The great French economist Frederic Bastiat once wrote of the unseen destruction imposed by policies based on economic fallacies. We may see the wealth amassed by the industry favored by protectionist trade restrictions, for example, but we fail to see the wealth lost to society when acting on comparative advantage is prohibited. Seeing this unseen cost is essential to a full understanding of the world of human action. As Bastiat writes,
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.
Bastiat’s essay focuses primarily upon the invisible and disproportionate destructive effects which policies imposed from above eventually produce. With all respect to the man, I think that it may be just as important to focus on the unseen value created in everyday action.
In a society with a complex division of labor such as Bastiat’s and especially such as ours, our positive actions rarely have only immediately-visible effects. The forklift operator in an Amazon warehouse may only see his day to day work in moving boxes from point A to point B. Perhaps he is incredibly bored at the thought of this. However, what he may not see is that his own speed or efficiency in loading shipped goods enables delivery trucks to transport them more cheaply, making it possible for a retailer like Amazon to offer its vast variety of goods at lower prices to more people in more places. When consumers encounter Amazon, they find a vast variety of books, media, and products which may enable their own pursuits of everything from ballet to cooking to philosophy. Though he may not be aware of it, the forklift operator is partially responsible for the enjoyment and creativity of all of these chefs, ballerinas, and philosophers (though the philosophers might be quick to deny it).
Any reader of Leonard Read’s “I, Pencil” will understand the point of the illustration: while we may not have a visible and direct role in producing great effects in an economy, we invariably play a great role in making wealth – tangible and intangible – possible. It is in a sense true to say that almost all work is the creation of capital. While this capital may not consist of the land, money, or tools classically considered as “capital goods” or “the means of production,” the value which our forklift operator creates enables our truck drivers, retailers, and buyers to produce even greater value for themselves and others. This understanding allows us to appreciate what we normally see as small actions even more, and it gives powerful credibility to the idea that all forms of work can be carried out with dignity.
The key point to understand through this imaginative application of economics is that the bonds we form through creation and trade allow us to multiply our impact as individuals. Just as great artists are said to gain a kind of immortality through their work, producers in an economy leave a permanent mark on the shape of society.
There is a reason that the study of economics is included in the Praxis curriculum. Applications of economic thinking like Bastiat’s allow us to see and appreciate the world in new philosophical light. Consciousness of what it means to work and create value in an economy can make discovering ways to multiply that value all the more meaningful.
March 11, 2015
