The Economic Thought of Gustave de Molinari, 1845-1855

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[Paris being encircled by the State: “The Fortifications of Paris and its Environs as adopted by the Chambers” (1841)
. The pink area is the old part of the city which is surrounded by a customs wall with entry gates which was build in the 1780s to help the Farmers General collect taxes. The orange area is enclosed by a new wall of fortifications which surrounded the city and was build between 1841-44 and had a circumference of 33 km. The outer ring of red and green shapes are a series of 14 stand-alone forts and barracks which also surrounded the city.]

Molinari: “Liberty! That was the cry of the captives of Egypt, the
slaves of Spartacus, the peasants of the Middle Ages, and more
recently of the bourgeoisie oppressed by the nobility and religious
corporations, of the workers oppressed by masters and guilds. Liberty!
That was the cry of all those who found their property confiscated by
monopoly and privilege. Liberty! That was the burning aspiration of
all those whose natural rights had been forcibly repressed.” (S12)

This is a paper I will be giving at the Austrian Economics Research Conference (31 March to 2 April 2016) at the Mises Institute. The full title is “The Struggle against Protectionism, Socialism, and the Bureaucratic State: The Economic Thought of Gustave de Molinari, 1845-1855”.

It is actually a synopsis of a book-length work I have written which can be found here:

It comes with two translations of essays by Molinari (in the Appendix), which are also available separately:

Here is the abstract of the paper:

In the late-1840s in Paris there was an extraordinary group of economists who had gathered around the Guillaumin publishing firm to explore and promote free market ideas. One of these was the young Belgian economic journalist Gustave de Molinari (1819-1912) who was just starting out on his career which would lead him to eventually becoming one of the most important and prolific free market economists in Europe in the 19th century. In this paper I explore the first ten years of Molinari’s career as an economic journalist, author of a book on labor issues and slavery, and on the history of tariffs, a free trade activist, editor of classics of 18th century economic thought, lecturer on economics at the Athénée royal, activist in the 1848 Revolution, prolific author of articles in the Journal des Économistes, author of Les Soirées de la rue Saint-Lazare (Conversations on Saint Lazarus Street), contributor to the Dictionnaire de l’Économie politique, and, after going into self-imposed exile to Brussels after the coup d’état of Louis Napoleon in December 1851, professor of economics at the Musée royal de l’industrie belge, author of a treatise on economics, owner-editor of a newsletter L’Économiste belge, author of a book on the class analysis of Bonapartist despotism, and another popular book of “conversations” about free trade.

In the middle of this very hectic period of his life Molinari published a book for Guillaumin as part of their anti-socialist campaign after the February 1848 Revolution saw socialists seize power and attempt to implement some of their ideas, especially that of the “right to a job,” paid for at taxpayer expense, as part of the National Workshops program run by Louis Blanc. Within the new Constituent Assembly politicians like Frédéric Bastiat fought to terminate the National Workshops program and keep the “right to a job” clause out of the new constitution. Outside the Assembly the economists wrote scores of books and pamphlets to intellectually defeat socialist ideas at both the popular and the academic level. Molinari’s book was designed to appeal to educated readers and consisted of a collection of 12 “evenings” or “soirées” at which “a Conservative,” “a Socialist,” and “an Economist” debated important political and economic issues. In these conversations, the economist (Molinari) exposes the folly of both the conservative (who supported tariffs, subsidies, and limited voting rights) and the socialist (who supported government regulation of the economy, the right to a job for all workers, and the end to the “injustice” of profit, interest, and rent).

Molinari begins by arguing that society is governed by natural, immutable and absolute laws which cannot be ignored either by conservatives or socialists, and that the foundation for a peaceful and prosperous society is the right to private property. He then proceeds to explain the free market position on a host of topics to his skeptical audience. Some of the more controversial topics Molinari discusses include the following: intellectual property, eminent domain laws, public goods such as roads, rivers, and canals, inheritance laws, the ban on forming trade unions, free trade, the state monopoly of money, the post office, state subsidies to theaters and libraries, subsidies to religious groups, public education, free banking, government regulated industries, marriage and population growth, the private provision of police and defense, and the nature of rent. On all these issues, Molinari shows himself to be a radical supporter of laissez-faire economic policies.

For modern Austrian economists, what is most interesting about Molinari’s work from this period are the following:

  • he believed that once freed from government regulations entrepreneurs would spring up in every industry to supply goods and services to customers
  • he offers private and voluntary solutions to the problem of the provision of all so-called “public goods”, from the water supply to police services
  • he seems to have inspired Rothbard to come up with his own theory of “anarcho-capitalism” in the 1950s and 1960s when he was writing MES and P&M

For modern libertarians, his book may well be the first ever one volume overview of the classical liberal position – much like an 1849 version of Rothbard’s own For a New Liberty (1973).

Entrepreneurs, Investors, and Scribblers: An Austrian Analysis of the Structure of Production and Distribution of Ideas

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A Paper given at the Southern Economics Association 2015 Annual Meeting
New Orleans, November 21-23, 2015

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An online version of this paper is available here: HTML and PDF.

Abstract: Austrian capital theory is applied to the study of how ideas (in this case classical liberal or libertarian ideas) have been produced, distributed, and consumed. It is based upon an examination of three key historical examples – the Anti-Corn Law League in the early 1840s, the Political Economists in Paris during the 1840s, and the activities of the Institute of Economic Affairs in London in post-war Britain. It is argued that there is a long structure of production in the realm of ideas as there is for capital goods, with highest order goods (the production of high theory) most removed from ultimate consumption (politicians, ordinary people, voters), and with several middle order stages which serve as intermediary steps along the way (production of ideas for college professors, intellectuals, members of think tanks, journalists, and lobbyists). In each of these historical examples there are investors with capital who invest in creating organisations to promote certain ideas, “entrepreneurs of ideas” who see opportunities for bringing together the right combination and mix of individuals with different talents to bring this about, marketers and other promoters who are able to sell these ideas to a broader public, and finally the ultimate consumers of these ideas who accept them and act on them in some way.

Here are the opening paragraphs:

I would like to begin by shamelessly stealing some ideas from Ed Lopez. He reminds us of the striking, parallel thinking of two widely divergent economic theorists, namely John Maynard Keynes and Friedrich Hayek. To begin with the latter:

In the light of recent history it is somewhat curious that this decisive power of the professional secondhand dealers in ideas should not yet be more generally recognized. The political development of the Western World during the last hundred years furnishes the clearest demonstration. Socialism has never and nowhere been at first a working-class movement. It is by no means an obvious remedy for the obvious evil which the interests of that class will necessarily demand. It is a construction of theorists, deriving from certain tendencies of abstract thought with which for a long time only the intellectuals were familiar; and it required long efforts by the intellectuals before the working classes could be persuaded to adopt it as their program. (The opening of Hayek’s “The Intellectuals and Socialism” (1949). Emphasis added.)

The flow of ideas in Hayek’s view goes from the “theorists” who spend their time “constructing” “abstract thought”; to the “intellectuals whom he describes as “secondhand dealers in ideas”; to their final destination in the minds of “the working classes” who adopt them as part of their program. Hayek describes the time frame for the transmission of ideas quite vaguely, as “a long time” and only after “long efforts”.

Thirteen years earlier Keynes expressed something very similar, but using different though still somewhat contemptuous terminology,

… the ideas of economists and philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed, the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back. I am sure that the power of vested interests is vastly exaggerated compared with the gradual encroachment of ideas. Not, indeed, immediately, but after a certain interval … [S]oon or late, it is ideas, not vested interests, which are dangerous for good or evil. (From John Maynard Keynes, The General Theory of Employment, Interest, and Money (1936) quoted in Leighton and Lopez, p. 109.)

The flow of ideas in Keynes’s view goes from “defunct economists”, to “academic scribblers”, to “madmen in authority” (presumably politicians), and finally to “practical men” and “vested interests.” Keynes likewise is quite vague about the time required for ideas to go from “scribbler” to “vested interests”, saying merely “after a certain interval”, or “sooner or later”.

What I would like to do is to offer some specific historical examples of such transmission of ideas and to use the Hayekian theory of capital structure to help explain the process by which this transmission occurs, and the types of people involved in it. This involves the identification of at least 4 stages or “orders” in the production of ideas from “high theory” to the “consumption” of (or, rather, the acting upon) those ideas by ordinary individuals; as well as the role played by key individuals such as “investors”, “entrepreneurs,” and “sales people,” and the different kinds of “idea factories” in which they work.

Reassessing Frédéric Bastiat as an Economic and Social Theorist

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Most economists and social theorists, if they have ever heard of him, dismiss Frédéric Bastiat as a light-weight theorist. Joseph Schumpeter summed up the consensus view in 1954 describing him as “no theorist at all” with the very witty but false put down, that he was a clever journalist who got out of his depth in the swimming pool of theory and drowned.

In this paper I conclude that Bastiat was in fact a theorist of considerable skill and originality who had conceived of a multi-volume work on social and economic theory the outline of which I have been able to reconstruct from his scattered remarks:

  • volume one would be a general theory of how human society in general functions, called Social Harmonies;
  • volume two would be his economic theory, called Economic Harmonies; and
  • the final volume or volumes would deal with disrupting factors or “disharmonies” and would be called A History and Theory of Plunder.

Not having time to complete this project because of his rapidly failing health (he died of throat cancer at the age of 49), Bastiat focused the time remaining to him to working on the Economic Harmonies. I have identified 16 elements of his economic thought which I believe demonstrate his sophistication and originality as an economic theorist. These include:

  • an individualist methodology of the social sciences (in particular his invention of “Crusoe economics” to explore the logic of human action),
  • an early form of subjective value theory,
  • the interdependence or interconnectedness of all economic activity,
  • the transmission of economic information through the economy,
  • the idea of opportunity cost,
  • the idea of the “ricochet effect” or multiplier, and
  • his Public Choice-like theory of politics and “place-seeking”, among others.

Copies of the paper:

Picasso and the Anti-Vietnam War Movement 1969

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I recently came across an interesting poster (thanks to a thoughtful reader) which was used in the 250,000 person “March against death : march on Washington” anti-Vietnam War protest march which took place on Nov. 13-15, 1969. You can read the front page story about the march on the NYT’s “On This Day” website and more details can be found in the memoirs of one of the organizers, Ron Young, Crossing Boundaries in the Americas, Vietnam, and the Middle East: A Memoir (Wipf and Stock Publishers, 2014).

Picasso donated a pen and ink drawing for the protesters to use in their promotional material which shows one of his “machines of war”.

(see a larger version 1828 px wide

A view of just the image:

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These “engines of war” first appeared in his anti-Korean War pictures from the early 1950s which marked a break from his earlier anti-war drawings which showed primarily the victims of war such as the women, children, and horse in “Guernica” (1937) or the apparently unfinished (or unfinishable) “The Charnel House” (1944-45) depicting the victims of WW2.

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For two or so decades after WW2 Picasso drew many images which were used for posters for various peace congresses. These consisted mainly of his classic peace dove images, or images of flowers.

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With the Korean War he changed tack and drew a series of works showing the actual killing rather than the aftermath of attacks. In “Massacre in Korea” (Jan. 1950) he shows a group of women and children facing immanent execution by a group of faceless, helmeted soldiers with rifles, very much in the style of Francisco Goya’s classic “The Third of May 1808”.

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This was followed a a pair of paintings in 1952, “War” and “Peace”, with the war painting showing a chariot with a warrior with a bloody sword and a group of silhouettes committing unseen atrocities in the background.

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During 1951 Picasso drew a series of works which showed various “machines of war” or tank-like vehicles attacking soldiers who look like classical Greek warriors. It was one of these tank-like vehicles which he drew for the 1969 anti-Vietnam War march in Washington.

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Another poster from the same year as the anti-war march shows the enduring relevance of the “Guernica” painting for anti-war protesters. It depicts a close-up of the head and arm of the fallen warrior/statue.

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For further information and images see:
– my Guide to the War Art of Picasso
– Picasso: Peace and Freedom, ed. Lynda Morris and Christoph Grunenberg (London: Tate Publishing, 2010).
– Picasso and the War Years, 1937-1945, ed. Stephen A. Nash, with Robert Rosenblum (New York: Thames and Hudson, Fine Arts Museums of San Francisco, 1998).

Slavery and the Hypocrisy of July 4

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A useful corrective to the unthinking patriotism usually on display on July 4th is to read Frederick Douglass’s great “July 5th Oration” which he gave in 1852. He asks his listeners the following important question and then gives a devastating answer to it:

“What, to the American slave, is your 4th of July? I answer; a day that reveals to him, more than all other days in the year, the gross injustice and cruelty to which lie is the constant victim. To him, your celebration is a sham; your boasted liberty, an unholy license; your national greatness, swelling vanity; your sounds of rejoicing are empty and heartless; your denunciations of tyrants, brass fronted impudence; your shouts of liberty and equality, hollow mockery; your prayers and hymns, your sermons and thanksgivings, with all your religious parade, and solemnity, are, to him, mere bombast, fraud, deception, impiety, and hypocrisy-a thin veil to cover up crimes which would disgrace a nation of savages. There is not a nation on the earth guilty of practices, more shocking and bloody, than are the people of these United States, at this very hour.” (p. 20)

Douglass does admit that in its rhetoric, in the philosophical ideas it articulates, “as it ought to be interpreted, the Constitution is a GLORIOUS LIBERTY DOCUMENT. Read its preamble, consider its purposes. Is slavery among them? Is it at the gateway? or is it in the temple? it is neither.” (p. 36)

Given the sad history of how the ideas of the Declaration of Independence were actually, and are now currently, being put into practice, one can only agree with his conclusion that “America is false to the past, false to the present, and solemnly binds herself to be false to the future.”

Source: Oration, Delivered in Corinthian Hall, Rochester, by Frederick Douglass, July 5th, 1852 (Rochester: Printed by Lee, Mann, and Co., American Building, 1852).

Very few know, or want to know, that twelve American presidents owned slaves at some point in their lives and that eight of them owned slaves while serving as President (see list below). Thus, for 50 years during the pre-Civil War period a slave-owner was in the White House. It is also the case that although the slave trade had been abolished in Washington D.C. in 1850, slave owning was still permitted for another 15 years. This meant that the “great emancipator” Abraham Lincoln lived in the White House when it was still using slave labour as household help.

Presidents who owned slaves (in caps if they owned slaves while in office):

  1. GEORGE WASHINGTON (Pres. 1789-1797) (owned between 250-350 slaves)
  2. THOMAS JEFFERSON (1801-1809) (about 200)
  3. JAMES MADISON (1809-1817) (more than 100)
  4. JAMES MONROE (1817-1825) (about 75)
  5. ANDREW JACKSON (1829-1837) (fewer than 200)
  6. Martin Van Buren (1837-1841) (one)
  7. William Henry Harrison (1841-41) (eleven)
  8. JOHN TYLER (1845-1849) (about 70)
  9. JAMES POLK (1845-1849) (about 25)
  10. ZACHARY TAYLOR (1849-1850) (fewer than 150)
  11. Andrew Johnson (1865-1869) (probably eight)
  12. Ulysses S. Grant (1869-1877) (probably five)

Here is an interesting image of Washington the slave owner from 1851 – “Washington as Farmer at Mount Vernon”, 1851, part of a series on George Washington by Junius Brutus Stearns. Located at the Virginia Museum of Fine Arts.

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And an advertisement placed in The Pennsylvania Gazette, Philadelphia, Pennsylvania, May 24, 1796, which offers a reward of $10 for the capture of one of his run-away slaves.

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Source: Mary V. Thompson, “William Lee & Oney Judge: A Look at George Washington & Slavery ,” Journal of the American Revolution, June 19, 2014.

Another useful corrective for patriots is Jeffrey Rogers Hummel’s article “The Constitution as Counter-Revolution: A Tribute to the Anti-Federalists,” Free Life. The Journal of the Libertarian Alliance, Vol. 5 : No.4. (no date) PDF