Essays on Political Economy | Page 5

or,
"Do this for me, and I will do that for you." It is well to remark (for this
will throw a new light on the notion of value) that the second form is
always implied in the first. When it is said, "Do this for me, and I will
do that for you," an exchange of service for service is proposed. Again,
when it is said, "Give me this, and I will give you that," it is the same
as saying, "I yield to you what I have done, yield to me what you have
done." The labour is past, instead of present; but the exchange is not the
less governed by the comparative valuation of the two services: so that
it is quite correct to say that the principle of value is in the services
rendered and received on account of the productions exchanged, rather
than in the productions themselves.
In reality, services are scarcely ever exchanged directly. There is a
medium, which is termed money. Paul has completed a coat, for which
he wishes to receive a little bread, a little wine, a little oil, a visit from a
doctor, a ticket for the play, &c. The exchange cannot be effected in
kind, so what does Paul do? He first exchanges his coat for some
money, which is called _sale_; then he exchanges this money again for
the things which he wants, which is called _purchase_; and now, only,
has the reciprocity of services completed its circuit; now, only, the
labour and the compensation are balanced in the same individual,--"I
have done this for society, it has done that for me." In a word, it is only
now that the exchange is actually accomplished. Thus, nothing can be
more correct than this observation of J. B. Say:--"Since the introduction
of money, every exchange is resolved into two elements, sale and
purchase. It is the reunion of these two elements which renders the
exchange complete."
We must remark, also, that the constant appearance of money in every
exchange has overturned and misled all our ideas: men have ended in

thinking that money was true riches, and that to multiply it was to
multiply services and products. Hence the prohibitory system; hence
paper money; hence the celebrated aphorism, "What one gains the other
loses;" and all the errors which have ruined the earth, and embrued it
with blood.[2] After much research it has been found, that in order to
make the two services exchanged of equivalent value, and in order to
render the exchange equitable, the best means was to allow it to be free.
However plausible, at first sight, the intervention of the State might be,
it was soon perceived that it is always oppressive to one or other of the
contracting parties. When we look into these subjects, we are always
compelled to reason upon this maxim, that equal value results from
liberty. We have, in fact, no other means of knowing whether, at a
given moment, two services are of the same value, but that of
examining whether they can be readily and freely exchanged. Allow the
State, which is the same thing as force, to interfere on one side or the
other, and from that moment all the means of appreciation will be
complicated and entangled, instead of becoming clear. It ought to be
the part of the State to prevent, and, above all, to repress artifice and
fraud; that is, to secure liberty, and not to violate it. I have enlarged a
little upon exchange, although loan is my principal object: my excuse is,
that I conceive that there is in a loan an actual exchange, an actual
service rendered by the lender, and which makes the borrower liable to
an equivalent service,--two services, whose comparative value can only
be appreciated, like that of all possible services, by freedom. Now, if it
is so, the perfect lawfulness of what is called house-rent, farm-rent,
interest, will be explained and justified. Let us consider the case of
loan.
Suppose two men exchange two services or two objects, whose equal
value is beyond all dispute. Suppose, for example, Peter says to Paul,
"Give me ten sixpences, I will give you a five-shilling piece." We
cannot imagine an equal value more unquestionable. When the bargain
is made, neither party has any claim upon the other. The exchanged
services are equal. Thus it follows, that if one of the parties wishes to
introduce into the bargain an additional clause, advantageous to himself,
but unfavourable to the other party, he must agree to a second clause,
which shall re-establish the equilibrium, and the law of justice. It would
be absurd to deny the justice of a second clause of compensation. This

granted, we will suppose that Peter, after having said to Paul,