Only admit that exchange is at once the cause and the effect of the division of labour and the separation of employments; only admit that the separation of occupations multiplies satisfactions in proportion to efforts, for the reasons explained at the beginning of this chapter, and you will comprehend at once the services which Money has rendered to mankind, by the simple fact that it facilitates Exchanges. By means of Money, Exchange is indefinitely extended and developed. Each man casts his services into the common fund, without knowing who is to enjoy the satisfactions which they are calculated to procure. In the same way he obtains from society, not immediate services, but money with which he can afterwards purchase services, where, when, and how it may best suit him. In this way the ultimate transactions occur at various times and places, between people totally unacquainted with each other, and in the greater number of cases no one knows by whose efforts his wants will be satisfied, or to the satisfaction of whose desires his own efforts will contribute. Exchange, by the intervention of Money, resolves itself into innumerable acts of barter, of which the contracting parties themselves are ignorant.
Exchange, however, confers so great a benefit on society (is it not society itself?) that it facilitates and extends it by other means besides the introduction of money. In logical order, after Want and Satisfaction united in the same individual with isolated Effort—after simple barter—after barter à deux facteurs, or Exchange composed of sale and purchase—come other transactions, extended farther over time and space by means of credit, mortgages, bills of exchange, bank notes, etc. By means of this wondrous machinery, the result of civilisation, the improver of civilisation, and itself becoming more perfect at the same time, an exertion made at the present hour in Paris may contribute to the satisfaction and enjoyment of an unknown stranger, separated from us by oceans and centuries; and he who makes the exertion will not the less receive for it a present recompense, through the intervention of persons who advance the remuneration, and wait to be reimbursed in a distant country or at a future day. Marvellous and astonishing complication! which, when subjected to analysis, shows us finally the accomplishment of the entire economic cycle—want, effort, satisfaction, taking place in each individual, according to a just law.
Limits of Exchange.—The general character of Exchange is to diminish the proportion which the Effort bears to the satisfaction. Between our wants and our satisfactions obstacles are interposed, [p112] which we succeed in diminishing by the union of forces or the division of occupations, that is to say, by Exchange. But Exchange itself encounters obstacles and demands efforts. The proof of this is the immense amount of human labour which it sets in motion. The precious metals, roads, canals, railways, wheeled carriages, ships—all these things absorb a considerable portion of human activity. Observe, besides, how many men are exclusively occupied in facilitating exchanges—how many bankers, merchants, shopkeepers, brokers, carriers, sailors! This vast and costly apparatus shows us, better than any reasoning, how much efficacy there is in the power of Exchange, for why otherwise should society be encumbered with it?
Since it is the nature of Exchange to save efforts and to exact them, it is easy to understand what are its natural limits. In virtue of that motive which urges man to choose always the least of two evils, Exchange will go on extending itself indefinitely as long as the effort it exacts is less than the effort which it saves. And its extension will stop naturally when, upon the whole, the aggregate of satisfactions obtained by the division of labour becomes less, by reason of the increasing difficulties attending Exchange, than if we procured them by direct production.
Suppose the case of a small tribe. If they desire to procure themselves satisfactions they must make an effort. They may address themselves to another tribe, and say to them, “Make this effort for us, and we shall make another for you.” The stipulation may suit all parties, if, for example, the second tribe is in a situation to obtain greater assistance than the other from natural and gratuitous forces. In that case it may be able to realize the result with an effort equal to eight, while the first could only accomplish it by an effort equal to twelve. There is thus an economy equal to four for the first. But then come the cost of transport, the remuneration of intermediate agents, in a word, the effort exacted by the machinery of Exchange. This cost must, then, clearly be added to the figure eight. Exchange will continue to take place as long as the Exchange itself does not cost four. The moment it reaches that figure it will stop. It is quite unnecessary to make laws on this subject; for either the law intervenes before this level is attained, and then it is injurious—it prevents an economy of efforts—or it comes after it, and then it is useless, like an ordinance forbidding people to light their lamps at noonday.
When Exchange is thus arrested from ceasing to be advantageous, the slightest improvement in the commercial apparatus gives it a new activity. Between Orleans and Angoulême a certain [p113] number of transactions take place. These towns effect an Exchange as often as they can obtain a greater amount of enjoyments by that means than by direct production. They stop short the moment the cost of obtaining commodities by means of exchange, aggravated by the cost of effecting the exchange itself, surpasses, or reaches, that of obtaining them by means of direct production. In these circumstances, if we improve the conditions under which Exchanges are effected—if the merchants’ profits are diminished, or the means of transport facilitated—if roads and railways are made, mountains levelled, and bridges thrown over rivers—in a word, if obstacles are removed, the number of Exchanges will be increased; for men are always desirous to avail themselves of the great advantages which we have ascribed to Exchange, and to substitute gratuitous for onerous utility. The improvement of the commercial apparatus, then, is equivalent to bringing two cities locally nearer to each other. Whence it follows that bringing men physically, locally, nearer each other is equivalent to improving the conditions of exchange. This is very important. It is, in fact, the solution of the problem of population; and this is precisely the element in that great problem that Malthus has neglected. Where Malthus saw Discordance, attention to this element enables us to discover Harmony.
When men effect an exchange, it is because they succeed by that means in obtaining an equal amount of satisfaction at a less expense of effort; and the reason of this is, that on both sides services are rendered which are the means of procuring a greater proportion of what we have termed gratuitous utility.
Now, you have always a greater number of exchanges in proportion as you remove the obstacles which impede exchanges, and diminish the efforts which these exchanges exact.
And Exchange encounters fewer obstacles, and exacts fewer efforts, just in proportion as you bring men nearer each other, and mass them more together. A greater density of population, then, is accompanied by a greater proportion of gratuitous utility. That density imparts greater power to the machinery of exchange; it sets free and renders disposable a portion of human efforts; it is a cause of progress.
Now, if you please, let us leave generalities and look at facts.