tion
The Economics of Freedom is a joint project of the Atlas Economic Research Foundation and Students For Liberty. Like Atlas, we at SFL believe that ideas know no borders. Our affiliates around the world work to promote free and just societies. We are young idealists who know that liberty is not only beautiful and inspiring, but that it works in practice. We, the youth, are taking up the task of educating ourselves and our fellow students about the great issues of freedom, justice, prosperity, and peace. We build on foundations built by generations of thinkers, entrepreneurs, activists, and scholars.
This movement is diverse. Our members speak many languages, profess many religions, and come from many nations, but we are united by our common principles: economic freedom to choose how to provide for oneself, social freedom to choose how to live one’s life, and intellectual and academic freedom. We believe that freedom does not come in pieces, but rather that it is a single and indivisible concept that must be defended at all times.
Why The Economics of Freedom? Because at present, fallacious economic thought is being used to justify the steady erosion of our freedoms. The examples are plentiful: “stimulus packages” that pile debt on top of debt; increased military spending in the name of “job creation”; foolish destruction of wealth (“cash for clunkers”) to benefit powerful industries; trade obstructions (quotas and tariffs) that benefit the few at the expense of the many and undermine international peace; phony “regulations” that do not make things “regular,” but instead disrupt and disorder economies; and confiscation, nationalization, and plunder. All are in vogue among the political classes.
Our generation is not the first to be confronted by such fallacies. Frédéric Bastiat destroyed the very same economic fallacies many generations ago. Bastiat was a nineteenth century French political economist who dedicated the last years of his short life to proving that government by its nature possesses neither the moral authority to intervene in our freedom nor the practical ability to create prosperity through its intervention.
The Economics of Freedom presents some of Bastiat’s most important essays. They reveal a sharp mind systematically debunking one fallacy after another and a moral conscience that recoiled from violence and tyranny. To read and understand “What Is Seen and What Is Not Seen” is to contemplate the world in a new light. It is one of the most important essays ever written in economics. In addition to Bastiat’s writings, this book includes two essays that show the importance of Bastiat’s ideas and than update and apply them to more contemporary issues.
The Foreword to Bastiat’s essays was written by the 1974 Nobel Laureate in economic science, F. A. Hayek. Hayek was not only a pioneer of economic thought who gained fame for his work showing why socialism fails and how markets utilize dispersed knowledge (see his essay on “The Use of Knowledge in Society,” which is available online at www.econlib.org, and his Nobel lecture, which is available at NobelPrize.org). He was also a forceful champion of liberty. The Road to Serfdom, published in 1944 in England, has become a classic of political thought, as have The Constitution of Liberty and Law, Legislation, and Liberty.
The concluding essay, “Twenty Myths about Markets” by Dr. Tom G. Palmer, was first delivered in 2007 in Nairobi, Kenya, at a meeting of the Mont Pelerin Society, the international society that Hayek founded in 1947. Dr. Palmer is a senior fellow at the Cato Institute and vice president of the Atlas Economic Research Foundation, a worldwide network of think tanks. Palmer formulates, considers, and refutes the myths that pass for wisdom, including even some “overly enthusiastic defenses” of markets that misstate their nature.
The academy is, perhaps unsurprisingly, full of people who think that they are smart enough to run the lives of others. They are not. Hence the subtitle of this volume: “What Your Professors Won’t Tell You.” While your teachers likely value freedom, they too often overlook the broader implications of government intervention, particularly in the economic sphere. Because they overestimate their own intellectual powers, they ignore the “unintended consequences” of intervention into the voluntary interactions of others. Nor do they understand that the theories they propound are too often deployed by special interests, which are better at manipulating and abusing power than are university professors. That is why we at Students For Liberty have taken up this cause, because if we do not advocate liberty in all of its forms, who will?
We believe that a free society demands respect for the freedom of everyone to pursue his or her own goals and to trade ideas, goods, and services on voluntarily agreed-to terms. When all enjoy equal freedom and our interactions are voluntary, the result is not chaos, but order; not poverty, but plenty; not conflict, but cooperation.
We hope this book has made it into the hands of a curious student with an open mind. If you find the ideas of this book interesting, you can visit www.studentsforliberty.org to learn more about the student movement for liberty and join the fight for a free academy and a free society.
Foreword by F. A. Hayek
Even those who may question the eminence of Frédéric Bastiat as an economic theorist will grant that he was a publicist of genius. Joseph Schumpeter calls him “the most brilliant economic journalist who ever lived.” For the purpose of introducing the present volume, which contains some of the most successful of his writings for the general public, we might well leave it at that. One might even grant Schumpeter's harsh assessment of Bastiat that “he was not a theorist” without seriously diminishing his stature. It is true that when, at the end of his extremely short career as a writer, he attempted to provide a theoretical justification for his general conceptions, he did not satisfy the professionals. It would indeed have been a miracle if a man who, after only five years as a regular writer on public affairs, attempted in a few months, and with a mortal illness rapidly closing in on him, to defend the points on which he differed from established doctrine, had fully succeeded in this too. Yet one may ask whether it was not only his early death at the age of forty-nine that prevented him. His polemical writings, which in consequence are the most important ones he has left, certainly prove that he had an insight into what was significant and a gift for going to the heart of the matter that would have provided him with ample material for real contributions to science.
Nothing illustrates this better than the celebrated title of the first essay in the present volume. “What is seen and what is not seen in political economy!” No one has ever stated more clearly in a single phrase the central difficulty of a rational economic policy and, I would like to add, the decisive argument for economic freedom. It is the idea compressed into these few words that made me use the word “genius” in the opening sentence. It is indeed a text around which one might expound a whole system of libertarian economic policy. And though it constitutes the title for only the first essay in this volume, it provides the leading idea for all. Bastiat illustrates its meaning over and over again in refuting the current fallacies of his time. I shall later indicate that, though the views he combats are today usually advanced only in a more sophisticated guise, they have basically not changed very much since Bastiat's time. But first I want to say a few words about the more general significance of his central idea.
This is simply that if we judge measures of economic policy solely by their immediate and concretely foreseeable effects, we shall not only not achieve a viable order but shall be certain progressively to extinguish freedom and thereby prevent more good than our measures w
ill produce. Freedom is important in order that all the different individuals can make full use of the particular circumstances of which only they know. We therefore never know what beneficial actions we prevent if we restrict their freedom to serve their fellows in whatever manner they wish. All acts of interference, however, amount to such restrictions. They are, of course, always undertaken to achieve some definite objective. Against the foreseen direct results of such actions of government we shall in each individual case be able to balance only the mere probability that some unknown but beneficial actions by some individuals will be prevented. In consequence, if such decisions are made from case to case and not governed by an attachment to freedom as a general principle, freedom is bound to lose in almost every case. Bastiat was indeed right in treating freedom of choice as a moral principle that must never be sacrificed to considerations of expediency; because there is perhaps no aspect of freedom that would not be abolished if it were to be respected only where the concrete damage caused by its abolition can be pointed out.
Bastiat directed his