…the political writers who deny this and the public speakers who exploit this alleged social scourge are inciting workers to a senseless and unjust conflict whose only outcome will be the misfortune of all.
Part 1 of 5
Today’s quote reminds us that all politicians have read The Prince from Machiavelli and that “dividing to rule” is undoubtedly part of their arsenal. Let’s stop falling for it. In an interesting way, Frédéric Bastiat leaves here the question as to who is right. If his opponents (the socialists) are right on the fact that interest is illegitimate, then the conflict of labour against capital is legitimate but if it is not, then this conflict can only lead to disaster (which tends to be confirmed by what we know now from the 20th century and does not bode well for the future with the current interest rates distortions implemented by Central Banks).
This first part introduces the justification of interest through the angle of exchange. It shows that, either by introducing a time variable within a money exchange or by illustrating a temporary exchange of two different tangible assets, the absence of interest would introduce an injustice in the heart of the exchange. In this demonstration, I find it particularly interesting that Frédéric Bastiat explains that the exchange of services is at the source of value, without any reference to working hours that was the mistake of Adam Smith and Karl Marx, as shown by Carl Menger subsequently, and despite what he himself had written six months earlier.