Wealth as Value in Exchange

3. The abstract idea of wealth or of value in exchange* is a definite idea.

Consequently, it is susceptible of rigorous treatment in combinations. It must be carefully distinguished from the accessory ideas of:

• utility
• scarcity
• suitability to the needs and enjoyments of mankind

These ideas are still suggested by the word “wealth” in common speech.

These ideas are variable, and by nature indeterminate. Consequently, they are ill-suited for the foundation of a scientific theory.

The ambiguity of the word wealth in ordinary speech has led to:

• the division of economists into schools
• the war waged between practical men and theorists

The lack of a fixed standard for the utility of things is the cause of:[1]

• the confusion between the fixed, definite idea of value in exchange, and the ideas of utility which each person estimates in his own way*

Sometimes, a publisher destroys 2/3 copies of some book so that it can be sought after by connoisseurs, letting him derive more profit from them. [2]

• There might be a book of which it would be easier to sell 1,000 copies at 60 francs, than 3,000 copies at 20 francs.

Calculating in this way, the Dutch Company destroyed in the islands of the Sound a part of the precious spices of which it had a monopoly.

• Here is a complete destruction of objects to which the word wealth is applied because they are both sought after, and not easily obtainable.
• Here is a miserly, selfish act, evidently opposed to the interests of society. Yet this sordid act, this actual destruction, is a real creation of wealth* in the commercial sense of the word.

The publisher’s inventory will rightly show a greater value for his assets. After the sale of the copies,

and after the copies have left his hands, either wholly or in part, if each individual should draw up his inventory in commercial fashion, and if all these partial inventories could be collated to form a general inventory or balance sheet of the wealth in circulation, an increase would be found in the sum of these items of wealth.

On the contrary, suppose that only 50 copies exist of a curious book. This scarcity raises the price at auction to 300 francs a copy. [This will lead to a total wealth of 15,000 francs]

A publisher reprints this book in an edition of 1,000 copies worth 5 francs each, bringing down its price from 300 francs.

The 1,050 copies will therefore only produce 5,250 francs of wealth. [1,050 * 5]

This would lead to a wealth loss of 9,750 francs*. [15,000-5,250]

*Superhysics Note: Here, Cournot becomes a selfish merchant and therefore adopts Mercantilism, the opposite of Adam Smith

The decrease will be even more considerable if (as should be the case) the value of the raw materials is considered, from which the reprints were made, and which existed prior to the reprinting.

Here is an industrial operation, a material production, useful to the publisher who undertook it, useful to those whose products and labour it employed, useful even to the public if the book contains valuable information, and which is nevertheless a real destruction of wealth, in the abstract and commercial meaning of the term.

The rise and fall of exchange show perpetual oscillations in values, or in the abstract wealth in circulation, without intervention of actual production or destruction of the physical objects to which, in the concrete sense, the term wealth is applicable.

Commerce* is the transportation of raw materials or finished products from one market to another. It adds to the worth of the objects transported. It creates value or wealth in just the same way as:

• the labour of the miner who extracts metals from the bowels of the earth, or
• the worker who adapts them to our needs.

*Superhysics Note: Here, Cournot confuses commerce with logistics. The labor of logistics is usually inferior to the labor of production. It can be totally negated by picking up the product yourself from the maker or factory. We define commerce as a system of exchange that pegs the value to money only. It includes logistics, point-of-sales, and even digital payments, as observed in e-commerce. This is oppposed to barter wherein money is not the measure of value.

But commerce may also be a cause of destruction of values, even while making profits for the merchants who carry it on. This is even when it is a benefit to the countries which it connects in commercial intercourse.

A fashion, a whim, or a chance occurrence may cause a creation or annihilation of values without notable influence on what is regarded as public utility or the general welfare.

It can even come about that a destruction of wealth may be salutary, and an increase detrimental.

If chemists should solve the problem of making diamonds, jewellers and the ladies who own sets of jewellery would suffer heavy losses; the general mass of wealth capable of circulation would experience a notable decrease, and yet I can hardly think than any sensible man would be tempted to consider it a public calamity, even though he might regret the individual losses involved.

On the contrary, if the taste for diamonds should decline, if wealthy people should stop devoting an important part of their fortunes to this idle vanity, and if, in consequence, the value of diamonds in commerce should decrease, wise men would gladly commend this new departure of fashion.