Chapter 3 argues that the division of the four-tale sequence into two fragments has obscured the pivotal function of the Squire’s performance, and especially of the linking passage that accomplishes the positioning of this performance as the dialectical answer to the Merchant’s response to the Clerk. Negating the Merchant’s negation of the Clerk, the Squire’s performance reinstates literary value as the power of the distinctive discourse of romance fiction: the power to provide a restorative vision of a world governed by exactly the kind of ideals that the Merchant’s view understands as mere smokescreens for material desire. Moreover, by associating this kind of literary value with the normative sociocultural practice of a young aristocrat, the Squire’s performance understands literary discourse as also possessing the concrete value of the cultural capital that helps distinguish the elite from the common. The chapter concludes that the Squire’s response to the Merchant nonetheless collapses, not for dramatic reasons (as one trend in criticism has held), but because of a contradiction at the heart of its view of literary value that Chaucer could not overcome.