14. After Mill: Bastiat and the French laissez-faire Tradition

0:00Chapter 14. After Mill. Bastiat and the French laissez-faire tradition. 1. The French laissez-faire school. John Stuart Mill's conquest of British economics by his 1848 treatise, The Principles of Political Economy, succeeded in imposing a miasma upon British economics for at least a quarter century. In some respects, indeed, the subjectivist, or in its trivialized label, the marginalist revolution against Mill, led abortively by Jevons in the 1870s, never really took hold in Great Britain. The Millian miasma imposed a vague and incoherent adhesion to the labor theory, or, at best, the cost of production theory of value, to the methodology of positivism, tempered by a confused inductivism, to individualism, muddled by organicism, to a vague tentative preference for the free market, easily overridden by almost any objection, in particular the alleged ability of labor unions to win general wage increases, as well as the supposed moral superiority of socialism.

1:21Politically, in short, Mill was cleverly positioned to be the patron saint of laissez-faire as well of virtually any and all attacks against it, in short, to be the philosopher of the British status quo as it existed or as it might become. At the same time, Mill became the modern liberal intellectual's favorite straw man champion of laissez-faire ever ready to make the most damaging concessions to his modern liberal opponents. In that way, the modern liberal intellectual can sound the triumphal note, but even Mill admits, and thus expect to win the day by the invocation of authority alone.

2:06In Monetary and Banking Affairs, indeed, Mill was the guru for precisely the status quo as imposed by the Peel Act of 1844 and continuing until World War I, that is, a broad commitment to hard money in the form of the gold standard, but cleverly and fundamentally vitiated by a Bank of England monopoly control of a Fractional Reserve Banking System that could readily inflate money and credit within that allegedly sound system. Although of all countries British economics in the 19th century and down through World War II managed to accrue the greatest prestige, it was not able to exercise total hegemony over economics abroad.

2:56In France, in particular, the legacy of J.B. Say led, in dramatic contrast, to a subjective utility and consistent laissez-faire tradition that managed to retain dominance over French economics for nearly a century. We have seen that French laissez-faire economics was established in the restoration period after 1815 by a brilliant group of young economists and social theorists inspired by J.B. Say and headed by Charles Du Noyer and by Say's son-in-law, Charles Comte. Although Comte died in middle age, Du Noyer lived long enough to write his three-volume Magnum Opus, on the Freedom of Labor, 1845, and to preside over the founding in 1842 of the leading Society of Political Economy, which would meet monthly for decades, as well as its scholarly journal, the Journal des Economistes, which had been launched a few months before the Society.

4:03From then until World War I, an admirable and productive cadre of economists staffed the main French academic posts, edited and wrote for numerous scholarly journals, formed associations and conferences, and wrote and lectured indefatigably on behalf of harmony of interests and general prosperity through free markets, free trade and laissez-faire. It is remarkable that at least three generations of French economists were schooled in and carried on and developed this laissez-faire tradition. Despite generations of changing fashions and enormous temptations from the side of statism and special privilege, French economists for nearly a century stuck to their guns and remained and stalwart champions of laissez-faire and enemies of state intervention and special privilege.

4:59Here we might pay special attention to the men who collaborated on the first encyclopedia of economics, an excellent two-volume work, Dictionnaire d'Economie Politique, Paris, 1852 and 1853, co-edited and published by Gilbert Guillemin, 1801 to 1864, an indefatigable publisher of countless French economic and laissez-faire works during the 19th century. The co-editor, Charles Coquelin, 1805 to 1852, himself a major contributor to the dictionary, Unfortunately died shortly before publication. The dictionary went through four printings.

5:46Another leading light of the dictionary and founding secretary of the Society of Political Economy was Joseph Garnier, Clément Joseph Garnier, 1813-1881, for some years editor-in-chief of the Journal des Economistes and author of several highly successful textbook treatises in Economics, Elements d'Economie Politique, 1845, many editions, Elements des Finances, 1858, many editions. French laissez-faire economists pioneered not only encyclopedias of economics, but also the study of the history of the discipline.

6:32The first history of economic thought was the Histoire de l'économie politique en Europe, 1837, 4th edition, 1860, English translation, History of Political Economy in Europe, 1880, by Jérôme Adolphe Blanqui, 1798 to 1854, who studied political economy under Say and succeeded him as professor. Blanqui was also for many years editor-in-chief of the Journal des Economistes. Joseph Garnier had been Blanqui's student. Blanqui, in turn, was the son-in-law of Michel Chevalier, 1806 to 1879.

7:18An engineer and Saint-Simonian socialist in his youth, Chevalier became a laissez-faire liberal, becoming professor of political economy at the Collège de France and publishing the The Three-Volume Cours d'Economie Politique, 1842-1850 Chevalier was also a statesman, negotiating the famous Free Trade Treaty with England, England being represented by the great Richard Cobden in 1860, a high watermark of the free trade and free market movement in 19th century Europe. Another prominent student of Chevalier was Henri-Joseph Léon Baudrillard, 1821-1892, who went on to teach political economy at the Collège de France, and whose Manuel d'Economie Politique was published in 1857 and went into numerous editions.

8:17Another prominent economist was the Pole, Louis Volovsky, 1810-1876, a brother-in-law of Michel Chevalier. Born in Warsaw, Volovsky emigrated to France in 1834, founding and editing for many years the Review of Legislation and Jurisprudence. Possessor of a doctorate of law and another in political economy, Volovsky was to become from a banker, statesman and professor, as well as being associated for many years with the Journal des Economistes. Wolowski's nephew, Émile Levasseur, 1828-1911, became a prominent economic historian and successor to Baudrillard at the Collège de France.

9:06Levasseur published a well-known work on the history of the working classes in France, in 1859, and in 1867 published a Précis d'Economie Politique, which went into many editions. Volovsky and Levasseur, it should be noted, wrote a scintillating joint article in defense of property rights, on Property, for Laylor's three-volume Cyclopedia of Political Science, published in the United States in 1884. A worthy successor to Jérôme Adolphe Blanqui as historian of economic thought in the French laissez-faire school was Maurice Bloch, 1816-1901.

9:52Born in Berlin, but emigrating to France, Bloch worked in the statistical department of the Ministry of Agriculture, Industry and Trade. By his forties, Bloch was a full-time editor and writer in economics. For 44 years, from 1856 virtually until his death, Block served as editor of the Annual of Economics and Statistics, as well as editor of the General Dictionary of Politics from 1862 and later years, and the Dictionary of French Administration, 1855 and later years, and also wrote several important books on the theory of statistics, on socialism, on French finances, and a short manual of political economy, published in 1873 and going into many editions.

10:46An erudite and indefatigable scholar, Maurice Bloch served for over 40 years as a reporter on all economic writings in Europe for the Journal des Economistes, capping his career with a great two-volume history of economic thought, Le progrès de la science économique depuis Adam Smith, 1890. In his progrès, Block praised the new Austrian school and denounced the historicism and opposition to economic law of the German historical school. Three generations of Say's also took a prominent part in the French movement of laissez-faire economics. Jean Baptiste's only son, Horace Emile Say, 1794-1860, was merchant for a time in the United States, and especially in Brazil, and served as a commercial judge and a counselor of state during the period of the Second Republic, 1859-1861.

11:50Horace Say wrote a book on the history of commercial relations between France and Brazil. Horace's son, Jean-Baptiste Léon Say, 1826-1896, became a prominent statesman devoted to free trade and laissez-faire. Léon Say wrote many articles for the Journal des Economistes. He was the owner of the laissez-faire-oriented Journal des Debats, and he was the Minister of Finance from 1872 to 1879, and again in 1882. He was also president of the French Senate in 1882. Léon Say concluded a preliminary free trade treaty with England in 1880 and successfully opposed the introduction of an income tax.

12:42One of the last of the fiery and uncompromising free market and anti-interventionists of the of the French School was Yves Gouillot, 1843-1928, a prolific writer who also served as city councillor of Paris, 1876-1885, and minister of public works, 1889-1892. Gouillot succeeded the venerable Gustave de Molinari after he stepped down as editor of the Journal des Economistes in 1909. So dominant was the laissez-faire school in France during the 19th century that its teaching permeated the popular culture. Popular writers, journalists and novelists expounded on the harmony of interests and on the mutual benefit and the general prosperity brought about by the free market.

13:36Thus, no more lucid and inspiring an economic primer and peon to the workings of the free Every market has ever been written than the lectures to French workers formed into the Handbook of Social Economy, or The Workers ABC, written by the popular novelist Edmond Abou, 1828 to 1885. Indeed, the very lucidity and popularity of the French writers was turned against them by the British classical economists, generally dense and obscure writers who could turn their Their very elegance of style against the French and denounce them for superficiality of thought and scholarship. This tradition has been redoubled by modern historians, whose intense hostility to the French writers' political conclusions reinforces their brusque dismissal.

14:30In particular, modern historians unfairly dismiss the French writers as mere popularizers, lacking theoretical depth. 2. Frederic Bastiat, The Central Figure Particularly suffering from historical neglect is the most famous of the French laissez-faire economists, Claude Frederic Bastiat, 1801-1850, to whom the two-volume Dictionnaire d'économie politique, 1852, was respectfully and affectionately dedicated. Bastiat was indeed a lucid and superb writer, whose brilliant and witty essays and fables to this day are remarkable and devastating demolitions of protectionism and of all forms of government subsidy and control.

15:22He was a truly scintillating advocate of an untrammeled free market. Frederic Bastiat's justly famous Petition of the Candlemakers is still anthologized in books of economic readings. In this satiric petition to the French Parliament, the Candlemakers Trade Association petitions the government to protect their industry, which employs many thousands of men from the unfair, unjust, invasive competition of a foreign light source, the sun. Bastiat's candlemakers petition the government to shut out the sunlight all over France, a protective device that would give employment to many millions of worthy French candlemakers. Bastiat's fable of the broken window also brilliantly refuted Keynesianism nearly a century before its birth. Here he outlines three levels of economic analysis. A mischievous boy hurls Bastiat calls a rock at a plate glass store window and breaks the glass.

16:26As a crowd gathers round, the first-level analysis, Common Sense, comments on the event. Common Sense deplores the destruction of property in breaking the window and sympathizes with the storekeeper for having to spend his money repairing the window. But then, says Bastiat, comes the second-level, sophisticated analyst, or what we might call a proto-Keynesian. The Keynesian says, Oh, but you people don't realize that the breaking of the window is really an economic blessing, for in having to repair the window, the storekeeper invigorates the economy by his spending, and gives welcome employment to glaciers and their workers. Destruction of property by compelling spending therefore stimulates the economy, and has an invigorating multiplier effect on production and employment.

17:21But then in steps Bastiat, the third level analyst, and points out the grievous fallacy in the destructionist proto-Keynesian position. The alleged sophisticated critic, says Bastiat, concentrates on what is seen and neglects what is not seen. The sophisticate sees that the storekeeper must give employment to glaciers by spending money to repair his window. But what he doesn't see is the storekeeper's opportunity for gone. If he did not have to spend the money on repairing the window, he could have added to his capital and to everyone's standard of living, and thereby employed people in the act of advancing, rather than merely trying to sustain, the current stock of capital.

18:13Or the storekeeper might have spent the money on his own consumption, employing people in In this way, the economist, Bastiat's third level observer, vindicates common sense and refutes the apologia for destruction of the pseudo-sophisticate. He considers what is not seen as well as what is seen. Bastiat, the economist, is the truly sophisticated analyst. Frédéric Bastiat was also a perceptive political or politico-economic theorist. Attacking statism as a growing parasitic burden upon producers in the market, he defined the state as the great fiction by which everyone tries to live off everyone else.

19:02And in his work The Law, 1850, Bastiat insisted that law and government must be strictly limited While often praised as a gifted popularizer, Bastiat has been systematically derided and undervalued as a theorist, criticizing the classical Smithian distinction between productive of Labor on Material Goods and Unproductive Labor in Producing Immaterial Services, Bastiat made an important contribution to economic theory by pointing out that all goods, including material ones, are productive and are valued precisely because they produce immaterial services.

19:59Exchange, he pointed out, consists of the mutually beneficial trade of such services. In emphasizing the centrality of immaterial services in production and consumption, Bastiat built on J.B. Say's insistence that all market resources were productive, and that income to productive factors were payments for that productivity. Bastiat also built upon Charles du Noyer's thesis in his New Treatise on Social Economy, 1830, that value is measured by services rendered, and that products exchange according to the quality of services stored in them. Perhaps most important, in stark contrast to the Smith-Ricardo classical school's exclusive Emphasis on Production and Neglect of the Goal of Economic Endeavors, Consumption, Bastiat proclaimed once again the continental emphasis on consumption as the goal and hence the determinant of economic activity. Bastiat's own oft-repeated triad, wants, efforts, satisfactions, summed it up.

21:15Once are the goal of economic activity, giving rise to efforts and eventually yielding satisfactions. Furthermore, Bastiat noted that human wants are unlimited and hierarchically ordered by individuals in their scales of value. Bastiat's concentration on exchange and on analysis of exchange was also a highly important contribution, especially in contrast to the British classicists' focus on production of material wealth. It was the emphasis on exchange that led Bastiat and the French school to stress the ways in which the free market leads to a smooth and harmonious organization of the economy, hence the importance of laissez-faire.

22:07Frederic Bastiat was born in 1801 in Bayonne in southwestern France, the son of a landowner and prominent merchant in the Spanish trade. Orphaned at the age of nine, Bastiat entered his uncle's business firm in 1818. When, seven years later, he inherited his grandfather's landed estate, Bastiat left the firm and became a gentleman farmer. But his interests were neither in trade nor in agriculture, but in the study of political economy. Fluent in English, Italian and Spanish, Bastiat steeped himself in all the extant economic literature in these languages. Apart from an unsuccessful attempt to establish an insurance firm in Portugal in the early 1840s, As well as being a member of the District Council and his undemanding service as a country judge, Bastiat spent two decades in quiet study and reflection on economic problems.

23:10He was most heavily influenced by J.B. Say, partially by Adam Smith, by D'Astute de Tracy, and particularly by the great four-volume laissez-faire libertarian work of Charles Comte, A Treatise on Legislation, 1827. Indeed, as a teenager, Bastiat had been a subscriber to Comte and Du Noyer's journal Le Censure, and he was to become a friend and colleague of Du Noyer's in the struggle for free trade. Bastiat entered the economic literature with a sparkling attack on protectionism in France and England in the Journal des Économistes in late 1844, an article which created a sensational impact.

23:58Bastiat followed this up with another article in the journal in early 1845 denouncing socialism and the concept of a right to labor. During the few years he had left on earth, Bastiat poured forth a stream of lucid and influential writings. His two-volume Economic Sophisms, 1845, a collection of witty essays on protectionism and government controls, sold out quickly, going into several editions, and was swiftly translated into English, Spanish, Italian and German. During the same year, Bastiat published Cabden et la Ligue, his tribute to Cabden and the Anti-Corn Law League, a history of the League that included the principal speeches and articles by Cabden, Bright and other stalwarts of the League.

24:53After setting up a free trade association in Bordeaux in 1846, Bastiat moved to Paris, in France, where he stepped up his literary efforts and organized a national association for free trade. He became the secretary general of the national association as well as editor in chief of Free Trade, the periodical of the French Free Trade Association. Even though in frail health, Bastiat also participated in the revolution of 1848, being Bastiat's final political service has been undervalued by most historians.

25:39While generally voting in the minority in the assembly as a stalwart of individual liberty and laissez-faire, Bastiat was highly influential as vice president and often acting president of the assembly's finance committee. where he fought tirelessly for lower government spending, lower taxes, sound money, and free trade. While he fought ardently in opposition to socialist and communist schemes, Bastiat elected to sit on the left, as a proponent of laissez-faire and the republic, and as an opponent of protectionism, absolute monarchy, and a warlike foreign policy. As a consistent civil libertarian, Bastiat also fought against the jailing of socialists, the outlawry of peaceful trade unionism, or the declaration of martial law.

26:32Bastiat also made his mark by at least partially converting the man who would become the president of the Provisional Republic in 1848, The eminent poet and orator Alphonse Marie Louis Lamartine, 1790-1869, from his previous socialism to an admittedly inconsistent laissez-faire position. Bastiat died young in 1850, leaving his two-volume theoretical magnum opus, Economic Harmonies, only partially published. The remainder was published posthumously. It was a fitting memorial to Bastiat that his friend Michel Chevalier, the man whom he had converted to free trade and laissez-faire, should have been the one to conclude with Richard Cobden, the great free trade Anglo-French treaty of 1860.

27:28Bastiat met Cobden on his first trip to England in the summer of 1845, and for the remainder of Bastiat's life, the two men were close friends and frequent correspondents, visiting each other frequently. The two influenced each other greatly, Bastiat providing Cobden with broader theoretical insights in his devotion to free trade and the latter inspiring Bastiat to organize a movement in France similar to the anti-corn law league. League. In particular, Cobden took from Bastiat a devotion to natural law and natural rights, an emphasis on the harmony of individuals, groups and nations through the mutual benefits of the free market, and a staunch opposition to war and an interventionist foreign policy, and a devotion to international peace.

28:24The two also shared a consistent devotion to laissez-faire, devoid of the numerous hesitancies 3. The Influence of Bastiat in Europe Inspired by Bastiat's organizing and by his theories, free trade associations rapidly established themselves in various countries in Europe, Belgium formed a free trade association shortly after France and the Belgian group stayed in constant correspondence with Bastiat and his libre-échange.

29:11Former minister Charles de Brucaire, burgomaster of Brussels, was president of the Belgian association. In Italy, an association for free trade established the journal Contemporaneo in the autumn of of 1846 and printed a statement hailing the French Free Trade Association. While the statement praised the Anti-Corn Law League, it also lauded the French Association as more all-encompassing in its free market position. The British Association has declared war against only one of the evils in its own country, tariffs and the corn laws, while the French Association has adopted a more general plan that encompasses the entire human race.

29:57It wishes to induce all nations to fraternize and to invite everyone to the banquet of production and consumption. One of the prominent signers of the Italian statement was Professor Raffaele Busacca, a vigorous defender of free trade and a prolific writer on statistical, historical and theoretical subjects in economics. A particularly important follower and admirer of Frederic Bastiat was the man who became the unquestioned leader and dominant force in economic theory and policy in 19th century Italy. He was the Sicilian-born Francesco Ferrara, 1810-1900, a stalwart advocate of laissez-faire, professor of political economy at the University of Turin, and the teacher and mentor of most Italian Economists of the Next Generation.

30:54Ferrara also played an important political role in the unification of Italy, and was at one time Minister of Finance of the new nation. In addition, Ferrara was an eminent historian of economic thought, to which he contributed the editorship of the first two series of the multi-volume translation Biblioteca dell'Economista Turin, 1850-1869, and especially his two volume, Esame Storico Critico di Economisti e Dottrine Economice, 1889-1892. For many years, Ferrara was professor at the University of Turin and there trained many prominent Italian economists, in addition to Bastiat, upon whom he lavished 100 pages in In his great Essamé, Ferrara particularly hailed the works of Say, Dunoyet and Chevalier.

31:54Ferrara's theoretical contributions, like Bastiat's, have been systematically underweighted by harsh, modern, anti-laisez-faire critics, who, as in the case of Bastiat, find it difficult to believe that anyone who is ardently and consistently in favor of laissez-faire could could possibly be an important scholar and economic theorist. Thus, Ferrara's cost of reproduction theory of value, often dismissed as a clumsy rewrite of Ricardian cost of production, has recently been shown instead to be a partial anticipation of subjective marginal utility theory. For several decades, Francesco Ferrara's exchange-oriented and laissez-faire economics held sway among Italian economists.

32:46In the 1870s, however, the interconnected statist trends of protectionism and of the German historical school, as well as outright socialism, began to infest Italian economics. Ferrara valiantly combated the new trends. A formal split occurred in 1874 when the younger statists, centered in Padua, formed the Association for the Development of Economic Studies, publishing a journal which soon became the Giornale Dele Economisti. On the other hand, the Ferraristas, centered in Florence, formed the Adam Smith Society and published the weekly L'Economista. While outnumbered, the Ferrara Group produced some notable younger disciples, including Domenico Berardi, who published a critique of government intervention in 1882 and a book on money 30 years later, A. Bertolini, who wrote a critique of socialism in 1889, and Fontanelli, who wrote a critique of unions and strikes.

33:55In particular, we might mention Tullio Martello of Bologna, known as the last of the Ferraristas. With the characteristic half-sneer which he tended to reserve for ardent partisans of laissez-faire, Schumpeter wrote of Martello's challenging call for polymetallism as the path of complete monetary freedom in La Moneta, 1883, that the value of which is but slightly impaired by some liberalist vagaries on free coinage. While seemingly battling a rearguard action against overwhelming odds, Ferrara and his school actually hung on long enough to turn the tide by influencing the new army of marginalist liberalists led by Maffeo Pantelloni.

34:46The group seized control of the dominant economic journal, the Giornale degli Economisti in in 1890 and was to remain dominant for years thereafter. Sweden was a country heavily influenced by Bastiat, who became the major authority in Swedish economics and politics. A young Swede, Johan August Gripenstedt, died 1874, met Bastiat on a trip to France and was deeply influenced for the rest of his life by the French laissez-faire leader. Gripenstedt became the greatest of the economic liberals in Sweden during the 1860s and 1870s, as well as the most influential politician in Sweden.

35:32By 1870, Gripenstedt, almost single-handed, had managed to eliminate all import and export prohibitions in Sweden, to abolish all export duties, to reduce tariffs on manufactured goods, and to bring about free trade in agricultural products. Shortly after Griepenstedt's death, his followers and disciples formed the Stockholm Economic Society in 1877, dedicated to the principles of Bastiat and Griepenstedt. Some of the leading members were Johann Walter Arnberg, director of the Bank of Sweden, who warned of the dangers of socialism stemming from businessmen's demands for government Subsidies, G. K. Hamilton, Professor of Economics at the University of Lund, so dedicated to Frederic Bastiat that he named his son Bastiat in 1865, A. O. Wallenberg, founder of the Stockholm Uskilda Bank, and Johann Henrik Palma, leading banker dedicated to free trade.

36:41Two prominent laissez-faire political leaders in the economic society should be mentioned. One was Axel Gustafsson Benich, Director General of the Customs and right-hand man of Grippenstedt. Benich was an indefatigable and joyous battler for free trade and laissez-faire throughout his long life. Another was the President of the Stockholm Economic Society, Carl Friedrich Verne, a Gothenburg merchant who became Minister of Finance and head of the Board of Trade. Verne resigned from the latter post because he refused to sign a law mandating protection of young timber in the forests, a measure he denounced as an egregious invasion of the rights of private property.

37:29As was true of laissez-faire thinkers and activists in England and France, Swedish libertarians were split on what to do about banking. Central banker Johann Arnberg and economist Hans Forsell favored the Central Bank of Sweden as a means of abolishing all private banknotes, which they considered inflationary and pernicious. On the other hand, banker A. O. Wallenberg championed free banking. By the mid-1880s, however, in Sweden, as in the rest of Europe, statism began to make to make a successful comeback and gradually to become dominant. Protectionists began to infiltrate the economic society by the mid-1880s and Sweden adopted a protective tariff system in 1888.

38:20In 1893, the symbol of protectionist triumph came with a protectionist being chosen president of the former central nucleus of free trade, the Stockholm Economic Society. Society. During the 1880s too, despite the bitter attacks of Forsell and other founding stalwarts, the society began to champion social welfare and other Katheder Sozialist, socialism of the chair, policies. In this way, Swedish economic theory and policy shifted during the decade from its original and the whole French laissez-faire orientation toward the German historical school and its monarchical socialism. This sharp change was greatly facilitated by German being made the dominant foreign language in the Swedish public schools in 1878.

39:14But even in Prussia, a free trade party was established during the late 1840s dedicated to Bastiat's principles. The Prussian Free Trade Movement was led by John Prince Smith, 1809-1874, son of an English father and German mother, who corresponded frequently with Bastiat. In one letter, Prince Smith wrote to Bastiat, The friends to whom I have shown your book, Economic Harmonies, are enthusiastic about it. I promise you that it will be read eagerly by our best thinkers. We hope to establish a formal league among the Democratic parties and the free traders. Bring Bastiat here, a leader of the Democrats said to me, and I promise to lead 10,000 men in a procession to celebrate his visit to our capital.

40:09John Prince Smith was born in London in 1809, the son of a barrister. On the death of his father, he began working at the age of 13 for a London mercantile firm. Later he turned to journalism, traveling to his mother's country, and in 1831 became a teacher of English and French at a gymnasium at the port of Elbing in East Prussia. Learning economics in Germany, Prince Smith, by the 1830s, began writing articles on behalf of the Free Market and vigorously defended seven professors who had been fired in 1837 from the University of Göttingen for protesting the despotic revocation of the liberal Hanoverian Constitution.

40:57His ensuing difficulties with the Prussian educational administration led Prince Smith to leave his teaching post in 1840 and turn to full-time journalism. Prince Smith not only came out generally for the free market, but also began a vigorous and consistent anti-war and anti-militarist stand, which brought him to advocate the elimination of the Prussian state's bulwark, the standing army, and its replacement by a far cheaper and popularly controlled citizens' militia. In 1843, Prince Smith launched his lifelong crusade for freedom of trade, putting it in a historical and sociological context reminiscent of the writings of Comte and Dunoyet.

41:45Furthermore, Prince Smith made clear that for him, free trade meant not simply absence of international trade barriers, but also an absolute free market at home, with the The State confined only to police protection. In 1846, Prince Smith, joined by several associates, sent an address to Robert Peel, in which they congratulated the British Prime Minister for his outstanding achievement in repealing the Corn Laws. Peel's gracious and highly principled reply caused a sensation in Prussia, and Prince Prince Smith was inspired by the response to found in December of that year the German Free Trade Union.

42:32The union, consisting of business leaders and scholars, held its first organizing meeting the following March in the hall of the Berlin Stock Exchange. The great majority of the 200 attendees were businessmen. For the rest of his life, John Prince Smith led the way in Germany in agitating for free Free Markets and Free Trade. In 1860 he founded the Economic Society as the successor to the Free Trade Union. His home in Berlin, he had married the daughter of a wealthy Berlin banker, became a salon for liberal Prussian politicians, some of whom formed the Progressive Party. In 1858 Prince Smith helped found the annual Congress of German Economists, which was dedicated to Laissez-Faire until its final meeting in 1885.

43:26At the Congress, Prince Smith delivered papers attacking usury laws, criticizing patents and denouncing irredeemable paper money. In 1863, Prince Smith helped found and co-edited the quarterly journal for economy, politics and Cultural History, along with the ultra-individualist Julius Falker, 1820 to 1878, Prince Smith's closest collaborator. The Quarterly Journal soon became the chief theoretical organ of classical liberalism in Germany and continued in existence for 30 years. Fluent in French, Prince Smith contributed to the French Journal des Economistes and and he also helped organize and wrote for a concise Dictionary of Economics, 1866, modeled after the French laissez-faire Dictionnaire d'économie politique.

44:26During the 1870s and 1880s, laissez-faire views in Prussia and Germany were swiftly replaced by the dominance of the German historical school, statism and socialism of the chair. This radical change was greatly fostered by the political triumph of Bismarck and Prussian militarism over classical liberalism and the union of the bulk of the German nation under the Prussian domination of blood and iron. The high point of the European free trade movement came early at a famous international congress of economists organized by the Belgian Free Trade Association at Brussels from 16 to 18 September 1847 Inspired by the Anti-Corn Law League victory and the Bastiat movement and by a triumphal 14-month long European tour by Cobden in 1846 and 1847, the Congress met to decide the free trade question.

45:30Presided over by the Belgian de Brucaire, the Congress consisted of 170 delegates from in 12 countries and included publicists, manufacturers, agriculturalists, merchants, and statesmen, as well as economists. While Bastiat was unable to attend, de Brucaire, in his opening address, hailed Bastiat as the zealous apostle of our doctrines. Particularly active at the Congress was the French delegation, especially Louis Volovsky, Charles Du Noyer, Jérôme Adolphe Blanqui, and Joseph Garnier. Also active was John Prince Smith, head of the Prussian delegation. Other prominent attendees were Colonel Thomas Paranet Thompson of the English Parliament and James Wilson, editor of The Economist.

46:24While a small contingent of protectionists spoke at the Congress, they were swamped by by the Free Traders, who passed a resounding declaration for freedom of trade. Unfortunately, plans for further meetings of the Congress were broken up by the Revolution of 1848, which delivered a grave setback to the movement for economic freedom in Europe, from which it took some years to recover. After a brief Indian summer of the 1860s, the laissez-faire movement for free markets, free trade and international peace began in the 1870s and 1880s to give way, tragically, to a Europe of protectionism, militarism, welfare states, compulsory cartels, and warring international power blocks.

47:14Nationalist and statist economics and industrial recrudescence of commercial mercantilism began to dominate Europe. 4. Gustave de Molinari, First Anarcho-Capitalist Of all the leading libertarian French economists of the mid and late 19th centuries, the most unusual was the Belgian-born Gustave de Molinari, 1819-1912. Born in Liège, the son of a Belgian Moulinari spent most of his life in France, where he became a prolific and indefatigable author and editor in lifelong support of pure laissez-faire, of international peace, and in determined and intransigent opposition to all forms of statism, governmental control and militarism.

48:15In contrast to British soft core utilitarianism on public policy, Molinari was an unflinching champion of freedom and natural law. Coming to Paris, the cultural and political center of the French-speaking world, at the age of 21 in 1840, Molinari joined the Société d'Economie Politique on its inception in 1842 and became the secretary of Bastiat's Association for Free Trade when it was formed in Paris in 1846. He soon became one of the editors of the association's periodical Libre Échange. Molinari quickly began to publish widely in the free trade and free market press in Paris, becoming an editor of the Journal des Economistes in 1847.

49:09He published the first of his many books in 1846, Economic Studies on the Organization of Liberty and the Abolition of Slavery. The young Molinari, however, hit the laissez-faire-oriented Société d'Economie Politique like a thunderclap in 1849 with his most famous and original work. He delivered a paper expounding for the first time in history a pure and consistent laissez-faire to the point of calling for free and unhampered competition in what are generally called uniquely public services. In particular, the sphere of police and judicial protection of person and private property. If free competition is better and more efficient in supplying all other goods and services, Molinari reasoned, why not for this last bastion, police and judicial protection, a view that over a century later would come to be called anarcho-capitalism.

50:17Molinari first setividh his view in the Journal des Economistes, the periodical of the Société, in February 1849. This article was quickly expanded into book form, Les Soirees de la Rue Saint-Lazare, a series of fictional dialogues between three protagonists, the conservative, advocate of high tariffs and state monopoly privilege, the socialist and the economist, clearly himself. The final or eleventh Soiree elaborated further on how his concept of free market protective A meeting of the Société d'Economie Politique in the autumn of 1849 was devoted to Molinari's radically new theory as expounded in the soirees.

51:12After Molinari had presented the essence of his proposal in a paper, the assembled libertarian dignitaries engaged in a discussion. Apparently the new theory threw them, because unfortunately no one dealt with the essence of the New Doctrine, Charles Coquelin and Frédéric Bastiat could only fulminate that no competition anywhere can exist without a backup by the supreme authority of the state – Coquelin – and that the force needed to guarantee justice and security can only be imposed by a supreme power – Bastiat. Both engaged in pure assertion without argument, and both here chose to ignore what they knew full well in all other contexts, that this supreme power had scarcely proved to be a reliable guarantor of private property in the past or present, to say nothing, alas, of the future.

52:12Of all the leading libertarian minds assembled, only Charles Dunaillet deigned to try to rebut Molinari's Argument. He deplored that Molinari had been carried away by the illusions of logic and maintained that competition between governmental companies is chimerical because it leads to violent battles. Apart from ignoring the truly violent battles that have always occurred between states in our existing international anarchy, Du Noyer failed to grapple with the very real incentives that would exist in an anarcho-capitalist world for defense companies to engage in treaties, contracts and arbitrations.

52:58Instead, Du Noyer proposed to rely on the competition of political parties within a representative government, hardly a satisfactory solution to the problem of social conflict from a libertarian, anti-statist point of view. Zunoyeh also opined that it was most prudent to leave force in the hands of the state where civilization has put it, this from one of the great founders of the conquest theory of the state. Unfortunately, except for these few remarks, the libertarian economists assembled failed to deal with Molinari's thesis, their discussion largely criticizing Molinari for allegedly going too far in attacking all use of the power of eminent domain by the state.

53:50Particularly interesting was the general treatment of the maverick Molinari by his fellow French laissez-faire libertarian economists. Even though he persisted in advocating his anarcho-capitalist or free market protection and Views for Many Decades, for example, in his Les Lois Naturelles de l'Economie Politique, 1887, Molinari was scarcely treated as a pariah for his heretical views. On the contrary, he was treated as he indeed was, the logical culmination of their own laissez-faire views which they respected even though they could not fully agree. On the death of Joseph Garnier in 1881, Molinari became the editor of the Journal des Economistes, a post which he occupied until his 90th year in 1909.

54:46Molinari only backtracked on his anarchistic views in his very late works, beginning in his Sketch of the Political and Economic Society of the Future, 1899. Here he retreated to the idea of a single monopoly defense and protection company, which service would be contracted out by the central state to a single private corporation. How Molinari was considered by his colleagues may be seen from the footnote by Joseph Garnier, the editor of the Journal, on introducing Molinari's first revolutionary article in 1849. Mr. Garnier noted,

55:57formulates strictly the boundaries outside of which the intervention of authority becomes anarchical and tyrannical rather than protective and profitable. Fifty-five years later, at the appearance of the first English translation of Molinari's work, his fellow octogenarian, the laissez-faire attorney and economist Frédéric Passy, 1822-1912, wrote a moving tribute to his old friend and colleague Molinari. He wrote of his esteem and admiration for the character and talent of the man who is the doyen of our liberal economists, of the men with whom, though, alas, few in number, I have been happy to stand side by side during more than half a century.

56:48Passe went on to state that these liberal principles had been proclaimed by Cobden, Gladstone and Bright in England, and by Turgot, Say, Chevalier, and Bastiat in France. And my belief grows yearly stronger that, but for these principles, the societies of the present would be without wealth, peace, material greatness, or moral dignity. Molinari, Passy added, has maintained these principles from his youth, from his Soirée de la Rue Saint-Lazare during the 1848 revolution, through lectures and writings, to his editorship of the Journal des Economistes, where, month by month, the important review of which he is editor-in-chief repeats them in a fresh guise.

57:40And finally, Molinari's books, where, annually, so to speak, a further book, as distinguished for clearness of grasp as for admirable literary style goes out to testify to the constancy of his convictions no less than to the unimpaired vigor of his metal outlook and the virile serenity of his green old age.