Liberty Matters
Bastiat on Value Theory and the Concept of Services
I have two related comments on Guido's astute and very enlightening observations on Bastiat's value theory.First, there is a certain ambiguity in his treatment of Bastiat's view of the connection between value and exchange. Guido observes that shortcomings in Bastiat's value theory diverted attention from his main point, "which is that value is ontologically bound up with exchange." In distinguishing Bastiat's value theory from those of his predecessors (Smith, Say, Ricardo, and Marx), Guido describes it as an "exchange theory of value," by which he means,
Value does not only come to be expressed through market exchanges. It is existentially bound up with the latter. It comes into being only through market exchanges.
Now I find this a very illuminating and fruitful depiction of Bastiat's value theory and its fundamental difference with preceding theories. However the ambiguity creeps in when Bastiat's theory is characterized as foreshadowing Mises's choice-based theory of subjective value. Bastiat's theory is not particularly subjective or choice-based. Indeed, in Guido's telling—and I believe that it is correct—the objective act of exchange is logically antecedent to the very existence of value.
Does Bastiat's theory, then, foreshadow the Misesian value theory simply because it posits that value is "existentially bound up" with something? But value in Marx's theory is certainly existentially bound up with labor and in Say's theory with utility. For Marx, labor alone confers value on goods and is its measure; for Bastiat, the emergence of an objective exchange ratio alone accounts for and measures the value of goods or, rather, the "services" goods convey. I think Guido needs to clarify this important issue.
My second comment is tangentially related to Guido's essay and concerns Bastiat's notion of "services," which I find much more significant than his value theory. Indeed I believe that this concept anticipated—although it may not have influenced—Böhm-Bawerk's neglected concept of "renditions of service."
Bastiat identified the service as the fundamental unit of individual judgment and evaluation and, ultimately, of exchange. As Bastiat stated:
FEE ed.: For a service to have value ... it is not obligatory for the service to be real, conscientiously rendered, or useful.... Everything depends on the judgment passed on the services.... [A]lways human services [are] exchanged for other human services, being measured, estimated, appraised, evaluated by comparison with one another.... [Emphases in the original.][60]new LF ed.: In order for a service to have value according to the economic meaning of the word, that has an actual value,[505] it is not necessary for it to be genuine, conscientiously rendered, or useful. It needs only to be accepted and paid for by another service. ... Everything depends on the assessment made of them ... always human services being exchanged for one another and being measured, estimated, assessed, and evaluated one against the other
Bastiat (63, 21. T292) also contended that tangible goods are exchanged and valued for the services they will render the recipients:
FEE ed.: I conclude that value ... can never reside in these substances [products] themselves.... [V]alue is merely the appraisal of the services exchanged, whether a material commodity is or is not involved in the transaction.... It is pure metonymy to attribute value to the material commodity itself. [V]alue results from the service and not the product....[61]new LF ed,: I conclude from this that value, ... can never lie in these things themselves but rather in the effort devoted to modifying them, ... value is just an appraisal of the (worth of the) services being exchanged, whether matter enters into it or not. ... It is by pure metonymy that value is attributed to the matter itself
Bastiat's emphasis on services as the fundamental unit of economic life sounds very much like Böhm-Bawerk's view, although their conceptions of services were not quite the same. Böhm-Bawerk (1962, 67-68) pointed out that the usefulness of "corporeal goods" in satisfying human wants consisted of "the activation for the delivery of useful renditions of the forces of nature residing in them."[62] But the fact that useful renditions of service are based on natural powers that inhere in a material good does not imply that the good itself is a purely objective phenomenon. To illustrate this, Böhm-Bawerk employed the example of the production and consumption of a poem to show that the good is inextricably bound up with the want-satisfaction process that traverses and links the objective and subjective realms:
Be it granted that the poet's soul must have originated thought and emotion, and be it further granted that only in another soul and through intellectual powers can those thoughts and emotions be reproduced, but the path from soul to soul leads through the physical world for one stretch of the journey and on that stretch the intellectual element must make use of the physical vehicle, that is to say, of the forces or powers of nature. The book is that physical material vehicle.[63]
Böhm-Bawerk concluded his discussion in a Bastiatian vein:
The concrete renditions of service are means for the satisfaction of want in a more real sense than are goods themselves.... [I]t is not goods but … the renditions of service that emanate from those goods which constitute the smallest independent units of our economy and that the former (i.e., goods) constitute only complexes of the latter, that goods are therefore a secondary category."[64]
Endnotes
[60.] Frederic Bastiat, Economic Harmonies, ed. George B. de Huszar, trans.W. Hayden Boyers (Irvington-on-Hudson, NY: Foundation for Economic Education, Inc., 1964), pp. 121-22. OLL online version: .
[61.] Ibid. pp. 63; Frederic Bastiat "On the Idea of Value," OLL 21. T292.
[62.] Eugen von Böhm-Bawerk, Whether Legal Rights and Relationships Are Economic Goods, trans. George D. Huncke. In Shorter Classics of Böhm-Bawerk. (Spring Mills, PA: Libertarian Press Inc., 1962), pp. 67-68.
[63.] Ibid., p. 69.
[64.] Ibid., p. 77.
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