Abundance, Generosity, and the State

PREFACE

Love, friendship, and life are gratuitous. The supreme goods of human existence cannot be bought at any price. Doctors and soldiers can protect life to some extent, but they cannot breathe it into dead matter. Gratuitous also are sunshine, wind, photosynthesis, and the fertility of the soil. Gratuitous are the laws of nature, logic, and mathematics. Gratuitous is the fact that many laws of nature can be described with mathematics. Gratuitous are good and bad examples, as well as the benefits of culture and civilization.

Even if we look at the economic goods that human beings have to bring about by the sweat of their brows, very often they are provided to and received from others without the slightest payment. Food and clothing for young children, assistance for the handicapped and frail seniors, religious celebrations, birthday parties, charitable donations, inheritances, public schooling, and public healthcare come to mind.

Human life is indeed full of gratuitous goods. Man arrives on earth as a beggar, and as a beggar he leaves it. He receives all initial endowments from others. Eventually, he bequeaths to others whatever he may have accumulated over many years. Gifts at the beginning, gifts at the end. In between, in the midst of all the toil and trouble, of all the bargaining and exchange, is a life full of goods that are gratuitously provided and received.

Despite the ubiquity of gratuitous goods, and despite their paramount practical importance, economists have neglected to study them systematically. To be sure, there are economic writings on gifts, on the welfare state, on externalities, and on a handful of related issues. Half a century ago, the American economist Kenneth Boulding outlined what a general economic theory of gratuitous goods might look like, if only someone cared to hammer it out. But today such a theory is still not there, despite the efforts of John Mueller, Catherine Gbedolo, and a few other scholars. Generosity, gifts, and unearned abundance still stand at the margins of economics. The purpose of the present book is to bring them in.

When I started delving into this subject, my research objective was to fill a few annoying gaps in the literature. Gifts, philanthropy, and the welfare state had already been covered in numerous texts. But other weighty issues had been disregarded. Few writings had systematically dealt with the unintentional production of gratuitous goods through for-profit activities. Next to none had tackled the influence of monetary interventionism on the gift economy and on the side effects of market exchange. I therefore set out to explore these areas, taking it for granted that the standard topics had been covered well enough, even though it did not escape me that previous writers had often disagreed on weighty issues such as the welfare state and the nature of gifts.

However, as I gained a deeper understanding of the field, it dawned on me that I would have to revisit the traditional topics just as systematically as I would the initial research gaps. Most notably, I began to realize that gratuitous goods and markets are not merely complementary but symbiotic. They feed into each other. In order to understand markets, it is necessary to grasp why and how certain economic goods are transferred without payment. Inversely, without at least some basic knowledge of markets and of the interventions of the state, it is impossible to appreciate gifts and the gratuitous side effects of human action.

This realization has straightforward implications for economics as a scientific discipline. It has long been known that economics is not just a theory of markets, but a general theory of human action. Further extensions are possible—so I contend—by studying the gratuitous transmission and acquisition of economic goods. The great pioneer in this field is the nineteenth-century French economist Frédéric Bastiat. Tragically, subsequent generations of economists have tended to focus on the shortcomings of his work rather than on his fruitful intuitions. As we shall see, gratuitous goods shed new light on the foundations of economics; on basic issues such as leisure, savings, and capital accumulation; on the nature of legal and monetary systems; and, more generally, on the workings of the market and of the state.

If the principles of gratuitousness are principles of economics, then it should be possible to write a treatise on economics by taking as the red thread the various ways in which goods are provided and received for free, both within and outside of markets. The present book seeks to make this red thread visible. It walks the reader through a great number of standard issues in present-day microeconomics and macroeconomics. It deals with preferences, subjective value, time, leisure, property rights, ownership, monetary exchange, economic calculation, errors, information, learning, savings, capital accumulation, moral hazard, externalities, market failures, interventionism, monopoly, government failures, public goods, and profits and losses. But the red thread in this book is different from that of standard economics. The focus is not on how and why goods are produced and exchanged, but on how and why goods are provided and obtained without payment.

The impetus for writing this book came from Pope Benedict XVI’s encyclical Caritas in veritate (2009). I presented my initial ideas on the economics of gratuitous goods in a 2011 lecture at the Institut Coppet in Paris and then in more detail in the 2016 Lou Church Lecture at the Austrian Economics Research Conference in Auburn, Alabama. I presented my initial thoughts on the sharing economy at the 2017 annual meeting of the Pontifical Academy of the Social Sciences. A sabbatical semester in the winter and spring of 2018, which I spent at Grove City College and at the Mises Institute, afforded me the opportunity to substantially revise and expand my 2016 lecture into the first draft of a book manuscript.

I gratefully acknowledge the support of the University of Angers, of Grove City College, and of the Mises Institute. Special thanks go to my hosts in the United States, Mark and Debra Reuber, Jeffrey Herbener, Shawn Ritenour, Paul Kengor, and Jeffrey Deist. My colleagues Mark Thornton, Walter Block, Michael Bauwens, François Facchini, and Pierre Garello have gratuitously advised me on various relevant points. My friend Anthony Deden has generously shared his scarce time in discussions of ownership, reason, and compliance, which have found their way into this book. I am even more indebted to my friends David Gordon, Jeffrey Herbener, and Reinhard Stiebler, who made liberal donations of their time to review a first draft of the book and provided extensive comments. A few years later, Judy Thommesen and Daniella Bassi from the Mises Institute, and Roger Bissell, provided outstanding editorial assistance to the final version. I am deeply grateful for their dedication, as well as for the support that this book has received from the numerous donors of the Mises Institute who are mentioned in the frontispiece. Finally, I thank my dear wife, Nathalie, for precious counsel and impatience in seeing this book come to life.

Jörg Guido Hülsmann

Angers, France
January 2024