Christian Economics in One Lesson is my reworking of Henry Hazlitt’s classic introduction to economic thought, Economics in One Lesson. That book set the standard as an introductory economics book. Nothing has come close to replacing it ever since it was first published in 1946.
Why do I believe it is necessary to replace a classic? There are several reasons. First and foremost, it was written in 1946. A lot has happened since then, including the publication of Ludwig von Mises’ Human Action (1949). Second, it was written under a strict deadline. Hazlitt had been given a six-week leave of absence, and he had to produce the book from start to finish. It is possible to do this. I have written several books in less than a month. I wrote my introductory book on Christian economics, Inherit the Earth (1987), in two weeks. But I had a tremendous advantage at the time, which a year earlier I would not have enjoyed. I had a structure, as I explain below. Hazlitt did not have a comparable structure. This made his work more difficult, and it made the book less effective than it might have been. Third, he targeted a different audience: readers of his business columns. I target Christians. (Orthodox Jews are invited to come along for the ride.) Fourth, I place ethics at the heart of my analysis: the deliberate breaking of the window. Hazlitt did not — not explicitly, anyway.
Then came Hazlitt’s book. Hazlitt resurrected Bastiat’s brilliant analogy, and then he applied it, chapter by chapter, state intervention by state intervention. He demonstrated the analytical power of the original observation. The fundamental insight of Bastiat was this: the typical observer of economic affairs is blinded by the visibility of the effects of spending. He does not think to investigate what could have been done with the money. This insight has become the most common definition of economic cost: the most valuable use forgone because a buyer spends the money on something else. Anyone who wants to demonstrate economic logic can do no better than to invoke the broken window analogy.
Every economic decision is something of a broken window. It is the substitution of a new set of conditions for an older set of conditions. Maybe we do not break the old window, but we exchange it for something we think will be better. We come to forks in the road, decision by decision. Once we take a particular fork in the road, we can never return to exactly the same fork. Our world changes at the margin. It changes because of the decision which we made. So, when we think of the cost of any decision, we should always think of it as a decision to go down one road rather than another. We spend our money and we spend our time on one thing, and therefore we cannot spend it on another.
Because public works were popular in France in 1850, and everywhere else, Bastiat’s observation helped make it possible to come to grips with the real costs that are borne by individuals and societies when violence is used against a property owner. Just because the government is the violator, this in no way changes the economic analysis of the replacement costs of the broken window.
The power of the analogy is simple, for this reason: we can understand it. It does not involve a long chain of reasoning. We find it difficult to follow long chains of reasoning, and economic analysis, more than any other social science, usually involves long chains of reasoning. People get lost along the way. Also, as the reasoning becomes more complex, people’s commitment to the details of the chain of reasoning grows weaker. If it is necessary to argue a point in such a way that not a single link in the chain is left out or misapplied, then the outcome of the chain of reasoning is not clear, either to the person making the argument, or to the person who is listening carefully — initially — and attempting to follow it. The longer the argument, the less its persuasive strength. People get bogged down in the details. They cannot keep the details straight. If you can’t keep the details straight, you cannot be confident that you have gone from point A to point Z in a systematic and accurate way.
Making effective use of the analogy of the broken window involves pointing to only a couple of short chains of reasoning. There are more chains, and they can be long, but you don’t need to follow all of them in order to make your point. Most people can follow this chain, and one of the reasons why they can follow it is the simplicity of the analogy. We can understand a broken window. We can understand the economic burden of replacing that window. We do not get bogged down in a long chain of reasoning.
This is why Hazlitt’s book was a success. Bastiat did not make it work in his lifetime. He died in the year he came up with it. Over a century later, Henry Hazlitt made it work.
My book is not an attempt to reinvent the wheel. My book is an attempt to re-balance the wheel, stick a new tire on it, and to sell it to a new audience.
He should have started with ownership. He should have made private ownership the bedrock foundation of his analysis.
By beginning with the division of labor, he committed a strategic error. Critics from the Left immediately challenged him. They were also able to invoke the division of labor. They invoked state planning as a way to deal with the division of labor.
The fundamental economic issue, ownership, did not become a major focus of economic theory until the 1950’s. So, for almost two centuries, the crucial economic issue had not been central in free market economic analysis.
Hazlitt, following the lead of Bastiat, began with a violation of private property: the broken window. This act was a violation of ownership, but neither Hazlitt nor Bastiat focused on the rights of ownership. In other words, they did not begin with the fundamental economic issue: “Who is legally responsible for the allocation of property, and why?” Both men began with a negative sanction: throwing a stone through a window. This was a violation of property rights, but they never mentioned property rights. Had they done so, this would have raised the issue of ownership.
Then they followed the money. They showed that the owner had to re-allocate his financial budget to replace the broken window. Already, he was a loser. That was because he was a victim of a violent invasion of his rights of ownership.
(For the rest of my article, click the link.)