Economics in One Lesson: Chapter I “The Lesson”

The fallacy of contemporary economic thought is, according to Hazlitt, essentially an inability (or refusal) to ‘see the forest for the trees,’ complicated further by the special pleading of interest groups (15). This tendency to only view the short term effects or the impact on a particular group, to the neglect of studying the long-term effects, Hazlitt dubs the “fallacy of overlooking secondary consequences (15-16).”

The Lesson then, is this:

The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups (17).

In one sense, this is a perfectly obvious and common-sense statement, truisms and cliches for which abound. And as far as the truism aspect of the statement goes, I’m wholly on board. Nobody should be willfully short-sighted. That is foolishness.

In addition, Mr. Hazlitt properly qualifies the statement of this lesson, guarding against the mirror-image fallacy (though I think he improperly downplays it’s significance in popular “conservative” thought):

In considering a policy, we ought not to concentrate only on its long-run results to the community as a whole. This is the error often made by classical economists. It resulted in a certain callousness toward the fate of groups that were immediately hurt by policies or developments which proved to be beneficial on net balance and in the long run (17).

Mostly to the good thus far. The concerns I have at this point are not with the principles explicitly stated in “The Lesson”: Rather, I am troubled by some of Mr. Hazlitt’s presuppositions which are implied in the way he frames his exposition of this lesson. Both of my current concerns stem from what I see as assumptions that reveal the “tradition” out of which Hazlitt is operating.

My first concern is more vague, and may be nothing more than a semantic quibble (though I doubt it, in light of his statement of purpose in the preface): Mr. Hazlitt seems to presuppose that economics is primarily a question of governmental “policy”; whether that policy be comprehensive rational organization enforced from the top down (socialism) or some kind of Lockean protection of “rights” such that “natural laws” may proceed upon their merry way unimpeded (or a combination thereof). We will have to see how this plays out in Hazlitt’s critiques of so-called “fallacies” in later chapters, but I expect that his views of the relationship between economics, government, and right behavior will bring us into conflict at some point.

My second (though related) concern is highlighted as Hazlitt waxes eloquent on the errors of the “new” economists:

They overlook the woods in their precise and minute examination of particular trees. Their methods and conclusions are often profoundly reactionary. They are sometimes surprised to find themselves in accord with seventeenth-century mercantilism. They fall, in fact, into all the ancient errors…that the classical economists, we had hoped, had once and for all got rid of [emphasis mine] (18).

Such a sweeping chronological snobbery is revelatory of a significant blind-spot in Mr. Hazlitt’s thinking: “Orthodoxy” is defined by your god. And anyone who has studied the Enlightenment should be just a little uneasy with this statement, however it works out in subsequent chapters.

Henry Hazlitt, Economics in One Lesson: The Shortest and Surest Way to Understand Basic Economics, (New York: Three River’s Press, 1979).

Economics in One Lesson: Preface

The economics instructor at my school uses this book as a part of her curriculum; and as I respect her opinion and scholarly knowledge of the subject, and as H.L. Mencken says of the author “He is one of the few economists in human history who could actually write.”, I will be working my way through Economics in One Lesson, with commentary as the spirit moves. Please feel free to jump into the ring and start throwing your weight about.

Preface to the First Edition

In order to understand where Hazlitt is coming from, one should apparently start by reading Frederic Bastiat’s Ce qu’on voit et ce qu’on ne voit pas (in translation for moi), Philip Wicksteed’s Commonsense of Political Economy, and the work of Ludwig von Mises.
I appreciate Hazlitt’s realistic understanding of “traditional” thought:

The present essay is, I suppose, unblushingly “classical”, “traditional”, and “orthodox”…But the student whose aim is to attain as much truth as possible will not be frightened by such adjectives. He will not be forever seeking a revolution, a “fresh start,” in economic thought. His mind will, of course, be as receptive to new ideas as to old ones; but he will be content to put aside merely restless of exhibitionistic straining for novelty and originality (10).

Couldn’t be more true, though whenever someone claims to be “orthodox” or “traditional,” a good question to ask is “which tradition?”; or, as Doug Wilson might say, “by what standard” do they measure their relative “orthodoxy?” Keep yer eyes peeled.

And finally, an explanatory statement of purpose, which is simultaneously sensible and revealing of some of the presuppositions that Mr. Hazlitt is going to be working from:

The object of this book is not to expose the special errors of particular writers, but economic errors in their most frequent, widespread or influential form. Fallacies, when they have reached the popular stage, become anonymous anyway. The subtleties or obscurities to be found in the authors most responsible for propagating them are washed off. A doctrine becomes simplified…It is the beliefs which politically influential groups hold and which governments act upon that we are interested in here, not the historical origins of those beliefs [emphasis mine] (11).

Henry Hazlitt, Economics in One Lesson: The Shortest and Surest Way to Understand Basic Economics, (New York: Three River’s Press, 1979).

The False Dichotomy of Enlightenment Economics I

One of the great dichotomies of modern thought is the conflict between Classical Economics (“Capitalism”) and Socialist Economics (more specifically “Marxism”). I would argue (and am hardly original in this notion) that the Cold War was between birds of a feather fighting over the same nest rather than diametrically opposed species. Because of their common root in Enlightenment assumptions about the nature of man, the universe, and epistemology, Capitalism and Marxism (or rather their adherents) have both caused incalculable dislocation, violence, and misery in the last two centuries. Certainly not the sole contributors to the inhumanity and malaise of contemporary society, but major contributors nevertheless.

Know your enemy:

The Wealth of Nations – Adam Smith

The Communist Manifesto

Preferring the Back of the bus to the Front

[C]apitalism and communism are based upon the same materialist errors and are related more as parent and offspring, or warring siblings, rather than diametrically opposed systems. In this light it is easy to understand why a number of the Agrarians…lobbied for the title of their manifest being “Tracts Against Communism”…insofar as they saw communism as the inevitable outcome of a system that concentrated wealth and industry…Andrew Lytle summed up: “[T]he defense of agrarianism was, itself, an attack on Communism”

– John Sharpe “Introduction” Beyond Capitalism and Socialism, xviii.