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Economic Harmonies
An inspiring exposition of the natural harmony that results when people are free to pursue their individual interests.
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First published January 1, 1850
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About the author
Frédéric Bastiat
594 books545 followersClaude Frédéric Bastiat (29 June 1801 – 24 December 1850) was a French classical liberal theorist, political economist, and member of the French assembly.
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July 19, 2021
Bastiat's last and (unfortunately) unfinished work, it might have been his greatest had he survived long enough to complete it. This is much deeper, a bit drier, and certainly a heavier read than Bastiat's other crystal clear and often entertaining illustrations of sound economic principles. Despite the age of this work, it remains as relevant today as when Bastiat first penned it. It might be Bastiat is the most under-read author on the topic today. I would recommend interested readers first peruse Economic Sophisms and Essays on political economy, both because they're easier reading and Bastiat presumes the reader of the present work has at least some familiarity with those ideas. Anyway, as this is an unfinished work, familiarity with the other works also helps to fill in the blanks here.
Bastiat sees the world acting in a harmony as created and ordained by God; he even sees the use of evil and suffering as working toward its own limitation, and humanity tending toward material progress and, largely, material improvement and the more or less equal distribution of real wealth. He shows the errors of alternative points of view and emphasizes how, in the absence of violence, all things tend toward this harmony. Those that advocate violence (or constraint) rather than liberty posit an antagonism between liberty and harmony (location 701).
Bastiat is not an absolute anarchist, and does not disown government as such. However, he uses a simple principle to limit the rightful role of any government:
The question then comes down to this: What are the things which men have a right to impose upon each other by force? Now, I know but one thing in this situation, and that is justice. I have no right to force any one whatever to be religious, charitable, well educated, or industrious; but I have a right to force him to be just,--this is a case of legitimate defense. (location 882-886)
Further: "All action of governments beyond this limit is a usurpation upon conscience, upon intelligence, upon industry; in a word, upon human liberty." (location 889-890)
Bastiat shows how each of us benefits immeasurably from our participation in human society and especially from the fruits of voluntary exchange, permitting each of us to specialize and divide labor, further advancing society as a whole and all its members. He shows up those who would replace voluntary exchange with some kind of coerced, controlled, organized method as those who would remake all human nature, and therefore the futility of it (unfortunately borne out again and again in history since then). They try persuasion, imposture, or outright violence, but in the end human nature prevails over their various utopias. Bastiat especially disagrees with Rousseau, Jean Jacques's vision of man's natural state as isolation and shows, rather, that man is a social animal and society is his natural state. In other words, "Association voluntary and progressive." (location 1198-1199) He also states it so:
In the state of isolation our wants exceed our powers; In the social state our powers exceed our wants. (location 1972-1974)
Bastiat claims God made man "capable of foresight and experience, perfectible, endued with self-love, it is true,--but self-love qualified by the sympathetic principle" (location 1291) leading to "a progressive march towards prosperity, improvement, and equality,--a sustained approximation of all classes toward the same physical, intellectual, and moral level, accompanied by a constant elevation of that level." (location 1294-1295)
Bastiat shows people suffer wants, which motivates them to take pains to achieve satisfaction. They can transfer the benefit of effort or labor to others as service, but both the wants and satisfactions are non-transferrable. The transfer of service becomes the basis of both voluntary exchange and plunder or slavery. Once two services are exchanged one for the other voluntarily, it can be said they are worth one another. Benefits that accrue gratuitously (like the sun or rain) are not worth anything, only that which stems from labor has value--therefore wilderness is worthless, but land only has value to the extent it has been improved through labor, for instance.
Because people have free will, than can choose wrongly or make errors. Evil and suffering are the consequence of wrong choices, which then steers people back to the right course, showing that evil tends to abolish itself, unless force is used to try and check the consequences of wrong decisions.
Bastiat shows up the fallacy of opposing machines, automation, or foreign imports--these things lead to abundance and wealth, and while they may temporarily dislocate the labor of some, the nature of man's desires ensures people will always find new employment satisfying new wants: "if human wants are indefinite, progressive, capable of increase, like desire, which is their never failing source, we must admit, under pain of introducing discordance and contradiction into the economical laws of society, that nature has placed in man and around him indefinite and progressive means of satisfaction." (location 1647-1650)
While Bastiat shows that the value of all things depend on the labor required to produce it (and make it available to the consumer), labor is not wealth. Rather, he who labors less for more satisfaction is the wealthier for it, and more able to exchange his abundance for the satisfaction of other wants, leading to a spread of whatever fortune he enjoys to others who do not (and hence, the trend toward equality). As to the value of service, it really stems from the trouble it would save the would-be buyer for doing something for himself or contracting another to do so, and therefore does not always depend on the actual amount of labor the would-be seller engaged in. A immaterial product (like security) can be valued, and an object that took its current possessor precious little labor to obtain (finding a diamond by chance, for instance) can also have great value by this reasoning.
In general, products lose value over time, as the trouble of producing them becomes easier with improvements in machinery, technique, etc., meaning that no matter how hard a person worked to produce something, its value to others generally tends to decline over time, "we may conclude that machinery and instruments of labor have a tendency to lose part of their value in consequence of the mere lapse of time, without taking into account their deterioration by use--and we may lay down this formula, that 'one of the effects of progress is to diminish the value of all existing instruments." (location 5471) Bastiat notes exceptions, whether it is in the aging of wine or the relative future scarcity of a thing, which would tend to make it more valuable.
Bastiat expands on the benefits of exchange, "In consequence of Exchange, the gain of each is the gain of all," (location 2353-2355) the proof of which is "each man is more likely to prosper in proportion to the general prosperity of the community in which he lives." (location 2367-2368) This leads Bastiat to conclude that "simplicity in government, respect for individual dignity, freedom of labor and exchange, peace among nations, security for persons and property, are all contained and shut up in this truth--Interests are harmonious." (location 2410-2413)
Bastiat predicted the troubles we are in today with bankrupt Greece and countries everywhere struggling under unsustainable debt and spending:
Where society consists of several grades, we are apt to think that people of the highest rank enjoy Privileges or Monopolies at the expense of all the other members of the community. This is odious, but it is not absurd. The second grade, the class immediately below the first, will not fail to attack and batter down monopolies...they will succeed sooner or later in brining about a Revolution. In that case, power passes into their hands, and they still think that power implies Monopoly...But then the masses, emaciated, ground down, trampled upon, must also have their revolution...in their turn demand to be privileged...Monopolies to the masses...Monopoly implies some one to enjoy it, and some one to pay for it...Will you never comprehend the whimsical mystification of which you are the dupes? Will you never understand that the state can give you nothing with the one hand but what it has taken from you with the other? (location 2489-2509)
In short: "the final result of the operation must be an arbitrary Government, more vexatious, more exacting, more uncertain, more expensive;--heavier taxes,--more injustice, more offensive favoritism,--liberty more restrained,--power thrown away,--occupations, labor, and capital displaced,-covetousness excited,--discontent provoked,--and individual energy extinguished?" (location 2509-2512) Or, "there is nothing which the State can give gratuitously." (location 5037)
Returning to more economic matters, Bastiat finds another harmony in wealth:
By labor the actions of man is combined with the action of nature. Utility results from that cooperation. Each man receives a share of the general utility proportioned to the value he has created,--that is to say, to the services he has rendered; in other words, to the utility he has himself produced. (location 3927-3930)
As to the morality of wealth, while Bastiat typically tries to avoid moral questions per se, he sees a certain overarching morality in the harmonies he explains, and he answers this question by observing the general practice: "all men endeavoring to emerge from their original state of poverty,--all preferring the sensation of satisfaction to the sensation of want, riches to poverty; all, I should say, or almost all, without excepting even those who declaim against wealth." (location 3940-3941)
Bastiat reprises familiar arguments about capital and interest, then shows how the accumulation of capital actually works toward harmony by marginally benefitting the person lacking capital more than the accumulator: In proportion to the increase of Capital, the absolute share of the total product falling to the capitalist is augmented, and his relative share is diminished; while, on the contrary, the laborer's share is increased both absolutely and relatively." (location 4328) This is true because "the more abundant capital becomes, the more interest falls." (location 4350)
Bastiat explores a great many other topics, land, rent, wages, competition, savings, and so on, some of which repeats ideas he dealt with in other works, some of which is original in this work, but all of which is wrapped around the idea of a natural harmony ordained by God to have all things work for the greater and eventual good, should they be allowed to.
Bastiat deals with more advanced topics, like population, where he takes on Malthus, and public services versus private services. He examines the cases where it might be permissible for the state to undertake to provide public services, along with the negative inescapable if unintended effects of doing so. He notes, "as Government acts only by the intervention of force, its action is legitimate only where the intervention of force is itself legitimate." (location 883788-38) In addition to watching over public security, Bastiat allows for the administration of common property and the levying of taxes.
Despite his faith in harmony, Bastiat allows for evil and injustice, brought about by error. However, the evil consequences of error and the suffering it brings about provides "warnings, corrections, experience, knowledge," (location 9058-9061) which tends to correct people's behavior and lead to the reduction of evil.
Bastiat explores the concept of responsibility, noting that there are natural sanctions that come as a natural reward or punishment of action, religious sanction in terms of metaphysical consequences, and the legal sanction, brought on by action of the law. He expresses confidence that the divine law is in accordance with the natural law, given God is creator of both. However, he notes "when a legal sanction is brought into play, it ought only to be to give more force, regularity, certainty, and efficacy to the natural sanction. These two powers should cooperate, and not run counter to each other." (location 9632-9633) He expands,
The machinery of the legal sanction comes from men, is worked by men, and is costly. Before submitting an action or a habit to organized repression, there is always this question to be asked:--
Does the excess of good which is obtained by the addition of legal repression to natural repression compensate the evil which is inherent in the repressive machinery?
In other words, is the evil of artificial repression greater or less than the evil of impunity?
In the cases of theft, or murder, of the greater part of crimes and delicts, the question admits of no doubt. Every nation of the earth represses these crimes by public force. But when we have to do with a habit which it is difficult to account for, and which may spring from moral causes of a delicate appreciation, the question is different, and it may very well be that, although this habit is universally esteemed hurtful and vicious, the law should remain neuter and hand it over to natural responsibility. (location 9647-9655)
Definitely a must read for anyone who cares about what is happening in the world today, how things have gone wrong, how they can be set right again. However, both its lengthier, more serious philosophical tone and its incomplete state make it a read-last work of Bastiat; read his other works first!
Bastiat sees the world acting in a harmony as created and ordained by God; he even sees the use of evil and suffering as working toward its own limitation, and humanity tending toward material progress and, largely, material improvement and the more or less equal distribution of real wealth. He shows the errors of alternative points of view and emphasizes how, in the absence of violence, all things tend toward this harmony. Those that advocate violence (or constraint) rather than liberty posit an antagonism between liberty and harmony (location 701).
Bastiat is not an absolute anarchist, and does not disown government as such. However, he uses a simple principle to limit the rightful role of any government:
The question then comes down to this: What are the things which men have a right to impose upon each other by force? Now, I know but one thing in this situation, and that is justice. I have no right to force any one whatever to be religious, charitable, well educated, or industrious; but I have a right to force him to be just,--this is a case of legitimate defense. (location 882-886)
Further: "All action of governments beyond this limit is a usurpation upon conscience, upon intelligence, upon industry; in a word, upon human liberty." (location 889-890)
Bastiat shows how each of us benefits immeasurably from our participation in human society and especially from the fruits of voluntary exchange, permitting each of us to specialize and divide labor, further advancing society as a whole and all its members. He shows up those who would replace voluntary exchange with some kind of coerced, controlled, organized method as those who would remake all human nature, and therefore the futility of it (unfortunately borne out again and again in history since then). They try persuasion, imposture, or outright violence, but in the end human nature prevails over their various utopias. Bastiat especially disagrees with Rousseau, Jean Jacques's vision of man's natural state as isolation and shows, rather, that man is a social animal and society is his natural state. In other words, "Association voluntary and progressive." (location 1198-1199) He also states it so:
In the state of isolation our wants exceed our powers; In the social state our powers exceed our wants. (location 1972-1974)
Bastiat claims God made man "capable of foresight and experience, perfectible, endued with self-love, it is true,--but self-love qualified by the sympathetic principle" (location 1291) leading to "a progressive march towards prosperity, improvement, and equality,--a sustained approximation of all classes toward the same physical, intellectual, and moral level, accompanied by a constant elevation of that level." (location 1294-1295)
Bastiat shows people suffer wants, which motivates them to take pains to achieve satisfaction. They can transfer the benefit of effort or labor to others as service, but both the wants and satisfactions are non-transferrable. The transfer of service becomes the basis of both voluntary exchange and plunder or slavery. Once two services are exchanged one for the other voluntarily, it can be said they are worth one another. Benefits that accrue gratuitously (like the sun or rain) are not worth anything, only that which stems from labor has value--therefore wilderness is worthless, but land only has value to the extent it has been improved through labor, for instance.
Because people have free will, than can choose wrongly or make errors. Evil and suffering are the consequence of wrong choices, which then steers people back to the right course, showing that evil tends to abolish itself, unless force is used to try and check the consequences of wrong decisions.
Bastiat shows up the fallacy of opposing machines, automation, or foreign imports--these things lead to abundance and wealth, and while they may temporarily dislocate the labor of some, the nature of man's desires ensures people will always find new employment satisfying new wants: "if human wants are indefinite, progressive, capable of increase, like desire, which is their never failing source, we must admit, under pain of introducing discordance and contradiction into the economical laws of society, that nature has placed in man and around him indefinite and progressive means of satisfaction." (location 1647-1650)
While Bastiat shows that the value of all things depend on the labor required to produce it (and make it available to the consumer), labor is not wealth. Rather, he who labors less for more satisfaction is the wealthier for it, and more able to exchange his abundance for the satisfaction of other wants, leading to a spread of whatever fortune he enjoys to others who do not (and hence, the trend toward equality). As to the value of service, it really stems from the trouble it would save the would-be buyer for doing something for himself or contracting another to do so, and therefore does not always depend on the actual amount of labor the would-be seller engaged in. A immaterial product (like security) can be valued, and an object that took its current possessor precious little labor to obtain (finding a diamond by chance, for instance) can also have great value by this reasoning.
In general, products lose value over time, as the trouble of producing them becomes easier with improvements in machinery, technique, etc., meaning that no matter how hard a person worked to produce something, its value to others generally tends to decline over time, "we may conclude that machinery and instruments of labor have a tendency to lose part of their value in consequence of the mere lapse of time, without taking into account their deterioration by use--and we may lay down this formula, that 'one of the effects of progress is to diminish the value of all existing instruments." (location 5471) Bastiat notes exceptions, whether it is in the aging of wine or the relative future scarcity of a thing, which would tend to make it more valuable.
Bastiat expands on the benefits of exchange, "In consequence of Exchange, the gain of each is the gain of all," (location 2353-2355) the proof of which is "each man is more likely to prosper in proportion to the general prosperity of the community in which he lives." (location 2367-2368) This leads Bastiat to conclude that "simplicity in government, respect for individual dignity, freedom of labor and exchange, peace among nations, security for persons and property, are all contained and shut up in this truth--Interests are harmonious." (location 2410-2413)
Bastiat predicted the troubles we are in today with bankrupt Greece and countries everywhere struggling under unsustainable debt and spending:
Where society consists of several grades, we are apt to think that people of the highest rank enjoy Privileges or Monopolies at the expense of all the other members of the community. This is odious, but it is not absurd. The second grade, the class immediately below the first, will not fail to attack and batter down monopolies...they will succeed sooner or later in brining about a Revolution. In that case, power passes into their hands, and they still think that power implies Monopoly...But then the masses, emaciated, ground down, trampled upon, must also have their revolution...in their turn demand to be privileged...Monopolies to the masses...Monopoly implies some one to enjoy it, and some one to pay for it...Will you never comprehend the whimsical mystification of which you are the dupes? Will you never understand that the state can give you nothing with the one hand but what it has taken from you with the other? (location 2489-2509)
In short: "the final result of the operation must be an arbitrary Government, more vexatious, more exacting, more uncertain, more expensive;--heavier taxes,--more injustice, more offensive favoritism,--liberty more restrained,--power thrown away,--occupations, labor, and capital displaced,-covetousness excited,--discontent provoked,--and individual energy extinguished?" (location 2509-2512) Or, "there is nothing which the State can give gratuitously." (location 5037)
Returning to more economic matters, Bastiat finds another harmony in wealth:
By labor the actions of man is combined with the action of nature. Utility results from that cooperation. Each man receives a share of the general utility proportioned to the value he has created,--that is to say, to the services he has rendered; in other words, to the utility he has himself produced. (location 3927-3930)
As to the morality of wealth, while Bastiat typically tries to avoid moral questions per se, he sees a certain overarching morality in the harmonies he explains, and he answers this question by observing the general practice: "all men endeavoring to emerge from their original state of poverty,--all preferring the sensation of satisfaction to the sensation of want, riches to poverty; all, I should say, or almost all, without excepting even those who declaim against wealth." (location 3940-3941)
Bastiat reprises familiar arguments about capital and interest, then shows how the accumulation of capital actually works toward harmony by marginally benefitting the person lacking capital more than the accumulator: In proportion to the increase of Capital, the absolute share of the total product falling to the capitalist is augmented, and his relative share is diminished; while, on the contrary, the laborer's share is increased both absolutely and relatively." (location 4328) This is true because "the more abundant capital becomes, the more interest falls." (location 4350)
Bastiat explores a great many other topics, land, rent, wages, competition, savings, and so on, some of which repeats ideas he dealt with in other works, some of which is original in this work, but all of which is wrapped around the idea of a natural harmony ordained by God to have all things work for the greater and eventual good, should they be allowed to.
Bastiat deals with more advanced topics, like population, where he takes on Malthus, and public services versus private services. He examines the cases where it might be permissible for the state to undertake to provide public services, along with the negative inescapable if unintended effects of doing so. He notes, "as Government acts only by the intervention of force, its action is legitimate only where the intervention of force is itself legitimate." (location 883788-38) In addition to watching over public security, Bastiat allows for the administration of common property and the levying of taxes.
Despite his faith in harmony, Bastiat allows for evil and injustice, brought about by error. However, the evil consequences of error and the suffering it brings about provides "warnings, corrections, experience, knowledge," (location 9058-9061) which tends to correct people's behavior and lead to the reduction of evil.
Bastiat explores the concept of responsibility, noting that there are natural sanctions that come as a natural reward or punishment of action, religious sanction in terms of metaphysical consequences, and the legal sanction, brought on by action of the law. He expresses confidence that the divine law is in accordance with the natural law, given God is creator of both. However, he notes "when a legal sanction is brought into play, it ought only to be to give more force, regularity, certainty, and efficacy to the natural sanction. These two powers should cooperate, and not run counter to each other." (location 9632-9633) He expands,
The machinery of the legal sanction comes from men, is worked by men, and is costly. Before submitting an action or a habit to organized repression, there is always this question to be asked:--
Does the excess of good which is obtained by the addition of legal repression to natural repression compensate the evil which is inherent in the repressive machinery?
In other words, is the evil of artificial repression greater or less than the evil of impunity?
In the cases of theft, or murder, of the greater part of crimes and delicts, the question admits of no doubt. Every nation of the earth represses these crimes by public force. But when we have to do with a habit which it is difficult to account for, and which may spring from moral causes of a delicate appreciation, the question is different, and it may very well be that, although this habit is universally esteemed hurtful and vicious, the law should remain neuter and hand it over to natural responsibility. (location 9647-9655)
Definitely a must read for anyone who cares about what is happening in the world today, how things have gone wrong, how they can be set right again. However, both its lengthier, more serious philosophical tone and its incomplete state make it a read-last work of Bastiat; read his other works first!
December 10, 2024
Obra incompleta de Bastiat, pero solo leyendo las primeras páginas ves su gran genio económico. Una verdadera pena que sus ideas y su figura esten olvidadas para el gran público, porque para cualquiera de sus lectores, aunque este en desacuerdo con sus ideas, es un economista brillante y muy ingenioso.
November 26, 2018
It's a good book yet it's very dogmatic.
August 1, 2015
Frederic Bastiat interesting work. The author shows in it that the interests of the people in the free market are harmonious, and not antagonistic like socialists say. It is a classic of economics. It is worth noting that Bastiat is a precursor of the Austrian School of Economics. When for Ludwig von Mises the most important thing in the economy was human action, for Bastiat the most important thing was service provided for the other person and abolishing some pain. In fact it is almost the same. I recommend it to anyone. In addition, the book is available for free at:
http://files.libertyfund.org/files/79...
//polish
Ciekawa praca Frederica Bastiata. Autor wykazuje w niej, że interesy ludzi na wolnym rynku są harmonijne, a nie antagonistyczne jak to twierdzą socjaliści. Jest to klasyka ekonomii. Warto zwrócić uwagę na to, że Bastiat jest prekursorem Austriackiej Szkoły Ekonomii. Gdy dla Ludwiga von Misesa najważniejsze w gospodarce było ludzkie działanie, dla Bastiata najważniejsza była usługa świadczona drugiej osobie i znoszącej jakiś trud. Tak właściwie jest to prawie to samo. Polecam przeczytać to każdemu. Ponadto, książka jest udostępniona za darmo na stronie :
http://mises.pl/blog/2006/11/29/frede...
http://files.libertyfund.org/files/79...
//polish
Ciekawa praca Frederica Bastiata. Autor wykazuje w niej, że interesy ludzi na wolnym rynku są harmonijne, a nie antagonistyczne jak to twierdzą socjaliści. Jest to klasyka ekonomii. Warto zwrócić uwagę na to, że Bastiat jest prekursorem Austriackiej Szkoły Ekonomii. Gdy dla Ludwiga von Misesa najważniejsze w gospodarce było ludzkie działanie, dla Bastiata najważniejsza była usługa świadczona drugiej osobie i znoszącej jakiś trud. Tak właściwie jest to prawie to samo. Polecam przeczytać to każdemu. Ponadto, książka jest udostępniona za darmo na stronie :
http://mises.pl/blog/2006/11/29/frede...
May 20, 2014
This is an important contribution to economics and social theory prior to the marginalist revolution of Gossen, Menger, Walras and Jevons. It is the most famous classic of what H. Dunning Macleod called the "Third School of Political Economy." Though not a perfect work (it was not completed by the time of its author's death, and it does not solve the problem of utility and value — or complete the demand schedule idea in any but a suggestive way), it is nevertheless worth reading.
Very much so. W. S. Jevons rightly praised it as a forerunner to the correct theory of economics.
I wrote the foreword to the Laissez Faire Books ebook edition, which I highly recommend (of course). Go to LFB.org.
Very much so. W. S. Jevons rightly praised it as a forerunner to the correct theory of economics.
I wrote the foreword to the Laissez Faire Books ebook edition, which I highly recommend (of course). Go to LFB.org.
January 9, 2011
Unfinished masterpiece. Read Bastiat's introduction. It reads like scripture in parts.
February 4, 2014
Le quito una estrella por atribuirle TODO a la providencia.
June 24, 2020
Transmite el conocimiento con asombrosa claridad, una genialidad.
Displaying 1 - 8 of 8 reviews