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The French political economist, politician, and journalist Fr\u00e9d\u00e9ric Bastiat (1801-1850) placed \u201cmarkets\u201d and mutually beneficial \u201cexchange\u201d at the very heart of of his theory of economics which he elaborated in a two volume collection of essays Sophismes \u00e9conomiques<\/em> (Economic Sophisms) (1846, 1848), a long essay on \u201cLa Loi\u201d (The Law) (1850), and his unfinished treatise Harmonies \u00e9conomiques<\/em> (Economic Harmonies) (1850, 1851)<\/p>\n His ideas are a sophisticated and theoretically rich \u201cphilosophy of markets\u201d as he combined into a coherent whole the following aspects:<\/p>\n Bastiat\u2019s theory of markets has the following key points:<\/p>\n He believed that all individuals have needs and desires<\/strong> (des besoins) which they attempt to satisfy by taking action (l\u2019action, les efforts) , either alone or by interacting with others in \u201cmarkets\u201d.<\/p>\n In order to explain how an individual makes choices when acting alone, Bastiat developed a theory of \u201cCrusoe economics\u201d to illustrate the nature of \u201chuman action\u201d (l\u2019action humaine)<\/strong> which influenced the thinking of Murray Rothbard in the 1950s and 60s when he was writing his treatise Man, Economy, and State<\/em> (1962).<\/p>\n When individuals interact with others to satisfy their needs they create \u201cmarkets\u201d (or \u201cthe market\u201d) which are made up of a multiplicity of individual exchanges<\/strong>.<\/p>\n He defined an exchange as the voluntary and mutually beneficial exchange of \u201cservice for service\u201d (service pour service)<\/strong>.<\/p>\n Over time there emerges an \u201capparatus of exchange\u201d (l\u2019appareil de l\u2019\u00e9change)<\/strong> which is a collection of practices, beliefs, customs, laws, and institutions which make markets \/ exchange possible on a large scale and which continues over long periods of time.<\/p>\n Like Destutt de Tracy Bastiat thought that society could be regarded as \u201cone Great Bazaar\u201d (un immense bazar)<\/strong>, in which there existed a huge number of interlocking \/ parallel markets satisfying a large number of of very diverse and often complex needs of the consumers which were satisfied by an equally large and very diverse number of producers. His concept of the \u201cGreat Bazaar\u201d is very similar to Friedrich Hayek\u2019s notion of the \u201cGreat Society\u201d which was the global scale \u201cspontaneous order\u201d within which there were a myriad of smaller spontaneous orders often local in scale.<\/p>\n Markets are normally \/ potentially \u201charmonious<\/strong>\u201d for all the participants (domestic or international, consumers and producers) unless they are disrupted by coercion and other \u201cdisturbing factors\u201d (des causes perturbatrices) which creates \u201cdisharmony\u201d (la dissonance).<\/p>\n If markets are allowed to flourish unmolested they can produce peace, prosperity and justice<\/strong> for those who participate in them.<\/p>\n On the other hand, if they are \u201cdisturbed\u201d by government intervention<\/strong> markets can become \u201cdistorted\u201d (d\u00e9plac\u00e9)<\/strong>, as in the misallocation of capital, and labour, and cause economic hardship, conflict, and injustice (economic recessions, war, plunder)<\/p>\n Thus markets are both fragile and robust at the same time. They can be broken or distorted by \u201cdisturbing factors\u201d<\/strong> like coercion, war, plunder, and the granting of privileges to a favored few; yet they can also be quite robust since they have a self-repairing feature or what Bastiat termed \u201crestorative factors\u201d (des causes r\u00e9paratrices))<\/strong>, which were driven by the self-interest of consumers and producers, price signals in the market, and the sense of \u201cresponsibility\u201d and \u201csolidarity\u201d help by most people.<\/p>\n In order to properly understand the complexity of markets, especially if they are \u201cdisturbed\u201d by government intervention, Bastiat developed his famous theory of \u201cthe seen\u201d and \u201cthe unseen\u201d.<\/strong> By \u201cthe seen\u201d Bastiat meant that which was obvious and immediately visible to observers; and by \u201cthe unseen\u201d he meant the hidden, delayed, or unexpected consequences of that intervention into markets which are not so obvious and apparent but nevertheless inevitable and apparent to the insightful and patient observer.<\/p>\n The opposite of the \u201charmony\u201d of markets is \u201cdisharmony\u201d (la dissonance\u201d)<\/strong> caused by \u201cla spoliation\u201d (plunder)<\/strong> of various kinds. Bastiat had plans to write a multi-volume work of social theory which would deal with \u201cSocial Harmonies\u201d, \u201cEconomic Harmonies\u201d (the only volume to appear), and the Disharmonies caused by Plunder, the history of which Bastiat planned to write another volume but died before he could finish it.<\/p>\n In summary, one could say that the ideal of liberals like Bastiat and his friend Richard Cobden is that there should be \u201cfree markets in everything<\/strong>\u201d.<\/p>\n Works by and about Bastiat here<\/a>.<\/p>\n The schematics I have created to illustrate the complex \u201cword clusters\u201d he used:<\/p>\n Blog Post: \u201cSome Key Terms used by Bastiat in his Economic Theory\u201d (22 Dec. 2019) here<\/a>.<\/p>\n Website: \u201cVocabulary Clusters in the Thought of Fr\u00e9d\u00e9ric Bastiat\u201d here<\/a>.<\/p>\n Introduction The French political economist, politician, and journalist Fr\u00e9d\u00e9ric Bastiat (1801-1850) placed \u201cmarkets\u201d and mutually beneficial \u201cexchange\u201d at the very heart of of his theory of economics which he elaborated in a two volume collection of essays Sophismes \u00e9conomiques (Economic Sophisms) (1846, 1848), a long essay on \u201cLa Loi\u201d (The Law) (1850), and his unfinished … Read more<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_import_markdown_pro_load_document_selector":0,"_import_markdown_pro_submit_text_textarea":"","footnotes":""},"categories":[76,77],"tags":[],"class_list":["post-1549","post","type-post","status-publish","format-standard","hentry","category-bastiat","category-tradition"],"acf":[],"_links":{"self":[{"href":"http:\/\/davidmhart.com\/wordpress\/wp-json\/wp\/v2\/posts\/1549","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/davidmhart.com\/wordpress\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/davidmhart.com\/wordpress\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/davidmhart.com\/wordpress\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/davidmhart.com\/wordpress\/wp-json\/wp\/v2\/comments?post=1549"}],"version-history":[{"count":3,"href":"http:\/\/davidmhart.com\/wordpress\/wp-json\/wp\/v2\/posts\/1549\/revisions"}],"predecessor-version":[{"id":203933,"href":"http:\/\/davidmhart.com\/wordpress\/wp-json\/wp\/v2\/posts\/1549\/revisions\/203933"}],"wp:attachment":[{"href":"http:\/\/davidmhart.com\/wordpress\/wp-json\/wp\/v2\/media?parent=1549"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/davidmhart.com\/wordpress\/wp-json\/wp\/v2\/categories?post=1549"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/davidmhart.com\/wordpress\/wp-json\/wp\/v2\/tags?post=1549"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}\n
Bastiat\u2019s Theory of Markets<\/h2>\n
Further Reading<\/h2>\n
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