The equivalence of services results from voluntary exchange and the free bargaining that precedes it.
Frédéric Bastiat
Economic Harmonies
Today’s quote constitutes one of the best definition of value to be found in Frédéric Bastiat’s writings, which has been touched upon in the corresponding chapter already. In the present chapter, which pertains to the differences between private and public services, one can take a glimpse at one of the major issues linked to the latter, namely the impossibility there is to assess the value of public services. It does not mean that their value is necessarily wrong but, since there is no voluntary exchange of public services and that there is no free bargaining to reach it, it is impossible to know if the value is correct.
As to the valuation of private services, it is important to note that the free bargaining that precedes it can take several forms. Indeed, one can think that the price of a yoghurt in a supermarket is not really subject to bargaining. However, to the extent that the exchange is free, that the seller can ask for any price he fancies and that the buyer is allowed to refuse such a price, there is bargaining indeed. If the seller cannot dispose of its wares at the requested price, he will have to review his claims and if the buyer refuses all the prices offered, he will end up without yoghurts. The fact that one or the other refuses the price does not mean others will as well.
Competition between buyers as well as competition between sellers will allow to set the value of the goods or services, which are a function of the value of all other goods and services offered for exchange, as soon as this competition can be pursued freely.
Other quotes from Private and Public Services:
Exchange – Value – Monopoly – Individual – Responsibility – Rights – Revolution – Ethics