Economics in One Lesson

Hazlitt’s economic philosophy, present both in Economics in One Lesson and across his broader body of work, is founded on the Classical economic belief that free markets are self-regulating and that state intervention often causes more harm than good. This theme is present in virtually every argument he makes and forms the backbone of his critique of the popular Keynesian economic policies of his contemporaries. Throughout the work, he thus argues for the need to establish free-market efficiency to ensure a strong economy.

Hazlitt draws from Classical and Austrian economics to present the market as a dynamic system governed by supply and demand, two forces that he believes naturally gravitate toward equilibrium. The price of goods, the wages of workers, and profit margins can all be derived from this equilibrium. In addition, the nature and quantity of production of goods and services are also dictated by these market forces. When everything is balanced, the market fosters full employment, an optimal allocation of resources, and encourages innovation. This theme is explored in Chapter 21, where Hazlitt defends profit as a “natural” but hard-to-achieve driver of economic growth, and in Chapter 23, where he argues that savings are essential to capital formation and funding investment for future productivity.