of Puera held a council. An old man (who had always been suspected of being secretly bribed by Stulta) stood up and said: “The obstacles created by Stulta damage our sales, and this is terrible. The ones we have created ourselves damage our purchases, and this is
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also terrible. We cannot do anything about the first situation, but the second is in our power. Let us at least free ourselves of one since we cannot get rid of both. Let us abolish our Corps of Obstructors without demanding that Stulta do the same. One day, it will doubtless learn to do its sums better.”
A second councilor, a practical man of action who had no theoretical principles and was imbued with the experience of his ancestors, replied: “Do not listen to this dreamer, this theoretician, this innovator, this utopian,5 this economist, this Stulta-lover.6 We would all be ruined if the obstacles on the road were not equal, in equitable balance between Stulta and Puera. There would be greater difficulty in going than in coming and in exporting than in importing. Compared with Stulta, we would be in the inferior position that Le Havre, Nantes, Bordeaux, Lisbon, London, Hamburg, and New Orleans are in compared with the towns situated at the sources of the Seine, the Loire, the Garonne, the Tagus, the Thames, the Elbe, and the Mississippi, for it is harder to go up rivers than to go down them.” (A voice observed that towns at the mouths of rivers were more prosperous than those at their sources.) “That is not possible.” (The same voice: But it is true.) “Well then, they have prospered contrary to the rules.” Such conclusive reasoning shook the assembly. The speaker succeeded in convincing it by referring to national independence, national honor, national dignity, national production, the flood of products, tributes, and merciless competition; in short, he carried the day for maintaining the obstacles and, if you are interested in this, I can take you to certain countries in which you will see with your own eyes the Corps of Road Builders7 and the Corps of Obstructors working with the best information available to them, in accordance with a decree issued by the same legislative assembly and at the expense of the same taxpayers, the former to clear the road and the latter to obstruct it.
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PUBLISHING HISTORY:
Original title: “Prix absolus.”
Place and date of first publication: JDE 12 (October 1845): 213–15. This chapter was originally numbered 12 in the JDE but became chapter 11 in the book version of Economic Sophisms and incorporated chapter 11, “Stulta et Puera,” from JDE 12: 211–12.
First French edition as book or pamphlet: Economic Sophisms (First Series) (1846).
Location in Paillottet’s edition of OC: Vol. 4. Sophismes économiques. Petits pamphlets I, pp. 70–74.
Previous translations: 1st English ed., 1846; 1st American ed., 1848; FEE ed., 1964.
Do you wish to assess the merits of freedom and protection? Do you wish to understand the effects of an economic phenomenon? Then look for its effects on the abundance or scarcity of things and not on whether prices rise or fall. Be careful of thinking only about nominal prices;1 this will lead you into an inextricable labyrinth.
After establishing that protection makes things more expensive, M. Mathieu de Dombasle adds:
“The increase in prices raises living expenses and consequently the price of labor, (but) each person is compensated for the increase in their expenses by the increase in prices for the things they produce. Thus, if everybody pays more as a consumer, everybody also receives more as a producer.”2
It is clear that this argument can be turned on its head, and we can say: “If everybody receives more as a producer, everybody pays more as a consumer.”
Well, what does that prove? Nothing other than that protection moves wealth about uselessly and unjustly. This is just what plunder does.
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Moreover, to accept that this vast apparatus results in simple mutual compensations, we have to agree with M. de Dombasle’s word “consequently” and be sure that the price of labor rises in line with the price of protected products. This is a question of fact that I pass back to M. Moreau de Jonnès;3 let him please look into whether pay rates have moved upward in line with Anzin mining shares. For my part, I do not think so, because I believe that the price of labor, like all the others, is governed by the relationship between supply and demand. Now, I can quite see that restriction decreases the supply of coal and consequently increases its price, but I see rather less clearly that it increases the demand for labor to the extent of increasing rates of pay. I see this all the less clearly in that the quantity of labor demanded depends on the capital available. Protection may well cause capital to move and shift from one industry to another, but it cannot increase it by an obole.4
Besides, this highly interesting question will be examined elsewhere. I will return to nominal prices and say that there are no absurdities that cannot be made plausible by reasoning like M. de Dombasle’s.
Imagine that an isolated nation that had a given quantity of cash took pleasure in burning half of what it produced each year, and I will take it on myself to prove, using M. de Dombasle’s theory, that it will not be a whit the less rich.
In effect, following the fire, everything will double in price and inventories taken before and after the disaster will show exactly the same nominal value. But in this case, who will have lost? If Jean buys cloth at a higher price, he will also sell his wheat at a higher price, and if Pierre loses on his purchase of wheat, he will make good on the sale of his cloth. “Each person is compensated (I say) for the increase in the amount of their expenses by the increase in the price for the things they produce; and if everybody pays more as a consumer, everybody receives more as a producer.”
All this is a tissue of confusion rather than science. The truth expressed in its simplest form is this: whether men destroy cloth and wheat by fire or through use, the effect will be the same with respect to the price but not with respect to wealth, for it is precisely in the use of things that wealth or well-being consists.
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In the same way, restriction, while decreasing the abundance of things, may increase their price so that, if you like, in purely monetary terms, each person may be just as rich. But in an inventory, does a record of three hectoliters of wheat at 20 francs or four hectoliters at 15 francs come to the same thing from the point of view of satisfying need because the result is still 60 francs?
And it is to this point of view of consumption that I will incessantly bring protectionists back, since this is the purpose of all our efforts and the solution to all problems.5 I will always say to them: “Is it not true that by hampering trade, by limiting the division of labor, and by forcing labor to grapple with the difficulties of location and temperature, restriction ultimately decreases the quantity produced by a given amount of effort?” And what does it matter that the lesser quantity produced under a protectionist regime has the same nominal value as a larger quantity produced under the regime of freedom? Man does not live by nominal values, but by real products, and the more he has of these products, at whatever price, the richer he is.
When writing the foregoing, I did not expect ever to meet an anti-economist who was sufficiently good as a logician to contend explicitly that the wealth of peoples depends on the monetary value of things irrespective
