In the preceding chapter we have described the marvellous effects of Exchange. They are such that men must naturally feel a desire to facilitate it, even at the expense of considerable sacrifices. It is for this end that we have roads, canals, railways, carriages, ships, merchants, tradesmen, bankers; and it is impossible to believe that society would submit to such enormous draughts upon its forces for the purpose of facilitating [p151] exchange, if it did not find in exchange itself an ample compensation.
We have also seen that direct barter could give rise only to transactions at once inconvenient and restrained.
It is on that account that men have thought of resolving barter into two factors, sale and purchase, by means of an intermediate commodity, readily divisible, and, above all, possessed of value, in order to secure public confidence. This intermediate commodity is Money.
And it is worthy of remark that what, by an ellipsis or metonymy, we designate the value of gold and silver rests on exactly the same foundation as that of the air, the water, the diamond, the sermons of our old missionary, or the roulades of Malibran—that is to say, upon services rendered and received.
The gold, indeed, which we find spread on the favoured banks of the Sacramento, derives from nature many precious qualities—ductility, weight, beauty, brilliancy, utility even, if you will. But there is one quality which nature has not given it, because nature has nothing to do with that—Value. A man knows that gold supplies a want which is sensibly felt, and that it is much coveted. He goes to California to seek for gold, just as my neighbour went to the spring to fetch water. He devotes himself to hard work—he digs, he excavates, he washes, he melts down—and then he comes to me and says: I will render you the service of transferring to you this gold; what service will you render me in return? We discuss the matter, we weigh all the circumstances which should influence our determination;—at last we conclude a bargain, and Value is manifested and fixed. Misled by this curt form of expression, “Gold is valuable,” we might suppose that the value resides in the gold, just as the qualities of ductility and specific gravity reside in it, and that nature has put it there. I hope the reader is already satisfied that this is a mistake. By-and-by he will be convinced that it is a deplorable fallacy.
Another misconception exists on the subject of gold, or rather of money. As it is the constant medium which enters into all transactions, the mean term between the two factors of compound barter, it is always with its value that we compare the value of the two services to be exchanged; and hence we are led to regard gold or money as a measure of value. In practice it cannot be otherwise. But science ought never to forget that money, so far as its value is concerned, is subject to the same fluctuations as any other product or service. Science does forget this sometimes; nor is it surprising. Everything tends to make us consider money [p152] as the measure of value, in the same way as the litre (or quart) is the measure of capacity. It plays an analogous part in actual business. One is not aware of its own fluctuations, because the franc, like its multiples and sub-multiples, always retains the same denomination. And arithmetic itself tends to propagate the confusion by ranking the franc as a measure, along with the measures of quantity in daily use.
I have given a definition of Value, at least of value according to my idea of it. I have subjected that definition to the test of divers facts. None of them, so far as I can see, contradict it; and the scientific signification which I have given to the word agrees with its vulgar acceptation, which is no small advantage, no slight guarantee—for what is science but experience classified? What is theory but the methodical exposition of universal practice?
I may now be permitted to glance rapidly at the systems which have hitherto prevailed. It is not in a spirit of controversy, much less of criticism, that I enter upon this examination, and I should willingly avoid it were I not convinced that it will throw new light upon the fundamental principles which I am advocating.
We have seen that writers on Political Economy have sought for the principle of Value in one or more of the accidents which exercise a notable influence over it, such as materiality, conservability, utility, rarity, labour, etc.; just like a physiologist who should seek the principle of life in one or more of the external phenomena which are necessary to its development, as air, water, light, electricity, etc.
Materiality.—“Man,” says M. de Bonald, “is mind served by organs.” If the economists of the materialist school had simply meant that men can render reciprocal services to each other only through the medium of their bodily organs, and had thence concluded that there is always something material in these services, and, consequently, in Value, I should not have proceeded a step farther, as I have a horror at word-catching and subtilties, which wit revels in.