Value is determined after bargaining between two contracting parties.

Frédéric Bastiat
Economic Harmonies

Concerning the value of landed property, it is easy to understand this mechanism of defining value. But it is the same for defining the value of anything, even if the bargaining does not effectively takes place – it is sufficient that one and the other contracting party has the possibility to refuse the transaction for the price to be set as if bargaining had occurred.

It is noticeable that today’s quote matches the definition of value that will be given by Jevons, Walras and Menger twenty years later and that will be set once and for all.

In any case, this chapter about landed property reverts back to the difference that Frédéric Bastiat sees between value and utility. According to him, this is the reason why economists were wrong when they attempted to justify the existence of landed property, mistake upon which the communist theory aiming at abolishing property was built (abolishing landed property in the first place that became then abolishing property of capital). It is now very clear that private property is absolutely necessary for the functioning of a market economy. What Bastiat here attempts at convincing us is that it does not reflect injustice and does not create a moral prejudice that should be compensated.

Other quotes from Landed Property:
Introduction – Part 1 – Part 2 – Part 3 – Part 4 – Part 5 – Conclusion

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