June 27, 2022

Frédéric Bastiat’s Fruitful Fusionism

“Economists don’t know how to inculcate virtue in business elites, because, as victims of the moral confusion that MacIntyre diagnosed, they don’t know what virtue is.” ~ Nathan Smith

Around the beginning of the 19th century, per capita economic growth turned decisively positive, and Western nations began prospering as never before. Economists have many theories to explain this, but the odd thing is that the most underrated explanation of modern economic growth is economics itself. Inspired by Adam Smith and other champions of classical “political economy,” 19th-century liberalism freed people to work and invent and prosper as never before, and they spearheaded innovations like railroads, factory production, cars, airplanes, and electrification. These inventions kept Western economies growing for generations afterwards as they slowly matured. We owe an incalculable debt, not only to Adam Smith, but to the popularizers and polemicists of 19th-century liberalism, such as that lantern of liberty, the French economist, satirist, and politician Frédéric Bastiat (1801-1850).

Sometimes popularizers, pundits, and politicians are wiser than allied academicians because they have to convince ordinary people. Bastiat is a case in point. He knew economics, but he also argued from natural law premises that were intuitively appealing and foundational to liberalism. Even then, natural law was becoming unfashionable among the intelligentsia. He shines in retrospect as a late spokesman for a lost tradition of classical liberalism based on natural law, whose roots in law and public opinion have since withered away. To fill in the authority gap left by the eclipse of natural law, a casual idolatry of the state has crept in and become pervasive on the populist right and the social-democratic left. 

Theoconservatives and free marketeers alike should take inspiration from Bastiat as they play the game of coalition politics for high-stakes principles of justice. For people really do have natural rights, and governments that leave people free to exercise them promote both justice and prosperity. A wholesome and realistic classical liberalism has God on its side. As Bastiat put it in the last sentence of “The Law” (published in a Liberty Fund collection in 2012): “liberty is an acknowledgment of faith in God and His works.”

Theism, Natural Law, and the Liberal Tradition

An irony of recent intellectual history is that great communitarian thinkers like Alasdair MacIntyre, David Bentley Hart, and Patrick Deneen have mostly stood alone in their proud singularity, while liberal thinkers have a community and a tradition. 

The insights of MacIntyre, to whom I am profoundly indebted, are difficult to build on. He claims that Western thought since the Enlightenment has been a fool’s errand, trying to base ethics on reason instead of tradition. As readers of After Virtue are still processing this thought, he surprises them with a scathing, obscure aside against Edmund Burke, one of modernity’s great champions of tradition. One almost despairs of writing anything that MacIntyre would approve. Bastiat, in complete contrast with this, was the bearer of a tradition, inheriting from others a set of beneficent ideas, and then enriching them in the process of applying them and passing them on to posterity. 

Bastiat stands today as a window on the liberal tradition. He is a valuable historical source, in part because he was a typical 19th-century liberal who happened to be articulate, and therefore displays the thoughts, feelings, and attitudes of those mid-19th century men who saw liberalism at the zenith of its influence. He has a peculiarly scintillating style because he wrote in France, where liberalism was never ascendant, as in England, but had to face off against both a reactionary right and a rising socialist left. Bastiat’s sense of humor flashes like a sword in the hands of a man surrounded by enemies and fighting for his life.

But Bastiat is also valuable for the way he synthesized two traditions, historically allied yet rarely integrated, namely (a) economics, and (b) theistic liberalism based on natural law. 

Modern political liberalism is rooted in Christian theology. John Locke, the single most influential thinker in the birth of liberalism, derives his idea of property rights directly from the biblical God. He is the great bridge by which scholastic ideas of natural law and natural rights passed from the Middle Ages across the chasm of early modern absolutism, to become the foundation for modern liberalism. And Bastiat agrees with Locke. Here is Bastiat’s statement of the doctrine of natural rights, and the moral basis of government in a social contract to protect them, from the beginning of his brilliant 1850 manifesto, “The Law.”

We hold from God the gift that encompasses them all: life, physical, intellectual, and moral life.

However, life is not self-supporting. He who has given it to us has left us the job of looking after it, developing it, and improving it. 

To do this, He has provided us with a set of exceptional faculties and immersed us in a milieu of diverse elements. It is through the application of our faculties to these elements that the phenomena of assimilation and appropriation take place, through which life proceeds along the circle allocated to it.

Existence, faculties, and assimilation—in other words, personality, freedom, and property—this is man in a nutshell.

It may be said that these three things, leaving aside any pedagogical hair-splitting, precede and supersede all human legislation.

It is not because men have enacted laws that personality, freedom, and property exist. On the contrary, it is because personality, freedom, and property are already in existence that men enact laws.

What is the law, then?… It is the collective organization of the individual right of legitimate defense.

Amen! The Declaration of Independence and John Locke’s Second Treatise of Government say essentially the same thing, though Bastiat goes on to reinforce the point with insights from economics. Unfortunately, this kind of theistic liberalism based on natural law would soon go out of fashion.

From Classical Liberalism to Secular Liberalism

J.S. Mill’s On Liberty, published in 1859, is a masterpiece of liberal political philosophy, yet it also fatally betrays the liberal tradition. Mill explicitly repudiates the doctrine of natural rights, with its unwelcome theological baggage. Mill rebuilt liberalism on utilitarian foundations instead, and secular liberalism was born. It was possible to do this because of economics, which had taught ever since Adam Smith’s Wealth of Nations in 1776 that the “invisible hand” of the market orchestrates self-interested endeavors in the service of the common good. This “system of natural liberty” was understood to be optimal for economic performance. That theme has remained the beating heart of economics down to the present day. The point is made far more succinctly in the clever graphical arguments of a modern undergraduate economics textbook, but what the graphs show, Smith and Mill understood. 

In the 19th century, a creeping scientific materialism undermined the moralistic view of nature that Smith inherited from Christianity and the Middle Ages. The idea of “natural liberty” stopped making sense. In its place, most economists—but not Bastiat—began to adopt a cold amorality in their analysis of human affairs. That turned out to be a convenient cul-de-sac to wander into at a time when ethics, as MacIntyre elucidates in After Virtue, was falling into irrevocable confusion. As ethics came to seem confused and unscientific, the amoral economists seemed more scientific than other social thinkers.

But it’s not really true, in general, that selfishness in a market framework maximizes the common good. Sometimes it’s true, often in counterintuitive ways, and economists have often made the world a better place by relieving people of false scruples. It’s okay for banks to lend at interest. It’s okay for commodity suppliers to charge what the market will bear. It’s okay to buy raw materials from low-priced foreign producers instead of expensive domestic ones. Bastiat was great at explaining such cases. But there are also many well-recognized “market failure” cases, for which economists have coined terms like “natural monopoly,” “incomplete contacts,” “principal-agent problems,” “public goods” and “externalities,” that depart from the assumptions underlying the theory of market efficiency, so that in principle an interventionist government could improve outcomes. As these cases became more important and better known, secular liberalism evolved into a warrant for intrusive, omnicompetent government. 

The root of the problem wasn’t just market failure, but a dangerous habit of mind. Over time, people start putting implicit trust in government to do the right thing, while reducing everyone else to a selfish homo economicus. Bastiat lambasts this notion in “The Law” with brilliant sarcasm, writing:

Political writers have assumed that left to its own devices humanity would concern itself with religion only to end up with atheism, with education only to achieve ignorance and with work and trade only to end up in destitution.

Fortunately, according to these same writers, there are a few men known as rulers and legislators who have received contrary tendencies from heaven not only for themselves but also on behalf of all the others.

Although human propensity is toward evil, the propensity of these few is toward good; although humanity marches on toward darkness, they aspire to the light; and although humanity is drawn to vice, they are attracted to virtue. And assuming this, [they] claim [the right to use] force to enable them to substitute their own propensities for those of the human race…

And then, after proving that point with extensive quotations, he concludes:

But, O sublime writers, please remember on occasion that this clay or sand, this compost of which you so arbitrarily dispose, is made up of men, your equals, who are intelligent and free beings like you, who, like you, have received from God the faculty of sight, foresight, thought, and making judgments for themselves!

Bastiat’s attack was not mainly against economists here. He saw economics as friendly to natural rights, and fought against social engineers of right and left, who, as it turned out, would kill tens of millions in the next century. Even when later economists forgot natural law and drifted towards interventionism, they maintained a wholesome deference to individual preferences. But they accepted and reinforced the fallacy by constantly assuming selfish private actors but a wise and benevolent government.

On a theoretical level, taking a generous view of interventionism can be a way to make a free market argument’s victory more complete. Even if the government were perfectly wise and benevolent, and private actors were totally selfish and greedy, the free market economist triumphantly concludes that it would still be best for government to do nothing! But that claims too much. Most fields of human endeavor are characterized by enough market failure that an industry run by ruthless, greedy Scrooges could be improved by the intervention of a wise and altruistic government. Intervention is far less helpful in the real world, where private businesses are often animated by an ethic of service, while most government bureaucrats are risk-averse, incompetent, unimaginative, and/or lazy, while politicians pander and regulators get captured by incumbent firms. 

A wiser society would trust government less, and focus much more on inculcating virtue in private actors. Some market failure could be solved not through coercion, but through moral suasion. Instead, the assumption of corporate greed has to some extent become a self-fulfilling prophecy. Medieval knights were not always brave, noble, gentle to women, or zealous to right wrongs, but they were surrounded by reminders that they should be. By contrast, the perverse fashion in the past generation has been to treat the “shareholder value maximizing corporation” not only as a fact, but as a norm, as if we trust market efficiency so much that businesses can do nothing better than maximize profits. Economists don’t know how to inculcate virtue in business elites, because, as victims of the moral confusion that MacIntyre diagnosed, they don’t know what virtue is. 

The Lost World of Classical Liberalism

Modern society is to its technological heritage as a modern driver is to his car: it can use it, but it couldn’t have built it. The great modern technologies came to birth at a time when corporations were organized, innovators invented, and firms employed workers by natural right. The public that mattered was enlightened enough to understand that government could not justly intervene. Passport requirements for crossing international borders were relegated to backward countries like tsarist Russia. And elites were expected to live up to the high moral ideals expressed in the word “gentlemen.”

Law largely aspired to be nothing but organized justice, i.e., protection of natural rights. As such, it gave scope for the development of human faculties in ways that no central planner could have anticipated, that were nevertheless still protected by principles of natural rights. And so in that age, Thomas Edison, George Westinghouse, Alexander Graham Bell, Guglielmo Marconi, Nikola Tesla, Henry Ford, Count Zeppelin, and the Wright brothers did their work, and to it we owe cars, planes, electrification, radio, telephony, and in general, the strangely affluent way of life that sets us so much apart from the people we read about in history books.

To get back to that old freedom and creativity, we need MacIntyre and Bastiat, the practice of the virtues and the system of natural liberty. MacIntyre was wise about ethics in many ways, but as a recovering Marxist, he unfortunately disbelieves in natural rights. As a result, his notion of justice is rarefied, vague, and out of touch with the actual practice of justice by historic human societies. Those defects can be corrected by a liberal like Bastiat. Belief in natural rights is the soil from which good revolutions grow. That includes political revolutions like the English revolution of 1688 and the American revolution of 1776, and also industrial and technological revolutions, like railroads and aviation and electricity. It’s too stultifying to have to ask permission every step of the way. Modern society needs to put meddling governments in their place, and free the creatives to make a better world.

Classical liberalism is dead as a societal model, though it retains some ideological influence. But it could be revived by combining economics with more faith in and cultivation of private virtue, and a bias against government coercion on grounds of justice, natural law, and obedience to the will of God. The Bible supplies the template of classical liberalism, as Locke knew. It has no use for homo economicus, but it is full of condemnations of tyrants and wicked busybodies, and condemns the covetousness that animates socialism and populism. It upholds property rights, and tells how God gave the earth to human beings to have dominion over it. 

Those aspiring to revive classical liberalism can take inspiration not only from Bastiat the thinker, but also from Bastiat the practical politician. Bastiat seems very quixotic, yet he won elected office and served as a non-partisan free lance in the French legislature, allying with right or left as justice demanded.      He helped catalyze a free trade movement in France which, but for his untimely death, he would have seen crowned with victory in the Cobden-Chevalier Anglo-French trade treaty of 1860. That treaty set off the golden age of European free trade. Sometimes faith moves mountains.

This article, Frédéric Bastiat’s Fruitful Fusionism, was originally published by the American Institute for Economic Research and appears here with permission. Please support their efforts.