land. How great would be his surprise to learn that a pastoral people can support more than ten times that number in the same space! The nomadic shepherd, in turn, would be amazed to learn that ordinary agriculture would permit of a population ten times greater. Tell a peasant accustomed to this method that another tenfold increase would be possible by crop rotation, and he would not believe you. And is the rotation of crops, which is the last word for us, also the last word for the human race? Let us, therefore, stop worrying about the fate of mankind. Thousands of centuries lie ahead of it; and in any case, without asking political economists to settle problems that are out of their field, let us confidently leave the fate of future generations in the hands of Him who will call them into existence.

Let us summarize the central ideas of this chapter.

The two phenomena, utility and value, the contribution of Nature and the contribution of man, consequently communal wealth and private property, are to be found in agricultural enterprises as in all others.

In the production of the wheat that satisfies our hunger, something takes place that is quite analogous to the production of the water that quenches our thirst. Does not the sea, which inspires the poet, also stir us, the economists, to fruitful meditation? It is a vast reservoir intended to give drink to all human creatures. Yet they are so far removed from its cooling waters, which, worse still, are filled with brine! But the marvelous resourcefulness of Nature comes to the rescue. The sun warms and stirs this mass and subjects it to slow evaporation. It turns to vapor, and, freed from its salt, which rendered it unsuitable for use, rises to the upper regions of the air. Winds, moving in from all directions, waft it Edition: current; Page: [267] toward the inhabited continents, where the cold congeals it and attaches it in solid form to the mountainside. Soon the warmth of springtime melts it. Its weight carries it down the slopes, and, as it flows through beds of schist and gravel, it is filtered and purified; it spreads out in all directions, feeding the refreshing springs in all parts of the world. This is certainly an immense and ingenious industrial project that Nature carries out for the benefit of mankind. Conversion of materials from one form to another, transportation from one place to another, creation of utility—all the elements of industry are there. Yet where is value? It has not yet been created, and if the so-called labor of God could be charged for (and it would be charged for if it had value), who could say what a single drop of water would be worth?

Yet all men do not have a spring of living water flowing at their feet. To quench their thirst they must still go to some pains, make some effort, practice foresight, employ their skill. It is this supplementary human labor that gives rise to arrangements, transactions, evaluations. In it, then, we find the origin and the basis of value.

With man, ignorance comes before knowledge. Originally, therefore, he was reduced to going after the water he drank and to doing, with a maximum of pains, such additional work as Nature had left him to do. This was the period in the development of exchange when water had its greatest value. Little by little he invented the cart and the wheel, he trained horses, he devised pipes, he discovered the laws of the siphon; in a word, he put part of the burden of his labor on the gratuitous forces of Nature, and proportionally the value of the water, but not its utility, decreased.

And, in this process, something takes place that must be carefully noted and understood if we are to avoid seeing discord where there is actually harmony. The purchaser of the water obtains it on better terms; that is, he exchanges a smaller amount of his labor for any given amount of water at each step along the path of progress, even though, in this case, he is obliged to pay for the instrument by means of which Nature is put to work. Formerly he paid for the labor of going after the water; now he pays for this labor and also for the labor it took to construct the cart, the wheel, and the pipe. And yet, everything included, he pays less. This Edition: current; Page: [268] illustration shows how unfortunate and erroneous is the bias of those who believe that the compensation paid to capital represents an added burden to the consumer. Will these people never realize that capital, in any given case, eliminates more labor than it demands as payment?

The process that has just been described applies equally well to the production of wheat. In it too there exists, antedating human industry, a tremendous, immeasurable industry of Nature, much of which even yet is not understood by the most advanced scientific thinking. Gases and minerals are present in the soil and in the atmosphere. Electricity, chemical forces, wind, rain, light, heat, life are all successively busy, often without our knowledge, transporting, transforming, collecting, dividing, combining these elements; and this wonderful industry, whose activity and utility surpass our understanding and even our imagination, possesses no value. The latter makes its appearance at the first intervention of man, who, in this case, has more supplementary labor to perform than in the other.

In order to direct these forces of Nature, to remove the obstacles that hinder their action, man takes possession of an instrument, which is the soil, and he does so without harming anyone, for this instrument has no value. This is not a debatable matter, but a simple fact. Show me, in any part of the world whatsoever, a piece of land that has not directly or indirectly been the object of man's activity, and I will show you a piece of land totally lacking in value.

Yet the farmer, in order to produce wheat, with the help of Nature, performs two very distinct types of labor. One type is directly related to the yearly harvest, is related to it alone, and must be paid for by it alone: things like planting, weeding, harvesting, transplanting. The other, like constructing farm buildings, providing drainage, clearing, fencing, etc., spans an indefinite number of successive harvests; this cost must be distributed over a series of years, a process that is carried out accurately by the admirable device that we call the laws of interest and amortization. The crops furnish the farmer's payment if he consumes them himself. If he exchanges them, he receives in return Edition: current; Page: [269] services of a different type, and the appraisal of the services so exchanged constitutes their value.

Now, it is easy to understand that all this long-range labor that the farmer performs on the soil represents a value that has not yet been paid for, but that surely will be. He cannot be forced to relinquish it and to allow another person to take over his right to it without compensation. Value has been incorporated, implanted in the soil; for that reason we may well say, by metonymy: The soil has value. It has value, in fact, because no one may now acquire it without offering in exchange the equivalent of this labor. But I maintain that this land, to which Nature's productive power had not originally communicated any value, still does not possess any value the more on that account. This power of Nature, which was gratis, is still gratis, and always will be. We may indeed say: This land has value; but what really has value is the human labor that has improved it, the capital that has been expended on it. Consequently, it is completely accurate to say that its owner is, strictly speaking, owner only of the value that he has created, of the services that he has rendered. And what ownership could be more legitimate? It has not been created at anyone's expense; it neither intercepts nor lays a tax on any gift of heaven.

Nor is this all. The capital outlay and the interest on it, which must be spread over successive harvests, far from increasing costs and becoming an extra burden for the consumers, enables them to obtain agricultural products on better and better terms in proportion as the amount of capital increases, that is, as the value of the soil is enhanced. I have no doubt that this assertion will be taken for an overly optimistic paradox, so accustomed are people to looking on the value of the soil as a calamity, if not an injustice. Yet I declare that it is not enough to say that the value of the soil has been created at no one's expense, or to say that it is harmful to no one; it must be stated that, on the contrary, it is to the profit of all. It is not merely legitimate; it is advantageous, even to those who are not landowners.

So here again we have the same phenomenon we just witnessed in regard to drinking water. As we said, as soon as the water carrier invented the cart and the wheel, it is quite true that the consumer Edition: current; Page: [270] was forced to pay for two types of labor instead of one: (1) the labor of making the cart or the wheel, or rather the interest and amortization on this capital outlay; (2) the actual labor that the water carrier was still required to perform. But it is equally true that these two types of labor together do not equal the total amount of labor of one type only that mankind was previously required to perform. Why is this true? Because, thanks to the invention of these mechanical aids, a part of the work has been turned over to the gratuitous forces of Nature. Indeed, it was the prospect of decreased toil that prompted the invention and brought about its adoption.

Exactly the same phenomena are to be observed in the case of land and wheat. Unquestionably, every time the landowner invests capital in permanent improvements, the succeeding crops must be charged with the interest on this capital. But it is equally certain that the amount of labor belonging to the other category, that of unskilled labor that must be performed annually, is also reduced in far greater proportions; so that the landowner, and hence the consumer, obtains each succeeding crop for less and less effort, it being the special characteristic of capital to substitute the gratuitous action of Nature for man's labor, which must be paid for.

Consider the following example: To produce the best crops, a field must be cleared of excessive moisture. Let us suppose that labor for this has not progressed beyond the first, or unskilled, category. Let us assume that the farmer must go out every morning with a pail to drain off water standing in spots where it would do harm. It is evident that at the end of the year this act will not have added any value to the soil, but the price of the crop will have been tremendously increased. So will all the prices of all succeeding crops, as long as the science of agriculture does not advance beyond this primitive procedure. But if the farmer digs a ditch, the soil immediately acquires value, for this work belongs to the second category. Such work becomes a part of the soil; it must be paid for by the crops of succeeding years, and no one can expect to acquire the land without paying also for this operation. But is it not true that it nevertheless tends to reduce the value of Edition: current; Page: [271] the crops? Is it not true that, although it required, during the first year, an unusual expenditure of effort, it saves in the long run more than it occasions? Is it not true that henceforth the drainage will be carried out more economically through the application of the laws of hydraulics than it was previously by dint of physical labor? Is it not true that the purchasers of the wheat will profit from the operation? Will they not have reason to deem themselves fortunate that the soil has acquired this new value? And, to generalize, is it not true, then, that the value given the soil is a sign of progress, which is to the benefit not of the owner alone, but of all mankind? How absurd, then, it would be of mankind, and how hostile to its own best interests, to say: The amount added to the price of the wheat for interest and amortization on this ditch, or for what it represents in the total value of the soil, is a privilege, a monopoly, a theft! Reasoning in this wise, the owner, in order to be no longer a thief or a monopolist, would only have to fill in his ditch and go back to the pail. Would you who do not own land be any better off for that?

Enumerate all the permanent improvements that together make up the value of the soil, and you can make the same observation for each one of them. After you destroy the ditch, destroy the fences too, forcing the owner to go back to standing guard on his field; destroy the well, the barn, the road, the plow, the grading, the artificial mould; put back into it the stories, the weeds, the tree roots, and then you will have achieved utopian equality. The soil, and the human race along with it, will have returned to its original state: it will no longer have value. The crops will no longer be burdened with capital. Their price will be free of that cursed element called interest. Everything, absolutely everything, will be done by current labor, visible to the naked eye. Political economy will be greatly simplified. France will support one man for every five square miles of land. All the others will have starved to death; but it can no longer be said: Property is a monopoly; it is an injustice; it is theft.

Let us not, therefore, be insensible to those economic harmonies that pass before our eyes as we analyze the concepts of exchange, value, capital, interest, private property, public ownership. Edition: current; Page: [272] Need I present the entire cycle? But perhaps we have gone far enough to realize that the social world, no less than the material world, bears the impress of the divine hand, from which come wisdom and loving-kindness, and toward which we should raise our eyes in awe and gratitude.

I cannot refrain from returning to a remark of M. Considérant.

Taking as his premise the idea that the soil has value in itself, independent of man's activity, that it is original and noncreated capital, he concludes, logically from his premise, that to convert it into private property is to usurp it. This supposed iniquity moves him to declaim vehemently against modern society. On the other hand, he agrees that permanent improvements add an extra value to this original capital, as an additional element so completely fused with the rest as to be inseparable. What, then, is to be done? For we are confronted with a total value composed of two parts, one of which, having been produced by labor, is legitimate property, and the other, being the creation of God, is an iniquitous usurpation.

This is no small dilemma. M. Considérant solves it by the right to employment.

Humanity's progress on Earth obviously demands that the land not be left in a wild and uncultivated state. Our very Destiny, as Human Beings, therefore, is opposed to the idea that man's Right to the Earth should retain its rude and original form.

In his forests and savannas the savage enjoys his four natural Rights of Hunting, Fishing, Gathering wild fruits, and Grazing. Such is the original form of his Rights.

In all civilized societies, the man of the common people, the Proletarian, is purely and simply despoiled of these rights. We cannot, therefore, say that his original Rights have changed form, since they no longer exist. The form has disappeared along with the Substance.

Now, what would be the form under which his Rights could be reconciled with the conditions of an industrial Society? The answer is simple.

In the savage state man, to enjoy his Rights, is obliged to act. The Labor of Fishing, Hunting, Gathering, and Grazing is the condition Edition: current; Page: [273] placed upon the exercise of his Rights. His original Rights, therefore, are simply his Right to perform these labors.

Very well, then, since an industrial Society has taken possession of the Earth, and prevents men from exercising on the soil freely and at will their four natural Rights, let this Society grant to them, in compensation for the Rights it takes away, the RIGHT TO EMPLOYMENT: then, if principle and practice are properly understood and carried out, the individual will have no grounds for complaint.

The indispensable prerequisite for the Legality of Property is, therefore, that Society recognize the Common Man's RIGHT TO EMPLOYMENT, and that it guarantee him for a given amount of his activity at least as much in the way of subsistence as a similar amount of activity would have brought him in his original state of savagery.

I do not propose to argue the point in all its ramifications with M. Considérant, for I should become insufferably repetitious in the process. If I proved to him that what he calls noncreated capital is not capital at all; that what he terms the additional value of the soil is not additional value, but total value; he would have to admit that his whole argument breaks down, and with it all his complaints against the manner in which humanity has seen fit to organize itself and to live since the time of Adam. But this controversy would oblige me to restate what I have already said concerning the fact that the forces of Nature remain inherently and unalterably gratuitous. I shall confine myself to observing that if M. Considérant is the spokesman for the working classes, he does them such a disservice that they may well consider that they have been betrayed. He says that the landowners have usurped both the land and all the miracles of vegetation that take place on it. They have usurped the sun, the rain, the dew, oxygen, hydrogen, and nitrogen—at least to the extent that these contribute to the raising of agricultural products—and he asks them to assure the worker, as compensation, at least as much in the way of subsistence for a given amount of activity as a similar amount of activity would have brought him in the original or savage state.

But do you not perceive, M. Considérant, that landed property has not waited for you to issue your injunctions, that it has already Edition: current; Page: [274] been a million times more generous? For, after all, what does your proposal actually come to?

In the original state of savagery, your four rights of fishing, hunting, gathering wild fruits, and grazing supported—or rather, allowed to eke out an existence in all the horrors of privation—approximately one man per five square miles. The usurpation of the land will therefore be deemed legitimate, according to your theories, if the guilty parties support one man per five square miles, with the further requirement that he exert himself as greatly as a Huron or an Iroquois must. Please note that the area of France is only thirty thousand square leagues; that, consequently, provided it support thirty thousand inhabitants in that state of material well-being afforded by a life of savagery, you are content to ask nothing more, on behalf of the workers, from the owners of property. Now, this leaves thirty million Frenchmen who do not have a square inch of land; and among that number there are quite a few—the President of the Republic, cabinet ministers, magistrates, bankers, businessmen, notaries, lawyers, doctors, brokers, soldiers, sailors, teachers, journalists, etc.—who would surely not be disposed to change their way of life for that of an Iowa Indian. Landed property must, therefore, already do a great deal more than you require. You demand from it a right to employment that, within certain fixed limits, and only in return for a certain amount of effort, will provide the masses with a level of subsistence equal to that which a state of savagery could offer them. The system of landed property does much better than that. It offers more than the right to employment; it offers actual employment, and if it did no more than meet the taxes it now pays, that figure is still a hundred times more than you would demand.

Alas! I am sorry to say that I have not yet finished with landed property and its value. I still have to state, and refute in as few words as possible, a plausible and even significant objection.

People will say:

“The facts belie your theory. Undoubtedly, as long as there exists in a country a large amount of uncultivated land, its mere presence will prevent cultivated land from acquiring exorbitant value. Undoubtedly, also, even when all the land has been converted Edition: current; Page: [275] into private property, if adjoining nations have great tracts yet to be tilled, the right of free bargaining will hold the value of landed property within just limits. In these two cases land prices would not seem to represent more than the capital outlay, and rent more than the interest on it. From these facts one must conclude, as you do, that what is done by the soil itself and by the forces of Nature, since it does not figure in the costs and cannot be added to the price of crops, does remain gratis and therefore common to all. All this is plausible. We may well be at a loss to discover the flaw in this line of reasoning, and yet it is fallacious. To be convinced that this is so, we have only to note the fact that in France there is cultivated land ranging in price from a hundred to six thousand francs an acre, an enormous difference, which is to be explained more by reason of the variations in fertility than in previous improvements. Do not deny, therefore, that fertility has its own inherent value; every bill of sale attests to this fact. Anyone buying a piece of land determines its quality and pays accordingly. If two fields are placed side by side and have the same advantages of location, but differ in their soil, the one consisting of rich loam and the other of barren sand, surely the first will be worth more than the second, even though the same capital improvements have been made on both. And, in fact, this is a point about which the buyer is not at all concerned. His eyes are turned toward the future, not the past. He is interested, not in what the land has cost, but in what it will yield, and he knows that its yield will be in proportion to its fertility. Therefore, this fertility has its own specific, intrinsic value, which is independent of any human labor performed on it. To maintain the contrary is to attempt to find the justification for private property in ingenious quibblings, or rather in a paradox.”

Let us, therefore, investigate what really gives value to the soil.

I ask the reader to remember that at the present time this question is a most vital one. Previously it could be either dismissed or treated superficially by economists, as a question of little more than passing interest. The legitimacy of private property was not then contested. Such is no longer the case. New theories, which Edition: current; Page: [276] have been only too successful, have cast doubt among even the best minds regarding the right to property. And on what do the authors of these theories base their complaint? On just the allegation contained in the objection I have presented above. On just this fact, which unfortunately has gained acceptance by all schools of thought, that the soil derives from its fertility, from Nature, an inherent value that has not been transmitted to it by any human agency. Now, value is not transferred gratis. Its very name excludes the idea that it is gratuitous. Therefore, we say to the landowner: You demand from me a value that is the fruit of my labor, and you offer me in exchange another value that is the fruit neither of your labor nor of anyone's labor, but of Nature's bounty.

And, make no mistake about it, this indictment would be a terrible one if it were based on fact. It did not originate with Messrs. Considérant and Proudhon. It is to be found in Smith, in Ricardo, in Senior, in all the economists without exception, not merely as a theory, but as an indictment. These authors have not stopped at attributing an extrahuman value to the soil; they have gone so far as to deduce clearly the consequences of this theory and to brand landed property as a privilege, a monopoly, a usurpation. To be sure, after thus blasting it, they have defended it in the name of necessity. But is such a defense anything more than a flaw in reasoning, which the logicians of communism have been quick to set right?

It is, therefore, not for the sake of yielding to an unfortunate proclivity for quibbling that I take up this delicate subject. I should have preferred to spare the reader and myself the tediousness that even now I feel is gathering over the final pages of this chapter.

The answer to the objection that I have just presented is to be found in my theory of value, which is set forth in chapter 5. There I stated: Value does not necessarily imply labor; even less is it necessarily proportional to labor. I showed that value is based less on the pains taken by the one who surrenders what is exchanged than on the pains spared the recipient, and for that reason I attributed it to something that includes both elements: service. Edition: current; Page: [277] A great service can be rendered, I said, at the cost of very little effort, and a very minor service can be rendered with great effort. The only result, then, is that labor does not necessarily receive a remuneration that is always proportional to its intensity, either in the case of the man living in isolation or in that of the man living in society.

Value is determined after bargaining between two contracting parties. Each one brings to the bargaining his own point of view. You offer me wheat. Of what importance to me are the time and trouble it may have cost you? What I am concerned about is the time and trouble it would cost me to obtain it elsewhere. The knowledge you have of my situation may make you more or less demanding; the knowledge I have of yours may make me more or less ready to come to terms. Hence, there can be no necessary measure of the payment you are to receive for your labor. That depends on circumstances and the value they give to the two services being exchanged. Soon we shall take up an external factor, called competition, whose function it is to regularize values and to make them correspond more and more closely to effort. Yet this correspondence is not of the essence of value, since it is established only under the pressure of a contingent fact.

Keeping this in mind, I can say that the value of the soil is created, fluctuates, is set, like that of gold, iron, water, an attorney's advice, a doctor's consultation, the performance of a singer or of a dancer, or an artist's painting—like all values; that it obeys no special laws; that it constitutes property that is of the same origin, the same nature, and is as legitimate as any other property. But it does not at all follow—this must be clear by now—that, of two efforts applied to the soil, one may not be better remunerated than the other.

Let us revert to that most simple of all industries, the one best fitted to illustrate the tenuous dividing line between man's onerous labor and Nature's gratuitous collaboration. I refer to the humble labor of the water carrier.

A man fills a barrel with water and brings it home. Does he own a value that necessarily is proportional to his labor? In that case the value would be distinct from the service that the water Edition: current; Page: [278] can render. Furthermore, it could not fluctuate, for labor that has once been performed is not susceptible of increase or diminution.

Very well, then, the very day after the water barrel has been filled and delivered, it can lose all its value, if, for example, it rains during the night. In that case, everybody has his supply of water; the barrel of water can render no service; it is no longer wanted. In the language of economics, there is no demand for it.

On the other hand, it can acquire considerable value if exceptional, unforeseen, and urgent demand arises.

The result is that man, working with the future in mind, can never know in advance exactly what that future holds in store for his labor. The value incorporated in a material object will be greater or less according to the services it will render; or, rather, human labor, the source of this value, will receive, according to circumstances, a greater or a smaller remuneration. Such eventualities fall within the domain of foresight, and foresight, too, is entitled to its reward.

But, I ask, what do these fluctuations of value, the variations in the price paid labor, have to do with Nature's marvelous industrial achievement, with the wonderful laws of physics that, without help from us, transport the waters we drink from the ocean to the spring? Because the value of this barrel of water varies according to circumstances, must we conclude that Nature sometimes charges a great deal, sometimes very little, and sometimes not at all, for evaporation, for the transportation of clouds from the sea to the mountains, for freezing, for melting, and all the wonderful industrial activity that feeds the spring?

The same is true of agricultural products.

The value of the soil, or rather of the capital invested in the soil, is composed not of one element, but of two elements. It depends not only on the labor that has gone into the soil but also on society's capacity to reward that labor, on demand as well as on supply.

Take the case of a field. Not a year goes by in which some work of a permanent nature is not done on it, and, by the same token, its value is enhanced.

Furthermore, new roads are built, and others are improved; Edition: current; Page: [279] law enforcement becomes more efficient; new markets are opened up; there are increases in population and in wealth; new careers are opened to intelligence and skill; and these changes in the physical environment and the general prosperity result in additional remuneration for labor past and present, and, concomitantly, greater value for the field.

In all this there is neither injustice nor special privilege for the landowner. Every line of work from banking to manual labor presents the same phenomenon. Each one finds its own remuneration enhanced through the mere fact of improvement in the surroundings in which it is carried on. This action and reaction of the prosperity of each one on the prosperity of all, and vice versa, is the very law of value. How completely erroneous it is to conclude from this evidence that the soil or its productive forces have a so-called value of their own can be seen from the fact that in intellectual work, in the professions and occupations in which material things and physical laws play no part, the same benefits are enjoyed. This is not exceptional, but the universal experience. The lawyer, the doctor, the teacher, the artist, the poet, are better paid, for the work they do, in proportion as their city or nation increases in prosperity, as the taste or the demand for their services grows, as the general public is both willing and able to remunerate them better. The simple sale of a doctor's or a lawyer's practice or of the good will of a business concern is carried out on this principle. Even the Basque Giant and Tom Thumb, who make their living by the mere display of their abnormal stature, exhibit themselves to their greater profit before the curious throngs of well-to-do city dwellers than before a few poor villagers. In this case demand does not merely contribute to value; it creates it entirely. Why should we feel that it is exceptional or unjust for demand also to have an influence on the value of land and of agricultural products?

Will it be alleged that the value of land can thereby rise exorbitantly? Those who say so have certainly never considered the enormous amount of labor that has gone into arable land. I venture to state that there is not a field in France that is worth as much as it cost, that can be exchanged for as great an amount Edition: current; Page: [280] of labor as has actually been expended on it to bring it to its present state of productivity. If this statement is well founded, it is conclusive. It does not permit of the least hint of injustice being charged against the principle of landed property. Therefore, I shall come back to this subject when I have occasion to consider Ricardo's theory of rent. I shall show that we must apply also to capital invested in land the general law that I have formulated in these terms: In proportion as capital increases, what it produces is distributed among the capitalists or landowners and the workers in such a way that the former's relative share constantly decreases, although their absolute share increases, while the latter's share increases in both respects.

The illusion that leads men to believe that productive forces have a value of their own because they have utility, has been responsible for many miscalculations and catastrophes. It has often involved them in premature efforts at colonization whose history reads like a lamentable chronicle of martyrs. They reasoned thus: In our country, we can acquire value only through labor; and when we work, we receive value only in proportion to our labor. If we went to Guiana, to the banks of the Mississippi, to Australia, or Africa, we could take possession of vast stretches of land, uncultivated, to be sure, but fertile. Our reward would be that we should become the owners both of the value that we should create and of the intrinsic value that is to be found in this land.

They set out, and harsh reality is not slow in confirming the truth of my theory. They work; they clear the land; they drive themselves to the point of exhaustion; they undergo hardship, suffering, sickness; and then, after they have made their land fit for production, they find, if they try to sell it, that they cannot get back what it cost them, and they are forced to acknowledge that value is of human creation. I defy anyone to cite an example of colonization that at the beginning was not a disaster.

Upwards of a thousand labourers were sent out to the Swan River Colony; but the extreme cheapness of the land [eighteen pence, or less than two francs, an acre] and the extravagant rate of labour, afforded Edition: current; Page: [281] them such facilities and inducements to become landowners, that capitalists could no longer get anyone to cultivate their lands. A capital of £200,000 [five million francs] was lost in consequence, and the colony became a scene of desolation. The labourers having left their employers from the delusive desire to become landowners, agricultural implements were allowed to rust, seeds rotted, and sheep, cattle, and horses perished from want of attention. A frightful famine cured the labourers of their infatuation, and they returned to ask employment from the capitalists; but it was too late.6

The Australian Association, attributing the disaster to the cheapness of the land, raised the price to twelve shillings. But, adds Carey, from whom I take this quotation, the real cause was that the farm workers were convinced that the land had intrinsic value, apart from any work done on it, and were eager to appropriate this so-called value, which they assumed would virtually assure them a yearly rent.

The sequel provides me with an even more conclusive argument.

In 1836, the landed estates of the colony of Swan River were to be purchased from the original settlers at a shilling an acre.7

Thus, this soil, for which the company had charged twelve shillings—and on which the settlers had spent much time and money—was now resold for one shilling! What had happened to the value of the productive and indestructible powers of Nature?8

The vast and important subject of the value of land has not been exhaustively treated, I realize, in this chapter, which was written at intervals in the midst of constant interruptions: I shall return to it, but I cannot close without submitting one observation to my readers and particularly to economists.

Those illustrious scholars who have contributed so much to the Edition: current; Page: [282] progress of political economy, whose lives and works breathe the spirit of benevolence and philanthropy, who, at least in certain respects and within the areas of their investigation, have discovered for us the true solution to the problems of society, men like Quesnay, Turgot, Smith, Malthus, Say, have not escaped, I do not say refutation, which is always in order, but slander, defamation, and the coarsest of insults. To attack their writings, and even their motives, has almost become the fashion. It will be said, perhaps, that in this chapter I myself furnish arms to their detractors, and, indeed, this is hardly the moment for me to turn against those whom, I most solemnly declare, I look upon as my first instructors, my guides, and my masters. But, in the last analysis, must not my highest allegiance be to truth, or to what I consider to be truth? Where in the world is there a book into which no error has crept? Now, in political economy, just one error, if we press it, if we torture it, if we insist upon drawing all its logical implications from it, will eventually be found to include all other errors; it will lead us to chaos. No book exists, therefore, from which an isolated proposition cannot be taken out of context and be declared incomplete, false, and consequently as involving a world of errors and confusions.

In all good conscience I believe that the definition that the economists have given of the word value is an error of this kind. We have just seen that this definition placed them in a position where they themselves cast grave doubt upon the legitimacy of landed property, and, by logical deduction, upon the whole system of capital; and only by an illogical chain of reasoning did they stop short of disaster along this road. Their inconsistency saved them. They redirected their steps toward the way of truth, and their error, if such it be, stands as the only blemish on their works. The socialists came along and laid hold of this definition, not to refute it, but to adopt it, to strengthen it, to make it the starting point for their propaganda, and to expatiate on all its implications. There has been in our time imminent danger to society in all this, and for that reason I felt it my duty to speak my mind completely, to trace this erroneous theory back to its very beginnings. Now, if one wished to conclude from my Edition: current; Page: [283] remarks that I have parted company with my masters, Smith and Say, with my friends Blanqui and Garnier, solely because they failed to grasp the full significance of one line out of all the many pages in their excellent and learned writings, and perhaps misused, as I believe, the word “value”; if one should conclude on that account that I no longer have faith in political economy and the economists; I can only protest—and that I do, most emphatically, as is evidenced by the very title of this book.

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10: Competition

There is no word in all the vocabulary of political economy that has so aroused the angry denunciations of the modern reformers as the word “competition,” to which, to add to the insult, they unfailingly apply the epithet “anarchistic.”

What does “anarchistic competition" mean? I do not know. What can replace it? I do not know that either.

Of course, I hear the cries of “Organization! Association!” But what does that mean? Once and for all we must come to an understanding. I really must know what kind of authority these authors propose to exert over me and over all men living on this earth of ours; for, in truth, the only authority I can grant them is the authority of reason, provided they can enlist reason on their side. Do they really propose to deprive me of the right to use my own judgment in a matter where my very existence is at stake? Do they hope to take from me my power to compare the services that I render with those that I receive? Do they mean that I should act under restraints that they will impose rather than according to the dictates of my own intelligence? If they leave me my liberty, competition also remains. If they wrest it from me, I become only their slave. The association will be free and voluntary, they say. Very well! But in that case every group with its associated members will be pitted against every other group, just as individuals are pitted against one another today, and we shall have competition. The association will be all-embracing, it is replied. This ceases to be a joking matter. Do you mean to say that anarchistic Edition: current; Page: [285] competition is wrecking our society right now, and to cure this malady we shall have to wait until all mankind, the French, the English, the Chinese, the Japanese, the Kafirs, the Hottentots, the Lapps, the Cossacks, the Patagonians, persuaded by your arguments, agree to unite for all time to come in one of the forms of association that you have contrived? But beware! This is simply to acknowledge that competition is indestructible; and do you have the presumption to claim that an indestructible, and therefore providential, phenomenon of society can be mischievous?

After all, what is competition? Is it something that exists and has a life of its own, like cholera? No. Competition is merely the absence of oppression. In things that concern me, I want to make my own choice, and I do not want another to make it for me without regard for my wishes; that is all. And if someone proposes to substitute his judgment for mine in matters that concern me, I shall demand to substitute my judgment for his in matters that concern him. What guarantee is there that this will make things go any better? It is evident that competition is freedom. To destroy freedom of action is to destroy the possibility, and consequently the power, of choosing, of judging, of comparing; it amounts to destroying reason, to destroying thought, to destroying man himself. Whatever their starting point, this is the ultimate conclusion our modern reformers always reach; for the sake of improving society they begin by destroying the individual, on the pretext that all evils come from him, as if all good things did not likewise come from him.

We have seen that services are exchanged for services. In the last analysis, each one of us comes into the world with the responsibility of providing his own satisfactions through his own efforts. Hence, if a man spares us pains, we are obligated to save him pains in return. His effort brings us a satisfaction; we must do as much for him.

But who is to make the comparison? For it is absolutely necessary that these efforts, these pains, these services that are to be exchanged, be compared so that an equivalence, a just rate, may be arrived at, unless injustice, inequality, chance, is to be our norm—which is another way of throwing the testimony of human Edition: current; Page: [286] reason out of court. There must be, therefore, one or more judges. Who will it be? Is it not natural that, in every particular case, wants should be judged by those who experience them, satisfactions by those who seek them, efforts by those who exchange them? Is it proposed in all seriousness to substitute for this eternal vigilance by the interested parties a social authority (even if it should be the reformer himself) charged with determining the intricate conditions affecting countless acts of exchange in all parts of the world? Is it not obvious that this would mean the establishment of the most fallible, the most far-reaching, the most arbitrary, the most inquisitorial, the most unbearable, the most short-sighted, and, fortunately, let us add, the most impossible of all despotisms ever conceived in the brain of an Oriental potentate?

We need only know that competition is merely the absence of any arbitrary authority set up as a judge over exchange, to realize that it cannot be eliminated. Illegitimate coercion can indeed restrain, counteract, impede the freedom of exchange, as it can the freedom of walking; but it cannot eliminate either of them without eliminating man himself. This being so, the only question that remains is whether competition tends toward the happiness or the misery of mankind—a question that amounts to this: Is mankind naturally inclined toward progress or fatally marked for decadence?

I do not hesitate to say that competition, which, indeed, we could call freedom—despite the aversion it inspires and the tirades directed against it—is essentially the law of democracy. It is the most progressive, the most egalitarian, the most universally leveling of all the laws to which Providence has entrusted the progress of human society. It is this law of competition that brings one by one within common reach the enjoyment of all those advantages that Nature seemed to have bestowed gratis on certain countries only. It is this law, also, that brings within common reach all the conquests of Nature that men of genius in every century pass on as a heritage to succeeding generations, leaving still to be performed only supplementary labors, which they Edition: current; Page: [287] exchange without succeeding in being remunerated, as they would like to be, for the co-operation of natural resources. And if, as always happens at the beginning, the value of this labor is not proportional to its intensity, it is once again competition that, by its imperceptible but constant action, restores a fairer and more accurate balance than could be arrived at by the fallible wisdom of any human officialdom. The accusation that competition tends toward inequality is far from true. On the contrary, all artificial inequality is due to the absence of competition; and if the distance separating a Grand Lama from a pariah is greater than that between the President and an artisan in the United States, the reason is that competition (or liberty) is suppressed in Asia, and not in America. Therefore, while the socialists find in competition the source of all evil, it is actually the attacks upon competition that are the disruptive elements working against all that is good. Although this great law has been misunderstood by the socialists and their partisans, although it is often harsh in its operation, there is no law that is richer in social harmonies, more beneficial in its general results; no law attests more strikingly to the immeasurable superiority of God's plans over man's futile contrivances.

I must at this point remind the reader of that curious but indisputable effect of the social order to which I have already called his attention,1 for too frequently the force of habit causes us to overlook it. It may be characterized thus: The total number of satisfactions that each member of society enjoys is far greater than the number that he could secure by his own efforts. In other words, there is an obvious disproportion between our consumption and our labor. This phenomenon, which we can all easily observe, if we merely look at our own situation for an instant, should, it seems to me, inspire in us some sense of gratitude toward the society to which we owe it.

We come into the world destitute in every way, tormented by countless wants, and provided with only our faculties to satisfy them. It would appear, a priori, that the most we could hope for would be to obtain satisfactions equal to our labors. If we possess Edition: current; Page: [288] more, infinitely more, to what do we owe the excess? Precisely to that natural order of society against which we are constantly railing, when we are not actually trying to destroy it.

The phenomenon, in itself, is truly extraordinary. It is quite understandable that certain men should consume more than they produce, if, in one way or another, they usurp the rights of others and receive services without rendering any in return. But how can this be true of all men simultaneously? How can it be that, after exchanging their services without coercion or plunder, on a footing of value for value, every man can truly say to himself: I use up in one day more than I could produce in a hundred years?

The reader realizes that the additional element that solves the problem is the increasingly effective participation of the forces of Nature in the work of production; it is the fact of more and more gratuitous utility coming within the common reach of all; it is the work of heat, of cold, of light, of gravitation, of natural affinity, of elasticity, progressively supplementing the labor of man and reducing the value of his services by making them easier to perform.

Certainly I must have explained the theory of value very badly indeed if the reader thinks that value declines immediately and automatically through the mere act of harnessing the forces of Nature and releasing the labor of man. No, such is not the case; for then we could say, as the English economists do: Value is in direct proportion to labor. The man who uses the help of a gratuitous force of Nature performs his services more easily; but he does not on that account voluntarily surrender any part whatsoever of what he has been accustomed to receive. To induce him to do so, some pressure from without—heavy, but not unjust—is necessary. This pressure is competition. As long as it does not intervene, as long as the man using a force of Nature remains master of his secret, that force of Nature is gratuitous, undoubtedly, but it is not yet common to all; the conquest of Nature has been achieved, but to the profit of only one man or one class. It is not yet of benefit to all mankind. Nothing has been changed in the world, except that one type of services, although partially relieved of its burden of pains, still brings the full price. We have, on the one hand, a man who asks the same amount of labor as before Edition: current; Page: [289] from his fellow men, while he offers them a reduced amount of his own labor; and, on the other, all mankind, still obliged to make the same sacrifices in time and toil to obtain a commodity that is now produced in part by Nature.

If things were to remain in this state, every new invention would bring into the world a further source of ever spreading inequality. Not only could we not say that value is proportional to labor, but we could not even say that value tends to become proportional to labor. All that we have said in earlier chapters concerning gratuitous utility and the trend toward the enlargement of the communal domain would be illusory. It would not be true that services are exchanged for services in such a way that God's gifts are transmitted, free of charge, from person to person until they reach the ultimate consumer. Everyone who had once managed to exploit any part of the forces of Nature would for all time to come charge for it along with the cost of his labor; in a word, mankind would be organized on the principle of universal monopoly, instead of the principle of an expanding domain of gratuitous and common utilities.

But such is not the case. God has lavished on His creatures the gifts of heat, light, gravitation, air, water, the soil, the marvels of plant life, electricity, and many other blessings too numerous to mention. And even as He has implanted in each man's heart a feeling of self-interest, which, like a magnet draws all things to it; so has He, in the social order, provided another mainspring whose function it is to preserve His gifts as they were originally intended to be: gratis and common to all. This mainspring is competition.

Thus, self-interest is that indomitable individualistic force within us that urges us on to progress and discovery, but at the same time disposes us to monopolize our discoveries. Competition is that no less indomitable humanitarian force that wrests progress, as fast as it is made, from the hands of the individual and places it at the disposal of all mankind. These two forces, which may well be deplored when considered individually, work together to create our social harmony.

And, we may remark in passing, it is not surprising that individualism, Edition: current; Page: [290] as it finds expression in a man's self-interest when he is a producer, has always revolted against the idea of competition, has decried it, and sought to destroy it, calling to its aid force, guile, privilege, sophistry, monopoly, restriction, government controls, etc. The immorality of its means discloses clearly enough the immorality of its end. But the amazing, and unfortunate, thing is that political economy—that is, false political economy—propagated with such ardor by the socialist schools, has, in the name of love of humanity, equality, and fraternity, espoused the cause of individualism in its narrowest form and has abandoned the cause of humanity.

Let us now see how competition works.

Man, under the influence of self-interest, always and inevitably seeks out the conditions that will give his services their greatest value. He is quick to realize that there are three ways in which he may use the gifts of God to his own special advantage:2

  • 1. He may appropriate to his own exclusive use these gifts themselves.
  • 2. Or he alone may know the techniques by which they may be put to use.
  • 3. Or he may possess the only implement by which their cooperation can be secured.

In every one of these cases he gives little of his own labor in exchange for a great deal of others' labor. His services have great relative value, and we tend to assume that the excess value resides inherently in the natural resource. If this were so, this value could not be diminished. What proves that value is, instead, created by services is, as we shall see, the fact that competition simultaneously diminishes both value and services.

1. Natural resources, the gifts of God, are not uniformly distributed over the earth's surface. What an infinite range of plant life extends from the land of the pine to the land of the palm tree! Here the soil is more fertile, there the warmth of the sun more vivifying; stone is found in one place, lime in another; iron, copper, oil in yet others. Water power is not to be found everywhere; Edition: current; Page: [291] the action of the winds cannot everywhere be turned to our profit. The mere fact of the distance that separates us from things necessary to us can make an incalculable difference in the obstacles our efforts encounter; even man's faculties vary, to a certain extent, according to climate and race.

It is easy to see that, were it not for the law of competition, this inequality in the distribution of God's gifts would result in a corresponding difference in men's material prosperity.

Any person finding a natural advantage within reach would turn it to his own profit, but not to that of his fellow men. They would be allowed to share in what he possessed only as he distributed it and at an exorbitant price that he would set arbitrarily. He could place any value he pleased on his services. We have already seen that the two extremes between which value is set are the pains taken by the one performing the service and the pains spared the one receiving it. If it were not for competition, nothing would prevent the setting of the value at the upper limit. For example, the inhabitant of the tropics would say to the European: “Thanks to my sun, I can obtain a given amount of sugar, coffee, cocoa, or cotton for labor equal to ten, whereas you, who in your cold part of the world are obliged to resort to greenhouses, heaters, and storage barns, can produce them only for labor equal to a hundred. You ask me for my sugar, my coffee, my cotton, and you would not be at all disturbed if, in arriving at my price, I considered only the pains I took. But I, on the other hand, am particularly aware of the pains I save you, for I know they are what determine how much you will be willing to pay, and I set my demands accordingly. Since I can do for pains equal to ten what you in your country do for pains equal to a hundred, it is certain that you would refuse if I were to demand of you, in return for my sugar, a product that would cost you pains equal to a hundred and one; but I ask only for pains equal to ninety-nine. You may very well be upset about it for a while, but you will come around, for at that rate the exchange is still to your advantage. You find these terms unfair; but after all, it is to me, not you, that God has given a warm climate. I know that I am in a position where I can exploit this boon of Providence by refusing Edition: current; Page: [292] it to you unless you are willing to pay me a surcharge, for I have no competition. So, here are my sugar, my cocoa, my coffee, my cotton. Take them on my terms, produce them yourself, or go without them.”

It is true that the European could in his turn speak in like fashion to the inhabitant of the tropics: “Excavate your land, dig mines, look for iron and coal, and count yourself fortunate if you find them; for, if you don't, I am determined to raise my demands to the limit. God has given us both of these precious gifts. First, we take as much of them as we need; then, we forbid others to take any unless they pay us a special levy on our windfall.”

Even if transactions were carried on in this manner, it still would not be possible, from the strictly scientific point of view, to attribute to natural resources the value that resides essentially in services. But it would be understandable if this mistake were made, for the result would be the same. Services would still be exchanged for services, but would evidence no tendency to be measured by effort, by labor. The gifts of God would be personal privileges and not common blessings, and we could perhaps complain with some reason of having been treated by the Author of all things in so hopelessly unfair a manner. Would we, then, be brothers here below? Could we consider ourselves the children of a common Father? The absence of competition, that is, of liberty, would exclude any idea of fraternity. Nothing would be left of the republican motto of “Liberty, Equality, Fraternity.”

But let competition appear on the scene, and there will be no more of these one-sided transactions, of these seizures of the gifts of God, of this revolting exorbitance in the evaluation of services, of these inequalities in the exchange of efforts.

And let us note, first of all, that competition must necessarily intervene, called into being, as it is, by the very fact of these inequalities. Labor instinctively moves in the direction that promises it the best returns, and thus unfailingly brings to an end the abnormal advantage it enjoyed; so that inequality is merely a spur that, in spite of ourselves, drives us on toward equality. This is one of the finest examples of teleology in the social machine. Edition: current; Page: [293] Infinite goodness, which has distributed its blessings over the earth, has, it would seem, selected the greedy producer as its agent for effecting their equitable distribution among all mankind, and it certainly is a wonderful sight to see self-interest continually bringing about the very thing it always tries to prevent. Man, as a producer, is necessarily, irresistibly, attracted toward the largest possible rewards for his services, and by that very fact always brings them back into line. He pursues his own interest, and what does he promote, unwittingly, unwillingly, unintentionally? The general good.

Thus, to return to our example, the inhabitant of the tropics, by the very fact that he realizes exorbitant profits from exploiting the gifts of God, attracts competition. Human labor flocks there with an eagerness that, if I may so express myself, is proportional to the magnitude of the inequality, and is not content until the inequality has been eliminated. Through the effect of competition we see tropical labor equal to ten successively exchanged for European labor equal to eighty, then sixty, then fifty, then forty, then twenty, and finally ten. There is no reason, under the natural laws of society, why things should not reach this point, that is, why services exchanged should not be measured in terms of labor performed and pains taken, with the gifts of God being thrown in gratis by both parties. So, when things do reach this point, we must realize, with gratitude, how great a revolution has taken place. First, the pains taken by both parties are now equal, which should satisfy our desire for justice. Then, what has become of the gift of God? This deserves the reader's full attention. No one has been deprived of it. Let us not, in this matter, be taken in by the clamor raised by the tropical producer. In so far as he is himself a consumer of sugar, cotton, or coffee, the Brazilian still profits from the heat of the sun; for this beneficent body has not ceased to help him in the work of production. All that he has lost is his unfair power to levy a surcharge on the consumption of the inhabitants of Europe. The gift of Providence, because it was free of charge, had to, and did, become common to all; for what is free of charge and what is common to all are essentially one and the same.

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God's gift has become—and I beg the reader not to forget that I am using a particular case to illustrate a universal phenomenon—common to all. This is not a flight of rhetoric, but the statement of a mathematical truth. Why has this wonderful fact not been understood? Because communal wealth is always achieved in the form of value that has been eliminated, and our minds have great difficulty in grasping what is expressed negatively. But, I ask, when, in order to get a certain amount of sugar, coffee, or cotton, I offer only a tenth of the pains I should have had to take in order to produce them myself, and for the reason that in Brazil the sun performs nine-tenths of the work, is it not true that I am exchanging labor for labor? And do I not, in a positive sense, receive, in addition to the Brazilian's labor, and into the bargain, the help that the tropical climate has contributed? Can I not state with complete accuracy that I, like all men, share in Nature's bounty in producing these things on the same terms as an Indian or a South American, that is, gratis?

England has an abundance of coal mines. This is, beyond doubt, of great local advantage, particularly if we assume, as I shall in order to simplify the illustration, that there is no coal on the Continent. As long as no exchange takes place, the advantage this gives to the English consists in the fact that they have more fuel than other nations and have it for less pains, for less expenditure of valuable time. As soon as exchange is introduced, taking no account of competition, their exclusive possession of the mines enables them to demand large sums in payment and thus to set a high price on their pains. Not being able to go to these pains ourselves, or to appeal elsewhere, we shall be obliged to submit. English labor engaged in this type of work will be very highly paid; in other words, coal will be expensive, and Nature's bounty can be considered to be lavished on one nation, and not on all mankind.

But this state of things cannot last; a great natural and social law is opposed to it, viz., competition. Precisely because this type of labor is highly paid in England, it will be in great demand there, for men are always in quest of high wages. The number of miners will increase, both through new recruits transferring from Edition: current; Page: [295] other industries and through the new generation of local miners' sons entering their fathers' trade. They will offer their services for less; they will be satisfied with a constantly decreasing rate, until it reaches the normal amount generally paid for similar work in the entire country. This means that the price of English coal will go down in France; that a given amount of French labor will obtain a greater and greater amount of English coal, or rather of English labor as it is represented in the coal; it means, in a word, and this is what I wish to point out, that the gift that Nature appeared to have conferred on England was in reality conferred on all mankind. Coal from Newcastle is bestowed gratis on all men. This is neither paradox nor exaggeration; the coal is bestowed without cost, like water from a rushing stream, provided only that men take the pains to get it or to compensate the pains of those who get it for them. When we buy coal, it is not the coal that we pay for, but the labor required to extract it and to transport it. All that we do is to offer what we consider as an equal amount of labor in wines or silks. So great has been Nature's bounty toward France that the amount of labor we offer in return is not more than we should have had to perform if the coal deposits had been located in France. Competition has put both nations on an equal footing as far as coal is concerned, except for the slight and unavoidable differences due to distance and transportation costs.

I have offered two illustrations, and, in order to make the phenomenon the more impressive by reason of its size, I have chosen international operations on a very large scale. For that reason I am afraid that I may have failed to make the reader realize that the same phenomenon constantly takes place all about us and in our most ordinary transactions. Let him, then, be good enough to pick out the most humble objects, a glass, a nail, a slice of bread, a piece of cloth, a book. I ask him to reflect a little on these unpretentious articles. Let him ask himself what an incalculable amount of gratuitous utility would, were it not for competition, have indeed remained free of charge for their producers, but would never have become free of charge for humanity; that is, would never have become common to all. He may well say to Edition: current; Page: [296] himself, as he buys his bread, that, thanks to competition, he pays nothing for what is done by the sun, the rain, the frost, the laws of vegetation, or even, despite all that is said, for what is done exclusively by the soil. He pays nothing for the law of gravitation set to work by the miller, nothing for the law of combustion set to work by the baker, nothing for the strength of the horses set to work by the deliveryman. Let him reflect that he pays only for services rendered, pains taken by human agents; that, were it not for competition, he would have had to pay an additional charge for all that is done by these natural resources; that this charge would have been limited only by the difficulty he would have experienced in producing the bread with his own hands; that, consequently, a whole lifetime of labor would not have been enough to meet the price he would have been asked to pay. Let him realize that there is not a single article he uses that might not give rise to the same reflection, and that this holds true for every person on the face of the earth; and then he will understand the flaw in the socialist theories, which, viewing only the surface of things, only society's outer shell, have so irresponsibly railed against competition, that is to say, against human freedom. Then he will understand that competition, which insures that the gifts of Nature so inequitably distributed over the globe will retain their double character of being free of charge and common to all, must be considered as the principle of a fair and natural equalization; that it must be admired as the force that holds in check selfish impulses, with which it combines so skillfully that competition serves as both a restraint on greed and a spur to the activity of self-interest. It deserves to be blessed as the most striking manifestation of God's impartial concern for all His creatures.

From the preceding discussion it is possible to arrive at the solution of one of the most controversial of questions: that of free trade among nations. If it is true, as seems to me incontestable, that the various nations of the world are led by competition to exchange with one another nothing but their labor, their efforts, which are gradually brought to a common level, and to include, into the bargain, the natural advantages each one enjoys; how blind and illogical, then, are those nations that by legislative Edition: current; Page: [297] action reject foreign goods on the grounds that they are cheap, that they have little value in proportion to their total utility, that is, for the very reason that they contain a high degree of gratuitous utility!

I have already said, and I repeat now, that a theory inspires me with confidence when I see that it agrees with universal practice. Now, it is certain that nations would carry on certain kinds of exchange with one another if they were not forcibly forbidden to do so. It takes the bayonet to prevent them; hence, it is wrong to prevent them.

2. Another factor that puts certain men in an exceptionally favorable position as regards remuneration is their exclusive knowledge of the techniques for utilizing the forces of Nature. What we call an invention is a conquest over Nature won by human genius. We must observe how these admirable and peaceful conquests, which originally are a source of wealth for those who make them, soon become, under the influence of competition, the gratuitous and common heritage of all mankind.

The forces of Nature do indeed belong to everyone. Gravitation, for example, is common property; it surrounds us, permeates us, rules over us. Nevertheless, if there were only one way to harness it for a given practical result, and if some man knew this way, he could set a very high price on his pains or refuse to take them at all unless a considerable amount were given in return. His demands in this respect would go as high as the point at which they would impose on the consumers a greater sacrifice than the old method would entail. He may have succeeded, for example, in eliminating nine-tenths of the labor required for producing article x. But at the present time x has a current market price that has been established by the pains it takes to produce it in the ordinary way. The inventor sells x at the market price; in other words, he is paid ten times more for his pains than are his competitors. This is the first phase of the invention.

Let us note, first of all, that this in no wise outrages justice. It is just that the man who reveals a new and useful process to the world should receive his reward: to each according to his ability.

Let us note further that up to this point mankind, the inventor Edition: current; Page: [298] excepted, has benefited only potentially, by anticipation so to speak, since, in order to obtain article x, everyone but him is still obliged to make the same sacrifices as before.

At this juncture, however, the invention enters its second phase, the phase of imitation. Excessive compensations by their very nature arouse covetousness. The new process spreads, the price of x steadily drops, and the remuneration also declines, more and more rapidly as the time interval between the invention and its imitations lengthens, that is, as it becomes easier and easier, and less and less risky, to copy the invention, and consequently less and less worth while. Certainly there is nothing in all this that could not be sanctioned by the most enlightened and impartial legislation.

At last the invention reaches its third and final phase, the phase of universal distribution, where it is common property, and free of charge to all. Its full cycle has been run once competition has brought the returns for the producers of article x into line with the prevailing and normal rate for similar types of labor. Then the nine-tenths of the pains that are eliminated by the hypothetical invention represent a conquest of Nature for the benefit of all mankind. The utility of article x remains the same; but nine-tenths of it have been supplied by gravitation, which was originally common to all in theory, and has now become common to all in fact in this special application. This is proved by the fact that all consumers on the face of the earth may now buy article x for one-tenth of what it once cost them. The rest of the cost has been eliminated by the new technique.

If the reader will stop to consider that every human invention has run this cycle, that x is here the algebraic sign for wheat, clothing, books, ships, for whose production an incalculable quantity of pains, or value, has been eliminated by the plow, the loom, the printing press, and the sail; that this observation applies to the humblest tool as well as to the most complex machinery, to the nail, the wedge, the lever, even as to the steam engine and the telegraph; he will understand, I hope, how this problem is solved within the human family, how a steadily greater and more Edition: current; Page: [299] equitably distributed amount of utility or enjoyment becomes the return for a given amount of human labor.

3. I have already shown how competition brings into the gratuitous and common domain both the forces of Nature and the processes by which they are harnessed. It remains for me to show that it performs the same function for the implements by means of which these forces are put to work.

It is not enough that there should exist in Nature forces like heat, light, gravitation, electricity; it is not enough that human intelligence should be able to conceive of a way of utilizing them. There is still need for implements to make these concepts of the mind a reality and for provisions to support men while they are occupied with this task.

Possession of capital is a third factor that, as respects remuneration, is favorable to a man or a class of men. He who has at his disposal the tool the worker needs, the raw materials on which the labor is to be performed, and the means of subsistence during the operation, is in a position to demand a remuneration; the principle involved is certainly just, for capital merely represents pains previously taken and not yet rewarded. The capitalist is in a good position to lay down the law, true enough; yet let us note that, even when he faces no competition, there is a limit beyond which he may not press his claims. This limit is the point at which his payment would eat up all the advantages that his service would provide. Hence, there is no excuse for talking, as people often do, about the tyranny of capital, since never, even in the most extreme cases, can its presence be more harmful to the worker's lot than its absence. The capitalist, like the man from the tropics who has at his disposal a certain degree of heat that Nature has denied other men, like the inventor who possesses the secret of a process unknown to his fellow men, can do no more than say: “Do you desire the use of my labor? I set a given price on it. If you find it too high, do as you have done heretofore: go without it.”

But competition intervenes among the capitalists. Implements, raw materials, and provisions can help to create utility only if they are put to work; hence, there is rivalry among capitalists to find a Edition: current; Page: [300] use for their capital. Since the amount by which this rivalry forces them to reduce their claims below the maximum limits that I have just determined brings about a reduction in the price of the product, this amount represents, therefore, a net profit, a gratuitous gain for the consumer, that is, for mankind!

It is evident here that cost can never be completely eliminated; since all capital represents some pains that have been taken, the principle of remuneration is always implied.

Transactions involving capital are subject to the universal law of all exchange, which is never carried out unless it is to the mutual advantage of the two contracting parties. This advantage, although it tends to be equal on both sides, may accidentally be greater for one than for the other. The return on capital is subject to a limit beyond which no one will consent to borrow; this limit is zero service for the borrower. Likewise, there is a limit below which no one will consent to make a loan; this limit is zero return for the lender. This is self-evident. If the demands of either party are raised to the point of zero advantage for the other, the loan becomes impossible. The return on capital fluctuates between these two extremes, raised toward the upper limit by competition among borrowers, brought back toward the lower limit by competition among lenders; so that, through a necessity that is in harmony with justice, it rises when capital is scarce and falls when capital is abundant.

Many economists believe that the number of borrowers increases more rapidly than capital can be formed, and hence that the natural trend of interest is upwards. The facts are conclusive in favor of the contrary opinion, and we observe that the effect of civilization everywhere is to lower the rate on the hire of capital. This rate, it is said, was 30 or 40 per cent in Rome; it is still 20 per cent in Brazil, 10 per cent in Algiers, 8 per cent in Spain, 6 per cent in Italy, 5 per cent in Germany, 4 per cent in France, 3 per cent in England, and even less in Holland. Now, all this amount by which, through progress, the interest on capital has been reduced, though lost to the capitalist, is not lost to mankind. If the rate of interest, starting at 40, falls to 2 per cent, it means a drop of 38 out of 40 parts for this item in the cost of production Edition: current; Page: [301] of all commodities. They will reach the consumer freed from this charge in the proportion of nineteen-twentieths; this force, then, like the forces of Nature, like more efficient techniques, results in abundance, equalization, and, ultimately, a general rise in the standard of living for the human race.

I still have to say a few words about the competition that labor creates for itself, a subject that has recently inspired so much sentimental rhetoric. But is it really necessary? Has the subject not been exhaustively treated, for the careful reader, by all that has already been said? I have proved that, thanks to competition, men cannot for long receive an abnormal return for the co-operation of the forces of Nature, for knowing special techniques, or for possessing the instruments whereby these forces are put to work. To do this is to prove that efforts tend to be exchanged on an equal footing, or, in other words, that value tends to be proportional to labor. This being so, I do not really understand what is meant by competition among workers. I understand even less how it could be harmful to their situation, since, in this respect workers are also consumers; the laboring class includes everybody, and in fact itself comprises the great community that in the last analysis reaps the rewards of competition and the benefits accruing from the steady elimination of value resulting from progress.

The course of development is as follows: Services are exchanged for services, or value for value. When a man (or a group of men) appropriates a natural resource or acquires a new technique, he bases his charges, not on the pains he takes, but on those he spares others. He raises his demands to the highest possible limit, without ever being able thereby to injure the welfare of others. He assigns the greatest possible value to his services. But gradually, through the effect of competition, this value tends to correspond to the pains he has taken; so that the full course has been run when his pains are exchanged for equal pains, every one of which represents the means of transmitting a growing amount of gratuitous utility, beneficial to the entire community. Such being the case, it would be a glaring inconsistency to say that competition hurts the workers.

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And yet this is constantly being said, and it is even widely accepted. Why? Because this word “worker” is used to mean one particular class, not the great community of all those who work. This community is divided into two groups. On one side are placed all those who have capital, who live entirely or in part on previous labor or on intellectual labor or on the proceeds of taxation; on the other are placed those who have only their hands and their wages, those who, to use the time-honored expression, form the proletariat. The relations of these two classes with each other are observed, and the question is asked whether, in view of the nature of these relations, the competition carried on by the wage earners among themselves is not harmful to their interests.

The situation of these men, it is said, is essentially precarious. Since they receive their wages daily, they live from day to day. During the bargaining that, in every free system, goes on before terms are reached, they are unable to wait; they must, no matter what, find work for the morrow or die. If this is not entirely true of all of them, it is at least true of many of them, of enough of them to depress the entire class; for the most hard-pressed, the most wretchedly poor, are the ones who capitulate first, and they set the general wage scale. In consequence, wages tend to be set at the lowest rate compatible with bare subsistence; and in this state of things the least bit of added competition among the workers is a veritable calamity, since for them it is not a question of a lower standard of living, but of not being able to live at all.

Certainly there is much truth, too much truth, in actual fact, in this allegation. To deny the sufferings and the miserable conditions prevailing among this class of men who perform the physical labor of the work of production would be shutting our eyes to the truth. The fact is that what we rightly term the social problem is related to the deplorable state of a great number of our fellow men, for, although other classes of society are not immune to many anxieties, many sufferings, economic reverses, crises, and upheavals, it is, nevertheless, true that freedom would be considered as the solution to the problem, if freedom did not appear helpless in curing this running sore that we call pauperism.

And since it is with this question that the social problem is most Edition: current; Page: [303] concerned, the reader will understand that I cannot analyze it here. Would to God that its solution might be the outcome of this whole book of mine, but obviously it cannot come from a single chapter!

I am now concerned with setting forth certain general laws that I believe to be harmonious, and I am confident that the reader also has become aware that these laws exist, that they tend toward the common sharing of all things and consequently toward equality. But I have not tried to deny that their action has been greatly hindered by disturbing factors. If, then, at the present moment we encounter any shocking fact of inequality, how can we interpret it until we know both the normal laws of the social order and the disturbing factors?

On the other hand, I have not sought to deny the existence of evil or its mission. I have felt entitled to state that, since man has been given free will, the term “harmony” need not be confined to a total system from which evil would be excluded; for free will implies error, at least as a possibility, and error is evil. Social harmony, like everything else that involves man, is relative; evil constitutes a necessary part of the machinery designed to conquer error, ignorance, and injustice, by bringing into play two great laws of our nature; responsibility and solidarity.

Since pauperism is an existing fact, must its existence be imputed to the natural laws that govern the social order or rather to human institutions that perhaps work contrary to these laws or, finally, to the victims themselves, who by their own errors and mistakes must have called down upon their heads so severe a punishment?

In other words: Does pauperism exist by divine plan or, on the contrary, because of some artificial element still remaining in our political order or as individual retribution? Fate, injustice, individual responsibility? To which of these three causes must this frightful sore be attributed?

I do not hesitate to say that it cannot be the result of the natural laws that have been the object of our study throughout this book, since these laws all tend toward equality under improved conditions, that is, toward bringing all men closer together in their Edition: current; Page: [304] enjoyment of a constantly rising standard of living. Hence, this is not the place to delve into the problem of poverty.

For the moment, if we wish to consider separately that class of workers who carry out the more physical part of the work of production, and who, without sharing, generally speaking, in its profits, live on fixed earnings that we call “wages,” the question that we must ask is this: Without taking into account either the goodness or the badness of our economic institutions or the woes that the members of the proletariat may have brought upon themselves, what is, as far as they are concerned, the effect of competition?

For this class of people, as for all others, the effect of competition is twofold. They are aware of it both as buyers and as sellers of services. The error of all those who write on this subject is that they never see more than one side of the question, like physicists who, if they understood only the law of centrifugal force, would believe and constantly predict that all is lost. Provide them with incorrect data, and you will see with what flawless logic they will lead you to their conclusions of doom. The same may be said of the lamentations that the socialists base on their exclusive preoccupation with the phenomenon of centrifugal competition, if I may use such an expression. They forget that there is also centripetal competition, and that is enough to reduce their theories to childish rantings. They forget that the worker, when he goes to market with the wages he has earned, is the center toward which countless industries are directed, and that he then profits from the universal competition of which the industries all complain in their turn.

It is true that the members of the proletariat, when they consider themselves as producers, as suppliers of labor or services, also complain of competition. Let us admit, then, that competition is to their advantage on the one hand, and to their disadvantage on the other; the question is to determine whether the balance is favorable or unfavorable, or whether there are compensating factors.

Unless I have expressed myself very badly, the reader now realizes that in this wonderful mechanism the interplay of various Edition: current; Page: [305] aspects of competition, apparently so antagonistic, brings about, as its singular and reassuring result, a balance that is favorable to all simultaneously, because of the gratuitous utility that steadily enlarges the circle of production and constantly falls within the communal domain. Now, what becomes free of charge and common to all is advantageous to all and harmful to none; we can even add, and with mathematical certainty, that it is advantageous to everyone in direct proportion to his previous state of poverty. This part of gratuitous utility, which competition has forced to become common to all, makes value tend to correspond to labor, to the obvious benefit of the worker. This, too, provides the basis for the solution of the social problem that I have tried to keep constantly before the reader, and which only the veil of misconceptions born of habit can prevent him from seeing, namely, that for a given amount of labor each one receives a sum of satisfactions whose tendency is to increase and to be distributed equally.

Furthermore, the condition of the worker is the result, not of one economic law, but of all of them. To understand his condition, to discover what is in store for him, what his future holds, is the one and only function of political economy; for, from its point of view, what else can there be in the world except workers? I am wrong, for there are also plunderers. What gives services their just value? Freedom. What deprives them of their just value? Oppression. Such is the cycle that we have still to traverse.

As for the fate of the working class, which carries out the more immediate work of production, we can evaluate it only when we are in a position to know how the law of competition combines with those of wages and of population and also the disrupting effects of unjust taxation and monopoly.

I shall add only a few more words on competition. It is quite clear that a decrease in the sum total of satisfactions distributed among men is a result that would be foreign to the nature of competition. Does it tend to make this distribution unequal? Nothing on earth is clearer than that competition, after attaching, so to speak, a greater proportion of utility to every service, to every value, works unceasingly to level the services themselves, Edition: current; Page: [306] to make them proportional to efforts. Is competition not the spur that turns men toward productive and away from unproductive careers? Its natural action is, therefore, to assure greater equality and at the same time a higher and higher social level.

Let us, however, understand what we mean by equality. It does not imply identical rewards for all men, but rewards in keeping with the quantity and quality of their efforts.

A host of circumstances contributes to making the remuneration of labor unequal (I am speaking now of free labor subject to the laws of competition). On close examination we discover that this alleged inequality, nearly always just and necessary, is in reality nothing else than actual equality.

All other things being equal, more profit can be had from dangerous labor than from labor that is not; from trades that require a long apprenticeship and outlays that remain unproductive for a long time, implying on the part of the family the long-sustained exercise of certain virtues, than from those in which physical strength alone is necessary; from the professions that demand trained minds and refined tastes, than from trades where nothing is needed beyond one's two hands. Is all this not just? Now, competition necessarily establishes these distinctions; society does not need Fourier or M. Louis Blanc to decide the matter.

Among these various factors the one most generally decisive is inequality of training; and here, as everywhere else, we see competition exerting its twofold influence, leveling classes and raising the general standard of society.

If we think of society as being composed of two strata placed one above the other, with intelligence predominant in the one, and brute force predominant in the other, and if we study the natural relations of these two strata with each other, we shall readily notice that the first one possesses a power of attraction, while in the second there is a force of aspiration, and these two work together to form the two strata into one. The very inequality of rewards inspires the lower stratum with a burning desire to reach the higher regions of well-being and leisure, and this desire is encouraged by gleams from the light that illuminates the upper classes. Teaching methods are improved; books cost less; Edition: current; Page: [307] instruction is acquired more rapidly and cheaply; learning, which had been monopolized by a single class or even caste, veiled in a dead language or in hieroglyphics, is written and printed in the vernacular, permeates the atmosphere, so to speak, and is breathed in like the air.

Nor is this all. Even while more universal and more equal education is working to bring the two social strata together, very important economic factors that are connected with the great law of competition accelerate their fusion. Progress in the knowledge of the laws of mechanics constantly decreases the proportion of brute labor in any operation. The division of labor, by simplifying and isolating each one of the operations that contribute to turning out the finished product, places within the reach of all new industries that previously were open only to a few. Moreover, a complex of various types of labor that originally required highly diversified skills becomes, with the mere passing of time, simple routine and is performed by the least skillful, as has happened in agriculture. Agricultural techniques, which, in antiquity, earned for their discoverers honors approaching deification, are today so completely the heritage and almost the monopoly of the most brutish sort of men, that this most important branch of human industry has become almost taboo, so to speak, for the well-bred. It is possible to draw false conclusions from all this and to say: “We do indeed observe that competition lowers remunerations in all countries, in all trades and professions, in all ranks of society, that it levels them downwards; but this means that the wages for unskilled labor, for mere physical exertion, will become the norm, the standard for all remuneration.”

The reader has misunderstood me if he does not perceive that competition, which tends to bring all excessive remunerations into line with a more or less uniform average, necessarily raises this average. This is galling, I admit, to men in their capacity as producers; but it results in improving the general lot of the human race in the only respects in which improvement may reasonably be expected: in well-being, in financial security, in increased leisure, in moral and intellectual development, and, in a word, in respect to all that relates to consumption.

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Will the objection be made that mankind has not made the progress that this theory would seem to imply?

I shall reply, in the first place, that competition in modern society is far from playing its natural role. Our laws inhibit it at least as much as they encourage it; and to answer the question whether inequality is due to the presence or the absence of competition, we need only observe who the men are who occupy the limelight and dazzle us with their scandalous fortunes, to assure ourselves that inequality, in so far as it is artificial and unjust, is based on conquest, monopolies, restrictions, privileged positions, high government posts and influence, administrative deals, loans from the public funds—with all of which competition has no connection.

Secondly, I believe that we fail to appreciate the very real progress that has been made since the very recent times from which we must date the partial emancipation of labor. It has been said with much truth that it takes a great deal of scientific insight to observe the facts that are constantly before our eyes. The present level of consumption enjoyed by an honest and industrious working-class family does not surprise us because habit has familiarized us with this strange situation. If, however, we were to compare the standard of living that this family has attained with the one that would be its lot in a hypothetical social order from which competition had been excluded; if statisticians could measure with precision instruments, as with a dynamometer, its labor in relation to its satisfactions at two different periods; we should realize that freedom, despite all still-existing restrictions on it, has wrought a miracle so enduring that for that very reason we fail to be aware of it. The total proportion of human effort that has been eliminated in achieving any given result is truly incalculable. There was a time when the day's work of an artisan would not have bought him the crudest sort of almanac. Today for five centimes, or the fiftieth part of his daily wage, he can buy a paper containing enough printed matter for a volume. I could say the same thing for clothing, transportation, shipping, illumination, and a host of satisfactions. To what are these results due? To the fact that a tremendous proportion of human labor, which must Edition: current; Page: [309] be paid for, has been replaced by the gratuitous forces of Nature. This represents value that has been eliminated, that no longer requires payment. It has been replaced, through the action of competition, by gratuitous and common utility; and, let us note, when, through progress, the cost of a given commodity happens to drop, the labor required to pay for it that is saved the poor man is always proportionately greater than that saved the wealthy man, as can be demonstrated mathematically.

Finally, this constantly growing flood of utility, poured forth by labor and pumped through all the veins of the social body by competition, is not to be measured entirely in terms of present material comforts. Much of it is absorbed into the rising tide of ever increasing new generations; it is diffused over an increased population, in accordance with the laws, closely related to our present subject, which will be set forth in another chapter.

Let us pause a moment to look back over the road we have just traveled.

Man has wants that know no limits; he experiences desires that are insatiable. To satisfy them he has raw materials and forces that are supplied him by Nature, faculties, implements—all the things that his labor can put into operation. Labor is the resource most widely distributed among all men. Every man seeks instinctively, inevitably, to bring to his aid all the forces of Nature, all the natural or acquired talent, all the capital that he can, in order that all this co-operation may bring him more utility or, what amounts to the same thing, more satisfactions. Thus, the more and more active participation of natural resources, the constant development of his intellectual faculties, the progressive increase of capital, all give rise to this phenomenon, surprising, at first sight: that a given amount of labor furnishes a constantly growing sum of utility, and that everyone may, without taking away from anyone else, enjoy a number of consumers' satisfactions far out of proportion to the ability of his own efforts to produce them.

But this phenomenon, the result of the divine harmony that Providence has implanted in the social structure, would have turned against society itself, by introducing the seeds of constantly increasing inequality, if it were not combined with another and Edition: current; Page: [310] no less admirable harmony, competition, which is one of the branches of the great law of human solidarity.

In fact, if it were possible for the individual, family, class, or nation that finds certain natural advantages within reach or makes an important discovery in industry or acquires through thrift instruments of production, to be permanently exempt from the law of competition, it is obvious that this individual, family, or nation would retain the monopoly of its exceptional remuneration for all time to come, at the expense of mankind. Where would we be if the inhabitants of the tropics, free from all competition among themselves, were able, in exchange for their sugar, coffee, cotton, and spices, to demand from us, not amounts of labor equal to theirs, but pains equal to those we ourselves would have to take in order to raise these commodities in our rugged climate? By what an immeasurable distance would the various social strata of mankind be separated if only the race of Cadmus could read; if no one could handle a plow unless he could prove that he was a direct descendant of Triptolemus; if only Gutenberg's descendants could print, Arkwright's sons could operate a loom, Watt's progeny could set the funnel of a locomotive to smoking? But Providence has not willed that these things should be, for it has placed within the social machinery a spring as amazingly powerful as it is simple. Thanks to its action every productive force, every improved technique, every advantage, in a word, other than one's own labor, slips through the hands of its producer, remaining there only long enough to excite his zeal with a brief taste of exceptional returns, and then moves on ultimately to swell the gratuitous and common heritage of all mankind. All these discoveries and advantages are diffused into larger and larger portions of individual satisfactions, which are more and more equally distributed. Such is the action of competition. We have already noted its economic effects; it remains for us to glance Edition: current; Page: [311] at a few of its political and moral consequences. I shall confine myself to pointing out the most important.

Some superficial commentators have accused competition of creating antagonisms among men. This is true and inevitable as long as men are considered solely as producers; but consider them as consumers, and you will see that competition binds individuals, families, classes, nations, and races together in the bonds of universal brotherhood.

Since the riches that originally appear to be the exclusive possession of a few become, through the admirable decree of divine bounty, the common patrimony of all; since the natural advantages resulting from location, fertility, temperature, mineral deposits, and even industrial aptitude, merely slip through the hands of their producers because of the competition they engage in with one another, and turn exclusively to the profit of the consumer; it follows that there is no country that does not have a selfish interest in the advancement of every other country. Every step of progress that is made in the Orient represents potential wealth for the Occident. Fuel discovered in the south of France means warmer homes for the men of the north. Let Great Britain make all the progress she can with her spinning mills. Her capitalists will not be the ones to reap the benefit, for the interest on money will not rise; nor will it be her workers, for their wages will remain the same; but, in the long run, the Russian, the Frenchman, the Spaniard, all mankind, in a word, will obtain equal satisfactions for less pains, or, what amounts to the same thing, greater satisfactions for equal pains.

I have spoken only of the benefits; I could have said as much for the ills that afflict certain peoples or certain regions. The peculiar action of competition is to make general what was once particular. It acts on exactly the same principle as insurance. If a scourge of Nature ravages the farmers' lands, the consumers of bread are the ones who suffer. If an unjust tax is levied on the vineyards of France, it is translated into high wine prices for all the wine-drinkers on earth. Thus, both advantages and disadvantages of any degree of permanence merely slip through the hands of individuals, classes, and peoples; their ultimate destiny, as ordained Edition: current; Page: [312] by Providence, is to affect all humanity and to raise or lower its standard of living. Hence, to envy any people whatsoever the fertility of its soil or the beauty of its ports and its rivers or the warmth of its sun is to fail to understand the benefits that we are invited to share. It is to disdain the abundance that is offered us; it is to deplore the toil that we are spared. Hence, national jealousies are not only perverse sentiments; they are absurd. To harm others is to harm ourselves; to spread obstacles, tariffs, coalitions, or wars along the path of others is to obstruct our own progress. Consequently, evil passions have their punishment even as noble sentiments have their reward. With all the moral authority that it commands, the principle of complete justice for all speaks to our self-interest, enlightens public opinion, proclaims and must eventually make prevail among men this eternally true proposition: The useful is one of the aspects of justice; liberty is the most beautiful of social harmonies; equity is the best policy.

Christianity gave to the world the great principle of the brotherhood of man. It speaks to our hearts, to our sentiments, to our noblest instincts. Political economy proclaims the same principle in the name of cold reason, and, by showing the interrelation of cause and effect, reconciles, in reassuring accord, the calculations of the most wary self-interest with the inspiration of the most sublime morality.

A second conclusion to be derived from this doctrine is that society is a true common association. Messrs. Owen and Cabet may save themselves the trouble of seeking the solution to the great communist problem; it has already been found. It is derived, not from their despotic contrivances, but from the organization that God has given to man and to society. The forces of Nature, efficient techniques, tools of production—everything is available in common to all men or tends to become so, everything, I say, except the individual's pains, labor, and effort. There is, there can be, among men, only one inequality, which even the most uncompromising communists admit: the inequality that comes from that of men's efforts.

Efforts alone are exchanged for other efforts according to terms discussed and agreed upon. All the utility imparted to commodities Edition: current; Page: [313] by Nature, by the genius of past centuries, and by human foresight are obtained gratis, into the bargain. The reciprocal remunerations established are related only to respective efforts, whether performed in the present under the name of labor or prepared in the past under the name of capital. The system is therefore a commonwealth in the most literal and rigorously accurate sense of the word, unless one wishes to assert that each person's share in the satisfactions should be equal, although his participation in the labor is not, a situation that certainly would produce the most unjust and monstrous of inequalities—and the most disastrous, for it would not destroy competition, but would merely reverse its direction: men would still compete, but they would compete to excel in idleness, stupidity, and improvidence.

Finally, this doctrine that we have just elaborated, so simple, and yet, as we believe, so true, lifts the great principle of human perfectibility out of the realm of mere oratory and establishes it as a demonstrable fact. From this inner drive, which never rests within man's heart and always prompts him to improve his lot, is born progress in the arts, which is nothing more nor less than the co-operation of forces that are by their very nature incompatible with any remuneration. From competition comes the process that transfers into the communal realm advantages originally held by certain individuals only. The amount of effort once required for a given result grows constantly less, to the benefit of the entire human race, which thus finds that its circle of satisfactions and leisure grows larger from generation to generation, and that its physical, intellectual, and moral level rises. By virtue of this arrangement, so deserving of our study and everlasting admiration, we clearly discern mankind moving upward from the state to which it had fallen.

Let no one misconstrue my words. I do not say that brotherhood, community, and perfectibility are contained in their entirety in the idea of competition. I do say that it is allied and combined with these three great social dogmas, that it is part of them, that it reveals them, and that it is one of the most powerful agents for effecting their realization.

I have set myself the task of describing the general and, consequently, Edition: current; Page: [314] beneficial effects of competition, for it would be sacrilege to assume that any great law of Nature could be permanently harmful in its effect, but I am far from denying that its action may be accompanied by much hardship and suffering. It even seems to me that the theory that I have just advanced explains both this suffering and the inevitable complaints to which it gives rise. Since the function of competition is to level, it must necessarily work against anyone who raises his proud head above the level. We understand how every producer, in order to set the highest price on his labor, tries to hold on for as long as possible to the exclusive use of a resource, a technique, or a tool of production. Now, since competition quite properly has as its mission and result the taking away from the individual of this exclusive enjoyment and making it common property, it is inevitable that all men, in so far as they are producers, should join in a chorus of imprecations against competition. They can become reconciled to it only when they take into account their interests as consumers; when they look upon themselves, not as members of a special group or corporation, but as men.

Political economy, it must be admitted, has not yet done enough to dispel this disastrous fallacy, which has been the source of so many hatreds, calamities, resentments, and wars. Instead, it has expended its efforts, with little scientific justification, in analyzing the phenomena of production. Even its terminology, convenient as it is, is not in keeping with its object of study. “Agriculture,” “manufacture,” “commerce,” make excellent classifications, perhaps, when the intention is to describe the techniques followed in these arts; but this description, though ideally suited for technology, hardly contributes to an understanding of social economy. I may add that it is positively dangerous. When we have classified men as farmers, manufacturers, and businessmen, what can we talk to them about except their special class interests, which are made antagonistic by competition and are in conflict with the general welfare? Agriculture does not exist for the sake of the farmers, manufacturing for the manufacturers, or trade for the businessmen, but in order that all men may have at their disposal the greatest possible number of commodities of all descriptions. Edition: current; Page: [315] The laws of consumption, what is good for it and makes it equitable and moral—these are the really important matters from the social and humanitarian point of view; these are the real objects of the science of political economy; these are the questions on which the clear light of its understanding needs to be focused, for therein lies the bond between classes, nations, and races, the principle and the explanation of the brotherhood of man. It is, therefore, with regret that we see economists expending their great talents and lavishing their wisdom on the problem of production, while they reserve a little space at the end of their books, in the supplementary chapters, for a few brief commonplaces on the phenomena of consumption. Recently a justly celebrated professor was known to have entirely suppressed this aspect of our science, to have concerned himself with the means to the exclusion of the ends, and to have banished from his course all reference to the consumption of wealth, on the ground, he said, that this was a subject that belonged to ethics and not to political economy! Can we be surprised that the general public is more concerned with the disadvantages of competition than with its advantages, since the former affect the public from the particular point of view of production, which is always being talked about, and the latter only from the general point of view of consumption, which is never mentioned?

As for the rest—I repeat—I do not deny, I recognize and deplore as much as others, the suffering that competition has inflicted on men; but is this a reason for shutting our eyes to the good that it accomplishes? It is all the more reassuring to perceive this good because I believe that competition, like the other great laws of Nature, can never be eliminated. If it could be destroyed, it undoubtedly would have succumbed in the face of the universal opposition of all men who ever competed in the production of any commodity since the beginning of the world, and particularly under the impact of the mass uprising of all the modern reformers. But if they have been mad enough to try to destroy it, they have not been strong enough to do so.

And what element of progress is there in the world whose beneficial action has not been marred, particularly at the beginning, Edition: current; Page: [316] by much suffering and hardship? Our great urban masses of human beings stimulate bold flights of thought, but they often deprive individuals in their private life of the corrective of public opinion and serve to shelter debauchery and crime. Wealth combined with leisure favors the cultivation of the mind, but it also nurtures ostentation and snobbishness among the great and resentment and envy among the lowly. Printing brings enlightenment and truth to all strata of society, but it also brings nagging doubt and subversive error. Political liberty has let loose enough tempests and revolutions upon the earth and has sufficiently modified the simple and naive customs of primitive peoples to make serious thinkers wonder whether they would not prefer tranquillity under the shadow of despotism. Christianity itself has sown the great seed of love and charity upon ground soaked in the blood of the martyrs.

Why has it entered into the plans of infinite Goodness and Justice that the happiness of one region or one age should be purchased by the sufferings of another age or another region? What is the divine purpose hidden under this great and irrefutable law of solidarity, of which competition is merely one of the mysterious aspects? Human wisdom does not know the answer, but human wisdom does know that good is constantly spreading and evil diminishing. Beginning with the social order as it had been made by conquest, where there were only masters and slaves, and where the inequality within society was extreme, the work of competition in bringing ever closer together men of different rank, fortune, and intelligence could not be accomplished without inflicting individual hardships that, as the work has progressed, have continually become less, like the vibrations of a sound or the oscillations of a pendulum. Against the sufferings still in store for it, humanity is daily learning how to oppose two powerful remedies, foresight, born of experience and enlightenment, and social co-operation, which is organized foresight.

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Conclusion to the Original Edition

In the first part of this work—alas, all too hastily written!—I have tried to fix the reader's attention on the line of demarcation, always shifting, but always distinct, that separates the two regions of the economic world: Nature's collaboration and man's labor, the liberality of God and the handiwork of man, what is gratuitous and what is onerous, what is paid for in exchange and what is donated without charge, total utility and the partial and supplementary utility that constitutes value, absolute wealth and relative wealth, the contribution of chemical or mechanical forces brought to the aid of production by the instruments that render them serviceable and the just returns due the labor that has created these instruments, common wealth and private property.

It was not enough to point out these two orders of phenomena, so fundamentally different in nature; it was also necessary to describe their relations, and, if I may so express it, their harmonious evolution. I have tried to explain how it was the function of private property to seize hold of utility for the human race, to transfer it to the communal domain, and then to fly away to new conquests, so that each given effort (and, consequently, the sum total of all efforts) constantly renders available to mankind an increasing number of satisfactions. Progress consists in the fact that human services, when exchanged, while keeping their relative value, act as a vehicle to convey a larger and larger proportion of utility which is free of charge, and therefore common to all. Thus, the possessors of value, of any kind whatsoever, far from usurping and monopolizing God's gifts, actually multiply them, but do not on that account make them any the less gratuitous to all—which was the intent of Providence.

In proportion as satisfactions (for which progress makes Nature Edition: current; Page: [318] foot the bill) fall, by reason of that very fact, within the communal domain, they become equal, since inequality can be conceived only in the realm of men's services, which are compared, appraised, and evaluated for exchange. Hence, it follows that equality is necessarily progressive. It is also progressive in another respect, for the inevitable result of competition is to equalize services themselves and to make their rewards correspond more and more closely with their true worth.

Let us now glance over the ground remaining for us to cover.

In the light of the theory that we have set forth in this volume, we still have to examine more closely the following subjects:

Man's relations, both as producer and as consumer, with economic phenomena.

The law of rent on landed property.

The law of wages.

The law of credit.

The law of taxation, which, introducing us to what is, strictly speaking, the subject of government, will lead us to the comparison of private and voluntary services with public and compulsory services.

The law of population.

We shall then be in a position to solve a number of practical problems that are still subjects of controversy: free trade, automation, luxury, leisure, association, organization of labor, etc.

Anticipating our findings in this study, I do not hesitate to say that they may be expressed in the following terms: A steady approach by all men toward a continually rising standard of living—in other words: improvement and equalization—in a single word: harmony.

Such is the final result of the providential plan, of the great laws of Nature, when they act without impediment, when we consider them in themselves, apart from the disturbance to which their action has been subjected by error and violence. At the sight of this harmony the economist may well cry out, as does the astronomer on beholding the movement of the planets, or the physiologist when he contemplates the structure of our human organs: Digitus Dei est hic!

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But man is a free agent, and consequently fallible. He is subject to ignorance and passion. His will, which can err, enters as an element into the workings of economic laws; he can misunderstand them, he can nullify them, he can divert them from their purpose. Just as the physiologist, after admiring the infinite wisdom that has gone into the creation and arrangement of each one of our organs and vital parts, also studies them in their abnormal state, when they are sickly and diseased; so we too shall have to enter a new world, the world of social disturbances.

We shall introduce this new study with a few observations on man himself. It would be impossible for us to evaluate the ills of society, their origin, their effects, their function, the ever narrowing limits within which their own action compresses them (a phenomenon that constitutes what I would almost dare to call a harmonious discord), if we did not examine the necessary consequences of free will, the aberrations due to self-interest, which always entail retribution, and the great laws of human responsibility and solidarity.

We have seen that all the social harmonies are contained in germ in these two principles: property and liberty. We shall see that all the social discords are merely the extension of these two contrary principles: plunder and oppression.

And, indeed, the words “property” and “liberty” merely express two aspects of the same fundamental notion. From the economic point of view, liberty is connected with the act of production, property with the thing produced. And, since value has its origin in human activity, we can say that liberty implies and includes property. The same holds true of oppresson as related to plunder.

Liberty! Therein, in the last analysis, lies the source of harmony. Oppression! Therein lies the source of discord. The struggle between these two forces fills the annals of history.

And since oppression has as its aim the unjust seizure of property, since it is transformed into and merges its identity with plunder, it is plunder that I shall show in action.

Man comes into this world bound to the yoke of want, which is pain.

He can escape only by subjecting himself to the yoke of toil, which is also pain.

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He has, then, only a choice between two kinds of pain, and he hates pain.

For this reason he looks about him, and if he sees that his fellow man has accumulated wealth, he conceives the idea of making it his own. Hence, property unjustly acquired, or plunder!

Plunder! Here is a new element in the economy of society.

From the day when plunder first appeared on earth, until that day, if it ever comes, when plunder will have completely disappeared, this element has had and will have a profound effect on the entire social mechanism; it will disturb, to the point of making them unrecognizable, the operation of the harmonious laws that we have worked to discover and describe.

Our task, then, will not be done until we have given a complete account of plunder.

Perhaps it will be thought that it is only an accidental, abnormal phenomenon, a sore that will soon heal, unworthy of scientific investigation.

But let us beware. Plunder occupies, in the traditions of families, in the history of nations, in the occupations of individuals, in the physical and intellectual energies of all classes, in the arrangements of society, in the precautions of governments, almost as important a place as property itself.

No, plunder is not a passing scourge, accidentally affecting the social mechanism, and the science of economics may not exclude it from consideration.

In the beginning this sentence was pronounced on man: In the sweat of thy face shalt thou eat bread. Hence, it appears that effort and satisfaction are indissolubly joined, and that the one can never exist unless paid for by the other. Yet everywhere we see man revolting against this law, and saying to his brother: Yours be the toil; mine, the fruit of that toil.

Enter the hut of the savage hunter or the tent of the nomadic shepherd. What sight meets your eyes? The wife, thin, disfigured, terrified, faded before her time, bears all the burden of the household chores, while the husband lolls in idleness. What idea can we form here of family harmony? It has disappeared, because force has laid upon the defenceless the burden of toil. And how Edition: current; Page: [321] many centuries of civilization will it take before woman will be raised from this frightful degradation?

Plunder, in its most brutal form, brandishing torch and sword, fills the annals of history. What are the names that make up history? Cyrus, Sesostris, Alexander, Scipio, Caesar, Attila, Tamerlane, Mohammed, Pizarro, William the Conqueror—outright plunder by means of conquest. To it go the laurel wreaths, the monuments, the statues, the triumphal arches, the songs of the poets, the heady admiration of women!

Soon the conqueror thinks of a better way of dealing with the conquered than to kill them, and slavery covers the earth. Almost down to our own day, all over the world, it was the accepted way of life, leaving in its wake hatred, resistance, civil strife, and revolution. And what is slavery except organized oppression with plunder as its object?

If plunder arms the strong against the weak, it no less lets loose the intelligent upon the credulous. What industrious peoples are there on earth who have escaped exploitation at the hand of sacerdotal theocracies, Egyptian priests, Greek oracles, Roman augurs, Gallic druids, brahmins, muftis, ulemas, bonzes, monks, ministers, mountebanks, sorcerers, soothsayers, plunderers of all garbs and denominations? It is the genius of plunderers of this ilk to place their fulcrum in heaven and to glory in a sacrilegious complicity with God! They put in chains, not men's bodies alone, but their minds as well. They put the brand of servitude as much upon the conscience of a Seid as upon the brow of a Spartacus, thus achieving what would seem to be impossible: the enslavement of the mind.

Enslavement of the mind! What a frightful association of words! O liberty! We have seen thee hunted from country to country, crushed by conquest, nigh unto death in servitude, Edition: current; Page: [322] jeered at in the courts of the mighty, driven from the schools, mocked in the drawing room, misinterpreted in the studio, anathematized in the temple. It would seem that in thought thou shouldst find an inviolable refuge. But if thou shouldst surrender in this last haven, what becomes of the hope of the ages and of the dignity of man?

Yet in the long run (so man's forward-looking nature wills it) plunder generates, in the very places where it holds sway, opposition that paralyzes its power, and knowledge that unmasks its impostures. It does not yield on that account, however; it merely becomes more cunning, and wrapping itself in forms of government and alignments, playing one faction against another, turns to political scheming, so long a fertile source of illicit power. Then we see plunder usurping the citizens' liberty in order the more readily to exploit their wealth, and draining off their substance the better to conquer their liberty. Private enterprise becomes public enterprise. Everything is done by government functionaries; a stupid and vexatious bureaucracy swarms over the land. The public treasury becomes a vast reservoir into which those who work pour their earnings, so that the henchmen of the government may tap them as they will. Transactions are no longer regulated by free bargaining, and nothing can establish or preserve the principle of service for service.

In this state of things the true notion of property is effaced, and every man appeals to the law to give his services an artificial and arbitrary value.

Thus, we enter the era of privilege. Plunder, becoming more and more subtle, establishes itself in monopolies and hides behind restrictions; it diverts the natural course of exchange and forces capital, and after it, labor and the whole population, into artificial channels. It produces laboriously in the north what could be produced easily in the south; it creates precarious industries and livelihoods; it substitutes for the gratuitous forces of Nature the onerous drudgery of human labor; it supports business concerns that cannot survive against competition, and then invokes the use of force against their competitors; it arouses international jealousies, encourages nationalistic sentiments, and invents ingenious theories that make allies of its own dupes; it always has Edition: current; Page: [323] impending industrial panics and bankruptcies; it undermines in the minds of the citizens all confidence in the future, all faith in liberty, and even their sense of justice. And then, when science exposes these misdeeds, Plunder stirs up even its victims against science, with the battle cry: Onward to utopia! Indeed, it repudiates not only the science that stands in its way, but even the idea that science can be applied to these areas, declaring with crowning cynicism: There are no absolute principles!

Nevertheless, spurred on by their suffering, the working-class masses revolt and topple over everything above them. Government, taxation, legislation, everything is at their mercy, and you believe perhaps that Plunder's reign is at an end; you believe that the principle of service for service will be established on the only foundation possible or imaginable, that of liberty. Undeceive yourself. Alas! This pernicious idea has infiltrated the masses: property has no origin, sanction, legitimacy, or justification other than the law, and thereupon the masses institute legislation to plunder one another. Suffering from the wounds inflicted upon them, they undertake to heal everyone of their number by giving to each the right to oppress his neighbor. This is called solidarity, brotherhood: “You have produced; I have not; we are comrades; let us share.” “You own something; I own nothing; we are brothers; let us share.”

We must therefore examine the abuses perpetrated in recent years in the name of “association,” “organization of labor,” “interest-free credit,” etc. We shall have to subject them to this acid test: Are they in harmony with the principle of liberty or of oppression? In other words: Are they in conformity with the great economic laws, or do they constitute a disturbance of their operation?

Plunder is too universal, too persistent, to be considered a purely accidental phenomenon. In this case, as in so many others, it is impossible to separate the study of natural laws from the study of the things that disturb their operation.

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But, it will be said, if plunder necessarily enters into the workings of the social mechanism as a discord, how do you dare affirm the harmony of economic laws?

I shall repeat here what I have said elsewhere: In everything that concerns man, a being who is perfectible only because he is imperfect, harmony does not consist in the complete absence of evil, but in its gradual reduction. The social body, like the physical body, is possessed of a curative force, vis medicatrix, whose laws and unfailing power cannot be studied without again eliciting the words: Digitus Dei est hic.1

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11: Producer and Consumer

If the standard of living of the human race is not constantly on the rise, man is not perfectible.

If the tendency of society is not continually to raise all men to this ever upward-moving standard of living, economic laws are not harmonious.

Now, how can the standard of living rise unless a given amount of labor yields increasing satisfactions, a phenomenon that can be explained only by the transforming of onerous utility into gratuitous utility?

And, on the other hand, how can this utility, when it has become gratuitous, raise all men to a common standard unless it at the same time becomes common wealth?

This, then is the essential law of social harmony.

I very much wish that the language of economics could supply me with two words to indicate services rendered and received other than the words “production” and “consumption,” which connote too much an exchange of materials. Obviously, there are services, like those of the priest, the teacher, the soldier, the artist, which promote morality, education, security, the enjoyment of the beautiful, and yet have nothing in common with industry, in the strict sense of the word, except in so far as their ultimate aim is satisfaction.

The words are in accepted usage, and I have no desire to indulge in neologisms. But at least let it be understood that by “production” I mean that which imparts utility, and by “consumption,” I mean the enjoyments that utility imparts.

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Let the protectionist school—which is really a variety of communism—believe me when I say that in using the words “producer” and “consumer,” I am not so illogical as to imagine, as I have been accused of doing, that the human race is divided into two distinct classes, the one concerned only with producing and the other only with consuming. Just as the biologist may divide the human race into whites and blacks, men and women, so the economist may divide it into producers and consumers, because, as our esteemed friends the protectionists observe with great penetration, producer and consumer are one and the same person.

But precisely because they are one and same person, every man must be considered by the science of political economy in this double capacity. It is not a matter of dividing the human race into two parts, but of studying two very different aspects of man. If the protectionists were to forbid grammar to use thee and me on the ground that each one of us is in turn the one speaking and the one spoken to, we could remind them that, while it is perfectly true that we cannot put all the tongues on one side and all the ears on the other simply because we all have ears and a tongue, yet it does not follow that, as each phrase of a conversation is uttered, the tongue does not belong to one man and the ears to the other. Similarly, as each service is performed, the one rendering it is perfectly distinct from the one receiving it. Producer and consumer confront each other from opposite sides, so opposed, indeed, that they are constantly in dispute.

The same people who are unwilling for us to study man's self-interest from the double point of view of consumer and producer have no qualms about making this distinction when they speak to the legislative assembly. Then we see them demanding monopoly or free trade, depending on whether they are selling or buying the commodity in question.

Without, therefore, paying heed to the pleas of the protectionists that the case be thrown out of court, let us recognize that in the social order the division of labor has created for every person two roles so distinct from each other that their interplay merits our careful study.

In general, we devote ourselves to a trade, a profession, or Edition: current; Page: [327] career from which we do not expect to receive our satisfactions directly. We render and we receive services; we offer and we demand value; we make purchases and sales; we work for others, and others work for us; in a word, we are producers and consumers.

When we go to the market place, we have different, even opposite, points of view, depending on whether we go as consumers or producers. In the case of wheat, for example, the same man does not desire the same thing when he goes as a buyer as when he goes as a seller. As a buyer he hopes for abundance; as a seller, for scarcity. These hopes stem from the same source, self-interest; but as buying or selling, giving or receiving, supplying or demanding, are completely opposite actions, they cannot fail, though they have the same motivation, to give rise to conflicting desires.

Desires that clash cannot both simultaneously coincide with the general welfare. In another work1 I have tried to show that men's desires as consumers are the ones that are in harmony with the public interest, and it cannot be otherwise. Since satisfaction is the end and purpose of labor, since the amount of labor depends solely upon the obstacles it encounters, it is clear that labor is the evil, and that everything should be done to lessen it, while satisfaction is the boon, and that everything should be done to increase it.

Here we encounter the great, eternal, and deplorable fallacy that arises from the false definition of value and its confusion with utility.

Since value is merely the expression of a relation, the greater its importance for the individual, the less is its importance for all men collectively.

For all men collectively only utility matters; and value in no wise serves as its measure.

For the individual also, only utility matters. But value is its measure; since for each determinate value he contributes, he can obtain from society an equivalent measure of the utility of his choice.

If we consider man in isolation, it becomes as clear as day that Edition: current; Page: [328] consumption is the essential thing, and not production; consumption quite clearly implies labor, but labor does not imply consumption.

The division of labor led certain economists to measure the general welfare, not in terms of consumption, but in terms of labor. And by following their example, we have come to this strange reversal of principles, that we favor labor at the expense of its results.

This is the reasoning that has been followed:

The more obstacles that are overcome, the more value for us. Hence, let us multiply the obstacles that are in our way.

The flaw in this reasoning is very obvious.

Yes, undoubtedly, granted a given number of obstacles, it is a good thing for a given quantity of labor to be able to surmount as many of them as possible. But it is simply monstrous to decrease the effectiveness of labor or to increase the difficulties in its way in order to obtain more value.

The individual member of society wants to see his services, even though retaining the same degree of utility, increase in value. If his wishes are granted, it is easy to see what will happen. He will enjoy a better living, but his fellows will have less, since the total utility has not been increased.

We cannot, therefore, pass from the particular case to the general rule and say: Let us take such measures as will satisfy the desire of every individual for an increase in the value of his services.

Since value is purely relative, we should have accomplished nothing if the increase remained in every instance in proportion to previous value; if it were set arbitrarily and unequally for different services, we should do nothing but introduce injustice into our distribution of utilities.

It is characteristic of every commercial transaction to give rise to argument and discussion. Good heavens! What have I just said? Have I not called down on my head the wrath of all the sentimentalist schools, which are so numerous these days? Argument implies antagonism, they will say to me. You therefore admit that antagonism is the natural state of society.

Once again I must stop to enter the lists against them. In our Edition: current; Page: [329] country the science of economics is so poorly understood that it is impossible to say a word without raising up an opponent.

I have been reproached, with reason, for having written this sentence: “Between buyer and seller there exists a fundamental antagonism.” The word “antagonism,” especially reinforced by the word “fundamental,” goes far beyond my intention. It appears to indicate a permanent hostility of interests, and consequently an ineradicable social discord, whereas I was merely referring to that short-lived argument, or discussion, which takes place before any bargain is made, and which is inherent in the very idea of a transaction.

As long as there remains, to the great chagrin of the sentimental utopian, the least vestige of liberty in this world, the seller and the buyer will argue for their interests, will haggle over their prices, will bargain, as the saying goes, and the laws governing the social order will not become the less harmonious on that account. Can we imagine that the one supplying a service and the one demanding it can come together without having momentarily divergent views on its value? And do we think that this is any world-shaking calamity? Either we must banish every transaction, every exchange, every act of barter, every vestige of liberty, from this earth, or we must recognize the right of each one of the contracting parties to defend his position, to make the most of his side of the argument. Indeed, this free debate, so often deplored, is in fact the means of establishing an equivalence of services and equity in transactions. How else will the social planners arrive at that equity that they desire so much? Will they shackle with their laws the freedom of one of the contracting parties? In that case he will be at the mercy of the other. Will they strip both parties of the power to determine their own interests on the pretext that henceforth they must sell and buy on the principle of brotherly love? But in that case I must say that what the socialists are proposing is nonsense, for in some way or other the respective interests of the parties to the transaction have to be determined. Will the bargaining take place in reverse, with the buyer presenting the seller's case, and vice versa? Such transactions would be highly entertaining, we must admit.

“Sir, pay me only ten francs for this piece of cloth.”

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“What do you mean? I want to give you twenty francs.”

“But, sir, it's worthless; it's out of style; in two weeks it will be worn out,” says the merchant.

“It's of the best quality and will last two winters,” replies the customer.

“Very well, sir, just to make you happy, I'll add five francs to the price; that's the most brotherly love will let me do for you.”

“It goes against my socialist principles to pay less than twenty francs; but we all have to make sacrifices, and I accept.”

Thus, the weird transaction will come out in exactly the ordinary way, and the social planners will observe with regret that accursed liberty still surviving, although moving in the wrong direction and creating antagonisms in reverse.

“This is not what we want,” say the social planners; “this would be individualistic freedom.”

“What do you want, then? For services still have to be exchanged and their conditions determined.”

“We propose that their control be entrusted to us.”

“I thought so.”

Brotherhood! Sacred tie that joins soul to soul, divine spark come down from heaven into the hearts of men, how can thy name be thus taken in vain? In thy name it is proposed to stifle all freedom. In thy name it is proposed to erect a new despotism such as the world has never seen; and we may well fear that after serving as a protection for so many incompetents, as a cloak for so many ambitious schemers, as a bauble for so many who haughtily scorn human dignity, it will at last, discredited and with sullied name, lose its great and noble meaning.

Let us, therefore, not have the presumption to overthrow everything, to regulate everything, to seek to exempt all, men and things alike, from the operation of the laws to which they are naturally subject. Let us be content to leave the world as God made it. Let us not imagine that we, poor scribblers, are anything but more or less accurate observers. Let us not make ourselves ridiculous by proposing to change humanity, as if we stood apart from it and from its errors and shortcomings. Let us permit producer and consumer to have their respective interests, to Edition: current; Page: [331] discuss, debate, and settle their differences through fair and peaceful arrangements. Let us limit ourselves to observing their relations and the ensuing results. This is what I propose to do, and always in keeping with what I proclaim is the great law of human society: the gradual equalization of individuals and classes concomitant with general progress.

A line no more resembles a force or a velocity than it does a value or a utility. Nevertheless, the mathematician finds lines and diagrams helpful. Why should not the economist also?

There are values that are equal to each other; there are values that have known ratios to each other of a half, a fourth, double, triple. There is no reason for not representing these differences by lines of varying lengths.

Such is not the case with utility. Utility, in general, as we have seen, can be broken down into gratuitous utility and onerous utility—into utility due to the action of Nature, and utility created by human labor. The latter, since it can be assigned value and be measured, may be represented by a line of fixed length; the former cannot be measured or assigned any value. It is certain that Nature contributes much toward the production of a hundred-weight of wheat, a cask of wine, a side of beef, a pound of wool, a ton of coal, a cord of wood. But we have no way of measuring Nature's aid contributed by a great multitude of forces, most of which are unknown and have been in operation since Creation. Nor is there anything to be gained from so doing. Gratuitous utility, then, must be represented by a dotted line of indeterminate length.

Two products, then, the one worth twice the other, may be represented by these lines:

lf0187_figure_002.jpg

IB, ID, represent the total product, general utility, the thing that satisfies the want, absolute wealth.

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IA, IC, represent the co-operation of Nature, gratuitous utility, the part that is common wealth.

AB, CD, represent the human service, onerous utility, value, relative wealth, the part that is private property.

I do not need to say that AB, in whose place you may put, in your imagination, whatever you wish—a house, a piece of furniture, a book, an aria sung by Jenny Lind, a horse, a piece of cloth, a doctor's appointment, etc.—can be exchanged for twice CD, and that the two parties to the transaction will give each other, into the bargain, and without even realizing that they are doing so, the one, IA, the other, twice IC.

Man is so constituted that his constant concern is to lessen the ratio of effort to result, to substitute the action of Nature for his own action—in a word, to do more with less. His skill, his intelligence, his industry are always directed toward this end.

Let us suppose, then, that John, the producer of IB, discovers a process whereby he can complete his task with half the labor it previously took, everything included, even the cost of making the implement used to harness the forces of Nature.

As long as he keeps his secret, there will be no change in the figures given above. AB and CD will represent the same values, the same ratios; for since John is the only one in the world who knows the formula, he will turn it to his own exclusive advantage. Either he will rest half the day, or else he will make two IB's rather than one per day; his labor will be better paid. The conquest over Nature will be to the benefit of mankind, but mankind as represented, in this case, by one man.

The reader should note, in passing, how treacherous is the axiom of the English economists: Value comes from labor, if its intent is to assume that value and labor are proportional. In our illustration we have a case in which labor has been reduced by half, and yet there is no change in value, and this happens every minute of the day. Why? Because the service is the same. The person furnishing IB performs the same service before as after the invention. This will no longer be the case when Peter, the producer of ID, can say to John: “You ask me for two hours of Edition: current; Page: [333] my labor in exchange for one of yours; but I am familiar with your process, and if you place such a high price on your service, I shall do it for myself.”

Now this day comes inevitably. When a new process is invented, it does not remain a secret for long. Then the value of product IB will fall by one-half, and we shall have these two figures:

lf0187_figure_003.jpg

AA′ represents value eliminated, relative wealth that has disappeared, private property made public, utility previously onerous, now gratuitous.

This has taken place because John, used here as the symbol of the producer, is put back in his original position. He now can make IB twice for the amount of effort that it used to take him to make it once. In order to have two ID's, he must give two IB's, whether IB represents furniture, books, houses, or anything else.

Who gains by all this? It is obviously Peter, the producer of ID, used here as the symbol of all consumers, including John himself. If, in fact, John wishes to use his own product, he will save himself the time represented by the elimination of AA'. As for Peter, that is, all the consumers on earth, they can now purchase IB for half the time, effort, labor, value, required before the natural resource was introduced. Hence, this resource is free of charge and, besides, common to all.

Since I have ventured to use geometric figures, let me employ them once again in the hope that this method, admittedly a little irregular in economics, will aid the reader in understanding the phenomenon to be described.

Every man, as producer or as consumer, is a center from which radiate the services he renders and to which are directed the services he receives in exchange.

Let us then place at A (Fig. 1) a producer, for example, a copyist, as the symbol of all producers or of production in general. He Edition: current; Page: [334] presents society with four manuscripts. If, at the moment at which we are making our observation, the value of each of the manuscripts is fifteen, he is performing services equal to sixty, and he receives an equal sum of value, variously distributed over many services. For the sake of simplification I show only the four points BCDE along the circumference.

lf0187_figure_004.jpg
lf0187_figure_005.jpg

Now suppose this copyist discovers the art of printing. He thereafter does in forty hours what used to take him sixty. Let us assume that competition has forced him to reduce the price of his books in the same ratio; they are now worth only ten, instead of fifteen. But it also happens that our worker can produce, not four, but six books. On the other hand, the amount received as payment, starting from the circumference, which was sixty, has not changed. There is, therefore, as much remuneration for six books, worth ten each, as there was previously for four when each manuscript was worth fifteen.

This, I may briefly remark, is what is always lost sight of in discussions concerning the question of machinery, free trade, and progress in general. We observe that labor is laid off by more efficient techniques, and we become alarmed. We fail to note that Edition: current; Page: [335] a corresponding proportion of the cost is likewise placed at our disposal at the same time.

The new transactions, then, are represented by Fig. 2, where we see radiating from center A a total value of sixty, spread over six books instead of four manuscripts. The lines extending inward from the circumference continue to represent a total value of sixty, which is necessary now, as formerly, to balance the services rendered.

Who, then, has gained by the change? From the point of view of value, nobody. From the point of view of real wealth, actual satisfactions, the countless number of consumers located on the circumference. Each one of them can now purchase a book for a third less labor. But the consumers are all mankind. For notice that A himself, if he gains nothing as producer, if he is still obliged, as formerly, to put in sixty hours of work to receive the old pay, nevertheless gains, as a user of books, that is, on the same basis as other men. Like all of them, if he desires to read, he obtains this satisfaction at a saving of one-third of his labor.

What if, in his capacity as producer, he sees the profit from his own discovery eventually slip through his hands because of competition? Where in that case, is there compensation for him?

First, it consists in the fact that, as long as he was able to keep his secret, he continued to sell for fifteen what cost him only ten.

Second, his compensation consists in the fact that he obtains books for his own use at less cost and thus shares in the advantages he has contributed to society.

But third, his greatest compensation consists in this fact: even as he was forced to benefit mankind by his progress, so he benefits from the progress of mankind.

Just as the progress made by A was of profit to B, C, D, E, so the progress realized by B, C, D, E, will be to the profit of A. A finds himself alternately at the center and at the circumference of world-wide industry, for he is alternately producer and consumer. If B, for example, is a cotton spinner who substitutes the bobbin for the spindle, the profit will go to A as well as to C and D. If C is a sailor who replaces the oar with the sail, the saving will profit B, A, E.

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In the final analysis, the whole system rests on this law:

lf0187_figure_006.jpg

Progress is of benefit to the producer, as such, only long enough to reward him for his skill. It soon brings about a fall in value, which gives the early imitators a fair, though smaller, recompense. Finally, the value levels off in proportion to the reduction in labor, and the entire saving accrues to mankind.

Thus, all profit from the progress of each, and each profits from the progress of all. The one for all, and all for one motto advanced by the socialists and proclaimed to the world as something new to be found in budding form in their social orders based on oppression and coercion has actually been provided by God Himself; and He derived it from liberty.

God, I say, provided it; and He did not establish His law in a model community under the direction of M. Considérant, or in a phalanstery of six hundred harmoniens, or in an experimental Icaria, on condition that a few fanatics submit to the arbitrary power of a monomaniac, and that the unbelievers pay for the believers. No, God has provided it on a general, world-wide basis, through a marvelous mechanism in which justice, liberty, utility, and social consciousness are combined and reconciled to a degree Edition: current; Page: [337] that should dampen the ardor of the planners and builders of artificial social orders.

Note that this great law—one for all, and all for one—is much more universal than my description of it would suggest. Words are cumbersome, and the pen is even more so. The writer is reduced to showing successively, one after another, with discouraging slowness, phenomena that stir our admiration only when we view them collectively.

Thus, I have just spoken of inventions. One might conclude from what I have said that they represent the only case in which progress, when once achieved, slips out of the producer's hands and finds its way into the common treasury of all mankind. This is not so. It is a general law that any advantage whatsoever created by special circumstances of location, climate, or any other liberality of Nature, quickly slips through the hands of the one who first discovers it and lays hold of it, yet is not on that account lost, for it moves on to feed the immense reservoir from which flow the satisfactions that men enjoy in common. Only one proviso is attached to this result: labor and exchange must be free. To go against liberty is to go against the will of Providence; it amounts to suspending the action of God's law, to restricting progress in the two directions it takes.

What I have just said concerning the blessings of life is true also of its evils. Nothing stops with the producer, whether advantage or disadvantage. Both tend to be distributed over the whole of society.

We have just seen with what eagerness the producer seeks out whatever will make his task easier, and we have assured ourselves that very shortly his profit will elude him. He appears to be, in the hands of a superior intelligence, only the blind and docile instrument of general progress.

With the same eagerness he avoids everything that would impede his activity; and this is a fortunate thing for mankind, since in the long run it is mankind that is harmed by these impediments. Let us assume, for example, that A, a book producer, has had a heavy tax levied upon him. He must add it to the price of his books. It will become an integral part of the books' Edition: current; Page: [338] value, which means that B, C, D, E, will have to offer more of their labor for the same satisfaction. What compensation they receive for this loss will depend upon the use the government makes of the tax. If it puts it to good use, they perhaps will not lose; they may even gain by the arrangement. If it is used to oppress them, their vexation will be doubly galling. But as far as A is concerned, he is relieved of the burden of the tax, even though he advances the money for it.

This does not mean that the producer does not often suffer greatly from obstacles of all sorts, taxes included. Sometimes taxes burden him to the breaking point, and it is precisely for this reason that their incidence tends to be shifted so that they fall ultimately on the masses.

Thus, wine in France was once the object of a multitude of taxes and controls. Then a system was contrived for restricting its sale outside the country. This case illustrates how the evils that arise tend to ricochet from producer to consumer. As soon as the tax and the restrictions are put into effect, the producer strives to make up for his losses. But since both the consumer demand and the supply of wine remain unchanged, he cannot increase his price. At first his income is no more after the imposition of the tax than it was before. And since, prior to the tax, he received only a normal return, determined by the value of the services freely exchanged, he discovers that he is out the amount of the tax. In order for prices to be raised, there must be a decrease in the amount of wine produced.2

The consumer, or the public, is, therefore, in relation to the loss or gain that is first experienced by a given class of producers, what the earth is to electricity: the great common reservoir. Everything comes from it; and everything, after making more or less lengthy detours, after producing more or less varied phenomena, returns to it.

We have just noted that economic effects merely slip away from the producer, so to speak, and ultimately come to rest at the consumer's door, and, therefore, that all the great economic questions Edition: current; Page: [339] must be studied from the consumer's point of view if we wish to grasp their general and lasting consequences.

This subordination of the producer's role to that of the consumer, which we have deduced from our consideration of utility, is fully confirmed by considerations of morality.

Now, the fact is that responsibility always rests where the initiative is. And where is the initiative? In demand.

Demand (which implies the ability to pay) determines everything: the allocation of capital and labor, the distribution of population, the morality of the various occupations, etc. It is demand that corresponds to wants, whereas supply corresponds to effort. Wants are reasonable or unreasonable, moral or immoral. Effort, which is merely an effect, is amoral or else has only a reflected morality.

Demand, or consumption, says to the producer: “Do this for me,” and the producer obeys. This would be obvious in every case if the producer always and everywhere followed the lead of the consumer and waited for the demand.

But in reality things do not happen this way at all.

Whether exchange brought about the division of labor, or the division of labor introduced exchange, is a subtle and idle question. Let us say that men exchange because, being intelligent and sociable creatures, they understand that exchange is a means of improving the ratio of effort to result. What is brought about solely by the division of labor and by foresight is that a man does not wait for a formal order from others before he sets to work. Experience teaches him that such an order is tacit in human relations and that the demand exists.

He exerts the effort to satisfy it in advance, and this gives rise to the trades and professions. Hats and shoes are made in advance; men prepare themselves to sing, to teach, to plead cases, to cure diseases, etc. But in these cases does supply really precede demand and create it?

No. Men prepare themselves because they are reasonably certain that these different services will be in demand, although they may not always know by whom. And the proof that this is the case Edition: current; Page: [340] consists in the fact that the relations among these services are well enough known, that their value has been well enough established, so that one may with some confidence devote himself to making a given article or embark on a given career.

The impetus of demand, then, comes first, since it has been possible to estimate its range so accurately.

Therefore, when a man enters a trade or a profession, when he becomes a producer, what is his first concern? Is it the utility of the thing he produces, its good or bad, moral or immoral results? Not at all; he thinks only of its value. It is the demander who considers its utility. Its utility corresponds to his want, his desire, his whim. Value, on the contrary, corresponds only to effort expended, to service transmitted. Only when, through exchange, the supplier becomes in his turn a demander, does he care about utility. When I decide to make shoes rather than hats, it is not because I have asked myself whether it is more to men's advantage that their feet be warm than their heads. No, this question concerns the demander and determines the demand. Demand, in turn, determines value, or the regard in which the public holds the service. Value, in a word, determines effort, or supply.

The moral results of this fact are quite noteworthy. Two nations may be equally provided with values, that is, with relative wealth,3 and yet be very unequal in their real utilities, that is, their absolute wealth. This happens when one of the nations has more unreasonable desires than the other, is concerned with artificial or immoral wants, while the other is mindful of its real wants.

In the one country a taste for learning may predominate, in the other a desire for good eating. In this case one renders a service to the first country by teaching it something; in the second, by tickling its palate.

Now, men reward services according to the importance they attach to them. If they did not exchange, they would perform the service for themselves; and what would be the determining factor if not the nature and intensity of their desires? In one of these nations, therefore, there will be many teachers; in the other, many cooks.

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In both countries the services exchanged may be equal in amount and may therefore represent equal value, the same relative wealth, but not the same absolute wealth. This means nothing more nor less than that the one country puts its labor to good use, the other to bad.

And the result, as regards satisfactions, will be this: One of the countries will have much learning; the other will eat well. The ultimate consequences of this diversity of tastes will have a great influence not only on real wealth but also on relative wealth; for learning, for example, can develop new ways of performing services, a thing that good meals cannot do.

We observe among the nations a prodigious diversity of tastes, the result of their past traditions, their character, their beliefs, their vanity, etc.

Undoubtedly, there are wants so immediate and so pressing, for example drinking and eating, that they may almost be considered fixed quantities. Yet it is not unusual to see one man go without eating as well as he would like in order to have clean clothing, while another man considers the cleanliness of his clothing only after he has satisfied his appetites. The same is true of nations.

But once these pressing wants are met, everything else depends much more on the will; it is a matter of taste, and in this area the role of morality and good sense is enormous.

The intensity of a nation's various desires always determines the quantity of labor, out of the sum total of all its efforts, that it sees fit to devote to the satisfaction of each particular desire. The Englishman wants above all else to be well fed. Therefore, he devotes an enormous quantity of his labor to producing foodstuffs; and if he produces other things, it is for the purpose of exchanging them abroad for food. The total amount of wheat, meat, butter, milk, sugar, etc., consumed in England reaches terrifying proportions. The Frenchman wants to be amused. He likes what catches the eye, and he enjoys change. The direction taken by his labor is fully in accord with his desires. In France there are many singers, comedians, milliners, coffeehouses, smart shops, etc. In China, the desire is to provide oneself with pleasurable Edition: current; Page: [342] dreams through the use of opium. For this reason a great amount of the national effort goes into obtaining this precious narcotic, either directly through production or indirectly through exchange. In Spain, where people are inclined toward the pomp and ceremony of religious ritual, their efforts are directed toward the decoration of churches, etc.

I will not go so far as to say that there is never any immorality in effort that has as its goal the rendering of services related to immoral or depraved desires. But it is evident that what is essentially immoral in such cases is the desire itself.

There could be no possible doubt on this question if man lived in a state of isolation, nor can there be any in regard to man in society, for society is simply the individual enlarged.

Who would dream of blaming our workers in the south of France for producing brandy? They respond to a demand. They dig their vineyards, they dress their vines, they harvest and distill the grapes, without concerning themselves about what will be done with the product. It behooves the one who seeks the satisfaction to determine whether it is respectable, moral, reasonable, beneficial. The responsibility rests with him. Otherwise the business of the world could not be carried on. Where would we be if the tailor were to say to himself: “I will not make a suit in the style that has been ordered, because it is much too elegant and ostentatious, or because it hampers breathing, etc., etc.?”

And what concern of our poor winegrowers is it whether the rich bons vivants of London get drunk on the wines of France? And can the English seriously be accused of raising opium in India with the deliberate intention of poisoning the Chinese?

No, a frivolous people always encourages frivolous industries, just as a serious people creates serious industries. If mankind is improving, this moral growth is due, not to the producer, but to the consumer.

Religion understood this perfectly when it severely admonished the rich man—the great consumer—in regard to his tremendous responsibility. From a different point of view and in different language political economy arrives at the same conclusion. It affirms that we cannot prevent supplying what is demanded; that Edition: current; Page: [343] the product for the producer is merely a value, a kind of currency, which no more represents evil than good, whereas in the mind of the consumer it is utility, an enjoyment that is either moral or immoral; that, therefore, it behooves the one who voices the desire and makes the demand to accept the consequences, whether beneficial or disastrous, and to answer before the justice of God, as before the opinion of mankind, for the good or evil end to which he has directed the labor of his fellow men.

Thus, from whatever point of view we consider it, we perceive that consumption is the great end and purpose of political economy; that good and evil, morality and immorality, harmony and discord, everything finds its meaning in the consumer, for he represents mankind.4

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12: The Two Mottoes

Modern moralists who hold up the axiom: One for all, all for one, against the ancient proverb: Every man for himself, every man by himself, have a very incomplete notion of society, and, for that reason, a quite false one. I shall even add, to their surprise, a very gloomy one.

Let us first eliminate the superfluous elements from these two famous mottoes. All for one is a redundancy, added for the sake of antithesis, since its meaning is necessarily included in one for all. Every man by himself is an idea that has no direct bearing on the other three, but as it is very important for political economy, we shall examine its implications later.

There remains, then, the conflicting sense of these two fragments of proverbs: One for all—every man for himself. The first one, it is said, expresses the principle of altruism; the second, the principle of individualism. The one unites; the other divides.

If we refer solely to the motive that prompts any effort, the conflict is undeniable. But I maintain that this is not the case if we consider the final outcome achieved by all human efforts taken collectively. Examine society as it actually is, obeying the individualistic impulse where remunerable services are concerned, and you will be convinced that every man, while working for himself, is in fact working for all. This cannot, indeed, be contested. If the reader of these lines follows a profession or a trade, I have only to ask him to consider his own case. I ask him whether all his labors do not have satisfactions for other persons as their object, Edition: current; Page: [345] and whether, on the other hand, he does not owe all his own satisfactions to the labor of others.

Obviously those who say that every man for himself and one for all are mutually exclusive believe that individualism and association are incompatible. They think that every man for himself implies isolation or a tendency in that direction; that personal interest divides men instead of uniting them, and results in a situation in which every man is by himself, that is, the absence of all social relations.

In this respect, I repeat, they have a quite false notion of society, because it is an incomplete one. Men, even when moved only by their own self-interest, seek to unite with others, to combine their efforts, to join forces, to work and to perform for one another, to be sociable, or to associate. It would not be correct to say that they act in this way in spite of self-interest; on the contrary, they act in this way because of self-interest. They are sociable because they benefit from association. If they were to lose by it, they would not associate. Individualism, then, accomplishes the task that the sentimentalists of our day would entrust to brotherhood, to self-sacrifice, or to some other motive opposed to self-love. And this fact proves (this is the conclusion we are always reaching) that Providence has known much better how to take care of the organization of society than do its self-styled prophets. For either society is harmful to individuality, or else it is advantageous. If harmful, how and why in all good reason are our socialist friends to introduce something that hurts everyone? If, on the contrary, association is an advantage, it will be achieved by virtue of self-interest, the strongest, the most lasting, the most uniform, the most universal of all motives, whatever may be said.

Let us take a concrete example. A squatter goes and clears some land in the Far West. Not a day goes by that he does not realize how many inconveniences isolation causes him. Soon a second squatter also moves out to the wilderness. Where will he pitch his tent? Does he spontaneously move away from the first squatter? No. He spontaneously moves near him. Why? Because he is aware of the advantages men enjoy, for equal efforts, from the mere Edition: current; Page: [346] fact of being near each other. He knows that in countless instances they can lend and borrow tools, unite their action, overcome obstacles that would be too much for them individually, make exchanges, communicate their ideas and opinions, provide for their common defense. A third, a fourth, a fifth squatter come into the wilderness, and invariably they are attracted by the presence of the firstcomers. Then others with more capital may arrive on the scene, certain that they will find hands waiting to be put to work. A colony is formed. They may vary the crops somewhat; cut a road through to the main highway where the stagecoach passes; begin to trade with the outside world; plan construction of a church, a schoolhouse, etc. In a word, the settlers become stronger, by the very fact of being together, infinitely stronger than would be their total strength if each were living alone. This is the reason that they were drawn together.

But, it will be said, every man for himself is a very gloomy and cold-blooded maxim. All the arguments, all the paradoxes in the world will not keep it from arousing our resentment, from reeking with selfishness; and is not selfishness worse than an evil, is it not the source of all the ills of society?

Let us understand one another, please.

If the motto every man for himself is understood in the sense that it must direct all our thoughts, all our actions, all our relations, that it must underlie all our affections, as fathers, sons, brothers, husbands, wives, friends, and citizens, or rather, that it must stifle these affections, it is frightful, horrible, and I do not believe that there is a single man on earth who, even if he did make it the guiding rule of his life, would dare to proclaim it as such.

But will the socialists always refuse to admit, despite the evidence of the facts everywhere, that there are two kinds of human relations: those springing from altruism, which we leave to the realm of morality; and those that are actuated by self-interest, which exist among people who do not know one another, who owe one another nothing but justice, and which are regulated by agreements voluntarily arrived at after free debate? This is precisely the type of agreements that constitute the domain of Edition: current; Page: [347] political economy. Now, it is no more possible to found transactions of this nature on the principle of altruism than it would be reasonable to base the ties of family and friendship upon self-interest. I shall never cease telling the socialists: You wish to combine two things that cannot be combined. If you are mad enough to try, you will never be strong enough to succeed. The blacksmith, the carpenter, the farmer, who exhaust their strength in rough toil, may be excellent fathers, admirable sons; they may have a high moral sense and affectionate hearts. Nevertheless, you will never persuade them to labor from dawn to dusk, to strain and sweat, to impose upon themselves hard privations, in the name of disinterested devotion to their fellow men. Your sentimental sermonizing is and always will be unavailing. If, unfortunately, a small number of workers should be led astray by your words, they would be just so many dupes. Let a merchant begin to sell his goods on the principle of brotherly love, and I do not give him even a month before his children will be reduced to beggary.

Providence has therefore wisely given our predilection for social relations quite other guarantees than these. Granted man's nature as a being whose feelings are inseparable from his personality, it is impossible to hope, to desire, to imagine that self-interest could be universally eradicated. And yet nothing less than this would be necessary to establish a just balance in human relations; for if you eliminate this motive force only in the case of some superior individuals, you will be creating two classes: the evil ones on the alert for victims, and the virtuous, for whom the role of victim is ready-made.

Since, in matters of labor and exchange, the principle of every man for himself was the motive bound to prevail, what is admirable, what is marvelous is that the Author of all things has made it work within the social order to achieve the ideal of brotherhood expressed in the motto, one for all; that His deft hand has made the obstacle the instrument of His will; that the general interest has been entrusted to self-interest and is eternally safeguarded by the very fact that self-interest is indestructible. It seems to me that, confronted with these facts, the communists and other inventors of artificial social orders might well admit—and Edition: current; Page: [348] without too much sense of humiliation, after all—that when it comes to organization, their divine rival is definitely their superior.

And note well that in the natural order of society, the principle of one for all, which developed from that of every man for himself, is much more complete, much more absolute, much more personal, than would be the case under communism or socialism. Not only do we work for all, but we cannot make any kind of progress whatsoever without sharing its benefits with the entire human community.1 Things are arranged in such a marvelous way that when we have developed a technique or discovered a gift of Nature, some new fertility in the soil, or some new application of the laws of the physical universe, the profit goes to us momentarily, fleetingly, as is our just recompense, useful to spur us on to further efforts. Then our advantage slips through our hands, despite our attempts to retain it; it ceases to be personal, becomes social, and eventually comes to rest for all time within the realm of what is free of charge and common to all. And, even while we contribute to the enjoyment of mankind the progress we have made, we ourselves enjoy the progress that other men have made.

In the last analysis, by the application of the principle of every man for himself, all the efforts of the most intense individualism act in the direction of a situation that could be characterized by the expression, one for all, and everything that represents a step on the road to progress is worth to society in gratuitous utility millions of times more than the profits it brings its inventor.

On the principle of one for all, no one would act even for himself. What producer would consider doubling his labor in order to receive one thirty-millionth more in wages?

Someone may, perhaps, ask me why I go to the trouble to refute this socialist axiom. What harm can it do? Undoubtedly, it will not penetrate into the workshops, the countinghouses, the stores; it will not establish the principle of self-sacrifice in the fairs and the markets. Either it will come to nothing, and you can let it rest in peace; or else it will soften somewhat the unyielding principle Edition: current; Page: [349] of self-interest, which, since it brooks no feeling of sympathy for others, has no claim on ours.

What is false is always dangerous. It is always dangerous to represent as reprehensible and damnable a universal, eternal principle that God has clearly ordained for the preservation and improvement of mankind, a principle, I admit, that as a motive does not appeal to our hearts, but does, by its results, astonish and satisfy our minds. It is a principle, furthermore, that leaves the way completely open for the action of motives of a higher order that God has also implanted in men's hearts.

But what happens is that the socialist public accepts only half of their motto, the second half: All for one. People continue to work, as before, every man for himself, but to demand in addition that all also work for every man.

And this was inevitable. When the dreamers decided to change the great mainspring of human activity in order to replace individualism with brotherhood, what did they think up? A contradiction that is at the same time also pure hypocrisy. They began to cry out to the masses: “Stifle self-interest in your hearts, and follow us; and your reward shall be all the good things and all the pleasures of this world.” When people try thus to parody the tone of the Gospel, they must conclude as the Gospel does. The self-denial of brotherhood implies sacrifice and suffering. “Dedicate yourselves,” means: “Take the humblest place; be ye poor, and gladly endure hardship.” But, under the pretext of self-sacrifice, to promise enjoyment; to exhibit, behind the so-called renunciation, material comforts and wealth; to combat the passion that is scathingly called selfishness by appealing to the crassest materialism—all this was not merely to testify to the indestructible vitality of the very principle that they proposed to overthrow; it meant exalting it to the highest possible point, even while declaiming against it; reinforcing the enemy, instead of vanquishing him; substituting unjust covetousness for legitimate individualism; and, despite the sham of a vague mystic jargon, actually stirring up the grossest kind of sensuality. Greed was bound to respond to this appeal.2

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And is not this the point that we have now reached? What is the cry going up everywhere, from all ranks and classes? All for one! When we say the word one, we think of ourselves, and what we demand is to receive an unearned share in the fruits of the labor of all. In other words, we are creating an organized system of plunder. Unquestionably, simple out-and-out plunder is so clearly unjust as to be repugnant to us; but, thanks to the motto, all for one, we can allay our qualms of conscience. We impose on others the duty of working for us. Then, we arrogate to ourselves the right to enjoy the fruits of other men's labor. We call upon the state, the law, to enforce our so-called duty, to protect our so-called right, and we end in the fantastic situation of robbing one another in the name of brotherhood. We live at other men's expense, and then call ourselves heroically self-sacrificing for so doing. Oh, the unaccountable folly of the human mind! Oh, the deviousness of greed! It is not enough that each of us tries to increase our share at the expense of others; it is not enough that we want to profit from labor that we have not performed. We even convince ourselves that in the process we are sublime examples of self-sacrifice; we almost go so far as to call our unselfishness Christlike. We have become so blind that we do not see that the sacrifices that cause us to weep with admiration as we contemplate ourselves are not made by us at all, but are exacted by us of others.3

The manner in which this great hocus-pocus is carried out is worth observing.

“Stealing! For shame! How base! Besides, it can put you in prison; it's against the law.”

“But suppose the law prescribed it and sanctioned it; wouldn't that be nice?”

“What a brilliant idea!”

Forthwith they ask the law for some trifling privilege, just a small monopoly, and since, to give it proper authority will cost somebody a few francs, they ask the state to take over the responsibility. Then the state and the law connive to bring about the very thing that it was their mandate to prevent or to punish. Little by little the taste for monopoly spreads. There is no class that does not demand its own special privilege. All for one, they cry. We Edition: current; Page: [351] too want to show that we are philanthropic and understand what solidarity is.

The result is that the classes granted the privileges steal from one another and lose at least as much by the demands made on them as they gain by the demands they make on others. Furthermore, the great masses of workers, to whom it has been impossible to grant any privileges, suffer until they can endure it no longer. They revolt, they cover the streets with barricades and bloodshed, and now it is they who must be reckoned with.

What will they demand? An end to the abuses, privileges, monopolies, and restrictions by which they have been engulfed? Not at all. The masses, too, have been imbued with the spirit of philanthropy. They have been told that the famous principle of all for one was the solution to the social problem; they have been shown by countless examples that privilege (which is only theft) is nevertheless highly moral if it has the sanction of the law. Therefore, we see the people demand.... What? .... Privileges! They, too, call upon the state to provide them with education, employment, credit, assistance, at the people's expense. Oh, what a strange illusion! How long can it last? We can well understand how all the upper classes, beginning with the highest, can come, one after the other, to demand favors and privileges. Beneath them are the great masses of the people for the burden to fall upon. But how the people, once they have won their battle, can imagine that they too can enter as a body into the ranks of the privileged, create monopolies for themselves and over themselves, extend abuses widely enough to provide for their livelihood; how they can fail to see that there is nobody below them to support these injustices, is one of the most amazing phenomena of this or any age.

What has happened? Society had followed this course to general shipwreck and quite properly grew alarmed. The people soon lost their power, and now the old order of abuses has temporarily regained its footing.

Yet the lesson has not been entirely lost on the upper classes. Edition: current; Page: [352] They realize that the workers must be given justice. They are eager to do so, not only because their own security depends upon it, but also, it must be admitted, out of a sense of equity. Yes, I state with great conviction that the wealthy classes ask nothing better than to find the solution to this great problem. I am sure that if they were asked to give up a considerable portion of their wealth in order to assure the future happiness and contentment of the common people, they would gladly make the sacrifice. They therefore earnestly seek to come, to use the time-honored phrase, to the aid of the laboring classes. But to that end what do they propose? Still a communistic system, the communism of privilege, though mitigated and held, they trust, within the bounds of prudence. That is all; they go no further.....

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13: Rent1

If, when there is an increase in the value of land, there were a corresponding increase in the prices of agricultural products, I could understand the objections raised against the theory presented in chapter 9 of this book. It could then be said: As civilization advances, the worker's situation becomes less favorable in relation to the landowner's; this is perhaps a necessary development, but it is certainly not a law of harmony.

Fortunately, this is not the case. In general, the circumstances that increase the value of land decrease at the same time the prices of what is raised on it. Let me explain this by an illustration.

Let us suppose that there is a farm located twenty miles from the city and worth one hundred francs. A highway is constructed that runs close to this farm. It opens up a market for the crops, and at once the value of the farm rises to one hundred and fifty francs. The landowner, now having the means to make improvements or to raise a greater variety of crops, improves his property, and its value increases to two hundred francs.

Thus, the farm's value has been doubled. Let us examine this additional value, first from the standpoint of justice, then from the standpoint of the utility enjoyed, not by the proprietor, but by the consumers in the city.

As for the increase in value coming from the improvements made by the landowner at his own expense, there is no question. This is a capital investment and follows the law of all capital investments.

The same is true, I venture to say, for the highway. The operation Edition: current; Page: [354] follows a more circuitous course, but the result is the same.

In fact, the owner, by reason of his farm, pays his share of the public expense. For many years he contributed to the general utility by doing work on outlying areas. Finally, a road has been constructed that runs in a direction that is helpful to him. All the taxes he has paid can be compared to stocks he might have bought in government enterprises; and the yearly rent, which now comes to him because of the new highway, may be regarded as their dividend.

Will it be said that a landowner may pay taxes forever and never receive anything in return for them? This case, then, is analogous to the other; and the improvements, although effected through the complicated and more or less questionable medium of the tax, may be considered as having been carried out by the landowner and at his expense in proportion to the partial advantage that he realizes.

I spoke of a highway, but I could have cited any other example of government intervention. Police protection, for example, gives value to land as well as to capital and labor. But who pays for police protection? The landowner, the capitalist, the worker.

If the state spends its revenue wisely, equivalent value must in some form or other find its way back to the landowner, the capitalist, and the worker. For the landowner it can only be in the form of an increased price for his land. If the state spends its revenue unwisely, it is unfortunate. The tax money is lost; the taxpayers should have been more alert. In that case the land does not rise in value, but certainly that is not the fault of the landowner.

But, now that the land has thus increased in value through government action and private initiative, do the crops raised on it bring a higher price from the city dwellers? In other words, is the interest on these hundred francs added as a surcharge on every hundredweight of grain that comes from this land? If the grain previously cost fifteen francs, does it now cost fifteen and a fraction? This is a most interesting question, since justice and the universal harmony of men's interests depend on its answer.

I reply confidently: No.

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No doubt the landowner will now get a return of five francs more (I am assuming a profit rate of five per cent), but he will not get them at a cost to anyone. Quite the contrary; the buyer, in his turn, will profit even more.

The fact is that the farm we have chosen as an illustration was originally remote from any markets, and little was produced on it. Because of transportation difficulties the products that reached the market were expensive. Today production has been stepped up; transportation is economical; a greater amount of grain reaches the market, costs less to get there, and is sold at a better price. So even though he yields the landowner a total profit of five francs, the buyer profits even more.

In a word, an economy of effort has been effected. To whose profit? To the profit of the two contracting parties. According to what law is a gain of this kind shared? The law that we have often cited in reference to capital, since this increase in value represents a capital gain.

When there is a capital gain, the landowner's (or capitalist's) share increases in absolute value and diminishes in relative value; the worker's (or consumer's) share rises in both absolute and relative value.

Observe how this occurs. As civilization develops, the lands nearest the centers of population increase in value. Inferior crops give way to superior ones. First, pasture lands give way to cereal crops; then, cereals are replaced by truck gardens. Foodstuffs come from greater distances at less cost, so that—and this is an unquestionable fact—meat, bread, vegetables, even flowers, cost less than in more backward countries, although labor is better paid than elsewhere.

The Clos-Vougeot

Services are exchanged for services. Often services prepared in advance are exchanged for present or future services.

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Services have value, not according to the labor they demand or have demanded, but according to the labor they save.

Now, it is a fact that human labor is becoming more efficient.

From these two premises is deduced a very important phenomenon for social economy: In general, labor previously performed loses value when exchanged for current labor.2

Twenty years ago, let us say, I made something that cost me a hundred days' work. I propose an exchange and say to my prospective buyer: Give me something that costs you likewise a hundred days. Probably he will be able to reply: In the last twenty years great progress has been made. What cost you a hundred days can now be made with seventy days' labor. Now, I measure your service, not by the time it cost you, but by the service it renders me. This service of yours is worth seventy days, since with that amount of time I can perform it for myself or find someone to perform it for me.

Consequently, the value of capital falls constantly, and capital, or previous labor, is not in as favorable a position as superficial economists believe.

There is no machine not completely new that has not lost some of its value, exclusive of deterioration resulting from use, from the very fact that better ones are made now.

This is true also of land. There are very few farms that have not cost more labor to bring them to their present state of fertility than it would cost today with the more efficient means we have at our disposal.

Such is the general, but not inevitable, trend.

Labor performed in the past may render greater service today than it did previously. This is rare, but it does happen. For example, I have kept some wine that represents twenty days' labor. If I had sold it immediately, my labor would have received a certain remuneration. I have kept my wine; it has improved; the next crop was a failure; in short, the price has gone up, and my return is greater. Why? Because I render more service, because the buyer would have to take more pains to get this wine than I took, because I satisfy a want that has become greater, of higher value, etc.

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This is the question that must always be considered.

There are a thousand of us. We each have our acre of land, which we clear. Time goes by, and we sell it. Now, it happens that out of the thousand of us nine hundred and ninety-eight do not receive, or never will receive, as many days of current labor for our land as it has cost us; and that is because our past labor, which was less skillful, performs relatively less service than current labor. But there are two landowners whose labor has been more intelligent or, if you will, more successful. When they offer it for sale, it is found to represent inimitable services. Everyone says: It would cost me much more to perform this service for myself; hence, I shall pay a high price; and, provided I am not coerced, I am still very sure that it will not cost me as much as if I performed this service by any other means.

This is the story of the Clos-Vougeot. It is the same as the case of the man who finds a diamond or who has a beautiful voice or a figure to exhibit for five sous, etc.

In my native province there is much uncultivated land. The stranger never fails to ask: Why do you not cultivate this land? The answer is: Because the soil is poor. But, it may be objected, right beside it is absolutely similar land, and it is cultivated. To this objection the native finds no reply.

Is it because he was wrong to answer in the first place: The soil is poor?

No, the reason why new land is not cleared is not that the soil is poor; for some of it is excellent, and still it is not cleared. This is the reason: to bring this uncultivated land to a state of fertility equal to that of the adjacent cultivated land would cost more than to buy the adjacent land itself.

Now, to any man capable of reflection this proves incontestably that the land has no value in itself.

(Develop all the implications of this idea.)3

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Money4

Credit5

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14: Wages

All men eagerly long for security. We do indeed find a few restless, adventurous individuals in the world for whom the thrill of the unknown is a kind of emotional necessity. Nevertheless, we can affirm that men, taken as a whole, want to be free of fear for their future, to know what to count on, to arrange their lives in advance. To understand what store they set by security, we need only to observe how eagerly they rush into government employment. Let no one say that they do so because of the prestige of public service. There are certainly civil service positions in which the work involved is far from being of a high order. It consists, for example, in spying on one's fellow citizens, prying into their affairs, annoying them. Yet such positions are nonetheless sought after. Why? Because they represent security. Who has not heard a father say of his son: “I'm trying to get him on the list for a temporary appointment in such and such a government bureau. Naturally, it's irritating that they require such a costly education. It's also true that with that kind of education, he might have gone into some more brilliant career. As a government functionary he will never get rich, but he will be sure of his living. He will always have enough to eat. In four or five years he will be getting a salary of eight hundred francs; then he will go up, step by step, to three or four thousand. After thirty years of service, he can retire on his pension. His livelihood is therefore assured. It's up to him to learn to live moderately and humbly, etc.”

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Security, then, has an all-powerful appeal.

And yet, when we consider the nature of man and of his labors, security seems incompatible with it.

Anyone looking back in his mind's eye to the hazards faced by human society at its inception will have difficulty in understanding how a great multitude of men can possibly obtain from the social order any fixed, assured, and constant means of existence. That they do so is another of those phenomena that fail to impress us as strikingly as they should for the very reason that our eyes are accustomed to them. Here are functionaries who receive fixed salaries, property owners who know in advance what income they will have, investors who can exactly calculate their returns, workmen who earn the same wages every day. If we exclude money, which is introduced simply to facilitate evaluation and exchange, we shall perceive that what remains stable is the quantity of the means of existence, the value of the satisfactions received by these various categories of workers. Now, I maintain that this stability, which little by little is spreading to all mankind, to all kinds of labor, is a miracle of civilization, a prodigious accomplishment of the social order that is so foolishly denounced in our day.

Let us go back, then, to a primitive social order. Let us imagine that we say to a hunting, fishing, pastoral, warrior, or agricultural people: “As your society progresses, you will be able to tell further and further in advance exactly what will be your total enjoyments for every year.”

These good people would not believe us. They would reply: “That will always depend on something that eludes all calculation—the uncertainty of the seasons, for example, etc.” They would never be able to understand the ingenious efforts by which men have succeeded in establishing a kind of insurance bridging all times and all places.

Now, this mutual insurance against the vicissitudes of the future is entirely dependent on a field of human knowledge that I shall call experimental statistics. And since there is continual progress in this field, based as it is on experience, it follows that security also can be progressively extended. It is favored by two permanent factors: first, men long for security; second, every day they acquire more means of attaining it.

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Before I demonstrate how security is established in those human transactions in which at first sight it would not seem to be an important concern, let us see how it is obtained in a transaction in which it is of special concern. The reader will thus understand what I mean by experimental statistics.

Consider a group of men who are all homeowners. One house happens to burn, and its owner is ruined. At once alarm spreads among all the others. Each one says to himself: “The same thing could happen to me.” It is not surprising, therefore, that the owners meet and make provision to share possible loss by forming a mutual fire-insurance association. Their agreement is very simple. It is expressed in these terms: If the house of one of us burns, the rest of us will take up a collection to help him.

By this device each owner can be sure of two things; first, that he will have a small share in all misfortunes of this type; second, that he will never have to bear the full brunt of any one misfortune.

In reality, if we extend the calculation over a great number of years, we see that the homeowner makes, so to speak, an arrangement with himself. He lays up savings with which to pay for the disasters that may strike.

This is association. Indeed, the socialists give the name association exclusively to arrangements of this kind. As soon as speculation is introduced, they say, association disappears. I say that it is improved, as we shall see.

The motive that prompted our homeowners to form an association, to provide for mutual insurance, was a love of stability, of security. They prefer known risks to unknown risks, a great number of possible small losses to one large one.

Nevertheless, their objective has not been completely accomplished, and there is still much uncertainty in their situation. Each one of them may say: “Suppose disasters multiply. Will my assessment not become exorbitant? In any case, I should like to know in advance what it will be, and also to insure my household goods, my merchandise, etc., in the same manner.”

These difficulties appear to be in the nature of things and beyond man's power to avoid. We are always tempted to believe, after every advance, that everything possible has been done. How, Edition: current; Page: [364] indeed, can we eliminate this hazard contingent on misfortunes still in a realm beyond our ken?

But mutual insurance has, through experience, gradually acquired in society an important piece of statistical information, namely, the ratio, in terms of yearly averages, between values destroyed by disasters and values covered by insurance.

Armed with this information, an individual or a company, having made all the necessary calculations, goes to the homeowners and says: “By providing for mutual insurance, you have tried to purchase your peace of mind. The price this precious asset costs you is the indeterminate assessment you set aside annually to cover your losses. But you never know in advance what this price will be; and, on the other hand, your peace of mind is never complete. Well, I am here to propose a different procedure. In consideration of a fixed annual premium that you will pay me, I will assume the risk for all losses. I will insure all of you, and here is the capital to guarantee my promises.”

The homeowners are quick to accept, even though this premium would cost a little more than the average assessment under the mutual insurance agreement; for the most important thing in their eyes is not the saving of a few francs, but the assurance of complete peace of mind.

At this point the socialists contend that the association is destroyed. I maintain that it is improved and on the way to still further improvement.

But, say the socialists, now the insured no longer have any common tie! They no longer see one another; they no longer have to reach a common understanding. Parasitical middlemen have intruded themselves among them, and the fact that the homeowners now pay more than is necessary to cover their losses is proof that the insurers are reaping outrageous profits.

It is easy to answer this criticism.

First of all, the association now exists under another form. The premium contributed by the insured still provides the fund to pay for the losses. The insured have found the means of remaining in the association without the bother of running it. Obviously, this is an advantage to every one of them, inasmuch as the end in Edition: current; Page: [365] view is nonetheless attained; and the opportunity of remaining in the association and still retaining independence of movement and the free use of one's faculties is precisely what characterizes social progress.

As for the middleman's profit, it is explainable and completely justified. The insured remain members of the association for the recovery of their losses. But a company has stepped in that offers them the following advantages: first, it removes the element of risk to which they were still exposed; second, it frees them from all trouble or labor that their losses might entail. These are services. Now, service for service. The fact that the proposal is willingly accepted and paid for is proof that the company is performing a service of definite value. The socialists are merely being ridiculous when they rant against the middleman. Does he impose his services by force? Has he other means at his disposal than to say: “I shall cost you something in the way of pains, but I shall save you more”? How, then, can he be called a parasite, or even a middleman?

Therefore, I declare that the association thus transformed is in a position to improve in every way.

In fact, the companies, in the hope of realizing profits proportional to the extent of their business, try constantly for new accounts. They have agents everywhere, they extend credit, they invent countless new coverages in order to increase the number of policyholders, that is, of associated parties. They insure many, many risks that were not covered by the original mutual association. In short, the association steadily increases so as to include more people and more things. As this expansion continues, it allows the companies to lower their rates; they are, in fact, forced to do so by competition. And here again we encounter the great law: the benefit soon slips through the hands of the producer and ultimately comes to rest with the consumer.

Nor is this all. The companies take out insurance on one another in the form of reinsurance; so that, as far as recovery of losses is concerned, which is the heart of the matter, a thousand different companies, operating in England, France, Germany, and America, form a single great corporation. And what is the Edition: current; Page: [366] result? If a house happens to burn in Bordeaux, Paris, or anywhere else, homeowners from all over the world—Englishmen, Belgians, Germans, Spaniards—have their assessment ready and are prepared to make good the loss.

This is an example of the power, the scope, the perfection, that a free and voluntary association can attain. But in order to do so, it must be free to choose its own methods. Now, what happened when the socialists, those great devotees of association, were in power? They found nothing more urgent to do than to browbeat associations of every description, and insurance associations in particular. And why? For the very reason that in order to operate on a world-wide basis, insurance companies follow the procedure of allowing every one of their members to remain independent. How little these poor socialists understand the social mechanism! They want to take us back to the first uncertain steps taken by society in its infancy, to the primitive and almost savage forms of association. They would suppress all progress on the ground that it has departed from these forms.

We shall see that, because of these same prejudices, this same ignorance, they rail constantly against interest, or else against wages, which are fixed forms, and therefore highly developed, for the payment of what is due capital and labor.

The wage system particularly has been the object of the socialists' attack. They have almost gone so far as to present it as something hardly less cruel than slavery or serfdom. In any case, they have viewed it as an oppressive and one-sided arrangement having only the semblance of liberty, as exploitation of the weak by the strong, as tyranny exercised by capital over labor.

Though everlastingly wrangling with one another over the new institutions they would like to establish, they evince a striking unanimity in their common hatred of existing institutions, and the wage system most of all; for, if they cannot reach agreement on the social order of their choice, we must at least give them their due in that they always see eye to eye in abusing, deploring, slandering, hating, and generating hatred for anything that actually exists. I have stated elsewhere the reasons for this attitude.1

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Unfortunately, all this did not remain a purely academic question; for socialist propaganda, aided and abetted by a weak and ignorant press, which, without admitting its socialist sympathies, nevertheless sought to curry popular favor by its sensational tirades, has succeeded in inspiring hatred for the wage system even among the wage earners. The workers have become dissatisfied with this form of remuneration. It appears to them unjust, humiliating, odious. They feel that it brands them with the mark of servitude. They desire to share by other means in the distribution of wealth. From this point to becoming infatuated with the most extravagant utopias is only a step, and this step has been taken. In the February Revolution the great preoccupation of the workers was to get rid of the wage system. For the means of doing so they consulted their gods; but on the occasions when the gods did not remain silent, their oracular utterances were, as is customary, anything but clear, though the great word “association” did predominate, as if association and wages were mutually exclusive. Then the workers proposed to try all the forms of this association that was supposed to bring them liberty, and, to make it the more attractive, they invested it with all the charms of “solidarity” and attributed to it all the merits of “brotherhood.” For the moment, one would have thought that the human heart itself was about to undergo a great transformation and, shaking off the yoke of self-interest, would henceforth be guided by nothing less than the purest forms of self-sacrifice. Strange contradiction! People hoped to receive, by way of association, at once the glory of self-sacrifice and the enjoyment of profits hitherto unknown. While they raced madly after fortune, they demanded that they be awarded, or rather they awarded themselves, the palm of martyrdom. Apparently these misguided workers, on the verge of being swept along on the path of injustice, felt the need of deluding themselves, of glossing over with idealism the lessons in plunder that their apostles had taught them, and of covering them with a veil before offering them up in the sanctuary of a new revelation. Perhaps never before had so many dangerous errors, such gross contradictions, taken such a hold upon the human mind.

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Let us see, then, what wages are. Let us look at their origin, their form, and their effects. Let us recognize why they were created; let us determine whether in the development of humanity they represent a step backward or forward. Let us ascertain whether or not they are essentially humiliating, degrading, brutalizing; and whether it is possible to discern their alleged connection with slavery.

Services are exchanged for services. What is offered and accepted in exchange is labor, effort, pains, trouble, natural or acquired skills; what is transmitted are satisfactions; what determines the exchange is mutual advantage; and what measures it is the free evaluation of reciprocal services. The various arrangements to which human transactions have given rise have necessitated a very large economic vocabulary, but the words “profit,” “interest,” “wages,” although they express different shades of meaning, do not change the real nature of things. It is always the do ut des, or rather the facio ut facias which, as far as the science of economics is concerned, forms the basis of all human evolution.

Wage earners are no exception to this law. Consider carefully. Do they perform services? Undoubtedly. Do they receive services? They do indeed. Are these services exchanged freely, voluntarily? Do we perceive fraud or violence in this type of transaction? It is at this point, perhaps, that the complaints of the workers begin. They do not go so far as to contend that they have been deprived of their freedom, but they declare that this freedom is purely nominal and even a mockery, for the person whose decisions are determined by necessity is not free in fact. It remains to be seen whether the lack of freedom thus understood is not the result of the worker's situation rather than of the manner in which he is paid.

When a man contributes the strength and skill of his hands to another's service, his payment may consist of a share in the thing produced or else in a fixed wage. In the one case as in the other, he must bargain over this share—for it may be larger or smaller—or for this wage—for it may be higher or lower. Edition: current; Page: [369] And if the man is in absolute want, if he cannot wait, if he is under the spur of urgent necessity, he will submit to its law; he will not be able to resist the conditions laid down by the man for whom he is to work. But it must be noted that it is not the form of his payment that puts him in this state of dependency. Whether he runs the risk of being paid according to the outcome of the enterprise, or whether he contracts for a fixed wage, it is his precarious situation that has put him at a disadvantage in the bargaining. The innovators who have presented the workers with the idea of association as an infallible cure have therefore deceived them and themselves as well. They can convince themselves of this fact by observing carefully situations in which the impoverished worker receives a share of the produce rather than a wage. Certainly there are no men in France more wretchedly poor than the fishermen and the vineyard workers in my native province of Bearn, although they have the honor of enjoying all the benefits of what the socialists exclusively term association.

But before inquiring into the influences that determine the rate at which wages are set, I must define, or rather describe, the nature of this transaction.

Men have a natural tendency—and consequently one that is beneficial, moral, universal, and indestructible—to desire security in regard to their means of existence, to seek stability, and to avoid risk and uncertainty.

Nevertheless, in the earliest stages of society risk and uncertainty held, so to speak, absolute sway; and I have often been amazed that political economy has failed to point out the great progress that has been achieved in constantly lessening their influence on human affairs.

For example, in a small community of hunters, in a nomadic tribe, or a newly established colony, who can predict with certainty what one's labor will be worth tomorrow? Does there not even seem to be a fundamental conflict between these two ideas, for could there be anything more uncertain than the results of labor devoted to hunting, fishing, and agriculture?

Therefore, it would be difficult to find, in the early period of any society, anything resembling salaries, retainers, stipends, Edition: current; Page: [370] wages, incomes, rents, interest payments, insurance premiums, etc., all of which are things invented to give more stability to the status of the individual, to remove from mankind as much as possible that painful sense of uncertainty and anxiety in regard to the means of existence.

The progress that has been made in this direction is truly remarkable, even though custom has so familiarized us with the fact that we fail to notice it. And yet, since the results obtained by labor, and consequently the consumption of products by mankind, can be so profoundly modified by the course of events, by unexpected circumstances, like Nature's whims, inclement weather, and disasters of all kinds, how does it happen that so many men find that, thanks to fixed wages, rents, salaries, pensions, they are exempt, for a time, and some for life, from that uncertainty which seems to form a part of our very nature?

The cause, the motive power, of this wonderful evolution by mankind is to be found in the tendency of all men to strive toward the attainment of their well-being, to which stability is so essential. The means consists in the substitution of the fixed contractual payment covering calculable risks for the earlier form of association wherein all members are liable for all risks of the enterprise—in other words, the creation of a more efficient association. It is curious, to say the least, that our great modern reformers would have us believe that association is dissolved by the presence of the very element that actually improves it.

For certain men to be willing to bind themselves by contract to assume certain risks that naturally fall on others, some degree of progress must have been made in a special field of knowledge that I have called experimental statistics; for they must be able through experience to appraise, at least approximately, these risks, and consequently the value of the services they render those for whom they take this responsibility. That is why the transactions and associations of primitive and ignorant peoples do not permit of provisions of this nature, and why, therefore, risk and uncertainty, as I have said, hold full sway over them. If a savage who is getting along in years and has a certain supply of game laid up engages a young hunter to help him, he will pay him, not with Edition: current; Page: [371] fixed wages, but with a certain share in the kill. How, in fact, could either of them draw inferences from the known to the unknown? The lessons of the past are not sufficiently available to them to permit them to insure themselves against the future beforehand.

In an age of ignorance and barbarism men undoubtedly associate, enter into associations, since otherwise, as we have shown, they cannot live; but association among them can assume only that primitive, elementary form which the socialists represent as the law and the salvation of the future.

Later on, in the case of two men who have long worked together sharing common risks, there comes a time when it is possible for them to calculate their risks in advance, and one of them may assume all the risks in consideration of a stipulated payment.

This arrangement certainly represents progress. To be assured of this, we need only to know that the arrangement is made freely, by mutual consent, which would not happen unless it were to the advantage of both parties. But it is easy to understand in what respects it is to their advantage. One party, by assuming all the risks of the undertaking, gains the advantage of having it completely under his control; the other gains that stability of position so dear to men's hearts. And society in general cannot fail to gain, because now an enterprise that was once subject to the conflicting pressures of two minds and two wills enjoys a unified policy and direction.

But, because the form of the association has been changed, can we say that it has been dissolved, as long as the two men continue to participate in it and nothing has been altered except the manner of distributing what they produce? Above all, can we say that the association has been vitiated as long as the new policy is freely agreed to and it satisfies all parties?

In order to create new means of satisfaction, it is almost always—I could say, always—necessary to have both current labor and the fruits of previous labor available. At the outset capital and labor, when they join forces in a common project, are each obliged to share its risks. This stage continues until these risks can be calculated experimentally. Then two tendencies, equally natural Edition: current; Page: [372] to the human heart, are to be observed: I mean the tendencies toward unified control and fixed responsibilities. Capital t