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J.-J.-L. Graslin, an ‘anti-economist’, who fundamentally criticized physiocratic doctrine, and N. Baudeau, described as a ‘blind enthusiast’ of Physiocracy, started an open controversy in journals over the value of the processing industry in 1767. The purpose of this paper is to clarify the historical significance of their short-term controversy and Graslin’s far-sighted subjective theory of value confronting Physiocracy. As with other physiocrats, Baudeau insisted on the sterility of industry because it does not produce any net product. Baudeau argued that the value of a processed product was composed of two values: the value of materials and that of food for labour. By contrast, Graslin maintained that the value of labour must be considered separately from the value of food for labour. According to Graslin, labour that processes raw materials generates new value beyond the value of those materials, in the same way that agricultural labour generates value; therefore, the former type of labour is not sterile. The controversy symbolizes a preliminary confrontation between the upcoming cost theory of value and the subsequent subjective theory of value. On the latter, Graslin produces a table similar to Carl Menger’s table of needs satisfaction.
