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The Importance of Subjectivism in Economics - Reason.com

After many years, Fr?d?ric Bastiat remains a hero to libertarians. No mystery there. He made the case for freedom and punctured the arguments for state socialism with clarity and imagination. He spoke to lay readers with great effect.

Bastiat loved the market economy, and badly wanted it to blossom in full?in France and everywhere else. When he described the blessings of freedom, his benevolence shined forth. Free?markets?can raise living standards and enable everyone to have better lives; therefore stifling freedom is unjust and tragic. The reverse of Bastiat?s benevolence is his indignation at the deprivation that results from interference with the market process.

He begins his book?Economic Harmonies?(available at the?FEE store) by pointing out the economic benefits of living in society:

It is impossible not to be struck by the disproportion, truly incommensurable, that exists between the satisfactions [a] man derives from society and the satisfactions that he could provide for himself if he were reduced to his own resources. I make bold to say that in one day he consumes more things than he could produce himself in ten centuries.

What makes the phenomenon stranger still is that the same thing holds true for all other men. Every one of the members of society has consumed a million times more than he could have produced; yet no one has robbed anyone else.

The Existence of Privilege

Bastiat was not na?ve. He knew he was not in a fully free market. He was well aware of the existence of privilege: ?Privilege implies someone to profit from it and someone to pay for it,? he wrote. Those who pay are worse off than they would be in the free market. ?I trust that the reader will not conclude from the preceding remarks that we are insensible to the social suffering of our fellow men. Although the suffering is less in the present imperfect state of our society than in the state of isolation, it does not follow that we do not seek wholeheartedly for further progress to make it less and less.?

He wished to emphasize the importance of free exchange for human flourishing. In chapter four he wrote,

Exchange?is?political economy. It is society itself, for it is impossible to conceive of society without exchange, or exchange without society. ?For man, isolation means death?.

By means of exchange, men attain the same?satisfaction?with less?effort,?because the mutual services they render one another yield them a larger proportion of gratuitous utility.

Therefore, the fewer obstacles an exchange encounters, the less effort it requires, the more readily men exchange.

How does trade deliver its benefits?

Exchange produces two phenomena: the joining of men?s forces and the diversification of their occupations, or the division of labor.

It is very clear that in many cases the combined force of several men is superior to the sum of their individual separate forces.?

Now, the joining of men?s forces implies exchange. To gain their co-operation, they must have good reason to anticipate sharing in the satisfaction to be obtained. Each one by his efforts benefits the others and in turn benefits by their efforts according to the terms of the bargain, which is exchange.

Source: http://reason.com/archives/2012/09/09/the-importance-of-subjectivism-in-econom

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