I will renounce all the illusions of socialism and make myself a Christian once more if you prove to me that the benefit provided by capital, as well as the circulation of financial assets, cannot under any circumstances be free of charge.

Pierre-Joseph Proudhon
Letter No. 7
P.-J. Proudhon to F. Bastiat

I cannot find in Proudhon’s letters any convincing explanation, or even any proper attempt at demonstrating that free credit is sound. He may well gesticulate and accuse Bastiat of intellectual dishonesty, I have the feeling that he is the one displaying some (although Frédéric Bastiat does not seem to think so and does not accuse him of such a misdemeanour). What appears certain in today’s quote is that Pierre-Joseph Proudhon believes in Santa Claus, or at least has never been told that TANSTAAFL (There Ain’t No Such Thing As A Free Lunch).

Obviously, he believes that because it is possible that someone obtains something for free one day, that thing can be free. Economists (notably Milton Friedman) know that it is not the case, that there exist opportunity costs and that, even without having push the reasoning that far, there is always a cost – monetary or not, borne by the beneficiary or not – to any benefit.

Towards the end of this seventh letter, Proudhon ridicules himself even more in launching an attempt at ad absurdum reasoning and using a Robinson Crusoe example (which are two methods notably cherished by economists for their didactical virtues) in order to try and show how unjust it can be when a negotiation is made with a capitalist. His example however proves only one thing, namely that the lack of competition can be tragic and is certainly harmful to a free-trade economy.

Other quotes from Free Credit:
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