Value In Exchange Or Of Wealth In General

1. The Teutonic root Rik or Reich has passed into all the Romance languages.

It vaguely expressed a relation of superiority, strength, or power.

Los ricos hombres is still used in Spain for distinguished noblemen and eminent men. Such is also the force of the words riches hommes in the French of de Joinville.

The idea which the word wealth presents to us today could not have been grasped by men of Teutonic stock when the feudal law was in full vigour.

All the following are found among the most savage tribes:

• property
• power
• the distinctions between masters, servants and slaves
• abundance and poverty
• rights and privileges

These flow necessarily from the natural laws among individuals and families.

But our current idea of wealth from our advanced state of civilization can only be slowly developed as a consequence of:

• the progress of commercial relations, and
• the gradual reaction of those relations on civil institutions.

A shepherd owns a vast pasture ground. No one can disturb him with impunity.

But it would be vain for him to think of exchanging it for something which he might prefer.

• There is nothing in existing habits and customs to make such an exchange possible.
• He is a landholder, but he is not rich.
• He has a lot of cattle and milk.
• He can provide for many servants and slaves.
• He maintains a generous hospitality towards poor dependents.

But he is neither able to accumulate his products, nor to exchange them for objects of luxury which do not exist.

• He has power, authority, the enjoyments which belong to his position, but he has not wealth*.

2. Men can live for a considerable time without an exchange of goods and services.

But from this natural and instinctive action, it is a long step to the abstract idea of value in exchange. This value supposes that the objects with value are in commercial circulation i.e. it is always possible to find means to exchange them for other objects of equal value.

“Wealth” today therefore means the things to which the state of commercial relations and civil institutions permits a value in exchange to be attached.

To form an intelligible theory, we should absolutely identify “wealth” with that which is presented to us by “exchangeable values”.

• Under this conception, wealth has only an abstract existence.
• Strictly speaking, no one thing is always exchangeable at will for any other commodity of equal value.

In the act of exchange, there is friction to be overcome just like in the transmission of power by machinery.

• Losses which must be borne.
• Limits exist which cannot be exceeded.

The proprietor of a great forest is only rich if he can manage his lumber production with prudence, and not glutting the market with his lumber.

The owner of a valuable picture gallery may spend his life in the vain attempting to find purchasers.

Whereas on the other hand in a city, the conversion of a sack of grain into money only requires the time to carry it to the grain market.

At great commercial centres, a stock of coffee can always be sold on the exchange.

The extension of commerce and the development of commercial facilities tend to bring the actual condition of affairs nearer and nearer to this order of abstract conceptions.

These abstract conceptions are alone the basis for theoretical calculations.

• Likewise, the skillful engineer gets nearer to theoretical conditions by reducing friction through polished bearings and accurate gearing.

In this way, nations make progress in the commercial or mercantile system.

These 2 expressions are etymologically equivalent. According to Bentham, one is now taken in a good, and the other in a bad sense.

The progress of nations in the commercial system is a fact.

Our part is to observe, and not to criticise, the irresistible laws of nature.

Whatever man can measure, calculate, and systematize, ultimately becomes the object of measurement, calculation, and system.

Wherever fixed relations can replace indeterminate, the substitution finally takes place.

It is thus that the sciences and all human institutions are organized.

The use of coins has been handed down to us from remote antiquity. It has powerfully aided the progress of commercial organization, just as the art of glass-making helped many discoveries in astronomy and physics.

But commercial organization is not essentially bound to the use of the monetary metals.

All means are good which tend to facilitate exchange, to fix value in exchange.

In the further development of this organization, the monetary metals will gradually reduce in importance.