Friday, March 14, 2025

The Law Frederic Bastiat

The Law

Frederic Bastiat

Preface

When a reviewer wishes to give special recognition to a book, he predicts that it will still be read "a hundred years from now." The Law, first published as a pamphlet in June, 1850, is already more than a hundred years old. And because its truths are eternal, it will still be read when another century has passed. Frederic Bastiat (1801-1850) was a French economist, statesman, and author. He did most of his writing during the years just before--and immediately following--the Revolution of February 1848. This was the period when France was rapidly turning to complete socialism. As a Deputy to the Legislative Assembly, Mr. Bastiat was studying and explaining each socialist fallacy as it appeared. And he explained how socialism must inevitably degenerate into communism. But most of his countrymen chose to ignore his logic.

The Law is here presented again because the same situation exists in America today as in the France of 1848. The same socialist-communist ideas and plans that were then adopted in France are now sweeping America. The explanations and arguments then advanced against socialism by Mr. Bastiat are--word for word--equally valid today. His ideas deserve a serious hearing.

The law perverted! And the police powers of the state perverted along with it! The law, I say, not only turned from its proper purpose but made to follow an entirely contrary purpose! The law become the weapon of every kind of greed! Instead of checking crime, the law itself guilty of the evils it is supposed to punish!

If this is true, it is a serious fact, and moral duty requires me to call the attention of my fellow-citizens to it.



Life Is a Gift from God

We hold from God the gift which includes all others. This gift is life--physical, intellectual, and moral life.

But life cannot maintain itself alone. The Creator of life has entrusted us with the responsibility of preserving, developing, and perfecting it. In order that we may accomplish this, He has provided us with a collection of marvelous faculties. And He has put us in the midst of a variety of natural resources. By the application of our faculties to these natural resources we convert them into products, and use them. This process is necessary in order that life may run its appointed course.

Life, faculties, production--in other words, individuality, liberty, property--this is man. And in spite of the cunning of artful political leaders, these three gifts from God precede all human legislation, and are superior to it.

Life, liberty, and property do not exist because men have made laws. On the contrary, it was the fact that life, liberty, and property existed beforehand that caused men to make laws in the first place.



What Is Law?

What, then, is law? It is the collective organization of the individual right to lawful defense.

Each of us has a natural right--from God--to defend his person, his liberty, and his property. These are the three basic requirements of life, and the preservation of any one of them is completely dependent upon the preservation of the other two. For what are our faculties but the extension of our individuality? And what is property but an extension of our faculties? If every person has the right to defend--even by force--his person, his liberty, and his property, then it follows that a group of men have the right to organize and support a common force to protect these rights constantly. Thus the principle of collective right--its reason for existing, its lawfulness--is based on individual right. And the common force that protects this collective right cannot logically have any other purpose or any other mission than that for which it acts as a substitute. Thus, since an individual cannot lawfully use force against the person, liberty, or property of another individual, then the common force--for the same reason--cannot lawfully be used to destroy the person, liberty, or property of individuals or groups. Such a perversion of force would be, in both cases, contrary to our premise. Force has been given to us to defend our own individual rights. Who will dare to say that force has been given to us to destroy the equal rights of our brothers? Since no individual acting separately can lawfully use force to destroy the rights of others, does it not logically follow that the same principle also applies to the common force that is nothing more than the organized combination of the individual forces? If this is true, then nothing can be more evident than this: The law is the organization of the natural right of lawful defense. It is the substitution of a common force for individual forces. And this common force is to do only what the individual forces have a natural and lawful right to do: to protect persons, liberties, and properties; to maintain the right of each, and to cause justice to reign over us all.



A Just and Enduring Government

If a nation were founded on this basis, it seems to me that order would prevail among the people, in thought as well as in deed. It seems to me that such a nation would have the most simple, easy to accept, economical, limited, non-oppressive, just, and enduring government imaginable--whatever its political form might be. Under such an administration, everyone would understand that he possessed all the privileges as well as all the responsibilities of his existence. No one would have any argument with government, provided that his person was respected, his labor was free, and the fruits of his labor were protected against all unjust attack. When successful, we would not have to thank the state for our success. And, conversely, when unsuccessful, we would no more think of blaming the state for our misfortune than would the farmers blame the state because of hail or frost. The state would be felt only by the invaluable blessings of safety provided by this concept of government.

It can be further stated that, thanks to the non-intervention of the state in private affairs, our wants and their satisfactions would develop themselves in a logical manner. We would not see poor families seeking literary instruction before they have bread. We would not see cities populated at the expense of rural districts, nor rural districts at the expense of cities. We would not see the great displacements of capital, labor, and population that are caused by legislative decisions.

The sources of our existence are made uncertain and precarious by these state-created displacements. And, furthermore, these acts burden the government with increased responsibilities.



The Complete Perversion of the Law

But, unfortunately, law by no means confines itself to its proper functions. And when it has exceeded its proper functions, it has not done so merely in some inconsequential and debatable matters. The law has gone further than this; it has acted in direct opposition to its own purpose. The law has been used to destroy its own objective: It has been applied to annihilating the justice that it was supposed to maintain; to limiting and destroying rights which its real purpose was to respect. The law has placed the collective force at the disposal of the unscrupulous who wish, without risk, to exploit the person, liberty, and property of others. It has converted plunder into a right, in order to protect plunder. And it has converted lawful defense into a crime, in order to punish lawful defense.

How has this perversion of the law been accomplished? And what have been the results? The law has been perverted by the influence of two entirely different causes: stupid greed and false philanthropy. Let us speak of the first.



A Fatal Tendency of Mankind

Self-preservation and self-development are common aspirations among all people. And if everyone enjoyed the unrestricted use of his faculties and the free disposition of the fruits of his labor, social progress would be ceaseless, uninterrupted, and unfailing. But there is also another tendency that is common among people. When they can, they wish to live and prosper at the expense of others. This is no rash accusation. Nor does it come from a gloomy and uncharitable spirit. The annals of history bear witness to the truth of it: the incessant wars, mass migrations, religious persecutions, universal slavery, dishonesty in commerce, and monopolies. This fatal desire has its origin in the very nature of man--in that primitive, universal, and insuppressible instinct that impels him to satisfy his desires with the least possible pain.



Property and Plunder

Man can live and satisfy his wants only by ceaseless labor; by the ceaseless application of his faculties to natural resources. This process is the origin of property.

But it is also true that a man may live and satisfy his wants by seizing and consuming the products of the labor of others. This process is the origin of plunder.

Now since man is naturally inclined to avoid pain--and since labor is pain in itself--it follows that men will resort to plunder whenever plunder is easier than work. History shows this quite clearly. And under these conditions, neither religion nor morality can stop it.

When, then, does plunder stop? It stops when it becomes more painful and more dangerous than labor.

It is evident, then, that the proper purpose of law is to use the power of its collective force to stop this fatal tendency to plunder instead of to work. All the measures of the law should protect property and punish plunder.

But, generally, the law is made by one man or one class of men. And since law cannot operate without the sanction and support of a dominating force, this force must be entrusted to those who make the laws.

This fact, combined with the fatal tendency that exists in the heart of man to satisfy his wants with the least possible effort, explains the almost universal perversion of the law. Thus it is easy to understand how law, instead of checking injustice, becomes the invincible weapon of injustice. It is easy to understand why the law is used by the legislator to destroy in varying degrees among the rest of the people, their personal independence by slavery, their liberty by oppression, and their property by plunder. This is done for the benefit of the person who makes the law, and in proportion to the power that he holds.



Victims of Lawful Plunder

Men naturally rebel against the injustice of which they are victims. Thus, when plunder is organized by law for the profit of those who make the law, all the plundered classes try somehow to enter--by peaceful or revolutionary means--into the making of laws. According to their degree of enlightenment, these plundered classes may propose one of two entirely different purposes when they attempt to attain political power: Either they may wish to stop lawful plunder, or they may wish to share in it. Woe to the nation when this latter purpose prevails among the mass victims of lawful plunder when they, in turn, seize the power to make laws!

Until that happens, the few practice lawful plunder upon the many, a common practice where the right to participate in the making of law is limited to a few persons. But then, participation in the making of law becomes universal. And then, men seek to balance their conflicting interests by universal plunder. Instead of rooting out the injustices found in society, they make these injustices general. As soon as the plundered classes gain political power, they establish a system of reprisals against other classes. They do not abolish legal plunder. (This objective would demand more enlightenment than they possess.) Instead, they emulate their evil predecessors by participating in this legal plunder, even though it is against their own interests.

It is as if it were necessary, before a reign of justice appears, for everyone to suffer a cruel retribution--some for their evilness, and some for their lack of understanding.



The Results of Legal Plunder

It is impossible to introduce into society a greater change and a greater evil than this: the conversion of the law into an instrument of plunder.

What are the consequences of such a perversion? It would require volumes to describe them all. Thus we must content ourselves with pointing out the most striking.

In the first place, it erases from everyone's conscience the distinction between justice and injustice.

No society can exist unless the laws are respected to a certain degree. The safest way to make laws respected is to make them respectable. When law and morality contradict each other, the citizen has the cruel alternative of either losing his moral sense or losing his respect for the law. These two evils are of equal consequence, and it would be difficult for a person to choose between them. The nature of law is to maintain justice. This is so much the case that, in the minds of the people, law and justice are one and the same thing. There is in all of us a strong disposition to believe that anything lawful is also legitimate. This belief is so widespread that many persons have erroneously held that things are "just" because law makes them so. Thus, in order to make plunder appear just and sacred to many consciences, it is only necessary for the law to decree and sanction it. Slavery, restrictions, and monopoly find defenders not only among those who profit from them but also among those who suffer from them.



The Fate of Non-Conformists

If you suggest a doubt as to the morality of these institutions, it is boldly said that "You are a dangerous innovator, a utopian, a theorist, a subversive; you would shatter the foundation upon which society rests." If you lecture upon morality or upon political science, there will be found official organizations petitioning the government in this vein of thought: "That science no longer be taught exclusively from the point of view of free trade (of liberty, of property, and of justice) as has been the case until now, but also, in the future, science is to be especially taught from the viewpoint of the facts and laws that regulate French industry (facts and laws which are contrary to liberty, to property, and to justice). That, in government-endowed teaching positions, the professor rigorously refrain from endangering in the slightest degree the respect due to the laws now in force."(1)

Another effect of this tragic perversion of the law is that it gives an exaggerated importance to political passions and conflicts, and to politics in general.

I could prove this assertion in a thousand ways. But, by way of illustration, I shall limit myself to a subject that has lately occupied the minds of everyone: universal suffrage.



Who Shall Judge?

The followers of Rousseau's school of thought--who consider themselves far advanced, but whom I consider twenty centuries behind the times--will not agree with me on this. But universal suffrage--using the word in its strictest sense--is not one of those sacred dogmas which it is a crime to examine or doubt. In fact, serious objections may be made to universal suffrage. In the first place, the word universal conceals a gross fallacy. For example, there are 36 million people in France. Thus, to make the right of suffrage universal, there should be 36 million voters. But the most extended system permits only 9 million people to vote. Three persons out of four are excluded. And more than this, they are excluded by the fourth. This fourth person advances the principle of incapacity as his reason for excluding the others.

Universal suffrage means, then, universal suffrage for those who are capable. But there remains this question of fact: Who is capable? Are minors, females, insane persons, and persons who have committed certain major crimes the only ones to be determined incapable?



The Reason Why Voting Is Restricted

A closer examination of the subject shows us the motive which causes the right of suffrage to be based upon the supposition of incapacity. The motive is that the elector or voter does not exercise this right for himself alone, but for everybody. The most extended elective system and the most restricted elective system are alike in this respect. They differ only in respect to what constitutes incapacity. It is not a difference of principle, but merely a difference of degree.

If, as the republicans of our present-day Greek and Roman schools of thought pretend, the right of suffrage arrives with one's birth, it would be an injustice for adults to prevent women and children from voting. Why are they prevented? Because they are presumed to be incapable. And why is incapacity a motive for exclusion? Because it is not the voter alone who suffers the consequences of his vote; because each vote touches and affects everyone in the entire community; because the people in the community have a right to demand some safeguards concerning the acts upon which their welfare and existence depend. The Answer Is to Restrict the Law

I know what might be said in answer to this; what the objections might be. But this is not the place to exhaust a controversy of this nature. I wish merely to observe here that this controversy over universal suffrage (as well as most other political questions) which agitates, excites, and overthrows nations, would lose nearly all of its importance if the law had always been what it ought to be.

In fact, if law were restricted to protecting all persons, all liberties, and all properties; if law were nothing more than the organized combination of the individual's right to self defense; if law were the obstacle, the check, the punisher of all oppression and plunder--is it likely that we citizens would then argue much about the extent of the franchise? Under these circumstances, is it likely that the extent of the right to vote would endanger that supreme good, the public peace? Is it likely that the excluded classes would refuse to peaceably await the coming of their right to vote? Is it likely that those who had the right to vote would jealously defend their privilege? If the law were confined to its proper functions, everyone's interest in the law would be the same. Is it not clear that, under these circumstances, those who voted could not inconvenience those who did not vote?



The Fatal Idea of Legal Plunder

But on the other hand, imagine that this fatal principle has been introduced: Under the pretense of organization, regulation, protection, or encouragement, the law takes property from one person and gives it to another; the law takes the wealth of all and gives it to a few--whether farmers, manufacturers, shipowners, artists, or comedians. Under these circumstances, then certainly every class will aspire to grasp the law, and logically so. The excluded classes will furiously demand their right to vote--and will overthrow society rather than not to obtain it. Even beggars and vagabonds will then prove to you that they also have an incontestable title to vote. They will say to you: "We cannot buy wine, tobacco, or salt without paying the tax. And a part of the tax that we pay is given by law--in privileges and subsidies--to men who are richer than we are. Others use the law to raise the prices of bread, meat, iron, or cloth. Thus, since everyone else uses the law for his own profit, we also would like to use the law for our own profit. We demand from the law the right to relief, which is the poor man's plunder. To obtain this right, we also should be voters and legislators in order that we may organize Beggary on a grand scale for our own class, as you have organized Protection on a grand scale for your class. Now don't tell us beggars that you will act for us, and then toss us, as Mr. Mimerel proposes, 600,000 francs to keep us quiet, like throwing us a bone to gnaw. We have other claims. And anyway, we wish to bargain for ourselves as other classes have bargained for themselves!" And what can you say to answer that argument!



Perverted Law Causes Conflict

As long as it is admitted that the law may be diverted from its true purpose--that it may violate property instead of protecting it--then everyone will want to participate in making the law, either to protect himself against plunder or to use it for plunder. Political questions will always be prejudicial, dominant, and all-absorbing.

There will be fighting at the door of the Legislative Palace, and the struggle within will be no less furious. To know this, it is hardly necessary to examine what transpires in the French and English legislatures; merely to understand the issue is to know the answer.

Is there any need to offer proof that this odious perversion of the law is a perpetual source of hatred and discord; that it tends to destroy society itself? If such proof is needed, look at the United States [in 1850]. There is no country in the world where the law is kept more within its proper domain: the protection of every person's liberty and property. As a consequence of this, there appears to be no country in the world where the social order rests on a firmer foundation. But even in the United States, there are two issues--and only two--that have always endangered the public peace.



Slavery and Tariffs Are Plunder

What are these two issues? They are slavery and tariffs. These are the only two issues where, contrary to the general spirit of the republic of the United States, law has assumed the character of plunder.

Slavery is a violation, by law, of liberty. The protective tariff is a violation, by law, of property.

Its is a most remarkable fact that this double legal crime--a sorrowful inheritance of the Old World--should be the only issue which can, and perhaps will, lead to the ruin of the Union. It is indeed impossible to imagine, at the very heart of a society, a more astounding fact than this: The law has come to be an instrument of injustice. And if this fact brings terrible consequences to the United States - where only in the instance of slavery and tariffs--what must be the consequences in Europe, where the perversion of law is a principle; a system?



Two Kinds of Plunder

Mr. de Montalembert [politician and writer] adopting the thought contained in a famous proclamation by Mr. Carlier, has said: "We must make war against socialism." According to the definition of socialism advanced by Mr. Charles Dupin, he meant: "We must make war against plunder." But of what plunder was he speaking? For there are two kinds of plunder: legal and illegal.

I do not think that illegal plunder, such as theft or swindling-- which the penal code defines, anticipates, and punishes--can be called socialism. It is not this kind of plunder that systematically threatens the foundations of society. Anyway, the war against this kind of plunder has not waited for the command of these gentlemen. The war against illegal plunder has been fought since the beginning of the world. Long before the Revolution of February 1848--long before the appearance even of socialism itself--France had provided police, judges, gendarmes, prisons, dungeons, and scaffolds for the purpose of fighting illegal plunder. The law itself conducts this war, and it is my wish and opinion that the law should always maintain this attitude toward plunder.



The Law Defends Plunder

But it does not always do this. Sometimes the law defends plunder and participates in it. Thus the beneficiaries are spared the shame, danger, and scruple which their acts would otherwise involve. Sometimes the law places the whole apparatus of judges, police, prisons, and gendarmes at the service of the plunderers, and treats the victim--when he defends himself--as a criminal. In short, there is a legal plunder, and it is of this, no doubt, that Mr. de Montalembert speaks.

This legal plunder may be only an isolated stain among the legislative measures of the people. If so, it is best to wipe it out with a minimum of speeches and denunciations--and in spite of the uproar of the vested interests.



How to Identify Legal Plunder

But how is this legal plunder to be identified? Quite simply. See if the law takes from some persons what belongs to them, and gives it to other persons to whom it does not belong. See if the law benefits one citizen at the expense of another by doing what the citizen himself cannot do without committing a crime. Then abolish this law without delay, for it is not only an evil itself, but also it is a fertile source for further evils because it invites reprisals. If such a law--which may be an isolated case--is not abolished immediately, it will spread, multiply, and develop into a system.

The person who profits from this law will complain bitterly, defending his acquired rights. He will claim that the state is obligated to protect and encourage his particular industry; that this procedure enriches the state because the protected industry is thus able to spend more and to pay higher wages to the poor workingmen.

Do not listen to this sophistry by vested interests. The acceptance of these arguments will build legal plunder into a whole system. In fact, this has already occurred. The present-day delusion is an attempt to enrich everyone at the expense of everyone else; to make plunder universal under the pretense of organizing it.



Legal Plunder Has Many Names

Now, legal plunder can be committed in an infinite number of ways. Thus we have an infinite number of plans for organizing it: tariffs, protection, benefits, subsidies, encouragements, progressive taxation, public schools, guaranteed jobs, guaranteed profits, minimum wages, a right to relief, a right to the tools of labor, free credit, and so on, and so on. All these plans as a whole--with their common aim of legal plunder-- constitute socialism.

Now, since under this definition socialism is a body of doctrine, what attack can be made against it other than a war of doctrine? If you find this socialistic doctrine to be false, absurd, and evil, then refute it. And the more false, the more absurd, and the more evil it is, the easier it will be to refute. Above all, if you wish to be strong, begin by rooting out every particle of socialism that may have crept into your legislation. This will be no light task.



Socialism Is Legal Plunder

Mr. de Montalembert has been accused of desiring to fight socialism by the use of brute force. He ought to be exonerated from this accusation, for he has plainly said: "The war that we must fight against socialism must be in harmony with law, honor, and justice."

But why does not Mr. de Montalembert see that he has placed himself in a vicious circle? You would use the law to oppose socialism? But it is upon the law that socialism itself relies. Socialists desire to practice legal plunder, not illegal plunder. Socialists, like all other monopolists, desire to make the law their own weapon. And when once the law is on the side of socialism, how can it be used against socialism? For when plunder is abetted by the law, it does not fear your courts, your gendarmes, and your prisons. Rather, it may call upon them for help.

To prevent this, you would exclude socialism from entering into the making of laws? You would prevent socialists from entering the Legislative Palace? You shall not succeed, I predict, so long as legal plunder continues to be the main business of the legislature. It is illogical--in fact, absurd--to assume otherwise.



The Choice Before Us

This question of legal plunder must be settled once and for all, and there are only three ways to settle it:

1. The few plunder the many.

2. Everybody plunders everybody.

3. Nobody plunders anybody.

We must make our choice among limited plunder, universal plunder, and no plunder. The law can follow only one of these three.

Limited legal plunder: This system prevailed when the right to vote was restricted. One would turn back to this system to prevent the invasion of socialism.

Universal legal plunder: We have been threatened with this system since the franchise was made universal. The newly enfranchised majority has decided to formulate law on the same principle of legal plunder that was used by their predecessors when the vote was limited.

No legal plunder: This is the principle of justice, peace, order, stability, harmony, and logic. Until the day of my death, I shall proclaim this principle with all the force of my lungs (which alas! is all too inadequate).(2)



The Proper Function of the Law

And, in all sincerity, can anything more than the absence of plunder be required of the law? Can the law--which necessarily requires the use of force--rationally be used for anything except protecting the rights of everyone? I defy anyone to extend it beyond this purpose without perverting it and, consequently, turning might against right. This is the most fatal and most illogical social perversion that can possibly be imagined. It must be admitted that the true solution--so long searched for in the area of social relationships--is contained in these simple words: Law is organized justice.

Now this must be said: When justice is organized by law--that is, by force--this excludes the idea of using law (force) to organize any human activity whatever, whether it be labor, charity, agriculture, commerce, industry, education, art, or religion. The organizing by law of any one of these would inevitably destroy the essential organization--justice. For truly, how can we imagine force being used against the liberty of citizens without it also being used against justice, and thus acting against its proper purpose?



The Seductive Lure of Socialism

Here I encounter the most popular fallacy of our times. It is not considered sufficient that the law should be just; it must be philanthropic. Nor is it sufficient that the law should guarantee to every citizen the free and inoffensive use of his faculties for physical, intellectual, and moral self-improvement. Instead, it is demanded that the law should directly extend welfare, education, and morality throughout the nation.

This is the seductive lure of socialism. And I repeat again: These two uses of the law are in direct contradiction to each other. We must choose between them. A citizen cannot at the same time be free and not free.



Enforced Fraternity Destroys Liberty

Mr. de Lamartine once wrote to me thusly: "Your doctrine is only the half of my program. You have stopped at liberty; I go on to fraternity." I answered him: "The second half of your program will destroy the first." In fact, it is impossible for me to separate the word fraternity from the word voluntary. I cannot possibly understand how fraternity can be legally enforced without liberty being legally destroyed, and thus justice being legally trampled underfoot. Legal plunder has two roots: One of them, as I have said before, is in human greed; the other is in false philanthropy.

At this point, I think that I should explain exactly what I mean by the word plunder.(3)



Plunder Violates Ownership

I do not, as is often done, use the word in any vague, uncertain, approximate, or metaphorical sense. I use it in its scientific acceptance--as expressing the idea opposite to that of property [wages, land, money, or whatever]. When a portion of wealth is transferred from the person who owns it--without his consent and without compensation, and whether by force or by fraud-- to anyone who does not own it, then I say that property is violated; that an act of plunder is committed.

I say that this act is exactly what the law is supposed to suppress, always and everywhere. When the law itself commits this act that it is supposed to suppress, I say that plunder is still committed, and I add that from the point of view of society and welfare, this aggression against rights is even worse. In this case of legal plunder, however, the person who receives the benefits is not responsible for the act of plundering. The responsibility for this legal plunder rests with the law, the legislator, and society itself. Therein lies the political danger.

It is to be regretted that the word plunder is offensive. I have tried in vain to find an inoffensive word, for I would not at any time--especially now--wish to add an irritating word to our dissentions. Thus, whether I am believed or not, I declare that I do not mean to attack the intentions or the morality of anyone. Rather, I am attacking an idea which I believe to be false; a system which appears to me to be unjust; an injustice so independent of personal intentions that each of us profits from it without wishing to do so, and suffers from it without knowing the cause of the suffering.



Three Systems of Plunder

The sincerity of those who advocate protectionism, socialism, and communism is not here questioned. Any writer who would do that must be influenced by a political spirit or a political fear. It is to be pointed out, however, that protectionism, socialism, and communism are basically the same plant in three different stages of its growth. All that can be said is that legal plunder is more visible in communism because it is complete plunder; and in protectionism because the plunder is limited to specific groups and industries.(4) Thus it follows that, of the three systems, socialism is the vaguest, the most indecisive, and, consequently, the most sincere stage of development.

With this explanation, let us examine the value--the origin and the tendency--of this popular aspiration which claims to accomplish the general welfare by general plunder.



Law Is Force

Since the law organizes justice, the socialists ask why the law should not also organize labor, education, and religion. Why should not law be used for these purposes? Because it could not organize labor, education, and religion without destroying justice. We must remember that law is force, and that, consequently, the proper functions of the law cannot lawfully extend beyond the proper functions of force. When law and force keep a person within the bounds of justice, they impose nothing but a mere negation. They oblige him only to abstain from harming others. They violate neither his personality, his liberty, nor his property. They safeguard all of these. They are defensive; they defend equally the rights of all.



Law Is a Negative Concept

The harmlessness of the mission performed by law and lawful defense is self-evident; the usefulness is obvious; and the legitimacy cannot be disputed.

As a friend of mine once remarked, this negative concept of law is so true that the statement, the purpose of the law is to cause justice to reign, is not a rigorously accurate statement. It ought to be stated that the purpose of the law is to prevent injustice from reigning. In fact, it is injustice, instead of justice, that has an existence of its own. Justice is achieved only when injustice is absent.

But when the law, by means of its necessary agent, force, imposes upon men a regulation of labor, a method or a subject of education, a religious faith or creed--then the law is no longer negative; it acts positively upon people. It substitutes the will of the legislator for their own wills; the initiative of the legislator for their own initiatives. When this happens, the people no longer need to discuss, to compare, to plan ahead; the law does all this for them. Intelligence becomes a useless prop for the people; they cease to be men; they lose their personality, their liberty, their property.

Try to imagine a regulation of labor imposed by force that is not a violation of liberty; a transfer of wealth imposed by force that is not a violation of property. If you cannot reconcile these contradictions, then you must conclude that the law cannot organize labor and industry without organizing injustice.



The Political Approach

When a politician views society from the seclusion of his office, he is struck by the spectacle of the inequality that he sees. He deplores the deprivations which are the lot of so many of our brothers, deprivations which appear to be even sadder when contrasted with luxury and wealth.

Perhaps the politician should ask himself whether this state of affairs has not been caused by old conquests and lootings, and by more recent legal plunder. Perhaps he should consider this proposition: Since all persons seek well-being and perfection, would not a condition of justice be sufficient to cause the greatest efforts toward progress, and the greatest possible equality that is compatible with individual responsibility? Would not this be in accord with the concept of individual responsibility which God has willed in order that mankind may have the choice between vice and virtue, and the resulting punishment and reward?

But the politician never gives this a thought. His mind turns to organizations, combinations, and arrangements--legal or apparently legal. He attempts to remedy the evil by increasing and perpetuating the very thing that caused the evil in the first place: legal plunder. We have seen that justice is a negative concept. Is there even one of these positive legal actions that does not contain the principle of plunder?



The Law and Charity

You say: "There are persons who have no money," and you turn to the law. But the law is not a breast that fills itself with milk. Nor are the lacteal veins of the law supplied with milk from a source outside the society. Nothing can enter the public treasury for the benefit of one citizen or one class unless other citizens and other classes have been forced to send it in. If every person draws from the treasury the amount that he has put in it, it is true that the law then plunders nobody. But this procedure does nothing for the persons who have no money. It does not promote equality of income. The law can be an instrument of equalization only as it takes from some persons and gives to other persons. When the law does this, it is an instrument of plunder.

With this in mind, examine the protective tariffs, subsidies, guaranteed profits, guaranteed jobs, relief and welfare schemes, public education, progressive taxation, free credit, and public works. You will find that they are always based on legal plunder, organized injustice.



The Law and Education

You say: "There are persons who lack education," and you turn to the law. But the law is not, in itself, a torch of learning which shines its light abroad. The law extends over a society where some persons have knowledge and others do not; where some citizens need to learn, and others can teach. In this matter of education, the law has only two alternatives: It can permit this transaction of teaching and learning to operate freely and without the use of force, or it can force human wills in this matter by taking from some of them enough to pay the teachers who are appointed by government to instruct others, without charge. But in this second case, the law commits legal plunder by violating liberty and property.



The Law and Morals

You say: "Here are persons who are lacking in morality or religion," and you turn to the law. But law is force. And need I point out what a violent and futile effort it is to use force in the matters of morality and religion?

It would seem that socialists, however self-complacent, could not avoid seeing this monstrous legal plunder that results from such systems and such efforts. But what do the socialists do? They cleverly disguise this legal plunder from others--and even from themselves--under the seductive names of fraternity, unity, organization, and association. Because we ask so little from the law--only justice--the socialists thereby assume that we reject fraternity, unity, organization, and association. The socialists brand us with the name individualist.

But we assure the socialists that we repudiate only forced organization, not natural organization. We repudiate the forms of association that are forced upon us, not free association. We repudiate forced fraternity, not true fraternity. We repudiate the artificial unity that does nothing more than deprive persons of individual responsibility. We do not repudiate the natural unity of mankind under Providence.



A Confusion of Terms

Socialism, like the ancient ideas from which it springs, confuses the distinction between government and society. As a result of this, every time we object to a thing being done by government, the socialists conclude that we object to its being done at all. We disapprove of state education. Then the socialists say that we are opposed to any education. We object to a state religion. Then the socialists say that we want no religion at all. We object to a state-enforced equality. Then they say that we are against equality. And so on, and so on. It is as if the socialists were to accuse us of not wanting persons to eat because we do not want the state to raise grain.



The Influence of Socialist Writers

How did politicians ever come to believe this weird idea that the law could be made to produce what it does not contain--the wealth, science, and religion that, in a positive sense, constitute prosperity? Is it due to the influence of our modern writers on public affairs?

Present-day writers--especially those of the socialist school of thought--base their various theories upon one common hypothesis: They divide mankind into two parts. People in general--with the exception of the writer himself--from the first group. The writer, all alone, forms the second and most important group. Surely this is the weirdest and most conceited notion that ever entered a human brain!

In fact, these writers on public affairs begin by supposing that people have within themselves no means of discernment; no motivation to action. The writers assume that people are inert matter, passive particles, motionless atoms, at best a kind of vegetation indifferent to its own manner of existence. They assume that people are susceptible to being shaped--by the will and hand of another person--into an infinite variety of forms, more or less symmetrical, artistic, and perfected. Moreover, not one of these writers on governmental affairs hesitates to imagine that he himself--under the title of organizer, discoverer, legislator, or founder--is this will and hand, this universal motivating force, this creative power whose sublime mission is to mold these scattered materials--persons--into a society.

These socialist writers look upon people in the same manner that the gardener views his trees. Just as the gardener capriciously shapes the trees into pyramids, parasols, cubes, vases, fans, and other forms, just so does the socialist writer whimsically shape human beings into groups, series, centers, sub-centers, honeycombs, labor corps, and other variations. And just as the gardener needs axes, pruning hooks, saws, and shears to shape his trees, just so does the socialist writer need the force that he can find only in law to shape human beings. For this purpose, he devises tariff laws, tax laws, relief laws, and school laws.



The Socialists Wish to Play God

Socialists look upon people as raw material to be formed into social combinations. This is so true that, if by chance, the socialists have any doubts about the success of these combinations, they will demand that a small portion of mankind be set aside to experiment upon. The popular idea of trying all systems is well known. And one socialist leader has been known seriously to demand that the Constituent Assembly give him a small district with all its inhabitants, to try his experiments upon. In the same manner, an inventor makes a model before he constructs the full-sized machine; the chemist wastes some chemicals--the farmer wastes some seeds and land--to try out an idea.

But what a difference there is between the gardener and his trees, between the inventor and his machine, between the chemist and his elements, between the farmer and his seeds! And in all sincerity, the socialist thinks that there is the same difference between him and mankind!

It is no wonder that the writers of the nineteenth century look upon society as an artificial creation of the legislator's genius. This idea--the fruit of classical education--has taken possession of all the intellectuals and famous writers of our country. To these intellectuals and writers, the relationship between persons and the legislator appears to be the same as the relationship between the clay and the potter.

Moreover, even where they have consented to recognize a principle of action in the heart of man--and a principle of discernment in man's intellect--they have considered these gifts from God to be fatal gifts. They have thought that persons, under the impulse of these two gifts, would fatally tend to ruin themselves. They assume that if the legislators left persons free to follow their own inclinations, they would arrive at atheism instead of religion, ignorance instead of knowledge, poverty instead of production and exchange.



The Socialists Despise Mankind

According to these writers, it is indeed fortunate that Heaven has bestowed upon certain men--governors and legislators--the exact opposite inclinations, not only for their own sake but also for the sake of the rest of the world! While mankind tends toward evil, the legislators yearn for good; while mankind advances toward darkness, the legislators aspire for enlightenment; while mankind is drawn toward vice, the legislators are attracted toward virtue. Since they have decided that this is the true state of affairs, they then demand the use of force in order to substitute their own inclinations for those of the human race.

Open at random any book on philosophy, politics, or history, and you will probably see how deeply rooted in our country is this idea--the child of classical studies, the mother of socialism. In all of them, you will probably find this idea that mankind is merely inert matter, receiving life, organization, morality, and prosperity from the power of the state. And even worse, it will be stated that mankind tends toward degeneration, and is stopped from this downward course only by the mysterious hand of the legislator. Conventional classical thought everywhere says that behind passive society there is a concealed power called law or legislator (or called by some other terminology that designates some unnamed person or persons of undisputed influence and authority) which moves, controls, benefits, and improves mankind.



A Defense of Compulsory Labor

Let us first consider a quotation from Bossuet [tutor to the Dauphin in the Court of Louis XIV]:*

"One of the things most strongly impressed (by whom?) upon the minds of the Egyptians was patriotism.... No one was permitted to be useless to the state. The law assigned to each one his work, which was handed down from father to son. No one was permitted to have two professions. Nor could a person change from one job to another.... But there was one task to which all were forced to conform: the study of the laws and of wisdom. Ignorance of religion and of the political regulations of the country was not excused under any circumstances. Moreover, each occupation was assigned (by whom?) to a certain district.... Among the good laws, one of the best was that everyone was trained (by whom?) to obey them. As a result of this, Egypt was filled with wonderful inventions, and nothing was neglected that could make life easy and quiet"(5)



Thus, according to Bossuet, persons derive nothing from themselves. Patriotism, prosperity, inventions, husbandry, science--all of these are given to the people by the operation of the laws, the rulers. All that the people have to do is to bow to leadership.



A Defense of Paternal Government

Bossuet carries this idea of the state as the source of all progress even so far as to defend the Egyptians against the charge that they rejected wrestling and music. He said:

"How is that possible? These arts were invented by Trismegistus [who was alleged to have been Chancellor to the Egyptian god Osiris]".

And again among the Persians, Bossuet claims that all comes from above:

"One of the first responsibilities of the prince was to encourage agriculture.... Just as there were offices established for the regulation of armies, just so were there offices for the direction of farm work.... The Persian people were inspired with an overwhelming respect for royal authority."

And according to Bossuet, the Greek people, although exceedingly intelligent, had no sense of personal responsibility; like dogs and horses, they themselves could not have invented the most simple games:

"The Greeks, naturally intelligent and courageous, had been early cultivated by the kings and settlers who had come from Egypt. From these Egyptian rulers, the Greek people had learned bodily exercises, foot races, and horse and chariot races.... But the best thing that the Egyptians had taught the Greeks was to become docile, and to permit themselves to be formed by the law for the public good."



The Idea of Passive Mankind

It cannot be disputed that these classical theories [advanced by these latter-day teachers, writers, legislators, economists, and philosophers] held that everything came to the people from a source outside themselves. As another example, take Fenelon [archbishop, author, and instructor to the Duke of Burgundy]. He was a witness to the power of Louis XIV. This, plus the fact that he was nurtured in the classical studies and the admiration of antiquity, naturally caused Fenelon to accept the idea that mankind should be passive; that the misfortunes and the prosperity--vices and virtues--of people are caused by the external influence exercised upon them by the law and the legislators. Thus, in his Utopia of Salentum, he puts men--with all their interests, faculties, desires, and possessions--under the absolute discretion of the legislator. Whatever the issue may be, persons do not decide it for themselves; the prince decides for them. The prince is depicted as the soul of this shapeless mass of people who form the nation. In the prince resides the thought, the foresight, all progress, and the principle of all organization. Thus all responsibility rests with him.

The whole of the tenth book of Fenelon's Telemachus proves this. I refer the reader to it, and content myself with quoting at random from this celebrated work to which, in every other respect, I am the first to pay homage.



Socialists Ignore Reason and Facts

With the amazing credulity which is typical of the classicists, Fenelon ignores the authority of reason and facts when he attributes the general happiness of the Egyptians, not to their own wisdom but to the wisdom of their kings:

"We could not turn our eyes to either shore without seeing rich towns and country estates most agreeably located; fields, never fallowed, covered with golden crops every year; meadows full of flocks; workers bending under the weight of the fruit which the earth lavished upon its cultivators; shepherds who made the echoes resound with the soft notes from their pipes and flutes. "Happy," said Mentor, "is the people governed by a wise king.". . ."

Later, Mentor desired that I observe the contentment and abundance which covered all Egypt, where twenty-two thousand cities could be counted. He admired the good police regulations in the cities; the justice rendered in favor of the poor against the rich; the sound education of the children in obedience, labor, sobriety, and the love of the arts and letters; the exactness with which all religious ceremonies were performed; the unselfishness, the high regard for honor, the faithfulness to men, and the fear of the gods which every father taught his children. He never stopped admiring the prosperity of the country. "Happy," said he, "is the people ruled by a wise king in such a manner."



Socialists Want to Regiment People

Fenelon's idyll on Crete is even more alluring. Mentor is made to say:



"All that you see in this wonderful island results from the laws of Minos. The education which he ordained for the children makes their bodies strong and robust. From the very beginning, one accustoms the children to a life of frugality and labor, because one assumes that all pleasures of the senses weaken both body and mind. Thus one allows them no pleasure except that of becoming invincible by virtue, and of acquiring glory.... Here one punishes three vices that go unpunished among other people: ingratitude, hypocrisy, and greed. There is no need to punish persons for pomp and dissipation, for they are unknown in Crete.... No costly furniture, no magnificent clothing, no delicious feasts, no gilded palaces are permitted."



Thus does Mentor prepare his student to mold and to manipulate--doubtless with the best of intentions--the people of Ithaca. And to convince the student of the wisdom of these ideas, Mentor recites to him the example of Salentum.

It is from this sort of philosophy that we receive our first political ideas! We are taught to treat persons much as an instructor in agriculture teaches farmers to prepare and tend the soil.



A Famous Name and an Evil Idea

Now listen to the great Montesquieu on this same subject: "To maintain the spirit of commerce, it is necessary that all the laws must favor it. These laws, by proportionately dividing up the fortunes as they are made in commerce, should provide every poor citizen with sufficiently easy circumstances to enable him to work like the others. These same laws should put every rich citizen in such lowered circumstances as to force him to work in order to keep or to gain." Thus the laws are to dispose of all fortunes!

Although real equality is the soul of the state in a democracy, yet this is so difficult to establish that an extreme precision in this matter would not always be desirable. It is sufficient that there be established a census to reduce or fix these differences in wealth within a certain limit. After this is done, it remains for specific laws to equalize inequality by imposing burdens upon the rich and granting relief to the poor.

Here again we find the idea of equalizing fortunes by law, by force.

In Greece, there were two kinds of republics, One, Sparta, was military; the other, Athens, was commercial. In the former, it was desired that the citizens be idle; in the latter, love of labor was encouraged.

Note the marvelous genius of these legislators: By debasing all established customs--by mixing the usual concepts of all virtues--they knew in advance that the world would admire their wisdom.

Lycurgus gave stability to his city of Sparta by combining petty thievery with the soul of justice; by combining the most complete bondage with the most extreme liberty; by combining the most atrocious beliefs with the greatest moderation. He appeared to deprive his city of all its resources, arts, commerce, money, and defenses. In Sparta, ambition went without the hope of material reward. Natural affection found no outlet because a man was neither son, husband, nor father. Even chastity was no longer considered becoming. By this road, Lycurgus led Sparta on to greatness and glory.

This boldness which was to be found in the institutions of Greece has been repeated in the midst of the degeneracy and corruption of our modern times. An occasional honest legislator has molded a people in whom integrity appears as natural as courage in the Spartans.

Mr. William Penn, for example, is a true Lycurgus. Even though Mr. Penn had peace as his objective--while Lycurgus had war as his objective--they resemble each other in that their moral prestige over free men allowed them to overcome prejudices, to subdue passions, and to lead their respective peoples into new paths.

The country of Paraguay furnishes us with another example [of a people who, for their own good, are molded by their legislators].(6)

Now it is true that if one considers the sheer pleasure of commanding to be the greatest joy in life, he contemplates a crime against society; it will, however, always be a noble ideal to govern men in a manner that will make them happier. Those who desire to establish similar institutions must do as follows: Establish common ownership of property as in the republic of Plato; revere the gods as Plato commanded; prevent foreigners from mingling with the people, in order to preserve the customs; let the state, instead of the citizens, establish commerce. The legislators should supply arts instead of luxuries; they should satisfy needs instead of desires.



A Frightful Idea

Those who are subject to vulgar infatuation may exclaim: "Montesquieu has said this! So it's magnificent! It's sublime!" As for me, I have the courage of my own opinion. I say: What! You have the nerve to call that fine? It is frightful! It is abominable! These random selections from the writings of Montesquieu show that he considers persons, liberties, property--mankind itself--to be nothing but materials for legislators to exercise their wisdom upon.



The Leader of the Democrats

Now let us examine Rousseau on this subject. This writer on public affairs is the supreme authority of the democrats. And although he bases the social structure upon the will of the people, he has, to a greater extent than anyone else, completely accepted the theory of the total inertness of mankind in the presence of the legislators: "If it is true that a great prince is rare, then is it not true that a great legislator is even more rare? The prince has only to follow the pattern that the legislator creates. The legislator is the mechanic who invents the machine; the prince is merely the workman who sets it in motion. And what part do persons play in all this? They are merely the machine that is set in motion. In fact, are they not merely considered to be the raw material of which the machine is made?"

Thus the same relationship exists between the legislator and the prince as exists between the agricultural expert and the farmer; and the relationship between the prince and his subjects is the same as that between the farmer and his land. How high above mankind, then, has this writer on public affairs been placed? Rousseau rules over legislators themselves, and teaches them their trade in these imperious terms:

"Would you give stability to the state? Then bring the extremes as closely together as possible. Tolerate neither wealthy persons nor beggars.

If the soil is poor or barren, or the country too small for its inhabitants, then turn to industry and arts, and trade these products for the foods that you need.... On a fertile soil--if you are short of inhabitants--devote all your attention to agriculture, because this multiplies people; banish the arts, because they only serve to depopulate the nation....

If you have extensive and accessible coast lines, then cover the sea with merchant ships; you will have a brilliant but short existence. If your seas wash only inaccessible cliffs, let the people be barbarous and eat fish; they will live more quietly-- perhaps better--and, most certainly, they will live more happily. In short, and in addition to the maxims that are common to all, every people has its own particular circumstances. And this fact in itself will cause legislation appropriate to the circumstances." This is the reason why the Hebrews formerly--and, more recently, the Arabs--had religion as their principle objective. The objective of the Athenians was literature; of Carthage and Tyre, commerce; of Rhodes, naval affairs; of Sparta, war; and of Rome, virtue. The author of The Spirit of Laws has shown by what art the legislator should direct his institutions toward each of these objectives.... But suppose that the legislator mistakes his proper objective, and acts on a principle different from that indicated by the nature of things? Suppose that the selected principle sometimes creates slavery, and sometimes liberty; sometimes wealth, and sometimes population; sometimes peace, and sometimes conquest? This confusion of objective will slowly enfeeble the law and impair the constitution. The state will be subjected to ceaseless agitations until it is destroyed or changed, and invincible nature regains her empire.

But if nature is sufficiently invincible to regain its empire, why does not Rousseau admit that it did not need the legislator to gain it in the first place? Why does he not see that men, by obeying their own instincts, would turn to farming on fertile soil, and to commerce on an extensive and easily accessible coast, without the interference of a Lycurgus or a Solon or a Rousseau who might easily be mistaken.



Socialists Want Forced Conformity

Be that as it may, Rousseau invests the creators, organizers, directors, legislators, and controllers of society with a terrible responsibility. He is, therefore, most exacting with them: "He who would dare to undertake the political creation of a people ought to believe that he can, in a manner of speaking, transform human nature; transform each individual--who, by himself, is a solitary and perfect whole--into a mere part of a greater whole from which the individual will henceforth receive his life and being. Thus the person who would undertake the political creation of a people should believe in his ability to alter man's constitution; to strengthen it; to substitute for the physical and independent existence received from nature, an existence which is partial and moral.(7) In short, the would- be creator of political man must remove man's own forces and endow him with others that are naturally alien to him."

Poor human nature! What would become of a person's dignity if it were entrusted to the followers of Rousseau?



Legislators Desire to Mold Mankind

Now let us examine Raynal on this subject of mankind being molded by the legislator:

"The legislator must first consider the climate, the air, and the soil. The resources at his disposal determine his duties. He must first consider his locality. A population living on maritime shores must have laws designed for navigation.... If it is an inland settlement, the legislator must make his plans according to the nature and fertility of the soil....

It is especially in the distribution of property that the genius of the legislator will be found. As a general rule, when a new colony is established in any country, sufficient land should be given to each man to support his family....

On an uncultivated island that you are populating with children, you need do nothing but let the seeds of truth germinate along with the development of reason.... But when you resettle a nation with a past into a new country, the skill of the legislator rests in the policy of permitting the people to retain no injurious opinions and customs which can possibly be cured and corrected. If you desire to prevent these opinions and customs from becoming permanent, you will secure the second generation by a general system of public education for the children. A prince or a legislator should never establish a colony without first arranging to send wise men along to instruct the youth...."

In a new colony, ample opportunity is open to the careful legislator who desires to purify the customs and manners of the people. If he has virtue and genius, the land and the people at his disposal will inspire his soul with a plan for society. A writer can only vaguely trace the plan in advance because it is necessarily subject to the instability of all hypotheses; the problem has many forms, complications, and circumstances that are difficult to foresee and settle in detail.



Legislators Told How to Manage Men

Raynal's instructions to the legislators on how to manage people may be compared to a professor of agriculture lecturing his students: "The climate is the first rule for the farmer. His resources determine his procedure. He must first consider his locality. If his soil is clay, he must do so and so. If his soil is sand, he must act in another manner. Every facility is open to the farmer who wishes to clear and improve his soil. If he is skillful enough, the manure at his disposal will suggest to him a plan of operation. A professor can only vaguely trace this plan in advance because it is necessarily subject to the instability of all hypotheses; the problem has many forms, complications, and circumstances that are difficult to foresee and settle in detail." Oh, sublime writers! Please remember sometimes that this clay, this sand, and this manure which you so arbitrarily dispose of, are men! They are your equals! They are intelligent and free human beings like yourselves! As you have, they too have received from God the faculty to observe, to plan ahead, to think, and to judge for themselves!



A Temporary Dictatorship

Here is Mably on this subject of the law and the legislator. In the passages preceding the one here quoted, Mably has supposed the laws, due to a neglect of security, to be worn out. He continues to address the reader thusly: "Under these circumstances, it is obvious that the springs of government are slack. Give them a new tension, and the evil will be cured.... Think less of punishing faults, and more of rewarding that which you need. In this manner you will restore to your republic the vigor of youth. Because free people have been ignorant of this procedure, they have lost their liberty! But if the evil has made such headway that ordinary governmental procedures are unable to cure it, then resort to an extraordinary tribunal with considerable powers for a short time. The imagination of the citizens needs to be struck a hard blow." In this manner, Mably continues through twenty volumes. Under the influence of teaching like this--which stems from classical education--there came a time when everyone wished to place himself above mankind in order to arrange, organize, and regulate it in his own way.



Socialists Want Equality of Wealth

Next let us examine Condillac on this subject of the legislators and mankind:

"My Lord, assume the character of Lycurgus or of Solon. And before you finish reading this essay, amuse yourself by giving laws to some savages in America or Africa. Confine these nomads to fixed dwellings; teach them to tend flocks.... Attempt to develop the social consciousness that nature has planted in them.... Force them to begin to practice the duties of humanity.... Use punishment to cause sensual pleasures to become distasteful to them. Then you will see that every point of your legislation will cause these savages to lose a vice and gain a virtue.

All people have had laws. But few people have been happy. Why is this so? Because the legislators themselves have almost always been ignorant of the purpose of society, which is the uniting of families by a common interest.

Impartiality in law consists of two things: the establishing of equality in wealth and equality in dignity among the citizens.... As the laws establish greater equality, they become proportionately more precious to every citizen.... When all men are equal in wealth and dignity--and when the laws leave no hope of disturbing this equality--how can men then be agitated by greed, ambition, dissipation, idleness, sloth, envy, hatred, or jealousy?

What you have learned about the republic of Sparta should enlighten you on this question. No other state has ever had laws more in accord with the order of nature; of equality."



The Error of the Socialist Writers

Actually, it is not strange that during the seventeenth and eighteenth centuries the human race was regarded as inert matter, ready to receive everything--form, face, energy, movement, life--from a great prince or a great legislator or a great genius. These centuries were nourished on the study of antiquity. And antiquity presents everywhere--in Egypt, Persia, Greece, Rome--the spectacle of a few men molding mankind according to their whims, thanks to the prestige of force and of fraud. But this does not prove that this situation is desirable. It proves only that since men and society are capable of improvement, it is naturally to be expected that error, ignorance, despotism, slavery, and superstition should be greatest towards the origins of history. The writers quoted above were not in error when they found ancient institutions to be such, but they were in error when they offered them for the admiration and imitation of future generations. Uncritical and childish conformists, they took for granted the grandeur, dignity, morality, and happiness of the artificial societies of the ancient world. They did not understand that knowledge appears and grows with the passage of time; and that in proportion to this growth of knowledge, might takes the side of right, and society regains possession of itself.



What Is Liberty?

Actually, what is the political struggle that we witness? It is the instinctive struggle of all people toward liberty. And what is this liberty, whose very name makes the heart beat faster and shakes the world? Is it not the union of all liberties--liberty of conscience, of education, of association, of the press, of travel, of labor, of trade? In short, is not liberty the freedom of every person to make full use of his faculties, so long as he does not harm other persons while doing so? Is not liberty the destruction of all despotism--including, of course, legal despotism? Finally, is not liberty the restricting of the law only to its rational sphere of organizing the right of the individual to lawful self- defense; of punishing injustice?

It must be admitted that the tendency of the human race toward liberty is largely thwarted, especially in France. This is greatly due to a fatal desire--learned from the teachings of antiquity-- that our writers on public affairs have in common: They desire to set themselves above mankind in order to arrange, organize, and regulate it according to their fancy.



Philanthropic Tyranny

While society is struggling toward liberty, these famous men who put themselves at its head are filled with the spirit of the seventeenth and eighteenth centuries. They think only of subjecting mankind to the philanthropic tyranny of their own social inventions. Like Rousseau, they desire to force mankind docilely to bear this yoke of the public welfare that they have dreamed up in their own imaginations.

This was especially true in 1789. No sooner was the old regime destroyed than society was subjected to still other artificial arrangements, always starting from the same point: the omnipotence of the law.

Listen to the ideas of a few of the writers and politicians during that period:



SAINT-JUST: "The legislator commands the future. It is for him to will the good of mankind. It is for him to make men what he wills them to be."

ROBESPIERRE: "The function of government is to direct the physical and moral powers of the nation toward the end for which the commonwealth has come into being."

BILLAUD-VARENNES: "A people who are to be returned to liberty must be formed anew. A strong force and vigorous action are necessary to destroy old prejudices, to change old customs, to correct depraved affections, to restrict superfluous wants, and to destroy ingrained vices.... Citizens, the inexible austerity of Lycurgus created the firm foundation of the Spartan republic. The weak and trusting character of Solon plunged Athens into slavery. This parallel embraces the whole science of government."

LE PELLETIER: "Considering the extent of human degradation, I am convinced that it is necessary to effect a total regeneration and, if I may so express myself, of creating a new people."



The Socialists Want Dictatorship

Again, it is claimed that persons are nothing but raw material. It is not for them to will their own improvement; they are incapable of it. According to Saint- Just, only the legislator is capable of doing this. Persons are merely to be what the legislator wills them to be. According to Robespierre, who copies Rousseau literally, the legislator begins by decreeing the end for which the commonwealth has come into being. Once this is determined, the government has only to direct the physical and moral forces of the nation toward that end. Meanwhile, the inhabitants of the nation are to remain completely passive. And according to the teachings of Billaud- Varennes, the people should have no prejudices, no affections, and no desires except those authorized by the legislator. He even goes so far as to say that the inflexible austerity of one man is the foundation of a republic.

In cases where the alleged evil is so great that ordinary governmental procedures cannot cure it, Mably recommends a dictatorship to promote virtue: "Resort," he says, "to an extraordinary tribunal with considerable powers for a short time. The imagination of the citizens needs to be struck a hard blow." This doctrine has not been forgotten.

Listen to Robespierre: "The principle of the republican government is virtue, and the means required to establish virtue is terror. In our country we desire to substitute morality for selfishness, honesty for honor, principles for customs, duties for manners, the empire of reason for the tyranny of fashion, contempt of vice for contempt of poverty, pride for insolence, greatness of soul for vanity, love of glory for love of money, good people for good companions, merit for intrigue, genius for wit, truth for glitter, the charm of happiness for the boredom of pleasure, the greatness of man for the littleness of the great, a generous, strong, happy people for a good-natured, frivolous, degraded people; in short, we desire to substitute all the virtues and miracles of a republic for all the vices and absurdities of a monarchy."



Dictatorial Arrogance

At what a tremendous height above the rest of mankind does Robespierre here place himself! And note the arrogance with which he speaks. He is not content to pray for a great reawakening of the human spirit. Nor does he expect such a result from a well-ordered government. No, he himself will remake mankind, and by means of terror.

This mass of rotten and contradictory statements is extracted from a discourse by Robespierre in which he aims to explain the principles of morality which ought to guide a revolutionary government. Note that Robespierre's request for dictatorship is not made merely for the purpose of repelling a foreign invasion or putting down the opposing groups. Rather he wants a dictatorship in order that he may use terror to force upon the country his own principles of morality. He says that this act is only to be a temporary measure preceding a new constitution. But in reality, he desires nothing short of using terror to extinguish from France selfishness, honor, customs, manners, fashion, vanity, love of money, good companionship, intrigue, wit, sensuousness, and poverty. Not until he, Robespierre, shall have accomplished these miracles, as he so rightly calls them, will he permit the law to reign again.(8)



The Indirect Approach to Despotism

Usually, however, these gentlemen--the reformers, the legislators, and the writers on public affairs--do not desire to impose direct despotism upon mankind. Oh no, they are too moderate and philanthropic for such direct action. Instead, they turn to the law for this despotism, this absolutism, this omnipotence. They desire only to make the laws.

To show the prevalence of this queer idea in France, I would need to copy not only the entire works of Mably, Raynal, Rousseau, and Fenelon--plus long extracts from Bossuet and Montesquieu--but also the entire proceedings of the Convention. I shall do no such thing; I merely refer the reader to them.



Napoleon Wanted Passive Mankind

It is, of course, not at all surprising that this same idea should have greatly appealed to Napoleon. He embraced it ardently and used it with vigor. Like a chemist, Napoleon considered all Europe to be material for his experiments. But, in due course, this material reacted against him.

At St. Helena, Napoleon--greatly disillusioned--seemed to recognize some initiative in mankind. Recognizing this, he became less hostile to liberty. Nevertheless, this did not prevent him from leaving this lesson to his son in his will: "To govern is to increase and spread morality, education, and happiness."

After all this, it is hardly necessary to quote the same opinions from Morelly, Babeuf, Owen, Saint-Simon, and Fourier. Here are, however, a few extracts from Louis Blanc's book on the organization of labor: "In our plan, society receives its momentum from power."

Now consider this: The impulse behind this momentum is to be supplied by the plan of Louis Blanc; his plan is to be forced upon society; the society referred to is the human race. Thus the human race is to receive its momentum from Louis Blanc. Now it will be said that the people are free to accept or to reject this plan. Admittedly, people are free to accept or to reject advice from whomever they wish. But this is not the way in which Mr. Louis Blanc understands the matter. He expects that his plan will be legalized, and thus forcibly imposed upon the people by the power of the law:

"In our plan, the state has only to pass labor laws (nothing else?) by means of which industrial progress can and must proceed in complete liberty. The state merely places society on an incline (that is all?). Then society will slide down this incline by the mere force of things, and by the natural workings of the established mechanism."

But what is this incline that is indicated by Mr. Louis Blanc? Does it not lead to an abyss? (No, it leads to happiness.) If this is true, then why does not society go there of its own choice? (Because society does not know what it wants; it must be propelled.) What is to propel it? (Power.) And who is to supply the impulse for this power? (Why, the inventor of the machine-- in this instance, Mr. Louis Blanc.)



The Vicious Circle of Socialism

We shall never escape from this circle: the idea of passive mankind, and the power of the law being used by a great man to propel the people.

Once on this incline, will society enjoy some liberty? (Certainly.) And what is liberty, Mr. Louis Blanc?

Once and for all, liberty is not only a mere granted right; it is also the power granted to a person to use and to develop his faculties under a reign of justice and under the protection of the law.

And this is no pointless distinction; its meaning is deep and its consequences are difficult to estimate. For once it is agreed that a person, to be truly free, must have the power to use and develop his faculties, then it follows that every person has a claim on society for such education as will permit him to develop himself. It also follows that every person has a claim on society for tools of production, without which human activity cannot be fully effective. Now by what action can society give to every person the necessary education and the necessary tools of production, if not by the action of the state?

Thus, again, liberty is power. Of what does this power consist? (Of being educated and of being given the tools of production.) Who is to give the education and the tools of production? (Society, which owes them to everyone.) By what action is society to give tools of production to those who do not own them? (Why, by the action of the state.) And from whom will the state take them?

Let the reader answer that question. Let him also notice the direction in which this is taking us.



The Doctrine of the Democrats

The strange phenomenon of our times--one which will probably astound our descendants--is the doctrine based on this triple hypothesis: the total inertness of mankind, the omnipotence of the law, and the infallibility of the legislator. These three ideas form the sacred symbol of those who proclaim themselves totally democratic.

The advocates of this doctrine also profess to be social. So far as they are democratic, they place unlimited faith in mankind. But so far as they are social, they regard mankind as little better than mud. Let us examine this contrast in greater detail.

What is the attitude of the democrat when political rights are under discussion? How does he regard the people when a legislator is to be chosen? Ah, then it is claimed that the people have an instinctive wisdom; they are gifted with the finest perception; their will is always right; the general will cannot err; voting cannot be too universal.

When it is time to vote, apparently the voter is not to be asked for any guarantee of his wisdom. His will and capacity to choose wisely are taken for granted. Can the people be mistaken? Are we not living in an age of enlightenment? What! are the people always to be kept on leashes? Have they not won their rights by great effort and sacrifice? Have they not given ample proof of their intelligence and wisdom? Are they not adults? Are they not capable of judging for themselves? Do they not know what is best for themselves? Is there a class or a man who would be so bold as to set himself above the people, and judge and act for them? No, no, the people are and should be free. They desire to manage their own affairs, and they shall do so.

But when the legislator is finally elected--ah! then indeed does the tone of his speech undergo a radical change. The people are returned to passiveness, inertness, and unconsciousness; the legislator enters into omnipotence. Now it is for him to initiate, to direct, to propel, and to organize. Mankind has only to submit; the hour of despotism has struck. We now observe this fatal idea: The people who, during the election, were so wise, so moral, and so perfect, now have no tendencies whatever; or if they have any, they are tendencies that lead downward into degradation.



The Socialist Concept of Liberty

But ought not the people be given a little liberty? But Mr. Considerant has assured us that liberty leads inevitably to monopoly!

We understand that liberty means competition. But according to Mr. Louis Blanc, competition is a system that ruins the businessmen and exterminates the people. It is for this reason that free people are ruined and exterminated in proportion to their degree of freedom. (Possibly Mr. Louis Blanc should observe the results of competition in, for example, Switzerland, Holland, England, and the United States.)

Mr. Louis Blanc also tells us that competition leads to monopoly. And by the same reasoning, he thus informs us that low prices lead to high prices; that competition drives production to destructive activity; that competition drains away the sources of purchasing power; that competition forces an increase in production while, at the same time, it forces a decrease in consumption. From this, it follows that free people produce for the sake of not consuming; that liberty means oppression and madness among the people; and that Mr. Louis Blanc absolutely must attend to it.



Socialists Fear All Liberties

Well, what liberty should the legislators permit people to have? Liberty of conscience? (But if this were permitted, we would see the people taking this opportunity to become atheists.) Then liberty of education? (But parents would pay professors to teach their children immorality and falsehoods; besides, according to Mr. Thiers, if education were left to national liberty, it would cease to be national, and we would be teaching our children the ideas of the Turks or Hindus; whereas, thanks to this legal despotism over education, our children now have the good fortune to be taught the noble ideas of the Romans.) Then liberty of labor? (But that would mean competition which, in turn, leaves production unconsumed, ruins businessmen, and exterminates the people.)

Perhaps liberty of trade? (But everyone knows--and the advocates of protective tariffs have proved over and over again--that freedom of trade ruins every person who engages in it, and that it is necessary to suppress freedom of trade in order to prosper.)

Possibly then, liberty of association? (But, according to socialist doctrine, true liberty and voluntary association are in contradiction to each other, and the purpose of the socialists is to suppress liberty of association precisely in order to force people to associate together in true liberty.)

Clearly then, the conscience of the social democrats cannot permit persons to have any liberty because they believe that the nature of mankind tends always toward every kind of degradation and disaster. Thus, of course, the legislators must make plans for the people in order to save them from themselves.

This line of reasoning brings us to a challenging question: If people are as incapable, as immoral, and as ignorant as the politicians indicate, then why is the right of these same people to vote defended with such passionate insistence?



The Superman Idea

The claims of these organizers of humanity raise another question which I have often asked them and which, so far as I know, they have never answered: If the natural tendencies of mankind are so bad that it is not safe to permit people to be free, how is it that the tendencies of these organizers are always good? Do not the legislators and their appointed agents also belong to the human race? Or do they believe that they themselves are made of a finer clay than the rest of mankind? The organizers maintain that society, when left undirected, rushes headlong to its inevitable destruction because the instincts of the people are so perverse. The legislators claim to stop this suicidal course and to give it a saner direction. Apparently, then, the legislators and the organizers have received from Heaven an intelligence and virtue that place them beyond and above mankind; if so, let them show their titles to this superiority. They would be the shepherds over us, their sheep. Certainly such an arrangement presupposes that they are naturally superior to the rest of us. And certainly we are fully justified in demanding from the legislators and organizers proof of this natural superiority.



The Socialists Reject Free Choice

Please understand that I do not dispute their right to invent social combinations, to advertise them, to advocate them, and to try them upon themselves, at their own expense and risk. But I do dispute their right to impose these plans upon us by law--by force--and to compel us to pay for them with our taxes.

I do not insist that the supporters of these various social schools of thought--the Proudhonists, the Cabetists, the Fourierists, the Universitarists, and the Protectionists--renounce their various ideas. I insist only that they renounce this one idea that they have in common: They need only to give up the idea of forcing us to acquiesce to their groups and series, their socialized projects, their free- credit banks, their Graeco-Roman concept of morality, and their commercial regulations. I ask only that we be permitted to decide upon these plans for ourselves; that we not be forced to accept them, directly or indirectly, if we find them to be contrary to our best interests or repugnant to our consciences.

But these organizers desire access to the tax funds and to the power of the law in order to carry out their plans. In addition to being oppressive and unjust, this desire also implies the fatal supposition that the organizer is infallible and mankind is incompetent. But, again, if persons are incompetent to judge for themselves, then why all this talk about universal suffrage?



The Cause of French Revolutions

This contradiction in ideas is, unfortunately but logically, reflected in events in France. For example, Frenchmen have led all other Europeans in obtaining their rights--or, more accurately, their political demands. Yet this fact has in no respect prevented us from becoming the most governed, the most regulated, the most imposed upon, the most harnessed, and the most exploited people in Europe. France also leads all other nations as the one where revolutions are constantly to be anticipated. And under the circumstances, it is quite natural that this should be the case.

And this will remain the case so long as our politicians continue to accept this idea that has been so well expressed by Mr. Louis Blanc: "Society receives its momentum from power." This will remain the case so long as human beings with feelings continue to remain passive; so long as they consider themselves incapable of bettering their prosperity and happiness by their own intelligence and their own energy; so long as they expect everything from the law; in short, so long as they imagine that their relationship to the state is the same as that of the sheep to the shepherd.



The Enormous Power of Government

As long as these ideas prevail, it is clear that the responsibility of government is enormous. Good fortune and bad fortune, wealth and destitution, equality and inequality, virtue and vice--all then depend upon political administration. It is burdened with everything, it undertakes everything, it does everything; therefore it is responsible for everything.

If we are fortunate, then government has a claim to our gratitude; but if we are unfortunate, then government must bear the blame. For are not our persons and property now at the disposal of government? Is not the law omnipotent? In creating a monopoly of education, the government must answer to the hopes of the fathers of families who have thus been deprived of their liberty; and if these hopes are shattered, whose fault is it?

In regulating industry, the government has contracted to make it prosper; otherwise it is absurd to deprive industry of its liberty. And if industry now suffers, whose fault is it?

In meddling with the balance of trade by playing with tariffs, the government thereby contracts to make trade prosper; and if this results in destruction instead of prosperity, whose fault is it? In giving protection instead of liberty to the industries for defense, the government has contracted to make them profitable; and if they become a burden to the taxpayers, whose fault is it? Thus there is not a grievance in the nation for which the government does not voluntarily make itself responsible. Is it surprising, then, that every failure increases the threat of another revolution in France?

And what remedy is proposed for this? To extend indefinitely the domain of the law; that is, the responsibility of government. But if the government undertakes to control and to raise wages, and cannot do it; if the government undertakes to care for all who may be in want, and cannot do it; if the government undertakes to support all unemployed workers, and cannot do it; if the government undertakes to lend interest-free money to all borrowers, and cannot do it; if, in these words that we regret to say escaped from the pen of Mr. de Lamartine, "The state considers that its purpose is to enlighten, to develop, to enlarge, to strengthen, to spiritualize, and to sanctify the soul of the people"--and if the government cannot do all of these things, what then? Is it not certain that after every government failure--which, alas! is more than probable--there will be an equally inevitable revolution?



Politics and Economics

[Now let us return to a subject that was briefly discussed in the opening pages of this thesis: the relationship of economics and of politics--political economy.(9)]

A science of economics must be developed before a science of politics can be logically formulated. Essentially, economics is the science of determining whether the interests of human beings are harmonious or antagonistic. This must be known before a science of politics can be formulated to determine the proper functions of government.

Immediately following the development of a science of economics, and at the very beginning of the formulation of a science of politics, this all-important question must be answered: What is law? What ought it to be? What is its scope; its limits? Logically, at what point do the just powers of the legislator stop?

I do not hesitate to answer: Law is the common force organized to act as an obstacle to injustice. In short, law is justice.



Proper Legislative Functions

It is not true that the legislator has absolute power over our persons and property. The existence of persons and property preceded the existence of the legislator, and his function is only to guarantee their safety.

It is not true that the function of law is to regulate our consciences, our ideas, our wills, our education, our opinions, our work, our trade, our talents, or our pleasures. The function of law is to protect the free exercise of these rights, and to prevent any person from interfering with the free exercise of these same rights by any other person.

Since law necessarily requires the support of force, its lawful domain is only in the areas where the use of force is necessary. This is justice.

Every individual has the right to use force for lawful self-defense. It is for this reason that the collective force--which is only the organized combination of the individual forces--may lawfully be used for the same purpose; and it cannot be used legitimately for any other purpose.

Law is solely the organization of the individual right of self-defense which existed before law was formalized. Law is justice.



Law and Charity Are Not the Same

The mission of the law is not to oppress persons and plunder them of their property, even though the law may be acting in a philanthropic spirit. Its mission is to protect persons and property.

Furthermore, it must not be said that the law may be philanthropic if, in the process, it refrains from oppressing persons and plundering them of their property; this would be a contradiction. The law cannot avoid having an effect upon persons and property; and if the law acts in any manner except to protect them, its actions then necessarily violate the liberty of persons and their right to own property.

The law is justice--simple and clear, precise and bounded. Every eye can see it, and every mind can grasp it; for justice is measurable, immutable, and unchangeable. Justice is neither more than this nor less than this.

If you exceed this proper limit--if you attempt to make the law religious, fraternal, equalizing, philanthropic, industrial, literary, or artistic--you will then be lost in an uncharted territory, in vagueness and uncertainty, in a forced utopia or, even worse, in a multitude of utopias, each striving to seize the law and impose it upon you. This is true because fraternity and philanthropy, unlike justice, do not have precise limits. Once started, where will you stop? And where will the law stop itself?



The High Road to Communism

Mr. de Saint-Cricq would extend his philanthropy only to some of the industrial groups; he would demand that the law control the consumers to benefit the producers.

Mr. Considerant would sponsor the cause of the labor groups; he would use the law to secure for them a guaranteed minimum of clothing, housing, food, and all other necessities of life. Mr. Louis Blanc would say--and with reason--that these minimum guarantees are merely the beginning of complete fraternity; he would say that the law should give tools of production and free education to all working people. Another person would observe that this arrangement would still leave room for inequality; he would claim that the law should give to everyone--even in the most inaccessible hamlet--luxury, literature, and art.

All of these proposals are the high road to communism; legislation will then be--in fact, it already is--the battlefield for the fantasies and greed of everyone.



The Basis for Stable Government

Law is justice. In this proposition a simple and enduring government can be conceived. And I defy anyone to say how even the thought of revolution, of insurrection, of the slightest uprising could arise against a government whose organized force was confined only to suppressing injustice.

Under such a regime, there would be the most prosperity--and it would be the most equally distributed. As for the sufferings that are inseparable from humanity, no one would even think of accusing the government for them. This is true because, if the force of government were limited to suppressing injustice, then government would be as innocent of these sufferings as it is now innocent of changes in the temperature.

As proof of this statement, consider this question: Have the people ever been known to rise against the Court of Appeals, or mob a Justice of the Peace, in order to get higher wages, free credit, tools of production, favorable tariffs, or government-created jobs? Everyone knows perfectly well that such matters are not within the jurisdiction of the Court of Appeals or a Justice of the Peace. And if government were limited to its proper functions, everyone would soon learn that these matters are not within the jurisdiction of the law itself. But make the laws upon the principle of fraternity--proclaim that all good, and all bad, stem from the law; that the law is responsible for all individual misfortunes and all social inequalities--then the door is open to an endless succession of complaints, irritations, troubles, and revolutions.



Justice Means Equal Rights

Law is justice. And it would indeed be strange if law could properly be anything else! Is not justice right? Are not rights equal? By what right does the law force me to conform to the social plans of Mr. Mimerel, Mr. de Melun, Mr. Thiers, or Mr. Louis Blanc? If the law has a moral right to do this, why does it not, then, force these gentlemen to submit to my plans? Is it logical to suppose that nature has not given me sufficient imagination to dream up a utopia also? Should the law choose one fantasy among many, and put the organized force of government at its service only? Law is justice. And let it not be said--as it continually is said-- that under this concept, the law would be atheistic, individualistic, and heartless; that it would make mankind in its own image. This is an absurd conclusion, worthy only of those worshippers of government who believe that the law is mankind. Nonsense! Do those worshippers of government believe that free persons will cease to act? Does it follow that if we receive no energy from the law, we shall receive no energy at all? Does it follow that if the law is restricted to the function of protecting the free use of our faculties, we will be unable to use our faculties? Suppose that the law does not force us to follow certain forms of religion, or systems of association, or methods of education, or regulations of labor, or regulations of trade, or plans for charity; does it then follow that we shall eagerly plunge into atheism, hermitary, ignorance, misery, and greed? If we are free, does it follow that we shall no longer recognize the power and goodness of God? Does it follow that we shall then cease to associate with each other, to help each other, to love and succor our unfortunate brothers, to study the secrets of nature, and to strive to improve ourselves to the best of our abilities?



The Path to Dignity and Progress

Law is justice. And it is under the law of justice--under the reign of right; under the influence of liberty, safety, stability, and responsibility--that every person will attain his real worth and the true dignity of his being. It is only under this law of justice that mankind will achieve--slowly, no doubt, but certainly-- God's design for the orderly and peaceful progress of humanity. It seems to me that this is theoretically right, for whatever the question under discussion--whether religious, philosophical, political, or economic; whether it concerns prosperity, morality, equality, right, justice, progress, responsibility, cooperation, property, labor, trade, capital, wages, taxes, population, finance, or government--at whatever point on the scientific horizon I begin my researches, I invariably reach this one conclusion: The solution to the problems of human relationships is to be found in liberty.



Proof of an Idea

And does not experience prove this? Look at the entire world. Which countries contain the most peaceful, the most moral, and the happiest people? Those people are found in the countries where the law least interferes with private affairs; where government is least felt; where the individual has the greatest scope, and free opinion the greatest influence; where administrative powers are fewest and simplest; where taxes are lightest and most nearly equal, and popular discontent the least excited and the least justifiable; where individuals and groups most actively assume their responsibilities, and, consequently, where the morals of admittedly imperfect human beings are constantly improving; where trade, assemblies, and associations are the least restricted; where labor, capital, and populations suffer the fewest forced displacements; where mankind most nearly follows its own natural inclinations; where the inventions of men are most nearly in harmony with the laws of God; in short, the happiest, most moral, and most peaceful people are those who most nearly follow this principle: Although mankind is not perfect, still, all hope rests upon the free and voluntary actions of persons within the limits of right; law or force is to be used for nothing except the administration of universal justice.



The Desire to Rule over Others

This must be said: There are too many "great" men in the world--legislators, organizers, do-gooders, leaders of the people, fathers of nations, and so on, and so on. Too many persons place themselves above mankind; they make a career of organizing it, patronizing it, and ruling it.

Now someone will say: "You yourself are doing this very thing." True. But it must be admitted that I act in an entirely different sense; if I have joined the ranks of the reformers, it is solely for the purpose of persuading them to leave people alone. I do not look upon people as Vancauson looked upon his automaton. Rather, just as the physiologist accepts the human body as it is, so do I accept people as they are. I desire only to study and admire.

My attitude toward all other persons is well illustrated by this story from a celebrated traveler: He arrived one day in the midst of a tribe of savages, where a child had just been born. A crowd of soothsayers, magicians, and quacks - - armed with rings, hooks, and cords--surrounded it. One said: "This child will never smell the perfume of a peace- pipe unless I stretch his nostrils." Another said: "He will never be able to hear unless I draw his ear-lobes down to his shoulders." A third said: "He will never see the sunshine unless I slant his eyes." Another said: "He will never stand upright unless I bend his legs." A fifth said: "He will never learn to think unless I flatten his skull."

"Stop," cried the traveler. "What God does is well done. Do not claim to know more than He. God has given organs to this frail creature; let them develop and grow strong by exercise, use, experience, and liberty."



Let Us Now Try Liberty

God has given to men all that is necessary for them to accomplish their destinies. He has provided a social form as well as a human form. And these social organs of persons are so constituted that they will develop themselves harmoniously in the clean air of liberty. Away, then, with quacks and organizers! Away with their rings, chains, hooks, and pincers! Away with their artificial systems! Away with the whims of governmental administrators, their socialized projects, their centralization, their tariffs, their government schools, their state religions, their free credit, their bank monopolies, their regulations, their restrictions, their equalization by taxation, and their pious moralizations! And now that the legislators and do-gooders have so futilely inflicted so many systems upon society, may they finally end where they should have begun: May they reject all systems, and try liberty; for liberty is an acknowledgment of faith in God and His works.



NOTES

1. General Council of Manufacturers, Agriculture, and Commerce, May 6, 1850.

Thus, if there exists a law which sanctions slavery or monopoly, oppression or robbery, in any form whatever, it must not even be mentioned. For how can it be mentioned without damaging the respect which it inspires? Still further, morality and political economy must be taught from the point of view of this law; from the supposition that it must be a just law merely because it is a law.

2. Translator's note: At the time this was written, Mr. Bastiat knew that he was dying of tuberculosis. Within a year, he was dead.

3. Translator's note: The French word used by Mr. Bastiat is spoliation.

4. If the special privilege of government protection against competition--a monopoly--were granted only to one group in France, the iron workers, for instance, this act would so obviously be legal plunder that it could not last for long. It is for this reason that we see all the protected trades combined into a common cause. They even organize themselves in such a manner as to appear to represent all persons who labor. Instinctively, they feel that legal plunder is concealed by generalizing it. But sincere or insincere, the intentions of persons are not here under question. In fact, I have already said that legal plunder is based partially on philanthropy, even though it is a false philanthropy.

5. Translator's note: The parenthetical expressions and the italicized words throughout this book were supplied by Mr. Bastiat. All subheads and bracketed material were supplied by the translator.

6. Translator's note: What was then known as Paraguay was a much larger area than it is today. It was colonized by the Jesuits who settled the Indians into villages, and generally saved them from further brutalities by the avid conquerors.

7. Translator's note: According to Rousseau, the existence of social man is partial in the sense that he is henceforth merely a part of society. Knowing himself as such--and thinking and feeling from the point of view of the whole--he thereby becomes moral.

8. At this point in the original French text, Mr. Bastiat pauses and speaks thusly to all do-gooders and would-be rulers of mankind: "Ah, you miserable creatures! You who think that you are so great! You who judge humanity to be so small! You who wish to reform everything! Why don't you reform yourselves? That task would be sufficient enough."

9. Translator's note: Mr. Bastiat has devoted three other books and several articles to the development of the ideas contained in the three sentences of the following paragraph.

Saturday, July 17, 2021

The road to recovery in Sub-Saharan Africa: Capitalizing on transformative opportunities from shifting FDI patterns


The flow of Foreign Direct Investment (FDI) to Africa has shifted over the past decade, as new sources of investment have emerged and new sectors have expanded. While the COVID-19 crisis has clouded the outlook for future investment, capitalizing on the longer-term trends presents a compelling opportunity for African policy makers looking towards economic recovery.

Low foreign investment has held back Africa’s participation in global value chains (GVCs). FDI is beneficial to the host countries because it helps to enhance firm productivity and integrate domestic firms into global markets, as illustrated by the rapid development of newly industrialized Asian economies in the last few decades. Unfortunately, both FDI inflows and GVC participation are low in the Africa region (Figure 1.1 and Figure 1.2).

In 2000, Africa only attracted 1% of global FDI inflows, and raised it to 3% by 2018. Yet its share of global GVC participation remained constant during this time at 2%. In contrast, developing countries in the Asia-Pacific region increased their global FDI share from 10 to 31% , and raised their GVC participation share from 11 to 17% during this time. Hence, compared to other regions, Africa’s FDI and GVC integration are still underdeveloped.

 Figure 1. FDI inflows and GVC participation

1.1. Total share of global FDI inflows                        



1.2. Total share of global GVC participation



Source: Authors’ calculations using UNCTAD FDI and EORA Statistics.
Note: For Africa, Latin America and Asia-Pacific, only GVC participation and FDI inflows for developing countries are reported. 

There has been a steady increase in FDI from Asia and Africa. Historically, Europe has been the dominant source of Africa’s FDI, making up two-thirds of its FDI stock until 2005. While its absolute value grew, its share has fallen since then to below 50% in 2018 (Figure 2.1 and Figure 2.2). In its place, FDI from Asia has increased, whose share grew from 5% in 2002 to 23% in 2018. A primary driver is China, whose FDI accounts for almost half of Asian FDI in the region. Recent evidence highlights the impact such Chinese FDI has had on Africa’s economic growth. Intra-African FDI also rose from 9% in 2002 to 13% in 2017.

 Figure 2: FDI in-stock by source region

2.2: Value of FDI stock (US$b)

2.1: Share of total FDI stock in SSA


 Source: Authors calculations using World Bank Group harmonized bilateral FDI database.

Note: Eastern Africa data excludes FDI to and from Mauritius as it operates as a major offshore financial center. Most of its FDI flows through the country but does not reside in the country. Separating out such FDI flows is extremely difficult and therefore the convention is to present FDI data without flows to and from offshore financial centers.


There have also been major changes in the destinations for FDI. Southern Africa (especially South Africa) has historically been the main destination for FDI, hosting more than 70% of all FDI in the region in 2004 (Figure 3.1). Yet, by 2018, it represented only 30% of FDI stocks by 2018. This is because FDI in other parts of the continent grew, most notably in Western Africa (led by Nigeria), where FDI stock increased from 15% in 2002 to 36% in 2018. Eastern Africa also saw an increase in FDI (Figure 3.2).


Figure 3: FDI in-stock in SSA by destination sub-region

3.1: Share of total FDI stock in SSA


3.2: Value of FDI stock (US$b)



Source: Authors calculations using World Bank Group harmonized bilateral FDI database.
Note: Eastern Africa data excludes FDI to and from Mauritius as a major offshore financial center (see note figure 2).

 

New investments have been increasingly diversifying from raw materials into manufacturing and services. Between 2006 and 2010, resource extraction, petroleum and coal processing projects made up more than half of the estimated $236 billion greenfield FDI projects announced in Africa (Figure 4.1). Yet, between 2016 and 2020, new projects in these sectors accounted less than a quarter of the total (Figure 4.2). Sectors that have attracted significant new investment in the recent period include logistics, communications and IT services, chemicals, and renewable energy (which makes up more than half of utilities investment, up from around 20%  in the earlier period).

 Figure 4: Announced greenfield FDI projects in Sub-Saharan Africa, by sector (US$ billion)

4.1: 2006-2010


4.2: 2016-2020

Source: Authors calculations using fDi Markets.
Note: dark-blue includes coal, oil & gas and metals, red captures manufacturing sectors, and grey reflects service sectors.

 

Unfortunately, COVID-19 significantly disrupted FDI to Africa. FDI flows globally were already in decline when the pandemic struck. Greenfield FDI announcements declined rapidly in the second and third quarter, before rebounding slightly in the fourth quarter of 2020 (Figure 5). Overall, new announcements in 2020 were down 56% from 2019. Such declines occurred across nearly every major sector.

Figure 5: Impact of COVID-19 on Greenfield FDI Announcements in Sub-Saharan Africa




Source: Authors calculations fDi Markets.

FDI has a key role to play to help Africa achieve a rapid economic recovery from COVID-19. For this to happen, Africa needs to attract more foreign investment, and ensure that it occurs in more employment-intensive, export-oriented or green sectors. The continent saw promising new developments on both fronts before the pandemic, and should continue to improve their domestic investment climates, adapt to possible new priorities in investment policy and promotion, and strengthen regional collaboration (as through the African Free Continental Trade Agreement).  




Wednesday, May 24, 2017

You Lazy (Intellectual) African Scum!


They call the Third World the lazy man’s purview; the sluggishly slothful and languorous prefecture. In this realm people are sleepy, dreamy, torpid, lethargic, and therefore indigent—totally penniless, needy, destitute, poverty-stricken, disfavored, and impoverished. In this demesne, as they call it, there are hardly any discoveries, inventions, and innovations. Africa is the trailblazer. Some still call it “the dark continent” for the light that flickers under the tunnel is not that of hope, but an approaching train. And because countless keep waiting in the way of the train, millions die and many more remain decapitated by the day.
“It’s amazing how you all sit there and watch yourselves die,” the man next to me said. “Get up and do something about it.”
Brawny, fully bald-headed, with intense, steely eyes, he was as cold as they come. When I first discovered I was going to spend my New Year’s Eve next to him on a non-stop JetBlue flight from Los Angeles to Boston I was angst-ridden. I associate marble-shaven Caucasians with iconoclastic skin-heads, most of who are racist.
“My name is Walter,” he extended his hand as soon as I settled in my seat.
I told him mine with a precautious smile.
“Where are you from?” he asked.
“Kenya.”
“Kenya!” he exclaimed, “Kenyatta’s country.”
“Yes,” I said, “Now the Son.”
“But of course,” he responded. “You just elected prince Cobra as your president.”
My face lit up at the mention of UK moniker. Walter smiled, and in those cold eyes I saw an amenable fellow, one of those American highbrows who shuttle between Africa and the U.S.
“I spent three years in Kenya in the 1980s,” he continued. “I wined and dined and many other highly intelligent Kenyan.” He lowered his voice. “I was part of the IMF group that came to rip you guys off.” He smirked. “Your government put me in a million dollar mansion overlooking a shanty called Kibera. From my patio I saw it all—the rich and the poor, the ailing, the dead, and the healthy.”
“Are you still with the IMF?” I asked.
“I have since moved to yet another group with similar intentions. In the next few months my colleagues and I will be in Nairobi to hypnotize the prince. I work for the broker that has acquired a chunk of your debt. Your government owes not the World Bank, but us millions of dollars. We’ll be in Nairobi to offer your president a couple of millions and fly back with a check twenty times greater.”
“No, you won’t,” I said. “Prince Cobra is incorruptible. He is …”
He was laughing. “Says who? Give me an African president, just one, who has not fallen for the carrot and stick.”
Quett Masire’s name popped up.
“Oh, him, well, we never got to him because he turned down the IMF and the World Bank. It was perhaps the smartest thing for him to do.”
At midnight we were airborne. The captain wished us a happy 2014 and urged us to watch the fireworks across Los Angeles.
“Isn’t that beautiful,” Walter said looking down.
From my middle seat, I took a glance and nodded admirably.
“That’s white man’s country,” he said. “We came here on Mayflower and turned Indian land into a paradise and now the most powerful nation on earth. We discovered the bulb, and built this aircraft to fly us to pleasure resorts like Lake Kenya.”
I grinned. “There is no Lake Kenya.”
He curled his lips into a smug smile. “That’s what we call your country. You guys are as stagnant as the water in the lake. We come in with our large boats and fish your minerals and your wildlife and leave morsels—crumbs. That’s your staple food, crumbs. That corn-meal you eat, that’s crumbs, the small Tilapia fish you call Omena is crumbs. We the Bwanas (whites) take the cat fish. I am the Bwana and you are the Muntu. I get what I want and you get what you deserve, crumbs. That’s what lazy people get— Africans, the entire Third World.”
The smile vanished from my face.
“I see you are getting pissed off,” Walter said and lowered his voice. “You are thinking this Bwana is a racist. That’s how most Kenyans respond when I tell them the truth. They go ballistic. Okay. Let’s for a moment put our skin pigmentations, this black and white crap, aside. Tell me, my friend, what is the difference between you and me?”
“There’s no difference.”
“Absolutely none,” he exclaimed. “Scientists in the Human Genome Project have proved that. It took them thirteen years to determine the complete sequence of the three billion DNA subunits. After they
were all done it was clear that 99.9% nucleotide bases were exactly the same in you and me. We are the same people. All white, Asian, Latino, and black people on this aircraft are the same.”
I gladly nodded.
“And yet I feel superior,” he smiled fatalistically. “Every white person on this plane feels superior to a black person. The white guy who picks up garbage, the homeless white trash on drugs, feels superior to you no matter his status or education. I can pick up a nincompoop from the New York streets, clean him up, and take him to Nairobi and you all be crowding around him chanting muzungu, muzungu and yet he’s a riffraff. Tell me why my angry friend.”
For a moment I was wordless.
“Please don’t blame it on slavery like the African Americans do, or colonialism, or some psychological impact or some kind of stigmatization. And don’t give me the brainwash poppycock. Give me a better answer.”
I was thinking.
He continued. “Excuse what I am about to say. Please do not take offense.”
I felt a slap of blood rush to my head and prepared for the worst.
“You my friend flying with me and all your kind are lazy,” he said. “When you rest your head on the pillow you don’t dream big. You and other so-called African intellectuals are damn lazy, each one of you. It is you, and not those poor starving people, who is the reason Africa is in such a deplorable state.”
“That’s not a nice thing to say,” I protested.
He was implacable. “Oh yes it is and I will say it again, you are lazy. Poor and uneducated Africans are the most hardworking people on earth. I saw them in the Nairobi markets and on the street selling merchandise. I saw them in villages toiling away. I saw women on Namanga Road crushing stones for sell and I wept. I said to myself where are the Kenyan intellectuals? Are the Kenyan engineers so imperceptive they cannot invent a simple stone crusher, or a simple water filter to purify well water for those poor villagers? Are you telling me that after fifty years of independence your university school of engineering has not produced a scientist or an engineer who can make simple small machines for mass use? What is the school there for?”
I held my breath.
“Do you know where I found your intellectuals? They were in bars quaffing. They were at the Muthaiga Golf Club, Bacchus Lounge, XS Millionaires,               Galileos Lounge and Nairobi Club. I saw with my own eyes a bunch of alcoholic graduates. These intellectuals work from eight to five and spend the evening drinking.
We don’t. We reserve the evening for brainstorming.”
He looked me in the eye.
“And you flying to Boston and all of you in the Diaspora are just as lazy and apathetic to your country. You don’t care about your country and yet your very own parents, brothers and sisters are in Kiambu, Kisii, and in villages, all of them living in squalor. Many have died or are dying of neglect by you. They are dying of AIDS because you cannot come up with your own cure. You are here calling yourselves graduates, researchers and scientists and are fast at articulating your credentials once asked—oh, I have a PhD in this and that—PhD my foot!”
I was deflated.
“Wake up you all!” he exclaimed, attracting the attention of nearby passengers. “You should be busy lifting ideas, formula, recipes, and diagrams from American manufacturing factories and sending them to your own factories. All those research findings and dissertation papers you compile should be your country’s treasure. Why do you think the Asians are a force to reckon with? They stole our ideas and turned them into their own. Look at Japan, China, India, just look at them.”
He paused. “The Bwana has spoken,” he said and grinned. “As long as you are dependent on my plane, I shall feel superior and you my friend shall remain inferior, how about that? The Chinese, Japanese, Indians, even Latinos are a notch better. You Africans are at the bottom of the totem pole.”
He tempered his voice. “Get over this white skin syndrome and begin to feel confident. Become innovative and make your own stuff for god’s sake.”
At 8 a.m. the plane touched down at JKIA International Airport. Walter reached for my hand.
“I know I was too strong, but I don’t give it a damn. I have been to Kenya and have seen too much poverty.” He pulled out a piece of paper and scribbled something. “Here, read this. It was written by a friend.”
He had written only the title: “Lords of Poverty.”
Thunderstruck, I had a sinking feeling. I watched Walter walk through the airport doors to a waiting car. He had left a huge dust devil twirling in my mind, stirring up sad memories of home. I could see Kenya’s literati—the cognoscente, intelligentsia, academics, highbrows, and scholars in the places he had mentioned guzzling and talking irrelevancies. I remembered some who have since passed—how they got the highest grades in mathematics and the sciences and attained the highest education on the planet. They had been to Harvard, Oxford, Yale, Massachusetts Institute of Technology (MIT), only to leave us with not a single invention or discovery. I knew some by name and drunk with them at the Playhouse and lounges.
Walter is right. It is true that since independence we have failed to nurture creativity and collective orientations. We as a nation lack a workhorse mentality and behave like 40 million civil servants dependent on a government pay cheque. We believe that development is generated 8-to-5 behind a desk wearing a tie with our degrees hanging on the wall. Such a working environment does not offer the opportunity for fellowship, the excitement of competition, and the spectacle of innovative rituals.
But the intelligentsia is not solely, or even mainly, to blame. The larger failure is due to political circumstances over which they have had little control. The past governments failed to create an environment of possibility that fosters camaraderie, rewards innovative ideas and encourages resilience. KANU, FORD,DP NARC, PNU, ODM, JP et al   embraced orthodox ideas and therefore failed to offer many opportunities for drawing outside the line.
Knowing well that the current leadership will not embody innovation at Walter’s level let’s begin to look for a technologically active-positive leader who can succeed him after a term or two. That way we can make our own stone crushers, water filters, water pumps, razor blades, and harvesters. Let’s dream big and make tractors, cars, and planes, or, like Walter said, forever remain inferior.
A fundamental transformation of our country from what is essentially non-innovative to a strategic superior African country requires a bold risk-taking educated leader with a triumphalist attitude and we have one in YOU. Don’t be highly strung and feel insulted by Walter. Take a moment and think about our country. Our journey from 1963 has been marked by tears. It has been an emotionally overwhelming experience. Each one of us has lost a loved one to poverty, hunger, and disease. The number of graves is catching up with the population. It’s time to change our political culture. It’s time for our intellectuals to cultivate an active-positive progressive movement that will change our lives forever.

Don’t be afraid or dispirited, rise to the challenge and salvage the remaining few of your beloved ones.


Sunday, January 1, 2017

Disruptive innovation: The most viable strategy for economic development in Africa

Without question, Africa is the poorest region in the world. The chart below shows the growth of gross domestic product (GDP) per person – an imperfect but widely used measure – for Africa and the rest of the world. Not only is the rest of the world six times richer than Africa, GDP per person has grown at a faster rate. These numbers are significant because they do not simply represent the macro-economic realities that governments in African countries must manage; they also translate to the circumstances in which millions of people live their lives. The numbers translate to the additional 50 million people in Africa living in extreme poverty today than did in 1990. They translate to the millions of babies, children, and mothers that die annually because they cannot afford life-saving medication. They translate to skyrocketing unemployment which reduces the barriers to youth involvement in terroristic activities. The numbers are very significant.
 


Source: Human Progress retrieves data from the World Bank, OECD, Harvard University, etc. See http://humanprogress.org/abou

But perhaps of even more significance is the demographic transformation that Africa is experiencing, and will continue to experience over the next several decades. Now home to 1.1 billion people, by 2050 the United Nations estimates that Africa’s population will reach 2.48 billion; by 2100, 4.39 billion people, a majority of whom will be youth.



When the slow pace at which Africa is developing is combined with the demographic transformation, contrary to the sentiments of many optimists, the future does not look bright. But it can.

Disruptive Innovations Targeted at Non-Consumption
No country has developed in sustainably without investments in disruptive innovations. There are two types of disruptive innovations, low-end disruptive innovation and new-market disruptive innovation. I write about the new-market disruptive innovations, which are targeted at non-consumption, a circumstance where a majority of people in a society are unable to afford a particular product due to cost, time, or skill constraints. These innovations transform the existing complicated and expensive products to simple to use, more affordable products, thereby making them more accessible to a larger set of people in society, such as M-PESA, the mobile money platform in Kenya. They serve as the engine of economic development in a society.

Can Africa Spur Disruptive Innovations

It is tempting to discount the possibility of executing disruptive innovations in Africa because of the many obstacles to innovation on the continent, including poor infrastructure, the difficulty of doing business, and the very low incomes on the continent. But when these obstacles are framed as opportunities, innovators can build truly disruptive companies.

In fact, it is precisely because these obstacles exist that disruptive innovations can thrive in Africa.

Nollywood and Noodles

Nollywood, Nigeria’s film industry, has taken many in the world by storm. While Hollywood’s revenues dwarf Nollywood, it is difficult to overlook Nollywood’s impact in Nigeria. The industry, according to a UN report, is now worth approximately $5 billion, employs more than one million people, and generates around $800 million annually. Nollywood has been able to thrive precisely because it is a disruptive innovation targeted at the average Nigerian citizen unable to purchase, watch, and perhaps relate to Hollywood movies. The innovators in Nollywood have keyed into the vast non-consumption of movies in Nigeria, and Africa, and have created relevant and relatable movies that have given birth to a booming industry.

When Haresh Aswani decided to start importing Indomie Noodles into Nigeria in 1988, the decks were stacked against his company, Tolaram. Nigeria was ruled by a military government, GDP per capita was only $256, and 78% of people lived on less than $2 per day. But Aswani began importing noodles into Nigeria and since then, has built 11 factories that manufacture many of the inputs for the noodles. The company directly employs approximately 10,000 people and hundreds of thousands indirectly. A packet of Indomie Noodles costs roughly 18 cents, a product affordable by the majority of Nigerians. Tolaram has begun expansion plans into other African countries. Where many see obstacles, the company sees opportunity.

The Rebirth of an Old Idea

Investing in disruptive innovations is not a new strategy for creating prosperity. The United States, many European countries, the Four Asian Tigers, and many other rich countries followed this strategy with great success. The returns from their investments were then invested in infrastructure, education, healthcare, and in building institutions. It is tempting to spend billions of dollars on infrastructure, institution building, education, healthcare, and other development indicators that are correlated with prosperity. But a closer look at rich countries today shows that investments in disruptive innovations came first. Africa should thus follow suit.

Governments should support entrepreneurs whose business models are targeted at non-consumption. By doing this, they will inevitably create jobs for many people, as was the case with Nollywood and Indomie Noodles. This, will ultimately lead to unfettered prosperity in Africa.

Agribusiness can help to unlock the true potential of Africa

The challenges faced by small farmers are similar across the developing world – pests, diseases and climate change. Yet in Africa the challenges are even greater. If farmers are to survive at current rates (let alone grow), they need to have access to high-yielding seeds, effective fertilizers and irrigation technologies. These issues threaten the region’s ability to feed itself and make business-growth and export markets especially difficult to reach. Other factors include the rise in global food prices and export subsidies for exporters in the developed economies, which leave African farmers struggling to price competitively.
Organizations such as The International Finance Corporation (IFC) provide and mobilize capital, knowledge and long-term partnerships in agribusiness. It has provided over $25 billion in financing, mobilized investments from partners and provided advisory services across the continent. Connecting the private sector with global and regional NGO’s and the public sector is one of the most important steps. Of the $3.7 billion invested in Sub-Saharan Africa in 2015 by the IFC, $1.8 billion came from other investors.
Modernization of technologies, innovative technologies and widening access to markets is central to turning such huge sums of money into results. In Kenya, a mobile app called M-Farm allows farmers to directly send messages requesting guidance and data on crop prices. It also helps farmers to connect directly with food suppliers; thus reducing reliance on middlemen and market buyers. Cutting costs in this way can go some way to mitigating the impact of subsidized exports from the developed economies.
In Ethiopia, access to simple market knowledge has also helped small food manufacturers grow. AfricaJUICE is the first Fairtrade certified fruit juice in sub-Saharan Africa and it has been able to expand through the provision of technical expertise and understanding global markets and industry practices. This assistance came from the World Bank, alongside equity financing of $6 million.
Agribusiness is growing fast, yet the true potential is stymied by limited mechanization, fragmented markets, price controls and poor infrastructure. For a sector that contributes 25% to Africa’s overall gross domestic product (GDP) and accounts for 70% of all employment, it is an industry that presents enormous opportunities to investors.


A woman farmer who works in the maize fields on the Canhumbuca Farm in Huambo, Angola. © Anita Baumann


For policymakers and investors, one of the hurdles is knowing how to find and identify those small-scale farmers or food manufacturers that have really strong commercial potential. In Angola, this challenge has been met by the creation of a state-backed organization called Fundo Activo de Capital de Risco Angolana (FACRA). It is a public venture capital fund that supports Angolan SME’s in agribusiness and other sectors in building, innovating and expanding their existing business. It opens doors for businesses that have the potential for growth and makes it significantly easier for investors to enter the Angolan market.
Aside from providing growth opportunities and support for market-entry, organizations such as FACRA also have a role to play in helping Africa to become self-sufficient in food and become a regional exporter. With 70% of the workforce already working in the sector, Africa already benefits from having a mobilized workforce. Honing in on communities that have such strong potential is one way of helping to support economic growth.
Like so much in Africa, things have to happen from the ground up, through investing in small projects and local communities. The financial and administrative burden for such initiatives very often fall on the government but the private sector has the ability to get involved at a local level too, if it can take a long-term view and work in partnership. The introduction of world-class machinery and support for the type of infrastructure needed for rural communities to succeed are two areas where foreign investors can take a stake through public-private partnerships (PPP’s) or direct investment.
Direct investment brings with it a range of financial incentives for foreign investors. Infrastructure linking rural communities to markets is much-needed. Mechanization is also particularly important in achieving greater production and capacity and so too are storage facilities and modern irrigation and water conservation technologies. These are all areas where investors can bring capital and technical expertise to an industry sector that has enormous economic potential.
As African economies continue to work against the tide of low oil and commodity prices, there is determination regionally and on the national level to achieve diversification and economic growth within the SME sector, not only in agriculture but all burgeoning sectors.
Agribusiness is especially important because of the scale of opportunity and the important role that it plays in supporting a wider value chain, job growth and economic diversification. Now is the right time for all African stakeholders, global bodies and private investors to come together and create an environment that helps Africa to feed itself and deliver economic growth for ordinary people, national economies and investors.

How can we help smallholder farmers seize opportunities in Africa?

Agriculture is at the heart of addressing poverty in Africa.
The recent End Poverty Day activities in Africa, which focused largely on agriculture, was also a reminder of how central the sector is to ending poverty and boosting prosperity.  Indeed, the different stakeholders I work with on a daily basis—which includes African governments, development partners, civil societies, the private sector and farmers—all agree: Agriculture is important to the future of Africa.
Much more than in any other region, agriculture is a major driver of African economies, typically representing 30-40% of GDP and 65-70% of labor force. Despite the fact that Africa is the most rapidly urbanizing region, agriculture will remain the dominant sector for many years in most African countries. The poverty impact from agricultural growth is higher relative to other sectors. Agriculture is important for growth, poverty and food.

It’s true that Africa’s agricultural transformation will be a complex, multi-sectoral agenda that requires different enabling factors, from sufficient financing and the right policies to the implementation of climate-smart agriculture. It’s also true that success depends on one crucial factor: the engagement of smallholder farmers. In short, Africa’s agricultural transformation will need smallholders to succeed.

Smallholder farmers continue to dominate African agriculture although some countries--for example, Ghana, Tanzania and Zambia--are experiencing a rise of medium-scale farms of between five and 100 hectares as part of the region’s broader economic transformation. Smallholder farmers still control the largest areas for production.  They employ 70% of the work force, farm most of the land, and are home to most of the poor – so the most obvious way to make agricultural growth pro-poor is to engage with huge numbers of small farms.

However, smallholder farmers face two major challenges today. One is that they are at a major disadvantage in linking to modern value chains because of their low volumes of sales, poor market information and contacts, and limited ability to meet the high standard requirements of many high value markets. Because of their small size and reach, they are perceived to be high cost and high risk farmers by private agrodealers and financial institutions.

So how can people working in the agriculture sector support smallholder farmers?

First, there is need to provide supportive incentives and policy reforms for farmers and agribusinesses. For example, modern inputs and credit remain out of reach for many smallholders. Farmers could benefit from a package of inputs and credit. The issue of land tenure policy reform is critical. Between 10-45% of businesses describe access to land as major constraint.  There is need to build institutions that help farmers--including youth and women-- access land and engage in profitable commercial agriculture.

Work also needs to be done on scaling up investments in infrastructure and technology, particular technology that helps farmers produce more food. Neglecting to invest in agricultural research and the creation of many small, underfunded research institutions has caused setbacks that will need to be addressed. Africa also needs investments to develop agricultural education at all levels. Finally, Africa’s aging infrastructure cannot launch or sustain internationally competitive commercial agriculture without investment, especially in irrigation, roads, energy, and logistics, especially port infrastructure.

We also need to strengthen institutions to make markets work better for smallholder farmers. Some of these institutions would provide critical services such as access to finance, market intelligence, marketing and business development services—all things that the private sector currently has few incentives to provide. Finally, we need to focus on improving coordination and leveraging partnerships among the different key players including but not limited to multilateral and bilateral development finance partners, the private sector, the Consultative Group on International Agricultural Research and African national and regional institutions.

The challenges facing agriculture are great but we have reasons to be optimistic. Agriculture’s value added increased by 5.1% between 2000 and 2013. There’s no limit to what agriculture can achieve—in terms of feeding Africa, creating jobs, and helping to end poverty and boost prosperity. We have to work hard to make sure that smallholder farmers will be part of the work to meet Africa’s growing food and beverage markets –which are expected to top $1 trillion in value by 2030.

Thursday, May 19, 2016

Continuous geometric growth in a finite biosphere is impossible

Continuous geometric growth in a finite biosphere is impossible
There is nothing quite as seductive as extrapolation.  I remember when I was in junior high study hall, we budding gearheads would sit around making "calculations" such as "if you can get a car to go 80 Kph with 150 horsepower, you should be able to go 320 Kph with 600 horsepower." And while this childish foolishness was wrong for dozens of sound reason, it was certainly no worse than the typical budget, growth, or profit calculations one finds in daily newspapers or teevee newscasts.

Geometric extrapolation is even worse.  It is probably the most commonly practiced form of utter insanity. For how long have we known this is crazy?  The Sumerians taught us about the S-curve at least 4000 years ago.  The S-curve is based on the historical experience of producing things--whether corn or iPhones.


Michael Hudson on the humans who knew better
Hudson says that – in every country and throughout history – debt always grows exponentially, while the economy always grows as an S-curve.
Moreover, Hudson says that the ancient Sumerians and Babylonians knew that debts had to be periodically forgiven, because the amount of debts will always surpass the size of the real economy.
For example, Hudson noted in 2004:
Mesopotamian economic thought c. 2000 BC rested on a more realistic mathematical foundation than does today’s orthodoxy. At least the Babylonians appear to have recognized that over time the debt overhead became more and more intrusive as it tended to exceed the ability to pay, culminating in a concentration of property ownership in the hands of creditors.
Babylonians recognized that while debts grew exponentially, the rest of the economy (what today is called the “real” economy) grows less rapidly. Today’s economists have not come to terms with this problem with such clarity. Instead of a conceptual view that calls for a strong ruler or state to maintain equity and to restore economic balance when it is disturbed, today’s general equilibrium models reflect the play of supply and demand in debt-free economies that do not tend to polarize or to generate other structural problems.
And Hudson wrote last year:
Every economist who has looked at the mathematics of compound interest has pointed out that in the end, debts cannot be paid. Every rate of interest can be viewed in terms of the time that it takes for a debt to double. At 5%, a debt doubles in 14½ years; at 7 percent, in 10 years; at 10 percent, in 7 years. As early as 2000 BC in Babylonia, scribal accountants were trained to calculate how loans principal doubled in five years at the then-current equivalent of 20% annually (1/60th per month for 60 months). “How long does it take a debt to multiply 64 times?” a student exercise asked. The answer is, 30 years – 6 doubling times.
No economy ever has been able to keep on doubling on a steady basis. Debts grow by purely mathematical principles, but “real” economies taper off in S-curves. This too was known in Babylonia, whose economic models calculated the growth of herds, which normally taper off. A major reason why national economic growth slows in today’s economies is that more and more income must be paid to carry the debt burden that mounts up. By leaving less revenue available for direct investment in capital formation and to fuel rising living standards, interest payments end up plunging economies into recession. For the past century or so, it usually has taken 18 years for the typical real estate cycle to run its course.
As I have previously pointed out, our modern fractional reserve banking system is really a debt-creation system, which is guaranteed to create more and more debts. The modern banking system is therefore exacerbating the debt growth problem which countries have suffered for thousands of years.
Hudson calls for a debt jubilee, and points out that periodic debt jubilees were a normal part of the Sumerian, Babylonian and ancient Jewish cultures. Economist Steve Keen and economic writer Ambrose Evans-Pritchard also call for a debt jubilee.
If a debt jubilee is not voluntarily granted, people may very well repudiate their debts.

It is important to understand the reasons why geometric extrapolation is ultimately impossible because those assumptions are built into almost every newscast, financial arrangement, political planning, etc.  It would be a rare days anymore when the subject is implicitly brought up at least ten times.

At this link, you can find 23 different charts showing historic geometric growth of human activity--which is why all of them are destined to crash in the very near future.
The human economic growth story is incredible. Population increased exponentially, as did global wealth, factory output and other measures of development.
But the flip side is the steady exhaustion of resources and destruction of the environment. As growth continues, planetary tensions will increase too. This is why we're running into peak everything.