Progress pill
Economic Harmonies

Freedom and Responsibility are the Key to the Social Problem

Bastiat Economic Thought

Freedom and Responsibility are the Key to the Social Problem

In a letter to Alphonse de Lamartine in 1845, Bastiat wrote that his entire philosophy is contained in a single principle:
Freedom is the best form of social organization.
However, he adds a condition:
That the law should not eliminate the consequences, positive or negative, of everyone's actions. This is the corollary principle of responsibility.
In other words, freedom and responsibility are inextricably linked; they cannot be separated from each other. For him, liberalism is distinguished from socialism by the belief that freedom cannot exist without responsibility. But what realities do the words freedom and responsibility exactly cover?
Freedom is essentially defined in a negative way: to be free is to act without external coercion in the exercise of one's own rights. However, this does not mean the absence of all constraints. Because freedom calls for reciprocity, it also imposes on us the responsibility to act without infringing on the property of others and, if necessary, to repair any harm done. This is responsibility.
Therefore, responsibility represents, in a way, the positive aspect of freedom: insofar as one acts freely, one must bear the consequences of one's own actions, good or bad.
Individual responsibility is both a major vector of creativity and an incentive for caution and foresight.
When one spends their own money, they are careful not to get too indebted, to check the quality of products, and the reliability of suppliers, at the risk of being heavily penalized. Such is the power of responsibility, allied with freedom, that it is the true engine of social progress.
But where does the phenomenon of irresponsibility or desponsibilization come from? Frédéric Bastiat provides an answer to this question, a political response. He says, I quote:
The intervention of the State takes away our governance of ourselves.
Indeed, statism continuously reduces private initiative and the free choice of people. It does for them what they could do themselves and better. It thus subtracts individuals from the consequences of their acts. It destroys responsibility.
According to Bastiat, the hypertrophy of laws and the excessive intervention of the State have the consequence of engendering the struggle for power, spoliation, privileges, monopolies, wars, in short, everything that obstructs the progress of civilization. The risk of overly favoring the path of law or bureaucratic control is that it discourages all motivation by imposing a deluge of constraints, thus depriving us of the multiple advancements that private initiative and free choice allow.
Let's illustrate this issue with a few major current topics. First example, the 2008 crisis.
(Alan Greenspan, Chairman of the FED, the American central bank, from 1987 to 2006)
For years, monetary policy leaders explained that if profits are privatized when everything goes well, losses will be mutualized in case of bankruptcy (bailouts, rescue plans, interest rate manipulation, printing money, etc.). In doing so, they created a moral hazard, they facilitated unreasonable risk-taking, and they encouraged the financial world to behave irresponsibly. They thus precipitated finance into the crisis we experienced.
And the phenomenon will repeat indefinitely as long as banks remain under the domination of central authorities, supposed to protect them by removing all autonomy of decision and operation.
Another example: public services
Each public service imposes the preferences of a bureaucratic elite, to the detriment of individual free choice. This leads to two consequences according to Bastiat: The citizen "stops exercising free control over his own satisfactions, and, no longer having the responsibility, naturally he ceases to have the intelligence." The reason is simple: every written law is coercive, and it applies equally to everyone; it takes no account of the particular situations, needs, or preferences of the citizens.
Finally, the public service is a cause of immobility. Indeed, when private services become public, they escape the competitive market. Consequently, says Bastiat, I quote: "the official is devoid of that stimulus which pushes towards progress."
When we observe the public service of national education, we understand what Bastiat means. It relieves the vast majority of parents of the burden of educating their children, reducing school to a daycare. It does not encourage teachers to innovate and take risks because, in such a system, they are merely executors of a program designed without them, by bureaucrats. Ultimately, it overlooks the unique needs of each individual.
We will explore this further in another course, according to Bastiat, who suggests that the only legitimate public services of a state are threefold: the military, the police, and the judiciary. However, to conclude on the issue of responsibility, the problem with state intervention is that those who make the decisions are not the ones who suffer the consequences. In other words, collective choices are not responsible choices, as they entail no risk-taking for the decision-makers, and on the other hand, they force others to suffer certain consequences, which is as disastrous as it is immoral.
Quiz
Quiz1/5
How was banking irresponsibility allowed?