James Dorn is vice president for academic affairs at the Cato Institute and a professor of economics at Towson University in Maryland. This is adapted from a longer article that will appear in the September 2001 Journal des Économistes. Reprinted by permission.
Frédéric Bastiat, although best known as an economic journalist, was also a pioneer in what has become known as constitutional political economy. Like James Buchanan and other constitutional political economists, Bastiat considers the nexus between economics and politics, employs methodological individualism, extends the exchange paradigm to collective choice, and traces the implications of alternative property rights structures for economic, social, and political order.
He derives the principles of a liberal social order from a theory of rights in which individuals have a fundamental right to be left alone to pursue their own interests provided they do not violate the equal rights of others. The primary duty of government is to serve the people by protecting their basic rights to life, liberty, and property. In his system of natural liberty—characterized by free trade and the rule of law—a spontaneous order emerges that enhances individual well-being through the process of free choice and wealth creation.
Bastiat recognized that a shift away from a minimal state to a redistributive state would undermine private property rights, attenuate individual freedom, and turn the true meaning of justice on its head. Bastiat saw consent as the only legitimate measure of justice, in both the private and the public sector.
Starting with the nature and rights of man and then proceeding to the role of government, the meaning of justice, and the legitimate function of the law, Bastiat laid the foundation for a constitution of liberty that would narrowly limit the power of government and maximize individual freedom.
Long before Public Choice economists used the term “rent-seeking,” Bastiat showed that when government steps beyond its proper function of protecting persons and property, there will be an incentive for special-interest groups to seek privileged positions and use the power of government to capture benefits at the expense of taxpayers and consumers. Income and wealth will be redistributed and resources will be wasted in the process.
From Bastiat’s perspective, rent-seeking is best seen as a form of “legal plunder,” because the force of law is used to unjustly take from some people, without their consent, in order to benefit others. Tariffs, subsidies, usury laws, and welfare payments all violate the fundamental principle of justice, as understood by Bastiat and classical liberals.
On the 200th anniversary of Bastiat’s birth, it is appropriate to reconsider his work from the perspective of constitutional political economy. The essential issue is how to solve the so-called social problem, that is, how to coordinate self-interested individuals so as to achieve economic, social, and political harmony. In addressing that issue, Bastiat takes individuals as they are and asks, What institutions (rules) are best suited to the perfectibility of imperfect man? Although Bastiat was influenced by those who went before him, especially Adam Smith, the physiocrats, and Jean-Baptiste Say, he has his own unique insights and can be considered a forerunner of Knut Wicksell and present-day constitutional political economists.
Pursuit of Self-Interest
A basic postulate of Bastiat’s economic approach to politics is that all individuals pursue their own self-interest, by which he simply meant that individuals are born with an “instinct of self-preservation.” It is a universal characteristic of human nature that individuals tend “to seek happiness and to shun misery.” Individuals, no doubt, will make mistakes, but if they are free to choose and are held responsible for their actions, they will learn. “In the last analysis,” writes Bastiat, “we must look to the law of responsibility to find the means to achieve human perfectibility.”
Bastiat is critical of certain political theorists (French socialists, in particular) for their attempt to change the nature of man by asserting that self-interest is socially destructive and should be replaced by the motive of “self-sacrifice” for the “common good.” Such a “complete transformation of the human heart” is unrealistic and dangerous, according to Bastiat. Any attempt to destroy self-interest will, in his opinion, destroy mankind. Virtue cannot be forced on individuals by government; it must be spontaneous and consistent with self-preservation.
In his famous 1848 essay, “Property and Law,” Bastiat argued that it is futile to try to “suppress self-interest by decree.” Government and the law cannot change human nature. Moreover, when individuals enter the public sector, they do not abandon their desire for personal gain—self-interest does not die, rather the so-called new motives (such as working for the honor of one’s country or for the common good) become “self-interest of another sort.” Thus Bastiat was consistent in applying the self-interest postulate to both private and public choice. His starting point is always the individual and the natural motive to improve one’s condition to achieve greater happiness.
The pursuit of happiness, however, cannot take place constructively without constraints on human action. Those constraints—in the form of rules against theft, fraud, murder, and so on—are both practical and consistent with the natural rights of each person to be free from coercion, except when it is used to protect life, liberty, and property.
For Bastiat, as for other classical liberals, the individual and his liberty and property precede government, and it is the duty of government to secure each individual’s pre-existing natural rights. Such rights are not a convention or a creation of government and the law; the law’s function is to protect, not to take, one’s justly (that is, freely) acquired property: “It is precisely because property as well as liberty is a right prior to the law that both exist only on condition of respecting the like right of others, and it is the function of the law to see that this limit is respected, which means to recognize and support this very principle.”
Freedom, property, and justice are inseparable in Bastiat’s constitutional political economy. Freedom, or consent, is the measure of justice, both in the market and in the choice of constitutional rules: to be just, transactions (exchanges) must be free. “Exchange, like property, is a natural right,” argued Bastiat. To deny people the right to trade would be to deny them a fundamental human right. Likewise, since individuals’ natural rights precede government, the just or legitimate state must ultimately rest on the consent of the people.
Bastiat understood the term “property,” in a broad sense, as “the right to enjoy the fruits of one’s labor, the right to work, to develop, [and] to exercise one’s faculties, according to one’s own understanding, without the state intervening otherwise than by its protective action.”
As each person has the right to defend his liberty and property, all individuals have the right to join together to provide a common defense of their natural rights to life, liberty, and property. But neither the state nor any individual has the right to take the property of others or to force others “to be industrious, sober, thrifty, generous, learned, or pious.” Government, or “collective force,” can only “be legitimately employed to further the rule of justice, to defend every man’s rights.”
In his approach to government, he adopts methodological individualism and asks: “If a right does not exist for any one of the individuals whom collectively we designate . . . as a nation, how can it exist for that fraction of the nation having merely delegated rights, which is the government? How can individuals delegate rights that they do not possess?”
The obvious answer is that they cannot do so without violating the “rule of justice.” Thus for Bastiat, the state “can have no rationally justifiable functions other than the legitimate defense of the rights of the individual; it can be called upon only to safeguard the liberty and property of all the citizens.”
Justice and the Law
Justice requires protection of property rights and freedom of contract. When government oversteps its legitimate boundary—that is, when the law is used to attenuate private property rights and violate individual rights—injustice occurs. The results of government overreaching are “the rights of some violated for the advantage of others, liberties sacrificed, property rights usurped, capabilities curtailed, [and] acts of plunder perpetrated.”
In a free society, the function of the law, according to Bastiat, is “to prevent injustice from prevailing,” rather than “to make justice prevail.” This view makes sense, says Bastiat, because “it is not justice, but injustice, that has an existence of its own. The first results from the absence of the second.”
To be just, government and the law, both of which operate through the use of force, must remain within the legitimate bounds of that use. Those bounds are defined by a prohibition against injustice, not by a positive directive to do good. As Bastiat notes: “When law and force confine a man within the bounds of justice, they do not impose anything on him but a mere negation. They impose on him only the obligation to refrain from injuring others.” In this sense, Bastiat first defines “law” as the “collective force organized to oppose injustice” and then adds, “To put it briefly: Law is justice.”
The Law of Justice and Spontaneous Order
When government is limited to its legitimate functions, property will be protected, and liberty and justice will prevail. Individuals will be held responsible for their actions, and self-interest will be directed by a competitive market process to satisfy consumers’ preferences in the long run. The spontaneous order, or harmony, that develops under free markets thus depends fundamentally on what Bastiat calls “the law of justice”: “Men’s interests, under the law of justice, tend to adjust themselves naturally in the most harmonious way.”
As Bastiat wrote, when government is limited to its proper role and property is secure, “Everyone would be sure of his future, at least in so far as it could be affected by the law.” Moreover, in such a regime, “It will be impossible for industry not to develop, for wealth not to increase, for capital not to be accumulated, with prodigious rapidity.”
Thus Bastiat was a true progressive: he believed that “the best chance of progress lies in justice and liberty.” His positive outlook is best summarized in this passage from his famous essay The Law, written in June 1850: “It is under the law of justice, under the rule of right, under the influence of liberty, security, stability, and responsibility, that every man will attain to the full worth and dignity of his being, and that mankind will achieve, in a calm and orderly way—slowly, no doubt, but surely—the progress to which it is destined.”
As a key proponent of free trade, Bastiat argued that trade is not only a human right, it is an important vehicle for promoting world peace: “In virtue of the principle of universal justice, no citizen being able to prevent another citizen from buying or selling abroad, the commercial relations of this nation will be free and widespread. No one will deny that these relations contribute to the maintenance of peace. They will themselves constitute a veritable and precious system of defense, which will render arsenals, fortified places, navies, and standing armies well-nigh useless.”
The Redistributive State and Legal Plunder
When government goes beyond the limits of universal justice and uses the law for plunder, rent-seeking will replace profit-seeking. The doors of government will then be open for endless interventions and redistributions to benefit some individuals or groups at the expense of others. Civil society will diminish as the rule of law erodes, and wealth creation will slow as the free market is suppressed.
In the redistributive state, self-sacrifice for the common good is regarded as a public virtue, and self-interest is frowned upon. The law is perverted and transformed from its legitimate function of protecting persons and property to forcing the transfer of income and wealth through market interventions, outright takings, and heavy taxes. Artificial rights (welfare rights) replace natural rights (property rights), and justice is turned on its head.
Bastiat clearly recognized that when the government oversteps its legitimate boundary, there is no end to the demand for further interventions and redistributions to benefit some individuals or groups at the expense of others. Instead of a positive-sum game, as occurs under limited government and voluntary exchange, there will be a zero-sum or negative-sum game under the redistributive state and its instrument of “legal plunder.”
By “legal plunder,” Bastiat meant “a violation of freedom and property rights.” In particular, “When property is transferred without the consent of its owner and without compensation, whether by force or by fraud, . . . I say that property rights have been violated, that plunder has been committed.” Once the law is used to protect special interests, rather than to protect private property, resources will be devoted to seeking the benefits government has the power to hand out in the form of subsidies, licenses, welfare payments, market access, and so on. Resources will be wasted in the process of rent-seeking, and overall wealth will be lower than in a market-liberal order.
The redistributive state, in addition to interfering with the spontaneous market order and wasting resources, will erode civil society and “weaken the moral fibre of a nation.” Individuals will lose their sense of responsibility and depend heavily on the state for their self-preservation. When the government is responsible for one’s health, housing, employment, education, retirement, and general well-being, little is left for private initiative. Everyone will have an incentive to live off the state, which means to prey on his neighbors. In such a world, “the law becomes a great school for demoralization.”
What deeply concerned Bastiat was that the true nature of justice is distorted beyond recognition in the redistributive state, yet legislators pretend to be moral authorities. True justice requires that freedom prevail, that the rights to property and contract be safeguarded by law. Voluntary self-sacrifice to help others is considered a virtue, but forced self-sacrifice is a vice and violates the rules of justice. When the state imposes “fraternity,” it distorts the real meaning of justice under the law: “Legal plunder may borrow the name of fraternity, . . . but it will never be anything but a principle of discord, confusion, unjust claims, terror, misery, inertia, and animosity.”
Bastiat foresaw that, with universal suffrage, democratic governments would come under increasing pressure to depart from first principles and use the force of law to buy votes rather than to protect property. He understood the danger of trying to use the state to “realize the general welfare by way of general plunder.” Under universal suffrage, Bastiat predicted that those who were previously disenfranchised and who were victims of legal plunder would now use the power of the law “to redress the balance by means of universal plunder. Instead of being abolished, social injustice [would be] made general.”
Two consequences of the “perversion of the law,” which Bastiat foresaw under universal suffrage, are (1) “to efface from everyone’s conscience the distinction between what is just and what is unjust” and (2) “to give to political passions and struggles, and indeed to the whole field of politics, an exaggerated importance.”
The rise of the redistributive state has decreased respect for private property rights and undercut individual responsibility. That should not be surprising: It is only natural for people to become less responsible when they bear only part of the costs of their actions. The politicization of economic life, the erosion of civil society, and the growth of rent-seeking that have occurred in Western democracies over the past 50 years attest to the soundness of Bastiat’s logic of collective choice. It is because “the voter acts not only for himself, but for everyone” that Bastiat placed primary importance on limited government and individual responsibility, rather than on simple majoritarianism and democratic rule. Like James Madison, his emphasis was on a constitutional republic, in which the powers of the state would be delegated and enumerated, and the rights of the people would be broad and consistent with liberty under the “law of justice.” He was interested in the general welfare, but he would achieve it by narrowly limiting government and relying on “spontaneous fraternity” rather than on “legal fraternity.”
To restore economic and social harmony, the state must return to its proper role, which means that people must accept responsibility for their actions and respect the liberty and property of others. The imperfect nature of welfare rights as moral rights needs to be widely recognized if the moral pretense of “liberal” activists, operating under the banner of social justice, is to be replaced by Bastiat’s rights-based approach to equality and justice, and legitimate constitutional order restored.
However, if people believe that “the state is responsible for establishing fraternity on behalf of its citizens,” then Bastiat’s prediction that “we shall see the entire people transformed into petitioners” will come true. The challenge Bastiat presents is to understand the institutional infrastructure of a market-liberal order and to appreciate the moral and constitutional principles that condition the long-run survival of a free society. In this sense, Bastiat fits clearly into the mold of a constitutional political economist.
- Frédéric Bastiat, Economic Harmonies, trans. W.H. Boyers, ed. George B. de Huszar (Irvington-on-Hudson, N.Y.: Foundation for Economic Education, 1964), p. 520.
- Ibid., p. 521.
- Ibid., pp. 520-21.
- Ibid., p. 534.
- Ibid., p. 522.
- Ibid., pp. 522-23.
- Frédéric Bastiat, Selected Essays on Political Economy, trans. S. Cain, ed. George B. de Huszar (Irvington-on-Hudson, N.Y.: Foundation for Economic Education, 1964), pp. 106-107. Bastiat’s criticism of the public-interest approach to politics parallels that of James Buchanan and Gordon Tullock in The Calculus of Consent: Logical Foundations of Constitutional Democracy (Ann Arbor, Mich.: University of Michigan Press, 1962), p. 20.
- Ibid., p. 103.
- Ibid., p. 197.
- Ibid., pp. 109-110.
- Economic Harmonies, p. 457.
- Ibid., p. 458.
- Ibid., pp. 458-59.
- Selected Essays, p. 66.
- Ibid., p. 65.
- Ibid., p. 91.
- Ibid., p. 136.
- Ibid., p. 122.
- Ibid., p. 123.
- Ibid., p. 137.
- Ibid., p. 94.
- Ibid., p. 124. For Bastiat, “universal justice” simply meant that “everyone exercises his rights as he pleases, provided that he does not encroach on the rights of others” (Ibid., p. 122).
- Ibid., p. 67.
- Ibid., p. 64.
- Ibid., p. 134.
- Economic Harmonies, p. 463.
- Selected Essays, p. 135.
- Ibid., p. 65.
- Ibid., p. 55.
- Ibid., pp. 55-57.
- Ibid., p. 57.
- Ibid., p. 68.
- Ibid., p. 128.