Capital And Interest

Capital and Interest

by Frederic Bastiat

Capital and Interest is an essay by French economist Frédéric Bastiat that addresses the popular fallacy of the day that capital should be available to all gratuitously, without the necessity of paying back loans, and looking upon any form of interest as usury. Bastiat argues that capital is created by savings and that savings are what make borrowing possible so that the common man can get ahead and prosper, and lending is only worth the risk if the lender profits by it, via interest. He demonstrates the law of supply and demand, that, in essence, interest decreases as the availability of capital increases. His basic premise is that without a leisure class (people who have money to spare over earning daily bread), there would be nothing to borrow, so that neither the common man nor society can prosper.

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Frederic Bastiat image

Claude-Frédéric Bastiat was a French economist, writer and a prominent member of the French Liberal School.    A member of the French National Assembly, Bastiat...

Books by Frederic Bastiat

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