1.3.4 services

The basic assumption of David Ricardo and Karl Marx is that labour is materialised in commodities. If this fundamental idea is wrong, the rest of their theory is wrong as well. The problem is that following this idea, more than half of the GDP is worth nothing because more than half of the GBD are services and the definition of a service is, that production and consumption happen at the time and nothing remains, that could contain any value. If the hair is cut, the orchestras finished to play a symphony, a package is delivered to the customer, the taxi driver has brought his customers to the place they want to go, the tourist is back at home nothing is left and, therefore, nothing can be accumulated.

Actually, the relevant question is if a service can be considered as an investment or as pure consumption. Pure consumption doesn't lead, if we put aside Keynesian effects, to no growth. Investments leads to economic growth. The question whether the labour is accumulated in something or not is completely irrelevant.

Teaching is a service, but, at least, if is about economically relevant issues, an investment. We can even say that "capital" is accumulated, but only in the head of the students..

The argument of Jean-Baptiste Say is perhaps not very good. A hardcore believer in the materialisation of labour would say that a saved patient is only consumption and the money would have been better invested in something productive. However, the doctor gets real money and from this real money he can save something that can be used for investments, therefore, services, as well as products, can lead to savings. That would be more coherent if someone wants to stick to the idea that savings are a necessary condition for investments. Something we don't do.

Un médecin vient visiter un malade, observe les symptômes de son mal, lui prescrit un remède, et sort sans laisser aucun produit que le malade ou sa famille puissent transmettre à d'autres personnes, ni même conserver pour la consommation d'un autre temps. L'industrie du médecin a-t-elle été improductive ? Qui pourrait le penser ? Le malade a été sauvé. Cette production était-elle incapable de devenir la matière d'un échange ? Nullement, puisque le conseil du médecin a été échangé contre ses honoraires ; mais le besoin de cet avis a cessé dès le moment qu'il a été donné. Sa production était de le dire ; sa consommation, de l'entendre; il a été consommé en même temps que produit. C'est ce que je nomme un produit immatériel

A doctor visits a sick person, examines the symptoms of his illness, writes a prescription and goes away without leaving a product that the sick person or his family can give to someone else. It is even impossible to conserve it for a later use. Were the activities of the doctor therefore unproductive? Who would believe that the sick person got well again. This product couldn't be the object of an exchange? Not at all. The product of the doctor could have been exchanged for a fee. The need for this advise didn't exist any more once it was given. The production consisted only in saying it and was consumed when it was said. At the time it was consumed, it was produced as well. That's what I call a non material product.

Jean-Baptiste SAY, Traité d’économie politique, Chapitre XIII, Des produits immatériels, ou des valeurs qui sont consommées au moment de leur production

For an unknown reason, Jean-Baptiste Say mentions only Adam Smith, although the idea that only commodities where labour is materialised have an value is radicalised by David Ricardo. It would have been more logical to address David Ricardo.

Smith refuse aux résultats de ces industries le nom de produits. Il donne au travail auquel elles se livrent le nom d'improductif, et c'est une conséquence du sens qu'il attache au mot richesse ; au lieu de donner ce nom à toutes les choses qui ont une valeur échangeable, il ne le donne qu'aux choses qui ont une valeur échangeable susceptible de se conserver, et par conséquent il le refuse aux produits dont la consommation a lieu à l'instant même de leur création. Cependant l'industrie d'un médecin, et, si l'on veut multiplier les exemples, l'industrie d'un administrateur de la chose publique, d'un avocat, d'un juge, qui sont du même genre, satisfont à des besoins tellement nécessaires, que, sans leurs travaux, nulle société ne pourrait subsister. Les fruits de ces travaux ne sont-ils pas réels ? Ils sont tellement réels, qu'on se les procure au prix d'un autre produit qui est matériel, auquel Smith accorde le nom de richesse, et que, par ces échanges répétés, les producteurs de produits immatériels acquièrent des fortunes.

Smith refuses to call the results of these industries products. He calls that kind of work unproductive. This is a consequence of the meaning he attributes to the word wealth. Instead of giving this name to any product that can be exchanged for something else, he only gives it to things that can be changed and as a consequence, he refuses to give this name to the products where consumption happens at the same time as production. However, the service of a doctor and, if other examples are needed, those of an public administrator, of a lawyer, a judge, which are of the same species, satisfy needs that are so basic, that a society couldn't live without them. Are the results of this work not real? They are so real, that they are exchanged for the price of a material product that Adam Smith calls wealth and that the producers of non materials products make wealthier by repeated changes.

Jean-Baptiste SAY, Traité d’économie politiqueChapitre XIII, Des produits immatériels, ou des valeurs qui sont consommées au moment de leur production

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Jean-Baptiste Say is the only one who recognises the character of services and the first one who defines them as they are defined today. In the case of services the product is consumed at the same time as it is produced.

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