Bastiat the Great (Mises Memo Newsletter, Fall 2001)

[Michael Koller]

Mises Memo Newsletter, Fall 2001
Bastiat the Great

This year marks the 200th anniversary of the birth of Claude Frederic
Bastiat (1801-1850), the great French economist whose parables of the folly
of interventionism still resonate today His writings foreshadowed the work
of Ludwig von Mises and the Austrian School, not only because he defended
free markets and private property but also because he wrote plainly and
always strove to make sense--rare qualities among economists in any age.

Bastiat is most famous for his Parable of the Candlemakers, which tells the
story of a candlemakers' trade association that petitions the government to
protect French jobs from a foreign light source: the sun. The story
illustrates the silliness of protectionist trade policy and other devices
designed to sh7ore up particular producers at public expense. The lesson is
that there is no social benefit to be gained from subsidizing unproductive
work.

His other famous story involved the "broken-window fallacy": the mistaken
belief that wealth destruction has an upside in that it provides jobs for
those who do repair windows. Once the glaziers are paid, this view says,
they consume, and this pattern repeats itself in ever-widening circles.
Here, then, in a nutshell is Keynesianism: a proposal to break as many
windows as possible. The fallacy is to concentrate on what is seen while
forgetting the unseen costs of wealth destruction.

Bastiat's public career writing as an economist lasted a mere six years,
from his first attack on protectionism, which appeared in the Journal des
Economistes in 1844, to his two-volume Economic Harmonies that appeared in
1850. He also served in the French constituent assembly of 1848, opposing
taxes, spending, regulations, and war, and favoring economic and civil
liberty His example inspired the founding of free-trade associations all
over Europe.

Bastiat is widely regarded as a popularizer of economic truth. That is
another way of saying that he understood his subject so well, he could
explain it to anyone. As a consequence, however, his scientific
contributions have been disparaged by myopic historians of thought. It has
been the primary intent of research backed by the Mises Institute to reverse
this impression and to put on display Bastiat the scientist as well as the
polemicist.

Murray N. Rothbard's second volume of his Austrian Perspective on the
History of Economic Thought is where this task really began. Rothbard points
out that Bastiat rejected Adam Smith's incorrect distinction between
productive and unproductive labor. The value of work is bound up with the
desires of consumers and the mutual gains that come from free-market
exchange. Rothbard's discussion helps reverse some of the damage wrought by
Joseph Schumpeter's scarring and unfortunate dismissal of Bastiat.

Then we have Thomas DiLorenzo's contribution to 15 Great Austrian
Economists, which has been heralded by Bastiat experts as providing new and
robust insights into his thought. DiLorenzo shows that Bastiat had an
Austrian understanding of capital (its accumulation helps workers), cost
(subjective), method (qualitative not quantitative), and the consequences of
regulation. Bastiat said that, under regulation, "the people no longer need
to discuss, to compare, to plan ahead; the law does all this for them.
Intelligence becomes a useless prop for the people; they cease to be men;
they lose their personality, their liberty, their property"

The 2001 Austrian Scholars Conference featured an entire panel on Bastiat's
thought. Jorg Guido Hulsmann explained how Bastiat mastered the use of
"counter-factual analysis" to show the relationship between cause and effect
in economics. Mark Thornton demonstrated that Bastiat had a
pre-praxeological understanding of the subject matter of economics: acting,
choosing, changing man. Philippe Nataf sketched the existence of the Bastiat
School in nineteenth-century France, and provided the details of Bastiat's
predecessors and followers.

Joseph Salerno's study of Bastiat's contribution to the history of ideas may
be the most comprehensive to date. Salerno seeks to solve the mystery as to
why Bastiat's ideas were so neglected by the Anglo-American economic
establishment in the late nineteenth century, to say nothing of our own
time. Salerno's answer points to the statization and professionalization of
economists that occurred in the Western world after 1870. The old French
liberals did not hold these jobs. The further consolidation of education in
the nineteenth century stripped them of intellectual prestige.

In these contributions, and the many more to follow, we see the beginnings
of a serious effort to rehabilitate and understand the scholarly
contributions of Bastiat. This kind of work, though difficult and detailed,
is as important as telling his parables and imparting his lessons for
economics today. Mises admired Bastiat and undoubtedly would be pleased to
see such serious scholarship being done in his memory. There's no better way
to celebrate this man's 200th birthday than by taking seriously his body of
thought.

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