# The Poverty of Philosophy/Chapter 1/Section 1

The Poverty of Philosophy
Chapter I. A Scientific Discovery.
Section I.—Opposition of Utility-Value to Exchange-Value.
"The capacity possessed by all products, natural or industrial, to serve the subsistence of man is specially described as utility-value; the capacity they have of being given in exchange for each other as exchange-value. . . . How does utility-value become exchange-value? . . . . . . The generation of the idea of value (in exchange) has not been noted by the economists with sufficient care; it is important for us to halt here. Since among the objects of which I have need many are found in nature only in very small quantities, or, in some cases, not at all, I am forced to aid in the production of what I want; and, as I cannot turn my hand to so many things, I propose to other men, my collaborators in different functions, to cede to me a portion of their products in exchange for mine." (Proudhon, vol. I., chap. ii.)
M. Proudhon proposes to himself to, before all, explain to us the double nature of value, "the distinction in value," ​the process which makes exchange-value of utility-value. It is important for us to halt with M. Proudhon at this act of transubstantiation. This is how this act is accomplished according to our author:
A large number of products are not found in nature, they are found at the end of industry. Suppose his needs exceed the spontaneous production of nature, man is forced to have recourse to industrial production. What is this production, in the supposition of M. Proudhon; What is its origin? A single man experiencing the want of a large number of things "cannot turn his hand to so many things." To have so many wants to satisfy supposes so many things to produce—there are no products without production—to have so many things to produce pre-supposes more than the hand of a single man already assisting in production. But from the moment that you suppose more than one hand assisting in production you have already supposed a whole system of production based on the sub-division of labor. Thus the need, such as M. Proudhon supposes it, itself pre-supposes the whole sub-division of labor. In supposing the sub-division of labor you have exchange, and consequently exchange-value. It would have been just as well to have supposed exchange-value in the first place.
But M. Proudhon prefers to make the circuit. Let us follow him in all his detours, to always return to the point of departure.
To leave the state of things in which each produces solitarily, and to arrive at exchange, "I address myself," says M. Proudhon, "to my collaborators in various functions." Then, it seems, I have some collaborators who all have various functions, without I and all the others, in order to arrive at such a state of things—always according to the supposition of M. Proudhon—​having abandoned the solitary and unsocial position of Robinson Crusoe. The collaborators, and the diverse functions, the division of labor and the exchange which it indicates are all existing already.
To summarise: I have wants based upon the division of labor and on the exchange of commodities. In supposing these wants M. Proudhon finds that he has supposed exchange, exchange-value, of which he precisely proposes to "note the generation with more care than the other economists."
M. Proudhon could just as well have inverted the order of things without by so doing inverting the justness of his conclusions. To explain exchange-value there must be exchange. To explain exchange there must be division of labor. To explain the division of labor there must be wants which necessitate the division of labor. To explain these wants it is necessary to "suppose" them, which is not to deny them, contrary to the first axiom of M. Proudhon's prologue: "To suppose God is to deny him." (Prologue, p. i).
How does M. Proudhon, for whom the division of labor is supposed known, take this to explain exchange-value, which for him is always the unknown?
"A man" sets out "to propose to other men, his collaborators in various functions," to establish exchange and to make a distinction between use-value and exchangeable value. In accepting this proposed distinction the collaborators have left to M. Proudhon no other "care" than to take account of the fact, to mark, to "note" in his treatise of political economy "the generation of the idea of value." But he owes it to us, always, to explain "the generation" of this proposition, to tell us, finally, how this single solitary man, this Robinson Crusoe, has had suddenly the idea of making ​"to his collaborators" a proposition of this kind, and how his collaborators have been led to accept it without any protest whatever.
M. Proudhon does not enter into these genealogical details. He simply gives to the fact of exchange a kind of historical cachet in presenting it under the form of a motion, which a third party has made, tending to establish exchange.
That is a sample of "the historical and descriptive method" of M. Proudhon, who professes a superb disdain for the "historical and descriptive method" of Adam Smith and Ricardo.
Exchange has its own history. It has passed through different phases.
There was a time, as in the Middle Ages, when only the superfluity, the excess of production over consumption, was exchanged.
There was, again, a time when not only the superfluity but all the products, the whole of industrial existence, entered into commerce, in which the whole production depended entirely upon exchange. How are we to explain this second phase of exchange—saleable value at its second power?
M. Proudhon would be prepared with an answer: Admit that a man has "proposed to other men, his collaborators in various functions," to raise saleable value to its second power.
Lastly, there comes a time when all that men have regarded as inalienable become objects of exchange, of traffic, and can be disposed of. It is the time in which even the things which until then had been communicated, but never exchanged; given, but never sold; acquired, but never bought—virtue, love, opinion, science, conscience, &c.—where all at last enter into commerce. It ​is the period of general corruption; of universal venality, or, to speak in the terms of political economy, the time when everything moral or physical having become a saleable commodity, is conveyed to the market to be appraised at its proper value.
How can we explain this new and last phase of exchange—saleable value at its third power?
M. Proudhon would have an answer all ready: Put it that a person has "proposed to some other persons, his collaborators in various functions," to make of virtue, love, &c., a saleable value, to raise exchange-value to its third and last power. We thus see that the "historical and descriptive method" of M. Proudhon suffices for everything, it answers to everything, it explains everything. If it is above all a question of explaining historically "the generation of an economic idea," he supposes a man who proposes to other men, his collaborators in various functions, that they should accomplish this act of generation, and all is said.
Henceforth we accept the "generation" of exchange-value as an accomplished fact; it only remains now to explain the relation of exchange-value to utility-value. Listen to M. Proudhon.
"The economists have very well explained the double character of value; but what they have not set out with equal clearness is its contradictory nature; it is here that our criticism begins.. . . . It is a small matter to have signalised in utility-value and exchange-value this astonishing contrast, in which the economists are accustomed to see nothing but the most simple matter: it is necessary to show that this pretended simplicity hides a profound mystery which it is our duty to penetrate.. . . . In technical terms use-value and exchange-value are in inverse ratio the one to the other."
​If we have grasped M. Proudhon's idea, here are the four points he proposes to establish:
(1) Utility-value and exchange-value form an "astonishing contrast," they are in opposition to each other.
(2) Utiltity-value and exchange-value are in inverse ratio the one to the other, in contradiction.
(3) The economists have neither seen nor known, either the opposition or the contradiction.
(4) The criticism of M. Proudhon begins at the end.
We also, we will commence at the end, and in order to clear the economists from the accusations of M. Proudhon we will hear what two economists of some importance have to say.
Sismondi: "It is the opposition between value in use and exchangeable value to which commerce has reduced all things, &c." ("Études,"," vol. II, p. 162. Brussels edition.)
Lauderdale: "In general national wealth (utility-value) diminishes in proportion as individual fortunes increase by the augmentation of saleable value; and to the extent that these are reduced by the diminution of this value, the first generally increases." ("Enquiries into the Nature and Origin of Public Wealth.")
Upon the opposition between use-value and exchange-value Sismondi has based his principal theory that the diminution of the revenue is in proportion to the increase of production.
Lauderdale has based his system on the theory of the inverse ratio of the two kinds of value, and his doctrine was so popular at the time of Ricardo that the latter could speak of it as of a thing generally known:—
"It is through confounding the ideas of value and wealth, or riches, that it has been asserted that by diminishing the quantity of commodities, that is to say, ​of the necessaries, conveniences and enjoyments of human life, riches may be increased." (Ricardo, "Principles of Political Economy.")
We have just seen that the economists before M. Proudhon have "signalised" the profound mystery of oppositon and contradiction. Let us now see how in his turn M. Proudhon explains this mystery after the economists.
The exchange-value of a product falls in proportion as the supply increases; in other terms, the greater the abundance of a product relatively to the demand, the lower its exchange-value or its price falls. And vice versa, the smaller the supply relatively to the demand, the higher the exchange-value or the price of the product rises; in other terms, the geater the scarcity of the products offered relatively to the demand the dearer they are. The exchange-value of a product depends upon its abundance or its scarcity, but always in relation to the demand. Suppose a most rare product, one unique of its kind, if you will: this unique product would be more than abundant if it were not wanted at all. On the other hand, suppose a product multiplied by millions, it will be always scarce so long as it does not meet the demand; that is to say, if it is in too great demand.
These are mere truisms, but it is necessary to reproduce them here in order to make M. Proudhon's mysteries clearly understood.
"Therefore in following the principle to its ultimate consequences, we come to this conclusion, the most logical in the world, that the things which are most necessary as articles of use, and whose quantity is infinite can be had for nothing, and those of which the utility is nil and which are extremely scarce will have an inestimable price. To increase the difficulty, actual ​practice does not admit these extremes; on the one side, no human product ever attains the infinite in magnitude; on the other the most scarce things have need of some degree of utility in order to be possessed of any value. Use-value and exchange-value are thus fatally chained to each other, although by their nature they continually tend to exclude each other." (Vol. I., p. 39.)
What is it which adds to the difficulty of M. Proudhon? It is simply that he has forgotten the demand, and that a thing can only be scarce or abundant according as it is in demand. Demand once set aside he assimilates exchange-value to scarcity and use-value to abundance. Practically in saying that the things "of whih the utility is nil, and which are extremely scarce, will have an inestimable price," he simply says that exchange-value is nothing but scarcity. "Extreme scarcity and utility nil," is pure scarcity. "Inestimable price" is the maximum of exchange-value, it is pure exchange-value. He puts these two terms in equation. Then, exchange-value and scarcity are equivalent terms. In arriving at these pretended "extreme consequences," M. Proudhon finds in effect that he has pushed to extremes, not the things, but the terms which express them, and in that he demonstrates his rhetoric rather than his logic. He finds once more his first hypotheses in all their nakedness when he believes that he has discovered new consequences. Thanks to the same process he succeeds in identifying use-value with pure abundance.
After having put in equation exchange-value and scarcity, utility-value and abundance, M. Proudhon is astonished not to find utility-value in scarcity and exchange-value, nor exchange-value in abundance and utility-value; and in seeing that actual practice does not admit of these extremes he can do no other than believe ​in the mystery. There is for him inestimable price, because there are no buyers, and he will never find them while he continues to exclude demand.
From another side, the abundance of M. Proudhon seems to be something spontaneous. He all at once forgets that there are people who produce, and that it is to their interest never to lose sight of the demand. If not, how can M. Proudhon have been able to say that the things which are very useful must be very cheap, or even cost nothing? He ought to have concluded, on the contrary, that it is necessary to restrict abundance, the production of very useful things, if one wished to raise their price, their value in exchange.
The old vine growers of France, in asking for a law prohibiting the planting of fresh vines; the Dutch, in burning the spices of Asia, in uprooting the clove-trees in the Malays, wished simply to reduce abundance in order to raise the exchange-value. So the society of the Middle Ages, in limiting by law the number of associates whom a single master could employ, and in limiting the number of instruments he could use, acted on the same principle. (See Anderson, "History of Commerce.")
After having represented abundance as use-value and scarcity as exchange-value—nothing more easy than to demonstrate that abundance and scarcity are in inverse ratio—M. Proudhon identifies use-value with supply and exchange-value with demand. To make the antithesis still more clear, he substitutes other terms by putting value of choice instead of exchange-value. Here then the struggle has changed its ground and we have on one side utility (use-value, supply), on the other choice (exchange-value, demand.)
These two powers opposed the one to the other, who will reconcile them? What can be done to bring them ​into accord? Is it possible for us only to establish between them a point of comparison?
"Certainly," cries M. Proudhon, "there is one, it is choice! The price which will result from this struggle between supply and demand, between utility and choice, will not be the expression of eternal justice."
M. Proudhon proceeds to develop this antithesis:
"In my character of free purchaser, I am the judge of what I want, judge of the convenience of the article, judge of the price I am willing to put upon it. On the other hand, in your quality of free producer, you are master of the means of production, and in consequence you have the power to reduce your cost of production." (Vol. I., p. 42.)
And as demand, or exchange-value, is identical with opinion, M. Proudhon is led to say:
"It is proved that it is the free will of man which gives rise to the opposition between use-value and exchange-value. How can we solve this opposition whilst maintaining free will? And how can we sacrifice this, without at least sacrificing man?" (Vol. I, p. 51.)
Thus then there is no result possible. There is a struggle between two incommensurable powers, so to speak, between utility and choice, between the free purchaser and the free producer.
Let us examine these things a little more closely.
Supply does not represent utility exclusively; demand does not represent choice exclusively. He who demands, does he not also offer a product of some kind, or the representative sign of all products, money; and in supplying this does he not, according to M. Proudhon, represent utility, or use-value?
On the other hand, he who offers, does he not also demand a product of some kind, or the representative ​sign of all products? And does he not thus become the representative of choice, of the value of choice, or exchange-value?
A demand is at the same time an offer, an offer is at the same time a demand. Thus the antithesis of M. Proudhon in simply identifying supply and demand, the one to utility, the other to choice, rests merely on a futile abstraction.
What M. Proudhon calls value of utility other economists, with as much reason, call value of choice. We will only cite Storch. ("Cours d'Économie Politique," Paris, 1823, pp. 88 and 99.)
According to him, those things are called wants, of which we feel the want; those things are called values to which we attribute value. Most things only have value because they satisfy wants engendered by choice. Opinion as to our wants may change, then the utility of things, which expresses only the relation of those things to our wants, may change also. Natural wants themselves change continually. What variety there is, for instance, in the objects which serve as the staple food among different peoples!
The struggle is not really between utility and choice; it is between the saleable value demanded by him who wishes to sell, and the saleable value offered by him who makes the demand, who wishes to buy. The exchangeable value of the product is each time the result of these contradictory appreciations.
In a final analysis, supply and demand bring together production and consumption, but production and consumption based upon individual exchanges. The product offered is not utility in itself. It is the consumer who verifies its utility. And even when its quality of utility is recognised, it is not exclusively utility. In the ​course of production it has been exchanged against all the expenses of production, such as raw material, work-people's wages, &c., all things which are saleable values. Thus the product represents, in the eyes of the producer, a sum of saleable values. What he offers is not merely an object of utility, but, above all, a saleable value.
As to demand, it can only be effective on condition that it has at its disposal some means of exchange. These means themselves are products, saleable values.
In supply and demand then, we find, on one side a product which has cost some saleable values, and the desire to sell; on the other, some means which have cost some saleable values and the desire to purchase.
M. Proudhon opposes the free purchaser to the free producer. He has given to the one and to the other some purely metaphysical qualities. This it is which makes him say: "It is proved that it is the free will of man which gives rise to the opposition between use-value and exchange-value."
The producer, from the moment that he has produced in a society based on the division of labor and the exchange of commodities—and that is the hypothesis of M. Proudhon—is forced to sell. M. Proudhon makes the producer master of the means of production; but he will agree with us that it is not upon his free will that his means of production depend. Further, these means of production consist largely of products which come to him from without, and in modern production he is not even free to produce whatever quantity he likes. The actual degree of development of productive forces obliges him to produce on such and such a scale.
The consumer is not more free than the producer. His choice depends upon his means and his wants. The one and the other are determined by his social position, ​which itself depends upon the entire social organisation. Thus the worker who buys potatoes, and the kept woman who buys lace, follow the one and the other their respective choice. But the diversity of their choice is explained by the difference in the positions which they occupy in the world, a difference which is the product of the social organisation.
Is the entire range of wants based upon choice or upon the whole organisation of production? In most cases wants spring directly from production or from a state of things based upon production. The commerce of the world almost entirely turns upon wants arising not from individual consumption but from production. Thus, to take another example, does not the need for notaries presuppose a given civil right, which is only an expression of a certain development of property; that is to say, production?
For M. Proudhon it is not sufficient to have eliminated from the relation of supply and demand the elements of which we have just spoken. He pushes abstraction to the farthest limits, in confounding all producers in a single producer, all consumers in a single consumer, and in establishing the struggle between these two chimerical personages. But in the real world matters go otherwise. The competition between those who offer, and the competition between those who demand, forms a necessary element of the struggle between buyers and sellers, from which saleable value arises.
After having eliminated the cost of production and competition, M. Proudhon can at his ease reduce to absurdity the formula of supply and demand.
"Supply and demand," he says, "are nothing but two ceremonial forms serving to set before each other use-value and exchange-value, and to effect their reconcilia​tion. They are the two electric poles which, when put into relation with each other, produce the phenomenon of affinity called exchange." (Vol. I., pp. 49 and 50.)
This amounts to as much as saying that exchange is only a "ceremonial form" to bring face to face the consumer and the object of consumption. As well say that all economic relations are "ceremonial forms" serving as intermediaries to immediate consumption. Supply and demand are relations of a given production, neither more nor less than are individual exchanges.
Of what, after all, then, does M. Proudhon's dialectic consist? In substituting for use-value and exchange-value, for supply and demand, some abstract and contradictory notions, such as scarcity and abundance, utility and choice, a producer and a consumer, both of them chevaliers of free will.
And to what, as the result of all this, does he come?
To arrange the means of introducing later one of the elements which he had excluded, the cost of production, as the synthesis between use-value and exchange-value. It is thus that in his eyes the cost of production constitutes synthetic value, or constituted value.