Sunday, March 11, 2012

How Liberals Distort Austrian Economics



How Liberals Distort Austrian Economics

The lame campaign to discredit the Austrian school

When a presidential candidate declares, as Ron Paul has, “We’re all Austrians now,”  it’s inevitable that his critics would try to discredit him—whether they understand what he’s talking about or not. That’s what Matthew Yglesias does in his Slatepiece “What Is ‘Austrian Economics’?”
I recommend the piece because it’s highly informative—about what Austrian economics is not.
We’re off to a rocky start with this: “The Austrian school originally referred to a set of classical liberal thinkers with diverse interests who came out of the Austro-Hungarian Empire.”
The earliest Austrian economists did not make their mark by advocating free markets and other classical-liberal ideas. They did so by proffering a revolutionary positive (not normative) theoretical approach to understanding how markets work, focusing on value, price, and capital, theory. What Wikipedia says is consistent with my understanding of the matter: “When Carl Menger, Eugen von Böhm-Bawerk, and [Friedrich von] Wieser began their careers in science, they were not focused on economic policy issues, much less in the rejection of intervention promoted by classical liberalism. Their common vocation was to develop an economic theory on a firm basis.”
Economics vs. Politics
Yglesias thus conflates Austrian economic theory with libertarian political theory. In fairness, he is not alone in committing this error. Many libertarians do the same, which is unfortunate. Austrian economic theory describes how purposive action by fallible human beings unintentionally generates a grand, complex, and orderly market process. An additional ethical step is required to pronounce the market process good. Economic theory per se cannot recommend but only explain markets. This is what Ludwig von Mises meant when he insisted that Austrian economics is value-free. Anyone of any persuasion ought to be able to acknowledge that economic logic indicates that imposing a price ceiling on milk will, other things equal, create a shortage of milk. But that in itself is not an argument against the policy. Mises assumed the policymaker would have thought that result bad, but the economist qua economist cannot declare it such. As Israel Kirzner likes to say, the economist’s job in the policy realm is merely to point out that you cannot catch a northbound train from the southbound platform.
Yglesias writes: “Austrians reject the idea that there is anything at all the government can do to stabilize macroeconomic fluctuations.” It’s odd to say this without also pointing out that Austrians believe that government causes the instability of inflationary booms, recessions, and depressions. In light of that point, the suggestion that government is capable of stabilizing the economy may be seen in its proper light.
That said, Yglesias’s statement is not quite right. Some prominent Austrian macroeconomists think that in a second-best world, the central bank (which of course wouldn’t exist in a first-best world) should counteract a sudden and substantial monetary contraction. In other words, deflation is not necessarily a cure for inflation. Mises made the point metaphorically in 1938: “If a man has been hurt by being run over by an automobile, it is no remedy to let the car go back over him in the [opposite] direction.” (See Steven Horwitz’s “Deflation: The Good, the Bad, and the Ugly.” )
Distorts Markets
“In the view of the Austrians,” Yglesias goes on, “practically every economic policy pursued by the federal government and Federal Reserve is a mistake that distorts markets. Rather than curing recessions, claim Austrians, stimulative policies cause them by producing unsustainable bubbles.” Well, yeah, and it’s amply demonstrated by George Selgin, William D. Lastrapes, and Lawrence H. White in“Has the Fed Been a Failure?” (See my summary, “‘F’ as in Fed.” ) As they put it:
Drawing on a wide range of recent empirical research, we find the following: (1) The Fed’s full history (1914 to present) has been characterized by more rather than fewer symptoms of monetary and macroeconomic instability than the decades leading to the Fed’s establishment. (2) While the Fed’s performance has undoubtedly improved since World War II, even its postwar performance has not clearly surpassed that of its undoubtedly flawed predecessor, the National Banking system, before World War I. (3) Some proposed alternative arrangements might plausibly do better than the Fed as presently constituted. We conclude that the need for a systematic exploration of alternatives to the established monetary system is as pressing today as it was a century ago.
Yglesias understands that the Austrian theory of the business cycle has something to do with artificially low interest rates breeding malinvestment, but he thinks it can’t be right because “it’s hard to understand why business people would be so easily duped in this way. If Ron Paul and Ludwig von Mises know that cheap money can’t last forever, why don’t private investors? Why wouldn’t firms avoid making the supposedly dumb investments?”
Gerald P. O’Driscoll and Mario Rizzo addressed this long ago in The Economics of Time and Ignorance:
[T]here are profits to be made from exploiting temporary situations. . . . Though entrepreneurs understand [the macro-aspects of a cycle] they cannot predict the exact features of the next cyclical expansion and contraction. . . . They lack the ability to make micro-predictions, even though they can predict the general sequence of events that will occur. These entrepreneurs have no reason to foreswear the temporary profits to be garnered in an inflationary episode. . . . From an individual perspective, then, an entrepreneur fully informed of the Austrian theory of economic cycles will face essentially the same uncertain world he always faced. Not theoretical or abstract knowledge, but knowledge of the circumstances of time and place is the source of profits.

Puzzlingly, Yglesias also thinks he can refute the Austrian theory by noting that “[s]pending patterns shift all the time without sparking a recession.” To which, Peter Klein replies, “Of course, Yglesias’s breezy summary of the theory skips over the time structure of production, the difference between consumption and investment, the role of interest rates in securing intertemporal coordination, the problem of expectations, and the other basic elements of the theory, which ten minutes of Wikipedia browsing could have explained.”
Yglesias reveals his unfamiliarity with the Austrian literature when he writes, “Many of the original Austrians found their business cycle ideas discredited by the Great Depression, in which the bust was clearly not self-correcting.” Considering thatHerbert Hoover's and Franklin Roosevelt’s New Deal impeded the market’s correction process, one wonders how the 1930s could possibly have discredited the Austrian theory of the origin of recessions.
Finally, Yglesias contends that “the Austrian school . . . preaches despair and demands no action at all.”
Balderdash. Since it explains that busts are central-bank-caused and hence avoidable through market-based money and banking, its implicit message is one of hope and optimism. And as for demanding no action, on the contrary, it puts forth a long list of actions for those who want stable economic growth—all of them designed to dismantle the interventionist state.
Sheldon Richman is editor of The Freeman, where this article originally appeared.


Saturday, March 10, 2012

Private consumption and public consumption; an increase in the latter does nothing to increase public wealth

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Jean-Baptiste Say argues that there is a world of difference between private consumption and public consumption; an increase in the latter does nothing to increase public wealth (1803)
Read the full quote in context here.
Jean-Baptiste Say (1767-1832) in his influential Treatise on Political Economy (1803) drew a distinction between private and public consumption, viewing an increase in the latter as no way to increase public wealth:
What, then, are we to think of the principles laid down by those writers, who have laboured to draw an essential distinction between public and private wealth; to show, that economy is the way to increase private fortune, but, on the contrary, that public wealth increases with the increase of public consumption: inferring thence this false and dangerous conclusion, that the rules of conduct in the management of private fortune and of public treasure, are not only different, but in direct opposition?

The full passage from which this quotation was taken can be be viewed below (front page quote in bold):

There has been long a prevalent notion, that the values, paid by the community for the public service, return to it again in some shape or other; in the vulgar phrase, that what government and its agents receive, is refunded again by their expenditure. This is a gross fallacy; but one that has been productive of infinite mischief, inasmuch as it has been the pretext for a great deal of shameless waste and dilapidation. The value paid to government by the tax-payer is given without equivalent or return: it is expended by the government in the purchase of personal service, of objects of consumption; in one word, of products of equivalent value, which are actually transferred. Purchase or exchange is a very different thing from restitution.

Turn it which way you will, this operation, though often very complex in the execution, must always be reducible by analysis to this plain statement. A product consumed must always be a product lost, be the consumer who he may; lost without return, whenever no value or advantage is received in return; but, to the tax-payer, the advantage derived from the services of the public functionary, or from the consumption effected in the prosecution of public objects, is a positive return.

If, then, public and private expenditure affect social wealth in the same manner, the principles of economy, by which it should be regulated, must be the same in both cases. There are not two kinds of economy, any more than two kinds of honesty, or of morality. If a government or an individual consume in such a way, as to give birth to a product larger than that consumed, a successful effort of productive industry will be made. If no product result from the act of consumption, there is a loss of value, whether to the state or to the individual; yet, probably, that loss of value may have been productive of all the good anticipated. Military stores and supplies, and the time and labour of civil and military functionaries, engaged in the effectual defence of the state, are well bestowed, though consumed and annihilated; it is the same with them, as with the commodities and personal service, that have been consumed in a private establishment. The sole benefit resulting in the latter case is, the satisfaction of a want; if the want had no existence, the expense or consumption is a positive mischief, incurred without an object. So likewise of the public consumption; consumption for the mere purpose of consumption, systematic profusion, the creation of an office for the sole purpose of giving a salary, the destruction of an article for the mere pleasure of paying for it, are acts of extravagance either in a government or an individual, in a small state or a large one, a republic or a monarchy. Nay, there is more criminality in public, than in private extravagance and profusion; inasmuch as the individual squanders only what belongs to him; but the government has nothing of its own to squander, being, in fact, a mere trustee of the public treasure.

What, then, are we to think of the principles laid down by those writers, who have laboured to draw an essential distinction between public and private wealth; to show, that economy is the way to increase private fortune, but, on the contrary, that public wealth increases with the increase of public consumption: inferring thence this false and dangerous conclusion, that the rules of conduct in the management of private fortune and of public treasure, are not only different, but in direct opposition?

If such principles were to be found only in books, and had never crept into practice, one might suffer them without care or regret to swell the monstrous heap of printed absurdity; but it must excite our compassion and indignation to hear them professed by men of eminent rank, talents, and intelligence; and still more to see them reduced into practice by the agents of public authority, who can enforce error and absurdity at the point of the bayonet or mouth of the cannon.
[More works by Jean Baptiste Say (1767 – 1832)]



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Friday, March 9, 2012

Bastiat asks the fundamental question of political economy: what should be the size of the state? (1850)

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What should be the size of the state?
Frédéric Bastiat
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Bastiat asks the fundamental question of political economy: what should be the size of the state? (1850)


Read the full quote in context here.
In his incomplete magnum opus Economic Harmonies (1850) Frédéric Bastiat asks the fundamental question of political economy: what should be the proper size of the state? His answer is that it should limit its functions to a very “small circle” of activity which would include only defence and policing:
The first question to be asked, then, as we begin the study of political science is this: What are the services that should remain in the realm of private activity? What are those that should fall within the domain of public or collective activity? That question amounts to this: Within the great circle that we call “society,” what should be the circumference of the smaller circle we call “government”?

The full passage from which this quotation was taken can be be viewed below (front page quote in bold):

But what we actually observe is that public services or government action increases or decreases according to time, place, or circumstances, from the communism of Sparta or the Paraguay missions to the individualism of the United States, with French centralization as a midpoint along the way.

The first question to be asked, then, as we begin the study of political science is this:

What are the services that should remain in the realm of private activity? What are those that should fall within the domain of public or collective activity?

That question amounts to this:

Within the great circle that we call “society,” what should be the circumference of the smaller circle we call “government”?

It is evident that this question is connected with political economy, since it requires the comparative study of two very different forms of exchange.

Once this problem is solved, there still remains another: How can public services best be organized? We shall not consider this question, since it falls entirely within the field of government.

Let us examine the essential differences between private services and public services, since this is a necessary preliminary to determining what should be the logical line of demarcation between them.

This entire book up to the present chapter has been devoted to showing the evolution of private services. We have seen that it is, implicitly or explicitly, based on this formula: You do this for me, and I will do that for you; which implies a double and mutual consent regarding what is given and what is received. The notions of barter, exchange, appraisal, value, cannot, therefore, be conceived of without freedom, nor freedom without responsibility. Each party to an exchange consults, at his own risk and peril, his wants, his needs, his tastes, his desires, his means, his attitudes, his convenience—all the elements of his situation; and nowhere have we denied that in the exercise of free will there is the possibility of error, the possibility of an unreasonable or a foolish choice. The fault is imputable, not to the principle of exchange, but to the imperfection of human nature; and the remedy is to be found only in responsibility itself (that is, in freedom), since it is the source of all experience. To introduce coercion into exchange, to destroy free will on the pretext that men may make mistakes, would not improve things, unless it can be proved that the agent empowered to apply the coercion is exempt from the imperfection of our nature, is not subject to passion or error, does not belong to humanity. Is it not evident, on the contrary, that this would be tantamount not only to putting responsibility in the wrong place, but, even worse, to destroying it, at least in so far as its most precious attribute is concerned, that is, as a rewarding, retributive, experimental, corrective, and, consequently, progressive force? We have also seen that free exchange, or services voluntarily received and voluntarily rendered, constantly increases, thanks to the effect of competition, the relative proportion of gratuitous utility to onerous utility, the domain of common wealth in relation to the domain of private property; and we have thus come to recognize in freedom the power that in every way promotes equality, or social harmony.
[More works by Frédéric Bastiat (1801 – 1850) and on 19th Century French Liberalism]




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Thursday, March 8, 2012

Bastiat on the state vs. laissez-faire (1848)

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Quotations about Liberty and Power




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Bastiat on the state vs. laissez-faire (1848)
Read the full quote in context here.
The French classical liberal economist and member of parliament Frédéric Bastiat (1801-1850) wrote in his revolutionary magazine in June 1848 that the policy of “laissez-faire”, or “let things be done” was in opposition to the policy of the state, which was to “prevent things being done”:
Laissez-faire! I will begin by saying, in order to avoid any ambiguity, that laissez-faire is used here for honest things, with the state instituted precisely to prevent dishonest things.
This having been said, and with regard to things that are innocent in themselves, such as work, trade, teaching, association, banking, etc., a choice must be made. It is necessary for the state to let things be done or prevent them from being done.
If it lets things be done, we will be free and optimally administered most economically, since nothing costs less than laissez-faire.
If it prevents things from being done, woe to our freedom and our purse. Woe to our freedom, since to prevent things is to tie our hands; woe to our purse, since to prevent things requires agents and to employ agents takes money.
In reply to this, socialists say: “Laissez-faire! What a disaster!” Why, if you please? “Because, when you leave men to act, they do wrong and act against their interests. It is right for the state to direct them.”
This is simply absurd. Do you seriously have such faith in human wisdom that you want universal suffrage and government of all by all and then you proclaim these very men whom you consider fit to govern others unfit to govern themselves?

The full passage from which this quotation was taken can be be viewed below (front page quote in bold):

“Laissez-faire”, Jacques Bonhomme, 11-15 June 1848.

Laissez-faire! I will begin by saying, in order to avoid any ambiguity, that laissez-faire is used here for honest things, with the state instituted precisely to prevent dishonest things.

This having been said, and with regard to things that are innocent in themselves, such as work, trade, teaching, association, banking, etc., a choice must be made. It is necessary for the state to let things be done or prevent them from being done.

If it lets things be done, we will be free and optimally administered most economically, since nothing costs less than laissez-faire.

If it prevents things from being done, woe to our freedom and our purse. Woe to our freedom, since to prevent things is to tie our hands; woe to our purse, since to prevent things requires agents and to employ agents takes money.

In reply to this, socialists say: “Laissez-faire! What a disaster!” Why, if you please? “Because, when you leave men to act, they do wrong and act against their interests. It is right for the state to direct them.”

This is simply absurd. Do you seriously have such faith in human wisdom that you want universal suffrage and government of all by all and then you proclaim these very men whom you consider fit to govern others unfit to govern themselves?
[More works by Frédéric Bastiat (1801 – 1850) and on 19th Century French Liberalism]

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Wednesday, March 7, 2012

From Loose Money to Fettered People

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 From Loose Money to Fettered People

Mises Daily: Monday, February 06, 2012 by



A governmental easy-money policy has many repercussions. Currency debasement, the enabling of unnecessary wars, and increases in the size of federal power are among them. And political interference into monetary affairs always leads to economic distortions.
These distortions in turn lead to government imposition of rules, regulations, taxation, and tariffs, all of which favor a handful of powerful and influential corporations to the detriment of small- and medium-sized businesses.
And easy money leads to the impoverishment of the middle and lower classes and an increase in government dependence. How can anyone who has come to depend on his government for his livelihood feel empowered to demand that the same government allow him the freedom that he thinks he deserves?
It is important to recognize the link between monetary policy and individual liberty.
These days you might find yourself behind a car with a bumper sticker that reads, "It's the Debt, Stupid!"; yet debt is still taken lightly. Central-bank monetary policies, which have been debt enablers for at least two decades, are rarely discussed.
Of course there is good debt and bad debt. But excessive debt can lead to conditions that are tantamount to slavery. Massive government inevitably becomes the enemy of the people.
There is nothing wrong with debt if it increases productive capacity. Think of a farmer borrowing money to purchase high-quality farm equipment. But if debt is used to finance incessant wars, to pay the interest on existing debt, to fund make-work projects, or to bail out failing businesses, there is no return on such debt and it is nothing but a burden to the economy.
Austrian School economists such as Murray Rothbard, Henry Hazlitt, and Ludwig Von Mises have elaborated on the distinction between debt used for production and debt used for consumption. Unlike John Maynard Keynes, who theorized that growth is directly driven by consumption, the Austrians argue that savings play the most important role in economic progress.
When additional debt is taken on solely to support additional consumption, it leaves fewer resources to support production. And such is the case with the Keynesian world of the 21st century. Saving is eschewed for more borrowing, and production is eschewed for more consumption.
Europe and the United States have reached the point where they can no longer service their excessive debt. Individuals are defaulting on personal debt, states and municipalities are defaulting on public debt, and nations are defaulting on sovereign debt.
Some corporations have been saved with taxpayer money. Others have temporarily escaped default by cutting expenses and relaxing their accounting standards. Still others have been forced to shut down or agree to a voluntary takeover. And how about financial institutions?
During the past three years we have witnessed local community banks and regional banks collapse while big banks have been bailed out via infusions of newly created money. And it is this massive creation of new money that increases the gap between rich and poor.
Historically, distribution of such money is such that the elite are in the first position of acquisition. This enables them to acquire goods and services at today's lower prices. But when the newly created money starts circulating in the economy there will be more money chasing the same amount of goods and services, which means that over time the same goods and services will cost more.
By the time the new money reaches the middle and lower classes, prices will have already gone up. They see no benefit from any nominal wage increases they manage to get, and furthermore they see the value of their savings dwindle with the rising prices. With less real savings to support himself and his family, the average man is forced to reduce his living standard and is now demanding that the government step in to create "justice." He does not know nor does he care that it was government policies that led to his predicament.
When politicians aim to be re-elected, they create and vote for bills to create employment. The average man and the politician ignore an important rule of economics. Production is the purpose of employment. Employing 5,000 people to build an embassy in Baghdad does not increase American wealth.
Lowering taxes and eliminating regulation, on the other hand, would enable businesses to increase capital investment. The more capital a business invests, the more productive are its workers. And the more productive the workers, the more valuable they are to business. Thus, on the market, their real wages will be bid up. But unlike make-work government jobs, the increase in wages comes from an increase in real wealth, and is not simply redistributed away from hapless taxpayers.
It is of utmost importance to recognize that production is the end goal and employment is merely a means. Employment is worse than pointless if it consumes more than it produces.
But the politician and the average man want to see instant results. To increase his chance for re-election, the politician wants to show the working man how quickly he can help him. Thus the bill that he introduces will be for creation of employment — not through expansion of the private sector but by expansion of the government.
In the process, the private sector — the one that ultimately creates society's wealth by being productive — gets smaller and smaller.
It is worth noting that many big corporations should not be classified with the private sector because of their unusual treatment. They often achieve their size due to favors exchanged between their headquarters and political leaders. This explains why many large corporations have shifted to thinking of the government, and not the people, as their main customer. And it is due to this strong relationship between the two that working for a big corporation is often analogous to working for the government.
The warning signs for the Western world are all around us. Debt has become the addiction of once-great nations. The creation of fiat money — without limits or restrictions — to service debt, to finance wars, and to support (and stimulate) excessive consumption can destroy whole economies.
Unemployment is a natural economic reaction. Small- and medium-sized businesses — which represent the private productive sector of the economy — will disappear, displaced by the ever-swelling public sector.
For those not lucky enough to find a government job, even more drastic government aid will be sought. Unemployment, food stamps, and other governments "benefits" will make individuals all the more dependent on, and beholden to, the government.
Piece by piece, in an obscure fashion, we move ever closer to fascism. In such a system — where the majority of people depend on a government or government-tied corporations — individual freedom and respect for private property will cease to exist. History proves that no country, no matter how great and powerful it once was, is immune from devolving into such a system.
It is obvious that any nation that fully grasps the dangers of fascism should take the necessary measures to prevent such economic and social catastrophe. Reversing a trend that's been dominant for decades is a difficult task; many would even claim it is impossible

It starts, most importantly, with acknowledgment of the danger, and with this generation's taking responsibility for it. The size of the government must be reduced to make room for private business to recover. Governments must recognize that the enormous public debts that exist today cannot be repaid. Why create new debt to pay for old debt? This is bad debt; it produces nothing but even more debt — and the destruction of the currency.
Speaking of money, to avoid their complete economic destruction these nations must rediscover the fundamentals of sound money — money backed by specie and a full-reserve banking system.
These, of course, are just the beginning steps that represent but a small fraction of the sacrifice that a nation and its people must make to avoid the threat of a fascist society. Most importantly, it is easy to forget that freedom is not free. And it is every individual's responsibility to work hard to keep it. Because once it is lost, we may never have it back.
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Tuesday, March 6, 2012

The Cruel Wreckage of Socialism

The Ludwig von Mises Institute



The Cruel Wreckage of Socialism 


by Frederic Bastiat


Socialism, like the old policy from which it emanates, confounds government and society. And so, every time we object to a thing being done by government, it concludes that we object to its being done at all. We disapprove of education by the state — then we are against education altogether. We object to a state religion — then we would have no religion at all. We object to an equality which is brought about by the state then we are against equality, etc., etc. They might as well accuse us of wishing men not to eat, because we object to the cultivation of corn by the state.
How is it that the strange idea of making the law produce what it does not contain — prosperity, in a positive sense, wealth, science, religion — should ever have gained ground in the political world? The modern politicians, particularly those of the Socialist school, found their different theories upon one common hypothesis; and surely a more strange, a more presumptuous notion, could never have entered a human brain.
They divide mankind into two parts. Men in general, except one, form the first; the politician himself forms the second, which is by far the most important.
In fact, they begin by supposing that men are devoid of any principle of action, and of any means of discernment in themselves; that they have no initiative; that they are inert matter, passive particles, atoms without impulse; at best a vegetation indifferent to its own mode of existence, susceptible of assuming, from an exterior will and hand an infinite number of forms, more or less symmetrical, artistic, and perfected.
Moreover, every one of these politicians does not hesitate to assume that he himself is, under the names of organizer, discoverer, legislator, institutor, or founder, this will and hand, this universal initiative, this creative power, whose sublime mission it is to gather together these scattered materials, that is, men, into society.
Starting from these data, as a gardener according to his caprice shapes his trees into pyramids, parasols, cubes, cones, vases, espaliers, distaffs, or fans; so the Socialist, following his chimera, shapes poor humanity into groups, series, circles, subcircles, honeycombs, or social workshops, with all kinds of variations. And as the gardener, to bring his trees into shape, needs hatchets, pruning hooks, saws, and shears, so the politician, to bring society into shape, needs the forces which he can only find in the laws; the law of tariffs, the law of taxation, the law of assistance, and the law of education.


It is so true, that the Socialists look upon mankind as a subject for social experiments, that if, by chance, they are not quite certain of the success of these experiments, they will request a portion of mankind, as a subject to experiment upon. It is well known how popular the idea of trying all systems is, and one of their chiefs has been known seriously to demand of the Constituent Assembly a parish, with all its inhabitants, upon which to make his experiments.
It is thus that an inventor will make a small machine before he makes one of the regular size. Thus the chemist sacrifices some substances, the agriculturist some seed and a corner of his field, to make trial of an idea.
But think of the difference between the gardener and his trees, between the inventor and his machine, between the chemist and his substances, between the agriculturist and his seed! The Socialist thinks, in all sincerity, that there is the same difference between himself and mankind.
No wonder the politicians of the 19th century look upon society as an artificial production of the legislator's genius. This idea, the result of a classical education, has taken possession of all the thinkers and great writers of our country.
To all these persons, the relations between mankind and the legislator appear to be the same as those that exist between the clay and the potter.
Moreover, if they have consented to recognize in the heart of man a capability of action, and in his intellect a faculty of discernment, they have looked upon this gift of God as a fatal one, and thought that mankind, under these two impulses, tended fatally toward ruin. They have taken it for granted that if abandoned to their own inclinations, men would only occupy themselves with religion to arrive at atheism, with instruction to come to ignorance, and with labor and exchange to be extinguished in misery.
Happily, according to these writers, there are some men, termed governors and legislators, upon whom Heaven has bestowed opposite tendencies, not for their own sake only, but for the sake of the rest of the world.
Whilst mankind tends to evil, they incline to good; whilst mankind is advancing toward darkness, they are aspiring to enlightenment; whilst mankind is drawn toward vice, they are attracted by virtue. And, this granted, they demand the assistance of force, by means of which they are to substitute their own tendencies for those of the human race.
It is only needful to open, almost at random, a book on philosophy, politics, or history, to see how strongly this idea — the child of classical studies and the mother of socialism — is rooted in our country; that mankind is merely inert matter, receiving life, organization, morality, and wealth from power; or, rather, and still worse — that mankind itself tends toward degradation, and is only arrested in its tendency by the mysterious hand of the legislator. Classical conventionalism shows us everywhere, behind passive society, a hidden power, under the names of Law, or Legislator (or, by a mode of expression which refers to some person or persons of undisputed weight and authority, but not named), which moves, animates, enriches, and regenerates mankind.
We will give a quotation from Bossuet:
One of the things which was the most strongly impressed (by whom?) upon the mind of the Egyptians, was the love of their country. … Nobody was allowed to be useless to the state; the law assigned to every one his employment, which descended from father to son. No one was permitted to have two professions, nor to adopt another. … But there was one occupation which was obliged to be common to all, this was the study of the laws and of wisdom; ignorance of religion and the political regulations of the country was excused in no condition of life. Moreover, every profession had a district assigned to it (by whom?). … Amongst good laws, one of the best things was, that everybody was taught to observe them (by whom?). Egypt abounded with wonderful inventions, and nothing was neglected which could render life comfortable and tranquil.
Thus men, according to Bossuet, derive nothing from themselves; patriotism, wealth, inventions, husbandry, science — all come to them by the operation of the laws, or by kings. All they have to do is to be passive. It is on this ground that Bossuet takes exception when Diodorus accuses the Egyptians of rejecting wrestling and music. "How is that possible," says he, "since these arts were invented by Trismegistus?"
It is the same with the Persians:
One of the first cares of the prince was to encourage agriculture. … As there were posts established for the regulation of the armies, so there were offices for the superintending of rural works. … The respect with which the Persians were inspired for royal authority was excessive.



The Greeks, although full of mind, were no less strangers to their own responsibilities; so much so, that of themselves, like dogs and horses, they would not have ventured upon the most simple games. In a classical sense, it is an undisputed thing that everything comes to the people from without.
The Greeks, naturally full of spirit and courage, had been early cultivated by kings and colonies who had come from Egypt. From them they had learned the exercises of the body, foot races, and horse and chariot races. … The best thing that the Egyptians had taught them was to become docile, and to allow themselves to be formed by the laws for the public good.

Fénelon

Reared in the study and admiration of antiquity and a witness of the power of Louis XIV, Fénelon naturally adopted the idea that mankind should be passive, and that its misfortunes and its prosperities, its virtues and its vices, are caused by the external influence that is exercised upon it by the law, or by the makers of the law. Thus, in his Utopia of Salentum, he brings the men, with their interests, their faculties, their desires, and their possessions, under the absolute direction of the legislator. Whatever the subject may be, they themselves have no voice in it — the prince judges for them. The nation is just a shapeless mass, of which the prince is the soul. In him resides the thought, the foresight, the principle of all organization, of all progress; on him, therefore, rests all the responsibility.
In proof of this assertion, I might transcribe the whole of the tenth book of Telemachus. I refer the reader to it, and shall content myself with quoting some passages taken at random from this celebrated work, to which, in every other respect, I am the first to render justice.
With the astonishing credulity that characterizes the classics, Fénelon, against the authority of reason and of facts, admits the general felicity of the Egyptians, and attributes it, not to their own wisdom, but to that of their kings:
We could not turn our eyes to the two shores, without perceiving rich towns and country seats, agreeably situated; fields that were covered every year, without intermission, with golden crops; meadows full of flocks; laborers bending under the weight of fruits that the earth lavished on its cultivators; and shepherds who made the echoes around repeat the soft sounds of their pipes and flutes. "Happy," said Mentor, "is that people who is governed by a wise king." … Mentor afterwards desired me to remark the happiness and abundance that was spread over all the country of Egypt, where twenty-two thousand cities might be counted. He admired the excellent police regulations of the cities; the justice administered in favor of the poor against the rich; the good education of the children, who were accustomed to obedience, labor, and the love of arts and letters; the exactness with which all the ceremonies of religion were performed; the disinterestedness, the desire of honor, the fidelity to men, and the fear of the gods, with which every father inspired his children. He could not sufficiently admire the prosperous state of the country. "Happy" said he, "is the people whom a wise king rules in such a manner."

Fénelon's idyll on Crete is still more fascinating. Mentor is made to say:
All that you will see in this wonderful island is the result of the laws of Minos. The education that the children receive renders the body healthy and robust. They are accustomed, from the first, to a frugal and laborious life; it is supposed that all the pleasures of sense enervate the body and the mind; no other pleasure is presented to them but that of being invincible by virtue, that of acquiring much glory … there they punish three vices that go unpunished amongst other people — ingratitude, dissimulation, and avarice. As to pomp and dissipation, there is no need to punish these, for they are unknown in Crete. … No costly furniture, no magnificent clothing, no delicious feasts, no gilded palaces are allowed.
It is thus that Mentor prepares his scholar to mould and manipulate, doubtless with the most philanthropic intentions, the people of Ithaca, and, to confirm him in these ideas, he gives him the example of Salentum.
So we receive our first political notions. We are taught to treat men very much as Oliver de Serres teaches farmers to manage and to mix the soil.

Montesquieu

To sustain the spirit of commerce, it is necessary that all the laws should favor it; that these same laws, by their regulations in dividing the fortunes in proportion as commerce enlarges them, should place every poor citizen in sufficiently easy circumstances to enable him to work like the others, and every rich citizen in such mediocrity that he must work, in order to retain or to acquire.
Thus the laws are to dispose of all fortunes.
Although in a democracy, real equality be the soul of the state, yet it is so difficult to establish that an extreme exactness in this matter would not always be desirable. It is sufficient that a census be established to reduce or fix the differences to a certain point, after which, it is for particular laws to equalize, as it were, the inequality by burdens imposed upon the rich and reliefs granted to the poor.
Here, again, we see the equalization of fortunes by law, that is, by force.
There were, in Greece, two kinds of republics. One was military, as Sparta; the other commercial, as Athens. In the one it was wished (by whom?) that the citizens should be idle: in the other, the love of labor was encouraged.

It is worth our while to pay a little attention to the extent of genius required by these legislators, that we may see how, by confounding all the virtues, they showed their wisdom to the world. Lycurgus, blending theft with the spirit of justice, the hardest slavery with extreme liberty, the most atrocious sentiments with the greatest moderation, gave stability to his city. He seemed to deprive it of all its resources, arts, commerce, money, and walls; there was ambition without the hope of rising; there were natural sentiments where the individual was neither child, nor husband, nor father. Chastity even was deprived of modesty. By this road Sparta was led on to grandeur and to glory.
The phenomenon that we observe in the institutions of Greece has been seen in the midst of the degeneracy and corruption of our modern times. An honest legislator has formed a people where probity has appeared as natural as bravery among the Spartans. Mr. Penn is a true Lycurgus, and although the former had peace for his object, and the latter war, they resemble each other in the singular path along which they have led their people, in their influence over free men, in the prejudices which they have overcome, the passions they have subdued.
Paraguay furnishes us with another example. Society has been accused of the crime of regarding the pleasure of commanding as the only good of life; but it will always be a noble thing to govern men by making them happy.
Those who desire to form similar institutions will establish community of property, as in the republic of Plato, the same reverence as he enjoined for the gods, separation from strangers for the preservation of morality, and make the city and not the citizens create commerce: they should give our arts without our luxury, our wants without our desires.
Vulgar infatuation may exclaim, if it likes, "It is Montesquieu! magnificent! sublime!" I am not afraid to express my opinion, and to say, "What! You have the gall to call that fine? It is frightful! It is abominable! And these extracts, which I might multiply, show that according to Montesquieu, the persons, the liberties, the property, mankind itself, are nothing but grist for the mill of the sagacity of lawgivers."

Rousseau

Although this politician, the paramount authority of the Democrats, makes the social edifice rest upon the general will, no one has so completely admitted the hypothesis of the entire passiveness of human nature in the presence of the lawgiver:

If it is true that a great prince is a rare thing, how much more so must a great lawgiver be? The former has only to follow the pattern proposed to him by the latter. This latter is the engineer who invents the machine; the former is merely the workman who sets it in motion.
And what part have men to act in all this? That of the machine, which is set in motion; or rather, are they not the brute matter of which the machine is made? Thus, between the legislator and the prince, between the prince and his subjects, there are the same relations as those that exist between the agricultural writer and the agriculturist, the agriculturist and the clod. At what a vast height, then, is the politician placed, who rules over legislators themselves and teaches them their trade in such imperative terms as the following:
Would you give consistency to the state? Bring the extremes together as much as possible. Suffer neither wealthy persons nor beggars.
If the soil is poor and barren, or the country too much confined for the inhabitants, turn to industry and the arts, whose productions you will exchange for the provisions which you require. … On a good soil, if you are short of inhabitants, give all your attention to agriculture, which multiplies men, and banish the arts, which only serve to depopulate the country. … Pay attention to extensive and convenient coasts. Cover the sea with vessels, and you will have a brilliant and short existence. If your seas wash only inaccessible rocks, let the people be barbarous, and eat fish; they will live more quietly, perhaps better, and most certainly more happily. In short, besides those maxims which are common to all, every people has its own particular circumstances, which demand a legislation peculiar to itself.
It was thus that the Hebrews formerly, and the Arabs more recently, had religion for their principal object; that of the Athenians was literature; that of Carthage and Tyre, commerce; of Rhodes, naval affairs; of Sparta, war; and of Rome, virtue. The author of the "Spirit of Laws" has shown the art by which the legislator should frame his institutions toward each of these objects. … But if the legislator, mistaking his object, should take up a principle different from that which arises from the nature of things; if one should tend to slavery, and the other to liberty; if one to wealth, and the other to population; one to peace, and the other to conquests; the laws will insensibly become enfeebled, the Constitution will be impaired, and the state will be subject to incessant agitations until it is destroyed, or becomes changed, and invincible Nature regains her empire.
But if Nature is sufficiently invincible to regain its empire, why does not Rousseau admit that it had no need of the legislator to gain its empire from the beginning? Why does he not allow that by obeying their own impulse, men would of themselves apply agriculture to a fertile district, and commerce to extensive and commodious coasts without the interference of a Lycurgus, a Solon, or a Rousseau, who would undertake it at the risk of deceiving themselves?
Be that as it may, we see with what a terrible responsibility Rousseau invests inventors, institutors, conductors, and manipulators of societies. He is, therefore, very exacting with regard to them.
He who dares to undertake the institutions of a people, ought to feel that he can, as it were, transform every individual, who is by himself a perfect and solitary whole, receiving his life and being from a larger whole of which he forms a part; he must feel that he can change the constitution of man, to fortify it, and substitute a social and moral existence for the physical and independent one that we have all received from nature. In a word, he must deprive man of his own powers, to give him others that are foreign to him.
Poor human nature! What would become of its dignity if it were entrusted to the disciples of Rousseau?

Raynal

The climate, that is, the air and the soil, is the first element for the legislator. His resources prescribe to him his duties. First, he must consult his local position. A population dwelling upon maritime shores must have laws fitted for navigation. … If the colony is located in an inland region, a legislator must provide for the nature of the soil, and for its degree of fertility. …
It is more especially in the distribution of property that the wisdom of legislation will appear. As a general rule, and in every country, when a new colony is founded, land should be given to each man, sufficient for the support of his family. …
In an uncultivated island, which you are colonizing with children, it will only be needful to let the germs of truth expand in the developments of reason! … But when you establish old people in a new country, the skill consists in only allowing it those injurious opinions and customs which it is impossible to cure and correct. If you wish to prevent them from being perpetuated, you will act upon the rising generation by a general and public education of the children. A prince or legislator ought never to found a colony without previously sending wise men there to instruct the youth. … In a new colony, every facility is open to the precautions of the legislator who desires to purify the tone and the manners of the people. If he has genius and virtue, the lands and the men that are at his disposal will inspire his soul with a plan of society that a writer can only vaguely trace, and in a way that would be subject to the instability of all hypotheses, which are varied and complicated by an infinity of circumstances too difficult to foresee and to combine.
One would think it was a professor of agriculture who saying to his pupils,

The climate is the only rule for the agriculturist. His resources dictate to him his duties. The first thing he has to consider is his local position. If he is on a clayey soil, he must do so and so. If he has to contend with sand, this is the way in which he must set about it. Every facility is open to the agriculturist who wishes to clear and improve his soil. If he only has the skill, the manure which he has at his disposal will suggest to him a plan of operation, which a professor can only vaguely trace, and in a way that would be subject to the uncertainty of all hypotheses, which vary and are complicated by an infinity of circumstances too difficult to foresee and to combine.
But, oh! sublime writers, deign to remember sometimes that this clay, this sand, this manure, of which you are disposing in so arbitrary a manner, are men, your equals, intelligent and free beings like yourselves, who have received from God, as you have, the faculty of seeing, of foreseeing, of thinking, and of judging for themselves!

Mably

He is supposing the laws to be worn out by time and by the neglect of security, and continues thus:
Under these circumstances, we must be convinced that the bonds of government are slack. Give them a new tension (it is the reader who is addressed), and the evil will be remedied. … Think less of punishing the faults than of encouraging the virtues that you want. By this method you will bestow upon your republic the vigor of youth. Through ignorance of this, a free people has lost its liberty! But if the evil has made so much way that the ordinary magistrates are unable to remedy it effectually, have recourse to an extraordinary magistracy, whose time should be short, and its power considerable. The imagination of the citizens requires to be impressed.
In this style he goes on through 20 volumes.
There was a time when, under the influence of teaching like this, which is the foundation of classical education, everyone was for placing himself beyond and above mankind, for the sake of arranging, organizing, and instituting it in his own way.

Condillac

Take upon yourself, my lord, the character of Lycurgus or of Solon. Before you finish reading this essay, amuse yourself with giving laws to some wild people in America or in Africa. Establish these roving men in fixed dwellings; teach them to keep flocks. … Endeavor to develop the social qualities that nature has implanted in them. … Make them begin to practice the duties of humanity. … Cause the pleasures of the passions to become distasteful to them by punishments, and you will see these barbarians, with every plan of your legislation, lose a vice and gain a virtue.

All these people have had laws. But few among them have been happy. Why is this? Because legislators have almost always been ignorant of the object of society, which is to unite families by a common interest.
Impartiality in law consists in two things, in establishing equality in the fortunes and in the dignity of the citizens. … In proportion to the degree of equality established by the laws, the dearer will they become to every citizen. How can avarice, ambition, dissipation, idleness, sloth, envy, hatred, or jealousy agitate men who are equal in fortune and dignity, and to whom the laws leave no hope of disturbing their equality?
What has been told you of the republic of Sparta ought to enlighten you on this question. No other state has had laws more in accordance with the order of nature or of equality.
It is not to be wondered at that the 17th and 18th centuries should have looked upon the human race as inert matter, ready to receive everything — form, figure, impulse, movement, and life, from a great prince, or a great legislator, or a great genius. These ages were reared in the study of antiquity; and antiquity presents everywhere — in Egypt, Persia, Greece, and Rome, the spectacle of a few men molding mankind according to their fancy, and mankind to this end enslaved by force or by imposture. And what does this prove? That because men and society are improvable, error, ignorance, despotism, slavery, and superstition must be more prevalent in early times. The mistake of the writers quoted above is not that they have asserted this fact, but that they have proposed it as a rule for the admiration and imitation of future generations. Their mistake has been, with an inconceivable absence of discernment, and upon the faith of a puerile conventionalism, that they have admitted what is inadmissible, viz., the grandeur, dignity, morality, and well-being of the artificial societies of the ancient world; they have not understood that time produces and spreads enlightenment; and that in proportion to the increase of enlightenment, right ceases to be upheld by force, and society regains possession of herself.
And, in fact, what is the political work that we are endeavoring to promote? It is no other than the instinctive effort of every people toward liberty. And what is liberty, whose name can make every heart beat, and which can agitate the world, but the union of all liberties, the liberty of conscience, of education, of association, of the press, of movement, of labor, and of exchange; in other words, the free exercise, for all, of all the inoffensive faculties; and again, in other words, the destruction of all despotisms, even of legal despotism, and the reduction of law to its only rational sphere, which is to regulate the individual right of legitimate defense, or to repress injustice?
This tendency of the human race, it must be admitted, is greatly thwarted, particularly in our country, by the fatal disposition, resulting from classical teaching and common to all politicians, of placing themselves beyond mankind, to arrange, organize, and regulate it, according to their fancy.

For whilst society is struggling to realize liberty, the great men who place themselves at its head, imbued with the principles of the 17th and 18th centuries, think only of subjecting it to the philanthropic despotism of their social inventions, and making it bear with docility, according to the expression of Rousseau, the yoke of public felicity as pictured in their own imaginations.
This was particularly the case in 1789. No sooner was the old system destroyed than society was to be submitted to other artificial arrangements, always with the same starting point — the omnipotence of the law.

Saint-Just

The legislator commands the future. It is for him to will for the good of mankind. It is for him to make men what he wishes them to be.

Robespierre

The function of government is to direct the physical and moral powers of the nation toward the object of its institution.

Billaud Varennes

A people who are to be restored to liberty must be formed anew. Ancient prejudices must be destroyed, antiquated customs changed, depraved affections corrected, inveterate vices eradicated. For this, a strong force and a vehement impulse will be necessary. … Citizens, the inflexible austerity of Lycurgus created the firm basis of the Spartan republic. The feeble and trusting disposition of Solon plunged Athens into slavery. This parallel contains the whole science of government.

LePelletier

Considering the extent of human degradation, I am convinced — of the necessity of effecting an entire regeneration of the race, and, if I may so express myself, of creating a new people.
Men, therefore, are nothing but raw material. It is not for them to will their own improvement. They are not capable of it; according to Saint-Just, it is only the legislator who is. Men are merely to be what he wills that they should be. According to Robespierre, who copies Rousseau literally, the legislator is to begin by assigning the aim of the institutions of the nation. After this, the government has only to direct all its physical and moral forces toward this end. All this time the nation itself is to remain perfectly passive; and Billaud Varennes would teach us that it ought to have no prejudices, affections, nor wants, but such as are authorized by the legislator. He even goes so far as to say that the inflexible austerity of a man is the basis of a republic.
We have seen that, in cases where the evil is so great that the ordinary magistrates are unable to remedy it, Mably recommends a dictatorship, to promote virtue. "Have recourse," says he, "to an extraordinary magistracy, whose time shall be short, and his power considerable. The imagination of the people requires to be impressed." This doctrine has not been neglected. Listen to Robespierre:
The principle of the republican government is virtue, and the means to be adopted, during its establishment, is terror. We want to substitute, in our country, morality for self-indulgence, probity for honor, principles for customs, duties for decorum, the empire of reason for the tyranny of fashion, contempt of vice for contempt of misfortune, pride for insolence, greatness of soul for vanity, love of glory for love of money, good people for good company, merit for intrigue, genius for wit, truth for glitter, the charm of happiness for the weariness of pleasure, the greatness of man for the littleness of the great, a magnanimous, powerful, happy people, for one that is easy, frivolous, degraded; that is to say, we would substitute all the virtues and miracles of a republic for all the vices and absurdities of monarchy.
At what a vast height above the rest of mankind does Robespierre place himself here! And observe the arrogance with which he speaks. He is not content with expressing a desire for a great renovation of the human heart; he does not even expect such a result from a regular government. No; he intends to effect it himself, and by means of terror. The object of the discourse from which this puerile and laborious mass of antithesis is extracted was to exhibit the principles of morality that ought to direct a revolutionary government.
Moreover, when Robespierre asks for a dictatorship, it is not merely for the purpose of repelling a foreign enemy, or of putting down factions; it is that he may establish, by means of terror and as a preliminary to the operation of the Constitution, his own principles of morality. He pretends to nothing short of extirpating from the country by means of terror, self-interest, honor, customs, decorum, fashion, vanity, the love of money, good company, intrigue, wit, luxury, and misery. It is not until after he, Robespierre, shall have accomplished these miracles, as he rightly calls them, that he will allow the law to regain her empire. Truly it would be well if these visionaries, who think so much of themselves and so little of mankind, who want to renew everything, would only be content with trying to reform themselves; the task would be arduous enough for them. In general, however, these gentlemen, the reformers, legislators, and politicians, do not desire to exercise an immediate despotism over mankind. No, they are too moderate and too philanthropic for that. They only contend for the despotism, the absolutism, the omnipotence of the law. They aspire only to make the law.
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