The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Economic Harmony

  • Israel M. Kirzner
Reference work entry


This term has been introduced frequently into economic discussion, and especially into discussions concerning the history of economic thought. Yet there seems to be a good deal of ambiguity as to what it is to mean. Moreover, there has developed considerable disagreement concerning the centrality of the ‘harmony’ idea to the development of economic thought, and similar disagreement concerning the extent to which the classical economists, in particular, are to be seen as harmony-theorists. We will return a little later to distinguish various different senses that have been attached to the term ‘harmony’ in economics. For each of these different senses, however, acceptance of the harmony thesis has been held to imply a favourable stance towards a policy of laissez-faire. It is thus not surprising that 18th-century precursors of the notion of harmony have been discovered in Cantillon and in Quesnay (Schumpeter 1954, p. 234). And we are not surprised to find some writers emphasizing the harmony ideas they see in the classical economists, especially in Adam Smith (Halévy 1901–4, p. 89; Heimann 1945, p. 65), while others vehemently question the unqualified identification of these writers with harmony theories (Robbins 1952, pp. 22–9; Samuels 1966, pp. 6–8; Sowell 1974, pp. 16f). It was in the middle of the 19th century that the best–known writings appeared concerning economic harmony. The term appeared in the title of two books by the American economist Henry C. Carey (Carey 1836, 1852). These works were followed by a general treatise stressing the same theme (Carey 1858–60). The term also appeared in the title of a book by the French economic writer Frédéric Bastiat (1850). For a (muted) defence of Bastiat against widespread 19th-century charges that his work in this respect was a crude plagiarism of Carey, see Teilhac (1936, pp. 100–113), who points to the inspiration that both Carey and Bastiat received from J.B. Say. Subsequent references to harmony theories in economics generally tended to be critical, as economists began to argue (from the latter decades of the 19th century into the 20th century) for greater state intervention in market economies on perceived grounds of economic efficiency or economic justice. During most of the 20th century economists, even when they have defended the efficiency and justice of markets, have generally not couched their arguments explicitly in terms of harmony theory. Even Ludwig von Mises who, as we shall see, was an important exception to this last generalization, relegated the notion of harmony to a distinctly subsidiary role in his system. Recent re-awakened attention to 18th-century theories of spontaneous order, especially as rediscovered and expanded in the work of Hayek, has not had the effect of reintroducing the term ‘economic harmony’ to current usage. We turn now to take notice of the several different (although certainly interrelated) senses in which this term has been used during the history of economics.

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© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Israel M. Kirzner
    • 1
  1. 1.