Economic Sophisms. Frederic Bastiat
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to demonstrate to the Chambers and the Government, that it is sound policy to raise legislatively the price of all things by means of tariffs. And do the Chambers and the Government not obey the injunction? Now tariffs can raise prices only by diminishing the supply of commodities in the market! Then the journals, the Chambers, and the Minister, put in practice the theory of scarcity, and I am justified in saying that this theory is by far the most popular.
How does it happen that in the eyes of workmen, of publicists, and statesmen, abundance should appear a thing to be dreaded, and scarcity advantageous? I propose to trace this illusion to its source.
We remark that a man grows richer in proportion to the return yielded by his exertions, that is to say, in proportion as he sells his commodity at a higher price. He sells at a higher price in proportion to the rarity, to the scarcity, of the article he produces. We conclude from this, that, as far as he is concerned at least, scarcity enriches him. Applying successively the same reasoning to all other producers, we construct the theory of scarcity. We next proceed to apply this theory, and, in order to favour producers generally, we raise prices artificially, and cause a scarcity of all commodities, by prohibition, by restriction, by the suppression of machinery, and other analogous means.
The same thing holds of abundance. We observe that when a product is plentiful, it sells at a lower price, and the producer gains less. If all producers are in the same situation, they are all poor. Therefore it is abundance that ruins society And as theories are soon reduced to practice, we see the law struggling against the abundance of commodities.
This sophism in its more general form may make little impression, but applied to a particular order of facts, to a certain branch of industry, to a given class, of producers, it is extremely specious; and this is easily explained. It forms a syllogism which is not false, but incomplete. Now, what is true in a syllogism is always and necessarily present to the mind. But incompleteness is a negative quality, an absent datum, which it is very possible, and indeed very easy, to leave out of account.
Man produces in order to consume. He is at once producer and consumer. The reasoning which I have just explained considers him only in the first of these points of view. Had the second been taken into account, it would have led to an opposite conclusion. In effect, may it not be said:—
The consumer is richer in proportion as he purchases all things cheaper; and he purchases things cheaper in proportion to their abundance; therefore it is abundance which enriches him. This reasoning, extended to all consumers, leads to the theory of plenty.
It is the notion of exchange imperfectly understood which leads to these illusions. If we consider our personal interest, we recognise distinctly that it is double. As sellers we have an interest in dearness, and consequently in scarcity; as buyers, in cheapness, or what amounts to the same thing, in the abundance of commodities. We cannot, then, found our reasoning on one or other of these interests before inquiring which of the two coincides and is identified with the general and permanent interest of mankind at large.
If man were a solitary animal, if he laboured exclusively for himself, if he consumed directly the fruit of his labour—in a word, if he did not exchange—the theory of scarcity would never have appeared in the world. It is too evident that, in that case, abundance would be advantageous, from whatever quarter it came, whether from the result of his industry, from ingenious tools, from powerful machinery of his invention, or whether due to the fertility of the soil, the liberality of nature, or even to a mysterious invasion of products brought by the waves and left by them upon the shore. No solitary man would ever have thought that in order to encourage his labour and render it more productive, it was necessary to break in pieces the instruments which saved it, to neutralize the fertility of the soil, or give back to the sea the good things it had brought to his door. He would perceive at once that labour is not an end, but a means; and that it would be absurd to reject the result for fear of doing injury to the means by which that result was accomplished. He would perceive that if he devotes two hours a day to providing for his wants, any circumstance (machinery, fertility, gratuitous gift, no matter what) which saves him an hour of that labour, the result remaining the same, puts that hour at his disposal, and that he can devote it to increasing his enjoyments; in short, he would see that to save labour is nothing else than progress.
But exchange disturbs our view of a truth so simple. In the social state, and with the separation of employments to which it leads, the production and consumption of a commodity are not mixed up and confounded in the same individual. Each man comes to see in his labour no longer a means but an end. In relation to each commodity, exchange creates two interests, that of the producer and that of the consumer; and these two interests are always directly opposed to each other.
It is essential to analyze them, and examine their nature.
Take the case of any producer whatever, what is his immediate interest? It consists of two things: 1st, that the fewest possible number of persons should devote themselves to his branch of industry; 2dly, that the greatest possible number of' persons should be in quest of the article he produces. Political economy explains it more succinctly in these terms, Supply very limited, demand very extended; or in other words still, Competition limited, demand unlimited.
What is the immediate interest of the consumer? That the supply of the product in question should be extended, and the demand restrained.
Seeing, then, that these two interests are in opposition to each other, one of them must necessarily coincide with social interests in general, and the other be antagonistic to them.
But which of them should legislation favour, as identical with the public good—if, indeed, it should favour either?
To discover this, we must inquire what would happen if the secret wishes of men were granted.
In as far as we are producers, it must be allowed that the desire of every one of us is anti-social. Are we vine-dressers? It would give us no great regret if hail should shower down on all the vines in the world except our own: this is the theory of scarcity. Are we iron-masters? Our wish is, that there should be no other iron in the market but our own, however much the public may be in want of it; and for no other reason than that this want, keenly felt and imperfectly satisfied, shall ensure us a higher price: this is still the theory of scarcity. Are we farmers? We say with M. Bugeaud, Let bread be dear, that is to say, scarce, and agriculturists will thrive: always the same theory, the theory of scarcity.
Are we physicians? We cannot avoid seeing that certain physical ameliorations, improving the sanitary state of the country, the development of certain moral virtues, such as moderation and temperance, the progress of knowledge tending to enable each man to take better care of his own health, the discovery of certain simple remedies of easy application, would be so many blows to our professional success. In as far as we are physicians, then, our secret wishes would be anti-social. I do not say that physicians form these secret wishes. On the contrary, I believe they would hail with joy the discovery of a universal panacea; but they would not do this as physicians, but as men, and as Christians. By a noble abnegation of self', the physician places himself in the consumer's point of view. But as exercising a profession, from which he derives his own and his family's subsistence, his desires, or, if you will, his interests, are anti-social.
Are we manufacturers of cotton stuffs? We desire to sell them at the price most profitable to ourselves. We should consent willingly to an interdict being laid on all rival manufactures; and if we could venture to give this wish public expression, or hope to realize it with some chance of success, we should attain our end, to some extent, by indirect means; for example, by excluding foreign fabrics, in order to diminish the supply, and thus produce, forcibly and to our profit, a scarcity of clothing.
In the same way, we might pass in review all other branches of industry, and we should always find that the producers, as such, have anti-social views. "The shopkeeper," says Montaigne, "thrives only by the irregularities of youth; the farmer by the high price of corn, the architect by the destruction of houses, the officers of justice by lawsuits and quarrels. Ministers of religion derive their distinction and employment from