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 "The Stimulus: Still Popular After All These Weeks

http://www.fivethirtyeight.com/2009/02/stimulus-still-popular-after-all-these.html?ext-ref=comm-sub-email>":


How many jobs are destroyed every time you tax, borrow or inflate $1 out of
the economy to fund the porkulus bill and give yourself goverment patronage
jobs you can get bribes and campaign contributions for?


What Is Seen and What Is Not Seen**1

1.1

In the economic sphere an act, a habit, an institution, a law produces not
only one effect, but a series of effects. Of these effects, the first alone
is immediate; it appears simultaneously with its cause; it is seen. The
other effects emerge only subsequently; they are not seen; we are fortunate
if we foresee them.
1.2

There is only one difference between a bad economist and a good one: the bad
economist confines himself to the visible effect; the good economist takes
into account both the effect that can be seen and those effects that must be
foreseen.
1.3

Yet this difference is tremendous; for it almost always happens that when
the immediate consequence is favorable, the later consequences are
disastrous, and vice versa. Whence it follows that the bad economist pursues
a small present good that will be followed by a great evil to come, while
the good economist pursues a great good to come, at the risk of a small
present evil.
1.4

The same thing, of course, is true of health and morals. Often, the sweeter
the first fruit of a habit, the more bitter are its later fruits: for
example, debauchery, sloth, prodigality. When a man is impressed by the
effect that is seen and has not yet learned to discern the effects that are
not seen, he indulges in deplorable habits, not only through natural
inclination, but deliberately.
1.5

This explains man's necessarily painful evolution. Ignorance surrounds him
at his cradle; therefore, he regulates his acts according to their first
consequences, the only ones that, in his infancy, he can see. It is only
after a long time that he learns to take account of the others.**2 Two very
different masters teach him this lesson: experience and foresight.
Experience teaches efficaciously but brutally. It instructs us in all the
effects of an act by making us feel them, and we cannot fail to learn
eventually, from having been burned ourselves, that fire burns. I should
prefer, in so far as possible, to replace this rude teacher with one more
gentle: foresight. For that reason I shall investigate the consequences of
several economic phenomena, contrasting those that are seen with those that
are not seen.

1. The Broken Window

1.6

Have you ever been witness to the fury of that solid citizen, James
Goodfellow,*1 when his incorrigible son has happened to break a pane of
glass? If you have been present at this spectacle, certainly you must also
have observed that the onlookers, even if there are as many as thirty of
them, seem with one accord to offer the unfortunate owner the selfsame
consolation: "It's an ill wind that blows nobody some good. Such accidents
keep industry going. Everybody has to make a living. What would become of
the glaziers if no one ever broke a window?"
1.7

Now, this formula of condolence contains a whole theory that it is a good
idea for us to expose, flagrante delicto, in this very simple case, since it
is exactly the same as that which, unfortunately, underlies most of our
economic institutions.
1.8

Suppose that it will cost six francs to repair the damage. If you mean that
the accident gives six francs' worth of encouragement to the aforesaid
industry, I agree. I do not contest it in any way; your reasoning is
correct. The glazier will come, do his job, receive six francs, congratulate
himself, and bless in his heart the careless child. That is what is seen.
1.9

But if, by way of deduction, you conclude, as happens only too often, that
it is good to break windows, that it helps to circulate money, that it
results in encouraging industry in general, I am obliged to cry out: That
will never do! Your theory stops at what is seen. It does not take account
of what is not seen.
1.10

It is not seen that, since our citizen has spent six francs for one thing,
he will not be able to spend them for another. It is not seen that if he had
not had a windowpane to replace, he would have replaced, for example, his
worn-out shoes or added another book to his library. In brief, he would have
put his six francs to some use or other for which he will not now have them.
1.11

Let us next consider industry in general. The window having been broken, the
glass industry gets six francs' worth of encouragement; that is what is
seen.
1.12

If the window had not been broken, the shoe industry (or some other) would
have received six francs' worth of encouragement; that is what is not seen.
1.13

And if we were to take into consideration what is not seen, because it is a
negative factor, as well as what is seen, because it is a positive factor,
we should understand that there is no benefit to industry in general or to
national employment as a whole, whether windows are broken or not broken.
1.14

Now let us consider James Goodfellow.
1.15

On the first hypothesis, that of the broken window, he spends six francs and
has, neither more nor less than before, the enjoyment of one window.
1.16

On the second, that in which the accident did not happen, he would have
spent six francs for new shoes and would have had the enjoyment of a pair of
shoes as well as of a window.
1.17

Now, if James Goodfellow is part of society, we must conclude that society,
considering its labors and its enjoyments, has lost the value of the broken
window.
1.18

From which, by generalizing, we arrive at this unexpected conclusion:
"Society loses the value of objects unnecessarily destroyed," and at this
aphorism, which will make the hair of the protectionists stand on end: "To
break, to destroy, to dissipate is not to encourage national employment," or
more briefly: "Destruction is not profitable."
1.19

What will the Moniteur industriel*2 say to this, or the disciples of the
estimable M. de Saint-Chamans,*3 who has calculated with such precision what
industry would gain from the burning of Paris, because of the houses that
would have to be rebuilt?
1.20

I am sorry to upset his ingenious calculations, especially since their
spirit has passed into our legislation. But I beg him to begin them again,
entering what is not seen in the ledger beside what is seen.
1.21

The reader must apply himself to observe that there are not only two people,
but three, in the little drama that I have presented. The one, James
Goodfellow, represents the consumer, reduced by destruction to one enjoyment
instead of two. The other, under the figure of the glazier, shows us the
producer whose industry the accident encourages. The third is the shoemaker
(or any other manufacturer) whose industry is correspondingly discouraged by
the same cause. It is this third person who is always in the shadow, and
who, personifying what is not seen, is an essential element of the problem.
It is he who makes us understand how absurd it is to see a profit in
destruction. It is he who will soon teach us that it is equally absurd to
see a profit in trade restriction, which is, after all, nothing more nor
less than partial destruction. So, if you get to the bottom of all the
arguments advanced in favor of restrictionist measures, you will find only a
paraphrase of that common cliché: "What would become of the glaziers if no
one ever broke any windows?"

2. The Demobilization

1.22

A nation is in the same case as a man. When a man wishes to give himself a
satisfaction, he has to see whether it is worth what it costs. For a nation,
security is the greatest of blessings. If, to acquire it, a hundred thousand
men must be mobilized, and a hundred million francs spent, I have nothing to
say. It is an enjoyment bought at the price of a sacrifice.
1.23

Let there be no misunderstanding, then, about the point I wish to make in
what I have to say on this subject.
1.24

A legislator proposes to discharge a hundred thousand men, which will
relieve the taxpayers of a hundred million francs in taxes.
1.25

Suppose we confine ourselves to replying to him: "These one hundred thousand
men and these one hundred million francs are indispensable to our national
security. It is a sacrifice; but without this sacrifice France would be torn
by internal factions or invaded from without." I have no objection here to
this argument, which may be true or false as the case may be, but which
theoretically does not constitute any economic heresy. The heresy begins
when the sacrifice itself is represented as an advantage, because it brings
profit to someone.
1.26

Now, if I am not mistaken, no sooner will the author of the proposal have
descended from the platform, than an orator will rush up and say:
1.27

"Discharge a hundred thousand men! What are you thinking of? What will
become of them? What will they live on? On their earnings? But do you not
know that there is unemployment everywhere? That all occupations are
oversupplied? Do you wish to throw them on the market to increase the
competition and to depress wage rates? Just at the moment when it is
difficult to earn a meager living, is it not fortunate that the state is
giving bread to a hundred thousand individuals? Consider further that the
army consumes wine, clothes, and weapons, that it thus spreads business to
the factories and the garrison towns, and that it is nothing less than a
godsend to its innumerable suppliers. Do you not tremble at the idea of
bringing this immense industrial activity to an end?"
1.28

This speech, we see, concludes in favor of maintaining a hundred thousand
soldiers, not because of the nation's need for the services rendered by the
army, but for economic reasons. It is these considerations alone that I
propose to refute.
1.29

A hundred thousand men, costing the taxpayers a hundred million francs, live
as well and provide as good a living for their suppliers as a hundred
million francs will allow: that is what is seen.
1.30

But a hundred million francs, coming from the pockets of the taxpayers,
ceases to provide a living for these taxpayers and their suppliers, to the
extent of a hundred million francs: that is what is not seen. Calculate,
figure, and tell me where there is any profit for the mass of the people.
1.31

I will, for my part, tell you where the loss is, and to simplify things,
instead of speaking of a hundred thousand men and a hundred million francs,
let us talk about one man and a thousand francs.
1.32

Here we are in the village of A. The recruiters make the rounds and muster
one man. The tax collectors make their rounds also and raise a thousand
francs. The man and the sum are transported to Metz, the one destined to
keep the other alive for a year without doing anything. If you look only at
Metz, yes, you are right a hundred times; the procedure is very
advantageous. But if you turn your eyes to the village of A, you will judge
otherwise, for, unless you are blind, you will see that this village has
lost a laborer and the thousand francs that would remunerate his labor, and
the business which, through the spending of these thousand francs, he would
spread about him.
1.33

At first glance it seems as if the loss is compensated. What took place at
the village now takes place at Metz, and that is all there is to it. But
here is where the loss is. In the village a man dug and labored: he was a
worker; at Metz he goes through "Right dress!" and "Left dress!": he is a
soldier. The money involved and its circulation are the same in both cases:
but in one there were three hundred days of productive labor; in the other
there are three hundreds days of unproductive labor, on the supposition, of
course, that a part of the army is not indispensable to public security.
1.34

Now comes demobilization. You point out to me a surplus of a hundred
thousand workers, intensified competition and the pressure that it exerts on
wage rates. That is what you see.
1.35

But here is what you do not see. You do not see that to send home a hundred
thousand soldiers is not to do away with a hundred million francs, but to
return that money to the taxpayers. You do not see that to throw a hundred
thousand workers on the market in this way is to throw in at the same time
the hundred million francs destined to pay for their labor; that, as a
consequence, the same measure that increases the supply of workers also
increases the demand; from which it follows that your lowering of wages is
illusory. You do not see that before, as well as after, the demobilization
there are a hundred million francs corresponding to the hundred thousand
men; that the whole difference consists in this: that before, the country
gives the hundred million francs to the hundred thousand men for doing
nothing; afterwards, it gives them the money for working. Finally, you do
not see that when a taxpayer gives his money, whether to a soldier in
exchange for nothing or to a worker in exchange for something, all the more
remote consequences of the circulation of this money are the same in both
cases: only, in the second case the taxpayer receives something; in the
first he receives nothing. Result: a dead loss for the nation.
1.36

The sophism that I am attacking here cannot withstand the test of extended
application, which is the touchstone of all theoretical principles. If, all
things considered, there is a national profit in increasing the size of the
army, why not call the whole male population of the country to the colors?

3. Taxes

1.37

Have you ever heard anyone say: "Taxes are the best investment; they are a
life-giving dew. See how many families they keep alive, and follow in
imagination their indirect effects on industry; they are infinite, as
extensive as life itself."
1.38

To combat this doctrine, I am obliged to repeat the preceding refutation.
Political economy knows very well that its arguments are not diverting
enough for anyone to say about them: Repetita placent; repetition pleases.
So, like Basile,*4 political economy has "arranged" the proverb for its own
use, quite convinced that, from its mouth, Repetita docent; repetition
teaches.
1.39

The advantages that government officials enjoy in drawing their salaries are
what is seen. The benefits that result for their suppliers are also what is
seen. They are right under your nose.
1.40

But the disadvantage that the taxpayers try to free themselves from is what
is not seen, and the distress that results from it for the merchants who
supply them is something further that is not seen, although it should stand
out plainly enough to be seen intellectually.
1.41

When a government official spends on his own behalf one hundred sous more,
this implies that a taxpayer spends on his own behalf one hundred sous the
less. But the spending of the government official is seen, because it is
done; while that of the taxpayer is not seen, because-alas!-he is prevented
from doing it.
1.42

You compare the nation to a parched piece of land and the tax to a
life-giving rain. So be it. But you should also ask yourself where this rain
comes from, and whether it is not precisely the tax that draws the moisture
from the soil and dries it up.
1.43

You should ask yourself further whether the soil receives more of this
precious water from the rain than it loses by the evaporation?
1.44

What is quite certain is that, when James Goodfellow counts out a hundred
sous to the tax collector, he receives nothing in return. When, then, a
government official, in spending these hundred sous, returns them to James
Goodfellow, it is for an equivalent value in wheat or in labor. The final
result is a loss of five francs for James Goodfellow.
1.45

It is quite true that often, nearly always if you will, the government
official renders an equivalent service to James Goodfellow. In this case
there is no loss on either side; there is only an exchange. Therefore, my
argument is not in any way concerned with useful functions. I say this: If
you wish to create a government office, prove its usefulness. Demonstrate
that to James Goodfellow it is worth the equivalent of what it costs him by
virtue of the services it renders him. But apart from this intrinsic
utility, do not cite, as an argument in favor of opening the new bureau, the
advantage that it constitutes for the bureaucrat, his family, and those who
supply his needs; do not allege that it encourages employment.
1.46

When James Goodfellow gives a hundred sous to a government official for a
really useful service, this is exactly the same as when he gives a hundred
sous to a shoemaker for a pair of shoes. It's a case of give-and-take, and
the score is even. But when James Goodfellow hands over a hundred sous to a
government official to receive no service for it or even to be subjected to
inconveniences, it is as if he were to give his money to a thief. It serves
no purpose to say that the official will spend these hundred sous for the
great profit of our national industry; the more the thief can do with them,
the more James Goodfellow could have done with them if he had not met on his
way either the extralegal or the legal parasite.
1.47

Let us accustom ourselves, then, not to judge things solely by what is seen,
but rather by what is not seen.
1.48

Last year I was on the Finance Committee, for in the Constituent Assembly
the members of the opposition were not systematically excluded from all
committees. In this the framers of the Constitution acted wisely. We have
heard M. Thiers*5 say: "I have spent my life fighting men of the legitimist
party and of the clerical party. Since, in the face of a common danger, I
have come to know them and we have had heart-to-heart talks, I see that they
are not the monsters I had imagined."
1.49

Yes, enmities become exaggerated and hatreds are intensified between parties
that do not mingle; and if the majority would allow a few members of the
minority to penetrate into the circles of the committees, perhaps it would
be recognized on both sides that their ideas are not so far apart, and above
all that their intentions are not so perverse, as supposed.
1.50

However that may be, last year I was on the Finance Committee. Each time
that one of our colleagues spoke of fixing at a moderate figure the salaries
of the President of the Republic, of cabinet ministers, and of ambassadors,
he would be told:
1.51

"For the good of the service, we must surround certain offices with an aura
of prestige and dignity. That is the way to attract to them men of merit.
Innumerable unfortunate people turn to the President of the Republic, and he
would be in a painful position if he were always forced to refuse them help.
A certain amount of ostentation in the ministerial and diplomatic salons is
part of the machinery of constitutional governments, etc., etc."
1.52

Whether or not such arguments can be controverted, they certainly deserve
serious scrutiny. They are based on the public interest, rightly or wrongly
estimated; and, personally, I can make more of a case for them than many of
our Catos, moved by a narrow spirit of niggardliness or jealousy.
1.53

But what shocks my economist's conscience, what makes me blush for the
intellectual renown of my country, is when they go on from these arguments
(as they never fail to do) to this absurd banality (always favorably
received):
1.54

"Besides, the luxury of high officials of the government encourages the
arts, industry, and employment. The Chief of State and his ministers cannot
give banquets and parties without infusing life into all the veins of the
body politic. To reduce their salaries would be to starve industry in Paris
and, at the same time, throughout the nation."
1.55

For heaven's sake, gentlemen, at least respect arithmetic, and do not come
before the National Assembly of France and say, for fear that, to its shame,
it will not support you, that an addition gives a different sum depending
upon whether it is added from top to bottom or from bottom to top.
1.56

Well, then, suppose I arrange to have a navvy dig me a ditch in my field for
the sum of a hundred sous. Just as I conclude this agreement, the tax
collector takes my hundred sous from me and has them passed on to the
Minister of the Interior. My contract is broken, but the Minister will add
another dish at his dinner. On what basis do you dare to affirm that this
official expenditure is an addition to the national industry? Do you not see
that it is only a simple transfer of consumption and of labor? A cabinet
minister has his table more lavishly set, it is true; but a farmer has his
field less well drained, and this is just as true. A Parisian caterer has
gained a hundred sous, I grant you; but grant me that a provincial
ditchdigger has lost five francs. All that one can say is that the official
dish and the satisfied caterer are what is seen; the swampy field and the
excavator out of work are what is not seen.
1.57

Good Lord! What a lot of trouble to prove in political economy that two and
two make four; and if you succeed in doing so, people cry, "It is so clear
that it is boring." Then they vote as if you had never proved anything at
all.

4. Theaters and Fine Arts

1.58

Should the state subsidize the arts?
1.59

There is certainly a great deal to say on this subject pro and con.
1.60

In favor of the system of subsidies, one can say that the arts broaden,
elevate, and poetize the soul of a nation; that they draw it away from
material preoccupations, giving it a feeling for the beautiful, and thus
react favorably on its manners, its customs, its morals, and even on its
industry. One can ask where music would be in France without the
Théâtre-Italien and the Conservatory; dramatic art without the
Théâtre-Français; painting and sculpture without our collections and our
museums. One can go further and ask whether, without the centralization and
consequently the subsidizing of the fine arts, there would have developed
that exquisite taste which is the noble endowment of French labor and sends
its products out over the whole world. In the presence of such results would
it not be the height of imprudence to renounce this moderate assessment on
all the citizens, which, in the last analysis, is what has achieved for them
their pre-eminence and their glory in the eyes of Europe?
1.61

To these reasons and many others, whose power I do not contest, one can
oppose many no less cogent. There is, first of all, one could say, a
question of distributive justice. Do the rights of the legislator go so far
as to allow him to dip into the wages of the artisan in order to supplement
the profits of the artist? M. de Lamartine*6 said: "If you take away the
subsidy of a theater, where are you going to stop on this path, and will you
not be logically required to do away with your university faculties, your
museums, your institutes, your libraries?" One could reply: If you wish to
subsidize all that is good and useful, where are you going to stop on that
path, and will you not logically be required to set up a civil list for
agriculture, industry, commerce, welfare, and education? Furthermore, is it
certain that subsidies favor the progress of the arts? It is a question that
is far from being resolved, and we see with our own eyes that the theaters
that prosper are those that live on their own profits. Finally, proceeding
to higher considerations, one may observe that needs and desires give rise
to one another and keep soaring into regions more and more rarefied**3 in
proportion as the national wealth permits their satisfaction; that the
government must not meddle in this process, since, whatever may be currently
the amount of the national wealth, it cannot stimulate luxury industries by
taxation without harming essential industries, thus reversing the natural
advance of civilization. One may also point out that this artificial
dislocation of wants, tastes, labor, and population places nations in a
precarious and dangerous situation, leaving them without a solid base.
1.62

These are some of the reasons alleged by the adversaries of state
intervention concerning the order in which citizens believe they should
satisfy their needs and their desires, and thus direct their activity. I
confess that I am one of those who think that the choice, the impulse,
should come from below, not from above, from the citizens, not from the
legislator; and the contrary doctrine seems to me to lead to the
annihilation of liberty and of human dignity.
1.63

But, by an inference as false as it is unjust, do you know what the
economists are now accused of? When we oppose subsidies, we are charged with
opposing the very thing that it was proposed to subsidize and of being the
enemies of all kinds of activity, because we want these activities to be
voluntary and to seek their proper reward in themselves. Thus, if we ask
that the state not intervene, by taxation, in religious matters, we are
atheists. If we ask that the state not intervene, by taxation, in education,
then we hate enlightenment. If we say that the state should not give, by
taxation, an artificial value to land or to some branch of industry, then we
are the enemies of property and of labor. If we think that the state should
not subsidize artists, we are barbarians who judge the arts useless.
1.64

I protest with all my power against these inferences. Far from entertaining
the absurd thought of abolishing religion, education, property, labor, and
the arts when we ask the state to protect the free development of all these
types of human activity without keeping them on the payroll at one another's
expense, we believe, on the contrary, that all these vital forces of society
should develop harmoniously under the influence of liberty and that none of
them should become, as we see has happened today, a source of trouble,
abuses, tyranny, and disorder.
1.65

Our adversaries believe that an activity that is neither subsidized nor
regulated is abolished. We believe the contrary. Their faith is in the
legislator, not in mankind. Ours is in mankind, not in the legislator.
1.66

Thus, M. de Lamartine said: "On the basis of this principle, we should have
to abolish the public expositions that bring wealth and honor to this
country."
1.67

I reply to M. de Lamartine: From your point of view, not to subsidize is to
abolish, because, proceeding from the premise that nothing exists except by
the will of the state, you conclude that nothing lives that taxes do not
keep alive. But I turn against you the example that you have chosen, and I
point out to you that the greatest, the noblest, of all expositions, the one
based on the most liberal, the most universal conception, and I can even use
the word "humanitarian," which is not here exaggerated, is the exposition
now being prepared in London,*7 the only one in which no government meddles
and which no tax supports.
1.68

Returning to the fine arts, one can, I repeat, allege weighty reasons for
and against the system of subsidization. The reader understands that, in
accordance with the special purpose of this essay, I have no need either to
set forth these reasons or to decide between them.
1.69

But M. de Lamartine has advanced one argument that I cannot pass over in
silence, for it falls within the very carefully defined limits of this
economic study.
1.70

He has said:

The economic question in the matter of theaters can be summed up in one
word: employment. The nature of the employment matters little; it is of a
kind just as productive and fertile as any other kind. The theaters, as you
know, support by wages no less than eighty thousand workers of all
kinds-painters, masons, decorators, costumers, architects, etc., who are the
very life and industry of many quarters of this capital, and they should
have this claim upon your sympathies!

1.71

Your sympathies? Translate: your subsidies.
1.72

And further on:

The pleasures of Paris provide employment and consumers' goods for the
provincial departments, and the luxuries of the rich are the wages and the
bread of two hundred thousand workers of all kinds, living on the complex
industry of the theaters throughout the Republic, and receiving from these
noble pleasures, which make France illustrious, their own livelihood and the
means of providing the necessities of life for their families and their
children. It is to them that you give these sixty thousand francs. [Very
good! Very good! Much applause.]

1.73

For my part, I am forced to say: Very bad! Very bad! confining, of course,
the burden of this judgment to the economic argument which we are here
concerned with.
1.74

Yes, it is, at least in part, to the workers in the theaters that the sixty
thousand francs in question will go. A few scraps might well get lost on the
way. If one scrutinized the matter closely, one might even discover that
most of the pie will find its way elsewhere. The workers will be fortunate
if there are a few crumbs left for them! But I should like to assume that
the entire subsidy will go to the painters, decorators, costumers,
hairdressers, etc. That is what is seen.
1.75

But where does it come from? This is the other side of the coin, just as
important to examine as its face. What is the source of these 60,000 francs?
And where would they have gone if a legislative vote had not first directed
them to the rue de Rivoli and from there to the rue de Grenelle?*8 That is
what is not seen.
1.76

Surely, no one will dare maintain that the legislative vote has caused this
sum to hatch out from the ballot box; that it is a pure addition to the
national wealth; that, without this miraculous vote, these sixty thousand
francs would have remained invisible and impalpable. It must be admitted
that all that the majority can do is to decide that they will be taken from
somewhere to be sent somewhere else, and that they will have one destination
only by being deflected from another.
1.77

This being the case, it is clear that the taxpayer who will have been taxed
one franc will no longer have this franc at his disposal. It is clear that
he will be deprived of a satisfaction to the tune of one franc, and that the
worker, whoever he is, who would have procured this satisfaction for him,
will be deprived of wages in the same amount.
1.78

Let us not, then, yield to the childish illusion of believing that the vote
of May 16 adds anything whatever to national well-being and employment. It
reallocates possessions, it reallocates wages, and that is all.
1.79

Will it be said that for one kind of satisfaction and for one kind of job it
substitutes satisfactions and jobs more urgent, more moral, more rational? I
could do battle on this ground. I could say: In taking sixty thousand francs
from the taxpayers, you reduce the wages of plowmen, ditchdiggers,
carpenters, and blacksmiths, and you increase by the same amount the wages
of singers, hairdressers, decorators, and costumers. Nothing proves that
this latter class is more important than the other. M. de Lamartine does not
make this allegation. He says himself that the work of the theaters is just
as productive as, just as fruitful as, and not more so than, any other work,
which might still be contested; for the best proof that theatrical work is
not as productive as other work is that the latter is called upon to
subsidize the former.
1.80

But this comparison of the intrinsic value and merit of the different kinds
of work forms no part of my present subject. All that I have to do here is
to show that, if M. de Lamartine and those who have applauded his argument
have seen on the one hand the wages earned by those who supply the needs of
the actors, they should see on the other the earnings lost by those who
supply the needs of the taxpayers; if they do not, they are open to ridicule
for mistaking a reallocation for a gain. If they were logical in their
doctrine, they would ask for infinite subsidies; for what is true of one
franc and of sixty thousand francs is true, in identical circumstances, of a
billion francs.
1.81

When it is a question of taxes, gentlemen, prove their usefulness by reasons
with some foundation, but not with that lamentable assertion: "Public
spending keeps the working class alive." It makes the mistake of covering up
a fact that it is essential to know: namely, that public spending is always
a substitute for private spending, and that consequently it may well support
one worker in place of another but adds nothing to the lot of the working
class taken as a whole. Your argument is fashionable, but it is quite
absurd, for the reasoning is not correct.

5. Public Works

1.82

Nothing is more natural than that a nation, after making sure that a great
enterprise will profit the community, should have such an enterprise carried
out with funds collected from the citizenry. But I lose patience completely,
I confess, when I hear alleged in support of such a resolution this economic
fallacy: "Besides, it is a way of creating jobs for the workers."
1.83

The state opens a road, builds a palace, repairs a street, digs a canal;
with these projects it gives jobs to certain workers. That is what is seen.
But it deprives certain other laborers of employment. That is what is not
seen.
1.84

Suppose a road is under construction. A thousand laborers arrive every
morning, go home every evening, and receive their wages; that is certain. If
the road had not been authorized, if funds for it had not been voted, these
good people would have neither found this work nor earned these wages; that
again is certain.
1.85

But is this all? Taken all together, does not the operation involve
something else? At the moment when M. Dupin*9 pronounces the sacramental
words: "The Assembly has adopted, ...." do millions of francs descend
miraculously on a moonbeam into the coffers of M. Fould*10 and M. Bineau?*11
For the process to be complete, does not the state have to organize the
collection of funds as well as their expenditure? Does it not have to get
its tax collectors into the country and its taxpayers to make their
contribution?
1.86

Study the question, then, from its two aspects. In noting what the state is
going to do with the millions of francs voted, do not neglect to note also
what the taxpayers would have done-and can no longer do-with these same
millions. You see, then, that a public enterprise is a coin with two sides.
On one, the figure of a busy worker, with this device: What is seen; on the
other, an unemployed worker, with this device: What is not seen.
1.87

The sophism that I am attacking in this essay is all the more dangerous when
applied to public works, since it serves to justify the most foolishly
prodigal enterprises. When a railroad or a bridge has real utility, it
suffices to rely on this fact in arguing in its favor. But if one cannot do
this, what does one do? One has recourse to this mumbo jumbo: "We must
create jobs for the workers."
1.88

This means that the terraces of the Champ-de-Mars*12 are ordered first to be
built up and then to be torn down. The great Napoleon, it is said, thought
he was doing philanthropic work when he had ditches dug and then filled in.
He also said: "What difference does the result make? All we need is to see
wealth spread among the laboring classes."
1.89

Let us get to the bottom of things. Money creates an illusion for us. To ask
for co-operation, in the form of money, from all the citizens in a common
enterprise is, in reality, to ask of them actual physical co-operation, for
each one of them procures for himself by his labor the amount he is taxed.
Now, if we were to gather together all the citizens and exact their services
from them in order to have a piece of work performed that is useful to all,
this would be understandable; their recompense would consist in the results
of the work itself. But if, after being brought together, they were forced
to build roads on which no one would travel, or palaces that no one would
live in, all under the pretext of providing work for them, it would seem
absurd, and they would certainly be justified in objecting: We will have
none of that kind of work. We would rather work for ourselves.
1.90

Having the citizens contribute money, and not labor, changes nothing in the
general results. But if labor were contributed, the loss would be shared by
everyone. Where money is contributed, those whom the state keeps busy escape
their share of the loss, while adding much more to that which their
compatriots already have to suffer.
1.91

There is an article in the Constitution which states:
1.92

"Society assists and encourages the development of labor.... through the
establishment by the state, the departments, and the municipalities, of
appropriate public works to employ idle hands."
1.93

As a temporary measure in a time of crisis, during a severe winter, this
intervention on the part of the taxpayer could have good effects. It acts in
the same way as insurance. It adds nothing to the number of jobs nor to
total wages, but it takes labor and wages from ordinary times and doles them
out, at a loss it is true, in difficult times.
1.94

As a permanent, general, systematic measure, it is nothing but a ruinous
hoax, an impossibility, a contradiction, which makes a great show of the
little work that it has stimulated, which is what is seen, and conceals the
much larger amount of work that it has precluded, which is what is not seen.

6. Middlemen

1.95

Society is the aggregate of all the services that men perform for one
another by compulsion or voluntarily, that is to say, public services and
private services.
1.96

The first, imposed and regulated by the law, which is not always easy to
change when necessary, can long outlive their usefulness and still retain
the name of public services, even when they are no longer anything but
public nuisances. The second are in the domain of the voluntary, i.e., of
individual responsibility. Each gives and receives what he wishes, or what
he can, after bargaining. These services are always presumed to have a real
utility, exactly measured by their comparative value.
1.97

That is why the former are so often static, while the latter obey the law of
progress.
1.98

While the exaggerated development of public services, with the waste of
energies that it entails, tends to create a disastrous parasitism in
society, it is rather strange that many modern schools of economic thought,
attributing this characteristic to voluntary, private services, seek to
transform the functions performed by the various occupations.
1.99

These schools of thought are vehement in their attack on those they call
middlemen. They would willingly eliminate the capitalist, the banker, the
speculator, the entrepreneur, the businessman, and the merchant, accusing
them of interposing themselves between producer and consumer in order to
fleece them both, without giving them anything of value. Or rather, the
reformers would like to transfer to the state the work of the middlemen, for
this work cannot be eliminated.
1.100

The sophism of the socialists on this point consists in showing the public
what it pays to the middlemen for their services and in concealing what
would have to be paid to the state. Once again we have the conflict between
what strikes the eye and what is evidenced only to the mind, between what is
seen and what is not seen.
1.101

It was especially in 1847 and on the occasion of the famine*13 that the
socialist schools succeeded in popularizing their disastrous theory. They
knew well that the most absurd propaganda always has some chance with men
who are suffering; malesuada fames.*14
1.102

Then, with the aid of those high-sounding words: Exploitation of man by man,
speculation in hunger, monopoly, they set themselves to blackening the name
of business and throwing a veil over its benefits.
1.103

"Why," they said, "leave to merchants the task of getting foodstuffs from
the United States and the Crimea? Why cannot the state, the departments, and
the municipalities organize a provisioning service and set up warehouses for
stockpiling? They would sell at net cost, and the people, the poor people,
would be relieved of the tribute that they pay to free, i.e., selfish,
individualistic, anarchical trade."
1.104

The tribute that the people pay to business, is what is seen. The tribute
that the people would have to pay to the state or to its agents in the
socialist system, is what is not seen.
1.105

What is this so-called tribute that people pay to business? It is this: that
two men render each other a service in full freedom under the pressure of
competition and at a price agreed on after bargaining.
1.106

When the stomach that is hungry is in Paris and the wheat that can satisfy
it is in Odessa, the suffering will not cease until the wheat reaches the
stomach. There are three ways to accomplish this: the hungry men can go
themselves to find the wheat; they can put their trust in those who engage
in this kind of business; or they can levy an assessment on themselves and
charge public officials with the task.
1.107

Of these three methods, which is the most advantageous?
1.108

In all times, in all countries, the freer, the more enlightened, the more
experienced men have been, the oftener have they voluntarily chosen the
second. I confess that this is enough in my eyes to give the advantage to
it. My mind refuses to admit that mankind at large deceives itself on a
point that touches it so closely.**4
1.109

However, let us examine the question.
1.110

For thirty-six million citizens to depart for Odessa to get the wheat that
they need is obviously impracticable. The first means is of no avail. The
consumers cannot act by themselves; they are compelled to turn to middlemen,
whether public officials or merchants.
1.111

However, let us observe that the first means would be the most natural.
Fundamentally, it is the responsibility of whoever is hungry to get his own
wheat. It is a task that concerns him; it is a service that he owes to
himself. If someone else, whoever he may be, performs this service for him
and takes the task on himself, this other person has a right to
compensation. What I am saying here is that the services of middlemen
involve a right to remuneration.
1.112

However that may be, since we must turn to what the socialists call a
parasite, which of the two-the merchant or the public official-is the less
demanding parasite?
1.113

Business (I assume it to be free, or else what point would there be in my
argument?) is forced, by its own self-interest, to study the seasons, to
ascertain day by day the condition of the crops, to receive reports from all
parts of the world, to foresee needs, to take precautions. It has ships all
ready, associates everywhere, and its immediate self-interest is to buy at
the lowest possible price, to economize on all details of operation, and to
attain the greatest results with the least effort. Not only French
merchants, but merchants the whole world over are busy with provisioning
France for the day of need; and if self-interest compels them to fulfill
their task at the least expense, competition among them no less compels them
to let the consumers profit from all the economies realized. Once the wheat
has arrived, the businessman has an interest in selling it as soon as
possible to cover his risks, realize his profits, and begin all over again,
if there is an opportunity. Guided by the comparison of prices, private
enterprise distributes food all over the world, always beginning at the
point of greatest scarcity, that is, where the need is felt the most. It is
thus impossible to imagine an organization better calculated to serve the
interests of the hungry, and the beauty of this organization, not perceived
by the socialists, comes precisely from the fact that it is free, i.e.,
voluntary. True, the consumer must pay the businessman for his expenses of
cartage, of trans-shipment, of storage, of commissions, etc.; but under what
system does the one who consumes the wheat avoid paying the expenses of
shipping it to him? There is, besides, the necessity of paying also for
service rendered; but, so far as the share of the middleman is concerned, it
is reduced to a minimum by competition; and as to its justice, it would be
strange for the artisans of Paris not to work for the merchants of
Marseilles, when the merchants of Marseilles work for the artisans of Paris.
1.114

If, according to the socialist plan, the state takes the place of private
businessmen in these transactions, what will happen? Pray, show me where
there will be any economy for the public. Will it be in the retail price?
But imagine the representatives of forty thousand municipalities arriving at
Odessa on a given day, the day when the wheat is needed; imagine the effect
on the price. Will the economy be effected in the shipping expenses? But
will fewer ships, fewer sailors, fewer trans-shipments, fewer warehouses be
needed, or are we to be relieved of the necessity for paying for all these
things? Will the saving be effected in the profits of the businessmen? But
did your representatives and public officials go to Odessa for nothing? Are
they going to make the journey out of brotherly love? Will they not have to
live? Will not their time have to be paid for? And do you think that this
will not exceed a thousand times the two or three per cent that the merchant
earns, a rate that he is prepared to guarantee?
1.115

And then, think of the difficulty of levying so many taxes to distribute so
much food. Think of the injustices and abuses inseparable from such an
enterprise. Think of the burden of responsibility that the government would
have to bear.
1.116

The socialists who have invented these follies, and who in days of distress
plant them in the minds of the masses, generously confer on themselves the
title of "forward-looking" men, and there is a real danger that usage, that
tyrant of language, will ratify both the word and the judgment it implies.
"Forward-looking" assumes that these gentlemen can see ahead much further
than ordinary people; that their only fault is to be too much in advance of
their century; and that, if the time has not yet arrived when certain
private services, allegedly parasitical, can be eliminated, the fault is
with the public, which is far behind socialism. To my mind and knowledge, it
is the contrary that is true, and I do not know to what barbaric century we
should have to return to find on this point a level of understanding
comparable to that of the socialists.
1.117

The modern socialist factions ceaselessly oppose free association in
present-day society. They do not realize that a free society is a true
association much superior to any of those that they concoct out of their
fertile imaginations.
1.118

Let us elucidate this point with an example:
1.119

For a man, when he gets up in the morning, to be able to put on a suit of
clothes, a piece of land has had to be enclosed, fertilized, drained,
cultivated, planted with a certain kind of vegetation; flocks of sheep have
had to feed on it; they have had to give their wool; this wool has had to be
spun, woven, dyed, and converted into cloth; this cloth has had to be cut,
sewn, and fashioned into a garment. And this series of operations implies a
host of others; for it presupposes the use of farming implements, of
sheepfolds, of factories, of coal, of machines, of carriages, etc.
1.120

If society were not a very real association, anyone who wanted a suit of
clothes would be reduced to working in isolation, that is, to performing
himself the innumerable operations in this series, from the first blow of
the pickaxe that initiates it right down to the last thrust of the needle
that terminates it.
1.121

But thanks to that readiness to associate which is the distinctive
characteristic of our species, these operations have been distributed among
a multitude of workers, and they keep subdividing themselves more and more
for the common good to the point where, as consumption increases, a single
specialized operation can support a new industry. Then comes the
distribution of the proceeds, according to the portion of value each one has
contributed to the total work. If this is not association, I should like to
know what is.
1.122

Note that, since not one of the workers has produced the smallest particle
of raw material from nothing, they are confined to rendering each other
mutual services, to aiding each other for a common end; and that all can be
considered, each group in relation to the others, as middlemen. If, for
example, in the course of the operation, transportation becomes important
enough to employ one person; spinning, a second; weaving, a third; why
should the first one be considered more of a parasite than the others? Is
there no need for transportation? Does not someone devote time and trouble
to the task? Does he not spare his associates this time and trouble? Are
they doing more than he, or just something different? Are they not all
equally subject, in regard to their pay, that is, their share of the
proceeds, to the law that restricts it to the price agreed upon after
bargaining? Do not this division of labor and these arrangements, decided
upon in full liberty, serve the common good? Do we, then, need a socialist,
under the pretext of planning, to come and despotically destroy our
voluntary arrangements, put an end to the division of labor, substitute
isolated efforts for co-operative efforts, and reverse the progress of
civilization?
1.123

Is association as I describe it here any the less association because
everyone enters and leaves it voluntarily, chooses his place in it, judges
and bargains for himself, under his own responsibility, and brings to it the
force and the assurance of his own self-interest? For association to deserve
the name, does a so-called reformer have to come and impose his formula and
his will on us and concentrate within himself, so to speak, all of mankind?
1.124

The more one examines these "forward-looking" schools of thought, the more
one is convinced that at bottom they rest on nothing but ignorance
proclaiming itself infallible and demanding despotic power in the name of
this infallibility.
1.125

I hope that the reader will excuse this digression. It is perhaps not
entirely useless at the moment when, coming straight from the books of the
Saint-Simonians, of the advocates of phalansteries, and of the admirers of
Icaria,*15 tirades against the middlemen fill the press and the Assembly and
seriously menace the freedom of labor and exchange.

7. Restraint of Trade

1.126

Mr. Protectionist*16 (it was not I who gave him that name; it was M. Charles
Dupin) devoted his time and his capital to converting ore from his lands
into iron. Since Nature had been more generous with the Belgians, they sold
iron to the French at a better price than Mr. Protectionist did, which meant
that all Frenchmen, or France, could obtain a given quantity of iron with
less labor by buying it from the good people of Flanders. Therefore,
prompted by their self-interest, they took full advantage of the situation,
and every day a multitude of nailmakers, metalworkers, cartwrights,
mechanics, blacksmiths, and plowmen could be seen either going themselves or
sending middlemen to Belgium to obtain their supply of iron. Mr.
Protectionist did not like this at all.
1.127

His first idea was to stop this abuse by direct intervention with his own
two hands. This was certainly the least he could do, since he alone was
harmed. I'll take my carbine, he said to himself. I'll put four pistols in
my belt, I'll fill my cartridge box, I'll buckle on my sword, and, thus
equipped, I'll go to the frontier. There I'll kill the first metalworker,
nailmaker, blacksmith, mechanic, or locksmith who comes seeking his own
profit rather than mine. That'll teach him a lesson!
1.128

At the moment of leaving, Mr. Protectionist had a few second thoughts that
somewhat tempered his bellicose ardor. He said to himself: First of all, it
is quite possible that the buyers of iron, my fellow countrymen and my
enemies, will take offense, and, instead of letting themselves be killed,
they might kill me. Furthermore, even if all my servants marched out, we
could not guard the whole frontier. Finally, the entire proceeding would
cost me too much, more than the result would be worth.
1.129

Mr. Protectionist was going to resign himself sadly just to being free like
everyone else, when suddenly he had a brilliant idea.
1.130

He remembered that there is a great law factory in Paris. What is a law? he
asked himself. It is a measure to which, when once promulgated, whether it
is good or bad, everyone has to conform. For the execution of this law, a
public police force is organized, and to make up the said public police
force, men and money are taken from the nation.
1.131

If, then, I manage to get from that great Parisian factory a nice little law
saying: "Belgian iron is prohibited," I shall attain the following results:
The government will replace the few servants that I wanted to send to the
frontier with twenty thousand sons of my recalcitrant metalworkers,
locksmiths, nailmakers, blacksmiths, artisans, mechanics, and plowmen. Then,
to keep these twenty thousand customs officers in good spirits and health,
there will be distributed to them twenty-five million francs taken from
these same blacksmiths, nailmakers, artisans, and plowmen. Organized in this
way, the protection will be better accomplished; it will cost me nothing; I
shall not be exposed to the brutality of brokers; I shall sell the iron at
my price; and I shall enjoy the sweet pleasure of seeing our great people
shamefully hoaxed. That will teach them to be continually proclaiming
themselves the precursors and the promoters of all progress in Europe. It
will be a smart move, and well worth the trouble of trying!
1.132

So Mr. Protectionist went to the law factory. (Another time, perhaps, I
shall tell the story of his dark, underhanded dealings there; today I wish
to speak only of the steps he took openly and for all to see.) He presented
to their excellencies, the legislators, the following argument:
1.133

"Belgian iron is sold in France at ten francs, which forces me to sell mine
at the same price. I should prefer to sell it at fifteen and cannot because
of this confounded Belgian iron. Manufacture a law that says: 'Belgian iron
shall no longer enter France.' Immediately I shall raise my price by five
francs, with the following consequences:
1.134

"For each hundred kilograms of iron that I shall deliver to the public,
instead of ten francs I shall get fifteen; I shall enrich myself more
quickly; I shall extend the exploitation of my mines; I shall employ more
men. My employees and I will spend more, to the great advantage of our
suppliers for miles around. These suppliers, having a greater market, will
give more orders to industry, and gradually this activity will spread
throughout the country. This lucky hundred-sou piece that you will drop into
my coffers, like a stone that is thrown into a lake, will cause an infinite
number of concentric circles to radiate great distances in every direction."
1.135

Charmed by this discourse, enchanted to learn that it is so easy to increase
the wealth of a people simply by legislation, the manufacturers of laws
voted in favor of the restriction. "What is all this talk about labor and
saving?" they said. "What good are these painful means of increasing the
national wealth, when a decree will do the job?"
1.136

And, in fact, the law had all the consequences predicted by Mr.
Protectionist, but it had others too; for, to do him justice, he had not
reasoned falsely, but incompletely. In asking for a privilege, he had
pointed out the effects that are seen, leaving in the shadow those that are
not seen. He had shown only two people, when actually there are three in the
picture. It is for us to repair this omission, whether involuntary or
premeditated.
1.137

Yes, the five-franc piece thus legislatively rechanneled into the coffers of
Mr. Protectionist constitutes an advantage for him and for those who get
jobs because of it. And if the decree had made the five-franc piece come
down from the moon, these good effects would not be counterbalanced by any
compensating bad effects. Unfortunately, the mysterious hundred sous did not
come down from the moon, but rather from the pocket of a metalworker, a
nailmaker, a cartwright, a blacksmith, a plowman, a builder, in a word, from
James Goodfellow, who pays it out today without receiving a milligram of
iron more than when he was paying ten francs. It at once becomes evident
that this certainly changes the question, for, quite obviously, the profit
of Mr. Protectionist is counterbalanced by the loss of James Goodfellow, and
anything that Mr. Protectionist will be able to do with this five-franc
piece for the encouragement of domestic industry, James Goodfellow could
also have done. The stone is thrown in at one point in the lake only because
it has been prohibited by law from being thrown in at another.
1.138

Hence, what is not seen counterbalances what is seen; and the outcome of the
whole operation is an injustice, all the more deplorable in having been
perpetrated by the law.
1.139

But this is not all. I have said that a third person was always left in the
shadow. I must make him appear here, so that he can reveal to us a second
loss of five francs. Then we shall have the results of the operation in its
entirety.
1.140

James Goodfellow has fifteen francs, the fruit of his labors. (We are back
at the time when he is still free.) What does he do with his fifteen francs?
He buys an article of millinery for ten francs, and it is with this article
of millinery that he pays (or his middleman pays for him) for the hundred
kilograms of Belgian iron. He still has five francs left. He does not throw
them into the river, but (and this is what is not seen) he gives them to
some manufacturer or other in exchange for some satisfaction-for example, to
a publisher for a copy of the Discourse on Universal History by Bossuet.*17
1.141

Thus, he has encouraged domestic industry to the amount of fifteen francs,
to wit:

10 francs to the Parisian milliner
5 francs to the publisher

1.142

And as for James Goodfellow, he gets for his fifteen francs two objects of
satisfaction, to wit:

1. A hundred kilograms of iron
2. A book

1.143

Comes the decree.
1.144

What happens to James Goodfellow? What happens to domestic industry?
1.145

James Goodfellow, in giving his fifteen francs to the last centime to Mr.
Protectionist for a hundred kilograms of iron, has nothing now but the use
of this iron. He loses the enjoyment of a book or of any other equivalent
object. He loses five francs. You agree with this; you cannot fail to agree;
you cannot fail to agree that when restraint of trade raises prices, the
consumer loses the difference.
1.146

But it is said that domestic industry gains the difference.
1.147

No, it does not gain it; for, since the decree, it is encouraged only as
much as it was before, to the amount of fifteen francs.
1.148

Only, since the decree, the fifteen francs of James Goodfellow go to
metallurgy, while before the decree they were divided between millinery and
publishing.
1.149

The force that Mr. Protectionist might exercise by himself at the frontier
and that which he has the law exercise for him can be judged quite
differently from the moral point of view. There are people who think that
plunder loses all its immorality as soon as it becomes legal. Personally, I
cannot imagine a more alarming situation. However that may be, one thing is
certain, and that is that the economic results are the same.
1.150

You may look at the question from any point of view you like, but if you
examine it dispassionately, you will see that no good can come from legal or
illegal plunder. We do not deny that it may bring for Mr. Protectionist or
his industry, or if you wish for domestic industry, a profit of five francs.
But we affirm that it will also give rise to two losses: one for James
Goodfellow, who pays fifteen francs for what he used to get for ten; the
other for domestic industry, which no longer receives the difference. Make
your own choice of which of these two losses compensates for the profit that
we admit. The one you do not choose constitutes no less a dead loss.
1.151

Moral: To use force is not to produce, but to destroy. Heavens! If to use
force were to produce, France would be much richer than she is.

8. Machines

1.152

"A curse on machines! Every year their increasing power condemns to
pauperism millions of workers, taking their jobs away from them, and with
their jobs their wages, and with their wages their bread! A curse on
machines!"
1.153

That is the cry rising from ignorant prejudice, and whose echo resounds in
the newspapers.
1.154

But to curse machines is to curse the human mind!
1.155

What puzzles me is that it is possible to find anyone at all who can be
content with such a doctrine.**5
1.156

For, in the last analysis, if it is true, what is its strictly logical
consequence? It is that activity, well-being, wealth, and happiness are
possible only for stupid nations, mentally static, to whom God has not given
the disastrous gift of thinking, observing, contriving, inventing, obtaining
the greatest results with the least trouble. On the contrary, rags,
miserable huts, poverty, and stagnation are the inevitable portion of every
nation that looks for and finds in iron, fire, wind, electricity, magnetism,
the laws of chemistry and mechanics-in a word, in the forces of Nature-an
addition to its own resources, and it is indeed appropriate to say with
Rousseau: "Every man who thinks is a depraved animal."
1.157

But this is not all. If this doctrine is true, and as all men think and
invent, as all, in fact, from first to last, and at every minute of their
existence, seek to make the forces of Nature co-operate with them, to do
more with less, to reduce their own manual labor or that of those whom they
pay, to attain the greatest possible sum of satisfactions with the least
possible amount of work; we must conclude that all mankind is on the way to
decadence, precisely because of this intelligent aspiration towards progress
that seems to torment every one of its members.
1.158

Hence, it would have to be established statistically that the inhabitants of
Lancaster, fleeing that machine-ridden country, go in search of employment
to Ireland, where machines are unknown; and, historically, that the shadow
of barbarism darkens the epochs of civilization, and that civilization
flourishes in times of ignorance and barbarism.
1.159

Evidently there is in this mass of contradictions something that shocks us
and warns us that the problem conceals an element essential to its solution
that has not been sufficiently brought to light.
1.160

The whole mystery consists in this: behind what is seen lies what is not
seen. I am going to try to shed some light on it. My demonstration can be
nothing but a repetition of the preceding one, for the problem is the same.
1.161

Men have a natural inclination, if they are not prevented by force, to go
for a bargain-that is, for something that, for an equivalent satisfaction,
spares them labor-whether this bargain comes to them from a capable foreign
producer or from a capable mechanical producer.
1.162

The theoretical objection that is raised against this inclination is the
same in both cases. In one as in the other, the reproach is made that it
apparently makes for a scarcity of jobs. However, its actual effect is not
to make jobs scarce, but to free men's labor for other jobs.
1.163

And that is why, in practice, the same obstacle-force-is set up against it
in both cases. The legislator prohibits foreign competition and forbids
mechanical competition. For what other means can there be to stifle an
inclination natural to all men than to take away their freedom?
1.164

In many countries, it is true, the legislator strikes at only one of these
types of competition and confines himself to grumbling about the other. This
proves only that in these countries the legislator is inconsistent.
1.165

That should not surprise us. On a false path there is always inconsistency;
if this were not so, mankind would be destroyed. We have never seen and
never shall see a false principle carried out completely. I have said
elsewhere: Absurdity is the limit of inconsistency. I should like to add: It
is also its proof.
1.166

Let us go on with our demonstration; it will not be lengthy.
1.167

James Goodfellow had two francs that he let two workers earn.
1.168

But now suppose that he devises an arrangement of ropes and weights that
will shorten the work by half.
1.169

Then he obtains the same satisfaction, saves a franc, and discharges a
worker.
1.170

He discharges a worker: that is what is seen.
1.171

Seeing only this, people say: "See how misery follows civilization! See how
freedom is fatal to equality! The human mind has made a conquest, and
immediately another worker has forever fallen into the abyss of poverty.
Perhaps James Goodfellow can still continue to have both men work for him,
but he cannot give them more than ten sous each, for they will compete with
one another and will offer their services at a lower rate. This is how the
rich get richer and the poor become poorer. We must remake society."
1.172

A fine conclusion, and one worthy of the initial premise!
1.173

Fortunately, both premise and conclusion are false, because behind the half
of the phenomenon that is seen is the other half that is not seen.
1.174

The franc saved by James Goodfellow and the necessary effects of this saving
are not seen.
1.175

Since, as a result of his own invention, James Goodfellow no longer spends
more than one franc for manual labor in the pursuit of a given satisfaction,
he has another franc left over.
1.176

If, then, there is somewhere an idle worker who offers his labor on the
market, there is also somewhere a capitalist who offers his idle franc.
These two elements meet and combine.
1.177

And it is clear as day that between the supply of and the demand for labor,
between the supply of and the demand for wages, the relationship has in no
way changed.
1.178

The invention and the worker, paid with the first franc, now do the work
previously accomplished by two workers.
1.179

The second worker, paid with the second franc, performs some new work.
1.180

What has then been changed in the world? There is one national satisfaction
the more; in other words, the invention is a gratuitous conquest, a
gratuitous profit for mankind.
1.181

From the form in which I have given my demonstration we could draw this
conclusion:
1.182

"It is the capitalist who derives all the benefits flowing from the
invention of machines. The laboring class, even though it suffers from them
only temporarily, never profits from them, since, according to what you
yourself say, they reallocate a portion of the nation's industry without
diminishing it, it is true, but also without increasing it."
1.183

It is not within the province of this essay to answer all objections. Its
only object is to combat an ignorant prejudice, very dangerous and extremely
widespread. I wished to prove that a new machine, in making a certain number
of workers available for jobs, necessarily makes available at the same time
the money that pays them. These workers and this money get together
eventually to produce something that was impossible to produce before the
invention; from which it follows that the final result of the invention is
an increase in satisfactions with the same amount of labor.
1.184

Who reaps this excess of satisfactions?
1.185

Yes, at first it is the capitalist, the inventor, the first one who uses the
machine successfully, and this is the reward for his genius and daring. In
this case, as we have just seen, he realizes a saving on the costs of
production, which, no matter how it is spent (and it always is), gives
employment to just as many hands as the machine has made idle.
1.186

But soon competition forces him to lower his selling price by the amount of
this saving itself.
1.187

And then it is no longer the inventor who reaps the benefits of the
invention; it is the buyer of the product, the consumer, the public,
including the workers-in a word, it is mankind.
1.188

And what is not seen is that the saving, thus procured for all the
consumers, forms a fund from which wages can be drawn, replacing what the
machine has drained off.
1.189

Thus (taking up again the foregoing example), James Goodfellow obtains a
product by spending two francs for wages.
1.190

Thanks to his invention, the manual labor now costs him only one franc.
1.191

As long as he sells the product at the same price, there is one worker the
fewer employed in making this special product: that is what is seen; but
there is one worker the more employed by the franc James Goodfellow has
saved: that is what is not seen.
1.192

When, in the natural course of events, James Goodfellow is reduced to
lowering by one franc the price of the product, he no longer realizes a
saving; then he no longer releases a franc for national employment in new
production. But whoever acquires it, i.e., mankind, takes his place. Whoever
buys the product pays one franc less, saves a franc, and necessarily hands
over this saving to the fund for wages; this is again what is not seen.
1.193

Another solution to this problem, one founded on the facts, has been
advanced.
1.194

Some have said: "The machine reduces the expenses of production and lowers
the price of the product. The lowering of the price stimulates an increase
in consumption, which necessitates an increase in production, and, finally,
the use of as many workers as before the invention-or more." In support of
this argument they cite printing, spinning, the press, etc.
1.195

This demonstration is not scientific.
1.196

We should have to conclude from it that, if the consumption of the special
product in question remains stationary or nearly so, the machine will be
harmful to employment. This is not so.
1.197

Suppose that in a certain country all the men wear hats. If with a machine
the price of hats can be reduced by half, it does not necessarily follow
that twice as many hats will be bought.
1.198

Will it be said, in that case, that a part of the national labor force has
been made idle? Yes, according to ignorant reasoning. No, according to mine;
for, even though in that country no one were to buy a single extra hat, the
entire fund for wages would nevertheless remain intact; whatever did not go
to the hat industry would be found in the saving realized by all consumers
and would go to pay wages for the whole of the labor force that the machine
had rendered unnecessary and to stimulate a new development of all
industries.
1.199

And this is, in fact, the way things happen. I have seen newspapers at 80
francs; now they sell for 48. This is a saving of 32 francs for the
subscribers. It is not certain, at least it is not inevitable, that the 32
francs continue to go into journalism; but what is certain, what is
inevitable, is that, if they do not take this direction, they will take
another. One franc will be used to buy more newspapers, another for more
food, a third for better clothes, a fourth for better furniture.
1.200

Thus, all industries are interrelated. They form a vast network in which all
the lines communicate by secret channels. What is saved in one profits all.
What is important is to understand clearly that never, never are economies
effected at the expense of jobs and wages.**6

9. Credit

1.201

At all times, but especially in the last few years, people have dreamt of
universalizing wealth by universalizing credit.
1.202

I am sure I do not exaggerate in saying that since the February
Revolution*18 the Paris presses have spewed forth more than ten thousand
brochures extolling this solution of the social problem.
1.203

This solution, alas, has as its foundation merely an optical illusion, in so
far as an illusion can serve as a foundation for anything.
1.204

These people begin by confusing hard money with products; then they confuse
paper money with hard money; and it is from these two confusions that they
profess to derive a fact.
1.205

In this question it is absolutely necessary to forget money, coins, bank
notes, and the other media by which products pass from hand to hand, in
order to see only the products themselves, which constitute the real
substance of a loan.
1.206

For when a farmer borrows fifty francs to buy a plow, it is not actually the
fifty francs that is lent to him; it is the plow.
1.207

And when a merchant borrows twenty thousand francs to buy a house, it is not
the twenty thousand francs he owes; it is the house.
1.208

Money makes its appearance only to facilitate the arrangement among several
parties.
1.209

Peter may not be disposed to lend his plow, but James may be willing to lend
his money. What does William do then? He borrows the money from James, and
with this money he buys the plow from Peter.
1.210

But actually nobody borrows money for the sake of the money itself. We
borrow money to get products.
1.211

Now, in no country is it possible to transfer from one hand to another more
products than there are.
1.212

Whatever the sum of hard money and bills that circulates, the borrowers
taken together cannot get more plows, houses, tools, provisions, or raw
materials than the total number of lenders can furnish.
1.213

For let us keep well in mind that every borrower presupposes a lender, that
every borrowing implies a loan.
1.214

This much being granted, what good can credit institutions do? They can make
it easier for borrowers and lenders to find one another and reach an
understanding. But what they cannot do is to increase instantaneously the
total number of objects borrowed and lent.
1.215

However, the credit organizations would have to do just this in order for
the end of the social reformers to be attained, since these gentlemen aspire
to nothing less than to give plows, houses, tools, provisions, and raw
materials to everyone who wants them.
1.216

And how do they imagine they will do this?
1.217

By giving to loans the guarantee of the state.
1.218

Let us go more deeply into the matter, for there is something here that is
seen and something that is not seen. Let us try to see both.
1.219

Suppose that there is only one plow in the world and that two farmers want
it.
1.220

Peter is the owner of the only plow available in France. John and James wish
to borrow it. John, with his honesty, his property, and his good name,
offers guarantees. One believes in him; he has credit. James does not
inspire confidence or at any rate seems less reliable. Naturally, Peter
lends his plow to John.
1.221

But now, under socialist inspiration, the state intervenes and says to
Peter: "Lend your plow to James. We will guarantee you reimbursement, and
this guarantee is worth more than John's, for he is the only one responsible
for himself, and we, though it is true we have nothing, dispose of the
wealth of all the taxpayers; if necessary, we will pay back the principal
and the interest with their money."
1.222

So Peter lends his plow to James; this is what is seen.
1.223

And the socialists congratulate themselves, saying, "See how our plan has
succeeded. Thanks to the intervention of the state, poor James has a plow.
He no longer has to spade by hand; he is on the way to making his fortune.
It is a benefit for him and a profit for the nation as a whole."
1.224

Oh no, gentlemen, it is not a profit for the nation, for here is what is not
seen.
1.225

It is not seen that the plow goes to James because it did not go to John.
1.226

It is not seen that if James pushes a plow instead of spading, John will be
reduced to spading instead of plowing.
1.227

Consequently, what one would like to think of as an additional loan is only
the reallocation of a loan.
1.228

Furthermore, it is not seen that this reallocation involves two profound
injustices: injustice to John, who, after having merited and won credit by
his honesty and his energy, sees himself deprived; injustice to the
taxpayers, obligated to pay a debt that does not concern them.
1.229

Will it be said that the government offers to John the same opportunities it
does to James? But since there is only one plow available, two cannot be
lent. The argument always comes back to the statement that, thanks to the
intervention of the state, more will be borrowed than can be lent, for the
plow represents here the total of available capital.
1.230

True, I have reduced the operation to its simplest terms; but test by the
same touchstone the most complicated governmental credit institutions, and
you will be convinced that they can have but one result: to reallocate
credit, not to increase it. In a given country and at a given time, there is
only a certain sum of available capital, and it is all placed somewhere. By
guaranteeing insolvent debtors, the state can certainly increase the number
of borrowers, raise the rate of interest (all at the expense of the
taxpayer), but it cannot increase the number of lenders and the total value
of the loans.
1.231

Do not impute to me, however, a conclusion from which I beg Heaven to
preserve me. I say that the law should not artificially encourage borrowing;
but I do not say that it should hinder it artificially. If in our
hypothetical system or elsewhere there should be obstacles to the diffusion
and application of credit, let the law remove them; nothing could be better
or more just. But that, along with liberty, is all that social reformers
worthy of the name should ask of the law.**7

10. Algeria

1.232

Four orators are all trying to be heard in the Assembly. At first they speak
all at once, then one after the other. What have they said? Very beautiful
things, surely, about the power and grandeur of France, the necessity of
sowing in order to reap, the brilliant future of our vast colony, the
advantage of redistributing our surplus population, etc., etc.; masterpieces
of eloquence, always ornamented with this conclusion:
1.233

"Vote fifty million francs (more or less) to build ports and roads in
Algeria so that we can transport colonists there, build houses for them, and
clear fields for them. If you do this, you will have lifted a burden from
the shoulders of the French worker, encouraged employment in Africa, and
increased trade in Marseilles. It would be all profit."
1.234

Yes, that is true, if we consider the said fifty million francs only from
the moment when the state spends them, if we look at where they go, and not
whence they come, if we take into account only the good that they will do
after they leave the coffers of the tax collectors, and not the harm that
has been brought about, or, beyond that, the good that has been prevented,
by causing them to enter the government coffers in the first place. Yes,
from this limited point of view, everything is profit. The house built in
Barbary is what is seen; the port laid out in Barbary is what is seen; the
jobs created in Barbary are what is seen; a certain reduction in the labor
force in France is what is seen; great business activity in Marseilles,
still what is seen.
1.235

But there is something else that is not seen. It is that the fifty millions
spent by the state can no longer be spent as they would have been by the
taxpayers. From all the benefits attributed to public spending we must
deduct all the harm caused by preventing private spending-at least if we are
not to go so far as to say that James Goodfellow would have done nothing
with the five-franc pieces he had fairly earned and that the tax took away
from him; an absurd assertion, for if he went to the trouble of earning
them, it was because he hoped to have the satisfaction of using them. He
would have had his garden fenced and can no longer do so; this is what is
not seen. He would have had his field marled and can no longer do so: this
is what is not seen. He would have added to his tools and can no longer do
so: this is what is not seen. He would be better fed, better clothed; he
would have had his sons better educated; he would have increased the dowry
of his daughter, and he can no longer do so: this is what is not seen. He
would have joined a mutual-aid society and can no longer do so: this is what
is not seen. On the one hand, the satisfactions that have been taken away
from him and the means of action that have been destroyed in his hands; on
the other hand, the work of the ditchdigger, the carpenter, the blacksmith,
the tailor, and the schoolmaster of his village which he would have
encouraged and which is now nonexistent: this is still what is not seen.
1.236

Our citizens are counting a great deal on the future prosperity of Algeria;
granted. But let them also calculate the paralysis that in the meantime will
inevitably strike France. People show me business flourishing in Marseilles;
but if it is transacted with the product of taxation, I shall, on the other
hand, point out an equal amount of business destroyed in the rest of the
country. They say: "A colonist transported to Barbary is relief for the
population that remains in the country." I reply: "How can that be if, in
transporting this colonist to Algeria, we have also transported two or three
times the capital that would have kept him alive in France?"**8
1.237

The only end I have in view is to make the reader understand that, in all
public spending, behind the apparent good there is an evil more difficult to
discern. To the best of my ability, I should like to get my reader into the
habit of seeing the one and the other and of taking account of both.
1.238

When a public expenditure is proposed, it must be examined on its own
merits, apart from its allegedly beneficial effect in increasing the number
of jobs available, for any improvement in this direction is illusory. What
public spending does in this regard, private spending would have done to the
same extent. Therefore, the employment issue is irrelevant.
1.239

It is not within the province of this essay to evaluate the intrinsic worth
of the public expenditures devoted to Algeria.
1.240

But I cannot refrain from making one general observation. It is that a
presumption of economic benefit is never appropriate for expenditures made
by way of taxation. Why? Here is the reason.
1.241

In the first place, justice always suffers from it somewhat. Since James
Goodfellow has sweated to earn his hundred-sou piece with some satisfaction
in view, he is irritated, to say the least, that the tax intervenes to take
this satisfaction away from him and give it to someone else. Now, certainly
it is up to those who levy the tax to give some good reasons for it. We have
seen that the state gives a detestable reason when it says: "With these
hundred sous I am going to put some men to work," for James Goodfellow (as
soon as he has seen the light) will not fail to respond: "Good Lord! With a
hundred sous I could have put them to work myself."
1.242

Once this argument on the part of the state has been disposed of, the others
present themselves in all their nakedness, and the debate between the public
treasury and poor James is very much simplified. If the state says to him:
"I shall take a hundred sous from you to pay the policemen who relieve you
of the necessity for guarding your own security, to pave the street you
traverse every day, to pay the magistrate who sees to it that your property
and your liberty are respected, to feed the soldier who defends our
frontiers," James Goodfellow will pay without saying a word, or I am greatly
mistaken. But if the state says to him: "I shall take your hundred sous to
give you one sou as a premium in case you have cultivated your field well,
or to teach your son what you do not want him to learn, or to allow a
cabinet minister to add a hundred-and-first dish to his dinner; I shall take
them to build a cottage in Algeria, not to mention taking a hundred sous
more to support a colonist there and another hundred sous to support a
soldier to guard the colonist and another hundred sous to support a general
to watch over the soldier, etc., etc.," it seems to me that I hear poor
James cry out: "This legal system very strongly resembles the law of the
jungle!" And as the state foresees the objection, what does it do? It
confuses everything; it advances a detestable argument that ought not to
have any influence on the question: it speaks of the effect of the hundred
sous on employment; it points to the cook and to the tradesman who supplies
the needs of the minister; it shows us a colonist, a soldier, a general,
living on the five francs; it shows us, in short, what is seen. As long as
James Goodfellow has not learned to put next to this what is not seen, he
will be duped. That is why I am forced to teach him by loud and long
repetition.
1.243

From the fact that public expenditures reallocate jobs without increasing
them there results against such expenditures a second and grave objection.
To reallocate jobs is to displace workers and to disturb the natural laws
that govern the distribution of population over the earth. When fifty
million francs are left to the taxpayers, since the latter are situated
throughout the country, the money fosters employment in the forty thousand
municipalities of France; it acts as a bond that holds each man to his
native land; it is distributed to as many workers as possible and to all
imaginable industries. Now, if the state, taking these fifty millions from
the citizens, accumulates them and spends them at a given place, it will
draw to this place a proportional quantity of labor it has transferred from
other places, a corresponding number of expatriated workers, a floating
population, declassed, and, I daresay, dangerous when the money is used up!
But this is what happens (and here I return to my subject): this feverish
activity, blown, so to speak, into a narrow space, attracts everyone's eye
and is what is seen; the people applaud, marvel at the beauty and ease of
the procedure, and demand its repetition and extension. What is not seen is
that an equal number of jobs, probably more useful, have been prevented from
being created in the rest of France.

11. Thrift and Luxury

1.244

It is not only in the matter of public expenditures that what is seen
eclipses what is not seen. By leaving in the shadow half of the political
economy, this phenomenon of the seen and the unseen induces a false moral
standard. It leads nations to view their moral interests and their material
interests as antagonistic. What could be more discouraging or more tragic?
Observe:
1.245

There is no father of a family who does not take it as his duty to teach his
children order, good management, economy, thrift, moderation in spending.
1.246

There is no religion that does not inveigh against ostentation and luxury.
That is all well and good; but, on the other hand, what is more popular than
these adages:
1.247

"To hoard is to dry up the veins of the people."
1.248

"The luxury of the great makes for the comfort of the little fellow."
1.249

"Prodigals ruin themselves, but they enrich the state."
1.250

"It is with the surplus of the rich that the bread of the poor is made."
1.251

Certainly there is a flagrant contradiction here between the moral idea and
the economic idea. How many eminent men, after having pointed out this
conflict, look upon it with equanimity! This is what I have never been able
to understand; for it seems to me that one can experience nothing more
painful than to see two opposing tendencies in the heart of man. Mankind
will be degraded by the one extreme as well as by the other! If thrifty, it
will fall into dire want; if prodigal, it will fall into moral bankruptcy!
1.252

Fortunately, these popular maxims represent thrift and luxury in a false
light, taking account only of the immediate consequences that are seen and
not of the more remote effects that are not seen. Let us try to rectify this
incomplete view.
1.253

Mondor and his brother Ariste, having divided their paternal inheritance,
each have an income of fifty thousand francs a year. Mondor practices
philanthropy in the fashionable way. He is a spendthrift. He replaces his
furniture several times a year, changes his carriages every month; people
talk about the ingenious devices to which he resorts to get rid of his money
faster; in brief, he makes the high livers of Balzac and Alexander Dumas
look pale by comparison.
1.254

What a chorus of praises always surround him! "Tell us about Mondor! Long
live Mondor! He is the benefactor of the workingman. He is the good angel of
the people! It is true that he wallows in luxury; he splashes pedestrians
with mud; his own dignity and human dignity in general suffer somewhat from
it. .... But what of it? If he does not make himself useful by his own
labor, he does so by means of his wealth. He puts money into circulation.
His courtyard is never empty of tradesmen who always leave satisfied. Don't
people say that coins are round so that they can roll?"
1.255

Ariste has adopted a quite different plan of life. If he is not an egoist,
he is at least an individualist; for he is rational in his spending, seeks
only moderate and reasonable enjoyments, thinks of the future of his
children; in a word, he saves.
1.256

And now I want you to hear what the crowd says about him!
1.257

"What good is this mean rich man, this penny-pincher? Undoubtedly there is
something impressive and touching in the simplicity of his life;
furthermore, he is humane, benevolent, and generous. But he calculates. He
does not run through his whole income. His house is not always shining with
lights and swarming with people. What gratitude do the carpetmakers, the
coachmakers, the horse dealers, and the confectioners owe to him?"
1.258

These judgments, disastrous to morality, are founded on the fact that there
is one thing that strikes the eye: the spending of the prodigal brother; and
another thing that escapes the eye: the equal or even greater spending of
the economical brother.
1.259

But things have been so admirably arranged by the divine Inventor of the
social order that in this, as in everything, political economy and morality,
far from clashing, are in harmony, so that the wisdom of Ariste is not only
more worthy, but even more profitable, than the folly of Mondor.
1.260

And when I say more profitable, I do not mean only more profitable to
Ariste, or even to society in general, but more profitable to present-day
workers, to the industry of the age.
1.261

To prove this, it suffices to set before the mind's eye those hidden
consequences of human actions that the bodily eye does not see.
1.262

Yes, the prodigality of Mondor has effects visible to all eyes: everyone can
see his berlines, his landaus, his phaetons, the delicate paintings on his
ceilings, his rich carpets, the splendor of his mansion. Everyone knows that
he runs his thoroughbreds in the races. The dinners that he gives at his
mansion in Paris fascinate the crowd on the boulevard, and people say to one
another: "There's a fine fellow, who, far from saving any of his income, is
probably making a hole in his capital." This is what is seen.
1.263

It is not as easy to see, from the viewpoint of the interest of the workers,
what becomes of Ariste's income. If we trace it, however, we shall assure
ourselves that all of it, down to the last centime, goes to give employment
to the workers, just as certainly as the income of Mondor. There is only
this difference: The foolish spending of Mondor is bound to decrease
continually and to reach a necessary end; the wise spending of Ariste will
go on increasing year by year.
1.264

And if this is the case, certainly the public interest is in accord with
morality.
1.265

Ariste spends for himself and his house twenty thousand francs a year. If
this does not suffice to make him happy, he does not deserve to be called
wise. He is touched by the ills that weigh on the poor; he feels morally
obligated to relieve them somewhat and devotes ten thousand francs to acts
of charity. Among businessmen, manufacturers, and farmers he has friends
who, for the moment, find themselves financially embarrassed. He inquires
about their situation in order to come to their aid prudently and
efficaciously and sets aside for this work another ten thousand francs.
Finally, he does not forget that he has daughters to provide dowries for,
sons to assure a future for, and, consequently, he imposes on himself the
duty of saving and investing ten thousand francs a year.
1.266

This, then, is how he uses his income:

1. Personal expenses 20,000 francs
2. Charity 10,000 francs
3. Help to friends 10,000 francs
4. Savings 10,000 francs
1.267

If we review each of these items, we shall see that not a centime escapes
going into the support of national industry.
1.268

1. Personal expenses. These, for workmen and shopkeepers, have effects
absolutely identical to an equal amount spent by Mondor. This is
self-evident; let us not discuss it further.
1.269

2. Charity. The ten thousand francs devoted to this end will support
industry just as much; they will go to the baker, the butcher, the tailor,
and the furniture dealer, except that the bread, the meat, the clothes do
not serve the needs of Ariste directly, but of those whom he has substituted
for himself. Now, this simple substitution of one consumer for another has
no effect at all on industry in general. Whether Ariste spends a hundred
sous or asks a poor person to spend it in his place is all one.
1.270

3. Help to friends. The friend to whom Ariste lends or gives ten thousand
francs does not receive them in order to bury them; that would be contrary
to our hypothesis. He uses them to pay for merchandise or to pay off his
debts. In the first case, industry is encouraged. Will anyone dare say that
there is more gained from Mondor's purchase of a thoroughbred for ten
thousand francs than from a purchase by Ariste or his friends of ten
thousand francs' worth of cloth? If this sum serves to pay a debt, all that
results is that a third person appears, the creditor, who will handle the
ten thousand francs, but who will certainly use them for something in his
business, his factory, or his exploitation of natural resources. He is just
one more intermediary between Ariste and the workers. The names change, the
spending remains, and so does the encouragement of industry.
1.271

4. Savings. There remain the ten thousand francs saved; and it is here that,
from the point of view of encouragement of the arts, industry, and the
employment of workers, Mondor appears superior to Ariste, although morally
Ariste shows himself a little superior to Mondor.
1.272

It is not without actual physical pain that I see such contradictions appear
between the great laws of Nature. If mankind were reduced to choosing
between the two sides, one of which hurts its interests and the other its
conscience, we should have to despair for its future. Happily this is not
so.**9 To see Ariste regain his economic as well as his moral superiority,
we need only understand this consoling axiom, which is not the less true for
having a paradoxical appearance: To save is to spend.
1.273

What is Ariste's object in saving ten thousand francs? Is it to hide two
thousand hundred-sou pieces in a hole in his garden? No, certainly not. He
intends to increase his capital and his income. Consequently, this money
that he does not use to buy personal satisfactions he uses to buy pieces of
land, a house, government bonds, industrial enterprises; or perhaps he
invests it with a broker or a banker. Follow the money through all these
hypothetical uses, and you will be convinced that, through the intermediary
of sellers or borrowers, it will go to support industry just as surely as if
Ariste, following the example of his brother, had exchanged it for
furniture, jewels, and horses.
1.274

For when Ariste buys for ten thousand francs pieces of land or bonds, he
does so because he feels he does not need to spend this sum. This seems to
be what you hold against him.
1.275

But, by the same token, the person who sells the piece of land or the
mortgage is going to have to spend in some way the ten thousand francs he
receives.
1.276

So that the spending is done in either case, whether by Ariste or by those
who are substituted for him.
1.277

From the point of view of the working class and of the support given to
industry, there is, then, only one difference between the conduct of Ariste
and that of Mondor. The spending of Mondor is directly accomplished by him
and around him; it is seen. That of Ariste, being carried out partly by
intermediaries and at a distance, is not seen. But in fact, for anyone who
can connect effects to their causes, that which is not seen is every bit as
real as that which is seen. What proves it is that in both cases the money
circulates, and that no more of it remains in the coffers of the wise
brother than in those of the prodigal.
1.278

It is therefore false to say that thrift does actual harm to industry. In
this respect it is just as beneficial as luxury.
1.279

But how superior it appears, if our thinking, instead of confining itself to
the passing hour, embraces a long period of time!
1.280

Ten years have gone by. What has become of Mondor and his fortune and his
great popularity? It has all vanished. Mondor is ruined; far from pouring
fifty thousands francs into the economy every year, he is probably a public
charge. In any case he is no longer the joy of the shopkeepers; he is no
longer considered a promoter of the arts and of industry; he is no longer
any good to the workers, nor to his descendants, whom he leaves in distress.
1.281

At the end of the same ten years Ariste not only continues to put all of his
income into circulation, but he contributes increasing income from year to
year. He adds to the national capital, that is to say, the funds that
provide wages;...