Friday, April 8, 2016

Classical Liberal Bastiat

Claude Frédéric Bastiat (30 June 1801– 24 December 1850) was a French classical liberal theorist, political economist, Freemason, and member of the French National Assembly. He was notable for developing the economic concept of opportunity cost, and for introducing the Parable of the Broken Window or the "Glazier's fallacy". His ideas have provided a basis for libertarianism and the Austrian School.


Bastiat was the author of many works on economics and political economy, generally characterized by their clear organization, forceful argumentation, and acerbic wit. Economist Murray Rothbard wrote that "Bastiat was indeed a lucid and superb writer, whose brilliant and witty essays and fables to this day are remarkable and devastating demolitions of protectionism and of all forms of government subsidy and control. He was a truly scintillating advocate of an unrestricted free market." However, Bastiat himself declared that subsidy should be available, but limited: "under extraordinary circumstances, for urgent cases, the State should set aside some resources to assist certain unfortunate people, to help them adjust to changing conditions." Among his better known works is Economic Sophisms, a series of essays (originally published in the Journal des Économistes) which contain a defence of free trade and many strongly worded attacks on statist policies. Bastiat wrote the work while living in England to advise the shapers of the French Republic on perils to avoid. Economic Sophisms was translated and adapted for an American readership in 1867 by the economist and historian of money Alexander del Mar, writing under the pseudonym "Emile Walter".[9]

Economic Sophisms and the "Candlemakers' Petition"

Contained within Economic Sophisms is the satirical parable known as the "Candlemakers' petition" in which candlemakers and tallow producers lobby the Chamber of Deputies of the French July Monarchy (1830–1848) to block out the Sun to prevent its unfair competition with their products. Also included in the Sophisms is a facetious petition to the king asking for a law forbidding the usage of everyone's right hand, based on a presumption by some of his contemporaries that more difficulty means more work and more work means more wealth.

The Law

Bastiat's most famous work, however, is The Law, originally published as a pamphlet in 1850. It defines, through development, a just system of laws and then demonstrates how such law facilitates a free society.

In The Law, he wrote that everyone has a right to protect "his person, his liberty, and his property". The State should be only a "substitution of a common force for individual forces" to defend this right. "Justice" (defense of one's life, liberty, property) has precise limits, but if government power extends further, into philanthropic endeavors, government becomes so limitless that it can grow endlessly. The resulting statism is "based on this triple hypothesis: the total inertness of mankind, the omnipotence of the law, and the infallibility of the legislator." The public then becomes socially-engineered by the legislator and must bend to the legislators' will "like the clay to the potter":

"I do not dispute their right to invent social combinations, to advertise them, to advocate them, and to try them upon themselves, at their own expense and risk. But I do dispute their right to impose these plans upon us by law – by force – and to compel us to pay for them with our taxes".

Bastiat posits that the law becomes perverted when it punishes one's right to self-defense (of his life, liberty, and property) in favor of another's right to "legalized plunder," which he defines as: "if the law takes from some persons what belongs to them, and gives it to other persons to whom it does not belong. See if the law benefits one citizen at the expense of another by doing what the citizen himself cannot do without committing a crime." Bastiat was thus against redistribution.

"What is Seen and What is Unseen"

In his 1850 essay "Ce qu'on voit et ce qu'on ne voit pas" ("What is Seen and What is Unseen"), through the parable of the broken window, he introduced the concept of opportunity cost in all but name; this term was not coined until over 60 years after his death—in 1914 by Friedrich von Wieser.

Debate with Proudhon
He also famously engaged in a debate, between 1849 and 1850, with Pierre-Joseph Proudhon about the legitimacy of interest. As Robert Leroux argued, Bastiat had the conviction that Proudhon's anti-interest doctrine "was the complete antithesis of any serious approach".  Proudhon famously lost his temper and declared to Bastiat: "Your intelligence is asleep, or rather it has never been awake...You are a man for whom logic does not exist...You do not hear anything, you do not understand anything...You are without philosophy, without science, without humanity...Your ability to reason, like your ability to pay attention and make comparisons is zero...Scientifically, Mr. Bastiat, you are a dead man."


Bastiat asserted that the sole purpose of government is to protect the right of an individual to life, liberty, and property, and why it is dangerous and morally wrong for government to interfere with an individual's other personal matters. From this, Bastiat concluded that the law cannot defend life, liberty, and property if it promotes "legal [or legalized] plunder," which he defined as using government force and laws to take something from one individual and give it to others (as opposed to a transfer of property via mutually-agreed contracts, without using fraud nor violent threats against the other party, which Bastiat considered a legitimate transfer of property).

In The Law, Bastiat explains that, if the privileged classes or socialists use the government for "legalized plunder," this will encourage the other socio-economic class to also use "legal plunder," and that the correct response to both the socialists and the corporatists is to cease all "legal plunder." Bastiat also explains in The Law why his opinion is that the law cannot defend life, liberty, and property if it promotes socialist policies. When used to obtain "legalized plunder" for any group, he says, the law is perverted against the only things (life, liberty, and property) it is supposed to defend.

Bastiat was also a strong supporter of free trade. He "was inspired by and routinely corresponded with Richard Cobden and the English Anti-Corn Law League and worked with free-trade associations in France."

Because of his stress on the role of consumer demand in initiating economic progress (a form of demand-side economics), Bastiat has been described by Mark Thornton, Thomas DiLorenzo, and other economists as a forerunner of the Austrian School. In his Economic Harmonies, Bastiat states that,

“We cannot doubt that self-interest is the mainspring of human nature. It must be clearly understood that this word is used here to designate a universal, incontestable fact, resulting from the nature of man, and not an adverse judgment, as would be the word selfishness.”

Thornton posits that Bastiat, through taking this position on the motivations of human action, demonstrates a pronounced "Austrian flavor.”

One of Bastiat's most important contributions to economics was his admonition to the effect that good economic decisions can be made only by taking into account the "full picture." That is, economic truths should be arrived at by observing not only the immediate consequences – that is, benefits or liabilities – of an economic decision, but also by examining the long-term second and third consequences. Additionally, one must examine the decision's effect not only on a single group of people (say candlemakers) or a single industry (say candlemaking), but on all people and all industries in the society as a whole. As Bastiat famously put it, an economist must take into account both "What is Seen and What is Not Seen." Bastiat's "rule" was later expounded and developed by Henry Hazlitt in his work Economics in One Lesson, in which Hazlitt borrowed Bastiat's trenchant "Broken Window Fallacy" and went on to demonstrate how it applies to a wide variety of economic falsehoods.

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The Bastiat Prize

The Bastiat Prize is a journalism award given annually by the Reason Foundation. In 2011 and before it was given by the International Policy Network. The Bastiat Prize recognizes journalists whose published works "explain, promote and defend the principles of the free society." The award comes with US$15,000.

Instituted in 2002, the Prize has been inspired by the 19th-century French philosopher Frédéric Bastiat and his defense of liberty. Bastiat's use of satire and allegory enabled him to relate complex economic issues to a general audience. In keeping with his legacy, Bastiat Prize entries are judged on intellectual content, the persuasiveness of the language used, and the type of publication in which they appear.

Judges have included Margaret Thatcher, James Buchanan, and Milton Friedman.

Prize Winners
  • 2015: Amit Varma
  • 2014: Robert Graboyes
  • 2013: Lane Filler and Ross Clark
  • 2012: Anne Jolis
  • 2011: Tom Easton and Virginia Postrel
  • 2010: James Delingpole and Bret Stephens
  • 2009: John Hasnas, Shikha Dalmia, and Daniel Hannan
  • 2008: Barton Hinkle.
  • 2007: Amit Varma
  • 2006: Tim Harford and Jamie Whyte.
  • 2005: Mary Anastasia O'Grady.
  • 2004: Robert Guest.
  • 2003: Brian Carney.
  • 2002: Sauvik Chakraverti and Amity Shlaes.

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