The Firm in a Free Society: Following Bastiat's Insights

Frédéric Bastiat did not devote much attention to the problem of the firm, so taking an interest in his thoughts on the topic could seem strange. Yet, the foundations for a realistic theory of the firm (and, more generally, of the distribution of human activities) are found in chapter 14, “Wages,” of Bastiat’s classic book Economic Harmonies. Further, the way that Bastiat lays the foundations are both original and profound. In this article, I will review Bastiat’s approach, develop it more fully, and draw some practical and theoretical conclusions about the nature of the firm.

Volume 16, Number 3 (2002)