It is at this point that Political Economy truly begins, for it is here that value first makes its appearance. Barter takes place only after an arrangement, a discussion. Each of the contracting parties is governed by considerations of self-interest. Each of them makes a calculation, which in effect comes to this, “I shall barter if the barter procures me the satisfaction I desire with a less Effort.” It is certainly a marvellous phenomenon that diminished efforts can yet keep pace with undiminished desires and satisfactions; and this is explained by the considerations which I have presented in the first part of this chapter. When two commodities or two services are bartered, we may conclude that they are of equal value. We shall have to analyze afterwards the notion of value, but this vague definition is sufficient for the present.
We may suppose a round-about barter, including 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, by means of which all is balanced. I need not say that this round-about transaction only takes place because it [p109] suits all the parties, without changing either the nature or the consequences of barter.
The essence of Barter is discovered in all its purity even when the number of contracting parties is greater. In my commune the vine-dresser pays with wine for the services of the blacksmith, the barber, the tailor, the beadle, the curate, the grocer; while the blacksmith, the barber, the tailor, in turn deliver to the grocer, for the commodities consumed during the year, the wine which they have received from the vine-dresser.
This round-about Barter, I cannot too often repeat, does not change in the least degree the primary notions explained in the preceding chapters. When the evolution is complete, each of those who have had part in it presents still the triple phenomenon, want, effort, satisfaction. We have but to add, the exchange of efforts, the transmission of services, the separation of employments, with all their resulting advantages—advantages to which every one of the parties has contributed, seeing that isolated individual labour is a pis aller, always reserved, and which is only renounced in consideration of a certain advantage.
It is easy to comprehend that Barter in kind, especially the indirect and round-about barter which I have described, cannot be much extended, and it is unnecessary to dwell upon the obstacles which set limits to it. How could he manage, for example, who wished to exchange his house against the thousand articles which enter into his annual consumption? In any case, Barter could never take place but among the few persons who happen to be acquainted with each other. Progress and the Division of Labour would soon reach their limits if mankind had not discovered the means of facilitating exchanges.
This is the reason why men, from the earliest ages of society, have employed an intermediate commodity to effect their transactions—corn, wine, animals, and almost always, the precious metals. Such commodities perform this function of facilitating exchanges more or less conveniently; still any one of them can perform it, provided that, in the transaction, Effort is represented by value, the transmission of which is the thing to be effected.
When recourse is had to an intermediate commodity, two economic phenomena make their appearance, which we denominate Sale and Purchase. It is evident that the idea of sale and purchase is not included in direct Barter, or even in round-about Barter. When a man gives another something to drink, in consideration of receiving from him something to eat, we have a [p110] simple fact which we cannot analyze farther. Now, what we must remark in the very outset of the science is, that exchanges which are effected by means of an intermediate commodity do not lose the nature, the essence, the quality of barter—only the barter is no longer simple, but compound. To borrow the very judicious and profound observation of J. B. Say, it is a barter of two factors [troc à deux facteurs], of which the one is called sale and the other purchase—factors whose union is indispensable in order to constitute a complete barter.
In truth, this discovery of a convenient means of effecting exchanges makes no alteration in the nature either of men or of things. We have still in every case the want which determines the effort, and the satisfaction which rewards it. The Exchange is complete only when the man who has made an effort in favour of another has obtained from him an equivalent service, that is to say, satisfaction. To effect this, he sells his service for the intermediate commodity, and then with that intermediate commodity he purchases equivalent services, when the two factors bring back the transaction to simple barter.
Take the case of a physician, for instance. For many years he has devoted his time and his faculties to the study of diseases and their remedies. He has visited patients, he has prescribed for them, in a word, he has rendered services. Instead of receiving compensation from his patients in direct services, which would have constituted simple barter, he receives from them an intermediate commodity, the precious metals, wherewith he purchases the satisfactions which were the ultimate object he had in view. His patients have not furnished him with bread, wine, or other goods, but they have furnished him with the value of these. They could not have given him money unless they had themselves rendered services. As far as they are concerned, therefore, there is a balance of services, and there is also a balance as regards the physician; and could we in thought follow this circulation of services out and out, we should see that Exchange carried on by the intervention of money resolves itself into a multitude of acts of simple barter.
In the case of simple barter, value is the appreciation of two services exchanged and directly compared with each other. In the case of Compound Exchange the two services measure each other’s value, not directly, but by comparison with this mean term, this intermediate commodity, which is called Money. We shall see by-and-by what difficulties, what errors, have sprung from this complication. At present it is sufficient to remark that [p111] the intervention of this intermediate commodity makes no change whatever in the notion of value.