David M. Hart, “On Ricochets, Hidden Channels, and Negative Multipliers: Bastiat on Calculating the Economic Costs of ‘The Unseen’.”

[Created: November 24, 2014]
[Updated: June 28, 2015]

A Paper given at the “History of Thought” Session of the Society for the Development of Austrian Economics.  Southern Economic Association 83rd Annual Meeting,
November 23–25, 2013
Tampa, Florida

Created: 19 January, 2013
Revised: Sunday, November 24, 2013
Updated: 28 June, 2015

Word Length: 13,569 words

Author: Dr. David M. Hart.

Director of the Online Library of Liberty Project at Liberty Fund <oll.libertyfund.org> and
Academic Editor of the Collected Works of Frédéric Bastiat.

Email:

Work: dhart@libertyfund.org
Private: davidmhart@mac.com

Websites:

Liberty Fund: <oll.libertyfund.org>
Personal: <davidmhart.com/liberty>
Blog: <davidmhart.com/wordpress>

Abstract

In this paper I would like to examine a theory Bastiat developed in the latter years of his life (1847–1850) on calculating the costs and benefits of what he called “the unseen”. This is an important part of Bastiat’s economic theory which has been ignored by researchers to date, partly because the relevant articles were not included in the FEE translation of his Economic Sophisms (but which will be included in LF’s new translation of the complete Sophisms), partly because of mistranslations of those that have been translated (the key word “ricochet” was often translated figuratively, often as “indirect” or “rebounds”, and not as the technical economic word Bastiat intended it to be), and partly because a full electronic version of his complete works did not exist until recently when comprehensive key word searches could be used for the first time to uncover the rich and colorful vocabulary Bastiat used in formulating his ideas on this topic.

The methodology used in this paper is a combination of history of ideas and linguistic analysis of his and other contemporary writings.

I will begin with a discussion of the idea of “the double incidence of loss” which Bastiat borrowed from the English free trader Perronet Thompson, Bastiat’s expansion of this idea, which originally included only three parties, to one which included many (perhaps millions) of interconnected parties in an economy (“the ricochet effect”), his failed attempts to use mathematics to scientifically calculate the losses caused by government interventions in the economy or by natural disasters, and his realization that there could be positive ricochet effects (PRE) as well as the negative ricochet effects (NRE) which is what he was most interested in when he began his analysis.

Bastiat’s theory of “the ricochet effect” led him to think about concepts such as opportunity costs, the multiplier effect (positive and negative), the use of mathematics to quantify costs and benefits of economic actions, the use of thought experiments (“Crusoe economics” and stories about Jacques Bonhomme) to explore the nature of human action in the abstract (praxeology), the interconnectedness of all economic activity, the idea of unintended consequences, and the transmission of economic information to other economic actors via information “flows”.

This analysis only proves yet again what a loss his premature death was in 1850. The originality and richness of his ideas are striking and one can only speculate what he might have done to develop them had he lived longer.

The paper also includes several Appendices illustrating Bastiat’s use of the term “ricochet” and some of the sources he used. The previously untranslated Economic Sophisms ES3 IV “Un profit contre deux pertes” (One Profit versus Two Losses), 9 May 1847, Le Libre-Échange and ES3 VII “Deux pertes contre un profit” (Two Losses versus One Profit), 30 May 1847, Le Libre-Échange are provided in the original French as well as LF’s new translation.

The Problem of Calculating the Economic Costs of the Unseen: the “Double Incidence of Loss”
- Introduction
- Seeing the Problem of “the Seen” and “the Unseen”
- Bastiat’s First Formulation in 1847: “the Double Incidence of Loss”
- The “Triple Incidence of Loss”
The Sophism Bastiat never wrote: the Sophism of the Ricochet Effect
- Preparatory Work and Regrets
- The Intellectual Origins of “The Ricochet Effect”
- Bastiat’s Use of the Term Ricochet
  - 1. Bastiat’s use of metaphors to understand economic activity
  - 2. Bastiat’s use of expressions which suggest that economic actions can have unintended consequences
  - 3. Bastiat’s criticism of the sophistical use of the term “ricochet” to justify government actions
- The Distinction between “Positive Ricochet Effects” (PRE) and “Negative Ricochet Effects” (NRE)
Conclusion
Bibliography
- Online
- Works by Bastiat
- Secondary Sources
Endnotes

On Ricochets, Hidden Channels, and Negative Multipliers: Bastiat on Calculating the Economic Costs of ‘The Unseen’.

The Problem of Calculating the Economic Costs of the Unseen: the “Double Incidence of Loss”↩

Introduction

A number of modern day Austrian economists (Hülsmann, Thornton, and DiLorenzo) have claimed that Bastiat is an “Austrian economist” because of his ideas on a number of topics, namely that:[1]

economics is a science of universally valid laws that are discovered by logical deductive reasoning
the methodology of using thought experiments in order to understand human action (and curiously, in the light of this paper, Bastiat’s rejection of mathematics for understanding economics)
the science of human action (praxeology) where individuals make valuations and choices, and take actions to achieve their goals
everybody’s economic interests are harmonious (in the absence of coercion)
the importance of justly acquired property as the basis of economic transactions
the value of goods and services are judged differently by each individual (subjective value theory)
the coordinating function of the market
capital accumulation enriches ordinary workers by raising their marginal productivity

I don’t go as far as they do, preferring to see him as a “proto-Austrian” who developed in a fairly precocious manner several ideas which have become associated with the Austrian school but which he did not have time to develop into a coherent theory because of his untimely death at the age of 49.

The methodology used in this paper is a combination of history of ideas and linguistic analysis of his and other contemporary writings.

Bastiat’s theory of “the ricochet effect” led him to think about concepts such as opportunity costs, the multiplier effect (positive and negative), the use of mathematics to quantify costs and benefits of economic actions, the use of thought experiments (“Crusoe economics” and stories about the French ev ery man “Jacques Bonhomme”) to explore the nature of human action in the abstract (praxeology), the interconnectedness of all economic activity, the idea of unintended consequences, and the transmission of economic information to other economic actors via information “flows”.

Seeing the Problem of “the Seen” and “the Unseen”

The French economist Frédéric Bastiat (1801–1850) is probably best known for his short essay debunking the view that the breaking of a window could result in an overall benefit for a society. “The Broken Window” (La vitre casée) was a chapter in a short book he wrote as he was dying from throat cancer in July 1850, Ce qu’on voit et ce qu’on ne voit pas (What is Seen and What is not Seen),[3] which also carried the marvelous and also true subtitle “Economics in One Lesson”. He took precious time off from writing his treatise on economic theory, Harmonies Économiques, the first half of which appeared in 1850 and the second half of which appeared in 1851 and was cobbled together from his unfinished manuscripts by his literary executors Prosper Paillottet and Roger Fonteyraud, or as they called themselves on the title page “Les Amis de Frédéric Bastiat.” The key insight which Bastiat articulated in this and other chapters in the book is the notion that there are consequences of economic activity (gains and losses for different individuals) which are immediately obvious to every observer (what he called “the seen”), and more importantly sometimes, there are consequences which remain hidden for a period of time, or are indirect and are not immediately apparent to observers, or which are unintended and thus not expected, but which need to be taken into account nevertheless (what he called “the unseen”). As was his wicked and amusing way, Bastiat called the economists who expected there to be “unseen” consequences, “good economists”, and those who only saw the immediately obvious, “the seen”, “bad economists.”

In addition, Bastiat also wanted to be able to calculate the gains and losses caused by these indirect, hidden or unexpected events, whether natural by means of storms or fires (the commonly discussed example in Bastiat’s day was the Great Fire of London in September 1666), or the result of human actions (whether by hooligan sons throwing rocks through windows or governments imposing taxes and regulations on economic activity). The arguments which he presented in WSWNS [4] were not his final thoughts on the matter as he had been thinking about this problem in several of his essays written between 1845 and 1848 which appeared in his collections of Sophismes Économiques, as well as in some of the chapters he was writing for the Harmonies Économiques. Unfortunately, he was not able to bring all his scattered thoughts and incomplete arguments into a coherent theory of the calculation of the economic costs and benefits of “the unseen” before he died. What we will attempt to show in this paper is how his thinking on this topic was evolving and where it might have ended up if he had not died before he could complete the task. Also at the back of our mind is the question of “how Austrian” was Bastiat in his insights?

Bastiat’s First Formulation in 1847: “the Double Incidence of Loss”

The trajectory his thinking took was to begin with a crude three-party analysis in which the amounts of the gains and losses were equal for each participant, with one party gaining and two parties losing an equal amount, hence there is a “double incidence of loss.” “The Double Incidence of Loss” is a theory first formulated by the anti-corn law campaigner Colonel Perronet Thompson (1783–1869)[5] in 1834–36 and taken up by Bastiat in 1847 when the campaign against protectionism was gaining momentum in the Chamber of Deputies. Bastiat was aware of Thompson because of his prominent position within the Anti-Corn Law league which Bastiat so much admired. The League’s success in getting the protectionist Corn Laws repealed in 1846 inspired Bastiat to set up a French Free Trade Association in mid 1846 and to lobby for tariff reform within France over the coming year. (This campaign was ultimately unsuccessful and the free trade lobby were defeated in Committee in mid 1847.) Thus Thompson’s and Bastiat’s first use of this theory had to do with tariffs and their impact on consumers. Later Bastiat was to make this theory more general when he applied it to the impact of any economic intervention in the economy (such as taxation) or any natural or human disaster such as the destruction of property, as in “The Broken Window” essay in 1850.

With respect to the impact of tariff protection or subsidies to industry on the economy, Thompson and Bastiat argued that they resulted in a directly observable and obvious profit for one industry (and its workers) but at the expense of two other participants in the market. These other participants (or would-be participants) suffer a loss equal to the benefit gained by the first party: the consumer loses by having to pay a higher price for a good which he or she could have bought more cheaply from another supplier (often foreign), and unknown third parties also lose because the consumer who was forced to pay more for a good which is protected or subsidized has that much less to spend on other goods and services. Hence there is one party which benefits and two which lose out to the same amount.

The phrase appears in Thompson’s A Running Commentary on Anti-Commercial Fallacies which were a series of articles which appeared in The Spectator magazine between February and June 1834, in which he attempts to quantify the losses to consumers (and by extension the nation) caused by protected industries:

(T)he (part) of the sum gained to the monopolists and lost twice over by the rest of France, - (viz. once by a corresponding diminution of business to some other French traders, and once more by the loss to the consumers, who are the nation)… The understanding of the misery of this basis, depends upon a clear comprehension of the way in which the gain to the monopolist is lost twice over by other parties; or what in England has been called the double incidence of loss.[6]

Later that same year Perronet Thompson put the argument in its reverse format, namely an attempt to calculate the gains to consumers provided by free trade. In a paragraph by paragraph refutation of a French government inquiry into tariff policy in 1834 called Contre-Enquête (Counter-Inquiry) he notes that free trade increases “la masse de la consommation collective” (the aggregate total of consumption) because it lowers the price of goods and “the difference of price” enjoyed by the consumers was a “nett gain” for the country:

(40.) There is no difficulty about having facts. Why has nobody asked the witness under examination, “If there was liberty of trade, do you think that supplying the goods to be given for the foreign cloths would make a gain [un gain] to anybody, and to what amount? Do you think that the expenditure of the difference of price by the consumer [la différence du prix pa la consommateur] would make a gain to anybody, and to what amount? Do you think that these two gains put together might equal what you would lose [deux gains ensemble pussent égaler vos pertes]? Do you think that after this, the gain of consumers, who are France, would stand out as nett gain?” It is pity there should be any scarcity of facts. (p. 211)
(41.) The liberty of commerce would increase the aggregate total of consumption [la masse de la consommation collective], by all the difference of prices; in the same manner as the quantity of wood a man cuts, would be increased by the liberty of using a sharp hatchet instead of a blunt one. (p. 213)[7]

Bastiat recognized that this was a powerful argument which could be used against defenders of tariff protection and subsidies to industry which he used for the first time in two articles which he wrote in May 1847 for the free trade journal Libre-Échange which he edited. The first was “Un profit contre deux pertes” (One Profit versus Two Losses) (9 May 1847) and the second was “Deux pertes contre un profit” (Two Losses versus One Profit) (30 May 1847).[8] These two essays were not republished in his collections of similar essays which were called the Sophismes Économique, two series of which appeared in January 1846 (ES1) and late 1847 or early 1848 (ES2), and thus did not get wider circulation. He had enough material for a third series of Sophisms (ES3) but did not live long enough to publish it. Therefore these and other articles languished in the relative obscurity of his Oeuvres complètes (1854–55). They will however be reinstated in a complete collection of his Sophisms which will be published by Liberty Fund in volume 3 of his Collected Works (forthcoming).

This is how Bastiat in May 1847 first defined the problem of calculating gains and losses after some act of destruction. Bastiat refuses to name the source for his insight as Perronet Thompson had acquired some notoriety for his mathematical equations and geometrical analyses which were regarded with some suspicion and thought of as overly complex.

I will therefore suppress the name of the author and the algebraic form and reproduce the argument, which is limited to establishing that any advantage flowing from tariffs will of necessity bring about the following:
1. A profit for one industry;
2. An equal loss for another industry;
3. An equal loss for the consumer.”[9]
(Supprimant donc le nom de l’auteur et la forme algébrique, je reproduirai l’argument qui se borne à établir que toute faveur du tarif entraîne nécessairement :
1° Un profit pour une industrie ;
2° Une perte égale pour une autre industrie ;
3° Une perte égale pour le consommateur.)

Bastiat used the same formula in his 30 May letter to the mathematician and astronomer François Arago (1786–1853)[10] which he capitalizes for special emphasis:

IF A PROTECTIONIST DUTY RAISES THE PRICE OF AN OBJECT BY A GIVEN QUANTITY, THE NATION GAINS THIS QUANTITY ONCE AND LOSES IT TWICE.
(Si un droit protecteur élève le prix d’un objet d’une quantité donnée, la nation gagne cette quantité une fois et la perd deux fois.)

Bastiat was still using the 3 party model when he wrote “La vitre cassée” (The Broken Window) in WSWNS (July 1850). His editor Paillottet tells us that Bastiat wrote this at least a year earlier but had lost the manuscript and had rewritten it from memory. This might explain why he makes no reference to “the ricochet effect” but sticks with the theory of “the double incidence of loss.” Here is how he concludes “The Broken Window”:

The reader must take care to note clearly that there are not just two characters, but three, in the little drama that I have put before him. One, Jacques Bonhomme, represents the Consumer, reduced by the breakage to enjoy one good instead of two. The second is the Glazier, who shows us the Producer whose activity is stimulated by the accident. The third is the Shoemaker (or any other producer) whose output is reduced to the same extent for the same reason. It is this third character that is always kept in the background and who, by personifying what is not seen, is an essential element of the problem. He is the one who makes us understand how absurd it is to see profit in destruction. He is the one who will be teaching us shortly that it is no less absurd to see profit in a policy of trade restriction, which is after all, nothing other than partial destruction.
(Il faut que le lecteur s’attache à bien constater qu’il n’y a pas seulement deux personnages, mais trois dans le petit drame que j’ai soumis à son attention. L’un, Jacques Bonhomme, représente le Consommateur, réduit par la destruction à une jouissance au lieu de deux. L’autre, sous la figure du Vitrier, nous montre le Producteur dont l’accident encourage l’industrie. Le troisième est le Cordonnier (ou tout autre industriel) dont le travail est découragé d’autant par la même cause. C’est ce troisième personnage qu’on tient toujours dans l’ombre et qui, personnifiant ce qu’on ne voit pas, est un élément nécessaire du problème. C’est lui qui nous fait comprendre combien il est absurde de voir un profit dans une destruction. C’est lui qui bientôt nous enseignera qu’il n’est pas moins absurde de voir un profit dans une restriction, laquelle n’est après tout qu’une destruction partielle.)

The next stage in his thinking was firstly, the realization that more than three parties were involved and secondly, that sometimes these “unseen” consequences could have positive effects and were not always negative. There is a hint of this in the 9 May article where he refers in passing to numerous “ancillary losses” but it is left tantalizingly undeveloped:

These (3 costs and benefits) are the direct and necessary effects of protection. In all justice, and to complete the assessment, we ought in addition to impute to it a number of ancillary losses, such as the cost of surveillance, expensive formalities, commercial uncertainty, fluctuations in duties, aborted operations, the increased likelihood of war, smuggling, repression, etc.
(Ce sont là les effets directs et nécessaires de la protection. En bonne justice, et pour compléter le bilan, il faudrait encore lui imputer de nombreuses pertes accessoires, telles que : frais de surveillance, formalités dispendieuses, incertitudes commerciales, fluctuations de tarifs, opérations contrariées, chances de guerre multipliées, contrebande, répression, etc.)

By moving beyond the three-party model he recognized the interconnectedness of all economic activity which meant that potentially millions of individuals might be influenced to one degree or another by an economic action. He also offers in the 30 May article another tantalizing insight about the role that the “circulation ultérieure” (subsequent circulation) of money might play in spreading the harms and benefits of government intervention. He throws his arms up figuratively in despair because he does not know how to calculate the impact of “des parallèles infinies” (infinite trajectories) created by the circulation of money.

The following is also said: the franc that the cutler receives as a supplement, thanks to trade protection, he pays to his workers. My reply is this : the franc that the bookseller would receive in addition, thanks to free trade, he would also pay to other workers, so that in this respect the balance is not upset, and it remains true that under one regime you have a book and on the other you do not. To avoid the confusion, intentional or not, that will not fail to be cast over this subject, you have to make a clear distinction between the original distribution of your 3 francs and their subsequent circulation which, in both hypotheses, follows infinite trajectories and can never affect our calculation.
(On dira encore ceci : Le franc que le coutelier reçoit en plus, grâce à la protection, il le fait gagner à des travailleurs. — Je réponds : Le franc que le libraire recevrait en plus, grâce à la liberté, il le ferait gagner aussi à d’autres travailleurs ; en sorte que, de ce côté, la compensation n’est pas détruite, et il reste toujours que, sous un régime vous avez un livre, et sous l’autre vous n’en avez pas. — Pour éviter la confusion volontaire ou non qu’on ne manquera pas de faire à ce sujet, il faut bien distinguer la distribution originaire de vos 3 francs d’avec leur circulation ultérieure, laquelle, dans l’une et dans l’autre hypothèse, suit des parallèles infinies, et ne peut jamais affecter notre calcul.)

His hope is that the mathematician and astronomer François Arago would come to his rescue with the requisite mathematics which would enable him to calculate scientifically the gains and losses to the relevant parties and thus make his theoretical arguments against tariffs and subsidies “invincible" (“I would like to see this demonstration clad in the invincible evidence that the language of equations communicates” (je désire voir cette démonstration revêtue de l’évidence invincible que communique la langue des équations)). Unfortunately his reply is not known and nothing came of the matter as far as we know:

Another complication was that the losses to one party and gains to another might not be exactly equal as he had first thought. They could of course, just cancel each other out or, if a sufficiently large number of participants were involved, then the relative gains and losses would gradually diminish (like waves on a pond or lines disappearing into infinity “des parallèles infinies") and thus have to be calculated using mathematics which he did not possess, especially as the impact became smaller, more distant and indirect over time.

The “Triple Incidence of Loss”

Had Bastiat thought about Thompson’s theory a bit more he might have come to the realisation that the damage caused by a broken window was even worse than he had first thought. It was true that at least three parties were involved but he ignores the fact that Jacques actually suffers a double not a single loss when his window gets broken. He loses the capital value of the window and then the value of his time in making temporary repairs and arranging for the window to be replaced, and then the out of pocket cost of buying the new window and having it installed. Since a new window cost Fr 6, and the average wage of a semi-skilled labourer was Fr 2–3 per day, his total losses would be the sum of the discounted capital value of the window which was broken (Fr 2), the time he spends cleaning up and making temporary repairs and arranging for a glazier to come (Fr. 1.5), the cost of the glazier’s repairs (Fr 6 for the window plus Fr 2 for time). When these additional factors are taken into account the costs to Jacques are no longer just Fr 6 but closer to Fr 12 or double the figure Bastiat was working with. Jacques could have been out of pocket the equivalent of 4–6 days work for an average semi-skilled labourer.

If one were a Keynesian one might object to Bastiat’s reasoning that the losses resulting from a broken window (or other natural disaster) always outweigh the gains by reversing the analysis. The glazier who gains the Fr 6 for repairing the broken window likewise will spend some or all of it on other things such as a new pair of shoes or a chicken for the Sunday pot. This purchase by the glazier is also “unseen” just as Jacques Bonhomme’s unmade purchase is also “unseen.” Bastiat in turn might admit that the sum of losses on Jacques’ side of the equation might equal the gains on the glazier’s side of the equation but that there is still a net loss to the economy in the form of the destroyed capital stock of a broken window. This Keynesian economist might go further by arguing that if the government had broken some strategically placed “windows” then the glazier’s income and his subsequent expenditure might have “multiplier effects” as they unlocked “idle resources” which were not being used productively in the economy. But this is another story.

Another twist in the argument is introduced if one examines a criminal act rather than an act of nature. It may well be that, in the case of an act of nature, the benefits accruing to “the glazier” and all the recipients of his new expenditure might equal those which would have accrued to the “unseen” shopkeepers had Jacques Bonhomme not had to replace his brown window. But if one considers an act of robbery does this change the mathematics of calculating gains and losses? This was an argument used by Perronet Thompson in “A Running Commentary on Anti-Commercial Fallacies” who regarded the beneficiaries of a tariff to be “robbers”. Would it be a reasonable economic argument to say that once the robbery had been committed one could argue in favour of it because the expenditure of the newly acquired money by the robbers stimulated consumption and production in all the businesses they subsequently frequented?

The Commission, however, think they have settled the point to all eternity; and they proceed without hesitation to avow, that in fixing the articles of the tariff, they pay not the slightest attention to the fact that France is the loser by each and every act of robbery, but confine themselves entirely to the question whether the several robbers declare their respective robberies to be “profitable” to themselves. (p. 188)

I suspect that Bastiat may have been aware of some of these concerns and tried to address them in his related theory which he called the “ricochet effect” (par ricochet) or “flow on effect.” By this he meant the indirect consequences of an economic action which flow or knock on to third or more parties, sometimes with positive results but more often with negative results.

The Sophism Bastiat never wrote: the Sophism of the Ricochet Effect↩

Preparatory Work and Regrets

Bastiat worked on this new theory intermittently during late 1847 and early 1848, before dropping it to work on more pressing matters such as his work as Vice-President of the Finance Committee in the Constituent and then the National Assembly to which he had been elected in April 1848, writing a series of pamphlets in the pamphlet war against the socialists which he took up in 1849, and working on the first half of Harmonies économiques.

Something should be said about why the translator of the FEE edition of Bastiat’s works missed this crucial expression and its related terms. Firstly, they only translated the two Series of Economic Sophisms which were published in Bastiat’s lifetime. The material he did not have time to edit into a third series, which was discussed as a possibility by Paillottet the French editor, contains the three essays which included his lengthy discussion of the theory of “the double incidence of loss” and the sophism “Monita secreta” (Monita secreta) (20 Feb 1848) ES3 XVIII which contain 5 references to “ricochet”.

Secondly, when they did come across the word, for example in ES2 IV, they translated “par ricochet” as “rebounds”, or in WSWNS III (???). “L’impôt” (Taxes) they translated “ses ricochets sur l’industrie” as “their indirect effects on industry”. This also occurred in Harmonies économiques. Chap. XVII. “Services privés, service public” (Private Services, Public Services) where they translated the several references to “ricochet” as the “indirect effect of spending”. Even when there was an explicit reference to “le sophisme des ricochets” in the essay “Spoliation et loi” (Plunder and Law) they translated it somewhat strangely as “the sophism of chain reactions.” This is in fact the reverse of what Bastiat was getting at. A chain reaction suggest an out of control and ever increasing reaction leading to an explosion. Ricochet suggests the opposite, as in a stone ricocheting across a pond with ever diminishing energy as each bounce becomes smaller and smaller, until the stone sinks beneath the surface. Bastiat realized that the impact of an economic action had a diminishing effect the further it moved away from its original source. The problem was how to calculate the total of these effects, which is where the need for calculus comes into the picture. Hence his appeal to the astronomer Arago.

An analysis of the electronic version of Bastiat’s Oeuvres complètes shows that Bastiat makes the following explicit references to “ricocher” (verb) or “ricochet” (noun) for a total of 24 uses of the word:

1 explicit reference to “ricocher” (the verb) in the essays published in ES1 (January 1846): ES1 XXI. “Matières premières” (Raw Materials)
1 reference to “ricochet” in the essays published in ES2 (January 1848): ES2 IV. “Conseil inférieur du travail” (The Lower Council of Labor)
6 references to “ricochet” in the essays we have called ES3 (articles written between January 1846 and February 1848): 1 in ES3 XII. “L’indiscret” (The Man who asked Embarrassing Questions) (12 Dec. 1847); 5 in the Sophism he wrote in February 1848 just before the outbreak of the Revolution, ES3 XVIII. “Monita secreta” (Monita secreta) [20 February 1848]
2 references to “ricochet” in speeches and other writings in 1847: 1 in “Cinquième discours, à Lyon” (Fifth Speech given at Lyons) (August 1847); 1 in “Réponse au journal l’Atelier” (Response to the journal The Workshop) (12 Sept. 1847)
6 references to “ricochet” in speeches and other writings in 1848: 2 in “Réponse à divers” (Response to various (criticisms) (1 Jan. 1848); 4 in “Septième Discours, à Paris, Salle Montesquieu” (Seventh Speech at the Salle Montesquieu in Paris) (7 Jan 1848)
1 reference to “ricochet” in 1849: “Paix et liberté ou le budget républicain” (Peace and Freedom or the Republican Budget) (February 1849)
7 references to “ricochet” in 1850: 1 in “Spoliation et loi” (Plunder and Law) (15 May 1850), only 1 in WSWNS (July 1850), 5 in Economic Harmonies with 1 reference in Chap. XI. Producteur. - Consommateur (Producer, Consumer) and 4 in Chap. XVII. “Services privés, service public” (Private Services, Public Services) with an explicit reference to “the Sophism of the Ricochet Effect.”

This analysis of key words shows a clustering of interest in the topic in January and February 1848 and then in late 1850. Bastiat seems to have returned to work on the ricochet effect in late 1850 when he was rushing to complete the second half of Harmonies économiques before he died. His most detailed comments on the theory of the ricochet effect appeared in the unfinished chapters in the second half of Harmonies Économiques, Chap. XI. Producteur. - Consommmateur (Producer, Consumer) and Chap. XVII. “Services privés, service public” (Private Services, Public Services). There was no mention of ricochet in the first part of 10 chapters which was published in the last year of his life. However, all the references are to be found in the notes and fragments he left behind which Paillottet put together for the second half of the treatise which appeared in 1851. A hint perhaps of the growing importance Bastiat was placing on this new kind of economic sophism.

As the second series of Economic Sophisms was being printed in January 1848 Bastiat expressed some regret in a public lecture he gave for the Free Trade Association at the Salle Montesquieu in Paris that he had never got around to writing a Sophism explicitly about what he called “le sophisme des ricochets” (the sophism of ricochet effects). Many in the audience must have read his earlier thoughts on the matter as they responded very positively to his comments about his plans for “the next edition” of the Economic Sophisms[11] which he promised would contain such an essay.

In his lecture Bastiat was reflecting on why the Swiss refused to impose tariffs on their economy in spite of the fact that they had large landowners, as France did, who had an economic interest in using the power of the state to gain benefits in this way. The answer, he thought, lay in the fact that Swiss voters, unlike their French counterparts, were not deceived by the sophistical arguments about the claimed benefits to ordinary workers of the “gros avantages par ricochet” (the considerable advantages of the ricochet effect). By this is meant the argument used by those in favour of high taxes and high tariffs that the ordinary worker will eventually benefit as a result of a form of “trickle down” theory. The beneficiaries of high taxes (the government) and tariffs (agriculture or industry), it is argued, will eventually spend their money in ways which will benefit the ordinary worker. Bastiat argued that the Swiss were different from other Europeans on the question of tariffs not because they lived in a mountainous country (as some defenders of French tariffs rather dismissively maintained) but because they had not been duped by the protectionists specious arguments:

It is not that Switzerland lacks large proprietors of agricultural land and forests, or large entrepreneurs who would attempt to introduce trade restrictions. These men who sell products said to those who sell their labour: Be good chaps; let us raise the price of our products and we will enrich ourselves, we will spend it, and it will come back to you by the ricochet effect to your great advantage. (Great mirth). But they were never able to persuade the Swiss people that it would be be to their advantage to pay a high price for something that could be got cheaply. The theory of the ricochet effect has not sold well in this country. And indeed, there is no abuse which couldn’t be justified by the is idea. Before 1830 one could also have said: It is a very great honor for the people to pay 36 million francs for the Civil List. The Royal Court lives lavishly and industry profits from the ricochet effect…
Truthfully, I believe that I neglected to include in a certain small volume an article entitled “the Sophism of the Ricochet Effect.”
I will repair this oversight in the next edition [prolonged hilarity from the audience]. Our adversaries claim that the example provided by the Swiss doesn’t count because it is a mountainous country. (Laughter).[12]
(Ce n’est pas qu’il ait manqué de gros propriétaires de champs et de forêts, de gros entrepreneurs qui aient essayé d’implanter en Suisse la restriction. Ces hommes qui vendent des produits disaient à ceux qui vendent leur travail : Soyez bonnes gens ; laissez-nous renchérir nos produits, nous nous enrichirons, nous ferons de la dépense, et il vous en reviendra de gros avantages par ricochet. (Hilarité.) Mais jamais ils n’ont pu persuader au peuple suisse qu’il fût de son avantage de payer cher ce qu’il peut avoir à bon marché. La doctrine des ricochets n’a pas fait fortune dans ce pays. Et, en effet, il n’y a pas d’abus qu’on ne puisse justifier par elle. Avant 1830, on pouvait dire aussi : C’est un grand bonheur que le peuple paye une liste civile de 36 millions. La cour mène grand train, et l’industrie profite par ricochet…
En vérité, je crois que, dans certain petit volume, j’ai négligé d’introduire un article intitulé : Sophisme des ricochets.
Je réparerai cet oubli à la prochaine édition. (Hilarité prolongée.))

Since Bastiat never lived to write “The Sophism of the Ricochet Effect” we can only collect the scattered remarks he did make about it and attempt to reconstruct what he might have written had he lived longer.

The Intellectual Origins of “The Ricochet Effect”

The word “ricochet” is a curious one for an economist like Bastiat to adopt. Its traditional meanings include a literal sense, as in English, of an object bouncing off objects in its path, such as a flat stone being bounced off the surface of a body of water. Bastiat used the word in this sense on several occasions along with other water images.

It also had a military meaning, referring to the strategy of firing artillery shells high in the air so they would land just behind the wall of a fortress thereby causing maximum damage to the walls and to any humans standing nearby from flying shrapnel ricocheting off the walls.[13]

There were also several uses of the word in political writings in the 1830s and 1840s. The socialist Charles Fourier used it in Le Nouveau monde industriel et sociétaire (1829) as part of his theory of class, where he talks about the “ricochet de mépris des supérieurs aux inférieurs, et ricochet de haines des inférieurs aux supérieurs” (the flow (ricochet) of disdain by the superior classes to the inferior, and the flow (ricochet) of hatred of the inferior classes for the superior classes."[14]

The anarchist socialist Proudhon used the term as part of his theory of property developed in Qu’est-ce que la propriété? (1841). He believed that the ownership of property creates a privilege and a benefit which puts the worker on wages at a disadvantage to the property owner on the “social ladder” (l’échelle sociale) resulting in “un ricochet de spoliation du plus fort au plus faible” (a cascade of plunder by the strongest of the weakest) where “la dernière classe du peuple est littéralement mise à nu et mangée vive par les autres” (the lowest class of the people is literally stripped naked and eaten alive by the others).[15]

The classical liberal economist and associate of Bastiat’s, Louis Reybaud, used the word ricochet in his amusing critiques of French society and politics, Mémoires de Jérôme Paturet, which appeared in serial form between 1843 and 1848, in particular his witty critique of how bureaucracies functioned. Reybaud describes the behaviour of individuals within the “ruche bureaucratique” (bureaucratic hive) where appointments are solicited by the weak and powerless from the powerful and well-connected thus creating a network of obligation and control throughout the hierarchy which radiates outwards to infinity (“ces ricochets allaient à l’infini”). This and other insights come from his witty and clever satirical stories about the exploits of the ambitious Jérôme Paturot about whom he wrote for over 20 years to much popular acclaim. In the story “Paturot publiciste officiel” Jérôme visits a friend who works in a large government bureaucracy and as the public servants stream out of the building at the end of the work day his friend explains the nepotism and connections which got them their jobs:[16]

The life of the employees can be summarized by two preoccupations: to arrive as late as possible and to leave as soon as possible. And if you add to work as little as possible, then you get the three ends of administrative existence …
The employees file out before us, both the senior bureaucrats as well as the junior ones. Max names them for me, telling me about their functions (pretty much as weighty as his), summing up their future prospects and telling me who their protectors are. Deputies (i.e. elected politicians) still play a very important role in this hierarchy: the bureaux were populated with their creatures. The son of a Deputy, the cousin of a Deputy, the nephew of a Deputy, the god child of a Deputy, these were the words which resounded in my ears. On the other hand, their influence was indirect without being any less powerful. There was an influential voter who was recommended to a Deputy, who in his turn recommended him to the Minister. These “ricochets” go on to infinity; in this way one could say, at a pinch, that no employee holds his position because of his own merit or his personal ability. Favouritism dominates and with this, incompetence.
(La vie des employés peut se résumer par deux préoccupations: arriver le plus tard possible, partir le plus tôt possible; et, si l’on y ajoute travailler le moins possible. on obtient les trois termes de l’existence administrative. … (p. 126)
Nous sortîmes, et déjà l’essaim (swarm) des employés sortait aussi, en bourdonnant (buzzing), de la ruche bureaucratique. Depuis une heure, on brossait les chapeaux, les paletots et les pantalons; on essuyait la poussière des pupitres, on rangeait dans les casiers les papiers épars. La taille des plumes était généralement suspendue, et le mot commencé remis au lendemain. Les employés défilèrent devant nous, les supérieurs comme les inférieurs, Max me les nomma, en me mettant au courant de leurs fonctions, à peu près aussi lourdes que les siennes, en me récapitulant leurs chances et me nommant leurs protecteurs. Les députés jouaient encore un grand rôle dans cette hiérarchie: les bureaux étaient peuplés de leurs créatures. Fils de député, cousin de député, neveu de député, filleul (godchild) de député, voilà ce qui retentissait à mon oreille. D’autres fois, l’influence était indirecte sans être moins active. C’était un électeur considérable qui recommandait au député, lequel recommandait à son tour au ministre. Ces ricochets allaient à l’infini; de sorte qu’on pouvait, à la rigueur, dire que pas un employé ne se trouvait là à cause de son propre mérite et pour ses services personnels. La faveur dominait, et avec elle l’impéritie (incompetence).)

What is clear from this brief analysis is that originally the word “ricochet” was used in order to explain certain political or social relationships of a hierarchical or “vertical” nature between those with power and those without power. The first was a political sense in which ricochet referred to the mutual ties of political influence and dependence which existed in a political or bureaucratic structure, as described by Louis Reybaud, where one’s position in the hierarchy was acquired through cronyism and nepotism, and where influence peddling determined the level of one’s success. Here, waves of power and influence would “ricochet” up and down the bureaucratic ladder, or, to return to Reybaud’s colorful image of the “ruche bureaucratique” (bureaucratic hive) one could almost hear the hive throbbing with power.

The socialist Fourier and Proudhon used the word “ricochet” in order to criticize what they regarded as unjust social and economic relationships which existed in the economic order. Because they were socialists they did not understand how the free market operated and they therefore falsely attributed to the market the “ricochets of plundering” (ricochet de spoliation) between the property owner and the propertyless (Proudhon), and the “ricochets of disdain and hatred” (ricochet de mépris et de haines) (Fourier) between the social classes, which, as Bastiat fully realized, were more properly the result of “disturbing factors” (des causes perturbatrices (also “des forces perturbatrices”)) caused by government privileges and use of coercion.[17]

Bastiat’s innovation was to “flatten” the concept of ricochet so that it referred to the consequences an economic action had on other participants in an economy. These consequences were often indirect, unforeseen, and unintended and Bastiat compared them to ripples in a pond spreading our from its point of impact.

Bastiat’s Use of the Term Ricochet

Bastiat knew the work of Fourier, Proudhon, and Reybaud and would no doubt have been familiar with their ideas about the ricochet effect in their social and political meanings of the term. However, Bastiat’s first use of the word was in a purely literal and negative sense of a flat stone being bounced across a body of water. He does this in a discussion in ES1 XXI. “Matières premières” (Raw Materials) (c. 1845) where he talks about trade restrictions which encourage cargo ships to carry “useless refuse” on their return journeys because Navigation Laws restricted what cargoes could be carried by what nations from port to port. Bastiat describes this as wasteful of human energy as paying sailors “pour faire ricocher des cailloux sur la surface de l’eau” (to make pebbles skim across the surface of the water.)[18] In other words it was a wasteful government make-work scheme for sailors. It is clear that in this instance Bastiat is using the word “ricochet” in a purely literary and figurative manner with no real economic significance attached to it. He was later to move beyond this and develop a new economic meaning for this colorful metaphor.

Whereas Fourier, Proudhon, and Reybaud used the term “ricochet” in a vertical or “political” sense, of waves of hatred and disdain going up and down the social hierarchy, or ties of power and influence going up and down the levels within a bureaucracy, Bastiat came to use the word primarily in a horizontal or “economic” sense. In fact, he seems to view it much like horizontal flows of water (or electricity) which radiate out from a central point. Thus, by “the ricochet effect” Bastiat meant the concatenation of effects caused by a single economic event which “rippled” outwards from its source causing indirect flow on effects to third and other parties.[19] A key insight behind this term is the idea that all economic events are tied together by webs of connectivity and mutual influence. The analogies he liked to use often involved water or lines of force, such as:

stones and pebbles thrown into water, or dropping coins into a cup, causing concentric circles of ripples to fan outwards
objects bouncing or rebounding of each other or walls
water splashing back, or blowing back in one’s face - “rejaillir” (to spill, , to cascade, to splash over)[20]
water flowing over objects - “glisser” (to slide or slip over something)[21]
communication flows through “canaux secrets” (hidden channels)[22] or “parallèles infinies” (infinite trajectories)[23] - In this context he has an intriguing and precocious statement about the “circulation of money” - “il faut bien distinguer la distribution originaire de vos 3 francs d’avec leur circulation ultérieure, laquelle, dans l’une et dans l’autre hypothèse, suit des parallèles infinies” (it is necessary to distinguish between the orignal distribution of your 3 francs and their subsequent circulation, which in either one of the hypotheses, follows infinite trajectories)
consumers are like reservoirs of water or electricity out of which all costs from intervention must be paid

The following is a listing of some of these key words and phrases which Bastiat used to explain economic actions. They include his use of colorful metaphors to understand economic activity, his use of expressions which suggest the unintended consequences of economic actions, and his criticism of the sophistical use of ricochet to justify government actions.

1. Bastiat’s use of metaphors to understand economic activity

(See Appendix 3 for a longer version of the quotation (“Q”) and publishing details.)

Q1. “pour faire ricocher des cailloux sur la surface de l’eau” (making pebbles skim or bounce across the surface of the water)
Q5. “la distribution originaire de vos 3 francs d’avec leur circulation ultérieure, laquelle, dans l’une et dans l’autre hypothèse, suit des parallèles infinies, et ne peut jamais affecter notre calcul” (the original distribution of your 3 francs and their subsequent circulation which, in both hypotheses, follows infinite trajectories and can never affect our calculation)
Q8. “ne doit-il pas arriver que la détresse des non-protégés rejaillisse sur les protégés ? — Je le crois. Je suis convaincu qu’à la longue la perte tend à se répartir sur tout le monde.” (should the distress of those not protected not spill over [rejaillir] on to those protected? I think so. I am convinced that in the long run the loss tends to spread over everyone)
Q12. “quand on a étudié le mécanisme naturel des impôts, leurs ricochets, leurs contre-coups, on sait bien que ce que le fisc demande à une classe est payé en grande partie par une autre” (when you have studied the natural mechanism of taxes, their rebounds and repercussions, you know full well that what the tax authorities require from one class is paid for the most part by another)
Q16. “Cette bienheureuse pièce de cent sous, que vous ferez tomber dans mon coffre-fort, comme une pierre qu’on jette dans un lac, fera rayonner au loin un nombre infini de cercles concentriques.” (This fortunate hundred sou coin that you drop into my coffer will radiate outwards to the far corners of the country an infinite number of concentric circles, just like a stone thrown into a lake.)
Q16. “La pierre n’est jetée sur un point du lac que parce qu’elle a été législativement empêchée d’être jetée sur un autre.” (The stone is merely cast into a particular point on the lake because it has been prevented by law from being cast into another.)
Q17. “Le consommateur, le public est donc, relativement à la perte ou au bénéfice qui affectent d’abord telle ou telle classe de producteurs, ce que la terre est à l’électricité: le grand réservoir commun. Tout en sort; et, après quelques détours plus ou moins longs, après avoir engendré des phénomènes plus ou moins variés, tout y rentre. Nous venons de constater que les résultats économiques ne font que glisser, pour ainsi dire, sur le producteur pour aboutir au consommateur, et que, par conséquent, toutes les grandes questions doivent être étudiées au point de vue du consommateur, si l’on veut en saisir les conséquences générales et permanentes.” (In relation to the profit or loss that initially affect this or that class of producers, the consumer, the general public, is what earth is to electricity: the great common reservoir. Everything comes out of this reservoir, and after a few more or less long detours, after the generation of a more or less great variety of phenomena, everything returns to it. We have just noted that the economic results just flow over producers, to put it this way, before reaching consumers, and that consequently all the major questions have to be examined from the point of view of consumers if we wish to grasp their general and permanent consequences.)

2. Bastiat’s use of expressions which suggest that economic actions can have unintended consequences

Some examples of Bastiat’s use of expressions which suggest unintended bad consequences of actions which “blow back” in the faces of those who expected good consequences:

Q2. “le mal indirect qui, frappant leur clientèle, retombe par ricochet sur eux” (the indirect harm which, as it affected their customers, ricocheted on to them)
Q4. “lui imputer de nombreuses pertes accessoires, telles que : frais de surveillance, formalités dispendieuses, incertitudes commerciales, fluctuations de tarifs, opérations contrariées, chances de guerre multipliées, contrebande, répression, etc.” (to impute to it (protection) a number of ancillary losses, such as the cost of surveillance, expensive formalities, commercial uncertainty, fluctuations in duties, aborted operations, the increased likelihood of war, smuggling, repression, etc.)

3. Bastiat’s criticism of the sophistical use of the term “ricochet” to justify government actions

Bastiat also used the word ricochet in the vertical and sophistical (i.e., false) sense used by many of his opponents when they argued that high taxes or high tariffs would have a “trickle down effect” on ordinary consumers eventually. He was scathing in his criticism of this way of thinking about the economy. He saw it as an obvious ploy by the powerful elites to “dupe” the taxpayers and consumers into accepting their own exploitation. The following are some examples of this sophistical use of ricochet to justify government actions:

Q3. “Pierre. C’est précisément la cherté des produits qui amènera la cherté des salaires.” (PIERRE: It is precisely the high prices of products that will produce higher wages as a result of the ricochet or flow on effect!)
Q6. “vous nous promettiez que le ricochet de ces mesures élèverait notre salaire en proportion et même au delà” (You promised us that the ricochet effect of these measures (higher taxes and tariffs on food etc) would increase our wags by the same amount, and even higher)
Q7. “On dit bien que le travail profite par ricochet de ces monopoles” (It is said that labour will profit from the ricochet effect of these monopolies)
Q9. “What is worse about these claims is that those who make them don’t believe a single word themselves… because, if this protection by the ricochet effect which so soothes the people (is so good), why don’t the manufacturers apply it to themselves? why don’t they pass a law which doubles their salaries, since so much good will come to them by means of the ricochet effect?” (Ce qu’il y a de pire dans ces assertions, c’est que ceux qui se les permettent n’en croient pas un mot eux-mêmes…. car, quant à cette protection par ricochet dont on berce le peuple, pourquoi les manufacturiers ne la prennent-ils pas pour eux ? pourquoi ne font-ils pas une loi qui double les salaires, en vue du bien qu’il leur en reviendra par ricochet ?
Q10. “laissez-nous renchérir nos produits, nous nous enrichirons, nous ferons de la dépense, et il vous en reviendra de gros avantages par ricochet” (let us increase the price of our products, we will enrich ourselves, we will make up (?) the added expence, and great advantages/benefits will come to us as a result of the ricochet effect)
Q11. “Since you force products to be expensive by recourse to the law, you ought also, in order to be fair, to force wages to be expensive by recourse to the law.” Let the argument drop for as long as you can. When you can no longer remain silent, answer: “The high price of products encourages us to make more of them, and in order to do this we need more workers. This increase in the demand for labor raises your wages and in this way, indirectly, our privileges extend to you by the ricochet or flow on effect. Workers will perhaps then answer you: “This would be true if the excess production stimulated by high prices was achieved with capital that had fallen from the moon. But if all that you can do is to take it from other sectors of industry, there will be no increase in wages, since there has been no increase in capital. We now, accordingly, have to pay more for the things we need and your ricochet or flow on effect is a trick.” (« Puisque vous forcez la cherté des produits par l’opération de la loi, vous devriez bien aussi, pour être justes, forcer la cherté des salaires par l’opération de la loi. » Laissez tomber l’argument aussi longtemps que possible. Quand vous ne pourrez plus vous taire, répondez : La cherté des produits nous encourage à en faire davantage ; pour cela, il nous faut plus d’ouvriers. Cet accroissement de demande de main-d’œuvre hausse vos salaires, et c’est ainsi que nos priviléges s’étendent à vous par ricochet. L’ouvrier vous répondra peut-être : « Cela serait vrai si l’excédant de production excité par la cherté se faisait au moyen de capitaux tombés de la lune. Mais si vous ne pouvez que les soutirer à d’autres industries, n’y ayant pas augmentation de capital, il ne peut y avoir augmentation de salaires. Nous en sommes pour payer plus cher les choses qui nous sont nécessaires, et votre ricochet est une déception. »
Q13. “However, as I have already said, I am not discussing today the economic consequences of legal plunder. When the supporters of protectionism are ready, they will find me ready to examine the ricochet sophism which, besides, can be quoted for all sorts of theft and fraud.” (Mais, je l’ai déjà dit, je ne discute pas aujourd’hui les conséquences économiques de la Spoliation légale. Quand MM. les protectionistes le voudront, ils me trouveront prêt à examiner le sophisme des ricochets, qui du reste peut être invoqué pour tous les genres de vols et de fraudes.)
Q14. “L’impôt, c’est le meilleur placement ; c’est une rosée fécondante ? Voyez combien de familles il fait vivre, et suivez, par la pensée, ses ricochets sur l’industrie : c’est l’infini, c’est la vie” (Taxes are the best investment; they are a life-giving dew. See how many families gain a livelihood from them; work out their ricochet or flow on effects on industry; this is beyond measure, it is life)
Q18. “De là on tire cette conclusion: La spoliation est avantageuse à tout le monde: à la classe spoliatrice qu’elle enrichit directement, aux classes spoliées qu’elle enrichit par ricochet. En effet, la classe spoliatrice, devenue plus riche, est en mesure d’étendre le cercle de ses jouissances. Elle ne le peut sans demander, dans une plus grande proportion, les services des classes spoliées.” (The argument is made that) Plunder is advantageous for everybody: the plundering class that it enriches directly and the plundered classes that it enriches by means of the ricochet effect. Indeed, the plundering class that has become wealthier has the means of expanding the circle of its benefits. It cannot do this without requiring the services of the plundered classes to a greater extent.)

The Distinction between “Positive Ricochet Effects” (PRE) and “Negative Ricochet Effects” (NRE)

As Bastiat worked on his theory of the ricochet effect between 1848 and 1850 he came to realize that it was a two-sided sword, that it could have both positive and negative effects on the economy. In the work he published in 1846–1848 he focussed on the “negative ricochet effects” (NRE) because they better suited his political agenda of fighting against protectionism.

The sophistical use of the ricochet effect was taken up by defenders of increased taxes or tariffs in the battle between free trade and protectionism in 1846–47 to show that their proposed measure would only have PRE for the nation and that any NRE would be minor or even non-existent. Economists like Bastiat used the ricochet effect in order to debunk this sophistry by showing firstly that there were always NRE which had to be taken into account (“the unseen”) and that these were almost always harmful to the interests of taxpayers and consumers at large. His classic example was a tax or tariff which raises the price of a particular commodity. It may have been designed to benefit a particular favoured industry and its employees (who may have been promised higher wages as a side benefit) but it has a ricochet effect in that the higher price flows though eventually to all consumers, including the protected or subsidized workers, and even other producers. If many other industries also receive benefits from the state in the form of subsidies and tariffs the cost structure of the entire economy is eventually raised as a result of similar ricochet effects. As Bastiat argues, all increased costs and taxes are eventually borne by consumers:

In relation to the profit or loss that initially affect this or that class of producers, the consumer, the general public, is what earth is to electricity: the great common reservoir. Everything comes out of this reservoir, and after a few more or less long detours, after the generation of a more or less great variety of phenomena, everything returns to it.
We have just noted that the economic results just flow over (glisser) producers, to put it this way, before reaching consumers, and that consequently all the major questions have to be examined from the point of view of consumers if we wish to grasp their general and permanent consequences.[24]
(Le consommateur, le public est donc, relativement à la perte ou au bénéfice qui affectent d’abord telle ou telle classe de producteurs, ce que la terre est à l’électricité: le grand réservoir commun. Tout en sort; et, après quelques détours plus ou moins longs, après avoir engendré des phénomènes plus ou moins variés, tout y rentre. Nous venons de constater que les résultats économiques ne font que glisser, pour ainsi dire, sur le producteur pour aboutir au consommateur, et que, par conséquent, toutes les grandes questions doivent être étudiées au point de vue du consommateur, si l’on veut en saisir les conséquences générales et permanentes.)

As he gradually turned more to economic theory in his latter years he realised that the ricochet effect could have profound positive effects as well, but unfortunately he had less time to explore this dimension of the theory. Examples of a “Positive Ricochet Effect” include the benefits of international free trade and technological inventions such as the printing press and steam powered transport. According to Bastiat, international free trade in the medium and long term has the effect of dramatically lowering costs for consumers and increasing their choice of things to buy. These lower costs and greater choice eventually flow on to all consumers thereby improving their standard of living. Technological inventions like steam powered locomotives or ships lower the cost of transport for every consumer and industry in an economy, thus lowering the overall cost structure and having an economy-wide PRE. The invention of printing by Gutenberg likewise had a profound impact on lowering the cost of the transmission of knowledge which all consumers could benefit from as the savings worked their way through the economy.

Conclusion↩

The significance of Bastiat’s work on the theory of “the ricochet effect” is that it reveals some startlingly original insights into how the economy functioned and the impact of government intervention which were not fully developed by Bastiat for a number of reasons: he was busy as an elected member of the NationalAssembly, he was busy fighting a pamphlet war with the socialists, and he was trying to finish his treatise on political economy. These insights can be summarized as follows:

the attempt to mathematically quantify the harm caused by government intervention in the economy. He began with a crude “three party” theory of “the double incidence of loss” (which were all equal in size) but came to realize this was inadequate and attempted to develop a more sophisticated theory of “the ricochet effect” which would involve taking into account many (perhaps millions) of parties and required some complex mathematics (calculus) to describe scientifically. This is interesting because at the same time he was also attempting to make economic theory more abstract with his version of the theory of human action in his “Crusoe economics” which he used in Economic Harmonies and other essays
the development of an early version of the “multiplier effect” where his idea of the “ricochet” is similar in many ways to the Keynesian notion of a “multiplier”. Bastiat was aware that defenders of protectionism believed that tariffs and subsidies had a “positive multiplier effect” in stimulating production; he initially saw this as really a “negative multiplier effect” (“divider effect” or a “multiplier of harms”). He later came to see that technological innovations could also have a “positive multiplier effect” in the economy by reducing costs for everyone.
the interconnectedness of economic activity where an action has “ripple” or “flow on” effects which effect perhaps millions of others in an economy.
that there are unintended consequences of economic action which can be either positive or negative. These unintended consequences are part of what Bastiat called “the unseen.”
that economic information is transmitted to other participants in the economy by various methods. Bastiat uses a number of hydraulic or electrical analogies such as flows of water in “secret channels”, waves in a pond, and so on, but does not seem to have a clear idea of the role of prices in doing this, although he hints at it on one occasion.

Two points could be made at this juncture. The first is that, given the number of interesting and original insights he developed in the last three years of his life, it is intriguing to speculate about what he might have done with these ideas if he had had the time to explore them further. Ideas such as opportunity costs, the multiplier effect (positive and negative), the use of mathematics to quantify costs and benefits of economic actions, among others.

The second is the striking similarity of some of Bastiat’s ideas and what would later be called Austrian economics. Some of Bastiat’s ideas with strong similarities to Austrian insights include the use of thought experiments (“Crusoe economics”) to explore the nature of human action in the abstract, the interconnectedness of all economic activity, the idea of unintended consequences, the transmission of economic information to other economic actors (not the Hayekian idea of the transmission of information through prices but quite close), not to mention all the other points of similarity identified by Hülsmann, Thornton, and DiLorenzo.

Thus Bastiat’s premature death in 1850 was not only a severe blow to the classical liberal movement in Paris but also to the emergence of “Austrian” ways of thinking about economic theory.

Bibliography↩

Online

My personal website <davidmhart.com/liberty/Bastiat>

The Online Library of Liberty website:

The Collected Works of Frédéric Bastiat. 6 Vols. Jacques de Guenin, General Editor. Translated from the French by Jane Willems and Michel Willems. Annotations and Glossaries by Jacques de Guenin, Jean-Claude Paul-Dejean, and David M. Hart. Translation Editor Dennis O’Keeffe. Academic Editor, David M. Hart (Indianapolis: Liberty Fund, 2011). http://oll.libertyfund.org/titles/2393.

Vol. 1: The Man and the Statesman. The Correspondence and Articles on Politics (2011) http://oll.libertyfund.org/titles/2393
Vol. 2: “The Law,” “The State,” and Other Political Writings, 1843–1850 (2012) http://oll.libertyfund.org/titles/2450
Vol. 3: Economic Sophisms and “What is Seen and What is Not Seen” (forthcoming)
Vol. 4: Miscellaneous Works on Economics: From Jacques-Bonhomme to Le Journal des Économistes (forthcoming)
Vol. 5: Economic Harmonies (forthcoming)
Vol. 6: The Struggle Against Protectionism: The English and French Free-Trade Movements (forthcoming)

The Best of Bastiat from LF’s Collected Works http://oll.libertyfund.org/titles/2477

FEE editions:

Frédéric Bastiat, Economic Harmonies, trans by W. Hayden Boyers, ed. George B. de Huszar, introduction by Dean Russell (Irvington-on-Hudson: Foundation for Economic Education, 1996). http://oll.libertyfund.org/titles/79.

Frédéric Bastiat, Economic Sophisms, trans. Arthur Goddard, introduction by Henry Hazlitt (Irvington-on-Hudson: Foundation for Economic Education, 1996).http://oll.libertyfund.org/titles/276.

Frédéric Bastiat, Selected Essays on Political Economy, trans. Seymour Cain, ed. George B. de Huszar, introduction by F.A. Hayek (Irvington-on-Hudson: Foundation for Economic Education, 1995). http://oll.libertyfund.org/titles/956.

Works by Bastiat

Oeuvres complètes de Frédéric Bastiat, mises en ordre, revues et annotées d’après les manuscrits de l’auteur (Paris: Guillaumin, 1854–55). 6 vols. Edited by Prosper Paillottet with the assistance of Roger de Fontenay, but they are not credited on the title page. A listing of the volumes are as follows:

Vol. 1: Correspondance et mélanges (1855)
Vol. 2: Le Libre-Échange (1855)
Vol. 3: Cobden et la Ligue ou L’agitation anglaise pour la liberté des échanges (1854)
Vol. 4: Sophismes économiques. Petits pamphlets I (1854)
Vol. 5: Sophismes économiques. Petits pamphlets II (1854)
Vol. 6: Harmonies économiques (1855)

Oeuvres complètes de Frédéric Bastiat, mises en ordre, revues et annotées d’après les manuscrits de l’auteur. Deuxième Édition. Ed. Prosper Paillottet and with a “Notice sur la vie et les écrits de Frédéric Bastiat” by Roger de Fontenay. (Paris: Guillaumin, 1862–64).

Vol. 1: Correspondance et mélanges (1862)
Vol. 2: Le Libre-Échange (1862)
Vol. 3: Cobden et la Ligue ou L’agitation anglaise pour la liberté des échanges (1864)
Vol. 4: Sophismes économiques. Petits pamphlets I (1863)
Vol. 5: Sophismes économiques. Petits pamphlets II (1863)
Vol. 6: Harmonies économiques (1864) 5th ed.
Vol. 7: Essais, ébauches, correspondance (1864).

Oeuvres choisies de Fr. Bastiat

Oeuvres choisies de Fr. Bastiat. Tome I: Sophismes économiques. Petits pamphlets. Tome Ie (Paris: Guillaumin, 1863).
Oeuvres choisies de Fr. Bastiat. Tome II: Sophismes économiques. Petits pamphlets. Tome II (Paris: Guillaumin, 1863).
Oeuvres choisies de Fr. Bastiat. Tome III: Harmonies économiques (Paris: Guillaumin, 1863). Called the 4e edition.

Frédéric Bastiat, Sophismes économiques (Paris: Guillaumin, 1846).

Ce qu’on voit et ce qu’on ne voit pas, ou l’Économie politique en une leçon. Par M. F. Bastiat, Représentant du peuple à l’Assemblée nationale, Membre correspondant de l’Institut (Paris: Guillaumin, 1850).

Economic Sophisms (First and Second Series), trans from the French and Edited by Arthur Goddard (Irvington-on-Hudson, New York: The Foundation for Economic Education, 1968) (1st edition D. Van Nostrand Company, Inc. 1964. Copyright William Volker Fund) http://oll.libertyfund.org/titles/276.

“What Is Seen and What Is Not Seen” in Selected Essays on Political Economy, translated from the French by Seymour Cain. Edited by George B. de Huszar (Irvington-on-Hudson, New York: The Foundation for Economic Education, 1968) (1st edition D. Van Nostrand Company, Inc. 1964. Copyright William Volker Fund), pp. 1–50 http://oll.libertyfund.org/titles/bastiat-selected-essays-on-political-economy#lf0181_label_033.

Economic Harmonies, translated from the French by W. Hayden Boyers. Edited by George B. de Huszar (Irvington-on-Hudson, New York: The Foundation for Economic Education, 1964) (1st edition D. Van Nostrand Company, Inc. 1964. Copyright William Volker Fund). http://oll.libertyfund.org/titles/79

Secondary Sources

Baslé, Maurice and Alain Gélédan. “Frédéric Bastiat, théoricien et militant du libre-échange,” in Breton, Yves and Michel Lutfalla, eds. L’Économie politique en France au XIXe siècle (Paris: Economica, 1991), pp. 83–110.

Breton, Yves. “The Société d’économie politique of Paris (1842–1914).” In The Spread of Political Economy and the Professionalisation of Economists: Economic Societies in Europe, America and Japan in the Nineteenth Century, edited by Massimo M. Augello and Marco E. L. Guidi. London: Routledge, 2001.

Breton, Yves and Michel Lutfalla, eds. L’Économie politique en France au XIXe siècle (Paris: Economica, 1991).

Demier, Francis. “Les économistes libéraux et la crise de 1848,” in Pierre Dockès et al., eds. Les Traditions économiques françaises, 1848–1939 (Paris: CNRS Editions, 2000), pp. 773–84.

Thomas J. DiLorenzo, 5. “Frédéric Bastiat: Between the French and Marginalist Revolutions,” 15 Great Austrian Economists, edited with and Introduction by Randall G. Holcombe (Auburn, Alabama: Ludwig von Mises Institute, 1999), pp. 59–69.

Frédéric Bastiat, Œuvres économiques, textes présentés par Florin Aftalion. (Paris: Presses Universitaires de France, Collection Libre Échange, 1983).

French Liberalism in the 19th Century: An anthology. Edited by Robert Leroux and David M. Hart (London: Routledge, 2012).

Hayek, Friedrich August von. “Introduction”, Selected Essays on Political Economy, trans. Seymour Cain, ed. George B. de Huszar (Irvington-on-Hudsnon: Foundation for Economic Education, 1975).

Hazlitt, Henry. Economics in One Lesson (New York: Harper and Brothers, 1946).

Hülsmann, Jörg Guido (JGH). “Bastiat, Frédéric (1801–1850)”, in The Encyclopedia of Libertarianism, eds. Ronald Hamowy et al. (Los Angeles: Sage, 2008), pp. 25–27.

Jörg Guido Hülsmann, “Bastiat’s Legacy in Economics,” The Quarterly Journal of Austrian Economics, vol. 4, no. 4, Winter 2001, pp. 55–70.

Journal des Économistes et des Études Humaines, vol. 11, no. 2/3 (Jun 2001). Editor-in-Chief: Garello, Pierre. Special issue devoted to papers given at the Bastiat bicentennial conference. Online http://www.degruyter.com/view/j/jeeh.2001.11.2/issue-files/jeeh.2001.11.issue-2.xml.

(1.) Hebert, Robert F., “Frederic Bastiat - ”A Man for All Reasons“.”
(2.) Barry, Norman, “Frédéric Bastiat: The Economics and Philosophy of Freedom.”
(3.) Arnaud Pellissier Tanon, “The Labour Theory of Value and Social Justice. The Teachings of Social Catholic Criticisms of Bastiat’s Doctrine”
(4.) Tanon, Arnaud Pellissier, “The Labour Theory of Value and Social Justice. The Teachings of Social Catholic Criticisms of Bastiat’s Doctrine”
(5.) Cubeddu, Raimondo and Masala, Antonio, “ Right, Providence, and Order: Frédéric Bastiat’s Laissez-Faire”
(6.) Rasmussen, Douglas B., “Natural Law and Natural Rights: Bastiat Vindicated”
(7.) Alvarado, Eduardo Mayora, “In Honor and Memory of Frédéric Bastiat´s The Law”
(8.) Bramoullé, Gérard, “Frédéric Bastiat: Praxeologist Theoretician”
(9.) Garello, Jacques, “To Err is Human: Bastiat on Value and Progress”
(10.) Thornton, Mark, "Frédéric Bastiat as an Austrian Economist”, pp. 387–98.
(11.) Dorn, James A., “Bastiat: A Pioneer in Constitutional Political Economy”
(12.) Lane, Georges, "“Bastiat’s Law”"
(13.) Salerno, Joseph T., “The Neglect of Bastiat’s School by English-Speaking Economists: A Puzzle Resolved”
(14.) Liggio, Leonard, “Bastiat and the French School of Laissez-Faire”

Leroux, Robert. Political Economy and Liberalism in France: The Contributions of Frédéric Bastiat (London: Routledge, 2011). This book contains the best bibliography on Bastiat to date.

Leter, Michel. “Éléments pour une étude de l’École de Paris (1803–1852), in Histoire du libéralisme en Europe, eds. Philippe Nemo and Jean Petitot (Pais: Presses Universitaires de France, 2006), pp. 429–509.

Minart, Gérard. Frédéric Bastiat (1801–1850). Le croisé de libre-échange (Paris: L’Harmattan, 2004).

Minart, Gérard. Gustave de Molinari (1819–1912), Pour un gouvernement à bon marché dans un milieu libre (Paris: Éditions de l’Institut Charles Coquelin, 2012).

Nataf, Philippe. “La vie et l’oeuvre de Charles Coquelin (1802–1852),” in Histoire du libéralisme en Europe, eds. Philippe Nemo and Jean Petitot (Pais: Presses Universitaires de France, 2006), pp.511–30.

Roche, George Charles, III. Frédéric Bastiat: A Man Alone. New Rochelle, N.Y.: Arlington House, 1971.

Rothbard, Murray N. An Austrian Perspective on the History of Economic Thought. 2 vols. Vol. 1: Economic Thought before Adam Smith. Vol. 2: Classical Economics. (Auburn, Ala.: Ludwig von Mises Institute, 2006).

Russell, Dean. Frédéric Bastiat: Ideas and Influence. Irvington-on-Hudson, N.Y.: Foundation for Economic Education, 1969.

Endnotes↩

Jörg Guido Hülsmann, “Bastiat’s Legacy in Economics,” The Quarterly Journal of Austrian Economics, vol. 4, no. 4, Winter 2001, pp. 55–70; Thornton, Mark, "Frédéric Bastiat as an Austrian Economist”, pp. 387–98. Journal des Économistes et des Études Humaines, vol. 11, no. 2/3 (Jun 2001). Editor-in-Chief: Garello, Pierre. Special issue devoted to papers given at the Bastiat bicentennial conference. Online http://www.degruyter.com/view/j/jeeh.2001.11.2/issue-files/jeeh.2001.11.issue-2.xml; Thomas J. DiLorenzo, 5. “Frédéric Bastiat: Between the French and Marginalist Revolutions,” 15 Great Austrian Economists, edited with and Introduction by Randall G. Holcombe (Auburn, Alabama: Ludwig von Mises Institute, 1999), pp. 59–69. ↩
It is very much to be regretted that Bastiat did not live to finish his next proposed book, a “History of Plunder”, in which he would have developed his ideas on plunder, its institutionalization in the form of the State, and the many sociological and historical insights he had already developed in the conclusion to ES1, the opening chapters of ES2, and in several of his anti-socialist pamphlets. Had he been able to do this I believe Bastiat might have been on the way to becoming the “Karl Marx of the Classical Liberal Movement.” See my post on the “Liberty Matters” online forum for July 2013 on Frédéric Bastiat and Political Economy, “17. David M. Hart, “What Might Bastiat Have Achieved If He Had Lived as Long as Karl Marx? Some Counterfactual Thoughts, Some What Might Have Beens, and Some Regrets” [Posted: July 26, 2013]”. In Liberty Matters Forum on Frédéric Bastiat and Political Economy (July, 2013) http://oll.libertyfund.org/pages/bastiat-and-political-economy#conversation17. This post is reproduced here as Appendix 4. ↩
Original edition: Ce qu’on voit et ce qu’on ne voit pas, ou l’Économie politique en une leçon. Par M. F. Bastiat, Représentant du peuple à l’Assemblée nationale, Membre correspondant de l’Institut (Paris: Guillaumin, 1850). Also Frédéric Bastiat, Selected Essays on Political Economy, trans. Seymour Cain, ed. George B. de Huszar, introduction by F.A. Hayek (Irvington-on-Hudson: Foundation for Economic Education, 1995). What Is Seen and What Is Not Seen. http://oll.libertyfund.org/titles/956/35425#lf0181_label_033. ↩
The abbreviations used in this paper are as follows: WSWNS = What is Seen and What is Not Seen; ES1 = Economic Sophisms Series I which were published in January 1846; ES2 = Economic Sophisms Series II which were published in January 1848; and ES3 = Economic Sophisms Series III which were never published in book form during Bastiat’s lifetime; OC = Oeuvres complètes is the Complete Works of Bastiat edited by Prosper Paillottet in two editions in 1854 and then in 1862; CW = The Collected Works of Frédéric Bastiat published in 6 vols. by Liberty Fund (2011). ↩
Thomas Perronet Thompson (1783–1869). Thompson had a colorful career as a soldier, politician, polymath writer, and pamphleteer and agitator for the Anti-Corn Law League. He was a member of the Philosophical Radicals who were inspired by utilitarian and reformist ideas of Jeremy Bentham. Thompson was active in urging Catholic emancipation, the repeal of the Corn Laws, and the abolition of slavery, and played a leading role in managing the reformist journal the Westminster Review. His most significant works include The True Theory of Rent (1829), Catechism on the Corn Laws; with a List of Fallacies and Answers (1827), Contre-Enquête: par l’Homme aux Quarante Ecus (1834) a defense of free trade written in response to a French government inquiry. He published a collection of his essays as Exercises, Political and Others. In Six volumes. (London: Effingham Wilson, 1842). ↩
See Thomas Perronet Thompson, Letters of a representative to his constituents, during the session of 1836. To which is added, A running commentary on anti-commercial fallacies, reprinted from the Spectator of 1834. With additions and corrections. (London: Effingham Wilson, 1836), pp. 188–89. ↩
Thomas Perronet Thompson, Contre-Enquête. Par l’Homme aux Quarante Ecus. Contenant un Examen des Arguments et des Principes mis en avant dans l’Enquête Commercial (Paris: Charpentier, 1834). “Counter-Inquiry. By the Man with the Forty Crowns a Year. Containing an Examination of the Arguments and Principles advanced in the French Commercial Inquiry” published in The Westminster Review, 1 January, 1835, and in Exercises, Political and Others. In Six volumes. (London: Effingham Wilson, 1842), vol. 3, pp. 177–213. ↩
“Un profit contre deux pertes” (One Profit versus Two Losses), 9 May 1847, Le Libre-Échange in Oeuvres complètes (1st ed. 1854–55), Vol. 2: Le Libre-Échange (1855), pp. 377–84.; “Deux pertes contre un profit” (Two Losses versus One Profit), 30 May 1847, Le Libre-Échange, in Oeuvres complètes (1st ed. 1854–55), Vol. 2: Le Libre-Échange (1855), pp. 384–91. Both these essays are included as an Appendix to this paper in the original French and in Liberty Fund’s new translation. ↩
LF translation of “Un profit contre deux pertes” (One Profit versus Two Losses), 9 May 1847, Le Libre-Échange. ↩
François Arago (1786–1853) was the eldest of four successful Arago brothers, the youngest of which, Étienne Arago (1802–1892) may have gone to school with Bastiat in Sorèze. François was a famous astronomer and physicist who was also active in republican politics throughout the 1830s and 1840s. He is mentioned several times in Bastiat’s correspondence. After the outbreak of the Revolution in February 1848 he became Minister of War, the Navy and Colonies and played an important role in the abolition of slavery in the French colonies. François also edited the works of Condorcet on the eve the 1848 Revolution. ↩
A Series III of the Economic Sophisms never appeared in Bastiat’s lifetime in spite of the fact that he expressed a wish to do so several times but his untimely death on 24 December 1850 prevented this from happening. His literary executor and editor Prosper Paillottet collected what he considered to be a Series III in OC, vol. 2 but Liberty Fund’s edition of his Collected Works is the first time they have been brought together in a way Bastiat might have wished. They are certainly the first time these essays have been translated into English. ↩
See, CW6 (forthcoming) and OC2. 48. Septième Discours, à Paris, Salle Montesquieu, 7 Janvier 1848. ↩
See the definition of “Ricochet” in Vocabulaire de la langue française: extrait de la dernière édition du Dictionnaire de l’Académie publié en 1835, ed. Charles Nodier, Paul Ackermann (Paris: Firmin-Didot, 1836). See also the online dictionaries at Centre National de Resources Textuelles et Lexicales (CNRTL) http://www.cnrtl.fr/. ↩
Œuvres complètes de Ch Fourier. Tome sixième. Le Nouveau monde industriel et sociétaire (Paris: La Société pour la propagation et pour la réalisation de la théorie de Fourier, 1841), Section V. De l’équilibre général des passions, Chap. XXXVI “Des accords transcendants, ou ralliements de seize antipathies naturelles,” p. 324–25. See Appendix 3 for the full passage from which this quotation comes. ↩
Pierre-Joseph Proudhon, Qu’est-ce que la propriété?: ou recherches sur le principe du droit et du gouvernement. Premier mémoire (Paris: Prévot, 1841), p. 203. The full passage is: “Si, dans toutes les professions, le salaire de l’ouvrier était le même, le déficit occasionné par le prélèvement du propriétaire se ferait sentir également partout; mais aussi la cause du mal serait tellement évidente, qu’elle eût été dès longtemps aperçue et réprimée. Mais comme entre les salaires, depuis celui de balayeur jusqu’à celui de ministre, il règne la même inégalité qu’entre les propriétés, il se fait un ricochet de spoliation du plus fort au plus faible, si bien que le travailleur éprouvant d’autant plus de privations qu’il est placé plus bas dans l’échelle sociale, la dernière classe du peuple est littéralement mise à nu et mangée vive par les autres.” ↩
Louis Reybaud, Jérôme Paturot à la recherche d’une position sociale. Édition illustrée par J. J. Grandville (Paris: J.J. Dubochet, 1846), Chap. XIII. “Paturot publiciste officiel. - Son ami l’homme de lettres,” pp. 126–27. ↩
See chapter XVIII “Causes perturbatrices” in Harmonies Économiques (1851). There are many references to this idea throughout the book. ↩
ES1 XXI “Matières premières” (Raw Materials) (no date given). Oeuvres complètes (1st ed. 1854–55), Vol. 4: Sophismes économiques. Petits pamphlets I. (1854), 5th ed., pp. 105–15. Also Frédéric Bastiat, Economic Sophisms, trans. Arthur Goddard, introduction by Henry Hazlitt (Irvington-on-Hudson: Foundation for Economic Education, 1996). Chapter: First Series, Chapter 21: Raw Materials. http://oll.libertyfund.org/titles/bastiat-economic-sophisms#lf0182_head_049. ↩
Other words one could use for “ricochet” include the following: ripples, trickle down, flow on, knock on, cascading (Bastiat uses the word “rejaillir” or splashing), bouncing, indirect, repercussions, reverberations, concatenation, and so on. The translator of the FEE edition and our original translator valiantly attempted to find synonyms like these to translate the rather awkward word “ricochet” or phrase “par ricochet” (ricochet effect) without recognizing that Bastiat was using it in a specific, technical way to describe certain economic phenomenon which he wanted to understand and explain. ↩
See ES3 XII. “The Man who asked Embarrassing Questions” (12 December 1847). ↩
See ES1 IV. “Equalizing the Conditions of Production” (July 1845). ↩
See WSWNS VIII. “Machines" ↩
See ES3 VII. “Deux pertes contre un profit” (Two Losses versus One Profit), 30 May 1847. ↩
Harmonies économiques. Chap. XI. Producteur. - Consommateur (Producer, Consumer), OC, vol. 6, and CW, vol. 5, (forthcoming). ↩