Frederic Bastiat (1801-1850): Between the French and Marginalist Revolutions
By Thomas J. DiLorenzo
CLAUDE FREDERIC BASTIAT was a French economist, legislator, and writer who championed private property, free markets, and limited government. Perhaps the main underlying theme of Bastiat’s writings was that the free market was inherently a source of “economic harmony” among individuals, as long as government was restricted to the function of protecting the lives, liberties, and property of citizens from theft or aggression. To Bastiat, governmental coercion was only legitimate if it served “to guarantee security of person, liberty, and property rights, to cause justice to reign over all.”
Bastiat emphasized the plan-coordination function of the free market, a major theme of the Austrian School, because his thinking was influenced by some of Adam Smith’s writings and by the great French free-market economists Jean-Baptiste Say, Francois Quesnay, Destutt de Tracy, Charles Comte, Richard Cantillon (who was born in Ireland and emigrated to France), and Anne Robert Jacques Turgot. These French economists were among the precursors to the modern Austrian School, having first developed such concepts as the market as a dynamic, rivalrous process, the free-market evolution of money, subjective value theory, the laws of diminishing marginal utility and marginal returns, the marginal productivity theory of resource pricing, and the futility of price controls in particular and of the government’s economic interventionism in general.
Bastiat’s Intellectual Background
Bastiat was orphaned at age ten, and was raised and educated by his paternal grandparents. He left school at age seventeen to work in the family exporting business in the town of Bayonne, where he learned firsthand the evils of protectionism by observing all the closed-down warehouses, the declining population, and the increased poverty and unemployment caused by trade restrictions.
When his grandfather died, Bastiat, at age twenty-five, inherited the family estate in Mugron, which enabled him to live the life of a gentleman farmer and scholar for the next twenty years. Bastiat hired people to operate the family farm so he could concentrate on his intellectual pursuits. He was a voracious reader, and he discussed and debated with friends virtually all forms of literature. His closest friend was his neighbor, Felix Coudroy. “Coudroy and Bastiat, worked their way through a tremendous number of books on philosophy, history, politics, religion, travel, poetry, political economy, biography, and so on. . . . It was in these conversations that the ideas of Bastiat developed and his thoughts matured.”
Coudroy was initially a follower of Rousseau and, like most of Rousseau’s admirers, then as now, was a socialist. But Bastiat, who always said he preferred a one-on-one conversation to giving a speech to thousands of people, converted Coudroy to classical liberalism.
Bastiat’s first published article appeared in April of 1834. It was a response to a petition by the merchants of Bordeaux, Le Havre, and Lyons to eliminate tariffs on agricultural products but to maintain them on manufacturing goods. Bastiat praised the merchants for their position on agricultural products, but excoriated them for their hypocrisy in wanting protectionism for themselves. “You demand privilege for a few,” he wrote, whereas “I demand liberty for all.” He then explained why all tariffs should be abolished completely.
Bastiat continued to hone his arguments in favor of economic freedom by writing a second essay in opposition to all domestic taxes on wine, entitled “The Tax and the Vine,” and a third essay opposing all taxes on land and all forms of trade restrictions. Then, in the summer of 1844, Bastiat’sent an unsolicited manuscript on the effects of French and English tariffs to the most prestigious economics journal in France, the Journal des Economistes. The editors published the article, “The Influence of English and French Tariffs,” in the October 1844 issue, and it unquestionably became the most persuasive argument for free trade in particular, and for economic freedom in general, that had ever appeared in France, if not all of Europe.
In this article, Bastiat first displayed his mastery of the accumulated wisdom of the economists of the pre-Austrian tradition, and established himself as a brilliant synthesizer and organizer of economic ideas. He immediately gained national and international fame and, as a fellow advocate of free trade, began a friendship with Richard Cobden, the leader of the British Anti-Corn Law League, which succeeded in abolishing all trade restrictions in England by 1850. Bastiat organized a similar organization in France the French Free-Trade Association which was instrumental in France’s elimination of most of its trade barriers in 1860, ten years after Bastiat’s death. Bastiat was especially effective in spreading his influence as editor of the Free Trade Association’s newspaper, Le Libre-Exchange.
After twenty years of intense intellectual preparation, articles began to pour out of Bastiat, and soon took the form of his first book, Economic Sophisms, which to this day is still arguably the best literary defense of free trade available. He quickly followed with his second book, Economic Harmonies,and his articles were reprinted in newspapers and magazines all over France. In 1846, he was elected a corresponding member of the French Academy of Science, and his work was immediately translated into English, Spanish, Italian, and German. Free-trade associations soon began to sprout up in Belgium, Italy, Sweden, Prussia, and Germany, and were all based on Bastiat’s French Free Trade Association.
Bastiat’s Austrian School Ideas
While Bastiat was shaping economic opinion in France, Karl Marx was writing Das Kapital, and the socialist notion of “class conflict” that the economic gains of capitalists necessarily came at the expense of workers was gaining in popularity. Bastiat’s Economic Harmonies explained why the opposite is true that the interests of mankind are essentially harmonious if they can be cultivated in a free society where government confines its responsibilities to suppressing thieves, murderers, and special-interest groups who seek to use the state as a means of plundering their fellow citizens.
Bastiat contributed to Austrian capital theory by masterfully explaining how the accumulation of capital results in the enrichment of the workers by raising labor s marginal productivity and, consequently, its remuneration. Capital accumulation, wrote Bastiat, would also result in cheaper and better quality consumer goods, which would also raise real wages. He also explained how the interest on capital declines as it becomes more plentiful.
Thus, the interests of capitalists and labor are indeed harmonious, and government interventions into capital markets will impoverish the workers as well as the owners of capital. Bastiat also explained why in a free market no one can accumulate capital unless he uses it in a way that benefits others, i.e., consumers. In reality, wrote Bastiat, capital is always used to satisfy the desires of people who do not own it. In sharp contrast to most of his predecessors, Bastiat believed that “it is necessary to view economics from the viewpoint of the consumer. . . . All economic phenomena . . . must be judged by the advantages and disadvantages they bring to the consumer.” Mises repeated this point in Human Action when he noted that although bankers may seem to “control” the allocation of capital by their day-by-day decisions, it is the consumers who are the “captains” of the economic ship, because it is their preferences to which successful businesses cater.
Bastiat’s greatest contribution to subjective value theory was how he rigorously applied the theory in his essay, “What is Seen and What is Not Seen.” In that essay, Bastiat, by relentlessly focusing on the hidden opportunity costs of governmental resource allocation, destroyed the proto-Keynesian notion that government spending can create jobs and wealth. In the first edition of Economics in One Lesson, Henry Hazlitt wrote that: “My greatest debt, with respect to the kind of expository framework on which the present argument is hung, is Frederic Bastiat’s essay, “What is Seen and What is Not Seen.” The present work may, in fact, be regarded as a modernization, extension and generalization of the approach found in Bastiat’s pamphlet.”
The Science of Human Action
The way in which Bastiat described economics as an intellectual endeavor is virtually identical to what modern Austrians label the science of human action, or praxaeology. Bastiat wrote in his Harmonies of how “The subject of political economy is MAN . . . [who is] endowed with the ability to compare, judge, choose, and act. . . . This faculty . . . to work for each other, to transmit their efforts and to exchange their services through time and space . . . is precisely what constitutes Economic Science.”
As with contemporary Austrians, Bastiat viewed economics as “the Theory of Exchange” where the desires of market participants “cannot be weighed or measured. . . . Exchange is necessary in order to determine value.” Thus, to Bastiat, as with contemporary Austrians, value is subjective, and the only way of knowing how people value things is through their demonstrated preferences as revealed in market exchanges. Voluntary exchange, therefore, is necessarily mutually advantageous. This was an important theoretical innovation in the history of economic theory, for many of the British economists had succumbed to the “physical fallacy” the misguided notion that value is determined by the production of physical objects alone.
The understanding that value is created by voluntary exchange, Murray Rothbard pointed out, “led Bastiat and the French school to stress the ways in which the free market leads to a smooth and harmonious organization of the economy.” Rothbard himself developed Bastiat’s subjectivist theory of exchange much more fully a century later in his devastating critique of modern welfare economics.
Another Rothbardian theme in Bastiat’s work (or a Bastiat theme in Rothbard’s work) has to do with land rent. In Bastiat’s time, socialists made the argument that no one was entitled to land rent because it was God, after all, who created the land, not the current landowners. Bastiat’s response was that land rent was indeed legitimate because landowners have rendered a valuable service by clearing the land, draining it, and making it suitable for agriculture. If all these investment costs are capitalized, explained Bastiat, then it is clear that landowners were not earning an exceptional income through land rent after all, but were providing a valuable public service. Murray Rothbard would later develop this idea more fully in his defense of “homesteading” as an appropriate means of establishing property rights.
While establishing the inherent harmony of voluntary trade, Bastiat also explained how governmental resource allocation is necessarily antagonistic and destructive of the free market s natural harmony. Since government produces no wealth of its own, it must necessarily take from some to give to others robbing Peter to pay Paul is the essence of government, as Bastiat described it. Moreover, as special-interest groups seek more and more of other peoples money through the aegis of the state, they undermine the productive capacities of the free market by engaging in politics rather than in productive behavior. “The state,” wrote Bastiat, “is the great fictitious entity by which everyone seeks to live at the expense of everyone else.”
Bastiat is perhaps best known for his work in the field of political economy the study of the interaction between the economy and the state as opposed to pure economic theory. He sought to understand how the state operated what incentives drive it and he did so as well as anyone ever has. There is no space here for a in-depth discussion of Bastiat’s ideas on political economy, but a few examples will suffice. Government was necessary, according to Bastiat, but only if restricted to its “essential” functions. He believed that “no society can exist unless the laws are respected to a certain degree,” but at the same time that could only occur if the laws themselves were respectable.
The moral justification for a law, moreover, can never be based on a majority vote, because “since no individual has the right to enslave another individual, then no group of individuals can possibly have such a right.” All income redistribution through majoritarian democracy is therefore “legal plunder” and is, by definition, immoral.
The slogan, “if goods don t cross borders, armies will,” is often attributed to Bastiat because he so forcefully made the case that free trade was perhaps the surest route to peace as well as prosperity. He understood that throughout history, tariffs had been a major cause of war. Protectionism, after all, is an attempt by governments to inflict on their own citizens in peacetime the same kinds of harm their enemies attempt (with naval blockades) during wars.
Bastiat understood that free-market competition was a “dynamic discovery procedure,” to use a Hayekian phrase, in which individuals strove to coordinate their plans to achieve their economic goals. All forms of government intervention interrupt and distort that process because once a law or regulation is issued, “the people no longer need to discuss, to compare, to plan ahead; the law does all this for them. Intelligence becomes a useless prop for the people; they cease to be men; they lose their personality, their liberty, their property.”
Bastiat also saw through the phony “philanthropy” of the socialists who constantly proposed helping this or that person or group by plundering the wealth of other innocent members of society through the aegis of the state. All such schemes are based on “legal plunder, organized injustice.”
Like today’s neo-conservatives, nineteenth-century socialists branded classical liberals with the name “individualist,” implying that classical liberals are opposed to fraternity, community, and association. But, as Bastiat astutely pointed out, he (like other classical liberals) was only opposed to forced associations, and was an advocate of genuine, voluntary communities and associations. “[E]very time we object to a thing being done by government, the socialists [mistakenly] conclude that we object to its being done at all.”
Natural Rights and Freedom of Exchange
Bastiat can also be seen as a link between the seventeenth- and eighteenth-century natural- rights theorists and some members of the modern Austrian School, most notably Murray Rothbard, who based their defense of free markets on natural rights, rather than merely on utilitarian arguments. To Bastiat, collectivism in all its forms was both morally reprehensible (being based on legalized theft) and an impediment to the natural harmonization of human interests that is facilitated by free markets and private property.
Bastiat not only believed that collectivism constituted legal plunder; he also believed that private property was essential to fulfill man’s nature as a free being who, by nature, acts in his own self-interest to satisfy his (subjective) wants. To argue against the right to private property would be to argue that theft and slavery were morally “correct.” Thus, the protection of private property is the primary (if not the only legitimate) function of government. The politician has “no authority over our persons and our property, since they pre-exist him, and his task is to surround them with guarantees.”
Bastiat authored what is to this day the strongest defense of free trade ever produced. His case was built on myriad economic concepts, but what the case for free trade really comes down to, “has never been a question of customs duties, but a question of right, of justice, of public order, of property. Because [government-created] privilege, under whatever form it is manifested, implies the denial or the scorn of property rights.” And “the right to property, once weakened in one form, would soon be attacked in a thousand different forms.”
In Economic Sophisms, Bastiat masterfully created the most complete case for free trade ever constructed up to that time, which applied such economic concepts as the mutual advantage of voluntary trade, the law of comparative advantage, the benefits of competition to the producer as well as the consumer, and the historical link between trade barriers and war. Free trade, Bastiat explained, would mean “an abundance of goods and services at lower prices; more jobs for more people at higher real wages; more profits for manufacturers; a higher level of living for farmers; more income to the state in the form of taxes at the customary or lower levels; the most productive use of capital, labor, and natural resources; the end of the “class struggle” that . . . was based primarily on such economic injustices as tariffs, monopolies, and other legal distortions of the market; the end of the “suicidal policy” of colonialism; the abolition of war as a national policy; and the best possible education, housing, and medical care for all the people.”
Bastiat was a genius at explaining all these economic principles and outcomes by the use of satire and parables, the most famous of which is “The Candlemaker’s Petition,” which “requested” a law to mandate “the covering of all windows and skylights and other openings, holes, and cracks through which the light of the sun is able to enter houses. This free sunlight is hurting the business of us deserving manufacturers of candles.”
Another of Bastiat’s most memorable satires is his destruction of the protectionist argument that a “balance of trade” is necessarily desirable. A French merchant is said to have shipped $50,000 worth of goods to the U.S., sold them for a $17,000 profit, and purchased $67,000 worth of U.S. cotton, which he then imported into France. Since France had therefore imported more than it exported, it “suffered” an “unfavorable” balance of trade. A more “favorable” situation, Bastiat’sarcastically wrote, would have been one where the merchant attempted a second transaction in the U.S., but had his ship sunk by a storm as it left the harbor. The customs house at the harbor would therefore have recorded more exports than imports, creating a very “favorable” balance of trade. But since storms are undependable, Bastiat reasoned, the “best” policy would be to have the government throw all the merchants goods into the sea as they left French harbors, thereby guaranteeing a “favorable balance of trade”! It is this kind of display of literary genius that must have motivated Henry Hazlitt to take up Bastiat’s fallen mantle a century after his death.
Bastiat’s Intellectual Legacy
Bastiat’s writing constitutes an intellectual bridge between the ideas of the pre-Austrian economists, such as Say, Cantillon, de Tracy, Comte, Turgot, and Quesnay, and the Austrian tradition of Carl Mengerand his students. He was also a model of scholarship for those Austrians who believed that general economic education especially the kind of economic education that shatters the myriad myths and superstitions created by the state and its intellectual apologists is an essential function (if not duty) of the economist. Mises was a superb role model in this regard, as were Henry Hazlitt and Murray Rothbard, among other Austrian economists. As Mises said, the early economists “devoted themselves to the study of the problems of economics,” and in “lecturing and writing books they were eager to communicate to their fellow citizens the results of their thinking. They tried to influence public opinion in order to make sound policies prevail.”
To this day, Bastiat’s work is not appreciated as much as it should be because, as Murray Rothbard explained, today’s intemperate critics of economic freedom “find it difficult to believe that anyone who is ardently and consistently in favor of laissez-faire could possibly be an important scholar and economic theorist.” It is bizarre that even some contemporary Austrian economists seem to believe that the act of communicating economic ideas especially economic policy ideas to the general public is somehow unworthy of a practitioner of “economic science.” For that is exactly the model of scholarship that Mises himself adopted, which was carried forward most aggressively and brilliantly by Murray Rothbard, all in the tradition of the great French Austrian economist, Frederic Bastiat.
Bastiat, Frederic. 1995. selected=”true”=”true” Essays on Political Economy. George B. de Huszar, ed. Irvington-on-Hudson, N.Y.: Foundation for Economic Education.
—-1966. Economic Sophisms. Irvington-on-Hudson, N.Y.: Foundation for Economic Education.
—-1966. Economic Harmonies. Irvington-on-Hudson, N.Y.: Foundation for Economic Education.
Hazlitt, Henry. 1946. Economics in One Lesson. New York: Harper and Brothers.
Mises, Ludwig von. 1963. Human Action: A Treatise on Economics. 3rd rev. ed. Chicago: Henry Regnery.
Rothbard, Murray. 1995. Classical Economics. Vol. 2. An Austrian Perspective on the History of Economic Thought. Cheltenham, U.K.: Edward Elgar.
Russell, Dean. 1969. Frederic Bastiat: Ideas and Influence. Irvington-on-Hudson, N.Y.: Foundation for Economic Education.
Frédérick Bastiat, “The Law,” in selected=”true”=”true” Essays on Political Economy, George B. de Huszar, ed. (Irvington-on-Hudson, N.Y.: Foundation for Economic Education, 1995), p. 52.
Dean Russell, Frédérick Bastiat: Ideas and Influence (Irvington-on-Hudson, N. Y.: Foundation for Economic Education, 1969), pp. 22-23.
Ibid., p. 24.
Frédérick Bastiat, Economic Sophisms (Irvington-on-Hudson, N.Y.: Foundation for Economic Education, 1966).
Frédérick Bastiat, Economic Harmonies (Irvington-on-Hudson, N.Y.: Foundation for Economic Education, 1966).
Russell, Ideas and Influence, p. 32.
Bastiat, “What is Seen and What is Not Seen,” in selected=”true”=”true” Essays, pp. 1-50.
Henry Hazlitt, Economics in One Lesson (New York: Harper and Brothers, 1946), p. 1.
Bastiat, Economic Harmonies, P. 35.
Ibid., p. 36.
Murray N. Rothbard, Classical Economics, vol. 2, An Austrian Perspective on the History of Economic Thought (Cheltenham, U.K.: Edward Elgar, 1995), p. 446.
Bastiat, selected=”true”=”true” Essays, p. 144.
Russell, Ideas and Influence, p. 5.
Ibid., p. 11.
Ibid., p. 12. Also, see Bastiat’s essay, “Justice and Fraternity,” in selected=”true”=”true” Essays, pp. 116-39.
Because Hayek’s defense of liberty was based largely on expediency (does it promote the efficient use of knowledge in society?) and utilitarianism (do “social” benefits outweigh “social” costs, as determined by an “impartial judge”?), he came to endorse virtually all of the government interventions that define the American (or Swedish) welfare state. This is something natural-rights-based theorists, such as Rothbard and Bastiat, would never have done.
Bastiat, “Property and Law,” in selected=”true”=”true” Essays, pp. 97-115.
Ibid., p. 111.
Russell, Ideas and Influence, p. 42.
Ludwig von Mises, Human Action: A Treatise on Economics, 3rd rev. ed (Chicago: Henry Regnery, 1963), p. 869.
Rothbard, Classical Economics, p. 449.
What is Seen and What is Not Seen, or Political Economy in One Lesson1 [July 1850] [final edit]
[Date: Nov. 14, 2015; Revised Nov. 17, 2015]
Frédéric Bastiat (1801-1850)
Title Page of the 1st edition of What is Seen and What is Not Seen (July 1850)
For more information about Frédéric Bastiat see the following:
This pamphlet will be in the Collected Works of Bastiat, vol. 3. Until the book is published, we have included this HTML version of the final edit in this collection as a temporary measure. The Glossaries and some other items indicated in some of the endnotes are not present at the moment.
Source: T.259 (1850.07) What is seen and what is not seen (Ce qu'on voit et ce qu'on ne voit pas). Published as a separate pamphlet. Contains as the first chapter "The Broken Window". [OC5, pp. 336-92.] [CW3]
First edition: Ce qu'on voit et ce qu'on ne voit pas, ou l'Économie politique en une leçon. Par M. F. Bastiat, Représentant du peuple à l'Assemblée nationale, Membre correspondant de l'Institut (Paris: Guillaumin, 1850).
We still have the old FEE edition of this pamphlet in the main OLL collection:
Frédéric Bastiat, Selected Essays on Political Economy, trans. Seymour Cain, ed. George B. de Huszar, introduction by F.A. Hayek (Irvington-on-Hudson: Foundation for Economic Education, 1995). </titles/956>.
Table of Contents:
- Original title, place and date of publication: [did not appear separately before publication, written July 1850]
- Published as book or pamphlet: 1st French edition 1850.
- Location in Paillottet's edition: Oeuvres complètes (1st ed. 1854-55), Vol. 5: Sophismes économiques. Petits pamphlets II. (1854), pp. 336-92.
- Previous translation: 1st English ed. 1852, FEE ed. 1964. See “Note on the Publishing History.”
Paillottet tells us that WSWNS was published in July 1850 barely 6 months before Bastiat was to die from his throat condition. It was over 12 months late because he had lost the manuscript in a house move and had to rewrite it. He was unhappy with the serious tone of the second version and threw that into the fire before writing the third and final version which we have here.
It was published as a 79 page pamphlet by Guillaumin and was reissued in this format in 1869 (4th ed.) and 1879 (5th ed.). It was also part of the collected works of Bastiat which appeared in 1854 (vol. 5 of Oeuvres complètes (1st ed. 1854)), and twice in 1863 (vol. 5 of Oeuvres complètes (2nd ed. 1863) and also vol. 2 of Oeuvres choisies). It was quickly translated into English by William Ballantyne Hodgson in 1852 and published in popular newspapers and circulated among ordinary working people in cheap editions. See the “Note on the Publishing History” for details.
1 (Paillottet’s note) This pamphlet, published in July 1850 was the last one written by Bastiat. It had been promised to the public for more than a year. The following is the reason for its delayed publication. The author lost the manuscript when he moved house from the Rue de Choiseul to the Rue d’Alger. After a long and fruitless search he decided to rewrite the work completely, and selected as the principal basis for his arguments, speeches recently made in the National Assembly. Once he had completed this task, he blamed himself for being too serious, threw the second manuscript into the fire and wrote the one we are publishing here. The subtitle was part of the first edition but it was usually dispensed with in most of the later editions.] [The rue de Choiseul was the headquarters of the French Free Trade Society.]
2 See “A Publishing History of the Economic Sophisms” for a more detailed discussion.
[The Author’s Introduction] [final draft]↩
In the sphere of economics an action, a habit, an institution or a law engenders not just one effect but a series of effects. Of these effects only the first is immediate; it is revealed simultaneously with its cause, it is seen. The others merely occur successively, they are not seen;3 we are lucky if we foresee them.
The entire difference between a bad and a good Economist is apparent here. A bad one relies on the visible effect while the good one takes account both of the effect one can see and of those one must foresee.
However, the difference between these is huge, for it almost always happens that when the immediate consequence is favorable the later consequences are disastrous, and vice versa. From which it follows that a bad Economist will pursue a small current benefit that is followed by a large disadvantage in the future, while a true Economist will pursue a large benefit in the future at the risk of suffering a small disadvantage immediately.4
This distinction is also true, moreover, for hygiene and the moral code. Often, the sweeter the first fruit of a habit, the more bitter are those that follow. Examples of this are debauchery, laziness and prodigality. So when a man, touched by some effect that can be seen, has not yet learnt to discern those that are not seen, he gives way to disastrous habits, not just through inclination but deliberately.
This explains the inexorably painful evolution of the human race. Ignorance surrounds its cradle; it therefore makes up its mind with regards to its acts according to their initial consequences, the only ones it is able to see originally. It is only in the long run that it learns to take account of the others.5 Two masters, very different from one another, teach it this lesson: experience and foresight. Experience governs effectively but brutally. It teaches us all the effects of an action by having us feel them and we cannot fail to end up learning that fire burns, by burning ourselves. For this rough teacher, I would like, as far as possible to substitute a gentler one: foresight. This is why I will be seeking the consequences of certain economic phenomena by opposing those that are not seen to those that are seen.
3 Bastiat’s first use of these concepts is most likely in ES1 XX “Human Labor and Domestic Labor” (c. 1845) where he contrasts “immediate and transitory effects” and “general and definitive consequences.”
4 During the course of 1849 when Bastiat repeatedly rewrote this pamphlet as he could not decide on the appropriate style to use, whether serious or satirical, he had developed his thinking on two ideas which were of great concern to him for the previous few years. These were firstly, the immediately observable and obvious consequences of an economic act (“the seen”) and the longer term and less apparent consequences (“the unseen”), and secondly the “ricochet” or flow on effects of economic actions which may or may not have positive or negative consequences. This pamphlet is an extended exploration of the former set of ideas. See the glossary entry on "The Double Incidence of Loss" and the Appendices "Bastiat and the Ricochet Effect" and "The Sophism Bastiat never wrote: the Sophism of the Ricochet Effect."
5 (Paillottet’s note) See chapter XX in vol. VI. [This is a reference to Chap. XX “Responsibility” in the Economic Harmonies.]
I. The Broken Window6 [final draft]↩
Have you ever witnessed the fury of the good bourgeois Jacques Bonhomme7 when his dreadful son succeeded in breaking a window? If you have witnessed this sight, you will certainly have noted that all the onlookers, even if they were thirty in number, appeared to have agreed mutually to offer the unfortunate owner this uniform piece of consolation: “Good comes out of everything. Accidents like this keep production moving. Everyone has to live. What would happen to glaziers if no window panes were ever broken?”
Well, there is an entire theory in this consoling formula, which it is good to surprise in flagrante delicto8 in this very simple example, since it is exactly the same as the one that unfortunately governs the majority of our economic institutions.
If you suppose that it is necessary to spend six francs to repair the damage, if you mean that the accident provides six francs to the glazing industry and stimulates the said industry to the tune of six francs, I agree and I do not query in any way that the reasoning is accurate. The glazier will come, do his job, be paid six francs, rub his hands and in his heart bless the dreadful child. This is what is seen.
But if, by way of deduction, as is often the case, the conclusion is reached that it is a good thing to break windows, that this causes money to circulate and therefore industry in general is stimulated, I am obliged to cry: “Stop!” Your theory has stopped at what is seen and takes no account of what is not seen.
What is not seen is that since our bourgeois has spent six francs on one thing, he can no longer spend them on another What is not seen is that if he had not had a window to replace, he might have replaced his down-at-heel shoes or added a book to his library. In short, he would have used his six francs for a purpose that he will no longer be able to.
Let us therefore draw up the accounts of industry in general.
As the window was broken, the glazing industry is stimulated to the tune of six francs; this is what is seen.
If the window had not been broken, the shoemaking industry (or any other) would have been stimulated to the tune of six francs; this is what is not seen.
And if we took into consideration what is not seen, because it is a negative fact, as well as what is seen, because it is a positive fact, we would understand that it makes no difference to national output and employment, taken as a whole, whether window panes are broken or not.
Let us now draw up Jacques Bonhomme’s account.9
In the first case, that of the broken window, he spends six francs and enjoys the benefit of a window neither more nor less than he did before.
In the second, in which the accident had not happened, he would have spent six francs on shoes and would have had the benefit of both a pair of shoes and a window.
Well, since Jacques Bonhomme is a member of society, it has to be concluded that, taken as a whole and comparing what he has to do with his benefits, society has lost the value of the broken window.
From which, as a generalization, we reach the unexpected conclusion: “Society loses the value of objects destroyed to no purpose”, and the aphorism that will raise the hackles of protectionists: “Breaking, shattering and dissipating does not stimulate the national employment”, or more succinctly: “Destruction is not profitable”.
What will Le Moniteur industriel say,10 and what will the opinion be of the followers of the worthy Mr. de Saint-Chamans,11 who has so accurately calculated what productive activity would gain from the burning of Paris because of the houses that would have to be rebuilt?12
It grieves me to upset his ingenious calculations, especially since he has introduced their spirit into our legislation. But I beg him to redo them, introducing into the account what is not seen next to what is seen.
The reader must take care to note clearly that there are not just two characters, but three, in the little drama that I have put before him. One, Jacques Bonhomme, represents the Consumer, reduced by the breakage to enjoy one good instead of two. The second is the Glazier, who shows us the Producer whose activity is stimulated by the accident. The third is the Shoemaker (or any other producer) whose output is reduced to the same extent for the same reason. It is this third character that is always kept in the background and who, by personifying what is not seen, is an essential element of the problem. He is the one who makes us understand how absurd it is to see profit in destruction. He is the one who will be teaching us shortly that it is no less absurd to see profit in a policy of trade restriction, which is after all, nothing other than partial destruction. Therefore, go into the detail of all the arguments brought out to support it and you will merely find a paraphrase of that common saying: “What would happen to glaziers if window were never broken?”13
6 The American journalist Henry Hazlitt played an important role in bringing the work of Bastiat to the attention of Americans in the immediate post-World War Two period. In his preface to his book Economics in One Lesson (1946) he acknowledged his debt to Bastiat’s pamphlet “What is Seen and What is no Seen”: “My greatest debt, with respect to the kind of expository framework on which the present argument is being hung, is to Frédéric Bastiat’s essay Ce qu’on voit et ce qu’on ne voit pas, now nearly a century old. The present work may, in fact, be regarded as a modernization, extension, and generalization of the approach found in Bastiat’s pamphlet” (p. 9). Hazlitt’s first chapter was entitled “The Broken Window” which is a reference to one of Bastiat’s better known Sophisms and the very title of Hazlitt’s book probably is drawn from the subtitle used in the printed edition of the pamphlet by the Guillaumin publishing firm, “ou l’économie politique en une leçon” (or, political economy in one lesson). See Henry Hazlitt, Economics in One Lesson (1st edition Harper and Brothers, 1946). The edition used for the quote is New York: Manor Books Inc, 1974.
7“Jacques Bonhomme” (literally Jack Goodfellow) is the name used by the French to refer to “everyman,” sometimes with the connotation that he is the archetype of the wise French peasant. Bastiat uses the character of Jacques Bonhomme frequently in his constructed dialogues in the Economic Sophisms as a foil to criticise protectionists and advocates of government regulation. The name Jacques Bonhomme was given to the small magazine that Bastiat and Molinari published and handed out on the street corners of Paris in June and July 1848. See the glossary entry "Jacques Bonhomme [person]."
8 "In flagrante delicto" is a Latin phrase which means literally "in blazing offence". It is used in legal circles to mean that someone has been caught in the act of committing an offence.
9 In drawing up this account Bastiat was keen to introduce some mathematical precision into his calculations. He was first inspired by the work of the anti-corn law advocate Colonel Perronet Thompson (1783-1869) who between 1834-36 developed the idea of a calculable “double incidence of loss” by which he meant "the (part) of the sum gained to the monopolists and lost twice over by the rest of France, - (viz. once by a corresponding diminution of business to some other French traders, and once more by the loss to the consumers, who are the nation)... The understanding of the misery of this basis, depends upon a clear comprehension of the way in which the gain to the monopolist is lost twice over by other parties; or what in England has been called the double incidence of loss." [See footnote above, pp. ??? for details]. Bastiat took up this idea and made it the basis for two sophisms beginning with ES3 IV. "One profit vs. Two Losses" (7 May 1847). Later that month he wrote an appeal to one of the leading physicists in France, François Arago (1786-1853), who was active in liberal politics to assist him in making these arguments more rigorous mathematically and thus “invincible.” See "Two Losses vs. One Profit" (30 May 1847) above, pp. ??? See also the glossary entries on “François Arago,” “Perronet Thompson,” “The Double Incidence of Loss,” and the Appendices "Bastiat and the Ricochet Effect" and "The Sophism Bastiat never wrote: the Sophism of the Ricochet Effect."
10Le Moniteur industriel was the journal of the protectionist "Association pour la défense du travail national" (Association for the Defense of National Employment) founded by Mimerel de Roubaix in 1846. See the glossary entries on “Le Moniteur industriel,” “Mimerel,” and “Association for the Defense of National Employment”.
11 Saint-Chamans was a deputy (1824-27) and a Councillor of State. He advocated protectionism and a mercantilist theory of the balance of trade. See the glossary entry on “Saint-Chamans."
12 Bastiat misremembers Saint-Chamans’ argument in this passage. In his Traité d’économie politique (1852), which was a reworking of a previous work on Nouvel essai sur la richesse des nations (1824), Saint-Chamans argues against the free market economist Joseph Droz (1773-1850) who stated that that a sudden loss of a large amount of accumulated capital in Europe would cause severe hardship and would take considerable time to overcome. Saint-Chamans countered this by arguing that the Great Fire of London in 1666 (so not Paris) destroyed a huge amount of the capital stock which was quickly replaced and was thus a net gain for the nation of some one million pounds stirling (or 25 million francs) (see above, pp. ???). See M. le vicomte de Saint-Chamans, Traité d’économie politique suivi d’un apercu sur les finances de la France (Paris: Dentu et Ledoyen, 1852), vol. 1. See the glossary entry for “Saint-Chamans.”
13 (Paillottet’s note) See pages 100 et seq. of chapter XX of the first series of Sophisms in Tome IV. . This is a reference to Chap. XX "Travail humain, travail national" (Human Labor and Domestic Labor" in Economic Sophisms Part I.]
II. Dismissing Members of the Armed Forces [final draft]↩
The same rules apply to a nation as to a single man. When a nation wishes to acquire some economic benefit or other , it is up to that nation to see whether it is worth what it costs. For a nation, Security is the greatest asset. If, in order to acquire it, one hundred thousand men have to be drafted and one hundred million spent, I have nothing to say.14 It is a benefit purchased at the price of a sacrifice.
Let no one therefore make any mistake about the significance of my thesis.
Imagine that a deputy proposes to discharge a hundred thousand men from the army to lessen the burden on taxpayers to the tune of a hundred million.15
If we limit ourselves to giving him the reply that “These hundred thousand men and this hundred million francs are essential to national security; they are a sacrifice, but without this sacrifice France would be torn apart by factions or invaded by foreigners,” then I have no rebuttal to make at this point to this argument, which may be true or false, but theoretically does not encompass any economic heresy. The heresy begins when you wish to represent the sacrifice itself as an advantage because it benefits someone.
Well, unless I am much mistaken, the author of the proposal will no sooner have come down from the rostrum than another speaker will leap on to it to say:
“Dismiss a hundred thousand men! Do you really mean this? What will become of them? What will they live on? Work? But do you not know that there is a shortage of work everywhere? That there are no vacancies in any trade? Do you wish to cast them into the street to increase competition and depress earnings? Just when it is so difficult to eke out a meager livelihood, is it not fortunate that the State is providing bread to these hundred thousand people? What is more, consider that the army consumes wine, clothing, and weapons, and thus provides activity for factories and in garrison towns, and that in fact it is the very salvation of its countless numbers of suppliers. Do you not tremble at the thought of abolishing this huge engine of industrial activity?”
As we can see, this speech concludes that the hundred thousand men should be retained, taking no account of the indispensability of the service, on economic grounds. It is these considerations alone that I have to refute.
One hundred thousand men who cost the taxpayer one hundred million, live and provide a living for their suppliers to the extent that one hundred million can be spread: that is what is seen.
But one hundred million, extracted from the pockets of taxpayers, interfere with the economic lives of these taxpayers and their suppliers to the tune of that one hundred million: that is what is not seen. Do the calculation, cost it and tell me where the profit lies for the mass of the people?
As for me, I will tell you where the loss lies, and to keep it simple, instead of talking about one hundred thousand men and one hundred million francs, let us base our reasoning on one man and a thousand francs.
Here we are, in the village of “A.” Recruiters are doing the rounds and have carried off one man. The tax collectors are doing their rounds and have carried off one thousand francs. The man and the money are taken to Metz16, one intended to provide a living for the other for a year without doing anything. If you take only Metz into consideration, you are right indeed a hundredfold; the measure is very beneficial. However, if your eyes turn to the village of A you would think otherwise, for unless you are blind you will see that this village has lost one worker and the thousand francs that rewarded his work as well as the activity which, through the expenditure of these thousand francs, he spread around him.
At first sight it would appear that there is compensation for this. The phenomenon that occurred in the village now occurs in Metz, that is all. But this is where the loss lies. In the village, one man dug and ploughed: he was a worker. At Metz, he turns his head left and right: he is a soldier. The money and its circulation are the same in both cases, but on one, there were three hundred days of productive work; in the other there are three hundred days of unproductive work, always supposing that part of the army is not essential to public security.
Now, discharge comes. You point out to me a glut of one hundred thousand workers, stimulated competition and the pressure that it exerts on rates of pay. This is what you see.
But here is what you do not see. You do not see that discharging one hundred thousand soldiers is not to annihilate one hundred million, it is to return this sum to the taxpayers. You do not see that casting one hundred thousand workers onto the market is at the same time to cast the one hundred million intended to pay for their work onto the same market. As a result, the same measure that increases the supply of labor also increases the demand, from which it follows that your decrease in earnings is an illusion. You do not see that before, as after the discharge of the soldiers, there are in the country one hundred million francs that correspond to one hundred thousand men, and that the entire difference lies in this: before, the country paid one hundred thousand men one hundred million to do nothing; after, it pays them this sum to work. Finally, you do not see that when a taxpayer hands over his money, either to a soldier in return for nothing or to a worker in return for something, all the subsequent consequences of the circulation of this money are the same in both cases, with the sole difference that in the second case, the taxpayer receives something while in the first he receives nothing. The result: a net loss for the nation.
The sophism that I am combating here does not stand up to the test of progressive application, which is the touchstone of principles. If, everything paid for, and all interests considered, there is a benefit to the nation in increasing the army, why do we not enroll under the flag the entire male population of the country?
14 To maintain its armed forces at the level of about 400,000 with a five year period of enlistment the French state had to recruit or conscript about 80,000 men each year. See the glossary entry on “The French Army and Conscription.”
15 To get some idea of what Bastiat was calling for here with 100,000 immediate dismissals from the French Army (Armée de terre) it should be kept in mind that, according to the budget passed on 15 May 1849 the size of the French army was 389,967 men and 95,687 horses. [This figure rises to 459,457 men and 97,738 horses for the entire French military (including foreign and colonial forces).] The expenditure on the Army in 1849 was fr. 346,319,558 and for the Navy and Colonies was fr. 119,206,857 for a combined total of fr. 465,526,415. Total government expenditure in 1849 was fr. 1.573 billion with expenditure on the armed forces making up 29.6% of the total budget. In these passages Bastiat roughly estimates that 100,000 soldiers cost the French state fr. 100 million. An immediate cut of 100,000 would be 25.6% of the total size of the French Army. An equivalent cut in the size of the US Armed Forces would be about 373,000 men and women [in 2012 there were 1,456,862 active personnel and a FY2011 budget of $549.4 billion.] As vice-president of the National Assembly's finance committee in 1848-49 Bastiat had access to the most recent figures. See Projet de loi pour la fixation des recettes et des dépenses de l'exercice 1850. IIIe volume. Budget des dépenses du Ministère de la guerre. Budget des dépenses du Ministère de la marine et des colonies (Paris: Imprimerie nationale, 1849), pp. 13-14; Alphonse Courtois, “Le budget de 1849” in Annuaire de l’économie politique et de la statistique pour 1850 par MM. Joseph Garnier. 7e année (Paris: Guillaumin, 1850), pp. 18-28. See the glossary entry on “The French Army.”
16 Metz is a city in the north-east of France with an important army garrison.
III. Taxes [final draft]↩
Have you ever happened to hear the following?
“Taxes are the best investment; they are a life-giving dew. See how many families gain a livelihood from them; work out their ricochet or flow on effects17 on industry; this is beyond measure, it is life.”
To combat this doctrine, I am obliged to repeat the preceding refutation. Political economy knows full well that its arguments are not amusing enough for people to say of them: Repetita placent. Repetitions are pleasing. For this reason, like Basile18, it has arranged the proverb to suit itself, fully convinced that in its mouth Repetita docent. Repetitions teach.
The advantages that civil servants find in drawing their salaries are what is seen. The benefit that results for their suppliers is again what is seen. It is blindingly obvious to the eyes.
However, the disadvantage felt by taxpayers in trying to free themselves is what is not seen and the damage that results for their suppliers is what is not seen either, although it is blindingly obvious to the mind.
When a civil servant spends one hundred sous too much for his own benefit, this implies that a taxpayer spends one hundred sous too little for his own benefit. However, the expenditure of the civil servant is seen because it is carried out whereas that of the taxpayer is not seen as, alas! he is prevented from carrying it out.
You compare the nation to an arid land and tax to bountiful rain. So be it. But you should also ask yourself where the sources of this rain are, and if it is not taxes themselves that absorb the humidity from the earth and dry it out.
You ought to ask yourself as well if it is possible for the earth to receive as much of this precious water through rain as it loses through evaporation.
What is obvious is that, when Jacques Bonhomme counts out one hundred sous to the tax collector, he receives nothing in return. When, subsequently, a civil servant, in spending these hundred sous, gives them back to Jacques Bonhomme, it is in return for an equal value in wheat or labor. The end result is a loss of five francs19 for Jacques Bonhomme.
It is very true that often, or in the majority of cases, if you prefer, the civil servant renders an equivalent service to Jacques Bonhomme. In this case, there is no loss on either side; there is merely an exchange. For this reason, my line of argument is not directed against useful activity. What I say is this: if you wish to create any such activity, prove its utility. Demonstrate that the services rendered to Jacques Bonhomme are worth what they cost him. But putting on one side this intrinsic utility, do not use as an argument the advantage it gives to the civil servant, his family and his suppliers; do not claim that it stimulates employment.
When Jacques Bonhomme gives one hundred sous to a civil servant in return for a genuinely useful service, it is exactly the same as when he gives one hundred sous to a shoemaker for a pair of shoes. Give and take, tit for tat. But when Jacques Bonhomme hands over one hundred sous to a civil servant and then receives no services or even suffers aggravation in return, it is as though he is handing this money to a thief. It is no good saying that the civil servant will spend these hundred sous for the general benefit of national output; the thief would have done the same with them. So would Jacques Bonhomme if he had not met on his way either the extra-legal parasite or the legal one.
Let us therefore acquire the habit of not judging things merely by what is seen, but also by what is not seen.
Last year I was a member of the Finance Committee,20 for under the Constituent Assembly members of the opposition were not systematically excluded from all Committees; in this the Constituent Assembly acted wisely. We heard Mr. Thiers21 say: “I have spent my life combating the men of the Legitimist Party and the Priests’ Party.22 Since the time that a common danger brought us together, since the time I have been seeing a lot of them and becoming acquainted with them, since we have been speaking frankly to one another, I have noticed that they are not the monsters I took them to be.”
Yes, mistrust is compounded and hatred aroused between parties that do not mix, and if the majority allowed a few members of the minority to become Committee members, perhaps it would be acknowledged on both sides that their ideas are not as far apart and, in particular, their intentions not as perverse as people suppose.
Be that as it may, last year I was a member of the Finance Committee. Each time that one of our colleagues spoke of setting at a moderate level the remuneration of the President of the Republic, ministers or ambassadors, he was told:
“For the very good of the service, certain roles have to be surrounded by an aura of brilliance and dignity. It is a means of attracting men of worth. Very many men who are short of funds seek the ear of the President of the Republic and it would place him in an uncomfortable position if he were obliged always to refuse them. A certain presence in ministerial and diplomatic salons is part of the wheels of constitutional government, etc. etc.”
Although arguments like this can be debated, they certainly warrant close examination. They are based on public interest, whether this is correctly or incorrectly appreciated, and for my part, I take more notice of them than many of our Catos23 who are moved by a narrow spirit of stinginess or jealousy.
However, what revolts my conscience as an economist and makes me blush for the intellectual reputation of my country is when the argument is reduced (and this invariably happens) to the following absurd banality, which is always favorably received:
“Besides, the luxurious living of high government officials encourages the arts, industry and labor in general. The Head of State and his ministers cannot give feasts and gala evenings without making life circulate in every vein of the social body. Reducing their remuneration is to starve productive activity in Paris, and by extension throughout the nation.”
Please, Sirs, show some respect at least to arithmetic, and do not stand before the National Assembly of France to say that addition produces a different sum depending on whether one adds the figures from top to bottom or from bottom to top, because you fear that this shameful Chamber will not support your measure unless you do.
What! I am going to reach an agreement with a laborer to have a ditch dug in my field at a cost of one hundred sous. Just when the agreement is about to be finalized, the tax collector takes my hundred sous and passes them on to the Minister of the Interior. My agreement falls apart but the Minister will have an extra dish for his dinner. On which basis, you dare to claim that this official expenditure is an addition to national output! Do you not understand that this is just a simple displacement of utility and labor? A minister has a better-laden table, it is true, but a farmer has a field that is less well drained, and this is just as true. A caterer in Paris has earned one hundred sous, I grant you, but you should grant me that a laborer in the provinces has failed to earn five francs. All that can be said is that the official dish and a satisfied caterer is what is seen; the flooded field and the laborer with no work is what is not seen.
Good God! What a lot of trouble to prove that, in political economy, two and two are four and if you succeed in doing this, the cry is heard: “This is so obvious, it is boring. ”And then they vote as though you had proved nothing at all.
17By the “ricochet (or flow on) effect” Bastiat means the indirect consequences of an economic action which flow or knock on to other parties (potentially numbering in their thousands or even millions), sometimes with positive results (as with the invention of printing or steam powered ships) but more often with negative results (as with tariffs, subsidies, and taxes). This insight was an elaboration of his earlier idea of the "Double Incidence of Loss" which he used to great effect in WSWNS. See the glossary entry on "The Double Incidence of Loss" and the Appendices "Bastiat and the Ricochet Effect" and "The Sophism Bastiat never wrote: the Sophism of the Ricochet Effect."
18 Don Basile is a character from Beaumarchais’ play The Barber of Seville (1775). Basile is a singing teacher who says to Dr. Bartholo that when he is unable to understand an argument he resorts to using proverbs such as “What is good to take, is good to keep.” He then says that “Yes, I arrange several little proverbs with variations, just like that.” Act IV, p. 254. Théâtre de Beaumarchais. Précédé d’une Notice sur sa vie et ses ouvrages, par M. Auger (Paris: Librairie de Firmin Didot Frères, 1844).
19 One hundred sous = five francs. See the glossary entry on “French Currency.”
20 Bastiat’s work on the Finance Committee of the National Assembly is a topic which has been scarcely explored in any detail and needs to be more fully researched. We know that he was nominated to be its vice-president and was required to present its reports officially to the Chamber of Deputies from time to time. He was re-appointed to this position 8 times such was the regard his peers had for his economic knowledge. Needless to say, his advice about cutting taxes and balancing the budget were not often heeded and he became a bit like the resident “Utopian” on the Committee. See the ES2 XI. “The Utopian” (17 January 1847) and the Appendix “Bastiat’s Activities in the National Assembly 1848-1850.”
21 Adolphe Thiers (1797-1877) was a lawyer, historian, politician, and journalist who served briefly as Prime Minister and Minster of Foreign Affairs in 1836 and 1840. After the 1848 revolution and the creation of the Second Empire he was elected deputy representing Rouen in the Constituent Assembly. See the glossary entry on “Thiers.”
22 The main political groups in the late 1840s when Bastiat was writing and becoming politically active include the Doctrinaires who were moderate royalists, the Legitimists (also known as the “Party of Order” in 1849) who were supporters of the descendants of Charles X, the Republicans who were a diverse and poorly organized group, the Montagnards who were radical socialists, the Orléanists who were supporters of the overthrown Louis Philippe, and the Bonapartists who were supporters of Napoleon, both the Emperor Napoleon I and then his nephew Louis Napoleon. All of the political groups were protectionist to one degree or the other, and the socialists were both protectionist and extremely interventionist as well. Free traders like Bastiat were very much in the minority and could draw upon only a few luke-warm supporters in the Doctrinaire and Bonapartist groups. See the glossary entry on “Political Parties.”
23 Cato the Younger (Cato Minor) was a politician in the late Roman Republic and a noted defender of "Roman Liberty" and opponent of Julius Caesar. See the glossary entry on “Cato the Younger.”
IV. Theatres and the Fine Arts [final draft]↩
Should the State subsidize the arts?24
There is certainly much to say both For and Against.25
In favor of the system of subsidies, it might be said that the arts expand and elevate the soul of a nation and make it more poetic, that they tear it away from material preoccupations, give it an appreciation of Beauty and thus have a beneficial effect on its manners, customs, habits and even its industry. The question might be asked where music would be in France without the Théâtre Italien and the Conservatoire, dramatic art without the Théâtre Français and painting and sculpture without our collections and museums.26 We may go even further and ask ourselves whether, without the centralization and consequent subsidization of the fine arts, that exquisite taste that is the imposing mark of French work and makes its products attractive around the world, would have developed. Faced with these results, would it not be extremely rash to abandon this modest contribution from all of its citizens who, in the end, have succeeded in establishing their superiority and shining reputation in Europe?
These reasons and many others whose validity I do not question may be countered by others that are just as powerful. First of all, it may be said, there is the question of distributive justice. Does the right of the legislator go so far as to make inroads into the earnings of artisans to supply extra income to artists? Mr. Lamartine 27 said: “If you remove the subsidy from a theatre, how far will you go down this road, and would you not logically be led to abolishing your Universities, Museums, Institutes and Libraries?” The answer to this might be: “If you wish to subsidize everything that is good and useful, how far will you go down this road, and would you not logically be led to establishing a civil list for farming, industry, trade, benevolent activities and education?” Moreover, is it certain that subsidies encourage the progress of art? This is a question that is far from being answered and we can see with our own eyes that the theatres that prosper are those that generate their own life. Finally, raising our considerations to a higher level, we can point out that needs and desires are born one from another, and rise to levels that are increasingly refined28 as public wealth makes it possible to satisfy them; that the government has no need to become involved in this interaction, since in a given state of current wealth it would be unable to stimulate luxurious lines of production through taxes without upsetting essential ones, thus turning upside down the natural progress of civilization. It might be pointed out that these artificial displacements of needs, taste, production and populations puts nations in a precarious and dangerous situation whose foundation is no longer solid.
These are just a few reasons put forward by those who oppose State intervention with respect to the priorities according to which citizens believe that they ought to satisfy their needs and desires and consequently direct their activity. I must admit that I am one of those who think that choice and impulse has to come from below, not above, from citizens, not the legislators, and a doctrine to the contrary seems to me to lead to the abolition of human freedom and dignity.
However, through a deduction that is as false as it is unjust, do you know what economists are accused of? It is that when we reject subsidies we are rejecting the very thing that is to be subsidized and are the enemies of all these types of activity since we want these activities to be free and at the same time pay their own way. Thus, if we demand that the State not intervene in religious matters through taxation, we are atheists; if we demand that the State not intervene in education through taxation, we are against enlightenment. If we say that that State ought not to give an artificial value to land or a particular sector of the economy through taxation, we are enemies of property and labor. If we think that the State ought not to subsidize artists, we are barbarians who think that art is of no use.
I protest here as forcefully as I can against these deductions. Far from entertaining the absurd notion of abolishing religion, education, property, production and the arts, when we demand that the State protect the free development of all these kinds of human activity without having them in its pay at the citizens’ mutual expense, we believe on the contrary that all these life-giving forces in society would develop harmoniously under the influence of freedom, that none of them would become, as we see today, a source of unrest, abuse, tyranny and disorder.
Our adversaries believe that an activity that is neither in the pay of the State nor regulated is an activity that has been destroyed. We believe the contrary. Their faith lies in the legislator, not in humanity; ours lies in humanity, not in the legislator.
Thus, Mr. Lamartine said: “In the name of this principle, we should abolish the public exhibitions that constitute the honor and wealth of this country.”29
My reply to Mr. Lamartine is:
“Your point of view is that failing to subsidize is to abolish, since, according to this notion that nothing exists other than through the will of the State, you conclude that nothing lives outside the things kept alive through taxes. But I am turning against you the example you have chosen and point out to you that the greatest and most noble of exhibitions, the one conceived in the most liberal and universal, and I might even use the word humanitarian, thought, which is no exaggeration in this context, is the exhibition being prepared in London, the only one in which no government is involved and where no tax is being used to pay for it.”30
To return to the Fine Arts, it is possible, I repeat, to put forward powerful reasons for and against the system of subsidies. The reader will understand that, in accordance with the particular aim of this article, my job is neither to set out these reasons nor decide between them.
But Mr. Lamartine has put forward an argument that I cannot allow to pass without comment, as it comes precisely within the sphere of this economic study.
He has said:
“The economic question with regard to theatres can be summed up in a single word: it is production. The nature of this production matters little; it is an activity that is as fecund and productive as any other type of project in a nation. As you know, in France theatres feed and pay no fewer than eighty thousand workers of all types, painters, masons, decorators, costume makers, architects, etc., who are the very lifeblood and dynamism of several districts of this capital city and, for this reason, should be given your sympathy.”
Your sympathy! In translation, your subsidy.
And further on:
“The pleasures of Paris lie in the output and consumption taking place in its departments and the luxury of the wealthy constitutes the earnings and bread of two hundred thousand workers of all sorts who earn a living from the various industries of the theatres over the entire surface of the Republic and who receive from these noble pleasures that make France illustrious, the food to keep them alive and the necessities required by their families and children. It is to them that you are giving these 60,000 francs (Hear! Hear! A host of approving gestures.)”
For my part, I am obliged to say: No! No! Restricting, of course, the scope of this judgment to the economic argument we are dealing with here.
Yes, it is to the workers in the theatres that these 60,000 francs in question will go, at least in part. 31 A few trifling sums may well be lost in transit. If you give the matter close scrutiny, actually, you may discover that things work out quite differently, such that fortunate are those workers if a few scraps are left to them! However, I am willing to accept that the entire subsidy will go to the painters, decorators, costume makers, hairdressers, etc. This is what is seen.
But where has it come from? This is the other side of the question that is just as important to examine as its face. Where is the source of these 60,000 francs? And where would they go if a legislative vote did not initially send them to the Rue de Rivoli and from there to the Rue de Grenelle32? That is what is not seen.
Certainly no one will dare to claim that the legislative vote has caused this sum to blossom in the voters’ urn, that it is a pure addition to national wealth, and that without this miraculous vote these sixty thousand francs would have remained forever invisible and intangible. It has to be admitted that all that the majority has been able to do is to decide that they will be taken from somewhere to be sent somewhere else, and that they are given one destination only by being taken from another.
Since things are like this, it is clear that the taxpayer who has been taxed one franc will no longer have this franc available to him. It is clear that he will be deprived of satisfaction to the value of one franc and that the worker, whoever he may be, who would have provided it to him will be deprived of pay to the same extent.
Let us therefore not harbor this puerile illusion of believing that the vote on 16 May33adds anything at all to national well-being and work. It displaces enjoyment and displaces pay; that is all.
Will people say that for one type of expenditure and one type of production, more urgent, more moral and more reasonable expenditure and production have been substituted? I might make a stand here. I might say: “By snatching 60,000 francs from taxpayers, you are reducing the earnings of ploughmen, laborers, carpenters and blacksmiths, and you are increasing the earnings of singers, hairdressers, decorators and costume makers by the same amount. Nothing proves that this latter class is more worthy than the other. Mr. Lamartine does not claim this. He himself says that the work of theatres is (just as fertile, just as productive and not more) than any other, which might itself still be contested, since the best proof that the second category is not as fertile as the first is that the first is called upon to subsidize the second.
But this comparison between the value and intrinsic merit of the diverse forms of production is not part of my present subject. All that I have to do here is to show that Mr. Lamartine and the people who applauded his line of argument saw with one eye the earnings of the suppliers of actors and ought to have seen with the other the earnings lost by the suppliers of taxpayers. By not doing so, they exposed themselves to the nonsense of taking a displacement for a gain. If they were consistent with their doctrine, they would demand an infinite number of subsidies, for what is true for one franc and 60,000 francs is true in identical circumstances for a billion francs.
When it is a question of taxes, gentlemen, let us prove their utility using reasons based on fundamentals, but never resort to the wretched argument that “Public expenditure provides a livelihood for the working class.” This makes the mistake of concealing an essential fact, that is to say, that public expenditure always takes the place of private expenditure and that, consequently, it provides a livelihood for one workman instead of another, but adds nothing to the lot of the working class taken as a whole. Your line of argument is very fashionable, but it is too absurd for reason not to get the better of it.
24 Music, art, theatre, and other forms of fine art were heavy regulated by the French state. They could be subsidized, granted a monopoly of performance, the number of venues and prices of tickets were regulated, and they were censored and often shut down for overstepping the bounds. In the 1848 budget the relatively small amount of fr. 2.6 million was spent in the category of "Beaux-Arts" (within the Ministry of the Interior) which included art, historical monuments, ticket subsidies, payments to authors and composers, subsidies to the royal theatres and the Conservatory of Music [out of total budget of fr. 1.45 billion.] By far the biggest parts of budget expenditure went for servicing the pubic debt (384 million), the Ministry of War (305 million), the Navy and Colonies (120 million), and the Ministry of the Interior (116 million). See, "Documents extraits de l'enquête sur les théâtres", JDE July 1850, T. XXVI, pp. 409-12; and the Appendix on the Budgets for 1848 and 1849. See the Appendix on French Government Finances 1848-1849.”
25 Bastiat's friend and colleague Gustave de Molinari (1819-1912) was a great fan of the theatre and wrote extensively about it, criticising both its subsidies from and its censorship by the state. He has an extended discussion of this question in one the chapters in Conversations on Saint Lazarus Street (1849), “8th Evening” (Liberty Fund, forthcoming). See also his article on "Théâtres" in DEP, vol. 2, pp. 731-33. See the glossary entry on "Molinari."
26 The Théâtre-Italien (also known as the Opéra-Comique) after several false starts in the 17th century was formally re-established in 1716 under the patronage of the Duc d'Orléans. The Conservatory of Music in Paris has experienced a large number of changes over the centuries as regimes and musical tastes changed. Louis XIV created the Académie royale de musique by royal patent in 1669 and by 1836 it was known as the Conservatoire de musique et de déclamation. The Comédie-Français (also known as the Théâtre-Français) was founded in 1680 by Louis XIV. He also founded the Opéra de Paris in 1669.
27 Alphonse de Lamartine (1790-1869) was a poet turned statesmen who was a member of the provisional government and Minister of Foreign Affairs in June 1848. See glossary entry on “Lamartine”.
28 (Paillottet’s note) See chapter III in vol. VI. [This is a reference to chap. III "Des besoins de l'homme" (The Needs of Mankind) in Economic Harmonies.]
29 The following quotations come from Lamartine, "Sur la subvention du Théâtre-Italien (Discussion du Budget) Assemblée National. - Séance du 16 avril 1850," pp. 160-66, in Alphonse de Lamartine, La France parlementaire: 1834-1851. Oeuvres oratoires et écrits politiques. Précédée d'une étude sur la vie et les oeuvres de Lamartine par Louis Ulbach. Troisième série: 1847-1851. Tome sixième (Paris: A. Lacroix, Verboeckhoven, 1865). Specific quotes can be found on pp. 163, 161, 166.]
30 The "Great Exhibition of the Works of Industry of all Nations" (The Great Exhibition, or the Crystal Palace Exhibition) was an international trade and industry exhibition held in Hyde Park, London, between May and October 1851. The Economists were very excited about the Exhibition because of the way in which it showcased the achievements of the industrial revolution as well as the possibilities which could be opened up by international free trade. The Exhibition was planned and organized privately by the members of the Royal Society for the Encouragement of Arts, Manufactures and Commerce under the patronage of Prince Albert, the husband of Queen Victoria. The French had begun the practice of holding international industrial exhibitions in 1798 and held others in 1819, 1823, 1827, 1834, 1839, and in Paris in 1844. It was this latter exhibition in Paris which probably inspired the London Exhibition of 1851. An exhibition was planned for Paris in 1849 but the Revolution in 1848 meant that it was only a shadow of the previous ones. See Blanqui, "Expositions," DEP, vol. 1, pp. 746-51.
31 In April 1850, a deputy asked for a subsidy of 60,000 francs for the Théatre des Italiens. Since 1801, this theater had had a permanent troupe and had performed the masterpieces of Italian music before French audiences. Lamartine warmly supported the proposition.
32 The Ministry of Finances was located in the Rue de Rivoli, and the Ministry of Education and Fine Arts in the Rue de Grenelle.
33 In April 1850, a deputy asked for a subsidy of 60,000 francs for the Théatre des Italiens. It was voted on 16 May (and not 16 April as Bastiat mistakenly says).
V. Public Works [final draft]↩
That a nation, after having ascertained that a great enterprise will be of benefit to the community, has it carried out using resources raised by general subscription, is perfectly normal. But I have to admit that I lose patience when I hear the following glaring economic error claimed in support of a resolution of this nature: “What is more it is a means of creating employment for the workers.”
The State opens a road, constructs a palace, repairs a street or digs a canal; in doing this it provides work for certain workmen, that is what is seen, but it deprives certain other workmen of employment, and that is what is not seen.
Here is the road in the process of being built. A thousand workmen come every morning and go home every evening, taking their pay; that is certain. If the road had not been decided upon, if the funds had not been voted for, these good people would not have found either work or pay at this place; that is also certain.
But is this all? Does the overall operation not involve something else? At the time when Mr. Dupin34 pronounces the sacramental words: “Passed by the Assembly”, do the millions miraculously slide down a moonbeam into the coffers of Messrs. Fould35 and Bineau36? In order for the change to be complete, as they say, does the State not need to organize the collection of taxes as well as their expenditure? Does it not need to send its tax collectors into the field and make the taxpayers pay their taxes?
Let us then examine both sides of the question. While noting the purpose intended by the State for the millions voted, let us not fail to note also the uses to which taxpayers would have put and can no longer put these same millions. You will then understand that a public enterprise is a two-sided coin. On one side, there is an employed worker with the motto “This is what is seen”; on the other, a worker out of work with the motto “This is what is not seen”.
The sophism that I am combating in this article is all the more dangerous when applied to public works if it serves to justify the wildest enterprises or excesses. When a railway or a bridge are genuinely useful, invoking this utility is enough. But if you cannot do this, what do you do? You resort to the following grossly misleading statement: “Work has to be found for the workers”.37
Once this is said, why not construct and demolish the terraces on the Champ de Mars?38 As we know, the great Napoleon considered he was performing a philanthropic act by digging and filling in ditches. He also said: “What does the result matter? All you have to see is the wealth spread around the working classes”.
Let us go to the heart of things. Money deludes us. Requesting a contribution in the form of money from all citizens for a work of common interest is in fact asking them for a contribution in kind, for each of them through work obtains for himself the sum on which he is taxed. Now, if all the citizens were to brought together in order to carry out some work useful to everybody, as part of their compulsory community obligation,39 this would be understandable; their compensation would be the results of the work itself. But if, after they have been brought together, they are subjected to making roads where no one will go and palaces in which no one will live on the pretext of procuring work for them, this would be absurd, and they would certainly have reason to object: “We have no need of work like this; we would prefer to work on our own behalf”.
The procedure that consists in making citizens contribute money and not work does not alter these general results one jot. The only thing is that using the second procedure the loss is shared by all, whereas using the first, those employed by the State escape their share of the loss, adding it to the loss their fellow citizens have already had to bear.
There is an article of the Constitution which says:
“Society favors and encourages the development of labor … through the establishment by the State, the departments and communes of public works suitable for employing idle hands.”40
As a temporary measure in times of crisis, or during a severe winter, this intervention by the taxpayers may have good results. It acts in the same way as insurance. It adds nothing either to labor or to pay, but it takes the labor and wages earned in good times and pays them out in difficult times, admittedly with some loss.
As a permanent, general and systematic measure, this is nothing less than a ruinous deception, an impossibility, a contradiction that gives the appearance of a little labor which has been stimulated, that is seen, and hides a great deal of labor which has been prevented, that is not seen.
34 Charles Dupin (1784-1873) was a pioneer in mathematical economics and worked for the statistical office of France. In 1828 he was elected deputy for Tarn, was made a Peer in 1830, and served in the Constituent and then the National Assemblies during the Second Republic. See glossary entry on “Charles Dupin.”
35 Achille Fould (1800-1867) served as Minister of Finance in the Second Republic and then Minister of State in the Second Empire. He was a personal financial advisor to Napoleon III and played an important part in the imperial household. See the glossary entry on “Fould.”
36 Jean Martial Bineau (1805-1855) was an engineer by training and a politician who served as Minster of Public Works in 1850 and then Minister of Finance in 1852 during the Second Empire. See the glossary entry on“Bineau.”
37 Napoléon did not seem to have a well thought out economic theory but his scattered remarks recorded in his Mémoires (1821) show him to be an economic nationalist and strong protectionist. His most direct comments about tariffs and protection for French industry come in a discussion of the Continental System he introduced in November 1806 to weaken the British economy by preventing the sale of British goods in Europe. In the Mémoires Napoleon is very proud of his economic accomplishments and believed that the system of protection he introduced stimulated French industry enormously. "Experience showed that each day the continental system was good, because the State prospered in spite of the burden of the war… The spirit of improvement was shown in agriculture as well as in the factories. New villages were built, as were the streets of Paris. Roads and canals made interior movement much easier. Each week some new improvement was invented: I made it possible to make sugar out of turnips, and soda out of salt. The development of science was at the front along with that of industry." See Mémoires de Napoléon Bonaparte: manuscrit venu de Sainte-Hélène (Paris: Baudouin, 1821), pp. 95-99. See the glossary entry on "Napoléon."
38 The Champs de Mars (Field of Mars) is a large public park in the 7th Arrondisement in Paris. Before the Revolution it had been a a military parade ground but during the Revolution it was used for a variety of purposes including public ceremonies as well as executions. In May 1848 it was site for a large revolutionary Festival of Concord. It the latter part of the 19th century it was the site for several World Exhibitions, especially that of 1889 for which the Eiffel Tower was built at his north east corner.
39 Bastiat uses the term "par prestation" (compulsory or required service) which has a powerful connotation to the Economists as it referred to the common 18th century practice of compulsory community labour ("la corvée"). The corvée was abolished by Turgot in 1776 but it survived in various forms being renamed "prestation" in 1802. They were abolished once again in 1818 only to revived again in 1824 when an obligation to work 2 days a year on local roads was introduced. This was raised to 3 days in 1836 but with the added improvement of being able to be commuted to a cash payment in lieu of physical work. See Courcelle Seneuil, "Prestation," DEP, vol. 2, pp. 428-30, and “French Taxation” in Appendix 3 "Economic Policy and Taxation."
40 Chapter 2, Article 13, of the Constitution of November 4, 1848 states “The Constitution guarantees citizens the liberty of work and industry. Society favours and encourages the development of work by means of free primary education, professional education, equality of relations between employers and workers, institutions of insurance and credit, agricultural institutions, voluntary associations, and the establishment by the state, the departments and the communes of public works suitable for employing idle hands; it provides assistance to abandoned children, to the sick and the old without means, which their families cannot help.” This article raises the problem which concerned Bastiat deeply of the difference between the free market idea of “the liberty of work and industry” (la liberté du travail et de l’industrie) and the socialist idea of the “right to a job” (la liberte au travail) which increasingly became an issue during the Revolution. The Constitution of November 1848 specifically refers to the former but also seems to advocate the latter with the phrase “public works suitable for reemploying the unemployed”. The creation and then the abolition of the National Workshops is an example of this confusion. See “Opinion de M. Frédéric Bastiat" (on "le droit au travail") in Le droit au travail à l'Assemblée nationale. Recueil complet de tous les discours prononcés dans cette mémorable discussion par MM. Fresneau, Hubert Delisle, Cazalès, Gaulthier de Rumilly, Pelletier, A. de Tocqueville, Ledru-Rolin, Duvergier de Hauranne, Crémieux, M. Barthe, Gaslonde, de Luppé, Arnaud (de l'Ariège), Thiers, Considerant, Bouhier de l'Ecluse, Martin-Bernard, Billault, Dufaure, Goudchaux, et Lagrange (texts revue par les orateurs), suivis de l'opinion de MM. Marrast, Proudhon, Louis Blanc, Ed. Laboulaye et Cormenin; avec des observations inédites par MM. Léon Faucher, Wolowski, Fréd. Bastiat, de Parieu, et une introduction et des notes par M. Joseph Garnier (Paris : Guillaumin, 1848), pp. 373-376.] See the discussion on “The Right to Work.”
VI. The Middlemen [final draft]↩
Society is the set of services that men render each other, either by force or voluntarily, i.e. public services and private services.
Public services, imposed and regulated by law, which is not always easy to change when it would be advisable, may, with the help of that law, far outlive their real usefulness and retain the name of public services, even when they are no longer services at all or even when they are nothing more than public vexations. Private services lie in the field of voluntary action and individual responsibility. Each person renders and receives what he wants or what he can, following face to face discussion. They are always characterized by the presumption of genuine utility, accurately measured by their comparative value.
This is why public services are so often characterized by immobility while private services conform to the law of progress.
While the excessive development of public services tends to constitute within society, through the wastage of energy that it entails, a disastrous form of parasitism, it is singularly notable that several modern schools of thought, attributing this tendency to free and private services, seek to transform all jobs into state functions.41
These thinkers savagely attack what they describe as middlemen. They would happily abolish capitalists, bankers, speculators, entrepreneurs, merchants and traders, accusing them of coming between production and consumption and holding both to ransom without adding value to either. Or rather they would like to transfer to the State the work they do, given that this work cannot be abolished.
The sophism of the socialists on this point consists in showing the public what they are paying middlemen in return for their services and hiding from them what they would have to pay the State. It is a constant struggle between what is obvious at a glance and what can be perceived only by the mind, between what is seen and what is not seen.
It was above all in 1847 and during the subsequent famine42 that the socialist schools sought and succeeded in popularizing their disastrous theory. They knew full well that the most absurd propaganda always has some chance of success with men who are suffering; malesuada fames43.
Therefore, with the aid of high sounding words: the exploitation of man by man, speculation on hunger, monopolies, they set about denigrating trade and casting a veil over its benefits.
“Why”, they said, “leave traders the task of importing the necessities of life from the United States and the Crimea?44 Why do the State, the departments and districts not organize a system of procurement and some storage warehouses? They would sell at cost price, and the people, the poor people, would be free of the tribute they pay to free trade, that is to say trade that is selfish, individualistic and anarchic.”
The tribute that the people pay to trade is what is seen. The tribute that the people would pay to the State or its agents under the socialist system is what is not seen.
In what does the alleged tribute that the people pay to trade consist? In this: two men render each other mutual service45 in total freedom under the pressure of competition and at an agreed price.
When a stomach that is hungry is in Paris and the wheat that is able to satisfy it is in Odessa, suffering will cease only when the wheat is brought to the stomach. There are three ways of bringing about this coming together: 1. The starving men can go to seek the wheat themselves; 2. They can delegate this task to those who have specialized in it; 3. They can have themselves taxed and entrust this operation to civil servants.
Of these three alternatives, which is the most advantageous?
In every age and in all countries, especially where they enjoyed greater freedom and were more enlightened and experienced, men have voluntarily chosen the second alternative, which I must admit is enough in my view to attribute the benefit of doubt to this choice. My mind refuses to admit that humanity in the mass would make a mistake on a point that has such a direct effect on it.46
Nevertheless, let us examine the question.
That thirty-six million citizens leave to go to Odessa to look for the wheat they need is obviously impracticable. The first alternative is valueless. Consumers cannot act on their own behalf; they have to resort to intermediaries, civil servants or traders.
However, we should note that this first alternative would be the most natural. Basically, it is up to the person who is hungry to go to find his wheat. This is a task that concerns him; a service that he owes himself. If another person, for whatever reason renders him this service and undertakes this task on his behalf, this person is entitled to compensation. What I am saying here serves to emphasize that the services of middlemen involves a principle of remuneration.
Be that as it may, since it is necessary to resort to someone the socialists call a parasite, which one, a trader or a civil servant, is the less demanding parasite?
Trade (I assume it to be free, otherwise how could I reason?), trade, as I say, out of its own interest tends to examine the seasons and note on a daily basis the state of the harvest, gather information from all corners of the globe, anticipate need and take the necessary precautions beforehand. It has ships ready, correspondents everywhere and its immediate interest is to buy at the best possible price, make savings on each detail of the operation and achieve the best results with the least effort. It is not only French traders, but traders the world over who are involved in procurement for France against her day of need, and if self-interest drives them invariably to fulfill their task at the least cost, the competition they wage with each other leads them no less invariably to allow consumers to benefit from all the savings achieved. Once the wheat arrives, it is in the interest of trade to sell it as soon as it can to minimize its risks, realize its funds and start again if necessary. Driven by a comparison of prices, it distributes foodstuffs around the whole country, always starting with the most expensive point, i.e. where the need is most pressing. It is therefore not possible to imagine an organization more in line with the interests of those who are hungry, and the beauty of such an organization, not noticed by the socialists, results precisely from the fact that it is free. In truth, consumers are obliged to reimburse trade with the cost of its transport, its transshipments, its storage and commissions, etc., but under what system does he who eats the wheat not have to reimburse the expenditure required to bring it to him? In addition the service rendered has to be paid for, but with regard to its proportion, this is reduced to the minimum possible by competition, and, as for its justice, it would be strange for the artisans in Paris not to work for the traders in Marseilles when the traders in Marseilles work for the artisans in Paris.
What would happen if the State took the place of trade in accordance with the socialist schema? Would someone please tell me where the saving would be for the public? Would it be in the purchase price? Just picture to yourself the delegates of forty thousand communes arriving in Odessa on a given day and at a time of need; just imagine the effect on prices. Would the saving lie in the costs? Would we need, however, fewer ships, fewer sailors, less transshipment, less warehousing or would we be relieved of having to pay for all of these things? Would it lie in the profits of the traders? Would your delegates and civil servants go to Odessa for nothing? Would they travel and work in accordance with the principle of fraternity? Do they not have to live? Does their time not need to be paid for? And do you think that this will not exceed a thousand times the two or three percent that the trader earns, a rate he is ready to work for?
And then, think of the difficulty of raising so many taxes and distributing so much food. Think of the injustice and abuse that is inseparable from an enterprise of this nature. Think of the responsibility that would weigh on the government.
The socialists, who have invented such folly and who, on days of misfortune, instill them into the minds of the masses, freely award themselves the accolade of progressive men, and it is not without danger that custom, that tyrant of languages, endorses the expression and the opinion it implies. Progressive! This implies that these fine fellows are more farsighted than the common man, that their sole error is to be too far ahead of their century and that if the time has not yet come to abolish certain free services that are alleged to be parasitic, the fault lies with the public, which lags behind socialism. For me, both in soul and conscience it is the contrary that is true, and I do not know to which barbaric century you would have to return to find the present level of socialist understanding in this respect.
Modern sectarians constantly contrast association47 with the current form of society. They do not appreciate that under a regime of liberty, society is a genuine association far better than all those that their fertile imagination engenders.
Let us illustrate this by an example:
In order for a man, when he gets out of bed, to be able to put on a suit of clothes, a piece of land has to have been fenced, cleared, drained, ploughed and sown with a specific type of plant. Flocks have to have grazed there and given their wool, this wool has to have been spun, woven, dyed and made into cloth and this cloth has to have been cut, sewn and made into a garment. And this series of operations implies a host of others, for it requires the use of farming machinery, sheepfolds, factories, coal, machines, vehicles, etc.
If society were not a genuine association, the man who wanted a suit of clothes would be reduced to working in isolation, that is to say, he would have to carry out himself the many tasks in this series, from the first blow of the pick that initiates it to the final stitch of the needle that completes it.
However, thanks to the sociability that is the distinctive characteristic of our species, these operations are shared out among a host of workers, and they are increasingly subdivided for the common good, until a point is reached where a single specialized task can support an entirely new industry as consumption becomes more intense. Then comes the distribution of the income generated according to whatever value each person has contributed to the total operation. If this is not association, I do not know what is.
Note that none of the workers having been able to draw even the minutest thing of substance from nothing, they have limited themselves to providing each other with mutual services,48 helping each other in line with a common goal, and that all may be considered as middlemen with regard to one another. If, for example, during an operation, transport became important enough to occupy one person, spinning another and weaving a third, why would the first be regarded as more parasitic than the two others? Is transport not necessary? Does he who carries it out not devote time and trouble to it? Does he not spare his associates this time and trouble? Do his associates do more than him or simply other things? Are they not all equally subject to the law of a freely negotiated price with regard to their pay, that is to say for their share of the product? Is it not in total freedom and for the common good that this separation of tasks is carried out and these arrangements made? Why then do we need a socialist to come to destroy our voluntary arrangements on the pretext of organization, stop the division of labour, substitute isolated effort for joint effort and cause civilization to take a backward step?
Is association, as I describe it here, any less an association because each person enters into it and leaves it of his own volition, chooses his own place in it, is responsible for his own judgements and stipulations, and brings to it the stimulus and guarantee of personal interest? For it to merit this name, is it necessary for a would-be reformer to come and impose on us his formula and will and concentrate humanity, so to speak, in himself?
The more we examine these progressive schools, the more we are convinced that there is just one thing at their root: ignorance proclaiming itself infallible and laying claim to despotism in the name of this infallibility.
I beg the reader to excuse this digression. It is perhaps not without point at a time when declarations against Middlemen have escaped from books by the Saint-Simonians, phalansterians and icarians,49 and invaded journalism and the public platform, causing a serious threat to freedom of work and exchange.
41 This was true for the followers of the socialists Louis Blanc, Charles Fourier, and the Montagnard faction in the Chamber in 1848. It was not true for the socialist anarchist Proudhon. See the glossary entries on “The Socialist School,” “Blanc,” “Fourier,” and “Proudhon.”
42 Crop failures in 1846, especially in Ireland with the spread of the potato blight, cause considerable hardship and a rise in food prices in 1847 across Europe. Some historians also believe this was a contributing factor to the outbreak of revolution in 1848. The Economists believed that this could have been alleviated if there had been international free trade in grain and other food stuffs which would have allowed surpluses from some areas to be sold in areas where there were shortages. The successful repeal of the Corn Laws in Britain in May 1846 (but which not take full effect until 1849) by Richard Cobden and the Anti-Corn Law League was a first step in this direction. See glossary entries on “Cobden,” “Anti-Corn Law League,” and “The Corn Laws.” See Vanhaute, Eric, C. O'Grada & R. Paping, "The European subsistence crisis of 1845-1850. A comparative perspective." in: Vanhaute E., C. O'Grada & R. Paping (eds.), When the potato failed. Causes and effects of the 'last' European subsistence crisis, 1845-1850. Turnhout: Brepols Publishers, 2007:15-42.
43 The Latin phrase "malesuada Fames" (ill-councelling famine) is from Virgil's Aeneid (VI, 276). In John Dryden's translation it is rendered as "Famine’s unresisted rage". See Virgil’s Aeneid, trans. John Dryden with Introduction and Notes (New York: P.F. Collier and Son, 1909). THE SIXTH BOOK OF THE ÆNEIS </title/1175/217545>.
44 Four factors led to the opening up of world trade in agricultural products after the "Hungry 1840s": the rise in European prices caused by the crop failures of the late 1840s, the freeing up of grain markets in Britain and then other European countries, the reduction in shipping costs, and the rise of large grain markets in the United States and the port of Odessa in the Crimea. From zero wheat imports from the United States to Britain in 1846, the level rose to 1,000 metric tonnes per annum by 1862.
45 Bastiat uses the phrase “se rendent réciproquement service” See the glossary entry on “Servie for Service”.
46 (Paillottet’s note) The author has often invoked the presumption of truth that is attached to the universal agreement shown by the practice followed by men. See in particular page 79 of chapter XIII of the Sophisms in Tome IV followed by page 441, then the appendix to chapter VI entitled the Morality of Wealth in Tome VI. . The reference is to chap. XIII "Théorie, Pratique" (Theory and Practice) in the Economic Sohphisms Part I, and the pamphlet "Propriété et Spoliation" (Property and Plunder) in OC vol. 4; and to chapter VI "Richesse" (Wealth) in Economic Harmonies in OC vol. 6.
47 Bastiat is using the word "association" in its socialist sense as it had become a slogan used by socialist critics of the free market during the 1840s. See the glossary entry on "Association and Organization."
48 Bastiat uses the phrase “se rendre des services réciproques.” See the glossary entry on “Servie for Service”.
49 Saint-Simonians, phalansterians and icarians: followers of Saint-Simon, Charles Fourier, and Étienne Cabet respectively. See the glossary entries on "Saint-Simon," "Fourier," and "Cabet".
VII. Trade Restrictions [final draft]↩
Mr. Prohibant 50 (it is not I who have given him this name, it is Mr. Charles Dupin51 who since the, … but then …) devoted his time and his capital to transforming the ore on his land into iron. As nature had been more prodigal toward the Belgians, they supplied iron to the French cheaper than Mr. Prohibant, which means that all Frenchmen or France herself were able to obtain a given quantity of iron with less labor by buying it from the honest Flemings. Driven by their self-interest, they did not fail to do so, and every day you could see a host of nail-makers, blacksmiths, wheelwrights, mechanics, farriers and ploughmen going on their own account or through middlemen to obtain supplies from Belgium. This did not please Mr. Prohibant at all.
First of all, the idea came to him to stop this abuse using his own forces. This was certainly the least he could do, since he alone was harmed by the abuse. “I will take my rifle,” he said to himself, “I will put four pistols in my belt, I will fill my cartridge pouch, I will buckle on my sword and, thus equipped, I will go to the border. There, I will kill the first blacksmith, nail-maker, farrier, mechanic or locksmith who comes to do business with them and not with me. That will teach him how to conduct himself properly.”
When he was about to leave, Mr. Prohibant had second thoughts, which mellowed his bellicose ardor somewhat. He said to himself: “First of all, it is not totally out of the question that my fellow-citizens and enemies, the purchasers of iron, will take this action badly, and instead of letting themselves be killed they will kill me first. Next, even if I marshal all my servants, we cannot guard all the border posts. Finally, this action will cost me a great deal, more than the result is worth.”
Mr. Prohibant was about to resign himself sadly to being merely as free as anyone else when a flash of inspiration shone in his brain.
He remembered that in Paris there was a great law factory.52 “What is a law?” he asked himself. “It is a measure to which everyone is required to comply once it has been decreed, whether it is good or bad. To ensure the execution of the aforesaid, a public force is organized, and in order to constitute the said public force, men and money are drawn from the nation.
If, therefore, I succeeded in obtaining from the great law factory a tiny little law that said: “Iron from Belgium is prohibited,” I would achieve the following results: the government would replace the few servants I wanted to send to the border by twenty thousand sons of my recalcitrant blacksmiths, locksmiths, nail-makers, farriers, artisans, mechanics and ploughmen. Then, in order to keep these twenty thousand customs officers53 in good heart and health, it would distribute twenty five million francs taken from these same blacksmiths, nail-makers, artisans and ploughmen. The security would be better done, it would cost me nothing, I would not be exposed to the brutality of the dealers, I would sell iron at my price and I would enjoy the sweet recreation of seeing our great nation shamefully bamboozled. That would teach it to claim incessantly to be the precursor and promoter of all progress in Europe. Oh! That would be a smart move and is worth trying.”
Therefore, Mr. Prohibant went to the law factory. Perhaps on another occasion I will tell you the story of his underhand dealings; right now I merely want to talk about his very visible actions. He put the following consideration to the venerable legislators:
“Belgian iron is being sold in France for ten francs, which obliges me to sell mine at the same price. I would prefer to sell it at fifteen and cannot do so because of this God damned Belgian iron.54 Please manufacture a law that says: ‘Belgian iron will no longer come into France.’ I will immediately raise my price by five francs and the result will be:
For each quintal55 of iron I deliver to the public, instead of receiving ten francs, I will receive fifteen. I will become richer faster and will expand my operation, giving work to more workmen. My workers and I will spend more money to the great benefit of our suppliers for several leagues around. As these suppliers will have more markets, they will give more orders to various other producers, and from one sector to another the entire country will increase its activity. This fortunate hundred sou coin that you drop into my coffer will radiate outwards to the far corners of the country an infinite number of concentric circles, just like a stone thrown into a lake.”56
Pleased to hear this speech and delighted to learn that it is so easy to increase the wealth of a nation by means of the law, the lawmakers voted for the restriction. “What do people say about work and economics?” they said, “What use are these painful means of increasing national wealth where one Decree suffices?”
And in fact, the law produced all the consequences forecast by Mr. Prohibant. The trouble was that it also produced others for, to do him justice, he had not reasoned falsely but incompletely. Petitioning for a privilege, he had pointed out those of its effects that are seen, leaving those that are not seen in the shadows. He presented two people only, when there are three in the cast.57 It is up to us to put right this involuntary or perhaps premeditated oversight.
Yes, the écu thus diverted by law to the coffers of Mr. Prohibant constitutes a benefit for him and for those whose work he is bound to stimulate. And if the decree had caused this écu to come down from the moon, these beneficial effects would not be counterbalanced by any compensating bad effects. Unfortunately, it is not from the moon that the mysterious hundred sou coin comes, but rather from the pockets of a blacksmith, nail-maker, wheelwright, farrier, ploughman or builder, in short from the pocket of Jacques Bonhomme,58 who will now pay it without receiving one milligram more of iron than he did at the time when he paid ten francs. At first sight you have to see that this changes the question considerably, since very clearly the Profit made by Mr. Prohibant is offset by the Loss made by Jacques Bonhomme, and everything that Mr. Prohibant is able to do with this écu to encourage national production, Jacques Bonhomme could also have done. The stone is merely cast into a particular point on the lake because it has been prevented by law from being cast into another.
Therefore, what is not seen offsets what is seen and up to now in the remainder of the operation, there remains an injustice, and what is deplorable is that it is an injustice perpetrated by the law.