Fallacies of the Public Goods Theory and the Production of Security

Abstract

In 1849, at a time when classical liberalism was still the dominant ideological force and “economist” and “socialist” were generally — and rightly so — considered antonyms, Gustave de Molinari, a renowned Belgian economist, wrote, “If there is one well-established truth in political economy, it is this: That in all cases, of all commodities that serve to provide for the tangible or intangible need of the consumer, it is in the consumer’s best interest that labor and trade remain free, because the freedom of labor and trade have as their necessary and permanent result the maximum reduction of price. And this: That the interest of the consumer of any commodity whatsoever should always prevail over the interests of the producer. Now, in pursuing these principles, one arrives at this rigorous conclusion: That the production of security should in the interest of consumers of this intangible commodity remain subject to the law of free competition. Whence it follows: That no government should have the right to prevent another government from going into competition with it, or require consumers of security to come exclusively to it for this commodity.” ¹ And he comments on this whole argument by saying, “Either this is logical and true, or else the principles on which economic science is based are invalid.”²