Richard M. Ebeling
Each New Generation of Advocates of Economic Liberty Has Been Inspired by His Writings
Richard Ebeling is the president of FEE. When this article first appeared, he was Ludwig von Mises Professor of Economics and chairman of the economics department at Hillsdale College in Michigan.
The defense of economic liberty has never been an easy task. Adam Smith expressed his own despair at this problem in The Wealth of Nations. After presenting his powerful criticisms of mercantilism—the eighteenth-century system of government regulation and planning—he despondently suggested that free trade in Great Britain was as unlikely as the establishment of a utopia.
He said that two factors made the success of economic liberty unpromising. “Not only the prejudices of the public,” Smith said, “but what is much more unconquerable, the private interests of many individuals, irresistibly oppose it.” By the prejudices of the public, Smith meant the apparent difficulty of many ordinary people to follow the often abstract and complex arguments of the economic theorist that demonstrate the superior workings of the free market over various forms of government intervention and control. And by the private interests of many individuals, Smith had in mind the wide variety of special-interest groups that gain from, and would therefore always lobby hard to maintain, government regulations that limit or prevent open competition. In combination, Smith feared, these two factors would permanently prevent the logic of economic freedom from ever winning in the arenas of ideas and politics.
In the nineteenth century, however, there was one champion of freedom who mastered the art of making the complexities of economic reasoning understandable to the layman: the French classical-liberal economist Frédéric Bastiat. More than one historian of economic thought has emphasized Bastiat’s special abilities in undermining the rationales for protectionism, socialism, and interventionism.
Sir Alexander Gray, for example, said that, “No one has ever been quite so skillful in making the case of his antagonist look extremely foolish. Even now his most ephemeral work remains a joy to read, by reason of its wit, its merciless satire and the neatness wherewith he pinks his opponents.” Lewis Haney referred to Bastiat’s “pleasing and luminous style” and how, “brilliantly, with fable and irony, the masses are appealed to.”
Eduard Heimann, a critic of the market economy, described him as, “A brilliant writer, [who] achieved world fame with his parable of the candle-makers, who petition for protection against the unfair competition of the sun in order that the community may become richer by the enrichment of their industry.” Charles Gide and Charles Rist pointed out that “If modern Protectionists no longer speak of the ‘inundation of a country’ or of an ‘invasion of foreign goods’ . . . we too often forget that all this is due to the small but admirable pamphlets written by Bastiat . . . . No one could more scornfully show the laughable inconsistency of tunneling the mountains which divide countries, with a view to facilitating exchange, while at the same time setting up a customs barrier at each end.”And even though Bastiat’s pen was sharp against the protectionist and collectivist ideas of his time, William Scott emphasized that the French liberal’s “attitude was calm and dignified and in spite of the incisiveness of his criticism he showed appreciation of the motives of his adversaries. He gave them full credit for a desire to promote the well-being of society, but wished simply to show that they were on the wrong path and, if possible, to set them right.”
Those qualities led Joseph A. Schumpeter to call Bastiat “the most brilliant economic journalist who ever lived.”And Ludwig von Mises praised him as a “brilliant stylist, so that the reading of his writings affords a quite genuine pleasure . . . . [H]is critique of all protectionist and related tendencies is even today unsurpassed. The protectionists and interventionists have not been able to advance a single word in pertinent and objective rejoinder.”
Other authors have modeled some of their own works after him. At the beginning of the twentieth century, the French free-market economist Yves Guyot said that his own little book, Economic Prejudices, was offered in the footsteps of Frédéric Bastiat, with the purpose of “[setting] forth truths in a handy, convenient form that is easy to remember, to criticize errors by means of proof that any one can apply,” as Bastiat had done half a century earlier. And surely the most famous and influential adaptation of Bastiat’s method and approach in the twentieth century was Henry Hazlitt’s Economics in One Lesson, in which the author said, “The present work may, in fact, be regarded as a modernization, extension and generalization of the approach found in Bastiat’s pamphlet,” known by the title “What Is Seen and What Is Not Seen.”
Orphaned at Nine
The bicentennial of Bastiat’s birth offers an appropriate occasion for an appreciation of his defense of economic liberty and its enduring value. Claude Frédéric Bastiat was born on June 30, 1801, in Bayonne, France, the son of a prominent merchant. His mother died when he was seven years old, and his father passed away two years later, when Frédéric was only nine. He was brought up by an aunt, who also saw to it that he went to the College of Sorèze beginning when he was 14. But at 17 he left without finishing the requirements for his degree and entered his uncle’s commercial firm in Bayonne. Shortly afterward he came across the writings of the French classical-liberal economist Jean-Baptiste Say, and they transformed his life and thinking. He began a serious study of political economy and soon discovered the works of many of the other classical-liberal writers in France and Great Britain.
In 1825 he inherited a modest estate in Mugron from his grandfather and remained there until 1846, when he moved to Paris. During these 20 years Bastiat devoted almost all his time to absorbing a vast amount of literature on a wide variety of subjects, sharing books and ideas with his friend Félix Coudroy. It seems that Coudroy had socialist leanings, and Bastiat began to refine his skills in clear thinking and writing by formulating the arguments that finally won over his friend to a philosophy of freedom.
In the late 1820s and 1830s he began writing monographs and essays on a variety of economic topics. But his real reputation as a writer began in 1844, when he published a lengthy article in defense of free trade and then a monograph on Cobden and the League: The English Movement for Free Trade. While writing these works Bastiat began a correspondence with Richard Cobden, one of the primary leaders of the British Anti-Corn Law League, the association working for the repeal of all barriers to free trade. The two proponents of economic freedom became fast friends, supporting each other in the cause of liberty.
The success of these writings, and the inspiration from the success of Cobden’s free-trade activities in bringing about the end of agricultural protectionism in Great Britain in 1846, resulted in Bastiat’s moving to Paris to establish a French free-trade association and to start Le Libre Échange, a newspaper devoted to this cause.For two years Bastiat labored to organize and propagandize for free trade. At first he was able to attract a variety of people in commerce and industry to support his activities, including delivering speeches, designing legislation for the repeal of French protectionism, and preparing writings to change public opinion. But it was to no avail. There were too many special interests benefiting from privileges and favors given by the government, and he was unable to arouse a sustained interest in his cause among the general public. It appeared that Adam Smith had been right in lamenting the prejudices of the public and the power of the interests, at least in France.
Enters the Legislature
Following the revolution of February 1848, Bastiat began a career in politics, serving first in the French Constituent Assembly and then in the Legislative Assembly. Having devoted most of his previous writings to demonstrating the fallacies in the arguments for protectionism, Bastiat turned his attention to a new enemy of economic liberty: socialism. In the Legislative Assembly he delivered powerful speeches against public-works programs, guaranteed national-employment schemes, wealth-redistribution proposals, nationalization of industry, and rationales for the expansion of bureaucratic controls over social and economic life. But because of a worsening tuberculosis that weakened his voice, he turned to the written word, producing a large number of essays detailing the absurdities in the arguments of the socialists.
Bastiat made his last appearance in the Assembly in February 1850. By spring of that year his health had declined so dramatically that he was forced to step down from his legislative responsibilities and spend the summer in the Pyrénées mountains in the south of France. He returned to Paris in September and visited his friends in the cause for free trade, before setting out for Italy in search of a cure for his tuberculosis. He died in Rome on December 24, 1850, at the age of 49.
Frédéric Bastiat’s intellectual legacy in the fight for economic freedom is contained in three volumes. Two of them are collections of some of his most biting, witty, and insightful essays and articles, and are available in English under the titles Economic Sophisms and Selected Essays on Political Economy. In his last years, Bastiat devoted part of his time to a general work of social philosophy and economic principles, published under the name Economic Harmonies.
As Henry Hazlitt rightly emphasized, the central idea in much of Bastiat’s writings is captured in his essay “What Is Seen and What Is Not Seen,” which was the last piece he wrote before his death in 1850. He points out that the short-run effects of any action or policy can often be quite different from its longer-run consequences, and that these more remote consequences in fact may be the opposite from what one had hoped for or originally planned.
Bastiat was able to apply the principle of the seen and the unseen to taxes and government jobs. When government taxes, what is seen are the workers employed and the results of their labor: a road, a bridge, or a canal. What is unseen are all the other things that would have been produced if the tax money had not been taken from individuals in the private sector and if the resources and labor employed by the government had been free to serve the desires of those private citizens. Government, Bastiat explained, produces nothing independent from the resources and labor it diverts from private uses.
This simple but profoundly important insight is the theoretical weapon through which Bastiat is able to demonstrate the errors and contradictions in the ideas of both protectionists and socialists. Thus in such essays as “Abundance and Scarcity,” “Obstacle and Cause,” and “Effort and Result,” he shows that barriers and prohibitions to freedom of trade only lead to poverty.
Both Consumer and Producer
He points out that each of us is both a consumer and a producer. To consume a good we must either make it ourselves or make some other good that we think someone else will take in exchange for the good we want. As consumers we desire as many goods as possible at the lowest possible prices. In other words, we want abundance. But as producers we want a scarcity of the goods we bring to market. In open competition, in which all exchanges are voluntary, the only way to “capture” customers and earn the income that enables each of us, in turn, to be a consumer is to offer better, cheaper, and more goods than our competitors. The alternative to this method, Bastiat warns, is for each of us as a producer to turn to the government to gain from our neighbors what we are unable to obtain through peaceful, nonviolent trade on the market.
Herein lies Bastiat’s famous distinction between illegal and legal plunder. The purpose of government, he says, is precisely to secure individuals in their rights to life, liberty, and property. Without such security men are reduced to a primitive life of fear and self-defense, with every neighbor a potential enemy ready to plunder what another has produced. If a government is strictly limited to protecting men’s rights, then peace prevails, and men can go about working to improve their lives, associating with their neighbors in a division of labor and exchange.
But government can also be turned against those whom it is meant to protect in their property. There can arise legal plunder, in which the powers of government are used by various individuals and groups to prevent rivals from competing, to restrict the domestic and foreign trading opportunities of other consumers in the society, and therefore to steal the wealth of one’s neighbors. This, Bastiat argues, is the origin and basis of protectionism, regulation, and redistributive taxation.
But the consequences of legal plunder are not only the political legitimizing of theft and the breakdown of morality through the blurring of the distinction between right and wrong—however crucially important and dangerous these may be for the long-term stability and well-being of society. Such policies also, by necessity, reduce the prosperity of the society.
Every trade protection, every domestic regulatory restriction, every redistributive act of taxation above that minimal amount necessary to secure the equal protection of each individual’s rights, Bastiat insisted, reduces production and competition in society. Scarcity replaces abundance. Limiting competition reduces the supply of goods available to all members of the society. Imposing protectionist barriers on foreign trade or domestic regulations on production decreases the general availability of goods and makes them more expensive. Everyone is, in the end, made worse off. And thus Bastiat reached his famous conclusion that the state is the great fiction through which everyone tries to live at the expense of everyone else.
Is this the way men have to live? Was illegal and legal plunder the only form of social existence? Bastiat answered no. In Economic Harmonies he tried to explain the nature and logic of a system of peaceful human association through production and trade. Historians of economic thought and other critics of Bastiat have said this work demonstrates that, despite his brilliant journalistic talents, he failed as a serious economic theorist. They point to his use of a form of a labor theory of value or his faulty theory of savings, capital, and interest.
But beyond these errors and limitations is an aspect of Economic Harmonies that still makes it insightful.Harmonies attempts to offer a grand vision of the causal relationships among work, the division of labor, voluntary exchange, and mutual improvement of men’s condition, as well as the importance of private property, individual freedom, and domestic and foreign free trade. In freedom there is social harmony, since each man sees his neighbor not as an enemy but as a partner in the ongoing processes of human improvement. Where relationships are based on consent and mutual agreement there can be no plunder, only reinforcing prosperity, as each works to trade with his neighbors and acquire all the things that make life better for each and all.
If one looks at the period during which Bastiat devoted his efforts to fight for freedom and free trade, the conclusion would appear to be that his life ended in failure. Both during his lifetime and following his death France remained in the grip of the protectionist and interventionist spirit, never achieving the degree of economic liberty enjoyed in Great Britain through the second half of the nineteenth century.
And yet Bastiat’s life should be seen as a glorious success. For the 150 years since his passing, each new generation of advocates of economic liberty has been inspired by his writings. His fables and essays read as fresh as if they were written yesterday, because they address the underlying nature of human association and the dangers from political encroachment on the social and market orders.