The Exit on the Road to Serfdom

One of my favorite quotes from the quotable Thomas Paine is a mere footnote in his treatise, Rights of Man, Part Second, in which he wrote:

It is scarcely possible to touch on any subject, that will not suggest an allusion to some corruption in governments.

Paine was referring to “the splendor of the throne,” which he said “is no other than the corruption of the state.  It is made up of a band of parasites, living in luxurious indolence, out of the public taxes.”  He thought the U.S. federal government, newly created by the Constitution, provided hope against political corruption because of the limitations it imposed on the government.  Paine was in England at the time and had no idea that the new government, whose intellectual leader was Alexander Hamilton, was busy interpreting those limitations out of existence.

Paine also didn’t know the Constitutional Convention of 1787 was in fact a coup d'état.  The participants had been authorized only to amend the Articles of Confederation, but the nationalists, at least, wanted to replace the Articles with a new government that would be more “energetic.”  Knowing that Washington’s presence at the convention would be critical to its success, Henry Knox told the retired general that he would be given the president’s chair, and moreover, that he would not be presiding over some middling conference of officials tinkering with the “present defective confederation,” but instead would lead a prestigious body of men as they created an “energetic and judicious system,” one which would “doubly” entitle him to be called The Father of His Country.

In a previous note Knox had awakened Washington’s interest by lying about the meaning of Shays’s Rebellion.  According to Knox, former Revolutionary War officer Daniel Shays had organized the riffraff of Western Massachusetts to shut down the courts to avoid paying their taxes.  They were levelers, Knox said, who sought to annihilate all debts through “the weakness of government.”  Washington, who owned some 60,000 acres in the Virginia backcountry, thought that such people were “a wretched lot, not to be trusted, and certainly not to be the bone and sinew of a great nation.”

In truth, as historian Leonard L. Richards has shown, Shays’s Rebellion was not an uprising of poor indebted farmers, but a protest against the Massachusetts state government and its attempt to enrich the few at the expense of the many through a regressive tax system. The rebellion began as peaceful petitioning and escalated into violence only after the state repeatedly ignored the petitions.  Though they were described in various disparaging terms, the rebels saw themselves as regulators whose purpose was “the suppressing of tyrannical government in the Massachusetts State.”  They drew their inspiration from the Declaration of Independence that said people should throw off any government that is destructive of their rights.

But the rebellion was finally crushed and has since been interpreted as proof that a stronger central government was necessary.  Following ratification, “We the people” were headed down the long road to serfdom at an accelerated pace.

Is there an exit on that road?

A few thinkers have argued that there is.

In 1849 in Paris, Gustav de Molinari and his laissez-faire colleagues met to discuss Molinari’s new book, Les Soirées de la Rue Saint-Lazare, a series of fictional dialogues between a conservative, a socialist, and himself, whom he referred to as the economist.  Molinari argued that the free market could produce the state’s traditional function of security without monopoly, or as he put it in another essay, “the production of security should . . . remain subject to the law of free competition.”

His friends at the meeting included Charles Coquelin, Frederic Bastiat, and Charles Dunoyer.  None of them accepted his thesis.  In the absence of a monopoly state, Coquelin asserted, competition was “impossible to put into practice or even to conceive of it.”  Bastiat said the only way to guarantee justice and security is with force, and that requires a “supreme power,” not spread over bodies “equal amongst themselves.”  Coquelin later wrote a review of Molinari’s arguments, correctly describing the latter’s position as one in which

the State would be nothing but a kind of insurance company, a rival to many others, and each person would, just as he pleases, freely subscribe to this one or to that one to guarantee himself against the troubles that threaten him, exactly as one would guarantee his house against fire or his ship against shipwreck.

Murray Rothbard describes the Belgian-born Molinari as the most “consistent, longest-lived and most prolific of the French laissez-faire economists.”  He was proposing life without a state, and there were virtually no takers.

Almost simultaneously in England a young Herbert Spencer was advancing a nearly identical thesis in his book, Social Statics.  Spencer argued that government would inevitably become smaller and “decay” as the voluntary institutions of the market replaced it.  As David Hart points out, “it must be assumed that the two thinkers arrived at their positions independently of one another, suggesting that anti-statism is inherent in the logic of the free market.”

A disciple of Spencer’s, Auberon Herbert, agreed with Molinari that the market, unhampered by the state, could satisfy every want that we have, including protection services.  David Hart:

Neither Spencer nor Herbert went as far as Molinari's suggestion that these voluntary defense agencies would be fully professional business organizations whose prices would be determined on the market by competition. They merely limited themselves to criticizing the monopoly of the state and arguing that the individual had the right to organize freely.

However reasonable their views might sound, they never had a wide following.  Molinari believed that the state would die a natural death, that full liberty and a free market were inevitable, yet in the last half of the 19th century he witnessed the rise of statism in all its virulent forms.  David Hart:

Molinari had well understood the fact that these groups which controlled or had access to the state, comprised a class which would not willingly give up the privileges that power bestowed. Unfortunately, he had badly over-estimated the readiness of the exploited classes, the workers, the consumers and the industrialists who did not seek state privileges, to identify government intervention as the enemy of progress.  [emphasis added]

The State: Protector or Predator?

Before dismissing Molinari as a hopeless idealist we should refresh ourselves on what the state actually is.  As Rothbard has written in “The Anatomy of the State,” one can acquire economic goods either by production or predation.  Following the line of thought of German sociologist Franz Oppenheimer, Rothbard says the state, as a monopolist of violence, “is the systematization of the predatory process over a given territory.”  More precisely,

The State provides a legal, orderly, systematic channel for the predation of private property; it renders certain, secure, and relatively "peaceful" the lifeline of the parasitic caste in society.

With this understanding, its hardly surprising that the state’s biggest problem is ideological.  To stay in control, it needs the support of the majority of its subjects, even if such support is only grudging acceptance.  Political leaders alone cannot muster the needed support.  The rulers need intellectuals to persuade the masses that the state is “good, wise and, at least, inevitable, and certainly better than other conceivable alternatives.”  In return for this support, the state sees that its intellectuals are well-taken care of. 

From this it follows that the greatest danger to the state is the person who publicly proclaims the nakedness of the emperor. 

This is our cue.  The state will continue to grow relentlessly if people are convinced that at the very least it is a necessary evil, as Paine once put it.  But the state’s abundant historical record is clear: It isn’t at all necessary.  It is simply evil.