Frédéric Bastiat wrote Economic Harmonies to show that the interests of people who trade and save tend to converge when no one uses force or fraud. He meant it as the constructive counterpart to Economic Sophisms, which attacked protectionist fallacies. He published the first ten chapters in 1850, months before his death; P. Paillottet and R. de Fontenay issued the first complete edition from his manuscripts in 1851. The book rewards a reader for its theory of value as a reciprocal exchange of services. With that relation Bastiat analyzes a sale and a loan alike, then carries into taxation the same test of whether the person paying could compare offers and refuse them. The later chapters are drafts he did not live to revise.
The harmony is conditional. Justice prevails, Bastiat writes, when no violence or fraud impairs the equivalence of services, and freedom leaves room for errors of judgment, since people are often the dupes of their own opinions and passions. He acknowledges evil and suffering. His confidence in a providential design is his religious conviction, and a reader can weigh the economic argument without granting it. Separating the two also blocks the careless reading in which every historical fortune counts as earned.
Bastiat rejects the idea that value inheres in physical objects or grows in fixed proportion to hours of labor. A service gains importance from its usefulness, the scarcity of people ready to perform it, the pains it costs and the effort it spares the buyer. Value also depends on the buyer's estimate, so vanity and ignorance enter the price, and a lucky find can command value for the effort it saves someone else. Rogues who sell little images promising Paradise receive payment, and in his economic sense their fraudulent service has value; he assigns the correction to morality. Market value follows the judgment of free parties, which separates him from a labor-cost theory without making every price rightful, since fraud breaks his condition of justice.
The chapter on capital carries the same relation into time. Robinson Crusoe, weighing whether to make a tool, spreads its labor over every future use, and Bastiat finds the basis of interest in that distribution of an advance. Tools require materials and provisions saved from present consumption, so a lender renders a service by postponing his own satisfaction, and interest compensates that postponement and service. Interest also lets an owner of permanent improvements divide his outlay across an unknown number of future users without making early users pay for later ones. Bastiat admits that borrowers can err. He grants that rents on improved land can rise with population, which makes the depreciation of older capital a tendency with exceptions. His stated law that capital's absolute income rises while its relative share falls, with labor gaining more, rests on two arguments: plentiful capital lowers the rate of interest, and capitalists would consume capital if an addition reduced their absolute income. He illustrates it with invented figures, such as capital doubling from 100 to 200 as the rate falls from 5 to 4 percent, which show the mechanism without supplying income-share data.
Chapter 17 turns the test on government. Bastiat rejects the claim that everything spent on public services is lost: officials and taxpayers labor for each other, and services valued for regularity and uniformity can sometimes be supplied more cheaply in common. His objection begins where payment stops depending on the payer's choice: the provider's pay then continues whatever the result. Uniform rules also displace individual valuation, and a note to the chapter cites the war minister's report of soldiers on identical rations, some throwing away bread while others went short of meat. Because government acts through force, Bastiat confines its legitimate scope to public safety and the protection of liberty and property, plus administering existing public property and debts and levying the necessary taxes. Voluntary associations count as private activity in his scheme, so private action for him includes cooperation. Public spending brings no automatic net gain through circulation, he argues, since taxpayers would have spent the money themselves. The result is a limited-government case, far from anarchism. His sketches of French and American conditions are period polemic, and he calls American slavery an injustice backed by law.
Readers should expect gaps in the later book. Chapter 17 breaks off in the manuscript, and the theological closing chapter stops after its introduction, followed by an appendix that is a letter Bastiat addressed to himself late in 1847. Where one manuscript page is missing, the continuation in the notes belongs to the editor. Bastiat's book suits readers who know The Law or the Sophisms and want the theory beneath them, and it expects tolerance for nineteenth-century argument against Proudhon and Ricardo. The 1996 Foundation for Economic Education translation by W. Hayden Boyers, edited by George B. de Huszar with an introduction by Dean Russell, is under copyright; the Online Library of Liberty hosts it with permission as the Economic Harmonies PDF.