"FRÉDÉRIC BASTIAT (1801-50): Campaigner for Free Trade, Political Economist, and a Politician in a Time of Revolution"
A Lecture by Dr. David M. Hart

 

 

Lecture Overview

Bastiat's Place in the History of Economic Thought

The Anglo-Scottish School - Adam Smith (1723-1790), David Ricardo (1772-1823), J.S. Mill (1806-1873)

• theory of value or price - a “natural” price which reflects deep underlying determinants of the economy (land, labour, cost of production); and a “market” price which reflects temporary, local fluctuations or changes theory of value or price, tends towards “natural price”
• money and banking - money as a “medium of exchange”, note issue based on gold
• trade - opposed mercantilism and favoured free trade and deregulation
• population - Malthusian idea of over-population
• theory of the state - utilitarianism (regulation to increase public utility); defence, police, public goods

The Socialist School - H. de Saint-Simon (1760-1825), P.J. Proudhon (1809-1865), Karl Marx (1818-1883)

• theory of value or price - “labour theory of value” - working class exploited because they do not receive the “full value” of their labour via wages; interest, profit, rent all “unearned income” of “capitalist class”
• money and banking - nationalization of banks to provide “cheap credit”
• trade - state regulation to develop “national economy”
• population - no particular theory of pop.
• theory of the state - nationalization of all factors of production (land, industry, banking) to ensure “equality”; dispossession of “capitalist class” through violent revolution or legislation

The French School (les Économistes) - Turgot (1727-1781), J.B. Say (1767-1832), F. Bastiat (1801-1850)

• theory of value or price - 18thC Physiocrats favoured land as “sole” productive agent; most in 19thC followed classical view of value; Bastiat developed “pre” or “proto” Austrian notions of value/rent
• money and banking - hard money banking; free banking (Coquelin)
• trade - radical free trade and deregulation; free trade vs. war; anti-socialist
• population - Malthusian idea of over-population
• theory of the state - natural rights defence of liberty; more radical limited state than Anglo-school (Bastiat); early free market anarchists (Molinari); class theory of exploited productive class vs. parasitic state and its cronies

The Marginalist/Austrian School - Léon Walras (1834-1910), W.S. Jevons (1835-1882), Karl Menger (1840-1921)

• theory of value or price - “subject theory of value” - individuals place a personal, subjective value on goods and services based upon their “preferences”; market prices send “signals” to produces concerning how and what is produced
• money and banking - government monopoly of banking and money causes business cycle by manipulating interest rate; need for gold standard, competitive issue of money
• trade - free trade and laissez-faire in all areas
• population - economic production not limited by size of population
• theory of the state - ultra-minimal “nightwatchman” state (or no state - Rothbardians)

The rediscovery of Bastiat in the Post-WW2 Era

• Leonard E. Read (1898-1983) - Foundation for Economic Education (FEE)
• Henry Hazlitt (1894-1993) - WSJ, NYT
• Murray N. Rothbard (1926-1995)
• Pres. Ronald Reagan (1911-2004) - president 1981-1989

Marx’s Hostility towards Bastiat and Free Market Ideas

• “the most superficial and therefore the most successful representative of apologetic vulgar economics”
• “the modern bagman of free trade”
• “a dwarf economist”

The importance of Frédéric Bastiat

• impact on the French classical liberal movement in mid-19th century
• rediscovery of Bastiat in the modern libertarian movement
• recognition as a brilliant stylist and polemicist
• proto-Austrian economist in his theoretical writing
• proto-public choice analysis of politics
• radical natural rights approach to individual liberty
• combined single-issue activism, journalism, election to political office, theoretical work in a coherent whole

Chronology of His Life and Work

location of Mugron and Les Landes in SW France

The early “unseen” Bastiat (1801-1844)

• in the provinces as provincial magistrate and landowner
• his intellectual influences
  • positive: Turgot (Physiocrats), Adam Smith, JB Say, Comte & Dunoyer, Destutt de Tracy, R. Cobden
  • negative: French monarchists/conservatives, Bonapartists, protectionists and socialists of 1840s

The “Seen” Bastiat (1844-1850)

• the Free Trade organizer and journalist
  
• the politician during the 1848 Revolution and 2nd Republic
  
• the theorist

Bastiat’s major works

1844 - “De l’influence des tarifs français et anglais sur l’avenir des deux peuples” in JDE Oct. 1844

1845

• Cobden et al ligue (Cobden and the League)
• Part 1 of Economic Sophisms (Part 1 1845, Part 2 1848)
• "Petition of the Candle-makers"
• 1846 - editor of Le libre échange (Free Exchagne or Free Trade) (until 16 Apr. 1848)

1848

• “Propriété et loi” (Property and Law)
• “Justice et franternité” (Justice and Fraternity)
• “Propriété et spoliation” (Property and Plunder)
• “L’État” (The State)

1849

• “Protectionnisme et communisme” (Protectionism and Communism)
• “Capitle et rente” (Capital and Rent)
• “Paix et liberté ou le budget républicain” (Peace and Liberty, or the Republican Budget)
• “Les incompatibilités parlementaires” (Parliamentary Conflicts of Interest)
• “Maudit l’argent!” (Damn Money!)

1850

• part 1 of his magnum opus Economic Harmonies (part 2 published posthumously)
• “Intérêt et principal” (Interest and Principal)
• “Spoliation et la loi” (Plunder and the Law)
• “La loi” (The Law)
• “Baccalauréat et socialisme”(Baccalaureat (or High School) and Socialism)
• “Ce qu’on voit et ce qu’on ne voit pas” (The Seen and the Unseen)

Bastiat’s key ideas

• the economy is a harmonious network of voluntary exchanges
• a natural rights theory of individual liberty, limited state constitutionalism
• theory of rent - all exchanges are services for services
• conflict between voluntary exchange and coercion via state
• free trade and peace
• class analysis theory - producers and exchangers vs plunderers

Key Quotes from Bastiat's Writings

• The Benefits of Free Exchange: the Provisioning of Paris (Ec. Soph. I)
• Restrictions on Trade harm Consumers: the Petition of the Candlemakers (Ec. Soph. I)
• Legal and Illegal Plunder (The Law) and The Laws of its Operation (Ec.Soph. II)
• Unseen Negative Unintended Consequences: The Broken Window Fallacy (Seen and Unseen)
• FB’s Definition of the State: The Great Fiction

Bastiat's enduring legacy

• monuments to Cobden and Bastiat
• the FEE editions of his works (1960s)
• LF's edition of his Collected Works