References and further reading
Hauser, K. (1989), ‘Friedrich List: Sein Leben und Wirken’, in K. Hauser, W. Lachmann and H. Scherf (eds), Vademecum zu einem schopferischen Klassiker mit tragischem Schicksal, Dusseldorf: Verlag Wirtschaft und Finanzen, pp.
29-47.Henderson, W.O. (1983), Friedrich List. Economist and Visionary, 1789-1846, London: Frank Cass.
List, F. (1827), Grundriβ der amerikanischen politischen Okonomie (Outlines of American Political Economy), reprinted 1996, ed. M. Liebig, Wiesbaden: Dr. Bottiger.
List, F. (1837), The Natural System of Political Economy, reprinted 1983, trans. and ed. W.O. Henderson, London: Frank Cass.
List, F. (1841), The National System of Political Economy, reprinted 1928, trans. S.S. Lloyd, London: Longmans, Green & Co.
List, F. (1841), Das nationale System derpolitischen Okonomie, in E. von Beckerath (ed.), The Collected Works, vol. 6, reprinted 1930, Berlin: Reimar Hobbing.
Muller, A. (1809/10), Die Elemente der Staatskunst, 1922 reprint of the original Berlin edn, Jena: Gustav Fischer.
Rieter, H. (2002), ‘Historische Schulen', in O. Issing (ed.), Geschichte der Nationalokonomie, 4th edn, Munich: Franz Vahlen, pp. 131-68.
Storch, H. von (1815), Cours d’economie politique: ou exposition desprincipes qui determinent laprosperite des nations, 1997 reprint of the original St Petersburg edn, Hildesheim: Olms-Weidmann.
Wendler, E. (2013), Friedrich List (1789-1846). Ein Okonom mit Weitblick und sozialer Verantwortung, Wiesbaden: Springer Gabler.
Born in Bayonne on 30 June 1801, Frederic Bastiat became an orphan at an early age and had to leave the religious school he attended before obtaining his Baccalaureat diploma. In 1818, he started to work in the trade company of his uncle but soon got bored. He left and lived in a landed property that his family possessed in Mugron, in the Landes, but, rather than managing the estate, he preferred to study philosophy, history and political economy - in particular the works of the French classics: Jean-Baptiste Say, Charles Comte and Charles Dunoyer.
Bastiat’s first writings date from 1830 and support a liberal candidate to the Parliament, Franςois Faurie. He was himself an unsuccessful candidate during the 1831 elections, but was elected in 1833 to a local position, as Conseiller general of the Canton of Mugron. In 1844, in England, he attended some meetings of the Anti-Corn Laws League and met its leaders. He kept in touch with Richard Cobden and translated into French, in 1845, the main speeches of the League leaders. Bastiat also published his first article in Journal des economistes - “De l’influence des tarifs franςais et anglais sur l’avenir des deux peuples” - which was successfully received. Following the English model, he tried to organize a Free Trade movement: in 1846 he created the Association bordelaise pour la liberte des echanges, and then a similar association in Paris. The 1848 Revolution opened new perspectives. Bastiat realized that he had not only to fight against protectionism but also socialism - first that of Louis Blanc, and then of Pierre- Joseph Proudhon. Elected to the Assemblee Constituante, he voted sometimes with the Right, sometimes with the Left. In particular, he declared himself against the prosecution of Louis Blanc, and against the death penalty. Re-elected to the Assemblee Legislative in 1849, he was in favour of the right of coalition for the workers. He died in Rome on 24 December 1850 where he had decided to go with the hope that the climate would dampen his sufferings due to a larynx disease. It is during the last year of his life that he published his most well-known book, Les harmonies economiques.
Bastiat’s short career can be divided into two periods. It started with the defence of free trade. French protectionists maintained that tariffs should be sufficiently high to cover the difference between the price of domestic and foreign commodities: competition can be free only if costs are equal. In order to discard this argument, Bastiat made use of two classical ideas.
He stressed first that such a measure was an attack against the very principle of exchange, which was based on the diversity of the conditions of production. He explained that employment in France could not suffer from the competition of countries which enjoyed more favourable conditions. If, initially, foreign prices were lower, if free trade would lead to a deficit of the balance of trade, the increase of the demand for foreign products and the monetary transfers would generate a rise in prices abroad and domestic prices would again become competitive. However, he wanted to go further and show that those which benefit most from free trade are the less favoured countries. In each product, he explained, “nature collaborates with labour. But the contribution of nature is always free. Only that part which is due to human labour is the object of exchange and consequently of a remuneration” (Bastiat 1845: 353). If prices depend only on the labour of the producers, a country will gain more from exchange than its partners that are possessed of natural resources which it does not have, because it will benefit freely from these resources. However, Bastiat’s main argument is moral. Exchange is a natural right: anyone who produces or acquires a product should be able to give it to anyone on earth against the objects that he desires.The 1848 Revolution radically modified the context. The enemy changed and Bastiat started to fight the socialists. He maintained that, while the economists rightly defended liberty, they did not know how to solidly establish their starting point, that is, the idea that “interests, left to themselves, tend to the preponderance of the general interest” (Bastiat 1850 [1982]: 5). Still worse, they advanced statements, which socialists used in order to maintain that private interests are in conflict with one another: they stated that the natural agents of production - land in particular - have a value. Landowners sell the power of production of land (the gifts of God) to the farmers.
Socialists concluded that this was an injustice. Ricardo explained that the price of the means of subsistence was determined on the land of the poorest quality among all lands cultivated. With the increase in population, men must give for their subsistence a growing quantity of labour, and rent must increase. The inequality is fatal. Malthus, on the other hand, explained that population grows faster than subsistence. Only two remedies are thus possible: a diminution of the number of births or an increase of mortality. Malthus was in favour of the moral constraint, but this remedy, to be efficient, must be universal: it is thus impossible to count on it. Pauperism is unavoidable.To fight against socialism, it is necessary to discard these classical propositions and reconstruct the theory of value, that is, discard at the same time Say’s thesis that utility is the foundation of value, and Ricardo’s that the expense of labour determines the price of goods. Their price, Bastiat maintains, is not determined by the labour of the producer, but by the labour saved to the buyer. The natural agents do not create any value: what land is worth is “the human labour which improved it, the capital sunk in it” (Bastiat 1850 [1982]: 279). The landowner is the owner of a value that he himself has created; his rent remunerates the services he provides. The ownership of land is legitimate because its origin is labour.
When more intensive techniques of production are introduced, Ricardo said, costs of production must increase. Bastiat (1850 [1982]: 280) maintains that they decrease instead. Of course, when the quality of land is improved, the successive crops are charged with the interest of the capital invested, but the quantity of labour necessary to cultivate land diminishes and every crop is thus obtained in less expensive conditions. Against the Ricardian approach Bastiat proposed a vision of an economy where, as capital accumulates, the sum total of wages increases both absolutely and relatively, while the sum total of profits increases in absolute but diminishes in relative terms.
The human society is harmonious: “all the interests tend towards a great outcome... : the convergence of all the social classes towards an always growing level; in other terms: the equalisation of individuals with a general improvement” (Bastiat 1850 [1982]: 115).
Alain Beraud
See also:
Jean-Baptiste Say (I); Pierre-Joseph Proudhon (I); French classical political economy (II); David Ricardo (I); Adam Smith (I); Thomas Robert Malthus (I); Gustave de Molinari (I).