by
Bertrand Lemennicier[1]
Remember Luc Besson's movie, The Fifth Element. The scene takes place in the office of Zorg, an unscrupulous businessman who specialises in trafficking weapons. He faces a priest named Cornelius, who is devoted completely to justice and known as a guardian of knowledge. The businessman then starts giving an economic lesson to the priest. He breaks a glass and explains to the priest how this destruction benefits the economy by creating jobs. Obviously, Luc Besson did not read Bastiat's sophism of the broken window in "What Is Seen And What Is Not Seen" {1}; otherwise he would have changed this part of his movie.
Viviane Forrester a famous French writer and a literary critic at "Le Monde" wrote a couple of books on economics, entitled "L'horreur économique" (The economic horror)[2] and "Une étrange dictature" (A strange dictatorship)[3]. Both of them are pamphlets against world globalisation and free trade. She wrote:
Cybernetics, ignored by the politicians, thus entered the economy without attracting much notice, with neither reflection nor strategic second thoughts... Will soon have abolished the demand for work without either duty to work.pp.158-159.
In an excellent booklet, M.Rojas {2} destroys this common fallacy about technology and the end of work. But his arguments are empirical, unlike Bastiat's theoretical analysis dealing with Human versus Mechanical Labour.
Bastiat argued against some recurring fallacies which were often used in his time. Still, 150 years after his writings it looks as if nothing much has changed, as the two aforementioned examples show. This is all the more depressing as similar sophisms are propagated today by academic economists, while in the nineteenth century, Bastiat was at least fighting these sophisms on the side of economists against popular beliefs.
The Toubon Law[4] and The theory of the emergence of the State in Public Choice literature or in neo-classical economics[5] are two cases in point.
The first one is a side effect of the typically French protectionism of art and culture. To protect the French language from its "foreign rival" the English language, all conferences held in English on the territory are taxed by the State. The taxation is taking the form of forced Labour[6] or of a fine if we do not respect the law.
Bastiat, if such a law had been passed in his time, would have certainly used his scintillating wit of expression to show how protectionism is detrimental to the very interests of the survival of the French language. Between a Russian, a Peruvian, a French and an English there is an obstacle if they want to communicate to each other: the barrier of language. This obstacle can be reduced by adopting a common language: one of them Russian, Spanish, French or English. Once spontaneously adopted, all people are able to communicate their ideas to others. This is the reason why the French Public Educational system spends a lot of resources to made available to all the French, English as a common language.
At the same time the State have set up at great cost an obstacle to the communication between French and Foreigners: the Toubon's law. By forcing the French to speak French in France, the government enforces a monopoly on the language on the territory like he is doing with money: Euro or French Francs! At the same time Foreign people, if they want to communicate with French people, are forced to learn the French language. This law impedes the communication of ideas "scientific or non scientific" between French and Foreign people. If the exchange of ideas in the long term is an ingredient in the growth of knowledge for everybody, both French and Foreign people are made less wealthy by such an artificial barrier. Fortunately nobody respects the law.
The modern theory of the State is also a case in point. This theory is based on the idea of social interaction failures and mimics the market failure theory of neo-classical economists. First, assume a state of nature, or an anarchist utopia as Nobel Prize James Buchanan labels this situation. In game theory language (the new way of thinking about social interaction)[7] three social interactions have to be solved to generate a stable society: the co-ordination game, the prisoner dilemma and the chicken game.
The co-ordination game covers a lot of social interactions like driving on the road (left or right), or like the choice of money, language, law and many others rules of conduct. It says that we need a centralised institution to edict the norms. If norms emerge in repeated game, the use of coercion is supposed to minimise on transition costs from a non co-ordination state to a co-ordinated state of social interaction[8].
The prisoner's dilemma covers all social interactions implying reciprocity including voluntary exchange. Every body will be better off if such a co-operation is emerging. The idea is that without binding contracts, dominant strategies lead to a natural state xof no co-operation between individuals. Here again the State plays the role of a deus ex machina, which resolves the failure of co-operation between individuals by the use of coercion.
Finally, the Chicken game covers all conflicting social interactions with a bimorphic equilibrium, especially those related to the emergence of property rights. Rules of establishing property rights (for example, homesteading versus the finder-keepers) imply unequal distribution or redistribution of wealth between those who benefit from the rules. Then conflicts between individuals arise about these inequalities or re-distributions of wealth. The principle of coercion is supposed to save people from hard conflicts.
From this perspective the necessity of having institutions to achieve the efficient, co-operative solution to the games or social interactions increases in likelihood as the number of players of the game increases. For economists like D. Mueller {3,4,5} or Nobel Prizes J. Buchanan or D. North, the State, with a capital S, seems the best institution suited to solve theses social interaction failures at a minimum cost. The minimal State with its monopoly on coercion on a territory[9] coupled with democracy, is then a means which allows an efficient and non conflicting co-operation to emerge among individuals inside any given society.
The chief method of Bastiat is the method of exaggeration and the reductio ad absurdum wrote H. Hazlitt {6}. However, he was the master of the opportunity cost analysis by directing the eyes of the reader to the alternative sacrificed by the intervention of the State. What is seen is the intervention of the State that economists try to rationalise ex post, what is not seen is the alternative, the counter factual reality which has been excluded by the use of the State to solve the so called social interaction failure. This counter factual reality would have, if it had existed, measured the opportunity cost of the interference of the State. We cannot prove the usefulness of government without knowing the opportunity cost of the alternative. What kind of institutions would have solved the social interaction failure in the state of nature?
The idea that State coercion will solve the problem at a minimum cost is false because opportunity costs are revealed only when individual are free to choose the best institution to solve the problem. When freedom is suppressed such knowledge cannot be discovered. Then modern economists cannot talk about efficiency of the State without committing a well-known fallacy named non sequitur.
But the aim of the present paper is not to review contemporary sophisms in economics or in the public opinion, but to explain why theses fallacies die-hard or haven't lost any of their power in our time. To explain such an anomaly we will in a first section developed the Bastiat thesis under the title: the power of special interests governs ideas. In a second section we will emphasise the power of ideas over interests in shaping facts and historical events. It is because ideas govern events that the use of sophisms is permanent. They cannot die, as they are part of the process which shapes collective beliefs.
One reason advanced by Bastiat himself to explain why sophisms die-hard is the following one:
But, it may be asked, are the benefits of freedom so well hidden that they are evident only to professional economists?
Yes, we must admit that our opponents in this argument have a marked advantage over us. They need only a few words to set forth a half-truth; whereas, in order to show that it is a half-truth, we have to resort to long and arid dissertations.{7}
Bastiat's quote suggests that sophisms are hard to detect and to fight. But the problem is not that it is long and arid to establish the truth: this arid dissertation has already been done. The problem is that nobody seems to learn from it, that people keep no memory of the truth in their inner mind. Why do the general public or the politicians in charge of the public interest not learn all the lessons from Bastiat?
One tentative answer to such a first obstacle is that politicians have no interest in learning or memorising any ideas or set of ideas. They need to keep their brain empty. Bastiat was well aware of this fact. In his profession of faith to the Electors of the district of Saint Sever in 1846, he wrote {8}:
My Dear fellow country men,
Encouraged by a few of you to stand at the forthcoming elections, and wishing to ascertain the degree of collaboration on which I could rely, I have spoken to a number of electors. Alas! one finds me too progressive, another not enough; my anti-academic opinions are rejected by one, my aversion to the Algerian enterprise by another, my economic convictions by a third, my views on parliamentary reform by yet another, etc.
This proves that the best policy for a candidate is to hide his opinions, or, for even greater security, not to have any...
The self-interest postulate indicates that the greater perceived net personal gain from particular set of ideas and beliefs, the likelier politicians favour certain sets of ideas. In contrast, the greater the perceived net economic cost imposed by a given set of ideas, the fewer politicians support those ideas. But politicians cannot undertake one set of ideas to satisfy one pressure group and the opposite set of ideas to satisfy another pressure group whose interests are just opposed to the former. This tie-in sale of ideas creates an inescapable problem for the politicians. If they commit themselves to a set of coherent ideas and beliefs, they cannot change it at will without great costs. If the set of ideas, to which they pre-commit, becomes obsolete, the politician himself will become obsolete. This is the reason why, under uncertainty, politicians refuse to be pre-committed to doctrines, theories, and ideologies or even to a consistent set of ideas. They prefer being, i.e. without ideas[10], even though they forget that being pragmatic means to be committed to a hidden set of inconsistent ideas or to a past theory.
A second explanation is that politicians like ordinary people are rationally ignorant. Politicians who investigate the offerings of competing set of ideas cannot do anything to act on that knowledge because they are unable to pass judgements between good and bad sets of ideas, or between good and bad deals! Politicians who would like to make an informed choice would become intellectual-suppliers. But they lack time to invest and expend energy in having an informed choice among ideas or beliefs. Under these circumstances, politicians find it sensible to remain uninformed on the quality of ideas. Politicians merely pass judgements on how to allocate their time and efforts. For instance, it does not make any sense for farmers to invest time and resources attempting to understand meteorology. The same is true for politicians. It does not make any sense for them to spend time and money trying to understand how sets of ideas can be good or bad.
Then, it is no surprise that politicians sometimes declare that they have not ideas at all. They adopt usually ideas on vague impressions or feelings, or on imitations of peers. They do not filter new ideas on their specific merits, but on the readiness with which they fit their preconceptions of society or with which they fit the ideas promoted by "second hand dealers" or "experts" who have large audiences in TV programs. This is the reason why politicians flirt with journalists, radio or TV commentators, artists, novel writers and so on. The hypothesis of rational ignorance pervades the political market. In fact, politicians are consumers who do not select new ideas not their specific merits but by the readiness with which they fit their preconceptions of society. And these preconceptions of society were learnt when they were young, i.e. when opportunity costs in investing in ideas were low. The policies and the form of government politicians and voters impose on citizens are the ones elaborated by intellectuals not of their own generation, but of the previous one.
Another explanation of why nobody learns or memorises sophisms is that there are biases in selecting ideas. On this matter, Bastiat also has an explanation:
This situation is due to the nature of things. Protection concentrates at a single point the good that it does, while the harm that it inflicts is diffused over a wide area. The good is apparent to the outer eye; the harm reveals itself only to the inner eye of the mind. In case of free trade, it is just the reverse
Bastiat 's own explanation of the anomaly has a modern flavour. It can be interpreted as the power of interests over ideas or truth. "The nature of things" leads to a modern analysis of pressure groups developing cover stories[11] to influence popular beliefs and of politicians' public discourses aiming at protecting their private interests against foreign competitors in an open end and free global world. At the same time, politicians follow their golden rule, given the incentive structure of democracy. They concentrate benefits (or the good) to specific groups of voters (the suppliers of a product or a services who are in fact producers) and disperse the costs (or the harm) to a diffused and wide group of people (the consumers)[12].
Sophisms die hard because they are an essential part of the cover stories required to influence public opinion and to gain votes. This is the traditional explanation of why sophisms or fallacies are always up to date and why we will need to read Bastiat even in the next centuries.
To illustrate this, think of the competition in the automobile industry. Peugeot C.E.O. fears invasion of Japanese cars in Europe. Everyone understands quite well that he would like to protect its own firm from competition, if he knows that he will loose a lot of profits. If our Prime Minister is ready to give subsidies to Peugeot or to implement tariffs and quotas against Japanese cars by using the legislation to favour the private interest of Peugeot, he will not hesitate to make pressure on her. But, he will never use, in his writings or public speeches, arguments showing he would like very much a public protection for his own interest at the expenses of the French consumers.
He will use arguments concerning "national independence", or the thousands layoffs in Peugeot's factories and in firms working with Peugeot if the French carmaker ever goes bust. He too argues that he is not against competition per se, but he is against it because the Japanese government puts barriers to the entry of Peugeot on their own markets. The rhetoric, in this case, is quite clear. He uses arguments of "fair play" and of "emotional drives" like nation pride and tries to make a coalition of private interests with others who will benefit from the protection: wage earners working in his own factories or business men and workers dependant of the Peugeot industries.
The main point of this rhetoric lies in mixing interests, passions and false metaphors:[13]
1) interests: the rhetoric has to make visible the benefits of the legislation for a high concentrated groups of voters easily identified - here the producers (including workers) - and to hide the costs, or to disseminate these costs, over a great number of non identified voters - here the consumers.
2) passions: the rhetoric consist to use feelings of justice, of nationalistic instinct or any other emotional drive to cut off all reflection based on reason. Voters will identify themselves to the firm like they are doing it with the frnch team of soccer during the world cup.
3) false metaphors: i.e. the appeal to "fair play" as if competition on a market is a static zero sum game like chess game[14] and as if legislators have to mimic the rule of such games is the rhetoric hides the pursuit of private interest.
Sophisms not only die hard because they are an essential part in a cover story but also because they legitimate the existing social order. This is another explanation suggested by A. Downs {9}.
Consider a typical citizen who is deciding how much time and money to spend to study the policies or the life of political leaders of his or her country. The more time and effort the citizen devotes to this matter, the greater the likelihood of a rational choice. However this typical citizen gets from this effort only a small gain. The reason is quite obvious; its vote will change the outcome of the election in favour of its preference only if its vote is the marginal one. But the probability to be this marginal vote is infinitesimal such that the expected gain from a rational vote is very low. If the cost to be rational is slightly positive it does not pay for the voter to be rational. To convince that it is irrational to devote time and effort to a rational vote, M. Olson {10} adds the following point. If the gain of a rational vote is going mainly to others, the citizen will not reap all the profits of an informed vote. He does not have an incentive to think about what would be the best for the country or for himself in choosing a policy or a political leadership. A. Downs explained that simple ideologies and political slogans are substitutes for detailed and informed research or sustained reflection about public affairs. Ideology can be guide principles and can be acquired at little cost. If the citizen subscribes to one of the familiar ideologies, he or she will have some guidance on what to believe. Ideas or ideology, in democratic form of government, will play a disproportionately dominant role in determining how to vote and will be highly requested on the market for ideas.
Another line of discussion concerning the same bias in ideas relates to the role of ideas as reducing transaction costs. Here we tackle the legitimacy of a set of coercive institutions like the State or Labour Unions.
The cost of maintenance of an existing order are inversely related
to the perceived legitimacy of the existing system
wrote Nobel Prize D. North in an important book
{11}.
The fundamental aim of ideologies or of collective beliefs is to constrain groups not to behave like a simple individual calculus of costs and benefits to overcome the free rider problem. If everyone believes in the sanctity of property rights, houses will remain unlocked while vacant without fear of vandalism or burglary, contracts will be honoured and no money will be expensed in justice or police either private or public. If every one believes that voluntary exchange and free competition is just, growth and wealth will spread all over the world without unnecessary expenditure in a State. If every one believes in the sanctity of the state, the rulers will have impunity to redistribute wealth to themselves without fear of revolution or tax evasion. This investment in legitimacy is a prominent feature of all governments. This is true for communist, socialist, democratic, royalist or religious regimes since rulers have no power other than the voluntary obedience of the citizens to their injunctions.
As force is always on the side of the governed, the governors have nothing to support them but opinion
This quotation from Hume's famous paradox of government is not new. Indeed, Etienne La Boétie in a famous pamphlet on civil disobedience {12} wrote the same thing four centuries ago while in 1905, Dicey {13} argued that the opinion of the governed is the real foundation of all government.
No change can occur in the political climate and public opinion until there is a change in the opinion of intellectuals, or until new intellectuals develop, alongside the current ones, new ways of thinking. A lot of ideas, ideologies or even pseudo-scientific ideas, like neo-classical theories of public goods, natural monopoly or externalities, are just ideas trying to legitimate the action of the State. If you think that the main function of the State is to reduce transaction costs in an economy, you will consider ideas that legitimate the State as reducing transaction costs devices. In that case you have an argument against classical liberal thinking. By contesting the State, these ideas increase the cost of maintaining the existing social order. You have to forbid the spread of such ideals. Otherwise if you think that politicians are just robbers you will classify ideas which legitimate the action of the State as cover stories.
If we follow this thesis we have to be pessimistic, classical liberal ideas will never dominate the market for ideas neither the political market.
The first and obvious reason is that there are no strong pressure groups that would like to promote these ideas, mainly because these ideas run counter any specific private interests and privileges given by the state. Classical liberalism supports the view of institutions (like voluntary exchange) which only make compatible all the actual or future specific and unknown private interests. As the political market is the market where favours and privileges are exchanged, the pressure groups that will demand these privileges cannot used classical liberalism as a cover story. Classical liberal ideas are difficult to spread among the population because they are not demanded by concentrated pressure groups politically powerful like unions, cartels of businessmen or politicians in search of interventions.
Second Classical Liberal or "laissez-faire" ideas are not an ideology
though it is often presented as such
{14}.
Ideology is a set of ideas
and beliefs which legitimate the existing order
as was for example suggested by neo-classical theorist D. North,
or the
framework by which societies perceive and interpret
the arrangements that order their lives
as Marxist R. Heilbroner wrote.
Contrary to neo-classical theories or keynesian or Marxist ones,
"Laissez-Faire" ideas have no elements which can serve
as cover stories to preserve the existing Statist order.
Classical Liberalism just shows
how this existing system of state interventions
under a nation state rule by a democracy based on simple majority
is unfair or biased in favour of the politically powerful
compared to an alternative system
based on the rules of consent and voluntary exchange.
It is true that the analysis of the market by "laissez faire" economists
leads to a glorification of the role
of entrepreneurs, speculators or intermediaries
and to the extension of voluntary exchange
to transactions forbidden by the state like transplants of organs
or free exchange in drugs and so on.
But the arguments are always because this type of interaction
benefits to consumers not
to the entrepreneurs, the speculators or the intermediaries.
The only pressure group who would have an interest
to promote "laissez faire" ideas is the diffused group of consumers,
which has divergent non-colluding private interests.
This is the worst case for collective action.
"Laissez-faire" ideas are far more critical of the existing social order than Marxist or neo-classical ideas. Marx rationalise in an extreme way (by denying that capitalist entrepreneurs serve the interest of the workers or of the public in general - the necessary cover story) the demand of state interventions and privileges by worker groups and unions to be protected against the competition on the labour market. Neo-classical and neo-keynesian theorists (mainly mathematical oriented) through their Immaculate Conception of the state are rationalising the existing static order even when experiences are inconsistent with their theories. In that sense "Laissez faire" ideas are definitely not an ideology. This aspect of criticising of the existing social order is felt as a threat for any conservatism coalitions such that these interests groups are ready to pay for blocking the emergence of these believes on the market for ideas.
As some politicians say, we will be classical liberals if the bulk of voters are classical liberals or "free-marketer". But the three main problems that Classical Liberal ideas face on the market of ideas independently of artificial barriers are the following ones:
1) Classical liberal ideas are not easy to learn and memorise. They are founded on reason not passion or interest. And they are a set of coherent ideas and beliefs. A real obstacle to a rationally ignorant person or a politician devoted to pragmatism.
2) Classical liberal ideas are not an ideology to economise on transaction costs or to preserve some social existing order and are not a cover story for some private concentrated and powerful pressure group.
This is the dilemma for all intellectuals dedicated to "laissez faire" or "free market" as Bastiat was.
This first theory which explains why sophisms die-hard is discouraging for classical liberal thinkers. The lesson is that they have to fight, generation after generation, false arguments, half-truths, common fallacies, ideologies, cover stories and to educate the every man or the politician to simple and basic economic truths which are so commonly ignored. He has also to fight the same sophistry among his peers, as the profession itself is not immune from such bias.
150 years after the death of Bastiat free trade and free market ideas seem to have won the battle in the wrong place that is on the political market[15] and not on the market for ideas at least in English speaking countries[16]. This supports the thesis of the power of interests over ideas.
M. Pirie offers an interesting explanation {15}. He refers to the experience of communist countries in relation with Marxist ideas and to the Reagan and Thatcher experiments in relation with classical liberal ideas. Russia in Lenin's day was not among the advanced economies. It was only just developing the factory system. The country was mainly a peasant country with an absolute monarchy. Had circumstances been different, it might have gone on to develop into a bourgeois liberal society. Had it done so, it would have conformed to a large extent with the Marxist ideas. But it did not. What Lenin did ran counter the Marxist theory to which he professes adherence! He became an active revolutionary. He was a man of action. Instead of applying Marx theory, he could seize control of a nation and hold that power with a small and dedicated band of communists. Marxism was not longer a theory which predicts the course of events and of social progress, but one which tells revolutionary "elite" how to seize power over societies and to hold it permanently. It is in that last step that ideas are becoming important in these countries. The control of the press and media as well as education systems is always the prominent weapon along with a monopoly on the political market of any band of communists to keep power.
Marxist ideology is only second to circumstances and interests of small groups of men which really influence events. This is so true that the communists create a class of workers through the elimination of peasants and forced industrialisation which did not exist before they came to power! Examples other than Russia are less suitable to this thesis. China was a peasant society with a primitive agriculture. Force and fraud occupied eastern European countries. The pattern which emerges from these examples said Pirie is one in which the action precedes the theory where interests precede ideas.
The Reagan and Thatcher experiments are also quite interesting.
Nixon was elected twelve years before Reagan;
Heath, in Great Britain won election nine years before Thatcher.
Both Nixon and Heath were neo-conservatives.
The voters were sufficiently in favour
of the anti-government and pro-enterprise ideas.
The battle of ideas on the political market on the right wing
had been won in favour of classical liberalism by 1968 in the U.S.
and in 1970 in Britain.
Given the programmes on which Nixon and Heath were elected,
their subsequent behaviour requires some explanation.
Regulation was extended under their term office.
The size and cost of government, and the burden of taxation increased.
Wage and price controls were introduced.
Pirie reviews several explanations.
The simplest one is duplicity.
Nixon or Heath do not believe in the ideas
on which they were elected or had any intention of trying to implement them.
As good politicians Nixon and Heath
have adopted the dominant ideas of the time to secure election.
They just play with rhetoric of radical change and then apply their own ideas.
Another explanation could be that both of them were not "tough enough". More convincing arguments are the ones which emphasise political realism. In the opposition the rhetoric is important, in the government leaders will have to modify their plans to fit the feasible - i.e. the vested interests. Another explanation quoted by Pirie is the disparity between the political leaders and the intellectuals. The battle of ideas has been won on the political market but not on the right place i.e. on the market for ideas. Both experiments show a disparity of opinions between the view of the intelligentsia and the political leaders. But this explanation fails to take into account that with Reagan and Thatcher it was the same. The hostility of the intellectuals to classical liberalism is not new, but why Reagan and Thatcher were able to implement their ideas even against the intellectual community?
M. Pirie proposes a tentative answer. The crucial difference between Nixon and Reagan or Heath and Thatcher, was policy itself. In the 1980, the technical details to implement classical liberalism were available, in the 1970 it were not. Here M. Pirie argues in favour of his own agenda by promoting the Adam Smith Institute. But technical details are practical ideas and in that case, ideas govern interests which run counter his argument. In fact, Pirie is right if we interpret the period 1970-1980 as a change in the "`material forces which govern the mode of production" of the State. This period is the information revolution which drastically reduces the cost of producing and transmitting information. This change introduces a decline of Hierarchies both in firms and in the State. Hierarchies were supposed to economise on information. With this new institutional framework, we will observe change in ideas and ideologies sustaining the new social order. The set of ideas which sustain the new social order is the classical liberal ideas!. This is the thesis of J.-J. Rosa {16} who has a more positivist or determinist view of the primacy of interest over ideas than M. Pirie and goes back to elements of Marxism or to North's thesis where ideas legitimate the new institutional framework of social interactions without hierarchies.
To challenge the interpretation of Bastiat, North, Pirie, Rosa is to go deeper in the process of the formation of popular ideas and beliefs. Ideas governs facts and interests and if classical liberal ideas do not govern facts and interests it is because the minority of libertarian activists are unable (or are ethically against) to use informational and reputational cascades to manipulate the public opinion as their enemies do[17]. This is a paradox as in fact, at the time of Bastiat, the Anti-Corn Laws agitation under the impetus of R. Cobden and others was at its peak. This popular movement could be interpreted as the victory of ideas (free trade principles) over some interests (those of landowners that are of the aristocracy of the time ruling the parliament and the House of Lords). Rereading Bastiat {17} and Garnier {18} it could be also understood as one of the first manipulation of the public opinion through an informational and reputation cascade.
Bastiat's thesis is that classical liberal ideas are on the side of latent groups widely dispersed and heterogeneous in their private interests. The worst case for collective action. But political activists and entrepreneurs in ideas are able to pass this obstacle through informational and reputation cascades.
In Bastiat's time, the aristocrats were well represented at the parliament and at the House of lords. They were landowners who were drawing their income from the production of wheat and cattle. They were a high concentrated group with similar highly concentrated private interests. They succeed quickly to pass a law in 1814 prohibiting the importation of foreign corn if the price of wheat in England was under 80 scheling per quarter... A higher price of corn combined with a prohibition to import wheat from the rest of the world has an immediate effect in increasing the rent of their land at the expenses of others income earners.
But what is not seen is the perverse effect of such a price floor combined with a monopoly of the landowners on selling corn in England not only on all others individuals but also on the class of landowners themselves. The stabilisation of the price of wheat that fluctuates with bad or good crops due to the weather is crucial for the rent of landowners. This stabilisation is coming from import or export of wheat and/or by keeping inventories of wheat between two successive crops. At that time any fluctuations in the agricultural sector leads to similar fluctuations in others sectors of the community. A price floor jointly with a prohibition to import wheat is disastrous on all classes, mercantile, industrial and agricultural. It is specially injurious to the landed interests.
If the demand for corn is rather inelastic and fairly constant, the variation in prices and in quantities is coming from fluctuations in the supply of corn. This fluctuations are reduced mainly by keeping inventories or by importing wheat from the rest of the world when the crop is bad and by exporting wheat when the crop is abundant. From this adjustment an average price, with a low standard deviation, emerges. This average price with low variation around the average command the level of the rent on land. A high standard deviation in the price of wheat means a low rent (if landowners are risk adverse, they will use the land to other purposes less profitable than to crops of wheat). A low standard deviation means a higher rent.
A price floor of corn higher than the average price jointly with a prohibition of imports of wheat creates an artificial famine in case of a bad crop and amplify the fluctuations in prices. The price of wheat becoming higher than the price floor. The higher price of corn reduces consumer's expenditures on other items than foods. The demand for cotton textile drops, affecting the manufactures industries and the mercantile or commercial ones.
The victims of the Corn Laws were people living in towns importing corn form the inner land or from foreign countries. They were numerous, anonymous, dispersed in space and even if the stakes are significant (famine due to a high price of wheat) and the interests convergent, the forming of a pressure group to suppress the cause would not be immediate.
One needs to overcome the 'free rider' obstacle[18]. Let us reconsider Olson's theoretical distinction between a group quite simply too large to be in a position to obtain a 'collective' good (i.e. abolition of protective tariff i.e. the corn laws) and an organised group whose small dimension can obtain such a 'collective' good (market prices higher to those established under free competition, the aristocrats). We may then understand the failure of free trade ideas. It is much easier for "intermediate" or "privilege" groups as Olson call them to organise themselves, even in an informal manner, through the impetus of one particular member who belongs to a group more active than others and to influence the public authorities to protect their private interests. So the most formidable obstacle to the efficiency of a 'latent' pressure group can be found in the difficulties of organising collective action in latent groups.
Nevertheless the anti-corn-laws league has overcome this formidable obstacle. This means that ideas govern facts and interests both to implement a regulation like "poor laws" or to repeal a law like the "Corn Law".
S. Davies {19} gives us an interesting example of the power of ideas in shaping events during the first part of the nineteenth century. One central figure of the nineteenth-century British history is E. Chadwick. A barrister and journalist of modest origins who was at least responsible for three of the most influential reports before the Parliament: the Poor law Report of 1834, the Constabulary Report of 1839 and the Report on "The Sanitary Condition of the Labouring Classes" in 1842[19]. These reports played a crucial role in the transformation of Poor Laws into the modern Welfare State. Even if we know that the reports were not reflecting the reality of the time. Chadwick, said Davies:
Was an early example of an important modern phenomenon the "ideological entrepreneur" who promotes ideas to politicians in the form of discrete solutions to pressing problems and arguments with which to sell them.
The anti-corn-laws league is also an example of such a phenomenon. Created in 1838 in Manchester, the league was an association under the head of R. Cobden and others who started a huge political campaign to influence the public opinion and to make pressure against the parliament to repeal the famous Corn Laws of 1814. The league was formed in 1838 and the success came in 1846 when Sir Robert Peel pass an act which abolished theses laws. The League was then dissolved.
This experiment in shaping the public opinion is interesting. We can draw some lessons for our contemporary classical liberal's thinkers and libertarian activists. To our knowledge it is the only libertarian movement which really succeed in repealing a law and had shaped the history of the nineteenth century by promoting free trade in general[20].
In this short history of the league, we will follow J.Garnier's {20} description of the "agitation". The movement against the Corn Laws does not start in fact in 1838 at the moment of the creation of the Anti-corn-Law league (the league) in Manchester under the impetus of several businessmen. It starts in 1828 with the Colonel Thompson who wrote a booklet against the Corn Law. The economists of the time also join their effort to criticise such legislation. Several associations were created in Liverpool, Manchester, and London to fight against these laws. But they do not succeed. Men and circumstances met only in 1838.
At the end of 1836 an economic crisis hit England coming from the US jointly with a deficit in the production of corn. In 1838, another bad crop of corn hits the country. The price of food increases, unemployment rises, wages drop, misery in the countryside spreads and many riots, arsons, illnesses, violent deaths occur. To end this agricultural crisis and the violence and misery going with it, people needs to have access to cheap corn or wheat. Then, businessmen denounce the Corn Laws of 1814 as the main obstacle to cheap corn.
Doctor Birnay organised a meeting at the Bolton theatre in Manchester. A young speaker M. Paulton was so successful in his speech at this meeting that he repeated his lecture several days in the same place. While Doctor Bowring was visiting Manchester, he was invited to an evening party where some businessmen were present. At this party Bowring, Paulton, Archibald Prentice (editorial leader of the Manchester-Time), J.B.Smith (one of the wealthiest businessman of Manchester) took a decision: to organise meetings against the Corn Laws in Manchester, Birmingham, Wolverhampton, Leicester, Coventry, and Derby.
Everywhere the public opinion was favourable to the repeal of the Corn Laws. At the same time Richard Cobden, a young and appreciate businessman of Manchester, owner of a factory (run by his brother) and member of the chamber of commerce, came back from a trip in Germany and join the group.
In a meeting at the chamber of commerce he proposed the abolition of the Corn laws and won the vote against the president of the chamber who was also a member of the parliament. The group start to raise funds (1 000 pounds sterling) to create a journal and to organise a petition to the parliament. They send the petition sign by the chamber of commerce in London. The parliament refused to abolish the corn laws (344 votes against 197). Following this failure, the delegates had a discussion on what to do. R. Cobden proposed to form an association in the form of a league of towns against the aristocracy by analogy with the German "Ligue Hanséatique". The Anti-corn-Law-League was born.
An executive council of 50 members was created in Manchester to organise, control and impulse the efforts of the league. To become a member to such a council you had to pay fifty pounds sterling. At the end of the campaign the council was composed of more than 300 of people. The League wrote articles for newspapers, edited booklets and a journal "the League" in London. 20 000 copies were printed at the peak of the movement in 1846. The league sent lecturers all over the countryside to educate peasants, organised meetings, festivals, evening parties, committees of women, committees of elections and raised fund through subscriptions and exhibitions.
G. Wilson was the President of the League and R.Cobden was the intellectual leader. The office of the association was so busy that it looks like a lively and active organisation. The league covered all the territory with the help of local associations and built a key network of people in newspapers and at the parliament. It influenced newspapers such as the Manchester Time with Prentice, the League with Paulton and the Economist with James Wilson. It influenced parliamentary decisions with Ch. Villiers, M. Gison, Bowring, etc. Actually, we are able to assess the League's success by simply looking at the number of people who attended its meetings. For example, 4 000 people once attended a banquet[21]. In the parliament the deputies, members of the league, formed a pressure group out of their own parties, Whigs or Tories. Not only the league developed a network in the newspapers or at the parliament but also in the religious camp the Anglican's one. 700 priests had a meeting in Manchester in 1841 to protest against the Corn Laws! With the success in the opinion came the league's wealth. Starting in 1839 with £ 5 000, £ 6 000 in 1840, £ 10 000 in 1841, the funds sharply rose in 1842. At that time, the association was able to expense 25 000 pound sterling. In 1845, one year before the repeal of the law, the league raised £ 500 000! To have an idea of the importance of this sum, Charles Tacquey {21} recalls us that the expenses of the government at the time was around £ 4 000 000. The funds raised at the time was 12% of the budget expenditures of the State! The funds were coming from the subscriptions, but also from an exhibition of manufactured products in Manchester which raised 10 000 £. Then, jointly with the revenues from the subscriptions, a Free Trade Hall was built. 10 000 people were able to attend a meeting in such a Hall. After battles against chartists and socialists to capture the public opinion of workers, the league became enough strong to enter political competition through elections. When Robert Peel came into power in 1841, the league was on the tide to become very powerful. In 1846, R.Peel passed an act repealing the Corn Law. The same year, the league was dissolved.
This success story illustrates the long, uncertain and tortuous process of organising collective action. It took eight years of battles, 1838-1846. These were uncertain years as the first fight against the Corn Laws started in 1828, ten years before the creation of the league! Success occurred after trials and failures. Circumstances like economic crisis or agricultural shortages could not be known in advance. There is no certainty that during theses events, key actors or entrepreneurs in ideas like Colonel Thompson or R. Cobden jointly with good organiser like G. Wilson meet and perceive the opportunity to shape political history. To shape collective beliefs is a production process well documented through the functioning of the League.
1) Produce ideas with economists[22] (or experts) and through books and booklets, write articles in the newspapers and have your own journal.
2) Create a coalition of businessmen who will support the ideas and who will bring money first in the association.
3) Create a network of friends who will have key positions in newspapers, in church among opinion leaders likes physicians and at the parliament.
4) Raise funds through subscriptions, festivals, meetings, exhibitions.
5) Organise meetings, evening parties and debates against your opponents in theatres, cafés etc.
6) Educate people victims of the regulation.
7) covers all the territory with associations or committees.
8) presents candidates at elections.
9) Wait and take advantage from any dramatic circumstances which will make your messages sound to the ordinary man.
The interesting thing is that missing one of these steps and the probability of failure is high.
The difference with today is coming from the existence of TV, Internet and mass media like advertising. It is remarkable that in our contemporary world the protectionists or the anti-globalisation people, the environmentalists, the sects, religious people, socialists and communists have developed all theses 8 steps in trying to influence public opinion! Why they fail? It is because of the lack of dramatic circumstances, which could illustrate their ideas.
Nevertheless if we come back to our thesis, it is worth noticing that the anti-corn-law league benefited from a concentrated pressure group playing the role of opinion leaders: the businessmen of Manchester[23]. They maybe had a concentrated interest in repealing the Corn Law because this law affects indirectly their own profits. We can suggest also that part of the success of the league is that they were linked to a special interest group sharing their views.
Could one expect a repeal of the laws which violates individuals' rights without having to go through this long and difficult process which imply to be linked with special interest of businessmen? Normally one only needs to play on the rational ignorance of individuals and exploit the way opinions come into circulation between individuals. In a thought-provoking article by T. Kuran and C. Sunstein {22} it is suggest that the most objectively weak part, according to the theory of M. Olson, the latent group, can triumph over the organised group:
In simply exploiting cognitive means skilfully using campaigns and exerting pressure on the right social groups thus succeeding in putting into practice a cascade in his favour. The party that succeeds in bringing out a cascade favourable to their cause will see interdependent responses of ordinary individuals increase their advantages explosively and transform their political weaknesses into real power points.
Individuals have at their disposition personal but incomplete information (emanating essentially from their local environment or from their personal experience) when they debate about a regulation or the repeal of a regulation (drug laws, anti-smoking laws, seatbelt laws, speed limits laws, environmental laws and so forth). This information is incomplete because it is expensive to get more accurate information on one's own. Citizens can complete their private or local information by observing what other individuals - whose judgement they estimate to be solid - think, or even by analysing information at their disposal. They establish their own opinions on those of others, or the ones they considered being the opinions of the others.
There are two motives that may explain the influences of other people, on our own opinion development:
1) The first is purely informational (one imitates another in the choices they make because we think that they are better informed),
2) The second concerns the desire that everyone possesses to set his or her own behaviour in accordance with those of everyone else (if the other individual is informed). The first is called an informational cascade the second a reputational cascade[24].
Without entering in the model, let us sum up the main ideas of these cascades. There are two groups of key people: experts and TV journalists. Let us assume that both the experts and the journalists share the same view about the repeal of the regulation. Then any individual has the choice either to declare publicly its own private opinion which has a value for himself or to declare the opinion of the others. The individual does not know if the group of experts and journalists are right or wrong. He attributes a certain degree of confidence in their declared opinions. Then he will declare the same opinion as others if the expected value of the opinion publicly declared by the expert plus the expected value of the opinion - publicly declared - by the journalist exceed the value of its own private opinion. He choose then rationally to ignore its own private information. He will conform to the one developed by the both experts and journalists even if its own belief is in an opposite direction. By declaring an opinion conform to the others, its own opinion adds to the others and a cascade of opinion is emerging.
If the groups of experts as well as journalists are sufficiently homogeneous, everybody tends to admit that the repeal of the law is a good thing. Thus, it is optimal even for people, who do not believe in the evil effects of the law, to believe that the regulation is wrong, whether or not they are against the legislation. This is why it is important to manipulate the opinion of experts as well as of intellectuals or journalists.
However, it is possible that this manipulation could be foiled and this is the second major conclusion. In case of disagreement between the group of experts and the group of journalists, the confidence that individuals have in the group of experts depends on the force with which journalists express their ideas. This deduction is vital because expert opinion, even when unanimous is not taken into consideration by the general public. The strong opposition of the two groups is then not successful in imposing an opinion in the general public. But it nevertheless succeeds in totally erasing the opinion of the experts' group and leaving every individual indifferent between the two alternatives, i.e. between good or bad legislation. Everyone would make his or her choice as if there was no influence whatsoever.
Another major result of this optimal strategic decision is that 10 million people are perfectly capable of believing that repealing the law is good only because two groups of individuals - experts and journalists - believe that this truly is the case, even if the law in fact is a "good" law.
An informational cascade is then a situation where:
1) Every individual after the two first has already developed their opinions on those of others without taking into consideration their own opinion.
2) The threshold over which the cascade falls is very low: two groups of key individuals.
3) If people adopt an ascending cascade when it is inaccurate, an erroneous collective behaviour can be observed.
4) Finally, when a shock to the chain of information brings about a massive change of opinion in the opposite direction, the cascades are said to be fragile.
Let us go back to the beginning and keep in mind the example of the anti-corn-law-league. The activists in the latent group will create a demand to repeal a regulation (or to have a regulation) without having to lobby the latent group through a long process they just have to manipulate a cascade. This is the essential lesson of this theory. Their objective is to make each individual publicly declare the opinion of others without taking into account his own. They must find someway of making the cascade take the path of B.B (Bad. Bad) and not G.G (Good. Good) or B.G. (Bad. Good). The probability of taking such a path is all the more high since X is an expert. First, they will target the group of economic experts (we are dealing with corn laws or an economic issue with other issues like health experts will be doctors) and try to convince them to publicly declare B, i.e. the law is bad. They will attach themselves to journalists because these reporters are the reference for the majority of public opinion and have at their disposal the vectors of informational cascades. To prevent disagreement between the two groups or between members of each group, the activists will develop a reputational cascade. This is where the activists' networks play a crucial role, as well as the rhetoric used in the debates. They serve to convince the experts of a common public opinion so as to conform the opinions of others to make this belief common place. For example, during televised interviews only those with a certain position on a particular issue are allowed to take part. They try to raise the stakes in the rewards and the sanction against those who do not tow the line. The essential role of experts (or journalists) is that they can publicly declare opinions to be similar, even though they privately disagree. Indeed, this is merely a sort of necessary evil to avoid the hypothesis of disagreement between experts themselves or between experts and journalists. It however raises the issue of constructing a 'politically correct' opinion among experts (and journalists).
Simultaneously they try to create the necessary external information to transform a descending cascade into an ascending one. So now we understand more clearly:
1) The importance of accessing to media that can dramatise information and communicate to millions of people simultaneously. Activists develop a web of information between the media and the experts.
2) The importance of aiming at the two first groups: experts and journalists and ensuring that the information from these sources is homogeneous as it is these who trigger the cascade.
3) If the evil effects of regulation are real the lies and exaggerations put forward facilitate the fight against the fragility of cascades. Indeed, the least external information can turn a cascade upside down in what might seem to the activists as an erroneous descending cascade.
4) One can therefore understand the essential role of rhetoric in the political debate since the whole idea is to persuade not by reasoning but rather by emotion because everybody is rationally ignorant. At the heart of most theories about the sources of social influence lies the importance of rhetoric. This point tends to be neglected. Without rhetoric it is extremely difficult, if not impossible, to trigger a cascade. The art of dramatisation involves the manipulation of perception, which implies playing with fear and this is where the intensive use of 'ad odium fallacy'. The first two individuals should command a certain respect and trust (the expert) and at the same time have an audience predisposed to imitate them. That is where the arguments of authority come from. The intimidation or stigmatisation is part of the technique aiming at influencing opinion.
5) This explains that once a cascade is triggered the struggle of activists is undertaken to prevent all information entering the hands of the public who could potentially turn the cascade in a direction they would consider contrary to the truth. That is where a series of attitudes and violations of individuals' rights of free speech come from!
6) The importance that we should give to experts that can declare publicly with the same voice a reasoned opinion, indeed we should prevent experts from declaring G if we think that G is the erroneous cascade. This were the political correctness enters the picture.
This theory of informational cascades is certainly not without insufficiencies. Firstly it does not substantial, indeed if at all, improve the comprehension of the aforementioned phenomenon. Given that each individual follows without question the opinions of the first two groups of key individuals neglecting their own opinions, we seem to live in the land of the blind. Besides, the theory is based on a mechanical, which consists of observing two referents and tracing their behaviour on the compatibility of their beliefs. On clearly experiences some difficulty in believing that, for example an economist (or a group of economists) can hold such power in the influencing of opinions. The cascade is only triggered if all the individuals concerned are neutral in respect of the potential risk, and all have the amount or means of access to the necessary information. It implies on the one hand an utter lack of thinking, and on the other a complete instability in relation to the slightest variation of external information. It does not explain the emergence of the group of activists and why or how they manage to persuade both experts and journalists alike to set of the cascade in the way the activists want. In fact, it does not really take into account why certain organised groups cannot effectively exploit the instability of fragility in order to reverse public opinion in their favour, whereas others clearly do.
Despite all these fault however, the theory of informational and reputation cascades casts some light on the failure of classical liberal ideas to influence public opinion!
The lesson of informational and reputation cascades theory can be applied to our case. The failure of classical liberal ideas to influence shortly public opinion is coming from the fact that the two groups of:
1) First: Economists, philosophers, lawyers, historians as experts interested in ideas shaping political institutions;
2) Second: intellectuals, movie players, journalists and political activists engaged in shaping popular beliefs,
are non-homogeneous between themselves and between their own members vis-à-vis of libertarian ideas unlike in the nineteenth century.
The first group is diverse in promoting free market ideas; the second group is entirely in the hand of the opponents to libertarian ideals. Without such key positions in both groups it is illusory to think to be able to influence public opinion. It is interesting to remember the experience of the English league in 1838. Experts of the time, mainly economists were homogenous on this topic of the corn law, and the league spent a lot of investment in influencing and developing a network in the newspapers and among opinion leaders including businessmen. The now famous English journal: the Economist has been founded in 1843 by James Wilson[25] to support the cause of free trade[26]. The elite read the journal and the journal received an increasing support from the leading Mercantile, Banking, and Manufacturing Classes[27].
The League succeeds, in fact, even unintentionally, in making homogenous both groups. The meetings and the spread of the association in all part of the territory were a substitute to the mass media of our time.
In the battle of ideas to promote libertarian ideals the solution today lies in a couple of directions:
1) The long and painful process of the 9 steps of the anti-corn-law-league.
2) The use of our comprehension of the informational and reputation cascades implemented by our intellectual enemies to turn upside down their efforts to influence public opinion.
The track proposed by Kendra Okonski[28] is the second one. She urges libertarian activists to follow the path of their enemies. The title of his paper is symbolic: "Taking our message to the streets". Her ideas are that libertarian activists can learn from their opponents. They have to borrow from their enemies their tactics: create NGO, train young activist to sit in and counter protest, talk to media, do lobbying, street campaigning, advertising, street theatre and so forth. But in fact the strategy proposed by K. Okonski is important not so far to promote libertarian ideals but to counteract or counter protest to opponent tactics. In our own interpretation, her strategy is to bet on the fragility of cascades.
Libertarian activists can provide information that could turn a cascade upside down or even penetrate the very infrastructure of the activist's web among experts and journalists to create dissenting voices and prevent the informational cascades to be effective. They can fight against reputational cascades among experts and journalists by rhetorical devices or through discriminatory laws. As suggested by Rothbard in his strategy towards liberty {23} making alliance with minorities group having more access to mass media and sharing the same objective: to repeal a law that violates individual rights, is also a trick to promote libertarian ideals.
But the usual classical liberal process is to follow the first track and to mimic the anti-corn-league strategy of the nineteenth-century:
1) Produce ideas through books and booklets, write articles in the newspapers and have your own journal. This is the strategy of all Think tanks all over the world.
2) Develop a coalition of businessmen who will support the ideas and who will bring money first in the association.
3) Focus on network of friends who will have key positions in newspapers, in TV[29], in movie theatre, in arts, in church, among opinion leaders likes economists, philosophers, physicians and even at the parliament. This is the missions of The Institute for Humane Studies.
4) Raise funds through subscriptions, festivals, meetings, exhibitions
5) Organise meetings, evening parties and debates against your opponents in theatres, cafés etc.
6) Educate people.
7) Covers all the territory with associations or committees
8) Presents candidates at elections.
All this steps are present at least in the English speaking countries. Nevertheless, on the part of classical liberal thinkers in these countries, there is a feeling of half-failure or incomplete victory.
Looking at the experience of the League and at the theory of cascades, this strategy of investing in the formation of collective beliefs faces at least three challenges.
1) The first one is the homogenisation of the groups of experts and journalists, otherwise activists loose their time. Even the opponents to libertarian activists do not succeed always on that point.
2) The second one is that libertarian activists have to fight to repeal laws that violates individuals rights. The fight for rights and privileges for a minority (gays and lesbians rights to marriage and adoption[30] for example) to profit from general privileges and protection given to a majority is not a progress towards liberty. Making alliance with groups who favours the violation of individual rights destroys the trade mark of libertarians. Do not forget the objective would have said M. Rothbard: "the victory of total liberty is the highest political end". The idea also to use the weapons of the enemies of libertarian activists like street demonstrations or counter protest, the appeal to emotion, passion, feeling of justice, slogans is in conflict with the libertarian ethic[31].
3) The third is the organisation of the movement. The success of the free trade ideas in the nineteen century was due mainly to the governance of the League. Remember the story. We have the ideas, the experts, the rhetoric but have neither the organisation nor the businessmen sharing our views and able to play the role of G. Wilson or R. Cobden.
By contrast the battle of ideas, compared to other ways to fight against the State, suffers two difficulties.
The first one is that in fact we compromise with the democracy and with the way the Modern State is working. By manipulating the public opinion libertarian activists adopt the weapons of their enemies and reinforce the role of the Modern State which is to give satisfaction to any loud voices by joining the concert of all minority groups in search of a privileges or franchises. Remember the experience of the nineteenth-century, before the League won its case again the Corn Laws, Chadwick won on the "Poor Laws" that gave rise to the modern welfare state and Sir Robert Peel pass his famous Peel act in 1844 giving to the central bank of England a monopoly in issuing bank notes!
The second difficulty is coming from the "objective" conditions. The objective fact of a "crisis situation" in the existing system. A crisis which is perceived as the fault of the system itself. It was the case with the Corn Laws[32]. Both the "objective " and "subjective" conditions were met at that time. Today it is not the case.
The last lesson we can draw from the Anti-Corn-Law-League experiment is that R. Cobden has made a big mistake by dissolving the League after its success, even if this attitude was typically "libertarian" by refusing to engage the League as a political movement and make this movement an abolitionnist one. All the fixed investments made in Networks to promote classical liberal ideas has been lost for future battles of ideas.
{1} F. Bastiat, 1850, What is seen and what is not seen, In Selected Essays on Political Economy, The Foundation for Economic Education.
{2} M. Rojas 1999 Millennium Doom, Fallacies about the end of work, SMF Timbro.
{3} D. Mueller, 1989 Public Choice, Cambridge University Press, London Macmillan,2nd edition.
{4} J. Buchanan, 1975 The Limits of Liberty, The University of Chicago Press, London Macmillan,2nd edition.
{5} D. North, 1981, Structure and Change in Economic History, Norton, New-York.
{6} H. Hazlitt, 1996, Introduction, "Introduction" In Economic Sophisms F. Bastiat, The Foundation for Economic Education.
{7} Author's Introduction to the French edition, In Economic Sophisms, FEE p.4 op. cit.
{8} F. Bastiat, 1846, Profession of Faith to the Electors of the District of Saint-Sever, Foundation For Economic Education (March 2001).
{9} A. Downs, 1956, An Economic Theory of Democracy, Harper and Row.
{10} M. Olson, 1989, How Ideas Affect Societies: Is Britain the Wave of the Future? In Ideas, Interests and Consequences, IEA Liberty Fund Symposium.
{11} D. North, 1981, Structure and Change in Economic History, New York Norton & Company.
{12} E. La Boétie, 1574, "Discours de la servitude volontaire" Le Réveille-Matin des Français et de leurs voisins.
{13} A. V. Dicey, 1926, Lectures on the Relation Between Law and Public Opinion in England, London Macmillan,2nd edition.
{14} R. Heilbroner, 1989, "Economics as ideology" in Economic as a Discourse, ed. by W.J. Samuels, Kluwer Academic Publisher, Massachusetts, USA.
{15} M. Pirie, 1988, Micropolitics, Widwood House.
{16} J.-J. Rosa, 2000, Le second XXè siècle Déclin des hiérarchies et avenir des nations, Economie Grasset.
{17} F. Bastiat, 1854, Cobden et la Ligue, Paris Guillaumin.
{18} J. Garnier, 1846, Richard Cobden, les ligueurs et la ligue. Précis de l'histoire contemporaine de la dernière révolution économique et financière en Angleterre, Paris Guillaumin.
{19} S. Davies, 1991, "Edwin Chadwick and the Genesis of the English Welfare State" Critical Review.
{20} J. Garnier, 1864, "Ligue anglaise", Dictionnaire de l'Economie Politique, sous la direction de MM. C. Coquelin et Guillamin. Paris Librairie Guillaumin. Tome 2 p.69.
{21} Charles Tacquey, 1939, "Richard Cobden un révolutionnaire pacifique", Paris Gallimard.
{22} T. Kuran and C. Sunstein, 1999, "Availability Cascades and Risk Regulation", Standford Law Review, VOL 51 n°4 pp.683-768.
{23} M. Rothbard, 1982, "The Ethics of Liberty", Humanities Press.
[1] Professor of Economics, University of Paris Panthéon Assas, Head of the Laboratoire d'Economie Publique, (LEP/3DI) University of Paris Panthéon Assas.
[2] The book the economic horror has been sold at 350 000 copies and has been translated into 24 languages!
[3] This one has been published in 2000.
[4] Toubon, one of the leader of a Right wing political party (RPR) was at the head of the Ministry of Culture when the law has been passed. This fact revealed how RPR our conservative party, like the socialist and communist parties that never repeal the law, is both a nationalist and socialist party.
[5] Even if Bastiat shares the angelic view of a minimal state reduced to "a common police force to guarantee to each its own and to make justice and security prevail" forgetting to apply its own precepts in What is seen and what is not seen.
[6] It is forced labor because the organisers of the conference are forced to present translation in French through resume all communications presented in English if they do not want to be fined.
[7] Game theory can be highly mathematical which give to this instrument an appearance of a scientific argument but this way of thinking is fundamentally metaphorical.
[8] Forgetting that coercion without consent by itself implies cost of transactions.
[9] The difference with Bastiat is that if he agrees with a minimal State he disagrees with the function of the State. The State has no role in the process, which leads to the production of the solutions to these social interaction failures; he has a role as a guarantee of the solution, which emerges from the spontaneous interaction of individuals trying to solve by themselves the social interaction failure.
[10] Bastiat in Theory and Practice, is well aware of this attitude of the politicians. In Bastiat's time, Sir Robert Peel was such a politician. He started as a protectionist and ended up as a classical liberal by repealing the Corn laws!
[11] A cover story is a set of ideas, which promotes a private interest under the disguise of public interest.
[12] Why is there not any demand for truth or for ideas which support free trade or classical liberal theories? Bastiat gives an answer: "In case of free trade it is just the reverse". Free trade is beneficial to diffused and wide group of people and harms some specific and concentrated groups of people.
[13] In fact, if ideas were without importance, politicians will have just to redistribute wealth to specific groups of people without developing a lot of rhetorics. The very fact that they need to hide this redistribution under the name of public interest shows that ideas are at least complementary to interests. We thanks Don Boudreaux for this remark.
[14] Bastiat refutes all these points in his Economic Sophisms. In Equalising the Conditions of Production, he destroys the false metaphor of fair play in competition. In Metaphors, he denounces the use of words which appeal to emotion. And in What is seen and what is not seen, he opens the eye of the reader on whose interest is protected by the governmental policy.
[15] in developed countries with the exception of France or Sweden
[16] In France the feelings of the leftist people is that free trade and free market ideas have won the battle on both markets! Bias in perceptions is also a result of democracy, which favours the median voter who is closed to the middle of the distribution of preferences on the right and left political spectrum. For extreme people the centre of any distribution looks like the enemy.
[17] Kendra Okonski suggests to libertarian activists to imitate what their enemies do. We disagree on that strategy. We will come back on this topic later on. See: K. Okonski, 2001, Taking our message to the streets, Liberty Magazine.
[18] Those who want to undertake collective action cover the costs. However, the costs are indivisible. So we face two implications: Either we do not do anything, leaving the hard work to others, and benefit from the promotion of the common interests; or we cover the costs of activism. There exists one prevailing strategy: each member waits for the others to cover the costs of collective action in order to benefit, without sacrificing one's own resources. Since each and every one of them reason in this fashion, nobody will rise to take up the challenges of promoting the common interest that benefits all the consumers.
[19] At the same time in France the reports of Villermé and Buret on the life of the labouring classes had the same influence on the politicians.
[20] We can contrast the league with all the anti globalisation movement of our days. We can contrast also the means used in both cases: Free discussion, meetings, subscriptions, fund raising, education of the people, writings with the league versus physical violences, riots and public subsidies for the anti-globalisation movement of today.
[21] More people than those attending political meetings of A. Madelin the only French classical liberal politician.
[22] D. Ricardo was writing his famous comparative advantage model to explain the advantage of free trade to his contemporaries. He was fighting against Corn Laws.
[23] It is also remarkable at the time that entrepreneurs are well aware of the works of A. Smith and of economists of the time.
[24] They are also known as a bandwagon or snowballing process or as threshold models of collective behaviour. See Harvey Leibenstein, 1950, "Bandwagon, Snob, and Veblen Effects in the Theory of Consumer Demand" Quarterly Journal of Economics. But we have to include T. Schelling, 1978, Micromotives and Macro behavior, M. Granoveter, 1978, "Threshold Models of Collective Behavior", American Journal of Sociology, R. Boudon, 1986, L'idéologie ou l'origine des idées reçues, Fayard, and a lot of others in psychology or political science as for example with M. Regnwetter, J.C. Falmagne and B.Grofman, 1999, "A stochastic Model of Preference Change and Its Application, to 1992 Presidential Election Panel Data" Psychological Review Vol 106, n°2, pp.362-384.
[25] James Wilson was one of the first to present the argument we have developed in the text on the impact of Corn Laws on the trade cycle under the title "Fluctuations of Currency, Commercial, and Manufactures Referable to the Corn Laws". He was also one of the first to show how free trade brings all economic interests in harmony.
[26] Bastiat admired the Economist and after Bastiat's death the Economist devoted a leading article to him a most unusual thing for it to do.
[27] See Scott Gordon, 1955, "The London Economist and the high Tide of Laissez Faire" Journal of Political Economy (December n°6 Vol. LXIII pp461-488).
[28] Kendra Okonski op.cit.
[29] See John Stossel's ABC NEWS.
[30] Libertarians ask for the abolition of the intervention of the State in marriage contract and adoption.
[31] In a counter protest the libertarian activist violates individual rights. Those for example of people living in the streets where the demonstration is taking place. The true libertarian collective action would have consisted in re-appropriating the streets through a "barricade" and forbidding the entry on these streets to any protestors in the name of the true and legitimate owners of the street: the riverside residents. How can you do street campaigning if the street is private?
I concentrate my paper only on the battle of ideas. The solution I favour is the Laissez Faire Cities approach i.e. the private government of towns and small territories, the growth of private cities by developers and the re-appropriation of streets by riverside residents. We have to fight the State on its hard core the re-appropriation of the territory by private persons.
[32] Will it be the case, in the near future, with the breakdown of our old age pension schemes?
This edition reedited with the author. Also available on the author's website or on Liberalia.com. See also associated powerpoint presentation from the author.