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Book Review: The Economics of Freedom

The Economics of Freedom by Hayek presents some of Bastiat’s most important essays, especially to counter the fallacious economic thought, which is being used to justify the steady erosion of our freedoms. Bastiat was a nineteenth century French political economist who in these essays, through the description of “What Is Seen and What Is Not Seen” at each economic step, analyzes the world in a new light.

Foreword by F. A. Hayek makes it clear that if we judge measures of economic policy solely by their immediate and concretely foreseeable effects, we shall not only not achieve a viable order but shall be certain progressively to extinguish freedom and thereby prevent more good than our measures will produce.  The book then examines both the visible effect and effects that must be foreseen, while investigating the consequences of several economic phenomena. Like those due to natural calamities, accidents, different kinds of taxation, entertainments, public works and expenditure, middlemen and their economic role, free and controlled trade, mechanization, effect of luxury, thrift and moderation in spending.

“There are two consequences in history: one immediate and instantaneously recognized; the other distant and unperceived at first. These consequences often contradict each other; the former come from our short-run wisdom, the latter from long-run wisdom. The providential event appears after the human event. Behind men rises God. Deny as much as you wish the Supreme Wisdom, do not believe in its action, dispute over words, call what the common man calls Providence “the force of circumstances” or “reason”; but look at the end of an accomplished fact, and you will see that it has always produced the opposite of what was expected when it has not been founded from the first on morality and justice”

In the essay ‘Twenty Myths about Markets’ Tom G. Palmer examines many myths of free markets, grouping those into Ethical Criticisms, Economic Criticisms, Hybrid Ethical-Economic Criticisms, and Overly Enthusiastic Defenses. That free market is an ethical entity, this essay mentions, because, for there to be exchange there has to be respect for justice. Love and friendship are the fruits of mutual benefit through cooperation, whether in small or in large groups and that is what the free market stands for. And it should be remembered that “free markets may not solve every conceivable problem, but they can and do produce freedom and prosperity, and there is something to be said for that”.

I think we have this tendency of attributing all that is good with our society to whatever is dear to us, and, putting the responsibility of all that is wrong with our society, to what we dislike. And this is seen most clearly in economic sciences. This essays can be of good help in changing that.