Free Minds & Free Markets

Les Economistes Libertaires

LIBERTAIRE n. Partisan de la liberte absolue, de l'abolition de toute loi, de toute gouvernement. - Adjectiv.: 'Doctrine' LIBERTAIRE. LIBERTARIAN n. Partisan of absolute liberty, of the abolition of all law and all government. - Adj.: LIBERTARIAN 'Doctrine.' —Encyelopedie Larousse Du XX Siecle.

POLITICAL ECONOMY, in modern times, assumed the form of a regular science, first in the hands of the political sect in France, called the ECONOMISTS. They made it a branch only of a comprehensive system on the natural order of Societies. —Count Destutt de Tracy, 1817.

The great historian of economic analysis, Joseph Schumpeter, noted that the publication of Jean Baptiste Say's Treatise in 1803 marked the beginning of the school of French economic-political thinkers known as the économistes. According to Schumpeter, the men of this school were strongly liberal in the laissez-faire sense and "anti-statist, that is to say that they indulged in the belief to the effect that the main business of economists [was] to refute socialist doctrines and to combat the atrocious fallacies implied in all plans of social reform and state interference of any kind." Schumpeter realized that the French politicians could have hardly liked a group of thinkers that stood for free trade and otherwise indulged in an "impracticable liberalism."

The économistes were not a tightly organized group of men, although their opinions were represented by two organs: the Journal des Économistes and the Société d'Économie Politique. During the greater part of the 19th century the ideas and influences of this sect reigned supreme in French academic circles. Some of the better known of the économistes were Charles Dunoyer, Frédéric Bastiat, Frédéric Passy, Yves Guyot, Courcelle-Seneuil, and (in the words of Schumpeter) "the indefatigable" Gustave de Molinari. Basically these men accepted and applied to the society around them the precepts of free trade and of the classical school of Adam Smith. Although they did not label themselves libertaires (libertarians), they were predisposed to adopt liberty as the solution to all social ills. For example, Gide and Rist, in their History of Economic Doctrines, described Charles Dunoyer as one of the most militant of the politico-economic liberals. "He fully shared the belief that free competition was a sufficient solution for every social problem.…No one was more opposed to State Socialism and to [state] intervention of every kind. He was opposed to labor legislation, to Protection, to the regulation of the right of property and even to state management of forests." Dunoyer was one of the early presidents of the Society of Political Economy, which was organized in 1842, and was a frequent contributor to the Journal des Économistes.

Just as the Austrian school of economics has had its great teachers, such as Böhm-Bawerk, Menger, and Mises, so did the économistes have their great men. The man who was described by Frédéric Passy in 1904 as "the doyen of our economists—of our liberal economists," was well esteemed by the économistes of the mid-19th century. Gustave de Molinari was a true representative of this school. As a young man, Molinari came into contact with the early founders of the Society of Political Economy in Paris, and he remained faithful to their doctrines throughout his long life, which ended in 1912. He was born in Liege, Belgium, on March 3, 1819, and was the son of a medical doctor, the Baron Philip de Molinari. At an early age he went to Paris, where he began to write for the various opposition and radical journals.

As a result of the coup of 1851, Molinari returned to Belgium, where he eventually became an instructor at the Industrial Museum in Brussels and professor of the history of commerce at the Commercial Institute of Anvers. He was active in the free-trade movement and was always true to his principles. During the campaign for the removal and lowering of import tariffs in Belgium, and while still employed at the Institute in Anvers, Molinari spoke out against the government position. It was his belief that the government was misrepresenting the state of economic affairs, in addition to maintaining protective tariffs on certain items. As a result of his outspoken criticism of the government, Molinari was called before the Minister of the Interior on December 28, 1858, and told that it was inconvenient for a professor employed by the State to publicly attack the government that provided his livelihood. The question had arisen in the chambers of parliament, and Molinari resigned his position.

Molinari led a productive life until his last days. His literary output numbered many books on political science and economics, as well as innumerable articles contributed to scholarly journals. In 1855 he founded L'Économiste Belge, a journal dedicated to propagating the truths of political economy and free trade in Belgium. Later, when Molinari returned to Paris, he became chief editor of the Journal des Economistes, a position he held from 1882 to 1903. "From all points of view he occupied one of the first places among the representatives of truly liberal ideas in 19th Century Europe," commented P. Michotte. "For his absolute way with economic principles and the intransigence of his social theories, Molinari must be considered as typical and foremost of the libertarian economists of his era."

These Frenchmen in general, and Molinari especially, were perhaps the first group of thinkers to examine the State and its social functions from an objective economic point of view. Government, according to the économistes, is nothing other than the "industry of protection," whose primary aim is to attain peace and security for its customers—the citizens of the nation. Starting from the principle of free competition, whose social benefits they readily acknowledged, it was only logical for them to examine the greatest exception to this principle, namely government. Dunoyer had noted in his writings that government was the one clear exception in society to the application of the rule of free competition; but it was left for Molinari, who had the fearlessness and logic of youth, to ask why the production of security should not be abandoned to free competition.

In the February 15, 1849 edition of the Journal des Économistes, Molinari published his article "De la Production de la Sécurité," which, in the words of Murray Rothbard, offers the "first fully developed outline of the purely libertarian system in the world." Essentially, Molinari viewed peace and security as commodities that are desired by people. He established that people living together in society are best able to satisfy their needs through the division of labor and voluntary exchange. This in turn requires that everyone be secure in the possession of their own person and rightfully acquired property. Since specialization in production is characteristic of the market, and since some people are not strong enough to provide their own protection against aggressors, it is only logical that the consumers of security would turn to firms who specialize in its production.

Molinari's main conclusion was "that one government may not prevent another government from establishing competition with it, nor oblige the consumers of security to address themselves exclusively to it for that commodity." His logic behind this conclusion was simple. It is obvious that consumers, regardless of the commodity involved, are interested in obtaining it at the cheapest possible price. The économistes had already seen that free competition results in the cheapest price on the market. Therefore, let supply and demand set their own price for security. As long as there is a demand for security, let it be satisfied by the free entry of firms or individuals who are interested in meeting the demand. Molinari realized that governments are monopolies allowing no competition within their borders. Until free competition can be established between competing defense agencies, there is simply no way for citizens of a country to determine whether they are getting the best possible defense services at the cheapest possible prices.

Molinari was a firm believer in the efficacy of natural laws, and it was his opinion that these natural laws of economics prevail in all phases of human action. He concluded that those who believe in economic science and the rule of free competition that it entails must, "a priori," advocate the production of security by competing firms. The alternatives are the production of security by a monopoly or by the community (communism). Under communistic or monopolistic organization, the interests of the producers dominate, rather than the interests of the consumers. In such cases, Molinari saw that the price for services would rise while quality would deteriorate through lack of competition. Furthermore, Molinari demanded to know why communism or monopoly should not be applicable to other areas of the market if they are suitable to the production of security. "Either communistic production is superior to free production or it is not. If it is, then it must be for all things, not just for security.…Complete communism or complete liberty: that is the alternative!"

If security were offered on the free market by private firms or individuals, it would become necessary for the consumer to investigate the claims of the producers in order to determine which one would best suit them. Consumers would have to know whether their supplier was actually strong enough to provide the degree and type of protection they would require. The purveyors of security would have to offer moral guarantees so that the consumers could be assured that they would not involve themselves in the aggressions they were supposed to suppress. As in any open market, Molinari believed that the purchasers of security would shop around for the best deal. If they couldn't find a satisfactory supplier, then the consumers would provide for their own security. In addition, Molinari realized that the producers would also establish certain guidelines for themselves and their customers. This would include rules regarding punishment, restitution, and evidence, which the consumers would accept as part of their contract.

Molinari thought that from the ability of the consumers to buy their own security would be born a constant emulation among all producers (in order to keep and attract customers) to produce the best service at the lowest possible price. Every producer would be under the threat of losing his clientele if he downgraded his services. Similarly, if the consumers were not free to purchase security from whomsoever they chose, then there would be a large area for the arbitrary and injurious administration of justice. "Justice would become costly and slow, and police vexing, and liberty would cease to be respected; the price of security would become excessively high and inequitably levied. The producers of security would fight battles among themselves for clients." In effect, one would see all the inherent abuses of monopoly and communism. Under free competition the consumers would not tolerate warlike producers, nor would they allow themselves to be conquered. As Molinari brilliantly declared, "War is a natural consequence of monopoly; peace is the natural consequence of liberty." It was his expectation that peace would more likely reign under a regime of liberty than under monopoly or communism.

In October 1849, with Molinari apparently absent, the économistes of the Society of Political Economy met in Paris to discuss the "Question of the Limits of State Action and Individual Action." Their meeting was prompted by the publication of Molinari's book Les Soirées de la Rue Saint-Lazare: Entretiens sur les Lois Économiques et Défense de la Propriété [Evenings on the Rue St. Lazare: Conversations on Economic Laws and the Defense of Property], in which he continued to advocate private defense agencies. Molinari was also a bitter critic of eminent domain laws, which were being used by the French government to aid railroad construction. His book also included a sharp critique of any type of expropriation for public use.

Bastiat was critical of Molinari's scheme, for it was his opinion that the State must provide guarantees for security and justice. The only way this could be done was by the use of or threat of force. How could agencies, none of which were supposed to possess monopoly powers, exercise the use of force equitably? Furthermore, Bastiat thought that these ideas, although they were offered in the spirit of fighting socialism, would provide ammunition to critics of the free market. Coquelin, another of the économistes, characterized Molinari's plan as future competition among insurance companies to provide their clients with security. He did not understand how competition (which was Molinari's only remedy against fraud and violence) could exist unless it was guaranteed by the State. Coquelin thought that with the State, competition would be possible and fruitful; without the State, it would be impossible to apply or to conceive.

Charles Dunoyer thought that Molinari had lost himself in the illusions of logic. Competition among private defense agencies would be chimerical, because it would lend itself to violent fights between the producers of security. As these battles could only end in the extreme use of force, Dunoyer thought it prudent to leave force where civilization had thought best to place it, namely, in the hands of the State. Dunoyer already saw the existence of political competition in the State, since citizens could choose among various forms of government (republics, monarchy, democracy, etc.) and could also choose among members of different political parties who offered their services to the public at election time.

When Molinari's book was reviewed in the November 15, 1849, Journal des Économistes, Coquelin, the reviewer, was still critical of some parts of the dialogue. Molinari offered the opinions of an économiste, a socialist, and a conservative regarding social policy. Coquelin could not forgive him for "giving to us [the économistes] some opinions that no economist ever professed. From the principle of free competition, Molinari concluded that free competition must pervade certain areas of State functions and that a day will come when the government would be simply a producer of security competing with other businesses for clientele. Such an idea never occurred to any économiste and only once was it suggested in the Journal des Economistes—and then by Molinari himself. His voice hasn't found a single echo or supporter. Why then does he resurrect this extraordinary idea?"

Coquelin also used the classic argument for the State against Molinari. "The State permits of no competition or choice because it is a necessary and inevitable monopoly. Molinari forgets that free competition presupposes peaceful existence. How is it possible to speak of free competition to people who put the sword in your back or the pistol to your chest? With no single agency to settle disputes, competition becomes impossible." As for the abuses of monopoly power, Coquelin suggested that Molinari look to constitutional guarantees and the regular participation of citizens in public affairs for safeguards.

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