Mises Wire

From Bastiat’s Defense of Exchange to Ideal Government

Frédéric Bastiat is justifiably famous among believers in liberty. His many classic contributions include The Law and his essays “Government” and “That Which Is Seen and That Which Is Not Seen,” not to mention some of the best reductio ad absurdum arguments ever (such as “The Candlemakers’ Petition” and “The Negative Railway”) and more. Less well known are other essays, such as his election manifesto of 1846, which illustrated what a principled politician who believed in liberty would stand for.

However, far fewer people seem to be very aware of Bastiat’s Economic Harmonies, which was to be his magnum opus but was cut short by his Christmas Eve death at only age 49.

I found that strikingly illustrated when I recently reread chapter 4, “Exchange,” in Economic Harmonies. Not only does Bastiat offer a powerful and uplifting defense of free exchange there, but it leads him to a very inspirational view of what government can and cannot do to advance the general welfare, as our Constitution put it.

Unfortunately, however, after more than 35 years of studying and defending liberty, I cannot remember ever reading a discussion of that chapter. So, in hopes of raising awareness of it, I present some of what I found that impressed me so much.

Bastiat starts with a powerful endorsement of private property-based free-exchange systems.

Exchange . . . is society itself.

The present social organization, provided the principle of free exchange [and the private property rights that undergird it] is recognized, is the most beautiful, most stupendous of associations . . . very different from the associations dreamed up by the socialists, since . . . the principle of individual liberty is recognized. All . . . may join or leave it at their pleasure. They contribute what they will; they receive in return a constantly increasing degree of satisfaction, which is determined, according to the laws of justice, by the nature of things, not by the arbitrary will of a chief.

Thanks to money. . . . Each one turns his services over to society, without knowing who will receive the satisfactions they are intended to give. Likewise each one receives from society, not immediate services, but pieces of money, with which he will buy particular services where, when, and how he wills. In this way the ultimate transactions are carried on across time and space between persons unknown to one another, and no one knows, at least in most instances, by whose effort his wants will be satisfied, or to whose wants his own efforts will bring satisfaction.

Exchange is a means given to men to enable them to make better use of their productive capacities. . . . [Consequently] [l]aws that limit exchange are always either harmful or unnecessary.

Governments, which are always disposed to believe that nothing can be done without them, refuse to understand this law of harmony. Exchange develops naturally to the point where further development would be more onerous than useful, and stops of its own accord at this limit.

Consequently, we see governments everywhere greatly preoccupied either with giving exchange special favors or with restricting it. To carry it beyond its natural limits, they seek after new outlets and colonies. To hold it within these limits, they think up all kinds of restrictions and checks.

This intervention of force in human transactions is always accompanied by countless evils.

The diverting of the agencies of law and order from their natural function is an even greater evil than adding unduly to their size. Their rational function was to protect all liberty and all property, and instead we see them bent on doing violence to the liberty and the property of the citizens. Thus, governments seem to be dedicated to the task of removing from men’s minds all notions of equity and principle.

Whether this intervention of force in the process of exchange creates exchanges that otherwise would not be made or prevents others from being made, it cannot fail to result in the waste and misuse of labor and capital.

After what I think was the inspiration for Leonard Read’s distinction between willing and unwilling exchange, Bastiat comes to a striking conclusion, especially in our world where opponents of freedom in exchange as well as other freedoms often challenge the motives behind voluntary arrangements—“Exchange . . . develops in society tendencies more noble than its motives.” That is, free exchange, enabled by private property rights and disciplined by competition for others’ voluntary association, produces mutually beneficial results from self-interested efforts.

By virtue of exchange, one man’s prosperity is beneficial to all others.

Each one applies himself to conquering one set of obstacles for the benefit of the community.

We may place our trust not only in the economic power of free exchange, but also in its moral force. Once men know what their true interests are, then all the restrictions . . . will fall.

We must confine our efforts to allowing Nature to act and to maintaining the rights of human liberty.

Under liberty, each man’s self-interest is in accord with that of every other . . . [so] all the efforts that we now see governments making to disrupt the action of these natural laws of society would better be devoted to leaving to them their full power; or rather no effort would be needed at all, except the effort it takes not to interfere.

In what does the interference by governments consist? . . . To take from some to give to others. Such is, in fact, the mandate that governments have given themselves.

Thus, governments, which we thought were instituted to guarantee every man his liberty and his property, have taken it upon themselves to violate all liberty and all property rights . . . by the very nature of their goal, they menace all existing interests.

Here, Bastiat lays out the connection between the social harmony that can be advanced by free exchange and good government.

The denial of liberty and property rights . . . is the logical outgrowth of the axiom: The profit of the one is the loss of the other . . . simplicity in government administration, respect for individual dignity, freedom of labor and exchange, peace among nations, protection of person and property—all this is the outgrowth of this truth: All interests are harmonious, provided . . . only that this truth be generally accepted.

The harmony of interests is not universally recognized, since . . . the force of government is constantly intervening to disrupt their natural combinations.

Do we not find obstructions everywhere?

On what pretext am I deprived of my liberty if not that my liberty is judged to be harmful to others?

We have tried so many things; when shall we try the simplest of all: freedom? Freedom in all our acts that do not offend justice; freedom to live, to develop, to improve; the free exercise of our faculties; the free exchange of our services.

Bastiat then contrasts what he called France’s February Revolution to the “fine and solemn spectacle it would have been had the government brought to power [instead] spoken thus to the citizens.”

You have invested me with the power of authority. I shall use it only in cases where the intervention of force is permissible. But there is only one such case, and that is for the cause of justice. I shall require every man to remain within the limits set by his rights. Every one of you may work in freedom by day and sleep in peace at night. I take upon myself the safety of your persons and property. That is my mandate; I shall fulfill it, but I accept no other.

Let there be no misunderstanding between us. Henceforth you will pay only the slight assessment indispensable for the maintenance of order and the enforcement of justice.

But also, please note, each one of you is responsible to himself for his own subsistence and advancement. Turn your eyes toward me no longer. Do not ask me to give you wealth, work, credit, education, religion, morality. Do not forget that the motive power by which you advance is within yourselves; that I myself can act only through the instrumentality of force. All that I have, absolutely all, comes from you; consequently, I cannot grant the slightest advantage to one except at the expense of others.

Unite your efforts for your individual good as well as for the general good; follow your inclinations, fulfill your individual destinies according to your endowments, your values, your foresight. Expect from me only two things: freedom and security, and know that you cannot ask for a third without losing these two.

If those had been the motivating principles of revolution, Bastiat considers the consequences.

Can we imagine citizens, otherwise completely free, moving to overthrow their government when its activity is limited to satisfying the most vital, the most keenly felt of all social wants, the need for justice?

Look to the state for nothing beyond law and order! Count on it for no wealth, no enlightenment! No more holding it responsible for our faults, our negligence, our improvidence! Count only on ourselves for our subsistence, our physical, intellectual, and moral progress!

Will you never understand that the state cannot give you something with one hand without taking that something, and a little more, away from you with the other? Do you not see that, far from there being any possible increase of well-being in this process for you, its end result is bound to be an arbitrary government, more galling, more meddling, more extravagant, more precarious, with heavier taxes, more frequent injustices, more shocking cases of favoritism, less liberty, more lost effort, with interests, labor, and capital all misdirected, greed stimulated, discontent fomented, and individual initiative stifled?

Why do our legislators thus contravene all sound notions of political economy? Why do they not leave things in their proper place: altruism in its natural realm, which is liberty; and justice in its, which is law? Why do they not use the law exclusively to further justice?

Justice is liberty and property. But they are socialists . . . they have no faith, whatever they may say, in liberty or in property or, consequently, in justice. And that is why we see them . . . seeking to achieve the good by the constant violation of the right.

What is the resulting choice we are faced with in pursuit of expanded social cooperation and advance?

Must we recognize the right of every man to his property, his freedom to work and to exchange on his own responsibility, whether to his profit or his loss, invoking the law, which is force, only for the protection of his rights; or can we reach a higher plane of social well-being by violating property rights and liberty, regulating labor, disrupting exchange, and shifting responsibility away from the individual?

In other words: Must the law enforce strict justice, or be the instrument of organized confiscation.

In a country that, until recently at least, laid claim to providing “liberty and justice for all,” the answer seems clear to me. But America seems to be awash with those arguing that justice is the highest political end (in contrast to Lord Acton, who knew that liberty is itself the highest political end) while redefining justice in a way that violates liberty.

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