[Created: October 6, 2012]
[Updated: October 6, 2012 ]
A Brief History of Economic Thought
Institute for Liberal Studies, The University of Toronto, Bahen Centre
Friday 29 September, 2012
[see the full slide show in PDF 13.7 MB]
[Draft Preface for the Harmonies (1847)]
My dear Frédéric [FB writing to himself],
Like you I love all forms of freedom; and among these, the one that is the most universally useful to mankind, the one you enjoy at each moment of the day and in all of life’s circumstances, is the freedom to work and to trade. I know that making things one’s own is the fulcrum of society and even of human life. I know that trade is intrinsic to property and that to restrict the one is to shake the foundations of the other. I approve of your devoting yourself to the defense of this freedom whose triumph will inevitably usher in the reign of international justice and consequently the extinction of hatred, prejudices between one people and another, and the wars that come in their wake.
I love freedom of trade as much as you do. But is all human progress encapsulated in that freedom? In the past, your heart beat for the freeing of thought and speech which were still bound by their university shackles and the laws against free association. You enthusiastically supported parliamentary reform and the radical division of that sovereignty, which delegates and controls, from the executive power in all its branches. All forms of freedom go together. All ideas form a systematic and harmonious whole, and there is not a single one whose proof does not serve to demonstrate the truth of the others. But you act like a mechanic who makes a virtue of explaining an isolated part of a machine in the smallest detail, not forgetting anything. The temptation is strong to cry out to him, “Show me the other parts; make them work together; each of them explains the others ”
[ES2 IX “Theft by Subsidy” (January 1846) (LF ed.)]
People find my small volume of Sophisms too theoretical, scientific and metaphysical. So be it. Let us try a mundane, banal and, if necessary, brutal style. Since I am convinced that the general public are easily taken in as far as protection is concerned, I wanted to prove it to them. They prefer to be shouted at. So let us shout:
Midas, King Midas has ass’s ears! [i.e. “The Emperor has no clothes]
An explosion of plain speaking often has more effect than the politest circumlocutions. Do you remember Oronte and the difficulty that the Misanthropist, as misanthropic as he is, has in convincing him of his folly?
Alceste: We risk playing the wrong character.
Oronte: Are you trying to tell me by that that I am wrong in wanting …
Alceste: I am not saying that, but …
Oronte: Do I write badly?
Alceste: I am not saying that, but in the end …
Oronte: But can I not know what there is in my sonnet …?
Alceste: Frankly it is fit to be flushed away.
Frankly, my good people, you are being robbed. That is plain speaking but at least it is clear.
Mercantilism or “Colbertism”:
emerged during 17th and 18thC
J.B. Colbert (1619-1683)
The Classical School:
2 schools of free market economic thought emerged out of 18thC
The Anglo-Scottish Classical School
The French School (“les économistes”)
The Socialist School
emergence in 1830s-1850s of Socialist schools of thought (Proudhon, Marx)
The Marginalist School (Austrian School)
emergence in 1870s of Marginalist School (Jevons, Menger, Walras)
The Neo-Classical School
emergence in 1890s of Neo-Classical School (Marshall)
Building upon the foundation laid by Physiocratic School of 18th Century:
Jean-Baptiste Say (1767-1832)
Charles Comte (1782-1837)
Charles Dunoyer (1786-1862)
Augustin Thierry (1795-1856)
Frédéric Bastiat (1801-1850)
Charles Coquelin (1802-1852)
Jean-Gustave Courcelle-Seneuil (1813-1892)
Gustave de Molinari (1819-1912)
Bastiat was one of “The Four Musketeers” as described by Gérard Minart in his biography of Molinari.
For more information about Bastiat’s life and work, as well as access to his works online, see <http://oll.libertyfund.org/person/25> and <http://davidmhart.com/FrenchClassicalLiberals/Bastiat/index.html>.
A detailed chronology of his life (in French) can be found here "Chronologie de la vie et des oeuvres Frédéric Bastiat" by Jean-Claude Paul-Dejean at the Bastiat Circle website <http://bastiat.net/fr/biographie/chronologie.html>.
A shorter one in English can be found here <http://davidmhart.com/FrenchClassicalLiberals/Bastiat/Lecture/Chronology.html>.
An expanded one based upon Paul-Dejean’s (in English) here <http://davidmhart.com/FrenchClassicalLiberals/Bastiat/ExpandedChronology.html>.
This begins the next tumultuous phase of FB’s life - The “Seen” Bastiat
Radical Moment in French CL Thought 1842-1855
These ideas pushed the Classical School into new directions. Especially work of Bastiat and Molinari: [with quotes]
Quote from ES2 XIV “Something Else” (March 1847) (LF ed.)
"Please explain the mechanism and effects of protection to me."
"That is not easy. Before moving on to complicated examples, we would have to study it in its simplest form."
"Take the simplest example you want."
"Do you remember how Robinson Crusoe set about making a plank when he had no saw?"
"Yes, he felled a tree and, trimming the trunk with his axe first on its left and then on its right side, he reduced it to the thickness of a beam."
"And did that take him a great deal of work?"
"Two whole weeks."
"And what did he live on during this time?"
"And what became of the axe?"
"It became very blunt."
"Very well. But perhaps you did not know this. Just when he was about to give the first stroke of his axe, Robinson Crusoe saw a plank cast up by the waves on the beach."
"Oh, what a coincidence! Did he run to pick it up?"
"This was his first reaction, but then he stopped for the following reason:
“If I pick up this plank, it will cost me only the fatigue of carrying it and the time to go down the cliff and climb it again.
But if I make a plank with my axe, firstly I will give myself enough work for two weeks, secondly I will wear out my axe, which will give me the opportunity of repairing it, and then I will eat up my provisions, a third source of work, since I will need to replace them. Now, work is wealth. It is clear that I will ruin myself by going to pick up the plank washed up on the beach. It is important for me to protect my personal labor and now that I think of it, I can create further work for myself by going to push this plank back into the sea!”
"But this line of reasoning is absurd!"
"So it is! It is nevertheless the one followed by any nation that protects itself through prohibition. It rejects the plank offered to it for little work in order to give itself more work. There is no work up to and including the work of the Customs Officer in which it does not see advantage. This is illustrated by the trouble taken by Robinson Crusoe to return to the sea the gift it wished to make him. Think of the nation as a collective being and you will find not an atom of difference between its way of reasoning and that of Robinson Crusoe."
"Did Robinson not see that the time he saved he could devote to doing something else?"
Quote from “Theft by Subsidy”
Since the opportunity has so kindly been offered to us, let us examine theft by subsidy. What can be said of it applies just as well to theft by tariffs, and while theft by tariffs is slightly better disguised, direct filching will help us understand indirect filching. The mind moves forward in this way from the simple to the compound.
What then! Is there no type of theft that is simpler still? Oh, yes, there is highway robbery: all it needs is to be legalized, monopolized or, as we say nowadays, organized.
Quote from Conclusion to ES1 (November 1845)
Let us end this monograph on sophistry with a final and important thought:
The world is not sufficiently aware of the influence that sophistry exercises on it.
If I have to say what I think, when the right of the strongest was dethroned, sophistry handed empire to the right of the most subtle, and it would be difficult to say which of these two tyrants has been the most disastrous for the human race.
Men have an immoderate love for pleasure, influence, esteem, and power, in a word, for wealth.
And at the same time, they are driven by an immense urge to procure these things for themselves at the expense of others.
But these others, who are the general public, have no less an urge to keep what they have acquired, provided that they can and they know how to.
Plunder, which plays such a major role in the affairs of the world, has thus only two things which promote it: force and fraud , and two things which limit it: courage and enlightenment.
Force used for plunder forms the bedrock upon which the annals of human history rest.Retracing its history would be to reproduce almost entirely the history of every nation: the Assyrians, the Babylonians, the Medes, the Persians, the Egyptians, the Greeks, the Romans, the Goths, the Francs, the Huns, the Turks, the Arabs, the Mongols, and the Tartars, not to mention the Spanish in America, the English in India, the French in Africa, the Russians in Asia, etc., etc.
But at least in civilized nations, the men who produce the wealth have become sufficiently numerous and strong to defend it. Is this to say that they are no longer dispossessed? Not at all; they are just as dispossessed as ever and, what is more, they mutually dispossess each other.
Only, the thing which promotes it has changed; it is no longer by force but by fraud that public wealth can be seized.
In order to steal from the public it it first necessary to deceive them. To deceive them it is necessary to persuade them that they are being robbed for their own good; it is to make them accept imaginary services and often worse in exchange for their possessions. This gives rise to sophistry. Theocratic sophistry, economic sophistry, political sophistry and financial sophistry. Therefore, ever since force has been held in check, sophistry has been not only a source of harm, it has been the very essence of harm. It must in its turn be held in check. And to do this the public must become cleverer than the clever, just as it has become stronger than the strong.
Quote ES2 I “The Physiology of Plunder”
In fact, there comes a time when, in its gradual acceleration, the loss of wealth is so great that Plunderers are less rich than they would have been if they had remained honest.
An example of this is a nation for which the cost of war is greater than the value of its booty;
A master who pays more for slave labor than for free labor;
A Theocracy that has so stupefied the people and sapped their energy that it can no longer wring anything out of them;
A Monopoly that has to increase its efforts to suck consumers dry as there is less to be sucked up, just as the effort needed to milk a cow increases as the udder dries up.
As we see, Monopoly is a Species of the Genus, Plunder. There are several Varieties of it, including Sinecure, Privilege and Trade Restriction.
Among the forms it takes, there are some that are simple and naïve. Such were feudal rights. Under this regime the masses were plundered and knew it. It involved the abuse of force and perished with it.
Others are highly complex. In this case, the masses are often plundered unaware. It may even happen that they think they owe everything to Plunder; what is left to them, as well as what is taken from them and what is lost in the operation. Further than that I would propose as time goes on, and given the highly ingenious mechanism of custom, many Plunderers are plunders without knowing it and without wishing it. Monopolies of this type are generated through Fraud and they feed on Error. They only disappear with Enlightenment.
I have said enough to show that Political Economy has an obvious practical use. It is the flame that destroys this social disorder which is Plunder, by unveiling Fraud and dissipating Error. Someone, I believe it was a woman and she was perfectly right, defined political economy thus: It is the safety lock on popular savings.
Quote ES2 I “The Physiology of Plunder”
I will review briefly a few of the forms of plunder that are exercised by Fraud on a grand scale.
The first to come forward is Plunder by theocratic fraud.
What is this about? To get people to provide real services, in the form of foodstuffs, clothing, luxury, consideration, influence and power, in return for imaginary ones.
If I said to a man “I am going to provide you with some immediate services”, I would have to keep my word, otherwise this man would know what he was dealing with and my fraud would be promptly unmasked.
But if I told him “In exchange for your services, I will provide you with immense services, not in this world but in the next. After this life, you will be able to be eternally happy or unhappy and this all depends on me; I am an intermediary between God and his creation and can, at will, open the gates of heaven or hell to you.” Should this man believe me at all, he is in my power.
This type of imposture has been practiced widely since the beginning of the world, and we know what degree of total power Egyptian priests achieved.
It is easy to see how impostors behave. You have to only ask yourself what you would do in their place.
If I came, with ideas like this in mind, amongst an ignorant clan and succeeded by dint of some extraordinary act and an amazing appearance to be taken for a supernatural being, I would pass for an emissary of God with absolute discretion over the future destiny of men.
I would then forbid any examination of my titles. I would go further; since reason would be my most dangerous enemy, I would forbid the use of reason itself, at least when applied to this awesome subject. I would make this question, and all those relating to it, taboo, as the savages say. To solve them, discuss them or even think of them would be an unpardonable crime.
It would certainly be the height of skill to set up a taboo as a barrier across all the intellectual avenues that might lead to the discovery of my deception. What better guarantee of its longevity is there than to make doubt itself a sacrilege?
However, to this fundamental guarantee I would add ancilliary ones. For example, in order that enlightenment is never able to reach down to the masses, I would grant to my accomplices and myself the monopoly of all knowledge. I would hide it under the veils of a dead language and a hieroglyphic script and, so that I would never be taken by surprise by any danger, I would take care to invent an institution which would, day after day, enable me to enter into the secret of all consciences.
Quote: FB’s parody of Molière’s parody of medical quacks
Sometimes Bastiat goes beyond quoting a famous scene from a well-known classic work and adapts it for his own purposes by rewriting it as a parody. A good example of this is Molière’s parody of the granting of a degree of doctor of medicine in the last play he wrote Le malade imaginaire (The Imaginary Invalid, or the Hypocondriac) (1673) which Bastiat quotes in “Theft by Subsidy” (JDE January 1846). Molière is suggesting that doctors in the seventeenth century were quacks who did more harm to their patients than good, as this translation of his dog Latin clearly suggests:
I give and grant you
Power and authority to Practice medicine,
Throughout the whole world.
Bastiat’s takes Molière’s Latin and writes his own pseudo-Latin, this time with the purpose of mocking French tax collectors. In his parody Bastiat is suggesting that government officials, tax collectors, and customs officials were thieves who did more harm to the economy than good, so Bastiat writes a mock “swearing in” oath which he thinks they should use to induct new officials into government service:
I give to you and I grant
virtue and power
At will, along this whole road
Quote from Ec Harmonies (LF ed.) - cabinet maker and the student
We would be shutting our eyes to the light if we refused to acknowledge that society cannot present such complicated combinations, in which civil and penal laws play so little a part, without obeying a prodigiously ingenious mechanism. This mechanism is the subject matter of political economy.
One more thing worthy of comment is that, in this truly incalculable number of transactions which have contributed to keeping alive one student for one day, there is perhaps not a millionth part which has been made directly. The countless things he has enjoyed today are the work of men a great number of whom have long since disappeared from the face of the earth. Nevertheless they were remunerated as they wished, although he who is benefiting today from the product of their work has done nothing for them. He did not know them and will never know them. He who reads this page, at the very moment at which he reads it, has the power, although he perhaps does not realize this, to set in motion men in all countries, of all races, and I might almost say, of all periods of time; white men, black men, red men and yellow men. He causes generations that have died away and generations not yet born to contribute to his current satisfactions, and he owes this extraordinary power to the services his father rendered in the past to other men who on the face of it have nothing in common with those whose labor is being set in motion today. However, the balance is such that in time and space, each one is reimbursed and has received what he calculated he should receive.
In truth, can all this have been possible, can such extraordinary phenomena have been achieved without there having been in society a natural and knowing organization which acts, so to speak, without our knowledge?
Quote from ES1 XVII “The are no Absolute Principles” (1845) about supplying large city like Paris (LF ed.)
On entering Paris, which I had come to visit, I said to myself: Here there are a million human beings who would all die in a few days if supplies of all sorts did not flood into this huge metropolis. The mind boggles when it tries to assess the huge variety of objects that have to enter through its gates tomorrow if the lives of its inhabitants are not to be snuffed out in convulsions of famine, uprisings, and pillage. And in the meantime everyone is asleep, without their peaceful slumber being troubled for an instant by the thought of such a frightful prospect. On the other hand, eighty departments have worked today without being in concert and without agreement to supply Paris. How does it happen that every day what is needed and no more or less is brought to this gigantic market? What is thus the ingenious and secret power that presides over the astonishing regularity of such complicated movements, a regularity in which everyone has such blind faith, although well-being and life depend on it? This power is an absolute principle, the principle of free commerce. We have faith in this intimate light that Providence has placed in the hearts of all men to whom it has entrusted the indefinite preservation and progress of our species, self-interest, for we must give it its name, that is so active, vigilant, and farsighted when it is free to act. Where would you be, you inhabitants of Paris, if a minister took it into his head to substitute the arrangements he had thought up, however superior they are thought to be, for this power? Or if he took it into his head to subject this stupendous mechanism to his supreme management, to gather together all these economic activities in his own hands, to decide by whom, how, or under what conditions each object has to be produced, transported, traded and consumed? Oh! Although there are a good many causes of suffering within your city, although destitution, despair, and perhaps starvation are causing more tears to flow than your ardent charity can stem, it is probable or, I dare to say, even certain, that the arbitrary intervention of the government would infinitely increase these sufferings and extend to you all the misfortunes that are only affecting a small number of your fellow citizens.
Quote from “The State” (June, September 1848) (LF ed.).
FB’s was an advocate of a strictly limited government which operated under a constitution and the rule of law. notion of the proper functions of the state. One might call him an advocated of “the ultra-minimalist state”.
At the height of the 1848 Revolution in June 1848 just prior to the bloody repression of Parisian protestors and rioters by the army, FB wrote a short article in his newspaper Jacques Bonhomme which he stood on street corners distributing to ordinary working people. He wanted to show them that their socialist-inspired demands for a more interventionist sate were both immoral and counterproductive. He later expanded it into a longer essay and then a pamphlet. Here is his conclusion:
Fellow citizens, since time immemorial two political systems have confronted one another and both have good arguments to support them. According to one, the State has to do a great deal, but it also has to take a great deal. According to the other, its twin action should be little felt. A choice has to be made between these two systems. But as for the third system, which takes from the two others and which consists in demanding everything from the state while giving it nothing, this is illusionary, absurd, puerile, contradictory and dangerous. Those who advocate it to give themselves the pleasure of accusing all forms of government of impotence, and of thus exposing them to your blows, those people are flattering and deceiving you, or at the very least they are deceiving themselves.
As for us, we consider that the state is not, nor should it be, anything other than a common force, instituted not to be an instrument of mutual oppression and plunder between all of its citizens, but on the contrary to guarantee to each person his own property and ensure the reign of justice and security.
Earlier in the article he notes that the French have a misconception of the state: they “personify” it seeing it as a great benefactor (or father) who can and will solve their problems. FB reminds them that what the state “gives” it has to “take” away first:
If I have taken the liberty of criticizing the opening words of our Constitution, it is because it is not a question, as one might believe, of wholly metaphysical subtlety. I claim that this personification of the state has been in the past and will be in the future a rich source of calamities and revolutions.
Here is the public on one side and the state on the other, considered to be two distinct beings, the latter obliged to spread over the former and the former having the right to claim from the latter a flood of human happiness. What is bound to happen?
In fact, the state is not and cannot be one-handed. It has two hands, one to receive and the other to give; in other words, the rough hand and the gentle hand. The activity of the second is of necessity subordinate to the activity of the first. Strictly speaking, The state is able to take and not give back. This has been seen and is explained by the porous and absorbent nature of its hands, which always retain part and sometimes all of what they touch. But what has never been seen, will never be seen and cannot even be conceived is that the state will give to the general public more than it has taken from them. It is therefore a sublime folly for us to adopt toward it the humble attitude of beggars. It is radically impossible for it to confer a particular advantage on some of the individuals who make up the community without inflicting greater damage on the community as a whole.
Which leads him to formulate one of his most memorably statements:
The state is the great fiction by which everyone endeavors to live at the expense of everyone else.
Quote from ES2 I “The Physiology of Plunder” (1848) (LF ed.)
It has been and still is such an important part of human existence that it should be studied by political economy. Existence of plunder is main reason why society does not progress faster. Plunder becomes institutionalised and becomes what FB calls “legal plunder” (as opposed to commonly accepted “illegal plunder” of petty criminals which is prohibited). His physiology includes “war” (killing and looting), “slavery” (forced labour), “theocracy” (fraudulent threats to behave now or lose afterlife), and “monopoly” (legal privileges to grant benefits to some at expence of others, such as “sinecures, privileges, and trade restriction”:
There are only two ways of acquiring the things that are necessary for the preservation, improvement and betterment of life: PRODUCTION and PLUNDER.
Some people say: “PLUNDER is an accident, a local and transitory abuse, stigmatized by moral philosophy, condemned by law and unworthy of the attentions of Political Economy.”
But whatever the benevolence and optimism of one’s heart one is obliged to acknowledge that PLUNDER is exercised on too a vast scale in this world, that it is too universally woven into all major human events, for any social science, above all Political Economy, to feel justified in disregarding it.
I will go further. What separates the social order from a state of perfection (at least from the degree of perfection it can attain) is the constant effort of its members to live and progress at the expense of one another.
So that, if PLUNDER did not exist, society would be perfect and the social sciences would be superfluous.
I will go even further. When PLUNDER has become the means of existence of a large group of men mutually linked by social ties, they soon contrive to pass a law that sanctions it and a moral code that glorifies it.
You need name only a few of the most clear-cut forms of Plunder to show the place it occupies in human affairs.
First of all, there is WAR. Among savage peoples, the victor kills the vanquished in order to acquire a right to hunt game that is if not incontestable, at least uncontested.
Then there is SLAVERY. Once man grasps that it is possible to make land fertile through work, he strikes this bargain with his fellow: “You will have the fatigue of work and I will have its product.”
Next comes THEOCRACY. “Depending on whether you give me or refuse to give me your property, I will open the gates of heaven or hell to you.”
Lastly, there is MONOPOLY. Its distinctive characteristic is to allow the great social law, a service for a service, to continue to exist, but to make force part of the negotiations and thus distort the just relationship between the service received and the service rendered.
Plunder always carries within it the deadly seed that kills it. Rarely does the majority plunder the minority. In this case, the minority would immediately be reduced to the point where it could no longer satisfy the greed of the majority, and Plunder would die for want of sustenance.
It is almost always the majority that is oppressed, and Plunder is also destined in this case as well to receive a death sentence.
For if the use of Force is Plunder’s agent, as it is for War and Slavery, it is natural for Force to go over to the side of the majority in the long run.
And if the agent is Fraud, as in Theocracy and Monopoly, it is natural for the majority to become informed on this score, or intelligence would not be intelligence.
Quote from “The Law” (June 1850) (LF ed.)
Further discussion in “The Law” where FB distinguished between “illegal plunder” and “legal plunder”:
But what form of Plunder was he wishing to talk about? For there are two forms. There is plunder outside the law and legal plunder.
As for plunder against the law, which we call theft or fraud and which is defined, provided for and punished by the Penal Code, I really do not think this can be cloaked in the name of socialism. It is not this that systematically threatens the very foundations of society. Besides, the war against this sort of plunder has not waited for a signal from M. de Montalembert or M. Carlier. It has been waged since the beginning of time. France had already provided for it, a long time before the February revolution, long before the apparition of socialism, by a whole apparatus of magistrates, police, gendarmes, prisons, convict settlements and scaffolds. It is the Law itself that wages this war, and what we should be hoping for, in my opinion, is that the law will always retain this attitude with regard to plunder.
But this is not the case. Sometimes the law takes the side of plunder. Sometimes it carries it out with its own hands, in order to spare the blushes, the risk and scruples of its beneficiary. Sometimes it mobilizes this whole system of magistrates, police, gendarmes and prison to serve the plunderer and treats the victim who defends himself as a criminal. In a word, there is legal plunder and it is doubtless to this that M. de Montalembert is referring.
Such plunder may be just an exceptional stain on the legislation of a people and, in this case, the best thing to do, without undue oratory and lamentation, is to remove it as quickly as possible, in spite of the outcry from those it favors. How do we recognize it? It is easy; we need to see whether the law takes property owned by some to give to others what they do not own. We need to see whether the Law carries out an act that a citizen cannot carry out himself without committing a crime, for the benefit of one citizen and at the expense of others. Make haste to repeal a law like this; it is not only an iniquity, it is a fruitful source of iniquity, for it generates reprisals, and if you are not careful an exceptional act will become widespread, more frequent and part of a system. Doubtless, those who benefit from it will make a loud outcry; they will invoke acquired rights. They will say that the state owes their particular product protection and support. They will claim that it is a good thing for the State to make them richer because, as they are richer, they spend more and thus rain down earnings on their poor workers. Be careful not to listen to these sophists for it is exactly the systematizing of these arguments that legal plunder becomes systematic.
This is what has happened. The illusion of the day is to make all sectors richer at each other’s expense; this is generalizing plunder on the pretext of organizing it. Well, legal plunder can be carried out in an infinite number of ways. This gives rise to an infinite number of plans for organizing it, through tariffs, protectionism, premiums, subsidies, motivation, progressive taxes, free education, the right to work, the right to assistance, the right to tools for work, free credit, etc. etc. And all of these plans, insofar as they have legal plunder in common, come under the name of socialism.
Well, what type of war do you wish to wage against socialism, as thus defined and as it forms a body of doctrine, if not a doctrinal war? Do you find this doctrine wrong, absurd or abominable? Refute it. This will be all the easier the more erroneous, absurd or abominable it is. Above all, if you wish to be strong, start by rooting out from your legislation everything relating to socialism that has managed to creep into it – no small task.
M. de Montalembert has been reproached for wanting to turn brute force against socialism. This is a reproach from which he should be cleared, since he formally stated, “The war against socialism should be in accordance with the law, honor and justice.”
But how has M. de Montalembert not seen that he has placed himself in a vicious circle? Do you want to oppose socialism by means of the law? But it is precisely socialism that invokes the law. It does not aim to carry out plunder against the law, but legal plunder. It is of the law itself that it claims to be the instrument, like monopolists of all stripes, and once it has the law on its side, how do you hope to turn the Law against it? How do you hope to bring it within striking power of your courts, your gendarmes or your prisons?
So what do you do? You want to prevent it from having any say in making laws. You want to keep it out of the legislative chamber. I dare to predict that you will never succeed in this, while laws are being passed inside it on the principle of legal plunder. It is too iniquitous and too absurd.
It is absolutely necessary for this question of legal plunder to be settled and there are just three alternatives:
That the minority despoils the majority;
That everyone despoils everyone else;
That nobody despoils anyone.
You have to choose between partial plunder, universal plunder, and no plunder at all. The law can pursue one of these three alternatives only.
Partial plunder – this is the system that prevailed for as long as the electorate was partial and is the system to which people return to avoid the invasion of socialism.
Universal plunder – this is the system that threatened us when the electorate became universal with the masses having conceived the idea of making laws along the same lines as their legislative predecessors.
Absence of plunder–this is the principle of justice, peace, order, stability, conciliation, and common sense that I will proclaim with all my strength which is, alas, very inadequate and with my lungs until my final breath.
Quote from WSWNS “The Broken Window” (1850) (LF ed.)
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; 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 an 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 an small disadvantage immediately.
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.
Quote from Ec. Harmonies on Negative Ricochet Effect of taxes (LF ed.)
(late 1850 - not 1st ed. but 1851 ed.) - Harmonies économiques. Chap. XI. Producteur. - Consommateur (Producer, Consumer) [OC, vol. 6] [CW, vol. 5, forthcoming]
[Bastiat uses another word which has a connection to water, “glisser” (to slip or slide, or flow over) in this passage.]
It is by way of such ricochet that the harmful effects tend to pass from the producer to the consumer. Immediately after the tax and the obstruction come into force, the producer tends to have himself compensated. However, since consumer demand as well as the quantity of wine remain the same, he cannot raise the price. Initially, he does not make more after the tax than before. And since before the tax he obtained only a normal reward for it, determined by the value of the services exchanged freely, he finds himself losing by the total amount of the tax. In order for prices to rise, there has to be a reduction in the quantity of wine produced.
In relation to the profit or loss that initially affect this or that class of producers, the consumer, the general public, is what earth is to electricity: the great common reservoir. Everything comes out of this reservoir, and after a few more or less long detours, after the generation of a more or less great variety of phenomena, everything returns to it.
We have just noted that the economic results just flow over producers, to put it this way, before reaching consumers, and that consequently all the major questions have to be examined from the point of view of consumers if we wish to grasp their general and permanent consequences.
Draft Preface for the Harmonies [addressed to himself and written at the end of 1847.], CW1, p. 318, 320. Online at <http://oll.libertyfund.org/title/2393/226010>.
Bastiat uses a variety of words in his attempt to speak plainly and brutally in this chapter. Here is a list with our preferred translation for each: "dépouiller"(to dispossess), "spolier" (to plunder), "voler" (to steal), "piller" (to loot or pillage), "filouter" (filching); and variants such as "le vol de grand chemin" (highway robbery). See the "Note on the translation" for details.