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Molinari’s 8th Evening

Gustave de Molinari, Les Soirées de la rue Saint-Lazare: entretiens sur les lois économiques et défense de la propriété (Evenings on Saint Lazarus Street: Discussions on Economic Laws and the Defence of Property) (1849)

[A Draft of Liberty Fund's new translation]
[May 17, 2012]

[8th Evening]

[SUMMARY: Attacks made on internal property. – Industries monopolised or subsidised by the State. – Production of money. – The nature and uses of money. – Why a country could not use up all its currency. – Communication routes. – Managed expensively and badly by the state. – Carrying letters. – Postmasters. – That government intervention in production is always harmful. – Subsidies and privileges for theatres. – Public libraries. – Subsidies to religion. – Monopoly of teaching. – Its dire results.]

Molinari_1849LesSoireesRSL-TP300.jpg MolinariObitB-300
Title Page of the original 1849 edition
The photo of Molinari (1819-1912) which accompanied his obituary in the Journal des économistes

Introduction

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Molinari's book Les Soirées de la rue Saint-Lazare; entretiens sur les lois économiques et défense de la propriété. (Paris: Guillaumin, 1849) is being translated by Liberty Fund. The translation was done by Dennis O'Keeffe and it is being edited by David M. Hart. The critical apparatus of foontnotes and glossary entries, and introduction are being provided by David Hart. We welcome feedback from Molinari scholars to ensure that this edition will be a great one and thus befitting Molinari in his centennial year.

This page has a detailed Table of Contents and links to other Chapters.

 

The Eighth Evening

[p. 206]

SUMMARY: Attacks made on internal property. – Industries monopolised or subsidised by the State. – Production of money. – The nature and uses of money. – Why a country could not use up all its currency. – Communication routes. – Managed expensively and badly by the state. – Carrying letters. – Postmasters. – That government intervention in production is always harmful. – Subsidies and privileges for theatres. – Public libraries. – Subsidies to religion. – Monopoly of teaching. – Its dire results.

THE ECONOMIST.

It is not just external property which is attacked; people also attack the property of man in his person, in his faculties, in his powers: internal property. [268]

There is an attack on internal property when man is forbidden to use his faculties as seems right to him, when he is told:

“You will not work in such and such an industry or, if you do, you will be subject to certain constraints; you will be required to observe certain regulations. The natural right you possess to use your faculties in the way most useful to you and yours will be diminished or regulated. -- By what right? -- By virtue of the superior rights of society.”

“But what if I do not put my [p207] abilities to any harmful use ? ”

“Society is convinced that you could not work freely in some industries without harming it.”

“But what if society is wrong? What if in using my abilities in this or that branch of production I do not cause society any harm? ”

“In that case so much the worse for you. Society cannot be wrong. ”

In deceiving itself thus, however, does not society inflict upon itself some damage? Rules which hinder the activity of the producer, do they not result inevitably, for certain, in the diminution of output through the raising of product prices? If one industry is burdened with rules, harassed while other industries remain unencumbered, will not people turn to these others by preference? Otherwise, if we are prepared to operate in the highly regulated activity, will we not pass on to the consumers some part of the burden of harassment and regulation?

Let us leave to one side the regimes in which all production is regulated, even more so, those in which no worker is allowed to use his abilities freely, in which labor is still enslaved. Thank God these monstrosities are beginning to be rare. Let us consider only those bastard regimes where certain industries are free, others regulated, and yet others are monopolised by the state.

Such is the deplorable regime which obtains today in France.

THE CONSERVATIVE.

Are you claiming that the government hurts society by regulating certain branches of production, and by managing certain industries itself.

[p208]

THE ECONOMIST.

That is what I am claiming.

All regulation, as well as all monopoly, leads to an increase, direct or indirect, in costs of production, and therefore to a fall in production.

Government produces more expensively and less well than individuals; in the first place because by managing several industries, it fails to recognize, if not in the details at least at the level of higher management, the economic principle of the division of labor; in the second place because by itself assuming either directly or indirectly the monopoly of an industry, if fails to recognize the economic principle of free competition

THE CONSERVATIVE.

In the event, therefore, the government produces money, builds roads and railways, and provides education more expensively and at a lower quality than individuals would.

THE ECONOMIST.

Without any doubt.

THE CONSERVATIVE.

Even money!

THE ECONOMIST.

Money like any other commodity.[269]

THE CONSERVATIVE.

Is not the minting of coin a prerogative of sovereignty?

THE ECONOMIST.

No more so than the manufacture of nails or of buttons for gaiters. Why should the manufacture of money be [p209] the prerogative of sovereignty? What is money? An instrument with the aid of which the exchange of value takes place….

THE SOCIALIST.

There are also direct exchanges. A host of paper exchanges takes place too.

THE ECONOMIST.

There are very few direct exchanges, and there will be fewer and fewer to the extent that the division of labor grows increasingly. A man who passes his life making a tenth part of a pin could not directly exchange his product for the things he needs.[270] He is obliged to barter first of all against some intermediate merchandise, which can easily be exchanged with other things. This intermediate merchandise must be durable, easy to divide and to transport. Various metals -- gold, silver, copper -- in different degree possess these qualities. This is why we have made from them instruments of exchange, money.

As for paper, it can also serve as money but on condition that it represents real value, value already created, value made concrete in an existing object, available and capable of serving as money.[271]

THE CONSERVATIVE.

This is what the supporters of paper money unfortunately do not understand.

THE ECONOMIST.

But you yourself give me the impression of not having a proper idea of what money is, when you tell me that the production of this vehicle of exchange is a prerogative of sovereignty. It is not because a sovereign [p210] has marked a piece of gold or silver with his effigy that the coin has value, it is because it contains a certain quantity of labor. Whether it be made or marked by a government or individual, matters little. No I am mistaken! Individuals would make it better and cheaper. They would also take care to supply the market with that variety of monies which the needs of circulation demand. Moreover, if from the very start, money had been made by individuals, forgery would have been rarer.

THE SOCIALIST.

How can you know that?

THE ECONOMIST.

The forgeries formerly committed by the very people who had the exclusive right to repress all types of plunder and fraud, itself inevitably went unpunished.[272] To which one must add that the public had no way of avoiding it, since the monarchs claimed for themselves the exclusive right to mint money.

If the manufacture of monies had remained open, individuals would have undertaken it as people will undertake any industry which will yield a profit.

THE CONSERVATIVE.

Can the manufacture of money yield a profit?

THE ECONOMIST.

As with any other manufacture. In France the government charges three francs for the minting of a kilogram of silver, and nine in the case of gold. This virtually covers the costs of producing [p211] the money. In England minting is free.

THE CONSERVATIVE.

Ah! Can you find me an individual who is prepared to work for nothing then?

THE ECONOMIST.

Please be wary of terms like gratis ,free, gratuity.[273] Nothing which requires labor is free; the point being that there are different ways of remunerating this labor. In France the users of money pay directly for its production; in England taxpayers pay the production costs indirectly in the form of taxes.

Which of these two ways of remunerating labor is the more economic and the more equitable? It is obviously the former. In France the production of money costs a certain sum annually, shall we say a million? Individuals who have the ingots transformed into coinage reimburse this million directly. If minting were free as in England the costs of production would be paid by taxpayers. The collection of tax revenues, however, is not free; in France it is never less than thirteen per cent of the principal. So if our minting were free, it would cost not a million but one million, one hundred and thirty thousand francs.

So much for the economics of things being free.

Now let us look for the justice of “free” production. Who has to pay for a product? He who consumes it, is that not true? Who must, in consequence, carry [p212] the costs of making that money? Those who use that money.

THE CONSERVATIVE.

But everybody uses it.

THE ECONOMIST.

The difference being that certain individuals, the richest people, use it a lot; others, the poorest, use it very little. When minting is paid for directly, it is paid for by the users of money in proportion to that use; when it is paid indirectly, when it is free, it is paid for by everybody, by small consumers as by large, often by the former more than by the latter. That depends on the basis of the taxation. Is that fair?

If the government mints for free, the costs of money production are raised to their maximum; if it has itself reimbursed directly for minting, it produces it, all the same, more expensively than private production would, because the production of money is not its speciality.

If minting had remained free, it would in all probability have been carried out by the great goldsmiths companies. Under this arrangement, with consumers able to refuse money made by forgers, and, what is more, to inflict on them exemplary punishment, forgery would have been extremely rare.

THE SOCIALIST.

In combining, however, to render the supply of money lower than the demand and for it, would not your free manufacturers [p213] have realized enormous profits at the expense of the public?

THE ECONOMIST.

No. First of all because one can, if need be, use ingots in place of money; next because free competition does not take long to smash even the strongest cartels.[274] When equilibrium between supply and demand comes to be broken, prices soon yield a return which the competition seeks to share in. In this case people start to produce outside the cartel, until the market price falls again to the level of the production costs.

THE SOCIALIST.

Ah! It is always the same law.

THE ECONOMIST.

Always. And this law explains also why a country’s money could never be exhausted. When the needs arising from circulation come to exceed the supply of money, the price of metals rises progressively. In this event people no longer export ingots; they find it on the contrary advantageous to import them up to the point when equilibrium is re-established.

THE SOCIALIST.

What you have said demolishes one of the big arguments used by protectionists.

I have another objection. If the production of monies were free, would it be possible to have a single currency? Would not each producer supply a distinctive money? We would no longer know where we were.

THE ECONOMIST.

There are thousands of producers of calicoes, and yet [p214] there is only a small number of types of calico. In Manchester, twenty or thirty manufacturers weave lengths of identical quality and size. It would be the same with money; the only coins struck would be those which the public found convenient and advantageous to use. If all the nations wanted to use the same currency we would arrive quite naturally at a single one. If they preferred different monies and measures, suitable to their ways and their particular needs, why I ask you would people take it into their heads to impose a single currency?

THE SOCIALIST.

You could well be right and I understand up to a certain point, that one might abandon the production of monies to private industry. The producers can in fact develop competition for themselves in such a way as to render the development of a monopoly impossible. Is the same true however for all the industries of which the government has taken over? For example are not communication routes natural monopolies?

THE ECONOMIST.

There are no natural monopolies. How could the builders and operators of communication routes achieve profits from monopoly? By raising the price of transportation above its production costs. But as soon as the market price exceeds production costs, competition is irresistibly drawn in…[275]

THE SOCIALIST.

In this case would they not build two or three parallel routes from one point to another? [p215]

THE ECONOMIST.

That would not be necessary. Competition in the means of communication, notably improved roads, railways and canals, etc., happens across a very wide range. Let the Le Havre to Strasbourg railway put up its fares, for example, and immediately the movement of travelers and goods to the centre of Europe will shift in favor of Antwerp or Amsterdam. For intermediate points, there is competition from canals, rivers, almost parallel sections of rail, or ordinary roads, competition which becomes more active in the face of attempts at monopoly…provided, of course, that the competition remains free.

Provided this condition obtains, present transport prices can never exceed the costs of production for very long.

Well I think you will certainly agree with me, that individuals build and run roadways better and cheaper than governments. Would you compare the roads in England with those in France?[276]

THE SOCIALIST.

This is an incontestable fact. Is it not essential, however, that traffic remains free and at no charge for the user?

THE ECONOMIST.

Have we not examined in depth already the mystery of things which are free? Have you forgotten that no good whatsoever – money, teaching, transport – could be provided free by the government, unless it were paid for by the taxpayers? Have you forgotten that in this case the good’s costs, over and above its ordinary production costs, include the further costs [p216] of collecting the tax? So if our roads were not free, they would be financed by those who use them, to the degree to which they use them, and the roads would be cheaper.

What is true of the great highways is no less true of little roads. These petty governments we call départements and communes, build roads at their own cost without, however, having central government approval. These roads, voted for by majorities on the councils of the communes and departments, are built and used at the cost of all taxpayers. Under the monarchical regime, when rich taxpayers alone had places on the councils of the communes, the departments, or the central state, the poor peasants were obliged to contribute a large part of the work decreed…to whose profit? I leave you to think about it. The corvées of the Ancien Régime had reappeared under the benign guise of ‘compulsory contributions in kind’. [277]

The only way to put an end to this scandalous iniquity is to hand over roads, great and small, to private industry, as well as all forms of transport.

THE CONSERVATIVE.

Without making an exception of letter delivery?

THE ECONOMIST.

Without making an exception of letter delivery.[278]

THE SOCIALIST.

Oh, come on!

THE ECONOMIST.

The post has not always been in government hands. [p217] Before the 1789 Revolution, the letter post had been contracted out to individual companies (or “farmers”).[279] In 1788 this lease brought in twelve million to the State. As you well know, however, the tariff on the letters was very high. The big farmers knew with regard to this, how to bribe the administrators in charge of working out and regulating the tariffs.[280] They flourished under this system but the public were paying handsomely for their good living.

What had to be done to remedy the manifest abuses of this system of leasing? Quite simply the remedy was to hand over the post to free competition. Under this new regime, the movement of letters would have promptly fallen to the lowest possible price. The preferred choice was to leave the post in the hands of the state. The public gained nothing from this, indeed the contrary! The post remained very expensive and became much less reliable. As you know very well, the abuse of trust and also general unreliability, have multiplied frightfully in the postal service.

THE CONSERVATIVE.

That is all too true.

THE ECONOMIST.

For a long time, moreover, the government claimed the right to infringe the confidentiality of correspondence. It is not long since the Cabinet Noir was suppressed, and some people claim it still exists.[281] The worst of it is that we do not have the power to remove ourselves from these risks, and these insults to the public. It is strictly forbidden for individuals to handle the post. Illegal letter delivery is subject to severe penalties. [p218]

THE SOCIALIST.

How barbarous!

THE ECONOMIST.

That is the advantage of communism for you....If the post were free you would be able to hold the carriers involved to account, both for the violation of your correspondence, and for stealing from you. Given the government’s communist monopoly, none of this is practicable. You are at the mercy of the administrators.[282]

THE SOCIALIST.

At least it has ended up with their giving us postal reform. [283]

THE ECONOMIST.

Yes, but postal reform has destroyed one abuse only to replace it with another. In England, reform has for several years caused a considerable deficit in the receipts. The tariff had been so reduced that half the charge of the postal service was falling on the taxpayers. The service was half free. Now is it not fair that the cost of correspondence should be met by the correspondents? Why should some poor uneducated peasant who neither writes nor receives letters throughout his life, contribute to paying for the carriage of the heavy missives from Monsieur Turcaret or the love-letters of his neighbor Mr. Lovelace?[284] Is there a communism more iniquitous and odious than that?

Shall I talk about the privileges enjoyed by mounted postmen? In past times, the postmasters set up by Louis XI, enjoyed a monopoly in passenger transport.[285] Little by little they were obliged to share this monopoly [p219] with the royal parcel service, and finally to leave a space for free enterprise. Given their insistent demands, however, the new entrepreneurs were obliged to pay the masters of the coaching inns, whose horses they did not use, an indemnity of twenty five centimes per delivery and for each horse in harness (law of the fifteenth ventôse in year XIII).[286] The overall indemnity had risen to a figure of six million (francs) per year. But the railways have considerably reduced that windfall. The consequence was loud complaints from the postmasters. They wanted to force the railway companies also, to pay them subsidies. The companies resisted. The question is on-going.

It has to be said in defense of the postmasters, that regulations dating from the reign of Louis XI, oblige them to have available teams of horses in places where these teams are perfectly pointless. But is it not absurd to pay pensions to one industry which no longer functions, at the expense of another which does? Is it not at once absurd and grotesque to constrain entrepreneurs in the coach business[287] to supply a rent to the idle horses of the postmasters?

THE SOCIALIST.

It is indeed absurd and grotesque. But if the government, the départements and the communes ceased completely their intervention in the transport industry in the construction of roads, canals, bridges and streets, if they stopped setting up communications between diverse parts of the country and seeing to it that established communications are maintained, would individuals take on the burden of this indispensible work? [p220]

THE ECONOMIST.

Do you believe that a stone thrown up into the air will end up falling?

THE SOCIALIST.

That is a law of physics!

THE ECONOMIST.

Well it is in virtue of the same physical law that all useful things, roads, bridges, canals, bread, meat etc get produced as soon as society needs them. When a useful thing is demanded , the production of that thing tends naturally to operate with an intensity of movement equal in intensity of movement to that of a falling stone.

When a useful thing is demanded without being produced yet, the ideal price, the price which would be put on it if it were produced, grows in geometric progression while the demand grows in arithmetic progression.[288] A moment comes when this price rises high enough to surmount all current obstacles and when production begins to operate.

This being so, the government could not interfere with any aspect of production without causing damage to society.

If it produces something later than private individuals would have done , it harms society by depriving it of the thing in question during the interval.

If it produces it at the same time as private individuals, its intervention is still harmful, because it will produce at a higher price than private individuals. [p221]

Last of all, if it produces it earlier, society is nonetheless harmed…You are protesting. I am going to prove it to you.

What does one produce with? With present labor and past labor or capital. How does an individual starting a new industry secure for himself labor and capital? By going to look for workers and capital in those places where the services of these agents of production are least useful and where consequently they are paid the lowest.

When the demand for a new product is weaker than that for established ones, when producing it one would not recover the costs incurred, individuals will carefully abstain from production. They begin production only from the time when they are sure of covering their costs.

When government gets ahead of them, is it going to find the labor and capital it needs? It finds them where the individual producers themselves would have got them, from the society itself. But by beginning production before the costs can yet have been covered, or even before the ordinary profits of this new industry have reached the level of those of existing industries, does not the government divert capital and labor from more useful employment than it is giving them? Does it not impoverish rather than enrich society?

The government has undertaken, too early, for example, certain stretches of canal which cross deserts. The labor and capital it has devoted to the building of these canals, still unfinished after a quarter of a century, were certainly better engaged where it found them. On the other hand it began building the telegraphs, for which it had reserved the monopoly or licence for itself, too late [p222] and then it did not build enough of them. We have only two or three electric telegraph lines and they are still for the exclusive use of the government and railways. In the United States, where this industry is under free enterprise, the electric telegraph is everywhere and serves everybody.[289]

THE SOCIALIST.

I agree with these observations as applied to industries of a purely material nature; but you are pretty well bound to agree, I would think, that the government must be concerned in some degree with the intellectual and moral development of society. Does it not have the right, indeed the duty, to impose a salutary direction on the arts and on literature, as well as on education, and to be of some service to religion? Can it abandon these noble branches of production, to all the winds of private speculation?

THE ECONOMIST.

Without doubt it would have this right and would be held to the fulfilling of this duty, if its intervention, in this area of the domain of production, were not always and necessarily as harmful here as in the rest.

Are we speaking of the fine arts? The government gives pensions to some men of letters and pays subsidies to some theatres.[290] I think I have proved to you that writers could easily do without the miserable pension allocated to them, if their property rights were fully recognized and respected.

The grants to the theaters are among the most blatant and scandalous abuses of our day.

[p223]

THE CONSERVATIVE.

It has been proven times many that the Théâtre-Français and the Opéra could not survive without subsidies. Do you wish, by any chance, to do away with the Théâtre-Français and the Opéra?[291]

THE ECONOMIST.

Notice first of all what profound injustice hides under this regime of subsidies. Each year the state spends more than two million to maintain two or three Parisian theaters. These theaters are precisely the ones frequented by the richest element of the Parisian bourgeoisie. Who pays these two million? All taxpayers do, including the poor peasant of Lower Brittany, who in his entire life has never set foot in, and never will, the auditorium of a theater, unlike members of the wealthy audience of the Opéra Orchestra. Is this justice? Is it fair to make a poor ploughman, who passes his day stooped over the handle of his plough, contribute to the dainty pleasures of the rich Parisian bourgeoisie?

THE SOCIALIST.

It is just exploitation.[292]

THE CONSERVATIVE.

Once again, however, would you prefer that there were no Opéra and no Théâtre-Français? What about our nation’s glory!

THE ECONOMIST.

When Louis XIV crushed the people with taxes in order to build his cold and lamentable Château at Versailles;[293] when he reduced the wretched country folk to living on grasses, to help pay for the sumptuous expenditures of his court, did he not also invoke the glory of France? Glory! In what do you think it consists?

[p224]

THE CONSERVATIVE.

In the great things which a people is able to accomplish.

THE ECONOMIST.

Nothing is greater or more splendid than justice. If an age should dawn when the many cease to be plundered for the sake of the few, and justice comes to be the sovereign law of society, that will be the greatest of the centuries.

I do not believe, however, that the theater needs subsidies. On the contrary, I think theaters are harmed by subsidies. Subsidized theaters are the ones which most mismanage their business. Why? I will tell you.

First of all you should note that they are robbed of part of their subsidy in various ways. A subsidized theater is required to grant free entry to ministers, to influential representatives of government, to a host of political figures, high and low. So the subsidy works, in the first place, to secure free access to the pleasures of theater-going to a crowd of people…

THE SOCIALIST.

Who are absolutely in a position to pay their own way.

THE ECONOMIST.

Much more so, for certain, than those who do pay for them. In the second place, the subsidies serve to enrich the most unscrupulous directors. If a theater has a deficit of fifty thousand francs, the director asks for a subsidy of a hundred thousand. They give it to him. He closes his deficit, gives up his subsidy and goes off to enjoy the monies the State has provided for him.

Subsidized theaters are constantly in [p225] debt. Is this in spite of the subsidy or because of it? Judge for yourselves.[294]

A firm under free enterprise, a firm obliged to cover all its costs itself, achieves prodigious efforts to attain this end. It improves the quality of its product, it lowers its price and comes up every day with some new way of attracting purchasers. For the firm, this is a question of life or death. A firm enjoying special treatment and subsidies does not make these efforts. Assured of receiving a living, even when its clients may have deserted it completely, even when its annual deficit may be as high as its total costs, it tends, naturally, to please itself with regard to the public. If Tortoni[295] received a government subsidy for selling his ice-creams, would he take as much trouble to make sure his trade went well? Would not his ice-creams become detestable, like certain theater pieces put on at a certain theater, and would not the public, which loves good ice-creams, desert his establishment en masse? You can easily see what a subsidy given to the ice-cream industry would have succeeded in doing.

There are, however, worse things than subsidies. There are privileges. In France the theater industry is not open to all. It is not just anyone who is allowed to open a theater, nor even any comparable institution. Recently, when the cafés lyriques (musical cafés) became popular, the privileged theaters were very put out. The Directors collectively petitioned for the suppression of this rival industry. The minister refused to comply with their petition, but he forbade the musical cafés: first, to put on any [p226] plays and secondly to feature their singers in theater costumes. Is not such a ban worthy of the Middle Ages?

THE CONSERVATIVE.

I have to confess it is ludicrous.

THE ECONOMIST.

This is what happened in 1849 and it happened to the wittiest nation on earth. The directors, however, are not especially guilty. They are bowing to imperatives created by their privileges.

The regime of privilege is by its very nature precarious. All such privileges are temporary. Now the first condition of all economic production, is clear and inviolable ownership. In any industry there are general costs whose repayment calls for a long time-period. Examples include the building, improvement and embellishment of premises. If these costs are spread across a long period of production they become almost unnoticeable. When, on the contrary, they are concentrated into a short period of time, they raise the cost of the expenditure significantly. When the tenure is short-term, people tend to run up as few costs as possible. Few halls are worse constructed and maintained than Parisian theater auditoria. The costs of embellishing them nevertheless are a heavy charge on their directors’ budgets.

Furthermore, like any industry, theaters have their good and bad seasons. Under free enterprise proper, there is less work in the bad season than in the good, so that production is not undertaken at a loss. Theaters are forced to work the whole year round, whether they make [p227] profits or not. This is an explicit condition of their privileged status.

THE SOCIALIST.

What an unimaginable absurdity!

THE ECONOMIST.

Their costs of production therefore increase by the whole sum of what they are obliged to lose in a bad season. Add to this the very high taxes levied in favor of welfare establishments and you will give yourself an idea of the excessively high price charged for shows.[296] You will also understand why the directors pursued their competitors so relentlessly.

If the theater industry was free, the costs of building and maintaining the auditoria could be spread across an indefinite period. Production could also be geared to the demands of consumers. There would be lots of plays in a good season and a few in a bad one. The costs of production would then fall to the lowest possible level, and the competition would take care of aligning market price s with the costs of production. The lowering of prices would increase consumption and therefore production. There would be more theaters, more actors, more authors.

THE CONSERVATIVE.

Would not art be coarsened thereby and thus diminished in worth?

[p228]

THE ECONOMIST.

I am convinced, on the contrary, that art would become more noble and broadened in its appeal. Every time production is developed it improves. People say today that dramatic art is languishing and demeaned. Put your trust in freedom to pick it up and reinvigorate it.

What is true for theaters is also true for libraries, museums, exhibitions and academies.

THE SOCIALIST.

What? You would like the State to cease opening its libraries to the public free of charge?

THE ECONOMIST.

I am of the view that public libraries should be closed in the interests of spreading knowledge.

THE CONSERVATIVE.

Oh! That is too extreme a paradox. I will protest to the bitter end.

THE ECONOMIST.

Protest by all means but listen. The State owns a certain number of libraries. [297] The government opens some of them to the public, free of charge. It does not open all of them, please note. Some libraries are only pretexts for employing librarians. The annual expenses entailed by the management of public libraries, including in this the maintenance of buildings, add up to more than a million.[298] This means that all taxpayers have to contribute, so that certain individuals can go and study or read, for nothing, at the National Library, the Mazarin Library and elsewhere. If public libraries were run by private individuals, we [p229] would first of all save the whole cost of collecting these taxes. The users of books would pay a smaller sum than the one paid today by the nation.

THE CONSERVATIVE.

Yes, but they would pay something, while today they pay nothing. And is it not a false economy to skimp on learning?

THE ECONOMIST.

You are right that it is a false economy. I would ask you, however, to have a good look at how the million which taxpayers make a present of every year to book enthusiasts, is used. Look at private establishments in France, and if you can find a single one whose administration is as bad as that of the National Library, for example, one in which wealth is as badly used and the public as badly served, I will say you have won the case.

THE SOCIALIST.

Service at the National Library is certainly deplorably organized. There is not a single manufacturing firm in France that does not do its stocktaking every year. The Library has not yet managed to complete its own one. Its catalogue, begun many years ago, is still not finished. One could, however, administer this great national institution better.

THE ECONOMIST.

I do not think so. As long as it remains locked into the vast communism of the State, the National Library cannot be administered any better.

In reality, then, the communist management of the public libraries [p230] has the result of keeping most of the treasures of learning away from the public. Put this capital in the hands of private industry and you will see to what good use the latter will be able to put it. The riches of science come to us slowly and intractably today. You will see how swift and easy our access to them will become. We will no longer wait long hours and often long days, in vain, for a book or manuscript. Service will be immediate. Private industry does not make people wait.

Would science lose out in all this?

THE CONSERVATIVE.

Is not a compromise possible? Could not the present libraries get by alongside private enterprise libraries?

THE ECONOMIST.

This is the mixed regime we have today.[299] On the one hand we have public libraries, whose vast resources remain more or less unproductive; on the other hand there are expensive and badly supplied reading rooms.

If the free libraries did not exist, the reading rooms would be on a bigger scale; all the precious output of science and literature would accumulate in them in a useful fashion; each category of knowledge would soon acquire a specialist library, in which those who undertake research would lack for nothing; and where the wealth of scientific and literary publications would on completion be put immediately at the disposal of the public. At the same time, free competition would oblige these establishments to lower their prices to the lowest possible level.

THE SOCIALIST.

All the same, poor students and needy scholars would have plenty to complain of under this regime.

THE ECONOMIST.

Library and reading room expenses are the smallest element in the costs of an education. As for poor scholars, they generally work for booksellers who take account of their research costs. A part of these costs falls on taxpayers today. Would it not be fairer if they were exclusively charged to purchasers of books? Moreover, the latter would not lose out thereby, since the books would become more substantial if the business of research became easier.

I was therefore not engaging in paradox at all when I said that we should close the public libraries in the interests of the spreading of knowledge. Maintaining free libraries is communism; and whether the issue is science or industry, communism is barbarous.

This detestable communism is also to be found in the domains of education and religion.

THE CONSERVATIVE.

Attack the universities as much as you like, but for pity’s sake respect religion. Religion is our mainstay.

THE ECONOMIST.

It is in the real interest of religion that the State should stop subsidizing religion.

Is it fair that a man who does not practice any of the religions recognized by the State, should be required, nevertheless, to provide them with a payment? Is it fair that one should pay for something [p232] which one does not use? Does not all religious morality condemn an abuse and plunder of this kind? Such plunder and abuse, however, are committed every day in France, for the benefit of recognized religions. So much the worse for taxpayers who follow religions that the State does not recognize! [300]

Do you think this flagrant iniquity is beneficial to religion?

Do you also not think that these faiths would be better administered if the State did not subsidize them? Do you not think the services of religion would be distributed with more intelligence and zeal if the State did not guarantee churchmen a stipend, come what may?[301] Besides, experience has already pronounced on the matter. Nowhere are religious services better managed than in the United States, where the different faiths receive no subsidies. Many enlightened churchmen believe that the same arrangements would give France the same results.[302]

THE SOCIALIST.

This experiment should be carried out.

THE ECONOMIST.

The present management of education is more defective still than that of religion. The nation allots an annual sum of seventeen millions to an organization which distributes education in the name of the State, and which deals high-handedly with rival enterprises.[303]

Under the Ancien Regime, education was, [p233] like all other industries, in the hands of certain privileged corporations. The Revolution destroyed these privileges. Unfortunately the Constituent Assembly and the Convention hastened to decree the establishment of State schools, schools run at the expense of the State, of the départements or communes. Napoleon extended and radicalized this communist notion in founding the University.[304]

Grafted as it was onto the traditions of the Ancien Régime, and nurtured under the jealous eye of despotism, the University dispensed in the nineteenth century, the education of the fifteenth or sixteenth centuries. It set about teaching dead languages as people had taught them in those times, without suspecting in the least that what might be useful in the sixteenth century might well not be so in the nineteenth.[305]

THE CONSERVATIVE.

Why is that?

THE ECONOMIST.

I can accept that the ancient languages were generally taught at the time of the Renaissance. Nations which had scarcely emerged from the darkness of the Middle Ages, had barely developed science and literature as yet. To equip themselves with knowledge, ideas and images, they had to draw on the vast store of antiquity, whose riches had just come to light. The indispensable tool for the assimilation of these intellectual riches was language. One could not learn what the Ancients knew, without a knowledge of Greek and Latin.

In the nineteenth century the situation has changed. All the ideas, all the knowledge of antiquity have passed into the modern languages. We can learn everything the ancients knew without knowing the ancient languages.[p234] Modern languages are a universal key which opens up both past and present. The dead languages resemble today those ancient and impressive machines that get put in the Conservatory of Arts and Crafts, but which are no longer used in manufacturing.[306]

I am well aware that people have claimed knowledge of the dead languages to be essential for learning living ones. If this were so, however, would we not be obliged to learn half a dozen ancient languages in order to know French, for God knows how many elements went into the formation of our language? A whole lifetime would not be enough. Moreover, how many college pedants write fluently in Latin, and cannot spell in French? Voltaire was certainly weaker in Latin than the Jesuit Patouillet or Father Nonotte. [307] The dead languages are tools which pointlessly clutter up the brain and often obliterate it.

THE CONSERVATIVE.

What do you mean?

THE ECONOMIST.

I mean that by teaching Greek and Latin to children, we are prematurely communicating to them the ideas, beliefs and passions of two nations, without doubt very civilized for the era they lived in, but who would today be regarded as barbarians. This is true above all of their moral outlook. By submitting today’s children to a regime of Greek and Latin, one is filling their minds with the prejudices and vices of a civilization scarcely beyond its earliest stages, instead of communicating to them (p235) the knowledge and the moral outlook of an advanced civilization; we are turning them into rather immoral little barbarians…

If education had enjoyed the benefit of freedom instead of passing from the detestable regime of privilege to the still more detestable communist monopoly, it would have rejected long ago this ancient tool kit of dead languages, just as industries in free competition rid themselves of old machinery. We would teach children what is useful or is harmful to them; we would stop teaching them what is useless or harmful to them. Latin and Greek would be relegated to the brains of those museum pieces we call polyglots.

THE CONSERVATIVE.

I agree with you that there are considerable reforms to be done in University management. It was odious for example to oblige those institutions which were rivals to the University to pay it an annual contribution; it was scarcely less so to prevent these establishments from opening without special authorization, and to impose on them inspection by the University’s agents. Would it not be good, however, to allow the existence, alongside individual institutions which are henceforth totally private, of the institutions of the State and the communes? Would not this salutary competition serve the progress of education admirably?

THE ECONOMIST.

This regime would scarcely be preferable to the present one. Let me give my reasons:

Educational establishments belonging to the State and to the communes do not cover their costs and are not [p236] required so to do. The Treasury and the communal budgets take care of their deficits. The tax payers, those who have no children as well as those who do have, provide part of the costs of this communist education. Now I ask you, can private enterprise compete on a regular basis with these half-free establishments? This half-free condition is, in truth, often very costly, perhaps because of the poor quality of the teaching, perhaps because of the high level of total costs. Have not the establishments of the State and the communes the wherewithal to lower their prices indefinitely? Has it not even been mooted that education be made entirely free? In reality this would make it as expensive as it could possibly be, but this outcome would at the same time make all competition impossible. If the State generously undertook the supplying of cloth at half-price or free, who would consider continuing with the making of cloth? Could cloth production under free enterprise ever assume any really large scale, given the presence of a competitor handing over its goods for nothing?

Liberty in education will remain the purest illusion until the State, the départements and the communes cease completely and absolutely to meddle in public education.

THE SOCIALIST.

Could not the State and Commune Schools manage their costs as well as those of private production?

THE ECONOMIST.

Let them try! Let us abolish the budget for State education. Let us make the University and communes establishments [p237] cover all their costs and you will soon be astonished.

THE CONSERVATIVE.

Will you not at least agree with me that the State should retain the overseeing of educational establishments?

THE ECONOMIST.

I do not see any difficulty there. I think, however, that State surveillance would rapidly become pointless under a regime of true liberty.

What prevents State establishments today from improving in quality and price terms alike, is the precarious existence that the unequal competition from the University imposes on them. Freedom would give them stability. Teaching in these circumstances would become organized on an immense scale, in the same way as any industry whose future is guaranteed will organize and develop itself. The directors of the institutions, with their interest in making known the progress achieved in their establishments, would open their doors to the public. Fathers would be able to judge for themselves the quality of the diet, material, intellectual and moral, being given to their children. Keeping a watch on what was happening in this way, would be just as good as or better than being observed by University inspectors.

THE SOCIALIST.

This advertising of state education would please me well enough; but I ask you once more do you think private industry could meet all the needs of education?

THE ECONOMIST.

Put your trust as to that in the law of supply and demand. As soon as some educational need made itself truly felt [p238] it would be in someone’s interest to satisfy it. Under this regime, the production of education, which the trammels of the regulatory system have confined within limits that are too narrow, would not be long in reaching workable proportions. Teaching would be better and cheaper, and therefore more extensive. The poor would no longer contribute to the paying of educational costs for the rich man’s child, the single man would no longer be taxed to the benefit of the married one. Production would be more abundant, and distribution fairer. What more could you ask for?

 

Endnotes

[268] [See the earlier discussion on intellectual property (artistic and literary property) in Soirée no. 2.]

[269] The orthodox view of money held by the political economists was expressed by Michel Chevalier in the entry on "Monnaie” in the DEP, vol. 2, pp. 200-219, where he stated that money was either gold or silver of a defined weight and purity which was issued by a state mint or other government regulated body. Molinari here adopts the opposing view of his friend and colleague Charles Coquelin (1803-1852) who, in a series of articles and a book called Du crédit et des banques (1848), defended the view that private banks should be allowed to competitively issue their own currency which could be redeemed for gold upon demand. The irony is that when Coquelin reviewed Molinari's book Les Soirées in the JDE he criticized Molinari for making it appear to be the orthodox Economist opinion that security services could be provided privately and competitively in Soirée 11 when in fact this wasn't the case. In this chapter Molinari is again appearing to make it appear that the orthodox Economist view was that of free banking and competitive currency issue, but in this case it is Coquelin's and Molinari's view not the mainstream economists' position. Coquelin was one of the friends who joined Molinari and Bastiat in founding the revolutionary newspaper Jacques Bonhomme in June 1848 and he was appointed the editor of the massive 2 volume DEP which appeared in 1852, the year of his death at the age of 49. Molinari wrote his obituary for the JDE which was republished in Courcelle Seneuil's revised and annotated 2nd (1859) and 3rd (1876) editions of the Coquelin's book. [See Coquelin, "Banque” in DEP, vol. 1, pp. 107-45; Du crédit et des banques (Paris: Guillaumin, 1848; 2nd ed. 1859; 3rd edition 1876); Molinari, "Charles Coquelin,” in JDE, Sept-Dec 1852, T. 33, pp. 167-76.

[270] Molinari is referring to Adam Smith’s famous story of the pin factory which he used to illustrate the benefits of the division of labour in expanding output. J.B. Say thought a better example was provided by the more complex operation of manufacturing playing cards ("les cartes à jouer"). His son Horace Say summarizes Smith's and Say's arguments but chastises them for not taking their analysis further to include all the other parties which had to cooperate to get the metal to the pin factory before the production of pins could begin. [See, Adam Smith, An Inquiry Into the Nature and Causes of the Wealth of Nations, Vol. I ed. R. H. Campbell and A. S. Skinner, vol. II of the Glasgow Edition of the Works and Correspondence of Adam Smith (Indianapolis: Liberty Fund, 1981). Chapter: [I.i] CHAPTER I: Of the Division of Labour. ; J.B. Say, Cours complet d'économie politique pratique. Ouvrage destiné à mettre sous les yeux des hommes d'état, des propriétaires fonciers et des capitalistes, des savants, des agriculteurs, des manufacturiers, des négociants, et en général de tous les citoyens l'économie des sociétés, Volume 1. 2nd ed. Horace Say (Paris:Guillaumin, 1840). 3rd ed. 1852. vol. 1 CHAPITRE XV. De la Division du travail, pp. 165-166; Horace Say, "Division du travail” in DEP, vol. 1, pp. 567-69.]

[271] In the article "Papier-monnaie” in the DEP, vol. 2, pp. 316-23, Courcelle Seneuil makes a distinction between "papier-monnaie” (paper money) and "monnaie de papier” (money in paper form). The former is the creation of a political power, is imposed on users through legal tender laws, and is fraudulent; the latter is a product of voluntary contracts between banks and their customers, and are promises to pay gold or silver upon demand.

[272] Molinari is hinting at the famous line from Juvenal's Satires "sed quis custodiet ipsos custodes” (but who guards the guards themselves?). This same question was raised by one of Molinari's late 19th century followers, Vilfredo Pareto (1848-1923) in the very same context. In a discussion of the Italian government officials who regulated the banks which issued currency he asks "sed quis custodiet ipsos custodes?” Given the banking crisis that had engulfed Italy in 1898, Pareto concludes that "The Argus (Panoptes) of fable was not able to guard very well the chastity of the priestess Io. The Argus of the government has not been able to guard the honesty of the money issuing banks any better …” Closer to Molinari's own time the son-in-law of Nicolas de Condorcet (1743-1794), the Irish-Frenchman Arthur Condorcet O'Connor (1763-1852), wrote a three volume work on "the evils of monopoly” (1849) in which he argued that banking services could be provided "infinitely better” privately and that when they were provided by governments or "privileged factions” the problem of the "guarding the guardian” emerged: "It is a question of discovering the "quis custodiet ipsos custodes", who is it who can prevent the shepherd and his dogs devouring the sheep?” [See Vilfredo Pareto, La Liberté économique et les événements d'Italie (Lausanne: F. Rouge, 1898), pp. 89-90; Arthur Condorcet O'Connor, Le Monopole cause de tous les maux (Paris: Didot, 1849-50), 3 vols. Vol.1, pp. 221-25. See also the glossary entries on "Condorcet O'Connor” and "Pareto".]

[273] Molinari is making a play on words which in the French are “gratis, gratuit, gratuité”.

[274] Molinari uses the word “coalition” here which we have prreviously translated as “unions”.

[275] The Economists were divided into four camps on the issue of the private provision of public goods such as roads and bridges. Adam Smith had argued that the principle of "user pays” should prevail in most cases and that the government should only step in when no individual or firm would undertake the work privately. J.B. Say, on the other hand, thought that the state should play a bigger role because the benefits to individuals might be small but when diffused over the entire economy would add up to a considerable sum. A third school (e.g. J. Dupuit, Chief Engineer of the Bridges and Highways department) thought that Smith's idea of user pays could be taken even further as technology now made it possible for private firms to make money providing the means of transport (such as engines) as long as the state provided some of the basic infrastructure such as roads. Molinari comprised the fourth group which thought that every aspect of transport could and should be provided privately and competitively. [See, Adam Smith, An Inquiry Into the Nature and Causes of the Wealth of Nations, Vol. I and II, ed. R. H. Campbell and A. S. Skinner, vol. II of the Glasgow Edition of the Works and Correspondence of Adam Smith (Indianapolis: Liberty Fund, 1981). Chapter: [V.i.d] And, first, of those which are necessary for facilitating Commerce in general. J.B. Say, Cours complet d'économie politique pratique; ouvrage destiné à mettre sous les yeux des hommes d'état, des propriétaires fonciers et les capitalistes, des savans, des agriculteurs, des manufacturiers, des négocians, et en général de tous les citoyens, l'économie des sociétés. Seconde édition entièrement revue par l'auteur, publiée sur les manuscrits qu'il a laisées et augmentée de notes par Horace Say, son fils (Paris: Guillaumin, 1840). Vol. II, Pat 7, chap. XXIII "Dépense des routes,” pp. 306-7. Jules Dupuit, De l'influence des péages sur l'utilité des voies de communication (Paris: Guillaumin et Cie., 1849); articles in DEP, vol. 2: "Péages” (Tolls), pp. 339-44; "Routes et chemins” (Highways and Roads), pp. 555-60;  "Voies de communication” (Communication Routes), pp. 846-54.]

[276] Ambroise Clément in his article on "Monopole” in DEP, vol. 2, pp. 219-25, laments the fact that because transportation is so controlled and regulate

Last modified April 10, 2014