Economic Sophisms

Frédéric Bastiat
Bastiat, Frédéric
(1801-1850)
CEE
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Editor/Trans.
Arthur Goddard, trans.
First Pub. Date
1845
Publisher/Editor
Irvington-on-Hudson, NY: The Foundation for Economic Education, Inc.
Pub. Date
1996
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Introduction by Henry Hazlitt
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Second Series*

The request of industry to government is as
modest as that of Diogenes to Alexander:
"Get out of my light."—Bentham.

Second Series, Chapter 1

The Physiology of Plunder1*

II.1.1

Why do I keep dwelling on that dry science, political economy?

II.1.2

Why? The question is a reasonable one. All labor by its very nature is so repugnant that one has the right to ask what purpose it serves.

II.1.3

Let us investigate and see.

II.1.4

I do not address myself to those philosophers who profess to adore poverty, if not in their own name, at least in the name of mankind.

II.1.5

I speak to whoever holds wealth in some regard; and I understand by this word, not the opulence of the few, but the comfort, the well-being, the security, the independence, the education, the dignity, of all.

II.1.6

There are only two ways of obtaining the means essential to the preservation, the adornment, and the improvement of life: production and plunder.

II.1.7

Some people say: "Plunder is a fortuitous event, a purely local and transient evil, condemned by moral philosophy, punished by law, and unworthy of the attention of political economy."

II.1.8

Yet however well disposed or optimistic one may be, one is compelled to recognize that plunder is practiced in this world on too vast a scale, that it is too much a part of all great human events, for any social science—political economy least of all—to be able to ignore it.

II.1.9

I go further. What keeps the social order from improving (at least to the extent to which it is capable of improving) is the constant endeavor of its members to live and to prosper at one another's expense.

II.1.10

Hence, if plunder did not exist, society would be perfect, and the social sciences would be without an object.

II.1.11

I go still further. When plunder has become a way of life for a group of men living together in society, they create for themselves in the course of time a legal system that authorizes it and a moral code that glorifies it.

II.1.12

It suffices to name some of the more obvious forms of plunder to indicate the position it holds in human affairs.

II.1.13

The first is war. Among savages, the conqueror kills the conquered in order to acquire hunting rights that, if not incontestable, are at least uncontested.

II.1.14

Next is slavery. When man learns that labor can make the earth fruitful, he arranges to share with his brother on the following terms: "Yours the toil; mine the harvest."

II.1.15

Then comes theocracy. "According as you give me, or refuse me, what is yours, I will open to you the gates of heaven or of hell."

II.1.16

Finally, monopoly makes its appearance. Its distinguishing characteristic is to permit the continued existence of the great law of society: service for service, but to introduce force into the negotiations, and, consequently, to upset the just balance between service received and service rendered.

II.1.17

Plunder always carries within itself the germ that ultimately kills it. It is rarely that the many plunder the few; for, in such a case, the latter would promptly be so reduced in number as no longer to be capable of satisfying the greed of the former, so that plunder would come to an end from want of sustenance.

II.1.18

Almost always it is the many that are oppressed by the few; yet plunder is none the less doomed to come to an end.

II.1.19

For if it makes use of force, as in war and slavery, in the long run force will naturally pass to the side of the many.

II.1.20

And if fraud is the means, as in theocracy and monopoly, it is natural, unless intelligence is to count for nothing, that the majority should eventually become aware of it.

II.1.21

There is, besides, another providential law whose operation is no less fatal, in the end, to the success of every system of plunder: Plunder not only redistributes wealth; it always, at the same time, destroys a part of it. War annihilates many values. Slavery paralyzes many capabilities. Theocracy diverts many energies toward childish or injurious ends. Monopoly too transfers wealth from one pocket to another, but much of it is lost in the process.

II.1.22

This is an admirable law. Without it, provided that there were a balance of power between oppressors and oppressed, plunder would have no end. Thanks to this law, the balance is always tending to be upset; either because the plunderers come to realize that too much wealth is being destroyed, or, in the absence of this realization, because the evil is constantly worsening, and it is in the nature of whatever keeps on worsening to come to an end.

II.1.23

In fact, there comes a time when the progressively accelerating destruction of wealth goes so far that the plunderer is poorer than he would have been if he had remained honest. Such is the case when a war costs a nation more than the booty is worth; when a master pays more for slave labor than for free labor; when a theocracy has so stupefied the people and so sapped their energies that it can no longer exact anything from them; when a monopoly increases its efforts to absorb in proportion as there is less to absorb, just as it takes more effort to milk a cow as the udder becomes empty.

II.1.24

Monopoly is evidently a species of the genus plunder. There are several varieties—among others, sinecures, privileges, and trade restrictions.

II.1.25

Some of the forms it may assume are simple and naive, like feudal rights. Under this system the masses were plundered and knew it. The system involved the abuse of force and fell with it.

II.1.26

Other forms are more complicated. Often the masses are plundered and do not know it. It may even happen that they believe they owe everything to plunder, not only what they are allowed to keep, but also what is taken away from them and what is lost in the operation. Moreover, I assert that, in the course of time, thanks to so ingenious a mechanism as custom, many people become plunderers without knowing it and without intending it. Monopolies of this kind are engendered by fraud and nourished on error. They flourish in the darkness of ignorance and vanish only in the light of knowledge.

II.1.27

I have said enough to show that political economy has an evident practical utility. It is the torch that, by exposing fraud and dispelling error, destroys that form of social disorder called plunder. Someone—I believe a woman—has rightly defined it as "the safety lock on the savings of the people."

Commentary

II.1.28

If this little book were fated to last three or four thousand years, to be read and reread, pondered and studied, sentence by sentence, word by word, and letter by letter, from generation to generation, like a new Koran; if it were to fill all the libraries in the world with avalanches of annotations, explanations, and paraphrases; I might abandon the foregoing remarks to their fate, without misgivings concerning their rather obscure succinctness. But since they need a commentary, I believe the wiser course is to provide it myself.

II.1.29

The true and just rule for mankind is the voluntary exchange of service for service. Plunder consists in prohibiting, by force or fraud, freedom of exchange, in order to receive a service without rendering one in return.

II.1.30

Forcible plunder is effected by waiting until a man has produced something, and then taking it from him by violence.

II.1.31

It is specifically forbidden by the Commandment: Thou shalt not steal.

II.1.32

When practiced by one individual on another, it is called theft and is punishable by imprisonment; when practiced by one nation on another, it is called conquest and leads to glory.

II.1.33

Why this difference? It is worth while to seek for the cause. It will reveal to us an irresistible power, public opinion, which, like the atmosphere, envelops us so completely that we no longer notice it. Rousseau never spoke more truly than when he said: "It takes a great deal of scientific insight to discern the facts that are closest to us."2*

II.1.34

The thief, precisely because he acts alone, has public opinion against him. He frightens everyone about him. However, if he has a few comrades, he boasts to them about his exploits, and here one may begin to notice the power of public opinion; for it takes merely the approval of his accomplices to relieve him of the feeling that he is doing anything wrong and even to make him proud of his dishonor.

II.1.35

The warrior lives in a different world. The public opinion that vilifies him is elsewhere, in the conquered nations; he does not feel its pressure. But the opinion of those around him approves of him and sustains him. He and his comrades have a strong sense of the common interest that unites them. The fatherland, which has created enemies and dangers for itself, finds it necessary to extol the courage of its children. It bestows honors, fame, and glory on the most intrepid among them, on those who have expanded its frontiers and brought it the most loot. Poets sing their exploits, and women braid garlands for them. And such is the power of public opinion that it separates the idea of injustice from plunder and frees the plunderer of even the consciousness of having done any wrong.

II.1.36

The public opinion that reacts against military plunder, since it arises, not in the plundering nation, but among the plundered, has very little influence. Yet it is not entirely ineffectual, and it gains in importance as nations come into contact with one another and come to understand one another better. In this connection, it is evident that the study of languages and freedom of communication among different nations tend to give the prevailing influence to the opinion that opposes this sort of plunder.

II.1.37

Unfortunately, it often happens that those who live in the vicinity of a plundering nation themselves become plunderers when they can, and thenceforth become imbued with the same prejudices.

II.1.38

When this happens, there is only one remedy: time. People have to learn, through hard experience, the enormous disadvantage there is in plundering one another.

II.1.39

Some may propose another form of restraint: moral influence. But the purpose of moral influence is to encourage virtuous actions. How, then, can it restrain acts of plunder when public opinion ranks these acts among the noblest virtues? Is there a more powerful moral influence than religion? Has there ever been a religion more favorable to peace and more widely accepted than Christianity? And yet what have we witnessed for eighteen centuries? The spectacle of men warring with one another not only in spite of religion, but in the very name of religion.

II.1.40

A conquering nation is not always waging offensive warfare. It, too, falls on evil days when its soldiers find themselves obliged to defend their homes and property, their families, their national independence, and their liberty. At such times war takes on the character of a great crusade. The flag, consecrated by the ministers of the Prince of Peace, symbolizes everything that is holy on earth; people revere it as the living image of the fatherland and of the homage due to it; and martial virtues are extolled above all others. But after the danger has passed, public opinion remains the same; and by a natural reaction of that spirit of revenge which is confused with patriotism, people love to parade their cherished flag from one capital city to another. It seems that Nature has thus prepared its punishment for the aggressor.

II.1.41

It is the fear of this punishment, and not our increased knowledge, that keeps weapons in our arsenals, for it cannot be denied that the most highly civilized nations wage war and concern themselves very little about justice when they do not have to fear any reprisals. The Himalayan, the Atlas, and the Caucasus Mountains attest to this.

II.1.42

If religion has been powerless, if knowledge is powerless, how, then, is war to cease?

II.1.43

Political economy demonstrates that, even in the case of the victors, war is always waged in the interest of the few and at the expense of the many. All that is needed, then, is that the masses should clearly perceive this truth. The weight of public opinion, which is still divided, will then fall entirely on the side of peace.3*

II.1.44

Forcible plunder also takes another form. Instead of waiting until a man has produced something in order to take it away from him, the plunderer takes possession of the man himself, deprives him of his freedom, and compels him to work. The plunderer does not say to him: "If you do this for me, I shall do that for you"; but: "Yours all the toil, mine all the enjoyment." This is slavery, which always implies the misuse of power.

II.1.45

Now, it is an important question whether it is not in the very nature of an incontestably dominant power to be misused. For my part, I put no faith in it at all, and I might just as well expect a falling stone to contain the power that will halt its fall as to rely upon force to impose restraints upon itself.

II.1.46

I should like, at least, to be shown a country or an era in which slavery was abolished by the free and voluntary action of the masters.

II.1.47

Slavery furnishes a second and striking example of the impotence of religious and humanitarian sentiments in a conflict with the powerful force of self-interest. This may seem regrettable to certain modern schools of thought that expect self-denial to be the principle that will reform society. Let them begin, then, by reforming the nature of man.

II.1.48

In the Antilles,4* the masters, from father to son, have been professing the Christian religion ever since slavery was established there. Several times a day they repeat these words: "All men are brothers; to love thy neighbor is to fulfill the whole of the law." And yet they have slaves, and nothing seems to them more natural or legitimate. Do the modern reformers expect that their ethical principles will ever be as universally accepted, as well-known, as authoritative, or as often on the lips of everyone, as the Gospel? And if the Gospel has been unable to pass from the lips to the heart, over or through the great barrier of self-interest, how do they expect their ethical principles to perform this miracle?

II.1.49

Is slavery, then, indestructible? No. Self-interest, which created it, will destroy it, provided that the special interests that have inflicted the wound are not protected in such a way as to nullify the general interests that tend to heal it.

II.1.50

Another truth demonstrated by political economy is that free labor is essentially progressive, whereas slave labor is necessarily static. Hence, the triumph of the first over the second is inevitable. What has become of the cultivation of indigo by the Negroes?5*

II.1.51

Free labor employed in the cultivation of sugar will lead to a continual reduction in its price. The slave will become proportionately less profitable to his master. Slavery would have collapsed of its own weight long ago in America if European laws had not kept the price of sugar artificially high. Therefore we see the masters, their creditors, and their legislative representatives making vigorous efforts to keep these laws in force, for they are today the pillars of the whole edifice of slavery.

II.1.52

Unfortunately, these laws still have the support of people among whom slavery has disappeared; from this it is clear that here, too, public opinion is sovereign.

II.1.53

If it is sovereign even in the domain of force, it is still more so in the domain of fraud. This, in fact, is the domain in which public opinion is most efficacious. Fraud consists in the misuse of the intellect; public opinion becomes progressively more enlightened as men's intellectual attainments are enlarged. These two forces are at least of the same nature. Imposture on the part of the plunderer implies credulity on the part of the plundered, and the natural antidote for credulity is truth. It follows that by enlightening men's minds we deprive this kind of plunder of the food that nurtures it.

II.1.54

I shall briefly review some of the kinds of plunder that are carried out by fraud on a grand scale.

II.1.55

The first is plunder by theocratic fraud.

II.1.56

In what does it consist? In inducing men to give one actual services, in the form of food, clothing, luxuries, prestige, influence, and power, in exchange for fictitious services.

II.1.57

If I tell a man, "I am going to render you an immediate service," I am obliged to keep my word; otherwise this man would soon know what to expect, and my fraud would be quickly unmasked.

II.1.58

But suppose I say to him, "In exchange for services from you, I shall confer immense services upon you, not in this world but in the next. Whether, after this life, you are to be eternally happy or wretched depends entirely upon me; I am an intermediary between God and man, and can, as I see fit, open to you the gates of heaven or of hell." If this man believes me, he is at my mercy.

II.1.59

This sort of imposture has been widely practiced since the beginning of the world, and the extent of the power which the Egyptian priests attained by such means is well known.

II.1.60

It is easy to understand how impostors operate. It is enough to ask yourself what you would do in their place.

II.1.61

If, with designs of this sort, I were to find myself among an ignorant people, and if, by some extraordinary and apparently miraculous deed, I were to succeed in passing myself off as a supernatural being, I should profess to be a messenger from God, with absolute power to control the future destinies of men.

II.1.62

Next, I should forbid any examination of my claims. I should go further: since reason would be my most dangerous enemy, I should forbid the use of reason itself, at least as applied to this awesome subject. I should render this question, and all questions related to it, taboo, as the savages say. To answer them, to ask them, even to think of them, would be an unpardonable crime.

II.1.63

It would certainly be the acme of ingenuity thus to set up a taboo as a barrier to all intellectual avenues that might lead to the discovery of my imposture. What could better guarantee its permanence than to make even doubt an act of sacrilege?

II.1.64

However, to this fundamental guarantee I should add some auxiliary ones. For instance, so that knowledge might never be diffused among the masses, I should confer upon myself, as well as upon my accomplices, a monopoly over all the sciences; I should hide them under the veil of a dead language and a hieroglyphic alphabet; and, in order never to be caught unawares by any danger, I should take care to devise some institution that would allow me to penetrate, by day, into the hidden recesses of every man's conscience.

II.1.65

It would not be amiss for me to satisfy some of the real needs of my people, especially if, by doing so, I were able to increase my influence and authority. For instance, men have a great need for education and morality, and I should make myself the source of both. In that way I should guide as I wished the minds and hearts of my people. I should establish an indissoluble connection between morality and my authority by representing them as unable to exist without one another, so that if anyone dared to raise a tabooed question, the whole of society, which cannot survive without morality, would feel the earth tremble beneath its feet and would turn its wrath upon this rash innovator.

II.1.66

When things reached such a point, these people would evidently belong to me more than if they were my slaves. The slave curses his chains; my people would bless theirs, and I should have succeeded in stamping the seal of servitude, not on their brows, but on their very hearts and consciences.

II.1.67

Public opinion alone can knock down such an edifice of iniquity; but where is it to begin, if every stone is tabooed? This must be the work of time and the printing press.

II.1.68

God forbid that I should seek here to disturb those comforting beliefs that view this life of sorrows as but a prelude to a future life of happiness! But that the irresistible yearning that impels us to accept such beliefs has been shamefully exploited, no one, not even the Pope, could deny. There is, it seems to me, one sign by which it is possible to determine whether or not people have been victimized in this way. Examine the religion and the priest, and see whether the priest is the instrument of the religion, or the religion is the instrument of the priest.

II.1.69

If the priest is the instrument of the religion, if his only thought is to disseminate everywhere its ethical principles and its beneficial influence, he will be gentle, tolerant, humble, charitable, and zealous; his life will resemble that of his divine model; he will preach freedom and equality among men, and peace and brotherhood among nations; he will resist the temptations of temporal power, since he will want no ties with that which, of all things in this world, has the greatest need of restraint; he will be a man of the people, a man of good counsel and tender consolation, a man whose opinion is esteemed, and a man obedient to the Gospel.

II.1.70

If, on the contrary, the religion is the instrument of the priest, he will treat it as one does an instrument that one modifies, bends, or twists to his own purposes, so as to derive from it the greatest possible advantage for oneself. He will multiply the number of tabooed questions; he will adjust his moral principles to suit changing times, men, and circumstances. He will try to awe the populace with his studied gestures and poses; a hundred times a day he will mumble words that have long since lost all their meaning and have become mere empty conventionalities. He will traffic in relics, but only just enough not to shake people's faith in their sanctity; and he will take care that the more perceptive the people become, the less obvious his trafficking will be. He will involve himself in worldly intrigues; and he will always side with those in power on the sole condition that those in power side with him. In brief, from every one of his acts it will be clear that what he is aiming at is, not to advance religion by means of the clergy, but to advance the clergy by means of religion; and since so much effort implies an end, and as this end, according to our hypothesis, can be nothing other than power and wealth, the conclusive proof that the people have been duped is that the priest is rich and powerful.

II.1.71

Quite clearly, one can misuse a true religion as well as a false one. Indeed, the more worthy of respect its authority is, the greater is the danger that it may be improperly employed. But there is a great deal of difference in the consequences. The abuse of such authority always outrages the sound, enlightened, self-reliant members of the population. Their faith cannot but be shaken, and the weakening of a true religion is far more lamentable than the crumbling of a false one.

II.1.72

The extent to which this method of plunder is practiced is always in inverse proportion to the perspicacity of the people, since it is in the nature of abuses to go as far as they can. Not that high-minded and dedicated priests cannot be found in the midst of the most ignorant people; but what is to stop a knave from donning the cassock and seeking to wear the miter? Plunderers conform to the Malthusian law: they multiply with the means of existence; and the means of existence of knaves is the credulity of their dupes. Seek as one will, there is no substitute for an informed and enlightened public opinion. It is the only remedy.

II.1.73

Another sort of plunder is known as commercial fraud, a term that seems to me much too restricted, for the guilty ones include not only the merchant who adulterates his goods or gives short weight, but also the quack doctor and the pettifogging lawyer. In such cases, one of the two services exchanged consists of debased coin; but since the service received was first voluntarily agreed upon, it is evident that plunder of this kind should diminish as the public becomes better informed.

II.1.74

Next comes the misuse of government services—an immense field for plunder, so immense that we can only glance at it.

II.1.75

If God had made man a solitary animal, everyone would labor for himself. Individual wealth would be in proportion to the services that each man performed for himself.

II.1.76

But, since man is a social creature, services are exchanged for services—a proposition whose terms you can transpose, if you are so minded.

II.1.77

The members of society have certain needs that are so general, so universal, that provision is made for them by organizing government services. Among these requirements is the need for security. People agree to tax themselves in order to pay, in the form of services of various kinds, those who perform the service of seeing to the common security.

II.1.78

This arrangement in no way conflicts with the principle of exchange as formulated in political economy: Do this for me, and I will do that for you. The essence of the transaction is the same; only the method of payment is different; but this fact is very important.

II.1.79

In ordinary, private transactions each party remains the sole judge both of the service he receives and of the service he performs. He can always either decline the exchange or make it elsewhere; hence the need of offering in the market only such services as will find voluntary acceptance.

II.1.80

This has not been true of the state, especially prior to the establishment of representative government. Whether or not we need its services, whether they are real or spurious, we are always obliged to accept what it provides and to pay the price that it sets.

II.1.81

Now, it is the tendency of all men to exaggerate the services that they render and to minimize the services they receive; and chaos would reign if we did not have, in private transactions, the assurance of a negotiated price.

II.1.82

This assurance is completely, or almost completely, lacking in our transactions with the government. And yet the state, which, after all, is composed of men (although nowadays this is denied, at least by implication), obeys the universal tendency. It wants to serve us a great deal—more, indeed, than we desire—and to make us accept as real services what are often far from being such, and all this for the purpose of exacting some services from us in return in the form of taxes.

II.1.83

The state too is subject to the Malthusian law. It tends to expand in proportion to its means of existence and to live beyond its means, and these are, in the last analysis, nothing but the substance of the people. Woe to the people that cannot limit the sphere of action of the state! Freedom, private enterprise, wealth, happiness, independence, personal dignity, all vanish.

II.1.84

For there is one circumstance that must be noted: Among the services that we demand of the state, the chief is security. To assure us this, it must have at its command a force capable of overcoming all individual or collective, domestic or foreign forces that might imperil it. In combination with that fatal disposition that we have observed among men to live at the expense of others, this fact makes for a situation that is obviously fraught with danger.

II.1.85

To appreciate this, one has only to consider on what a vast scale, throughout history, plunder has been practiced by way of the abuses and excesses of government. One has only to ask oneself what services were performed for the people, and what services were exacted from them, by the governments of Assyria, Babylon, Egypt, Rome, Persia, Turkey, China, Russia, England, Spain, and France. The enormous disparity between the one and the other in each case staggers the imagination.

II.1.86

At last, representative government was established, and one might have supposed, a priori, that all this would come to an end as if by magic.

II.1.87

In fact, such governments are based on the following principle:

II.1.88

"The people themselves, through their representatives, will determine the nature and extent of the functions that they regard as proper to be established as government services, and the amount they propose to pay in remuneration for these services."

II.1.89

The tendency to appropriate the property of others was thereby placed in direct confrontation with the tendency to defend one's own property. There was every reason to expect that the latter would overcome the former.

II.1.90

To be sure, I am convinced that in the long run the system of representative government will succeed. Yet it must be admitted that up to now it has not done so.

II.1.91

Why? For two quite simple reasons: Governments have had too much discernment, and people have had too little.

II.1.92

Governments are very adroit. They act methodically, step by step, according to a well-contrived plan that is constantly being improved by tradition and experience. They study men and their passions. If they perceive, for instance, that the people are inclined to war, they incite and inflame this calamitous propensity. By their diplomacy they surround the nation with dangers, and, as a natural consequence, they demand that it provide soldiers, sailors, arsenals, and fortifications. Often, in fact, they do not need to go to the trouble of making such demands, for everything they want is offered to them. Then they have jobs, pensions, and promotions to distribute. All this requires a great deal of money; hence, they impose taxes and float loans.

II.1.93

If the nation is open-handed, the government offers to cure all the ills of mankind. It promises to restore commerce, make agriculture prosperous, expand industry, encourage arts and letters, wipe out poverty, etc., etc. All that is needed is to create some new government agencies and to pay a few more bureaucrats.

II.1.94

In a word, the tactic consists in initiating, in the guise of actual services, what are nothing but restrictions; thereafter the nation pays, not for being served, but for being disserved. Governments, assuming gigantic proportions, end by absorbing half of the national income. The people are astonished to find that, while they hear of wonderful inventions that are to multiply goods without end, they are working as hard as ever and are still no better off than before.

II.1.95

The trouble is that, while the government has been acting with so much ability, the people have shown practically none. Thus, when called upon to choose those who are to be entrusted with the powers of government, those who are to determine the sphere of and the payment for governmental action, whom do they choose? Government officials. They entrust the executive authority itself with the power to fix the limits of its own activities and requirements. They act like Molière's would-be gentleman, who, for the selection and the number of his suits, relied upon—his tailor.6*

II.1.96

In the meanwhile, things go from bad to worse, and at last people open their eyes, not to the remedy (for they have not yet progressed to that point), but to the evil.

II.1.97

Governing is so pleasurable a profession that everyone aspires to engage in it. Hence, the demagogues never cease telling the people: "We are aware of your sufferings, and we deplore them. Things would be different if we were governing you."

II.1.98

This period, which is ordinarily quite long, is one of rebellions and insurrections. If the people are conquered, the costs of the war are added to their tax burden. If they are the conquerors, the government changes hands, and the abuses continue.

II.1.99

And this goes on until the people learn to recognize and defend their true interests. Thus, we always reach the same conclusion: The only remedy is in the progressive enlightenment of public opinion.

II.1.100

Certain nations seem particularly liable to fall prey to governmental plunder. They are those in which men, lacking faith in their own dignity and capability, would feel themselves lost if they were not governed and administered every step of the way. Without having traveled a great deal, I have seen countries in which the people think that agriculture can make no progress unless the government supports experimental farms; that soon there will no longer be any horses, if the government does not provide studs; that fathers will not have their children educated, or will have them taught only immorality, if the government does not decide what it is proper to learn; etc., etc. In such countries, revolutions may come in rapid succession, with governments falling one after another; but the governed are none the less governed at the discretion and the mercy of the rulers (for the propensity that I am discussing here is the very stuff of which governments are made), until the people finally come to realize that it is better to leave the greatest possible number of services to be exchanged by the interested parties at a freely negotiated price.7*

II.1.101

We have seen that society consists in the exchange of services. It should be an exchange of only good and honest services. But we have also shown that men have a great interest in, and consequently an irresistible inclination toward, exaggerating the relative value of the services they perform. I cannot, indeed, see any other limit to these pretensions than the voluntary acceptance or rejection of the exchange on the part of those to whom the services are offered.

II.1.102

Hence, certain men have recourse to the law in order to abridge the natural prerogatives of this freedom on the part of other men. This kind of plunder is called privilege or monopoly. Let us be very clear about its origin and character.

II.1.103

Everyone knows that the services that he offers in the general market will be evaluated and remunerated in proportion to their scarcity. Everyone, therefore, will seek the enactment of a law that will keep from the market all those prepared to offer services similar to his own; or, what amounts to the same thing, if the employment of some means of production is indispensable for the performance of the service, he will ask the law for exclusive possession of it.8*

II.1.104

I shall say little about this variety of plunder here, limiting myself to one comment only.

II.1.105

An isolated case of monopoly never fails to enrich those to whom the law has granted it. It may then happen that each class of producers, instead of seeking to destroy this monopoly, will demand for itself a similar monopoly. This kind of plunder, thus reduced to a system, then becomes the most ridiculous practical joke on everybody, and the ultimate result is that each person thinks he is getting more out of a general market in which the supply of everything is being lessened.

II.1.106

It is needless to add that this extraordinary system also sows the seeds of universal discord among all classes, all professions, and all nations; that it requires the constant, but always unpredictable, interference of the government; that it therefore abounds in the type of abuses described in the preceding paragraph; that it renders every industrial enterprise desperately insecure, and accustoms men to making the law, and not themselves, responsible for their livelihood. It would be difficult to imagine a more prolific source of social disturbance.9*

Justification

II.1.107

It may be asked: "Why this ugly word plunder? Besides being crude, it is offensive and irritating; it only turns calm and temperate men against you and embitters the whole controversy."

II.1.108

I submit that I do respect individuals; I do believe in the sincerity of practically all the advocates of protectionism; and I do not arrogate to myself the right to question the personal honesty, scrupulosity, or humanitarianism of anyone. I repeat that protectionism is the consequence—the fateful consequence—of a common error of which all men, or at least the great majority of them, are at once victims and accomplices. But, after all, I cannot prevent things from being as they are.

II.1.109

Imagine a sort of Diogenes thrusting his head out of his tub and saying, "Athenians, you force slaves to serve you. Has it never occurred to you that you are practicing upon your brothers the most iniquitous kind of plunder?"

II.1.110

Or imagine a tribune speaking as follows in the Forum: "Romans, you have based your whole way of life on the successive pillaging of all other nations."

II.1.111

To be sure, they would only have been expressing incontestable truths. Must we therefore conclude that Athens and Rome were inhabited exclusively by dishonest people, and that Socrates and Plato, Cato and Cincinnatus were despicable individuals?

II.1.112

Who could harbor such a thought? After all, these great men lived in an environment that made them unconscious of their injustice. It is well known that Aristotle could not even conceive of the idea of a society that would be capable of existing without slavery.

II.1.113

In modern times, slavery has continued to our own day without causing the plantation owners many qualms of conscience. Armies have served as instruments for large-scale conquests—in other words, for acts of plunder on a large scale. Does this mean that they are not well provided with officers and men as individually scrupulous as, and perhaps more scrupulous than, the ordinary run of men engaged in industrial pursuits—men who would blush at the very thought of theft, and who would face a thousand deaths rather than stoop to a single disgraceful action?

II.1.114

It is not individuals who are to blame, but the general tendency of public opinion that blinds and misleads them—a tendency of which the whole of society is guilty.

II.1.115

The same is true of monopoly. I accuse the system, and not individuals; society as a whole, and not any of its members in particular. If the greatest philosophers were incapable of seeing the iniquity of slavery, how much easier it is for farmers and manufacturers to deceive themselves concerning the nature and effects of protectionism!


Notes for this chapter


*
[The second series of Economic Sophisms, several chapters of which had been published in the Journal des économistes and the newspaper, Le Libre échange, appeared at the end of January 1848.—EDITOR.]

Second Series, Chapter 1

1.
[Cf., in Vol. VI (of the French edition), chaps. 18, 19, 22, and 24, for the further remarks planned and begun by the author on "Disturbing Factors" (Economic Harmonies, chap. 18) affecting the harmony of natural laws.—EDITOR.]
2.
[This quotation is from Part One of the Discourse on Inequality by J. J. Rousseau (1712-1778), a French philosopher. Bastiat was so impressed it that he referred to it five times in his Economic Harmonies.—TRANSLATOR.]
3.
[Cf., in Vol. I (of the French edition), the letter addressed to the President of the Peace Congress at Frankfort.—EDITOR.]
4.
[The reference is to such French West Indian islands as Martinique and Guadeloupe, where slavery existed until 1848 or later.—TRANSLATOR.]
5.
[More efficient (and humane) methods of production in India had resulted in a sharp drop in indigo productions by slave labor in the West Indies.—TRANSLATOR.]
6.
[Cf., in Vol. I (of the French edition), the letter addressed to M. Larnac; and in Vol. V (of the French edition), "Parliamentary Inconsistencies."—EDITOR.]
7.
[Cf. Selected Essays on Political Economy, chap. 5, "The State," and chap. 2, "The Law," and Economic Harmonies, chap. 17, "Private and Public Services."—EDITOR.]
8.
[For the distinction between true monopolies and what have been called natural monopolies, cf., in Economic Harmonies, chap. 5, note 2, accompanying the analysis of Adam Smith's theory of value.—EDITOR.]
9.
[The author was soon to witness an increase in this source of disruption and to wage energetic war against it. Cf. Selected Essays on Political Economy, chap. 5, "The State"; Vol. II (of the French edition), "Disastrous Illusions," and Vol. VI (of the French edition), the final pages of chap. 4.—EDITOR.]

Second Series, Chapter 2

End of Notes


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Second Series, Chapter 2

Two Systems of Ethics

II.2.1

Having arrived—if he does arrive—at the end of the preceding chapter, the reader may well exclaim:

II.2.2

"Well, was I wrong to accuse economists of being dry and cold? What a portrait of mankind! Plunder is represented as an omnipresent force, almost a normal phenomenon, assuming every guise, practiced under any pretext, legal or extralegal, perverting to its own purposes all that is most sacred, exploiting weakness and credulity by turns, and constantly growing by what it feeds on! Could any more depressing picture of the world be imagined?"

II.2.3

But the question is, not whether it is depressing, but whether it is true. History says that it is.

II.2.4

It is rather odd that those who denounce political economy (or economism, as they are pleased to call this science) for studying man and the world just as they are, take a far gloomier view, at least of the past and the present, than the economists do. The books and newspapers of the socialists are full of such bitterness and hatred toward society that the very word civilization has come to be for them synonymous with injustice, civil disorder, and anarchy. So little confidence do they have in the natural capacity of the human race to improve and progress of its own accord that they have even gone so far as to condemn freedom, which, as they see it, is every day driving mankind closer to the edge of doom.

II.2.5

It is true that they are optimists in regard to the future. For, although mankind, in itself incompetent, has been on the wrong track for six millennia, a prophet has come who has shown men the way to salvation; and if the flock will only be docile enough to follow the shepherd, he will lead it into the promised land where prosperity may be attained without effort, and where order, security, and harmony are the easy reward of improvidence.

II.2.6

All that men have to do is to permit the reformers to change, as Rousseau said, their physical and moral constitution.

II.2.7

Political economy has not been given the mission of finding out what society would be like if it had pleased God to make man different from what he is. It may be regrettable that Providence, at the beginning, neglected to seek the advice of some of our modern social reformers. And just as the celestial mechanism would have been quite different if the Creator had consulted Alfonso the Learned;10* so too, if He had not disregarded the advice of Fourier, the social order would have borne no resemblance to the one in which we are obliged to live, breathe, and move about. But, since we are in it, since we do live, move, and have our being in it, our only recourse is to study it and to understand its laws, especially if the improvement of our condition essentially depends upon such knowledge.

II.2.8

We cannot prevent an endless succession of unsatisfied desires from springing up in men's hearts.

II.2.9

We cannot render it possible for these desires to be satisfied without labor.

II.2.10

We cannot close our eyes to the fact that labor is as repugnant to mankind as its fruits are attractive.

II.2.11

We cannot prevent men, since they are so constituted, from engaging in a constant effort to increase their share of the fruits of labor, while throwing upon one another, by force or fraud, the burden of its pains.

II.2.12

It is not within our competence to erase the whole record of human history, or to silence the voice of the past, which attests that this is the way things have been since the beginning of time. We cannot deny that war, slavery, serfdom, theocracy, the excesses of government, privileges, frauds of every kind, and monopolies have been the indisputable and terrifying manifestations of these two sentiments united in the heart of man: fondness for the fruits of toil and repugnance to its pains.

II.2.13

"In the sweat of thy face shalt thou eat bread." But everyone wants as much bread and as little sweat as possible. History provides conclusive proof of this.

II.2.14

Thank heaven, history also shows that the distribution of the fruits and the pains among the members of the human race is approaching ever more nearly to equality.

II.2.15

Unless one is prepared to deny the obvious, it must be admitted that at least in this respect society has made some progress.

II.2.16

In that case, there must exist in society some natural and providential force, some law that causes iniquity progressively to decline and justice no less inexorably to prevail.

II.2.17

We say that this force exists within society, and that God has put it there. If it were not already there, we should be reduced, like the utopians, to resorting to artificial means for producing it, by arrangements that would require the preliminary alteration of the physical and moral constitution of man; or rather, we should consider the effort to produce such a force useless and vain, because we cannot understand how a lever can operate without a fulcrum.

II.2.18

Let us try, therefore, to identify the beneficent force that tends progressively to overcome the maleficent force which we call plunder, and whose existence is all too well demonstrated by reason and proved by experience.

II.2.19

Every maleficent action necessarily has two termini: its point of origin and its point of impact; the man who performs the action, and the man upon whom the action is performed; or, in the language of the schools, the agent and the patient.

II.2.20

There are, thus, two possible ways of preventing the maleficent action from taking effect: the agent may voluntarily abstain, or the patient may resist.

II.2.21

This fact gives rise to two systems of ethics that, far from contradicting each other, concur in their conclusions: religious or philosophical ethics and utilitarian ethics, which I shall permit myself to call economic.

II.2.22

Religious ethics, in order to prevent a maleficent action, addresses its author—man in his active role. It says to him: "Reform and purify thyself; cease to do evil; do good; subdue thy passions; sacrifice thine own interests; do not oppress thy neighbor, for it is thy duty to love and to comfort him; be first just and then charitable." This code of ethics will always be the more beautiful and the more moving of the two, the one that displays the human race in all its majesty, that better lends itself to impassioned eloquence, and is better fitted to arouse the admiration and sympathy of mankind.

II.2.23

The economic, or utilitarian, system of ethics has the same end in view, but above all addresses itself to man in his passive role. Merely by showing him the necessary consequences of his acts, it stimulates him to oppose those that injure him, and to honor those that are useful to him. It strives to disseminate enough good sense, knowledge, and justifiable mistrust among the oppressed masses to make oppression more and more difficult and dangerous.

II.2.24

It should be noted that utilitarian ethics is not without its influence upon the oppressor as well. A maleficent action produces both good and evil effects: evil for him who is subjected to it; and good for him who performs it, or else it would not have been performed. But the good effects by no means compensate for the evil. The evil is always, and necessarily, greater than the good, because the very act of oppressing involves a waste of energy, creates dangers, provokes reprisals, and demands costly precautions. The mere demonstration of these effects not only stimulates a reaction on the part of the oppressed, but attracts to the side of justice all those whose hearts have not been corrupted and disturbs the security of the oppressors themselves.

II.2.25

But it is easy to understand that this system of ethics, which is more implicit than explicit; which, after all, is only a scientific demonstration; which would even lose some of its efficacy if it changed its character; which addresses itself, not to the heart, but to the mind; which seeks, not to persuade, but to convince; which gives, not counsel, but proofs; whose mission is, not to arouse, but to enlighten; and which wins over evil no other victory than that of denying it sustenance—it is easy to understand, I say, that this system of ethics has been accused of being dry and prosaic.

II.2.26

The reproach is true, but unfair. It amounts to saying that political economy does not tell us everything, does not include everything, is not the universal science. But who in the world has ever made so sweeping a claim for it?

II.2.27

The accusation would be justified only if political economy pretended that its procedures gave it exclusive dominion over the entire moral realm, and if it had the presumption to forbid philosophy and religion the use of their own direct methods of working for the improvement of mankind.

II.2.28

Let us welcome, then, the concurrent action of moral philosophy properly so called and political economy—the one stigmatizing the evil deed in our conscience by exposing it in all its hideousness, and the other discrediting it in our judgment by the description of its effects.

II.2.29

Let us even concede that the triumph of the religious moralist, when it occurs, is more noble, more encouraging, and more fundamental. But at the same time it is difficult not to acknowledge that the triumph of economics is more easy to secure and more certain.

II.2.30

In a few lines that are worth more than many ponderous volumes, J. B. Say some time ago observed that there are two possible ways of bringing to an end the dissensions introduced by hypocrisy into a respectable family: to reform Tartuffe or to make Orgon less of a fool.11* Molière, that great depictor of the human heart, seems to have had constantly in mind the second procedure as the more efficacious.

II.2.31

The same is true on the world's stage.

II.2.32

Tell me what Caesar did, and I shall describe to you the Romans of his day.

II.2.33

Tell me what modern diplomacy accomplishes, and I shall describe for you the moral condition of the nations of the world.

II.2.34

We should not be paying close to two billions in taxes if we did not delegate the power of voting them to those that consume them.

II.2.35

We should not have all the difficulties and all the expenses of the African problem if we were as well convinced that two and two is four in political economy as in arithmetic.12*

II.2.36

M. Guizot would not have had occasion to say: "France is rich enough to pay for its glory," if France had not been infatuated with false glory.13*

II.2.37

The same statesman would never have said, "Liberty is too precious for France to haggle over its price," if France really understood that heavy government expenditures and liberty are incompatible.

II.2.38

It is not, as people think, the monopolists, but the monopolized, that sustain the monopolies.

II.2.39

And, in regard to elections, it is not because there are corrupters that people are corruptible, but the reverse; and the proof consists in the fact that the latter pay all the costs of corruption. Is it not, then, their responsibility to bring it to an end?

II.2.40

Let religious ethics soften, if it can, the hearts of the Tartuffes, the Caesars, the colonialists, the sinecurists, the monopolists, etc. The task of political economy is to enlighten their dupes.

II.2.41

Of these two methods, which is the more efficacious in promoting social progress? If this question requires any answer at all, I should say it is the second. Mankind, I fear, cannot escape the necessity of first learning a defensive system of ethics.

II.2.42

In vain have I investigated, read, observed, and inquired: nowhere do I find any abuse, practiced to any considerable extent, that has perished by voluntary renunciation on the part of those who were profiting from it.

II.2.43

I see many, on the contrary, that are yielding to the manly opposition of those who suffer from them.

II.2.44

To describe the consequences of abuses is therefore the most efficacious means of destroying them. And this is true particularly in regard to abuses that, like the system of protectionism, while inflicting real hardships on the masses, prove only an illusion and a disappointment to those who expect to profit from them.

II.2.45

Does this mean that utilitarian ethics will, of itself, bring about all the social improvement that the sympathetic nature of the human soul and of its noblest faculties leads one to hope for and expect? I am far from making such a claim. Let us assume the universal diffusion of this defensive system of ethics, which is, after all, nothing but the acknowledgment that the rightly understood interests of all men are consonant with justice and the general welfare. A society based on such principles, although certainly well regulated, might not be very attractive; for it would be one in which there would no longer be any swindlers only because there would no longer be any dupes; where vice, always latent and, so to speak, enervated by famine, would need only a little sustenance to revive; where prudence on the part of everyone would be enjoined by the vigilance of everyone else; where, in short, reform, although regulating external acts, would not have penetrated beneath the surface to the consciences of men. We sometimes see such a society typified in one of those sticklers for exact justice who are prepared to resist the slightest infringement of their rights and are skillful at warding off encroachments from any quarter. You respect and may, perhaps, even admire him; you would choose him as your deputy, but you would not choose him as your friend.

II.2.46

These two systems of ethics, instead of engaging in mutual recriminations, should be working together to attack evil at each of its poles. While the economists are doing their work—opening the eyes of the credulous, uprooting prejudices, arousing justifiable and necessary mistrust of every type of fraud, studying and describing the true nature of things and actions—let the religious moralist, on his part, perform his more agreeable, but more difficult, task. Let him engage in hand-to-hand combat with iniquity; let him pursue it into the most secret recesses of the human heart; let him depict the delights of beneficence, self-denial, and self-sacrifice; let him tap the springs of virtue where we can but dry up the springs of vice—that is his task. It is a noble and glorious one. But why should he dispute the utility of the one that has devolved upon us?

II.2.47

Would not a society that, without being intrinsically virtuous, was nevertheless well regulated by the action of the economic system of ethics (by which I mean nothing more than knowledge of political economy), offer opportunities for the progress of religious morality?

II.2.48

Habit, it has been said, is a second nature.

II.2.49

A country in which everyone has been long unaccustomed to injustice solely as a result of the resistance of enlightened public opinion might still be a sorry place to live in. But it seems to me that it would at least be ready to receive precepts of a purer and higher order. To have become unaccustomed to doing evil is already to have taken a long stride toward becoming good. Men cannot remain stationary. Turned aside from the path of vice, which would lead only to ignominy, they would feel the attraction of virtue all the more.

II.2.50

Perhaps society must pass through this prosaic stage, in which men practice virtue out of self-interest, so that they may thence rise to the more poetic sphere in which they will no longer have need of such a motive.


Notes for this chapter


10.
[Alfonso X (the Learned), ruler of Castile from 1252 until 1284, a weak king but a man of encyclopedic interests. He is supposed once to have observed, as Bartlett's Familiar Quotations has it: "Had I been present at the Creation, I would have given some useful hints for the better ordering of the universe."—TRANSLATOR.]
11.
[In Molière's comedy, Tartuffe, or the Impostor, Tartuffe is the scheming hypocrite, and Orgon his well-meaning dupe.—TRANSLATOR.]
12.
[The African problem constituted a series of costly military expeditions by the French to conquer Algeria.—TRANSLATOR.]
13.
[François Pierre Guillaume Guizot (1787-1874), French statesman and historian, chief rival of Thiers for political power in the 1840's. He urged the French people to devote themselves to making money, opposed domestic reforms, and was friendly toward Britain.—TRANSLATOR.]

Second Series, Chapter 3

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Second Series, Chapter 3

The Two Hatchets

Petition of Jacques Bonhomme,14* Carpenter,
to M. Cunin-Gridaine,15* Minister of Commerce

II.3.1

Mr. Manufacturer and Cabinet Minister:

II.3.2

I am a carpenter, as Jesus was; I wield the hatchet and the adze to serve you.

II.3.3

Now, while I was chopping and hewing from dawn to dusk on the states of our lord the king, it occurred to me that my labor is as much a part of our domestic industry as yours.

II.3.4

And ever since, I have been unable to see any reason why protection should not come to the aid of my woodyard as well as your factory.

II.3.5

For after all, if you make cloth, I make roofs. We both, in different ways, shelter our customers from the cold and the rain.

II.3.6

Yet I have to run after my customers, whereas yours run after you. You have found a way of forcing them to do so by preventing them from supplying themselves elsewhere, while my customers are free to turn to whomever they like.

II.3.7

What is so astonishing about this? M. Cunin, the cabinet minister, has not forgotten M. Cunin, the textile manufacturer: that is only natural. But, alas, my humble craft has given no cabinet minister to France, although it did give a God to the world.

II.3.8

And in the immortal code this God bequeathed to man, there is not the slightest expression that could be interpreted as authorizing carpenters to enrich themselves at the expense of others, as you do.

II.3.9

Consider my position, then. I earn thirty sous a day, except Sundays and holidays. If I offer you my services at the same time as a Flemish carpenter offers you his, and if he is prepared to work for a sou less than I, you will prefer him.

II.3.10

But suppose I want to buy myself a suit of clothes? If a Belgian textile manufacturer offers his cloth on the market in competition with yours, you drive both him and his cloth out of the country.

II.3.11

Thus, forced to enter your shop, although it is the more expensive, my poor thirty sous are really worth only twenty-eight.

II.3.12

What am I saying! They are not worth more than twenty-six, for instead of expelling the Belgian manufacturer at your expense (which would be the very least you could do), you make me pay for the people whom, in your interest, you set at his heels.

II.3.13

And since a great number of your fellow legislators, with whom you have a perfect understanding, each takes from me a sou or two—one under the pretext of protecting iron; another, coal; this one, oil; and that one, wheat—I find, when everything is taken into account, that of my thirty sous I have been able to save only fifteen from being plundered.

II.3.14

You will doubtless tell me that these little sous, which pass in this way, without compensation, from my pocket to yours, provide a livelihood for the people around your castle and enable you to live in grand style. May I point out to you in reply that if you left the money in my hands, it would have provided a livelihood for the people around me.

II.3.15

Be that as it may, Mr. Cabinet Minister and Manufacturer, knowing that I should be ill-received, I do not come to you and demand, as I have a full right to do, that you withdraw the restriction you are imposing on your customers; I prefer to follow the prevailing fashion and claim a little protection for myself.

II.3.16

At this point, you will raise a difficulty for me: "My friend," you will tell me, "I should really like to protect you and others of your craft; but how are we to go about conferring tariff benefits upon the work of carpenters? Are we to forbid the importation of houses by land or by sea?"

II.3.17

This would quite obviously be absurd; but, by dint of much reflection on the matter, I have discovered another means of benefiting the sons of St. Joseph; and you will welcome it all the more readily, I hope, as it in no way differs from the means you employed in maintaining the privilege that you vote for yourself every year.

II.3.18

The wonderful means I have in mind consists in forbidding the use of sharp hatchets in France.

II.3.19

I maintain that this restriction would be no more illogical or more arbitrary than the one to which you subject us in the case of your cloth.

II.3.20

Why do you drive out the Belgians? Because they undersell you. And why do they undersell you? Because they are in some respect superior to you as textile manufacturers.

II.3.21

Between you and a Belgian, consequently, there is exactly the same difference as between a dull hatchet and a sharp hatchet.

II.3.22

And you are forcing me—me, a carpenter—to buy from you the product of a dull hatchet.

II.3.23

Look upon France as a workman who is trying, by his labor, to obtain everything he needs, including cloth.

II.3.24

There are two possible ways of doing this:

II.3.25

The first is to spin and weave the wool himself.

II.3.26

The second is to produce other commodities—for instance, clocks, wallpaper, or wine—and to exchange them with the Belgians for the cloth.

II.3.27

Of these two procedures the one that gives the better result may be represented by the sharp hatchet; the other, by the dull hatchet.

II.3.28

You do not deny that at present, in France, it requires more labor to obtain a piece of cloth directly from our looms (the dull hatchet) than indirectly by way of our vines (the sharp hatchet). You are so far from denying this that it is precisely because of this additional toil (which, according to you, is what wealth consists in) that you request, nay more, you impose, the use of the poorer of the two hatchets.

II.3.29

Now, at least be consistent; be impartial; and if you mean to be just, give us poor carpenters the same treatment you give yourself.

II.3.30

Enact a law to this effect:

II.3.31

"No one shall use beams or joists save those produced by dull hatchets."

II.3.32

Consider what the immediate consequences will be.

II.3.33

Where we now strike a hundred blows with the hatchet, we shall then strike three hundred. What we now do in one hour will take three hours. What a mighty stimulus to employment! Apprentices, journeymen, and masters, there will no longer be enough of us. We shall be in demand, and therefore well paid. Whoever wants to have a roof made will be henceforth obliged to accept our demands, just as whoever wants cloth today is obliged to submit to yours.

II.3.34

And if the free-trade theorists ever dare to call into question the utility of this measure, we shall know perfectly well where to find a crushing retort. It is in your parliamentary report of 1834. We shall beat them over the head with it, for in it you have made a wonderful plea on behalf of protectionism and of dull hatchets, which are simply two names for one and the same thing.


Notes for this chapter


14.
[The nickname for French peasants as a class.—TRANSLATOR.]
15.
[Laurent Cunin-Gridaine (1778-1859), a textile manufacturer, Deputy, Minister of Commerce, and extreme advocate of protectionist policies.—TRANSLATOR.]

Second Series, Chapter 4

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Second Series, Chapter 4

Subordinate Labor Council

II.4.1

"What! You have the effrontery to demand for all citizens the right to buy, sell, barter, and exchange, to render and receive service for service, and settle on the price among themselves, on the sole condition that they carry on these transactions honestly and pay their taxes? What are you trying to do—deprive workingmen of their jobs, their wages, and their bread?"

II.4.2

This is what people say to us. I know what to think of it myself, but I wanted to know what the workers themselves think of it.

II.4.3

I had at hand an excellent instrument of inquiry.

II.4.4

It was not one of those supreme industrial councils, where big landlords who call themselves farmers, influential shipowners who think of themselves as sailors, and wealthy stockholders who pretend to be laborers, practice their well-known form of humanitarianism.

II.4.5

No; it was bona fide workingmen, real workingmen, as they say today—joiners, carpenters, masons, tailors, shoemakers, dyers, blacksmiths, innkeepers, grocers, etc., etc.—who in my village have established a mutual-aid society.

II.4.6

I transformed it, by my own personal authority, into a subordinate labor council, and I obtained from it a report that is worth quite as much as any other, though it is not crammed with figures and inflated to the dimensions of a quarto volume printed at government expense.

II.4.7

My aim was to interrogate these good people in regard to the way in which they are, or think they are, affected by the policy of protectionism. The president pointed out to me that this would violate to some extent the principles on which the association was founded. For, in France, in this land of freedom, people who associate give up their right to discuss politics—that is, to take counsel together concerning their common interests. However, after a great deal of hesitation, he agreed to put the question on the agenda.

II.4.8

The council was divided into as many committees as there were groups representing different trades. Each was given a form to be filled out after fifteen days of discussion.

II.4.9

On the designated day, the venerable president took the chair (we are adopting the official style, for in fact it was nothing more than an ordinary kitchen chair), and took from the table (official style again, for it was a table of poplar wood) about fifteen reports, which he read one after another.

II.4.10

The first one submitted was that of the tailors. Here is an exact and authentic copy of its text:

EFFECTS OF PROTECTION—REPORT OF THE TAILORS
Disadvantages
Advantages
1. As a result of the policy of protectionism, we are paying more for bread, meat, sugar, wood, needles, thread, etc., which is equivalent in our case to a considerable loss of income. None.*
2. As a result of the policy of protectionism, our customers also pay more for everything, which leaves them less to spend on clothing. This means less business for us, and therefore smaller profits.
3. As a result of the policy of protectionism, cloth is expensive, so that people put off buying clothes for a longer time and make do with what they have. This again means less business for us and compels us to offer our services at a lower price. * In spite of all our efforts, we found it impossible to discover any respect whatsoever in which the policy of protectionism is of advantage to our business.

II.4.11

Here is another report:

EFFECTS OF PROTECTION—REPORT OF THE BLACKSMITHS
Disadvantages
Advantages
1. Every time we eat, drink, heat our homes, and buy clothing, the policy of protectionism imposes on us a tax that never reaches the treasury. None.
2. It imposes a similar tax on all our fellow citizens who are not blacksmiths; and since they have that much less money, most of them use wooden pegs for nails and a piece of string for a latch, which deprives us of employment.
3. It keeps iron at such a high price that it is not used on farms for plows, gates, or balconies; and our craft, which could provide employment for so many people who need it, does not provide us even with enough for ourselves.
4. The revenue that the tax collector fails to realize from duties on foreign goods that are not imported into the country is added to the tax we pay on salt and postage.  

II.4.12

As the same refrain recurs in all the other reports, I spare the reader their perusal. Gardeners, carpenters, shoemakers, clogmakers, boatmen, millers—all gave vent to the same grievances.

II.4.13

I regret that there were no farmers in our association. Their report would certainly have been very instructive.

II.4.14

But alas, in our section—the Landes16*—the poor farmers, well protected though they are, do not have a sou, and after they have insured their livestock, they themselves lack the means of joining a mutual-aid society. The alleged benefits of protection do not prevent them from being the pariahs of our social order. What shall I say of the vineyardists?

II.4.15

What I find particularly noteworthy is the good sense which our villagers showed in perceiving not only the direct injury that the policy of protectionism inflicts on them, but also the indirect injury that, after first affecting their customers, rebounds upon them.

II.4.16

This, I said to myself, is what the economists of the Moniteur industriel apparently do not understand.

II.4.17

And perhaps those—the farmers in particular—whose eyes are dazzled by a little protection would be willing to give it up if they could see this side of the question.

II.4.18

Perhaps they would say to themselves: "It is better to support oneself by one's own efforts and have customers who are well off than to be protected and have customers who are impoverished."

II.4.19

For to seek to enrich each industry in turn by creating a void around one after another is as futile an endeavor as trying to leap over one's own shadow.


Notes for this chapter


16.
[A department in southwestern France.—TRANSLATOR.]

Second Series, Chapter 5

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Second Series, Chapter 5

High Prices and Low Prices17*

II.5.1

I feel it my duty to present to the reader certain—alas, theoretical—comments on the illusions to which the expressions high prices and low prices give rise. At first glance, I know, people may be inclined to consider these comments a little abstruse; but the question is, not whether they are abstruse, but whether they are true. Now, I believe that they are not only perfectly true but particularly well suited to raise some doubts in the minds of those—by no means few in number—who have a sincere faith in the efficacy of protectionism.

II.5.2

Whether we are advocates of free trade or proponents of restrictive measures, we are all obliged to make use of the expressions high prices and low prices. The former proclaim themselves in favor of low prices, with a view to the interests of the consumer; the latter declare themselves in favor of high prices, having regard for the interests of the producer. Others take a middle position and say: "The producer and the consumer are one and the same person"; thereby leaving it quite undecided whether the law should aim at high prices or at low.

II.5.3

Faced with this conflict, the law, it would seem, has only one alternative, and that is to permit price to be arrived at naturally. But then one has to meet the objections of the implacable enemies of laissez faire. They absolutely insist that the law intervene, even without knowing in what direction. Yet it is incumbent upon those who want to use the law for the purpose of creating artificially high or unnaturally low prices to explain the grounds of their preference. The burden of proof rests exclusively upon them. Hence, it follows that free trade is always to be deemed good until the contrary is proved, for free trade consists in allowing prices to be arrived at naturally.

II.5.4

But the roles have been reversed. The advocates of high prices have succeeded in making their system prevail, and it is incumbent upon the proponents of natural prices to prove the superiority of theirs. On both sides the argument turns on the meaning of two expressions, and it is therefore essential to ascertain just what these two expressions really mean.

II.5.5

But first we must call attention to a series of events that may well disconcert the champions of both camps.

II.5.6

In order to raise prices, the restrictionists have obtained protective tariffs; and, much to their surprise and disappointment, prices have fallen.

II.5.7

In order to reduce prices, the freetraders have sometimes succeeded in securing the adoption of their program, and, to their great astonishment, what followed was a rise in prices.

II.5.8

For example, in France, in order to favor agriculture, a duty of twenty-two per cent was imposed on foreign wool; and yet domestic wool has been selling at a lower price after the law than it did before.

II.5.9

In England, for the relief of the consumer, the duty on wool was reduced and finally removed entirely; and yet the price of English wool is higher than ever before.

II.5.10

And these are not isolated cases, for there is nothing unique about the price of wool that exempts it from the general law governing all prices. The same result is produced whenever the circumstances are analogous. Contrary to every expectation, a protective tariff has more often brought about a fall, and competition more often a rise, in commodity prices.

II.5.11

Then the debate reached the height of confusion with the protectionists saying to their adversaries: "It is our system that brings about these low prices of which you boast so much," and the latter replying: "It is free trade that brings about those high prices that you find so advantageous."18*

II.5.12

Would it not be amusing to see low prices in this way become the password in the rue Hauteville, and high prices in the rue Choiseul?19*

II.5.13

Evidently there is in all this a misunderstanding, an illusion, that needs to be dispelled, and this is what I shall now attempt to do.

II.5.14

Imagine two isolated nations, each containing a million inhabitants. Suppose that, other things being equal, one of them has twice as much of everything—wheat, meat, iron, furniture, fuel, books, clothing, etc.—as the other. Evidently, then, one is twice as rich as the other.

II.5.15

However, there is no reason to assert that money prices will differ in these two countries. They may even be higher in the richer country. It may be that in the United States everything is nominally more expensive than in Poland, and that the American people are nevertheless better provided in all respects; whence we see that what constitutes wealth is, not the money prices of goods, but their abundance. Hence, when we wish to compare protectionism and free trade, we should not ask which of the two produces low prices and which produces high prices, but which leads to abundance and which leads to scarcity.

II.5.16

For it should be noted that, when products are exchanged, a relative scarcity of everything and a relative abundance of everything leave the money prices of things at exactly the same point, but not the relative condition of the inhabitants of the two countries.

II.5.17

Let us enter a little more deeply into this subject.

II.5.18

When tariff increases and reductions are found to produce effects directly contrary to those expected of them—a fall in prices often following a higher duty, and a rise in prices sometimes accompanying the removal of a duty—it becomes the obligation of political economy to seek an explanation of phenomena that controvert all our accepted ideas; for needless to say, science—if it is to be worthy of the name—is but the faithful description and correct explanation of events.

II.5.19

Now, the one that we are examining here can be quite satisfactorily accounted for by a circumstance that must never be lost sight of, namely, that high prices have two causes, and not just one.

II.5.20

The same is true of low prices.20*

II.5.21

One of the best-established principles of political economy is that prices are determined by the relation between supply and demand.

II.5.22

There are, then, two factors that influence prices: supply and demand. These factors are inherently variable. They can work together in the same direction, or they can work in opposite directions, and in infinitely varied proportions in either case. Hence, prices are the resultant of an inexhaustible number of combinations of these two factors.

II.5.23

Prices may rise, either because the supply diminishes or because the demand increases.

II.5.24

They may fall, either because the supply increases or because the demand diminishes.

II.5.25

Hence, there are two types of high prices and two types of low prices.

II.5.26

High prices of the bad type are the results of diminution in the supply, for this implies scarcity and therefore privation (such as was experienced this year in regard to wheat); high prices of the good type result from an increase in demand, for this presupposes a rise in the general level of prosperity.

II.5.27

In the same way, low prices are desirable when they have their source in abundance, and are lamentable when they are caused by a cessation in demand resulting from the poverty of the consumer.

II.5.28

Now, please observe that a policy of protectionism tends to produce, at the same time, both the bad type of high prices and the bad type of low prices: the bad type of high prices, in that it diminishes the supply of goods—which, indeed, is its avowed purpose; and the bad type of low prices, in that it also reduces demand, since it encourages unwise investment of both capital and labor, and burdens the consumer with taxes and restrictions.

II.5.29

Hence, so far as prices are concerned, these two tendencies neutralize each other; and that is why this system, which restricts demand at the same time as supply, does not in the long run result even in the high prices that are its object.

II.5.30

But, so far as the condition of the population is concerned, these two tendencies do not neutralize each other; on the contrary, they co-operate in making it worse.

II.5.31

The effect of free trade is precisely the opposite. In its general consequences, it may likewise fail to result in the low prices it was intended to produce; for it, too, has two tendencies, the one toward a desirable reduction in prices effected by an increase in the supply, i.e., by way of abundance, and the other toward an appreciable rise in prices resulting from an increase in demand, i.e., in general wealth. These two tendencies neutralize each other in regard to money prices; but they co-operate in improving the well-being of the population.

II.5.32

In short, in so far as a policy of protectionism is put into effect, men retrogress toward a state of affairs in which both supply and demand are enfeebled; under a system of free trade, they advance toward a state of affairs in which both supply and demand increase together without necessarily affecting money prices. Such prices are not a good criterion of wealth. They may very easily remain the same, whether society sinks into the most abject poverty or advances to a high level of prosperity.

II.5.33

The following remarks may serve to illustrate this point briefly.

II.5.34

A farmer in the south of France thinks he has the treasures of Peru in his hand because he is protected by tariffs from foreign competition. It makes no difference that he is as poor as Job; he nonetheless believes that sooner or later the policy of protectionism will make him rich. In these circumstances, if the question is put to him, in the terms in which it was framed by the Odier Committee: "Do you want to be subject to foreign competition—yes or no?" his first reaction is to answer, "No," and the Odier Committee21* proudly gives wide publicity to his answer.

II.5.35

However, one must probe a little more deeply into the matter. Unquestionably, foreign competition—and indeed, competition in general—is always irksome; and if one branch of industry alone could get rid of it, business in that branch would for some time be very profitable.

II.5.36

But protection is not an isolated privilege; it is a system. If it tends to create, to the profit of the farmer, a scarcity of grain and of meat, it tends also to create, to the profit of other producers, a scarcity of iron, of cloth, of fuel, of tools, etc. that is, a scarcity of everything.

II.5.37

Now, if the scarcity of wheat tends to raise its price on account of the diminution in the supply, the scarcity of all the other commodities for which wheat is exchanged tends to lower the price of wheat on account of the diminution in demand; so that it is by no means certain that in the long run the price of wheat will be one centime higher than under a system of free trade. All that is certain is that, since there is less of everything in the country, everyone will be less well provided in every respect.

II.5.38

The farmer really ought to ask himself whether it would not be better for him if a certain quantity of wheat and livestock were imported from abroad, so long as, on the other hand, he was surrounded by a well-to-do population, able to consume and pay for all sorts of agricultural products.

II.5.39

Suppose there were a department in France in which the inhabitants were clothed in rags, dwelt in hovels, and lived on chestnuts. How could you expect agriculture to flourish there? What could you make the earth produce with any reasonable hope of fair return? Meat? It would form no part of their diet. Milk? They would have to be content to drink water. Butter? For them it would be a luxury. Wool? They would use as little of it as possible. Is it to be supposed that all these consumers' goods could be thus forgone by the masses without exerting a downward pressure on prices concomitantly with the upward pressure exerted by protectionism?

II.5.40

What we have said of the farmer is just as true of the manufacturer. Textile manufacturers assert that foreign competition will lower prices by increasing the supply. Granted; but will not these prices rise again as a result of an increase in demand? Is the consumption of cloth a fixed, invariable quantity? Does everyone have as much of it as he could and should have? And if the general level of prosperity was raised by the abolition of all these taxes and restrictions, would not the first use that people would make of the money be to clothe themselves better?

II.5.41

The problem—the eternal problem—then, is not whether protectionism favors this or that particular branch of industry; but whether, all things considered, restriction is, by its very nature, more productive than free trade.

II.5.42

Now, no one ventures to maintain this. Otherwise people would not always be granting that we are "right in principle."

II.5.43

If this is the case, if restriction is advantageous to each particular branch of industry only by impairing the general well-being to an even greater extent, we must conclude that money prices in themselves express a relation between each particular branch of industry and industry in general, between supply and demand, and, accordingly, that a remunerative price, which is the object of protectionism, far from being realized by such a policy, is actually rendered impossible by it.22*

Addendum

II.5.44

The article that we published under the title, "High Prices and Low Prices," has brought us the following two letters, which we present here, together with our replies:

II.5.45

Dear Editor:
You are upsetting all my ideas. I used to be a staunch champion of free trade and found it very persuasive to use low prices as an argument. Everywhere I went, I used to say: "Under a system of free trade, bread, meat, wool, linen, iron, and fuel are going to be cheaper." This displeased those who sold these commodities, but pleased those who bought them. Now you are raising doubts about whether free trade will, in fact, result in low prices. If not, of what use is it? What will people gain by it, if foreign competition, which can injure them in their sales, brings them no advantage in their purchases?

II.5.46

Dear Freetrader:

II.5.47

Allow us to inform you that you only half read the article that inspired your letter. We said that free trade acts in the same way as roads, canals, railways, and everything else that facilitates communication by removing obstacles. Its first tendency is to increase the supply of the duty-free commodity, and consequently to lower its price. But, by increasing at the same time the supply of everything else for which this commodity may be exchanged, it concomitantly increases the demand for it, and its price accordingly goes up. You ask how people will gain by free trade. Suppose you have a balance consisting of several scales, in each of which there are a certain number of the items that you have enumerated. If you add a little wheat to one scale, it will tend to tip the balance; but if you add a little cloth, a little iron, and a little fuel to the other scales, the equilibrium will be restored. So far as the beam is concerned, nothing has changed. But so far as the people are concerned, they are evidently better fed, better clothed, and better housed.

II.5.48

Dear Editor:
I am a textile manufacturer and a protectionist. I confess that your article on "High Prices and Low Prices" is causing me to reconsider my position. It has a certain plausibility about it that would require only a conclusive proof to bring about a conversion.

II.5.49

Dear Protectionist:

II.5.50

We say that the object of your restrictive measures is something evil, namely, artificially high prices. But we do not say that they always realize the hopes of those who support them. It is certain that they inflict on the consumer all the evil consequences of high prices. But it is not certain that they invariably confer any of the expected benefits on the producer. Why? Because while they diminish the supply, they also diminish the demand.

II.5.51

This proves that in the economic arrangement of this world there is a moral force, a healing power, that makes unjust ambition ultimately meet with disappointment.

II.5.52

Be good enough to observe, sir, that one of the factors making for the prosperity of each individual branch of industry is the general wealth of the community. The price of a house depends not only on its original cost but also on the number and economic status of the occupants. Do two houses that are exactly similar necessarily have the same price? Certainly not, if one is situated in Paris and the other in Lower Brittany. One should never speak of price without taking all the relevant circumstances into consideration, and one should recognize quite clearly that no undertaking is more futile than that of trying to base the prosperity of the parts on the ruination of the whole. And yet this is what the policy of protectionism seeks to do.

II.5.53

Competition always has been and always will be troublesome to those who have to meet it. That is why men have always and everywhere struggled to rid themselves of it. We (and perhaps you, too) are acquainted with a municipal council in which the resident merchants wage violent war on nonresident merchants. Their projectiles are their exactions for local permits to stall animals, for licenses to set up stands for the sale of goods, for bridge-tolls, etc., etc.

II.5.54

Now, consider what would have become of Paris if this war had been waged successfully there.

II.5.55

Suppose that the first shoemaker who established himself there had succeeded in keeping out all others; that the first tailor, the first mason, the first printer, the first watchmaker, the first hairdresser, the first doctor, and the first baker had all likewise been successful in maintaining a monopoly on their services. Paris today would still be a village of from 1,200 to 1,500 inhabitants. Instead, the market has been open to everyone (save those whom you still debar), and this is precisely what has made it the great metropolis it is today. For the enemies of competition it has meant only a long series of vexations; but it has made Paris a city of a million inhabitants. No doubt it has raised the general level of prosperity; but has it been detrimental to the individual prosperity of the shoemakers and the tailors? That is the essential question you have to ask yourself. As competitors arrived, you would have said, "The price of shoes is going to fall." But has it fallen? No; for if the supply has increased, the demand has increased as well.

II.5.56

The same will be true of cloth, sir; let it be imported duty-free. You will have more competitors, it is true; but you will also have more customers, and what is more, they will be richer. Has this never occurred to you on seeing nine-tenths of your fellow countrymen in the winter obliged to do without that cloth which you weave so well?

II.5.57

If you wish to prosper, let your customer prosper. This is a lesson it has taken you a very long time to learn.

II.5.58

When people have learned this lesson, everyone will seek his individual welfare in the general welfare. Then jealousies between man and man, city and city, province and province, nation and nation, will no longer trouble the world.


Notes for this chapter


17.
[This chapter first appeared as an article in Le Libre échange, issue of July 25, 1847.—EDITOR.]
18.
Recently M. Duchâtel,* who had formerly advocated free trade, with a view to low prices, stated in the Chamber, "It would not be difficult for me to prove that protectionism results in low prices."

    * [Charles Jacques Marie Tanneguy, Comte de Duchâtel (1803-1867), author of Considérations d'économie politique sur la bienfaisance (1836). He collaborated with Pierre Leroux and others in editing Le Globe, a political and literary review, served as a cabinet minister under the July monarchy, and was one of the promoters of the tariff reform of 1834.—TRANSLATOR.]
19.
[Bastiat himself lived for some time in the rue Choiseul, while the Odier Committee (see infra, p. 167) was established in the rue Hauteville.—TRANSLATOR.]
20.
[The author, in the speech he gave on September 29, 1846, at Montesquieu Hall, provided a striking illustration demonstrating this very principle. Cf. this speech in Vol. II (of the French edition).—EDITOR.]
21.
[The Committee for the Defense of Domestic Industry, a protectionist organization of which Antoine Odier (1766-1853), President of the Chamber of Commerce of Paris, a Deputy, and later a Peer of France, was one of the leaders.—TRANSLATOR.]
22.
[In Le Libre échange of August 1, 1847, the author presented an exposition of this topic that we deem worthy of reprinting here.—EDITOR.]

Second Series, Chapter 6

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