The Economics of Freedom by Freric Bastiat

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The Economics of FreedomWhat Your ProessorsWont Tell You


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The Economics of FreedomWhat Your ProessorsWont Tell You

Selected Works o Frdric Bastiat

Foreword by F.A. Hayek

Closing Essay by Tom G. Palmer

Students For LibertyJameson Books, Inc.


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Published by Students For Liberty / Jameson Books, Inc.

Reprinted with the permission of the Foundation for Economic Education.www.FEE.org

Edited by Clark RuperCopyediting by Hannah Mead and Charles KingCover design by Valerie CrainBook design by Cox-King Multimedia: www.ckmm.comBastiat translated by Seymour Cain

For information and other requests please write Students For Liberty, PO Box, Arlington, VA , or Jameson Books, Inc., Columbus Street,P.O. Box , Ottawa, Il linois .

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Printed in the United States of America


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ContentsIntroduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ixForeword (F.A. Hayek) . . . . . . . . . . . . . . . . . . . . . . xiii

What Is Seen and What Is Not Seen (Frdric Bastiat) . . . .

. The Broken Window . . . . . . . . . . . . . . . . . . . . . The Demobilization . . . . . . . . . . . . . . . . . . . . . . Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Theaters and Fine Arts . . . . . . . . . . . . . . . . . . . . Public Works. . . . . . . . . . . . . . . . . . . . . . . . . . Middlemen. . . . . . . . . . . . . . . . . . . . . . . . . . . Restraint o Trade . . . . . . . . . . . . . . . . . . . . . . . Machines . . . . . . . . . . . . . . . . . . . . . . . . . . .

. Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Algeria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thrif and Luxury . . . . . . . . . . . . . . . . . . . . . . The Right to Employment and the Right to Prot .

A Petition (Frdric Bastiat) . . . . . . . . . . . . . . . . . . .

A Negative Railroad (Frdric Bastiat) . . . . . . . . . . . . .

The Balance o Trade (Frdric Bastiat) . . . . . . . . . . . .

Twenty Myths about Markets (Tom G. Palmer). . . . . . . .

Ethical Criticisms . . . . . . . . . . . . . . . . . . . . . . . Economic Criticisms . . . . . . . . . . . . . . . . . . . . .

Hybrid Ethical/Economic Criticisms . . . . . . . . . . . Overly Enthusiastic Deenses . . . . . . . . . . . . . . . .


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ix

Introduction

The Economics o Freedomis a joint project o the Atlas EconomicResearch Foundation and Students For Liberty. Like Atlas, weat SFL believe that ideas know no borders. Our affi liates aroundthe world work to promote ree and just societies. We are youngidealists who know that liberty is not only beautiul and inspir-ing, but that it works in practice. We, the youth, are taking upthe task o educating ourselves and our ellow students about thegreat issues o reedom, justice, prosperity, and peace. We buildon oundations built by generations o thinkers, entrepreneurs,activists, and scholars.

This movement is diverse. Our members speak many languages,proess many religions, and come rom many nations, but we areunited by our common principles: economic reedom to choosehow to provide or onesel, social reedom to choose how to live

ones lie, and intellectual and academic reedom. We believe thatreedom does not come in pieces, but rather that it is a single andindivisible concept that must be deended at all times.

Why The Economics o Freedom? Because at present, allaciouseconomic thought is being used to justiy the steady erosion oour reedoms. The examples are plentiul: stimulus packages that

pile debt on top o debt; increased military spending in the nameo job creation; oolish destruction o wealth (cash or clunk-ers) to benet powerul industries; trade obstructions (quotasand tariffs) that benet the ew at the expense o the many andundermine international peace; phony regulations that do notmake things regular, but instead disrupt and disorder economies;and conscation, nationalization, and plunder. All are in vogueamong the political classes.

Our generation is not the rst to be conronted by such alla-

cies. Frdric Bastiat destroyed the very same economic allaciesmany generations ago. Bastiat was a nineteenth century French

political economist who dedicated the last years o his short lie toproving that government by its nature possesses neither the moral


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authority to intervene in our reedom nor the practical ability tocreate prosperity through its intervention.

The Economics o Freedompresents some o Bastiats most im-

portant essays. They reveal a sharp mind systematically debunkingone allacy afer another and a moral conscience that recoiled rom

violence and tyranny. To read and understand What Is Seen andWhat Is Not Seen is to contemplate the world in a new light. Itis one o the most important essays ever written in economics. Inaddition to Bastiats writings, this book includes two essays thatshow the importance o Bastiats ideas and then update and applythem to more contemporary issues.

The Foreword to Bastiats essays was written by the NobelLaureate in economic science, F.A. Hayek. Hayek was not onlya pioneer o economic thought who gained ame or his workshowing why socialism ails and how markets utilize dispersedknowledge (see his essay on The Use o Knowledge in Society,

which is available online at www.econlib.org, and his Nobel lec-ture, which is available at NobelPrize.org). He was also a orceul

champion o liberty. The Road to Serdom, published in inEngland, has become a classic o political thought, as have TheConstitution o LibertyandLaw, Legislation, and Liberty.

The concluding essay, Twenty Myths about Markets by Dr.Tom G. Palmer, was rst delivered in in Nairobi, Kenya, ata meeting o the Mont Pelerin Society, the international societythat Hayek ounded in . Dr. Palmer is a senior ellow at theCato Institute and vice president o the Atlas Economic ResearchFoundation, a worldwide network o think tanks. Palmer or-mulates, considers, and reutes the myths that pass or wisdom,including even some overly enthusiastic deenses o markets thatmisstate their nature.

The academy is, perhaps unsurprisingly, ull o people whothink that they are smart enough to run the lives o others. Theyare not. Hence the subtitle o this volume: What Your Proessors

Wont Tell You. While your teachers likely value reedom, theytoo ofen overlook the broader implications o governmentintervention, particularly in the economic sphere. Because theyoverestimate their own intellectual powers, they ignore the


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unintended consequences o intervention into the voluntaryinteractions o others. Nor do they understand that the theoriesthey propound are too ofen deployed by special interests, which

are better at manipulating and abusing power than are universityproessors. That is why we at Students For Liberty have takenup this cause, because i we do not advocate liberty in all o itsorms, who will?

We believe that a ree society demands respect or the reedom oeveryone to pursue his or her own goals and to trade ideas, goods,and services on voluntarily agreed-to terms. When all enjoy equalreedom and our interactions are voluntary, the result is not chaos,but order; not poverty, but plenty; not conict, but cooperation.

We hope this book has made it into the hands o a curiousstudent with an open mind. I you nd the ideas o this book in-teresting, you can visit www.studentsorliberty.org to learn moreabout the student movement or liberty and join the ght or aree academy and a ree society.


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xiv

allacies o his time. I shall later indicate that, though the views hecombats are today usually advanced only in a more sophisticatedguise, they have basically not changed very much since Bastiats

time. But rst I want to say a ew words about the more generalsignicance o his central idea.

This is simply that i we judge measures o economic policysolely by their immediate and concretely oreseeable effects, weshall not only not achieve a viable order but shall be certain

progressively to extinguish reedom and thereby prevent moregood than our measures will produce. Freedom is important inorder that all the different individuals can make ull use o the

particular circumstances o which only they know. We thereorenever know what benecial actions we prevent i we restrict theirreedom to serve their ellows in whatever manner they wish. Allacts o intererence, however, amount to such restrictions. Theyare, o course, always undertaken to achieve some denite objective.Against the oreseen direct results o such actions o governmentwe shall in each individual case be able to balance only the mere

probability that some unknown but benecial actions by someindividuals will be prevented. In consequence, i such decisionsare made rom case to case and not governed by an attachment toreedom as a general principle, reedom is bound to lose in almostevery case. Bastiat was indeed right in treating reedom o choiceas a moral principle that must never be sacriced to considerationso expediency; because there is perhaps no aspect o reedom that

would not be abolished i it were to be respected only where theconcrete damage caused by its abolition can be pointed out.

Bastiat directed his arguments against certain ever-recurring al-lacies as they were employed in his time. Few people would employthem today quite as naively as it was still possible to do then. But letthe reader not deceive himsel that these same allacies no longer

play an important role in contemporary economic discussion:they are today expressed merely in a more sophisticated orm and

are thereore more diffi cult to detect. The reader who has learntto recognize these stock allacies in their simpler maniestations

will at least be on his guard when he nds the same conclusionsderived rom what appears to be a more scientic argument. Itis characteristic o much o recent economics that by ever new


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arguments it has tried to vindicate those very prejudices whichare so attractive because the maxims that ollow rom them areso pleasant or convenient: spending is a good thing, and saving is

bad; waste benets and economy harms the mass o the people;money will do more good in the hands o the government thanin those o the people; it is the duty o government to see thateverybody gets what he deserves; etc., etc.

None o these ideas has lost any o its power in our time. Theonly difference is that Bastiat, in combating them, was on the

whole ghting on the side o the proessional economists againstpopular belies exploited by interested parties, while similar pro-posals are today propagated by an inuential school o economistsin a most impressive and, to the layman, largely unintelligible garb.It is doubtul whether there is one among the allacies which onemight have hoped Bastiat had killed once and or all that has notexperienced its resurrection. I shall give only one example. To anaccount o Bastiats best-known economic able, The Petition othe Candlemakers against the Competition o the Sun, in which

it is demanded that windows should be prohibited because o thebenet which the prosperity o the candlemakers would coneron everyone else, a well-known French textbook o the historyo economics adds in its latest edition the ollowing ootnote: Itshould be noted that according to Keyneson the assumptiono underemployment and in accordance with the theory o themultiplierthis argument o the candlemakers is literally andully valid.

The attentive reader will notice that, while Bastiat grapples withso many economic panaceas which are amiliar to us, one o themain dangers o our time does not appear in his pages. Thoughhe has to deal with various queer proposals or using credit which

were current in his time, straight ination through a governmentdecit seemed in his age not a major danger. An increase o expen-diture means or him necessarily and immediately an increase in

taxation. The reason is that, as among all people who have gonethrough a major ination within living memory, a continuousdepreciation o money was not a thing with which people wouldhave put up with in his day. So i the reader should be inclined toeel superior to the rather simple allacies that Bastiat ofen nds


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it necessary to reute, he should remember that in some otherrespects his compatriots o more than a hundred years ago wereconsiderably wiser than our generation.

F.A. Hayek


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What Is Seen and What Is Not Seen

by Frdric Bastiat

In the economic sphere an act, a habit, an institution, a law pro-duces not only one effect, but a series o effects. O these effects,the rst alone is immediate; it appears simultaneously with itscause; it is seen.The other effects emerge only subsequently; they

are not seen; we are ortunate i weoreseethem.There is only one difference between a bad economist and a

good one: the bad economist connes himsel to the visibleeffect;the good economist takes into account both the effect that can beseen and those effects that must beoreseen.

Yet this difference is tremendous, or it almost always happensthat when the immediate consequence is avorable, the later conse-quences are disastrous, and vice versa. Whence it ollows that the

bad economist pursues a small present good that will be ollowedby a great evil to come, while the good economist pursues a greatgood to come, at the risk o a small present evil.

The same thing, o course, is true o health and morals. Ofen,the sweeter the rst ruit o a habit, the more bitter are its laterruits: or example, debauchery, sloth, prodigality. When a manis impressed by the effect that is seenand has not yet learned todiscern the effects that are not seen, he indulges in deplorablehabits, not only through natural inclination, but deliberately.

This explains mans necessarily painul evolution. Ignorancesurrounds him at his cradle; thereore, he regulates his acts ac-cording to their rst consequences, the only ones that, in hisinancy, he can see. It is only afer a long time that he learns to takeaccount o the others. Two very different masters teach him thislesson: experience and oresight. Experience teaches effi caciously

but brutally. It instructs us in all the effects o an act by makingus eel them, and we cannot ail to learn eventually, rom havingbeen burned ourselves, that re burns. I should preer, insoaras possible, to replace this rude teacher with one more gentle:oresight. For that reason I shall investigate the consequences o


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several economic phenomena, contrasting those that are seenwiththose that are not seen.

. The Broken Window

Have you ever been witness to the ury o that solid citizen, JamesGoodellow, when his incorrigible son has happened to break a

pane o glass? I you have been present at this spectacle, certainlyyou must also have observed that the onlookers, even i thereare as many as thirty o them, seem with one accord to offer theunortunate owner the selsame consolation: Its an ill windthat blows nobody some good. Such accidents keep industry go-ing. Everybody has to make a living. What would become o theglaziers i no one ever broke a window?

Now, this ormula o condolence contains a whole theory thatit is a good idea or us to expose,agrante delicto, in this verysimple case, since it is exactly the same as that which, unortunately,underlies most o our economic institutions.

Suppose that it will cost six rancs to repair the damage. I youmean that the accident gives six rancs worth o encouragementto the aoresaid industry, I agree. I do not contest it in any way;

your reasoning is correct. The glazier will come, do his job, receivesix rancs, congratulate himsel, and bless in his heart the carelesschild. That is what is seen.

But i, by way o deduction, you conclude, as happens only tooofen, that it is good to break windows, that it helps to circulatemoney, that it results in encouraging industry in general, I amobliged to cry out: That will never do! Your theory stops at whatis seen.It does not take account o what is not seen.

It is not seenthat, since our citizen has spent six rancs or onething, he will not be able to spend them or another.It is not seenthat i he had not had a windowpane to replace, he would havereplaced, or example, his worn-out shoes or added another book

to his library. In brie, he would have put his six rancs to someuse or other or which he will not now have them.

Let us next consider industry in general.The window havingbeen broken, the glass industry gets six rancs worth o encourage-ment; that is what is seen.


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I the window had not been broken, the shoe industry (or someother) would have received six rancs worth o encouragement;that is what is not seen.

And i we were to take into consideration what is not seen,be-cause it is a negative actor, as well as what is seen,because it is a

positive actor, we should understand that there is no benet toindustry in generalor to national employmentas a whole, whether

windows are broken or not broken.Now let us consider James Goodellow.On the rst hypothesis, that o the broken window, he spends

six rancs and has, neither more nor less than beore, the enjoy-ment o one window.

On the second, that in which the accident did not happen, hewould have spent six rancs or new shoes and would have had theenjoyment o a pair o shoes as well as o a window.

Now, i James Goodellow is part o society, we must concludethat society, considering its labors and its enjoyments, has lost the

value o the broken window.

From which, by generalizing, we arrive at this unexpected con-clusion: Society loses the value o objects unnecessarily destroyed,and at this aphorism, which will make the hair o the protection-ists stand on end: To break, to destroy, to dissipate is not toencourage national employment, or more briey: Destructionis not protable.

What will theMoniteur industrielsay to this, or the discipleso the estimable M. de Saint-Chamans, who has calculated withsuch precision what industry would gain rom the burning o Paris,because o the houses that would have to be rebuilt?

I am sorry to upset his ingenious calculations, especially sincetheir spirit has passed into our legislation. But I beg him to beginthem again, entering what is not seen in the ledger beside whatis seen.

The reader must apply himsel to observe that there are not only

two people, but three, in the little drama that I have presented.The one, James Goodellow, represents the consumer, reduced bydestruction to one enjoyment instead o two. The other, underthe gure o the glazier, shows us the producer whose industrythe accident encourages. The third is the shoemaker (or any other


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manuacturer) whose industry is correspondingly discouraged bythe same cause. It is this third person who is always in the shadow,and who, personiying what is not seen,is an essential element o the

problem. It is he who makes us understand how absurd it is to see aprot in destruction. It is he who will soon teach us that it is equallyabsurd to see a prot in trade restriction, which is, afer all, nothingmore nor less than partial destruction. So, i you get to the bottomo all the arguments advanced in avor o restrictionist measures,

you will nd only a paraphrase o that common clich: Whatwould become o the glaziers i no one ever broke any windows?

. The Demobilization

A nation is in the same case as a man. When a man wishes to givehimsel a satisaction, he has to see whether it is worth what it costs.For a nation, security is the greatest o blessings. I, to acquire it, ahundred thousand men must be mobilized, and a hundred millionrancs spent, I have nothing to say. It is an enjoyment bought at

the price o a sacrice.Let there be no misunderstanding, then, about the point I wish

to make in what I have to say on this subject.A legislator proposes to discharge a hundred thousand men,

which will relieve the taxpayers o a hundred million rancs intaxes.

Suppose we conne ourselves to replying to him: These onehundred thousand men and these one hundred million rancs areindispensable to our national security. It is a sacrice; but withoutthis sacrice France would be torn by internal actions or invadedrom without. I have no objection here to this argument, whichmay be true or alse as the case may be, but which theoreticallydoes not constitute any economic heresy. The heresy begins whenthe sacrice itsel is represented as an advantage, because it brings

prot to someone.

Now, i I am not mistaken, no sooner will the author o theproposal have descended rom the platorm, than an orator willrush up and say:

Discharge a hundred thousand men! What are you thinkingo ? What will become o them? What will they live on? On their


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earnings? But do you not know that there is unemployment ev-erywhere? That all occupations are oversupplied? Do you wishto throw them on the market to increase the competition and to

depress wage rates? Just at the moment when it is diffi cult to earna meager living, is it not ortunate that the state is giving bread toa hundred thousand individuals? Consider urther that the armyconsumes wine, clothes, and weapons, that it thus spreads businessto the actories and the garrison towns, and that it is nothing lessthan a godsend to its innumerable suppliers. Do you not tremble atthe idea o bringing this immense industrial activity to an end?

This speech, we see, concludes in avor o maintaining a hun-dred thousand soldiers, not because o the nations need or theservices rendered by the army, but or economic reasons. It is theseconsiderations alone that I propose to reute.

A hundred thousand men, costing the taxpayers a hundredmillion rancs, live as well and provide as good a living or theirsuppliers as a hundred million rancs will allow; that is what is

seen.

But a hundred million rancs, coming rom the pockets o thetaxpayers, ceases to provide a living or these taxpayers and theirsuppliers, to the extent o a hundred million rancs; that is whatis not seen.Calculate, gure, and tell me where there is any protor the mass o the people.

I will, or my part, tell you where the loss is, and to simpliythings, instead o speaking o a hundred thousand men and ahundred million rancs, let us talk about one man and a thousandrancs.

Here we are in the village o A. The recruiters make the roundsand muster one man. The tax collectors make their rounds alsoand raise a thousand rancs. The man and the sum are transportedto Metz, the one destined to keep the other alive or a year with-out doing anything. I you look only at Metz, yes, you are righta hundred times; the procedure is very advantageous. But i you

turn your eyes to the village o A, you will judge otherwise, or,unless you are blind, you will see that this village has lost a laborerand the thousand rancs that would remunerate his labor, and thebusiness which, through the spending o these thousand rancs,he would spread about him.


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At rst glance it seems as i the loss is compensated. What tookplace at the village now takes place at Metz, and that is all there is toit. But here is where the loss is. In the village a man dug and labored:

he was a worker; at Metz he goes through Right dress! and Lefdress!: he is a soldier. The money involved and its circulation arethe same in both cases: but in one there were three hundred dayso productive labor; in the other there are three hundreds days ounproductive labor, on the supposition, o course, that a part othe army is not indispensable to public security.

Now comes demobilization. You point out to me a surplus oa hundred thousand workers, intensied competition and the

pressure that it exerts on wage rates. That is what you see.But here is what you do not see. You do not see that to send

home a hundred thousand soldiers is not to do away with a hun-dred million rancs, but to return that money to the taxpayers.You do not see that to throw a hundred thousand workers on themarket in this way is to throw in at the same time the hundredmillion rancs destined to pay or their labor; that, as a conse-

quence, the same measure that increases thesupplyo workers alsoincreases the demand;rom which it ollows that your loweringo wages is illusory. You do not see that beore, as well as afer, thedemobilization there are a hundred million rancs correspondingto the hundred thousand men; that the whole difference consistsin this: that beore, the country gives the hundred million rancsto the hundred thousand men or doing nothing; aferwards, itgives them the money or working. Finally, you do not see that

when a taxpayer gives his money, whether to a soldier in exchangeor nothing or to a worker in exchange or something, all the moreremote consequences o the circulation o this money are thesame in both cases: only, in the second case the taxpayer receivessomething; in the rst he receives nothing. Result: a dead lossor the nation.

The sophism that I am attacking here cannot withstand the test

o extended application, which is the touchstone o all theoreti-cal principles. I, all things considered, there is a national protin increasing the size o the army, why not call the whole male

population o the country to the colors?


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. Taxes

Have you ever heard anyone say: Taxes are the best investment;they are a lie-giving dew. See how many amilies they keep alive,and ollow in imagination their indirect effects on industry; theyare innite, as extensive as lie itsel.

To combat this doctrine, I am obliged to repeat the precedingreutation. Political economy knows very well that its argumentsare not diverting enough or anyone to say about them:Repetita

placent; repetition pleases. So, like Basile, political economy hasarranged the proverb or its own use, quite convinced that, romits mouth,Repetita docent; repetition teaches.

The advantages that government offi cials enjoy in drawing theirsalaries are what is seen.The benets that result or their suppliersare also what is seen.They are right under your nose.

But the disadvantage that the taxpayers try to ree themselvesrom is what is not seen,and the distress that results rom it or

the merchants who supply them is something urther that is notseen, although it should stand out plainly enough to be seenintellectually.

When a government offi cial spends on his own behal onehundred sous more, this implies that a taxpayer spends on his ownbehal one hundred sous the less. But the spending o the govern-ment offi cial isseen,because it is done; while that o the taxpayeris not seen,becausealas!he is prevented rom doing it.

You compare the nation to a parched piece o land and the tax toa lie-giving rain. So be it. But you should also ask yoursel wherethis rain comes rom, and whether it is not precisely the tax thatdraws the moisture rom the soil and dries it up.

You should ask yoursel urther whether the soil receives more othis precious water rom the rain than it loses by the evaporation?

What is quite certain is that, when James Goodellow counts out

a hundred sous to the tax collector, he receives nothing in return.When, then, a government offi cial, in spending these hundredsous, returns them to James Goodellow, it is or an equivalent

value in wheat or in labor. The nal result is a loss o ve rancsor James Goodellow.


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It is quite true that ofen, nearly always i you will, the govern-ment offi cial renders an equivalent service to James Goodellow.In this case there is no loss on either side; there is only an exchange.

Thereore, my argument is not in any way concerned with useulunctions. I say this: I you wish to create a government offi ce,

prove its useulness. Demonstrate that to James Goodellow it isworth the equivalent o what it costs him by virtue o the servicesit renders him. But apart rom this intrinsic utility, do not cite, asan argument in avor o opening the new bureau, the advantagethat it constitutes or the bureaucrat, his amily, and those whosupply his needs; do not allege that it encourages employment.

When James Goodellow gives a hundred sous to a governmentoffi cial or a really useul service, this is exactly the same as when hegives a hundred sous to a shoemaker or a pair o shoes. It is a case ogive-and-take, and the score is even. But when James Goodellowhands over a hundred sous to a government offi cial to receive noservice or it or even to be subjected to inconveniences, it is as ihe were to give his money to a thie. It serves no purpose to say

that the offi cial will spend these hundred sous or the great proto our national industry; the more the thie can do with them, themore James Goodellow could have done with them i he had notmet on his way either the extralegal or the legal parasite.

Let us accustom ourselves, then, not to judge things solely bywhat is seen,but rather by what is not seen.

Last year I was on the Finance Committee, or in the Con-stituent Assembly the members o the opposition were notsystematically excluded rom all committees. In this the ramerso the Constitution acted wisely. We have heard M. Thiers say:

I have spent my lie ghting men o the legitimist party and othe clerical party. Since, in the ace o a common danger, I havecome to know them and we have had heart-to-heart talks, I seethat they are not the monsters I had imagined.

Yes, enmities become exaggerated and hatreds are intensied

between parties that do not mingle; and i the majority would al-low a ew members o the minority to penetrate into the circles othe committees, perhaps it would be recognized on both sides thattheir ideas are not so ar apart, and above all that their intentionsare not so perverse, as supposed.


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However that may be, last year I was on the Finance Committee.Each time that one o our colleagues spoke o xing at a moder-ate gure the salaries o the President o the Republic, o cabinet

ministers, and o ambassadors, he would be told:For the good o the service, we must surround certain offi ces

with an aura o prestige and dignity. That is the way to attract tothem men o merit. Innumerable unortunate people turn to thePresident o the Republic, and he would be in a painul positioni he were always orced to reuse them help. A certain amount oostentation in the ministerial and diplomatic salons is part o themachinery o constitutional governments, etc., etc.

Whether or not such arguments can be controverted, theycertainly deserve serious scrutiny. They are based on the publicinterest, rightly or wrongly estimated; and, personally, I can makemore o a case or them than many o our Catos, moved by a nar-row spirit o niggardliness or jealousy.

But what shocks my economists conscience, what makes meblush or the intellectual renown o my country, is when they go

on rom these arguments (as they never ail to do) to this absurdbanality (always avorably received):

Besides, the luxury o high offi cials o the government encour-ages the arts, industry, and employment. The Chie o State andhis ministers cannot give banquets and parties without inusinglie into all the veins o the body politic. To reduce their salaries

would be to starve industry in Paris and, at the same time, through-out the nation.

For heavens sake, gentlemen, at least respect arithmetic, anddo not come beore the National Assembly o France and say, orear that, to its shame, it will not support you, that an additiongives a different sum depending upon whether it is added romtop to bottom or rom bottom to top.

Well, then, suppose I arrange to have a navvy dig me a ditchin my eld or the sum o a hundred sous. Just as I conclude this

agreement, the tax collector takes my hundred sous rom me andhas them passed on to the Minister o the Interior. My contractis broken, but the Minister will add another dish at his dinner.On what basis do you dare to affi rm that this offi cial expenditureis an addition to the national industry? Do you not see that it is


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only a simple transero consumption and o labor? A cabinetminister has his table more lavishly set, it is true; but a armerhas his eld less well drained, and this is just as true. A Parisian

caterer has gained a hundred sous, I grant you; but grant me thata provincial ditchdigger has lost ve rancs. All that one can say isthat the offi cial dish and the satised caterer are what is seen;theswampy eld and the excavator out o work are what is not seen.

Good Lord! What a lot o trouble to prove in political economythat two and two make our; and i you succeed in doing so, peoplecry, It is so clear that it is boring. Then they vote as i you hadnever proved anything at all.

. Theaters and Fine Arts

Should the state subsidize the arts?There is certainly a great deal to say on this subject pro and

con.In avor o the system o subsidies, one can say that the arts

broaden, elevate, and poetize the soul o a nation; that they drawit away rom material preoccupations, giving it a eeling or thebeautiul, and thus react avorably on its manners, its customs, itsmorals, and even on its industry. One can ask where music wouldbe in France without the Thtre-Italien and the Conservatory;dramatic art without the Thtre-Franais; painting and sculpture

without our collections and our museums. One can go urtherand ask whether, without the centralization and consequentlythe subsidizing o the ne arts, there would have developed thatexquisite taste which is the noble endowment o French labor andsends its products out over the whole world. In the presence o suchresults would it not be the height o imprudence to renounce thismoderate assessment on all the citizens, which, in the last analysis,is what has achieved or them their pre-eminence and their gloryin the eyes o Europe?

To these reasons and many others, whose power I do not con-test, one can oppose many no less cogent. There is, rst o all,one could say, a question o distributive justice. Do the rights othe legislator go so ar as to allow him to dip into the wages othe artisan in order to supplement the prots o the artist? M. de


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Lamartine said: I you take away the subsidy o a theater, whereare you going to stop on this path, and will you not be logicallyrequired to do away with your university aculties, your museums,

your institutes, your libraries? One could reply: I you wish tosubsidize all that is good and useul, where are you going to stopon thatpath, and will you not logically be required to set up a civillist or agriculture, industry, commerce, welare, and education?Furthermore, is it certain that subsidies avor the progress o thearts? It is a question that is ar rom being resolved, and we see

with our own eyes that the theaters that prosper are those that liveon their own prots. Finally, proceeding to higher considerations,one may observe that needs and desires give rise to one another andkeep soaring into regions more and more rareed in proportionas the national wealth permits their satisaction; that the govern-ment must not meddle in this process, since, whatever may becurrently the amount o the national wealth, it cannot stimulateluxury industries by taxation without harming essential industries,thus reversing the natural advance o civilization. One may also

point out that this articial dislocation o wants, tastes, labor, andpopulation places nations in a precarious and dangerous situation,leaving them without a solid base.

These are some o the reasons alleged by the adversaries o stateintervention concerning the order in which citizens believe theyshould satisy their needs and their desires, and thus direct theiractivity. I coness that I am one o those who think that the choice,the impulse, should come rom below, not rom above, rom thecitizens, not rom the legislator; and the contrary doctrine seemsto me to lead to the annihilation o liberty and o human dignity.

But, by an inerence as alse as it is unjust, do you know whatthe economists are now accused o? When we oppose subsidies,

we are charged with opposing the very thing that it was proposedto subsidize and o being the enemies o all kinds o activity, be-cause we want these activities to be voluntary and to seek their

proper reward in themselves. Thus, i we ask that the state notintervene, by taxation, in religious matters, we are atheists. I weask that the state not intervene, by taxation, in education, then

we hate enlightenment. I we say that the state should not give, bytaxation, an articial value to land or to some branch o industry,


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then we are the enemies o property and o labor. I we think thatthe state should not subsidize artists, we are barbarians who judgethe arts useless.

I protest with all my power against these inerences. Far romentertaining the absurd thought o abolishing religion, education,

property, labor, and the arts when we ask the state to protect theree development o all these types o human activity withoutkeeping them on the payroll at one anothers expense, we believe,on the contrary, that all these vital orces o society should developharmoniously under the inuence o liberty and that none o themshould become, as we see has happened today, a source o trouble,abuses, tyranny, and disorder.

Our adversaries believe that an activity that is neither subsidizednor regulated is abolished. We believe the contrary. Their aithis in the legislator, not in mankind. Ours is in mankind, not inthe legislator.

Thus, M. de Lamartine said: On the basis o this principle, weshould have to abolishthe public expositions that bring wealth

and honor to this country.I reply to M. de Lamartine: From your point o view, not to

subsidizeis to abolish,because, proceeding rom the premise thatnothing exists except by the will o the state, you conclude thatnothing lives that taxes do not keep alive. But I turn against youthe example that you have chosen, and I point out to you thatthe greatest, the noblest, o all expositions, the one based on themost liberal, the most universal conception, and I can even usethe word humanitarian, which is not here exaggerated, is theexposition now being prepared in London, the only one in whichno government meddles and which no tax supports.

Returning to the ne arts, one can, I repeat, allege weightyreasons or and against the system o subsidization. The readerunderstands that, in accordance with the special purpose o thisessay, I have no need either to set orth these reasons or to decide

between them.But M. de Lamartine has advanced one argument that I cannot

pass over in silence, or it alls within the very careully denedlimits o this economic study. He has said:


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had not rst directed them to the rue de Rivoli and rom there tothe rue de Grenelle? That is what is not seen.

Surely, no one will dare maintain that the legislative vote has

caused this sum to hatch out rom the ballot box; that it is a pureaddition to the national wealth; that, without this miraculous

vote, these sixty thousand rancs would have remained invisibleand impalpable. It must be admitted that all that the majority cando is to decide that they will be taken rom somewhere to be sentsomewhere else, and that they will have one destination only bybeing deected rom another.

This being the case, it is clear that the taxpayer who will havebeen taxed one ranc will no longer have this ranc at his disposal.It is clear that he will be deprived o a satisaction to the tune oone ranc, and that the worker, whoever he is, who would have

procured this satisaction or him, will be deprived o wages inthe same amount.

Let us not, then, yield to the childish illusion o believing thatthe vote o May addsanything whatever to national well-being

and employment. It reallocates possessions, it reallocates wages,and that is all.

Will it be said that or one kind o satisaction and or one kindo job it substitutes satisactions and jobs more urgent, more moral,more rational? I could do battle on this ground. I could say: Intaking sixty thousand rancs rom the taxpayers, you reduce the

wages o plowmen, ditchdiggers, carpenters, and blacksmiths, andyou increase by the same amount the wages o singers, hairdressers,decorators, and costumers. Nothing proves that this latter class ismore important than the other. M. de Lamartine does not makethis allegation. He says himsel that the work o the theaters isjust asproductive as,just asruitul as, and not more sothan, anyother work, which might still be contested; or the best proo thattheatrical work is not as productive as other work is that the latteris called upon to subsidize the ormer.

But this comparison o the intrinsic value and merit o the di-erent kinds o work orms no part o my present subject. All thatI have to do here is to show that, i M. de Lamartine and those

who have applauded his argument have seen on the one hand thewages earned by those who supply the needs o the actors, they


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should see on the other the earnings lost by those who supply theneeds o the taxpayers; i they do not, they are open to ridiculeor mistaking a reallocation or a gain. I they were logical in

their doctrine, they would ask or innite subsidies; or what istrue o one ranc and o sixty thousand rancs is true, in identicalcircumstances, o a billion rancs.

When it is a question o taxes, gentlemen, prove their useulnessby reasons with some oundation, but not with that lamentableassertion: Public spending keeps the working class alive. It makesthe mistake o covering up a act that it is essential to know: namely,that public spending is always a substitute or private spending,and that consequently it may well support one worker in place oanother but adds nothing to the lot o the working class taken asa whole. Your argument is ashionable, but it is quite absurd, orthe reasoning is not correct.

. Public Works

Nothing is more natural than that a nation, afer making sure thata great enterprise will prot the community, should have suchan enterprise carried out with unds collected rom the citizenry.But I lose patience completely, I coness, when I hear alleged insupport o such a resolution this economic allacy: Besides, it isa way o creating jobs or the workers.

The state opens a road, builds a palace, repairs a street, digs acanal; with these projects it gives jobs to certain workers. That iswhat is seen.But it deprives certain other laborers o employment.That is what is not seen.

Suppose a road is under construction. A thousand laborersarrive every morning, go home every evening, and receive their

wages; that is certain. I the road had not been authorized, i undsor it had not been voted, these good people would have neitheround this work nor earned these wages; that again is certain.

But is this all? Taken all together, does not the operation involvesomething else? At the moment when M. Dupin pronounces thesacramental words: The Assembly has adopted . . . do millionso rancs descend miraculously on a moonbeam into the cofferso M. Fould and M. Bineau? For the process to be complete, does


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not the state have to organize the collection o unds as well astheir expenditure? Does it not have to get its tax collectors intothe country and its taxpayers to make their contribution?

Study the question, then, rom its two aspects. In noting whatthe state is going to do with the millions o rancs voted, do notneglect to note also what the taxpayers would have doneandcan no longer dowith these same millions. You see, then, thata public enterprise is a coin with two sides. On one, the gureo a busy worker, with this device: What is seen; on the other, anunemployed worker, with this device: What is not seen.

The sophism that I am attacking in this essay is all the more dan-gerous when applied to public works, since it serves to justiy themost oolishly prodigal enterprises. When a railroad or a bridgehas real utility, it suffi ces to rely on this act in arguing in its avor.But i one cannot do this, what does one do? One has recourseto this mumbo jumbo: We must create jobs or the workers.

This means that the terraces o the Champ-de-Mars are orderedrst to be built up and then to be torn down. The great Napoleon,

it is said, thought he was doing philanthropic work when he hadditches dug and then lled in. He also said: What differencedoes the result make? All we need is to see wealth spread amongthe laboring classes.

Let us get to the bottom o things. Money creates an illusionor us. To ask or cooperation, in the orm o money, rom all thecitizens in a common enterprise is, in reality, to ask o them actual

physical co-operation, or each one o them procures or himselby his labor the amount he is taxed. Now, i we were to gather to-gether all the citizens and exact their services rom them in orderto have a piece o work perormed that is useul to all, this wouldbe understandable; their recompense would consist in the resultso the work itsel. But i, afer being brought together, they wereorced to build roads on which no one would travel, or palaces thatno one would live in, all under the pretext o providing work or

them, it would seem absurd, and they would certainly be justiedin objecting: We will have none o that kind o work. We wouldrather work or ourselves.

Having the citizens contribute money, and not labor, changesnothing in the general results. But i labor were contributed, the


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loss would be shared by everyone. Where money is contributed,those whom the state keeps busy escape their share o the loss,

while adding much more to that which their compatriots already

have to suffer.There is an article in the Constitution which states:Society assists and encourages the development o labor . . .

through the establishment by the state, the departments, and themunicipalities, o appropriate public works to employ idle hands.

As a temporary measure in a time o crisis, during a severewinter, this intervention on the part o the taxpayer could havegood effects. It acts in the same way as insurance. It adds nothingto the number o jobs nor to total wages, but it takes labor and

wages rom ordinary times and doles them out, at a loss it is true,in diffi cult times.

As a permanent, general, systematic measure, it is nothing buta ruinous hoax, an impossibility, a contradiction, which makes agreat show o the little work that it has stimulated, which is whatis seen,and conceals the much larger amount o work that it has

precluded, which is what is not seen.

. Middlemen

Society is the aggregate o all the services that men perorm orone another by compulsion or voluntarily, that is to say, public

servicesandprivate services.The rst, imposed and regulated by the law, which is not always

easy to change when necessary, can long outlive their useulnessand still retain the name o public services, even when they areno longer anything but public nuisances. The second are in thedomain o the voluntary, i.e., o individual responsibility. Eachgives and receives what he wishes, or what he can, afer bargaining.These services are always presumed to have a real utility, exactlymeasured by their comparative value.

That is why the ormer are so ofen static, while the latter obeythe law o progress.

While the exaggerated development o public services, withthe waste o energies that it entails, tends to create a disastrous

parasitism in society, it is rather strange that many modern schools


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o economic thought, attributing this characteristic to voluntary,private services, seek to transorm the unctions perormed by thevarious occupations.

These schools o thought are vehement in their attack on thosethey call middlemen. They would willingly eliminate the capitalist,the banker, the speculator, the entrepreneur, the businessman, andthe merchant, accusing them o interposing themselves between

producer and consumer in order to eece them both, withoutgiving them anything o value. Or rather, the reormers wouldlike to transer to the state the work o the middlemen, or this

work cannot be eliminated.The sophism o the socialists on this point consists in showing

the public what it pays to the middlemenor their services and inconcealing what would have to be paid to the state. Once again wehave the conict between what strikes the eye and what is evidencedonly to the mind, between what is seen and what is not seen.

It was especially in and on the occasion o the amine thatthe socialist schools succeeded in popularizing their disastrous

theory. They knew well that the most absurd propaganda alwayshas some chance with men who are suffering; malesuada ames.

Then, with the aid o those high-sounding words:Exploitationo man by man, speculation in hunger, monopoly,they set themselvesto blackening the name o business and throwing a veil over itsbenets.

Why, they said, leave to merchants the task o getting ood-stuffs rom the United States and the Crimea? Why cannot thestate, the departments, and the municipalities organize a provi-sioning service and set up warehouses or stockpiling? They wouldsell at net cost, and the people, the poor people, would be relievedo the tribute that they pay to reei.e., selsh, individualistic,anarchicaltrade.

The tribute that the people pay to business, is what is seen.Thetribute that the people would have to pay to the state or to its

agents in the socialist system, is what is not seen.What is this so-called tribute that people pay to business? It

is this: that two men render each other a service in ull reedomunder the pressure o competition and at a price agreed on aferbargaining.


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When the stomach that is hungry is in Paris and the wheat thatcan satisy it is in Odessa, the suffering will not cease until the

wheat reaches the stomach. There are three ways to accomplish

this: the hungry men can go themselves to nd the wheat; theycan put their trust in those who engage in this kind o business;or they can levy an assessment on themselves and charge publicoffi cials with the task.

O these three methods, which is the most advantageous?In all times, in all countries, the reer, the more enlightened, the

more experienced men have been, the ofener have they oluntarilychosen the second. I coness that this is enough in my eyes to givethe advantage to it. My mind reuses to admit that mankind atlarge deceives itsel on a point that touches it so closely.

However, let us examine the question.For thirty-six million citizens to depart or Odessa to get the

wheat that they need is obviously impracticable. The rst meansis o no avail. The consumers cannot act by themselves; they arecompelled to turn to middlemen, whether public offi cials or

merchants.However, let us observe that the rst means would be the

most natural. Fundamentally, it is the responsibility o whoeveris hungry to get his own wheat. It is a taskthat concerns him; it isaservicethat he owes to himsel. I someone else, whoever he maybe, perorms thisserviceor him and takes the task on himsel, thisother person has a right to compensation. What I am saying hereis that the services o middlemeninvolve a right to remuneration.

However that may be, since we must turn to what the social-ists call a parasite, which o the twothe merchant or the publicoffi cialis the less demanding parasite?

Business (I assume it to be ree, or else what point would therebe in my argument?) is orced, by its own sel-interest, to studythe seasons, to ascertain day by day the condition o the crops, toreceive reports rom all parts o the world, to oresee needs, to

take precautions. It has ships all ready, associates everywhere, andits immediate sel-interest is to buy at the lowest possible price,to economize on all details o operation, and to attain the great-est results with the least effort. Not only French merchants, butmerchants the whole world over are busy with provisioning France


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or the day o need, and i sel-interest compels them to ulll theirtask at the least expense, competition among them no less compelsthem to let the consumers prot rom all the economies realized.

Once the wheat has arrived, the businessman has an interest inselling it as soon as possible to cover his risks, realize his prots,and begin all over again, i there is an opportunity. Guided bythe comparison o prices, private enterprise distributes ood allover the world, always beginning at the point o greatest scarcity,that is, where the need is elt the most. It is thus impossible toimagine an organizationbetter calculated to serve the interestso the hungry, and the beauty o this organization, not perceivedby the socialists, comes precisely rom the act that it is ree, i.e.,

voluntary. True, the consumer must pay the businessman or hisexpenses o cartage, o transshipment, o storage, o commissions,etc., but under what system does the one who consumes the wheatavoid paying the expenses o shipping it to him? There is, besides,the necessity o paying also orservice rendered, but, so ar as theshare o the middleman is concerned, it is reduced to a minimum

by competition; and as to its justice, it would be strange or theartisans o Paris not to work or the merchants o Marseilles, whenthe merchants o Marseilles work or the artisans o Paris.

I, according to the socialist plan, the state takes the place oprivate businessmen in these transactions, what will happen? Pray,show me where there will be any economy or the public. Willit be in the retail price? But imagine the representatives o ortythousand municipalities arriving at Odessa on a given day, the day

when the wheat is needed; imagine the effect on the price. Willthe economy be effected in the shipping expenses? But will ewerships, ewer sailors, ewer trans-shipments, ewer warehouses beneeded, or are we to be relieved o the necessity or paying orall these things? Will the saving be effected in the prots o thebusinessmen? But did your representatives and public offi cials goto Odessa or nothing? Are they going to make the journey out

o brotherly love? Will they not have to live? Will not their timehave to be paid or? And do you think that this will not exceed athousand times the two or three percent that the merchant earns,a rate that he is prepared to guarantee?

And then, think o the diffi culty o levying so many taxes


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to distribute so much ood. Think o the injustices and abusesinseparable rom such an enterprise. Think o the burden o re-sponsibility that the government would have to bear.

The socialists who have invented these ollies, and who in dayso distress plant them in the minds o the masses, generously coneron themselves the title o orward-looking men, and there is areal danger that usage, that tyrant o language, will ratiy both the

word and the judgment it implies. Forward-looking assumesthat these gentlemen can see ahead much urther than ordinary

people; that their only ault is to be too much in advance o theircentury; and that, i the time has not yet arrived when certain

private services, allegedly parasitical, can be eliminated, the aultis with the public, which is ar behind socialism. To mymind andknowledge, it is the contrary that is true, and I do not know to

what barbaric century we should have to return to nd on thispoint a level o understanding comparable to that o the socialists.

The modern socialist actions ceaselessly oppose ree associationin present-day society. They do not realize that a ree society is a

true association much superior to any o those that they concoctout o their ertile imaginations.

Let us elucidate this point with an example:For a man, when he gets up in the morning, to be able to put on

a suit o clothes, a piece o land has had to be enclosed, ertilized,drained, cultivated, planted with a certain kind o vegetation;ocks o sheep have had to eed on it; they have had to give their

wool; this wool has had to be spun, woven, dyed, and convertedinto cloth; this cloth has had to be cut, sewn, and ashioned intoa garment. And this series o operations implies a host o others;or it presupposes the use o arming implements, o sheepolds,o actories, o coal, o machines, o carriages, etc.

I society were not a very real association, anyone who wanteda suit o clothes would be reduced to working in isolation, that is,to perorming himsel the innumerable operations in this series,

rom the rst blow o the pickaxe that initiates it right down tothe last thrust o the needle that terminates it.

But thanks to that readiness to associate which is the distinctivecharacteristic o our species, these operations have been distrib-uted among a multitude o workers, and they keep subdividing


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themselves more and more or the common good to the pointwhere, as consumption increases, a single specialized operationcan support a new industry. Then comes the distribution o the

proceeds, according to the portion o value each one has contrib-uted to the total work. I this is not association, I should like toknow what is.

Note that, since not one o the workers has produced thesmallest particle o raw material rom nothing, they are connedto rendering each other mutual services, to aiding each other ora common end; and that all can be considered, each group inrelation to the others, as middlemen.I, or example, in the courseo the operation, transportation becomes important enough toemploy one person; spinning, a second; weaving, a third; whyshould the rst one be considered more o a parasite than theothers? Is there no need or transportation? Does not someonedevote time and trouble to the task? Does he not spare his associ-ates this time and trouble? Are they doing more than he, or justsomething different? Are they not all equally subject, in regard

to their pay, that is, their share o the proceeds, to the law thatrestricts it to theprice agreed upon afer bargaining?Do not thisdivision o labor and these arrangements, decided upon in ullliberty, serve the common good? Do we, then, need a socialist,under the pretext o planning, to come and despotically destroyour voluntary arrangements, put an end to the division o labor,substitute isolated efforts or cooperative efforts, and reverse the

progress o civilization?Is association as I describe it here any the less association because

everyone enters and leaves it voluntarily, chooses his place in it,judges and bargains or himsel, under his own responsibility, andbrings to it the orce and the assurance o his own sel-interest? Forassociation to deserve the name, does a so-called reormer have tocome and impose his ormula and his will on us and concentrate

within himsel, so to speak, all o mankind?

The more one examines these orward-looking schools othought, the more one is convinced that at bottom they rest onnothing but ignorance proclaiming itsel inallible and demandingdespotic power in the name o this inallibility.

I hope that the reader will excuse this digression. It is perhaps


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not entirely useless at the moment when, coming straight rom thebooks o the Saint-Simonians, o the advocates o phalansteries,and o the admirers o Icaria, tirades against the middlemen ll

the press and the Assembly and seriously menace the reedom olabor and exchange.

. Restraint o Trade

Mr. Protectionist (it was not I who gave him that name; it was M.Charles Dupin) devoted his time and his capital to converting orerom his lands into iron. Since Nature had been more generous

with the Belgians, they sold iron to the French at a better pricethan Mr. Protectionist did, which meant that all Frenchmen, orFrance, could obtain a given quantity o iron with less laborbybuying it rom the good people o Flanders. Thereore, promptedby their sel-interest, they took ull advantage o the situation, andevery day a multitude o nailmakers, metalworkers, cartwrights,mechanics, blacksmiths, and plowmen could be seen either go-

ing themselves or sending middlemen to Belgium to obtain theirsupply o iron. Mr. Protectionist did not like this at all.

His rst idea was to stop this abuse by direct intervention withhis own two hands. This was certainly the least he could do, sincehe alone was harmed. Ill take my carbine, he said to himsel. Ill

put our pistols in my belt, Ill ll my cartridge box, Ill buckle onmy sword, and, thus equipped, Ill go to the rontier. There Illkill the rst metalworker, nailmaker, blacksmith, mechanic, orlocksmith who comes seeking his own prot rather than mine.Thatll teach him a lesson!

At the moment o leaving, Mr. Protectionist had a ew secondthoughts that somewhat tempered his bellicose ardor. He said tohimsel: First o all, it is quite possible that the buyers o iron, myellow countrymen and my enemies, will take offense, and, insteado letting themselves be killed, they might kill me. Furthermore,

even i all my servants marched out, we could not guard the wholerontier. Finally, the entire proceeding would cost me too much,more than the result would be worth.

Mr. Protectionist was going to resign himsel sadly just to beingree like everyone else, when suddenly he had a brilliant idea.


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He remembered that there is a great law actory in Paris. Whatis a law? he asked himsel. It is a measure to which, when once

promulgated, whether it is good or bad, everyone has to conorm.

For the execution o this law, a public police orce is organized,and to make up the said public police orce, men and money aretaken rom the nation.

I, then, I manage to get rom that great Parisian actory a nicelittle law saying: Belgian iron is prohibited, I shall attain theollowing results: The government will replace the ew servantsthat I wanted to send to the rontier with twenty thousand sons omy recalcitrant metalworkers, locksmiths, nailmakers, blacksmiths,artisans, mechanics, and plowmen. Then, to keep these twentythousand customs offi cers in good spirits and health, there will bedistributed to them twenty-ve million rancs taken rom thesesame blacksmiths, nailmakers, artisans, and plowmen. Organizedin this way, the protection will be better accomplished; it will costme nothing; I shall not be exposed to the brutality o brokers; Ishall sell the iron at my price; and I shall enjoy the sweet pleasure

o seeing our great people shameully hoaxed. That will teach themto be continually proclaiming themselves the precursors and the

promoters o all progress in Europe. It will be a smart move, andwell worth the trouble o trying!

So Mr. Protectionist went to the law actory. (Another time,perhaps, I shall tell the story o his dark, underhanded dealingsthere; today I wish to speak only o the steps he took openly andor all to see.) He presented to their excellencies, the legislators,the ollowing argument:

Belgian iron is sold in France at ten rancs, which orcesme to sell mine at the same price. I should preer to sell it atfeen and cannot because o this conounded Belgian iron.Manuacture a law that says: Belgian iron shall no longer enterFrance. Immediately I shall raise my price by ve rancs, with theollowing consequences:

For each hundred kilograms o iron that I shall deliver to thepublic, instead o ten rancs I shall get feen; I shall enrich myselmore quickly; I shall extend the exploitation o my mines; I shallemploy more men. My employees and I will spend more, to thegreat advantage o our suppliers or miles around. These suppliers,


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having a greater market, will give more orders to industry, andgradually this activity will spread throughout the country. Thislucky hundred-sou piece that you will drop into my coffers, like

a stone that is thrown into a lake, will cause an innite number oconcentric circles to radiate great distances in every direction.

Charmed by this discourse, enchanted to learn that it is soeasy to increase the wealth o a people simply by legislation, themanuacturers o laws voted in avor o the restriction. What isall this talk about labor and saving? they said. What good arethese painul means o increasing the national wealth, when adecree will do the job?

And, in act, the law had all the consequences predicted by Mr.Protectionist, but it had others too; or, to do him justice, he hadnot reasonedalsely,but incompletely.In asking or a privilege, hehad pointed out the effects that are seen,leaving in the shadowthose that are not seen.He had shown only two people, whenactually there are three in the picture. It is or us to repair thisomission, whether involuntary or premeditated.

Yes, the ve-ranc piece thus legislatively rechanneled into thecoffers o Mr. Protectionist constitutes an advantage or him andor those who get jobs because o it. And i the decree had madethe ve-ranc piece come down rom the moon, these good effects

would not be counterbalanced by any compensating bad effects.Unortunately, the mysterious hundred sous did not come downrom the moon, but rather rom the pocket o a metalworker, a nail-maker, a cartwright, a blacksmith, a plowman, a builder, in a word,rom James Goodellow, who pays it out today without receivinga milligram o iron more than when he was paying ten rancs. It atonce becomes evident that this certainly changes the question, or,quite obviously, theproto Mr. Protectionist is counterbalanced bythe losso James Goodellow, and anything that Mr. Protectionist

will be able to do with this ve-ranc piece or the encouragemento domestic industry, James Goodellow could also have done. The

stone is thrown in at one point in the lake only because it has beenprohibited by law rom being thrown in at another.

Hence, what is not seencounterbalances what is seen; and theoutcome o the whole operation is an injustice, all the more de-

plorable in having been perpetrated by the law.


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But this is not all. I have said that a third person was always lefin the shadow. I must make him appear here, so that he can revealto us asecond losso ve rancs. Then we shall have the results o

the operation in its entirety.James Goodellow has feen rancs, the ruit o his labors. (We

are back at the time when he is still ree.) What does he do with hisfeen rancs? He buys an article o millinery or ten rancs, and itis with this article o millinery that he pays (or his middleman paysor him) or the hundred kilograms o Belgian iron. He still has verancs lef. He does not throw them into the river, but (and this iswhat is not seen) he gives them to some manuacturer or other inexchange or some satisactionor example, to a publisher or acopy o theDiscourse on Universal History by Bossuet.

Thus, he has encouraged domestic industryto the amount ofeen rancs, to wit:

rancs to the Parisian milliner

rancs to the publisher

And as or James Goodellow, he gets or his feen rancs twoobjects o satisaction, to wit:

. A hundred kilograms o iron. A book

Comes the decree.What happens to James Goodellow? What happens to do-

mestic industry?James Goodellow, in giving his feen rancs to the last centime

to Mr. Protectionist or a hundred kilograms o iron, has nothingnow but the use o this iron. He loses the enjoyment o a book oro any other equivalent object. He loses ve rancs. You agree with

this; you cannot ail to agree; you cannot ail to agree that whenrestraint o trade raises prices, the consumer loses the difference.

But it is said that domestic industrygains the difference.No, it does not gain it; or, since the decree, it is encouraged

only as much as it was beore, to the amount o feen rancs.


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Only, since the decree, the feen rancs o James Goodellow goto metallurgy, while beore the decree they were divided betweenmillinery and publishing.

The orce that Mr. Protectionist might exercise by himsel atthe rontier and that which he has the law exercise or him can be

judged quite differently rom the moral point o view. There arepeople who think that plunder loses all its immorality as soon asit becomes legal. Personally, I cannot imagine a more alarmingsituation. However that may be, one thing is certain, and that isthat the economic results are the same.

You may look at the question rom any point o view you like,but i you examine it dispassionately, you will see that no goodcan come rom legal or illegal plunder. We do not deny that itmay bring or Mr. Protectionist or his industry, or i you wishor domestic industry, a prot o ve rancs. But we affi rm that it

will also give rise to two losses: one or James Goodellow, whopays feen rancs or what he used to get or ten, the other ordomestic industry, which no longer receives the difference. Make

your own choice o which o these two losses compensates or theprot that we admit. The one you do not choose constitutes noless a dead loss.

Moral: To use orce is not to produce, but to destroy. Heavens!I to use orce were to produce, France would be much richerthan she is.

. Machines

A curse on machines! Every year their increasing power condemnsto pauperism millions o workers, taking their jobs away romthem, and with their jobs their wages, and with their wages theirbread! A curse on machines!

That is the cry rising rom ignorant prejudice, and whose echoresounds in the newspapers.

But to curse machines is to curse the human mind!What puzzles me is that it is possible to nd anyone at all who

can be content with such a doctrine.For, in the last analysis, i it is true, what is its strictly logical

consequence? It is that activity, well-being, wealth, and happiness


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are possible only or stupid nations, mentally static, to whom Godhas not given the disastrous gif o thinking, observing, contriving,inventing, obtaining the greatest results with the least trouble.

On the contrary, rags, miserable huts, poverty, and stagnation arethe inevitable portion o every nation that looks or and nds iniron, re, wind, electricity, magnetism, the laws o chemistry andmechanicsin a word, in the orces o Naturean addition to itsown resources, and it is indeed appropriate to say with Rousseau:

Every man who thinks is a depraved animal.But this is not all. I this doctrine is true, and as all men think

and inventas all, in act, rom rst to last, and at every minute otheir existence, seek to make the orces o Nature cooperate withthem, to do more with less, to reduce their own manual labor orthat o those whom they pay, to attain the greatest possible sumo satisactions with the least possible amount o workwe mustconclude that all mankind is on the way to decadence, preciselybecause o this intelligent aspiration toward progress that seemsto torment every one o its members.

Hence, it would have to be established statistically that theinhabitants o Lancaster, eeing that machine-ridden country,go in search o employment to Ireland, where machines are un-known; and, historically, that the shadow o barbarism darkensthe epochs o civilization, and that civilization ourishes in timeso ignorance and barbarism.

Evidently there is in this mass o contradictions something thatshocks us and warns us that the problem conceals an element essen-tial to its solution that has not been suffi ciently brought to light.

The whole mystery consists in this: Behind what is seen lieswhat is not seen.I am going to try to shed some light on it. Mydemonstration can be nothing but a repetition o the precedingone, or the problem is the same.

Men have a natural inclination, i they are not prevented byorce, to go or a bargainthat is, or something that, or an

equivalent satisaction, spares them laborwhether this bargaincomes to them rom a capableoreign produceror rom a capablemechanical producer.

The theoretical objection that is raised against this inclinationis the same in both cases. In one as in the other, the reproach is


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made that it apparently makes or a scarcity o jobs. However, itsactual effect is not to make jobs scarce, but toeemens labor orother jobs.

And that is why, in practice, the same obstacleorceis set upagainst it in both cases. The legislatorprohibitsoreign competi-tion andorbidsmechanical competition. For what other meanscan there be to stie an inclination natural to all men than to takeaway their reedom?

In many countries, it is true, the legislator strikes at only oneo these types o competition and connes himsel to grumblingabout the other. This proves only that in these countries thelegislator is inconsistent.

That should not surprise us. On a alse path there is alwaysinconsistency; i this were not so, mankind would be destroyed.

We have never seen and never shall see a alse principle carriedout completely. I have said elsewhere: Absurdity is the limit oinconsistency. I should like to add: It is also its proo.

Let us go on with our demonstration; it will not be lengthy.

James Goodellow had two rancs that he let two workers earn.But now suppose that he devises an arrangement o ropes and

weights that will shorten the work by hal.Then he obtains the same satisaction, saves a ranc, and dis-

charges a worker.He discharges a worker: that is what is seen.Seeing only this, people say: See how misery ollows civiliza-

tion! See how reedom is atal to equality! The human mind hasmade a conquest, and immediately another worker has oreverallen into the abyss o poverty. Perhaps James Goodellow can stillcontinue to have both men work or him, but he cannot give themmore than ten sous each, or they will compete with one anotherand will offer their services at a lower rate. This is how the richget richer and the poor become poorer. We must remake society.

A ne conclusion, and one worthy o the initial premise!

Fortunately, both premise and conclusion are alse, becausebehind the hal o the phenomenon that is seenis the other halthat is not seen.

The ranc saved by James Goodellow and the necessary effectso this saving are not seen.


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Since, as a result o his own invention, James Goodellow nolonger spends more than one ranc or manual labor in the pursuito a given satisaction, he has another ranc lef over.

I, then, there is somewhere an idle worker who offers his laboron the market, there is also somewhere a capitalist who offers hisidle ranc. These two elements meet and combine.

And it is clear as day that between the supply o and the demandor labor, between the supply o and the demand or wages, therelationship has in no way changed.

The invention and the worker, paid with the rst ranc, now dothe work previously accomplished by two workers.

The second worker, paid with the second ranc, perorms somenew work.

What has then been changed in the world? There is one nationalsatisaction the more; in other words, the invention is a gratuitousconquest, a gratuitous prot or mankind.

From the orm in which I have given my demonstration wecould draw this conclusion:

It is the capitalist who derives all the benets owing romthe invention o machines. The laboring class, even though it su-ers rom them only temporarily, never prots rom them, since,according to what you yoursel say, they reallocatea portion othe nations industry without diminishing it, it is true, but also

without increasingit.It is not within the province o this essay to answer all objections.

Its only object is to combat an ignorant prejudice, very dangerousand extremely widespread. I wished to prove that a new machine,in making a certain number o workers available or jobs, neces-sarilymakes available at the same time the money that pays them.These workers and this money get together eventually to producesomething that was impossible to produce beore the invention;rom which it ollows that the nal result o the inention is anincrease in satisactions with the same amount o labor.

Who reaps this excess o satisactions?Yes, at rst it is the capitalist, the inventor, the rst one who uses

the machine successully, and this is the reward or his genius anddaring. In this case, as we have just seen, he realizes a saving onthe costs o production, which, no matter how it is spent (and it


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always is), gives employment to just as many hands as the machinehas made idle.

But soon competition orces him to lower his selling price by

the amount o this saving itsel.And then it is no longer the inventor who reaps the benets o

the invention; it is the buyer o the product, the consumer, thepublic, including the workersin a word, it is mankind.

And what is not seenis that the saving, thus procured or all theconsumers, orms a und rom which wages can be drawn, replac-ing what the machine has drained off.

Thus (taking up again the oregoing example), James Goodellowobtains a product by spending two rancs or wages.

Thanks to his invention, the manual labor now costs him onlyone ranc.

As long as he sells the product at the same price, there is oneworker the ewer employed in making this special product: thatis what is seen; but there is one worker the more employed by theranc James Goodellow has saved: that is what is not seen.

When, in the natural course o events, James Goodellow isreduced to lowering by one ranc the price o the product, heno longer realizes a saving; then he no longer releases a ranc ornational employment in new production. But whoever acquiresit, i.e., mankind, takes his place. Whoever buys the product paysone ranc less, saves a ranc, and necessarily hands over this savingto the und or wages; this is again what is not seen.

Another solution to this problem, one ounded on the acts,has been advanced.

Some have said: The machine reduces the expenses o pro-duction and lowers the price o the product. The lowering o the

price stimulates an increase in consumption, which necessitatesan increase in production, and, nally, the use o as many workersas beore the inventionor more. In support o this argumentthey cite printing, spinning, the press, etc.

This demonstration is not scientic.We should have to conclude rom it that, i the consumption

o the special product in question remains stationary or nearlyso, the machine will be harmul to employment. This is not so.

Suppose that in a certain country all the men wear hats. I with


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a machine the price o hats can be reduced by hal, it does notnecessarilyollow that twice as many hats will be bought.

Will it be said, in that case, that a part o the national labor

orce has been made idle? Yes, according to ignorant reasoning.No, according to mine; or, even though in that country no one

were to buy a single extra hat, the entire und or wages wouldnevertheless remain intact; whatever did not go to the hat industry

would be ound in the saving realized by all consumers and wouldgo to pay wages or the whole o the labor orce that the machinehad rendered unnecessary and to stimulate a new developmento all industries.

And this is, in act, the way things happen. I have seen newspa-pers at rancs; now they sell or . This is a saving o rancsor the subscribers. It is not certain, at least it is not inevitable, thatthe rancs continue to go into journalism; but what is certain,

what is inevitable, is that i they do not take this direction, theywill take another. One ranc will be used to buy more newspapers,another or more ood, a third or better clothes, a ourth or

better urniture.Thus, all industries are interrelated. They orm a vast network in

which all the lines communicate by secret channels. What is saved inone prots all. What is important is to understand clearly that never,never are economies effected at the expense o jobs and wages.

. Credit

At all times, but especially in the last ew years, people have dreamto universalizing wealth by universalizing credit.

I am sure I do not exaggerate in saying that since the FebruaryRevolution, the Paris presses have spewed orth more than tenthousand brochures extolling this solution o thesocial problem.

This solution, alas, has as its oundation merely an optical illu-sion, insoar as an illusion can serve as a oundation or anything.

These people begin by conusing hard money with products;then they conuse paper money with hard money; and it is romthese two conusions that they proess to derive a act.

In this question it is absolutely necessary to orget money,coins, bank notes, and the other media by which products pass


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rom hand to hand, in order to see only the products themselves,which constitute the real substance o a loan.

For when a armer borrows fy rancs to buy a plow, it is not

actually the fy rancs that is lent to him; it is the plow.And when a merchant borrows twenty thousand rancs to

buy a house, it is not the twenty thousand rancs he owes; it isthe house.

Money makes its appearance only to acilitate the arrangementamong several parties.

Peter may not be disposed to lend his plow, but James maybe willing to lend his money. What does William do then? Heborrows the money rom James, and with this money he buys the

plow rom Peter.But actually nobody borrows money or the sake o the money

itsel. We borrow money to get products.Now, in no country is it possible to transer rom one hand to

another more products than there are.Whatever the sum o hard money and bills that circulates, the

borrowers taken together cannot get more plows, houses, tools,provisions, or raw materials than the total number o lenders canurnish.

For let us keep well in mind that every borrower presupposesa lender, that every borrowing implies a loan.

This much being granted, what good can credit institutionsdo? They can make it easier or borrowers and lenders to ndone another and reach an understanding. But what they cannotdo is to increase instantaneously the total number o objects bor-rowed and lent.

However, the credit organizations would have to do just thisin order or the end o the social reormers to be attained, sincethese gentlemen aspire to nothing less than to give plows, houses,tools, provisions, and raw materials to everyone who wants them.

And how do they imagine they will do this?

By giving to loans the guarantee o the state.Let us go more deeply into the matter, or there is something here

that isseenand something that is not seen.Let us try to see both.Suppose that there is only one plow in the world and that two

armers want it.


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Peter is the owner o the only plow available in France. Johnand James wish to borrow it. John, with his honesty, his property,and his good name, offers guarantees. One believesin him; he has

credit.James does not inspire condence or at any rate seems lessreliable. Naturally, Peter lends his plow to John.

But now, under socialist inspiration, the state intervenes andsays to Peter: Lend your plow to James. We will guarantee youreimbursement, and this guarantee is worth more than Johns, or heis the only one responsible or himsel, and we, though it is true wehave nothing, dispose o the wealth o all the taxpayers; i necessary,

we will pay back the principal and the interest with their money.So Peter lends his plow to James; this is what is seen.And the socialists congratulate themselves, saying, See how our

plan has succeeded. Thanks to the intervention o the state, poorJames has a plow. He no longer has to spade by hand; he is on theway to making his ortune. It is a benet or him and a prot orthe nation as a whole.

Oh no, gentlemen, it is not a prot or the nation, or here is

what is not seen.It is not seenthat the plow goes to James because it did not go

to John.It is not seenthat i James pushes a plow instead o spading, John

will be reduced to spading instead o plowing.Consequently, what one would like to think o as anadditional

loan is only the reallocationo a loan.Furthermore, it is not seenthat this reallocation involves two

proound injustices: injustice to John, who, afer having meritedand won creditby his honesty and his energy, sees himsel deprived;injustice to the taxpayers, obligated to pay a debt that does notconcern them.

Will it be said that the government offers to John the sameopportunities it does to James? But since there is only one plowavailable, two cannot be lent. The argument always comes back to

the statement that, thanks to the intervention o the state, morewill be borrowed than can be lent, or the plow represents herethe total o available capital.

True, I have reduced the operation to its simplest terms; but testby the same touchstone the most complicated governmental credit


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institutions, and you will be convinced that they can have but oneresult: to reallocate credit, not to increaseit. In a given countryand at a given time, there is only a certain sum o available capital,

a

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The Economics of Freedom by Freric Bastiat

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