I first came across the work of Frédéric Bastiat in Robert Heilbroner’s The Worldly Philosophers, a readable survey of the major economic thinkers, in which Bastiat plays a minor role. I was attracted by Bastiat’s deft use of the reductio ad absurdum, as in his story of a hypothetical “negative railroad,” which is (de)constructed by a series of limitations meant to stimulate trade, but which wind up destroying it instead. It goes like this:
I have said that as long as one has regard, as unfortunately happens, only to the interest of the producer, it is impossible to avoid running counter to the general interest, since the producer, as such, demands nothing but the multiplication of obstacles, wants, and efforts.
I find a remarkable illustration of this in a Bordeaux newspaper.
M. Simiot raises the following question:
Should there be a break in the tracks at Bordeaux on the railroad from Paris to Spain?
He answers the question in the affirmative and offers a number of reasons, of which I propose to examine only this:
There should be a break in the railroad from Paris to Bayonne at Bordeaux; for, if goods and passengers are forced to stop at that city, this will be profitable for boatmen, porters, owners of hotels, etc.
Here again we see clearly how the interests of those who perform services are given priority over the interests of the consumers.
But if Bordeaux has a right to profit from a break in the tracks, and if this profit is consistent with the public interest, then Angoulême, Poitiers, Tours, Orléans, and, in fact, all the intermediate points, including Ruffec, Châtellerault, etc., etc., ought also to demand breaks in the tracks, on the ground of the general interest — in the interest, that is, of domestic industry — for the more there are of these breaks in the line, the greater will be the amount paid for storage, porters, and cartage at every point along the way. By this means, we shall end by having a railroad composed of a whole series of breaks in the tracks, i.e., a negative railroad.
Whatever the protectionists may say, it is no less certain that the basic principle of restriction is the same as the basic principle of breaks in the tracks: the sacrifice of the consumer to the producer, of the end to the means.
I was so charmed by this description of a self-defeating process (my favorite kind), that it was not immediately clear to me what Bastiat was for, which was unrestricted free trade. Bastiat is an icon with the Mises crowd. But, rather than anti-protectionism and anti-statism, the negative railroad strikes me today as a cautionary tale about something else entirely: namely, unfettered capitalism and monopoly power.
This is not to say that Bastiat is wrong; only that the “the sacrifice of the consumer to the producer” can take different forms. For Bastiat, the threat was that the producers would leverage state power to screw consumers. But that doesn’t imply that an absence of state regulation — Bastiat’s desired state — won’t allow producers to construct a negative railroad all on their own. A privately-run negative railroad. Like the Internet.
Everywhere we are assailed by the online equivalents of this “break in the railroad from Paris to Bayonne at Bordeaux,” in the form of pop-up forms and paywalls and sponsored search results and astroturf and propaganda. Bastiat’s “negative railroad” turns out to be little more than a restatement of the tragedy of the commons, where actors make local, short-term optimizations that lead to the destruction of the whole.
“Local” here is important, because when Bastiat and his negative railroad are deployed by libertarians they knowingly chuckle (see Henry Hazlitt’s classic Economics in One Lesson) at how short-sighted regulators are, harvesting local, short-term gains that can be seen while sacrificing unseen benefits in the long-term. (To which Keynes famously replied that, “In the long run we are all dead.”)
But scope is a funny thing, as anyone who fiddles with numbers for a living can tell you, and there is a case to be made that Bastiat and his successors widen it only far enough to make their point. In other words they urge the enlargement of the sphere of effects to the entire realm of capital, but do not consider that capital — property and enclosure — are the original negative railroad. Originally everything was free, and — ontologically — it all still is. You can pick up anything in a store and handle it and are only prohibited from leaving with it by the force of law, a break in the tracks created by the state for capital’s (and possibly consumer’s) benefit. (In 2018’s Oscar-nominated Shoplifters from Japan, the master thief explains to his young protégé that things in stores don’t belong to anyone yet, which gets at this intuition.)
I am not arguing that “property is theft” — Bastiat had a famous debate with Proudhon — only that the negative railroad argument fails because the negative railroad is irreducible. The only real debates are about where to put the stops.