Essays on Political Economy
Author: Frederick Bastiat
Translated from the French and Edited by: David A. Wells.
Newly set type of the 1877 Putnam edition.
Publisher's Commentary
The more things change, the more they stay the same. Reading these essays, which were written in the late 1840s, is like reading today's newspapers or listening to today's talk radio. Just change the names of the speakers, the political parties, and the media outlets, and you will recognize the issues and the debates immediately.
The first essay, Capital and Interest, addresses the topic of whether capital should earn interest, and why. Bastiat would be fascinated and horrified by today's central bankers' efforts to debase money and push interest rates to near-zero, then zero, and then to negative. He asserts that "neither the one [wages] nor the other [interest] will ever arrive at zero, for labor and capital can no more live without recompense than a sheep without a head". Have not the Socialists achieved their end? Will it not result in the destruction of capital? Will not this result in generations of misery for labor?
Bastiat may be best-known for the second essay That Which is Seen, and That Which is Not Seen. Although he does not appear to have invented the term, this essay is credited with outlining what is now known as opportunity cost, the cost of not taking an alternative to the path that was taken. He starts with the classic "broken window" illustration, and thoroughly debunks the notion that prosperity can be achieved by destruction, idleness, taxation, public spending, repression of middle-men, and even private spending.
The third essay, Government, addresses the folly of government being used to solve all problems, and the equal folly of trying to do so without taxation. He describes this as "the great fiction through which everybody endeavors to live at the expense of everybody else." He correctly points out that this is impossible, and the net result of attempts at such an enterprise are failure and continuous conflict and revolution. Credit (deficit spending) bridges that gap for a while, but ultimately leads to bankruptcy if the principle is maintained. This essay, along with That Which is (Not) Seen, addresses the folly of what today is called fiscal policy.
In What is Money?, the fourth essay, Bastiat addresses the fallacy that more money necessarily either causes or signals more prosperity. People with money but no bread will starve. Money is the reciprocal of the goods and services available. Doubling the quantity of money in a system simply reduces the value of each unit of it by 50%. After promising much and delivering less, spending more and taxing less (see Government), governments turn to the folly of monetary policy to stave off bankruptcy. The question for the central bankers of the world today is, in the zero-sum game of each country attempting to pay its debts with debauched currency, how long can credit exist? Bastiat shows that bankers and those who are financially sophisticated will find ways to protect themselves against inflation. The people hurt are the common folks, the folks who thought they were being helped by all of the spending. He ends the essay by asserting that State education is the cause of these economic fallacies: "All monopolies are detestable, but the worst of all is the monopoly of education."
The Law, essay five, is the gem of them all. Bastiat shows that when the law is perverted to do exactly what it was created to punish, civilization itself must fall. Justice and injustice become confused, political questions and contests have much more weight than they should, everyone tries to use the law to plunder his neighbor. Acknowledging God as the Author, Bastiat defines law as "the collective organization of the individual right to lawful defense," and demonstrates that it is frequently perverted by 1) bare egotism, and 2) false philanthropy. The effect in either case is legal plunder. When law attempts to be both just and philanthropic, it must fail. "The Socialists say, since the law organizes justice, why should it not organize labor, instruction, and religion? Why? Because it could not organize labor, instruction, and religion, without disorganizing justice." Perhaps most importantly, Bastiat demonstrates that Socialism's view of government to citizen is that of the gardener to his trees. It is impelled by an astounding arrogance that views citizens as raw material for social experimentation, that ultimately leads to despotism. French history in 1850 had already proven Bastiat correct, and world history since then has done nothing but underscore this great truth. Yet most modern Americans, like lemmings, follow either the Greater Socialist Party or the Lesser Socialist Party over the cliff. Bastiat ends the essay with this appeal: "And now, after having vainly inflicted upon the social body so many systems, let them [the Socialists] end where they ought to have begun: reject all systems, and make trial of liberty—of liberty, which is an act of faith in God and in His work."
Bastiat is not only a gifted economist, but a gifted teacher. Through the use of illustrations accessible to anyone, he breaks the questions down to their simplest form, where it is easy to grasp the straightforward answer. There are no demand curves or analysis of financial derivatives here, but rather the case of one carpenter wanting to borrow the plane of another. Simple without being simplistic, he politely allows the other (i.e. Socialist) point of view to express itself ably and fully, then skillfully demonstrates the unintended consequences of those policies. His illustrations have a constant anchor of the moral issues, not just finding the best economic outcome, but also the morally just outcome. And his essays invariably call for a return to peace between parties who have been torn apart unnecessarily by the bad policies of Socialism.
Portage does have two disclaimers regarding these essays: 1) Bastiat's universal stand against slavery, and 2) his stand against State religion. In both cases, we think we understand his position, but ultimately disagree with his conclusion on both practical and Scriptural grounds. Briefly, we believe that slavery can be either just or unjust. To the extent that it is unjust, we agree fully with Bastiat. With regard to State religion, we think that the notion of justice and law itself flow from religion. Justice established by a State with no notion of religion must default to a root of Humanism and the flower of Socialism, the very thing Bastiat resists. Further discussion is beyond the scope of this paragraph, but can be found in other books published by Portage. We like to think that our differences with Bastiat on these issues would be easily resolved if we had the opportunity. In any case, the important point is that these differences do not affect the major points made by Bastiat, and we can, with these two exceptions, wholeheartedly recommend this work to our readers.
History:
- September 5, 2016: First Portage edition posted.
- March 19, 2023: Fix Table of Contents. Minor formatting changes.
Other Editions:
Note that there are numerous translations of this work, so the content may vary from the edition published by Portage.
- Mises Institute is an excellent resource for “Austrian Economics, Freedom, and Peace.” They publish The Bastiat Collection, which contains the Essays on Political Economy as well as additional Bastiat works. Please support their work when you visit.
- The Foundation for Economic Education is an excellent resource for the study of freedom-based economics. They publish The Essential Frederic Bastiat which includes some of Essays on Political Economy. Please support their work when you visit.
- Amazon has numerious print and Kindle editions.