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Chapter 5: The Role of Government

in Society

Every day when we turn on the news, we discover that the bulk of it consists of what governments around the world are doing. It seems that if we didn't have governments to amuse us, there would be no news at all. In fact, without the beneficence of government, life might become so boring as to not be worth living at all.

Even with all this talk about government, it is amazing that the population in general does not have a clear idea of what government is. When I ask people what the purpose of government is, or what the essence of government enterprise is, they frequently shrug their shoulders. The term government , like so many other terms we use daily, is taken for granted and is poorly defined at best.

Government Defined

When I asked this question at a fund-raiser in 1990, one Colorado state senator offered this definition: "The purpose of government is to accomplish goals that cannot be met through individual cooperation alone." When I asked him if that meant government is an agency of force for making people do what they would not do of their own free will, he squirmed a little, and said "yes." Even though he tried to euphemise the hard reality of the coercion that underpins government enterprise, his statement was still illuminating, both in terms of what he said and how he said it.

The best way to learn what government is, is to consider what government does. American politicians have not always been so coy when describing the essence of government. George Washington declared: "Government is not reason; it is not eloquence; it is force! Like fire, it is a dangerous servant and a fearful master."1

In this era, simple definitions are hard for people to accept. Even in the Dictionary , euphemisms abound. Let's consider "government":

The act or process of governing, especially the control and administration of public policy in a political unit. 2. The office, function, or authority of one who governs or of a governing body. 3. The exercise of authority in a political unit; rule."2

That helps us some. Let's now consider "politics":

(used with a singular verb). The art or science of government; political science. 2.(used with a singular verb). The activities or affairs of a government, politician, or political party."3

This one did not really tell us much more than we already knew. How about pursuing a description of politicians that is used frequently in the media? Are they not called "lawmakers?" Let's check on the definition of "law":

a. A rule established by authority, society, or custom. b. The body or system of such rules. c. The control or authority imposed by such a system of rules."4

We are getting closer. Let's try one more lead--a derivative of "government" which is "govern":

To make and administer the public policy and affairs of; exercise sovereign authority in. 2. To control the speed or magnitude of; regulate: a valve governing fuel intake. 3. To control the actions or behavior of. 4. To keep under control; restrain."5

The last two entries are the least euphemistic: government's primary function is to "restrain" and to "control the actions or behavior of." Of whom? Anyone who is not-government. The confusion we experience when considering the purpose of government is not new. In the 1770s, Thomas Paine observed, "Some writers have so confounded society with government, as to leave little or no distinction between them; whereas they are not only different, but have different origins. Society is produced by our wants, and government by our wickedness; the former promoting happiness positively by uniting our affections, the latter negatively by restraining our vices."6 This idea was further developed by James Madison when he wrote, "Why has government been instituted at all? Because the passions of men will not conform to the dictates of reason and justice, without constraint."7 Summed up, government is that agency in society which is given a monopoly on the use of legal coercion. Whenever a law is passed, the government is empowered to assess penalties against those who refuse to comply.

In Chapter 3 , a distinction was made between offensive coercion and defensive coercion. It was also noted that whether an act of coercion is legal or illegal often bears little relation to whether the coercion is defensive or offensive in nature.

In America it is considered common wisdom that any and all political involvement is good. Very often we hear, "it doesn't matter how you are involved politically, all that matters is that you are involved." If politics is about coercion, does it automatically follow that any kind of coercion is good? As some laws work to keep people off each other's backs, and other laws assist some people in living at the expense of others, indulging in the blind worship of politics may not be such a good idea after all.

Is Government Necessary?

There are those who insist that government is totally unnecessary. In theory, that remote possibility might exist. However, James Madison summed it up best when he said, "It may be a reflection on human nature, that such devices should be necessary to control the abuses of government. But what is government itself, but the greatest of all reflections on human nature? If men were angels, no government would be necessary . If angels were to govern men, neither external nor internal controls on government would be necessary."8 In other words, if it weren't for the predators among us, ordinary productive citizens would have no need for protection. As long as each new generation brings with it a new crop of predators, government will be necessary.

One reason why some people oppose government is because its power has been abused so often. George Washington once commented that "throughout history, man's worst enemy has always been his own government." Of course, he did not oppose government as an institution, but instead insisted that limitations be placed on its exercise of power. He, like Thomas Jefferson, declared that "In questions of power, then, let no more be said of confidence in man, but bind him down from mischief by the chains of the constitution ."8

The problem that faces each generation anew is how do we organize this agency of coercion in such a way as to control the predators without being taken over by the predators. Even more fundamental is the problem of defining what constitutes predatory behavior and what constitutes legitimate defense.

In the next section, we will explore commonly accepted uses of government coercion. Before we can decide whether legal coercion is defensive or offensive in nature, we must first consciously catalog our commonly accepted uses of legal coercion.

Commonly Accepted Uses of Government Coercion

Before evaluating whether or not law is defensive in nature, we need an overview of the areas of life where it is generally assumed that government should control. Currently accepted uses of government force are: 1) fight crime (as defined by government); 2) promote charity; 3) regulate resource allocation and use; 4) control information (education and media); 5) regulate socially acceptable behavior.

Fight Crime

Crime is an interesting topic. I once saw a bumper sticker that said, "If popcorn is outlawed, only outlaws will have popcorn." At first glance, this bumper sticker might seem silly. But then again, if popcorn were outlawed, anyone possessing said vile substance would by definition become an outlaw.
Thanks to the long held notion that "it must be a just law merely because it is a law,"10 it seldom occurs to us that there might be just laws and unjust laws. For the most part, we find ourselves in this dilemma:

"How would you set standards for right and wrong?"
"I'd say that, ultimately, right and wrong are what a body of reasonable people of good will decide they are."
"And who decides what is 'reasonable' and what is 'good will'?"
"Reasonable people of goodwill."11

The chapter on ethics concluded that all ethical systems prescribe principles of action for guiding relations among people. Also, it was observed that relationships are of two types: voluntary or coercive. Using this yardstick, we can better determine whether laws are designed to protect people from encroachment by others, or whether the laws themselves are a form of encroachment.

When it comes to protecting peoples' lives, the principle of law is quite clear--government uses defensive force to protect citizens from force and fraud perpetrated by others. Predators who seek to live at the expense of productive people must be controlled if society is to survive and prosper. Laws that mandate the use of organized coercion to protect the lives and property of non-predators is defensive law .

Beyond protecting people from force or fraud perpetrated by others, law becomes "preventative law" at best and offensive force at worst. When that happens, we know that the predators themselves have taken over the writing of the laws. (On the lighter side, one rascal politician I know, Snidely Slickster , sums it up best: "I can accomplish through law what can only be done otherwise through crime.")

Promote Charity

One universal and popular use of government power is to enforce charitable giving. This can be accomplished directly through taxation, or indirectly through devices such as laws that mandate benefits, thereby imposing costs on the community in a manner not measurable in terms of tax collections. (Strategies like this make governments appear smaller than they really are because the added costs imposed on the economy are not reflected by treasury receipts.)

The principle justification for using coercion to motivate charitable giving is the indictment against humanity that declares people are selfish by nature and therefore will not give enough charity unless forced. Implicit in this indictment against the average person is a presumption of moral superiority by an elite. Their compassion is said to give them the right to force their version of virtue on everyone else. (Of course, it is worth noting that they "do not spend their own money; they advocate taxes."12)

This brings us to a difficult philosophical problem. Why is it illegal for a private citizen in need to use force to collect charitable donations, and yet it is a moral imperative for government officials to do the same? Isn't it arbitrary to sanction the use of coercion by some, but not by others? Of course, were we to extend the privilege of coercion enjoyed by bureaucrats to everyone, we would soon have a free-for-all. (Given the track record for social programs so far, the result may not be much worse.)

In a 1976 lecture at Hillsdale College, M. Stanton Evans made a disturbing calculation. He observed that there were by official definition 25 million poor people in the United States. And he also noted that between 1965 and 1975 the total expenditure on social welfare programs increased some $209 billion to a staggering total of $286.5 billion. He said: "If we take those 25 million poor people and divide them into the $209 billion increase--not the whole thing, just the increase--we discover that if we had simply taken that money and given it to the poor people, we could have given each and every one of them a stipend of some $8,000 a year, which means an income for a family of four of approximately $32,000. That is, we could have made every poor person in America a relatively rich person. But we didn't. Those poor people are still out there."13

Of course, that was almost 20 years ago. Now the media informs us daily that poverty has increased, all the while calling for even greater sacrifices. What seems to be overlooked is the likelihood that those programs have been partly responsible for making these problems bigger. When resources are forcefully taken from productive citizens and given to non-productive citizens, both producers and non-producers alike are demotivated. Once productive people figure out that they will not be allowed to enjoy rewards from their work, they will naturally conclude, "why bother?" Also, when non-productive people learn they can enjoy rewards without work, they too will say, "why bother?" Finally, all the resources that have been forcefully confiscated on behalf of "charitable" enterprises are no longer available for investment and job creation.

For some, however, the loss of aggregate wealth is a small price to pay for the pursuit of a humanitarian ideal. While exploring the ethics of St. Thomas, William Augustus Banner quoted him thusly: "Even theft must be seen in the full light of charity in order to determine which acts of appropriation are morally wrong. Inasmuch as material things are to be held in such a way as to be shared with others, the taking of the goods of another when one is in need is not really theft."14 This does leave us with a curious dilemma. When even the saints advocate the use of coercion for the sake of charity, we know that the ideal of voluntary charity will be a tough sell.

Regulation of Resource Allocation and Use

The next area that is popular for government to control is material resources--either directly through possession of legal title or indirectly through regulation. The first focus of regulation is usually on the "means of production" (a fancy way of saying tools.) Of course, because tools have no existence or value without people, tool control is people control. "Give me control over a man's economic actions, and hence over his means of survival, and except for a few occasional heroes, I'll promise to deliver to you men who think and write and behave as you want them to."15

In some circles it is considered common wisdom to equate economic power with political power. Furthermore, some consider economic power to be even more dangerous. One such case was an immigration judge I met who openly declared that he would rather see one-hundred poor Mexicans added to the welfare roles than admit a successful Chinese person into the United States who might "shift the balance of racial power."

Underlying the propensity for equating economic power and political power is envy, economic ignorance and ethical confusion. If a private citizen's new business offers workers new options that are an improvement over their previous options, but fails to produce paradise on Earth, he or she is accused of being a dictator and an exploiter. On the other hand, if government policies limit peoples' options, that is acceptable because a worker's paradise is just around the corner which will more than justify today's sacrifices. (And if a government program fails, there will be the inevitable conclusion that even more resources should have been used.)

While the above theory makes no sense logically, it has a strong appeal for envious souls. Eric Hoffer once observed, "Where freedom is real, equality is the passion of the masses. Where equality is real, freedom is the passion of a small minority."16 By discrediting voluntary association in the market and extolling demagogues who sabotage the market, the masses enjoy the guarantee of equality--meaning, of course, being equally poor . (Equal, except for the bureaucrats who preside over the creation of widespread poverty while living luxuriously themselves.)

In practice, the theory that command economies will create equality has not worked out. Max Eastman believed strongly in the ideal of shifting competition from the pursuit of private property to the pursuit of honors--recognition for social achievement and service. Based on this lofty ideal, he placed great hopes on the success of the Soviet experiment. Later, he had second thoughts. In his words, "It did not occur to me that the new goal might be power--still less that the new rulers by getting power would manage to get most of the money as well."17 Gandhi, who believed in nationalizing numerous industries18, nevertheless observed that, "When the disparities in income in the U.S.A. are in the ratio of 1:15, they still continue to be 1:80 in the blessed country where the experiment started first."20 (It is interesting to note that disparities of income in America are becoming more pronounced as industry becomes ever more regulated--in some cases as much as 109 times as high as the income of the average person. ) Now that command economies have been going concerns for some four decades, we have statistical data:

The evidence strongly suggests that free societies have higher shares of income going to the second through the fourth quintiles (twentieth to eightieth percentiles) and lower shares being received by the fifth quintile (eightieth to one hundredth percentiles). Conversely, societies in which political, civil, and economic rights are restricted have lower shares of income recipients in the twentieth to eightieth percentiles and higher income shares among the income recipients among those in the eightieth to one hundredth percentiles. The relative share of the poorest in society (Q1) is invariant to the choice of institutional framework. Thus the poor are no better off in terms of relative income, which is only one aspect of quality of life, in free or tyrannical societies.21

Summed up, the middle 60 percent of the population fares better in less regulated societies, while the top 20 percent fares better in more regulated societies. As for the bottom 20 percent, they fare poorly in both. Depressions come and depressions go and they never notice. (However, additional regulations and bureaucratic harassment cannot help but make being poor even more of a burden.)

From an economic viewpoint, more efficient methods of production can only mean a better standard of living. But material well-being is only one concern people have. Some fear change more than they fear poverty. They are the ones who do not want to upgrade their skills or equipment to meet the next wave of competition. Instead, they prefer to sabotage the entry of each new generation of innovators as they invade the marketplace.

From a political viewpoint, leaders who are invested in the status quo are obliged to try to fight change. Also, a better standard of living for the masses often works against the best interests of those in power. "Where people toil from sunrise to sunset for a bare living, they nurse no grievances and dream no dreams."22 Therefore, people who make promises to improve the lives of the general population through increased regulation need to be considered naive at best, or malevolent at worst. It can only help those in power at the expense of the general population.

Regarding ethics, there is a great deal of difference between being forced by law to choose an option and being obliged by circumstance to choose an option because it is the best one available at the moment. Our material existence requires that we (or someone we have enslaved) perform productive actions in the material world as the price of our survival. That is our metaphysical slavery . On the other hand, if someone forces us to labor on their behalf, and/or limits our range of available options, that is manmade slavery . This common failure to differentiate between manmade slavery and metaphysical slavery causes humanity a great deal of suffering and grief--both physically and emotionally.

Information Control

Once a new government has been successfully established, its emphasis immediately shifts from revolution to self-preservation. Hence, the need for information control. Eric Hoffer observed that once "men of action" take over the helm of the ship of state, "No effort is spared to present the new order as the glorious consummation of the hopes and struggles of the early days."23 In America, for instance, government is promising security as the fulfillment of the constitution, whereas much historical evidence suggests that opportunity was the driving force from the revolution until the early 1900s (when new college graduates started asking about retirement benefits instead of opportunity for advancement during employment interviews). Benjamin Franklin summed up the early American ethic by declaring, "They that give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety."24

The two primary sources of information in any society are the education system and the media. These two mediums are the government's primary avenues of information control. Of course, even the best propaganda mills have their limitations because people cannot deny the evidence of their senses indefinitely.


Education is a very important tool for governments seeking to maintain the status quo. Also, it is generally accepted that government should control the education system. (There is still much resistance to the notion that the media should be so controlled.) Thomas Jefferson, although opposed to big government in general, was in favor of public education: "If the people don't have enough information to wield power correctly, don't take the power from them. Give them the information!"25 His advocacy of public education was probably quite innocent and well-intentioned, but we must remember that Hitler also called for a government monopoly on education.26


The media does not need to be controlled directly. Before people can work in the "free press" they must first be indoctrinated by the government education system. In other words, controls over the press do not have to be direct. When journalists are indoctrinated in advance, less control of the press is needed.

Even propaganda has limits.

Governments have long used education as a tool to maintain their power and influence. Nevertheless, the more the party line is at variance with reality, the more force must be used to control malcontents. The Soviet leaders, for instance, went to great lengths to convince their people that the West was worse off economically than the Soviet Union. The book, Political Economy, which was referred to in Chapter 2 , worked hard to portray the rest of the world as suffering in comparison to the worker's paradise. According to Aleksandr Solzhenitsyn, Soviet soldiers who had served in World War II in Europe were immediately imprisoned or executed when they returned home so they would not leak out the news of how much better people in the West were living.27

Words and propaganda have their limits. "So acknowledged a master of propaganda as Dr. Goebbels admits in an unguarded moment that 'A sharp sword must always stand behind propaganda if it is to be really effective.'"28

Regulating Socially Acceptable Behavior

Another popular area for government regulation is personal behavior. The most visible prohibitions are usually related to sexual behavior (especially prostitution), drug use and gambling. However, governmental prohibitions often extend to other activities as well. For instance, minimum wage laws prohibit employers from paying less than minimum wage to entry level employees, making on-the-job training less feasible. Consequently, the unskilled people with little or no money must somehow find and pay for formal school training in order to learn sufficient skills to justify payment of the minimum wage. Even more bizarre, people who would gladly accept smaller than regulation-size oranges in exchange for a lower price are forbidden to buy them from producers who are willing to sell them, and millions of bushels of oranges are thrown away every year (in the interest of the consumer, of course).

There are three basic reasons why those in power might want to regulate these activities. (Not counting the motivation suspected by H.L. Mencken: "Puritanism is the haunting fear that someone, somewhere, may be happy.")

The first reason is self-righteousness and/or religious fervor which is convinced that everyone should share the values of those in power. These are the friendly folks who believe in killing the body to save the soul.

The second reason is that most people, including otherwise economic conservatives, believe that we should be our brother's keeper at all costs. Both liberals and conservatives agree on this ideal. Both believe in forcefully "redistributing wealth" to take care of the less fortunate. Liberals generally see no limits to wealth, so they insist that habitually unfortunate people should be free to do anything they want, even if society gets the bill. (There are some exceptions like President Bill Clinton who, while promoting National Health Care, recognizes that rationing may be necessary.) Conservatives, on the other hand, are generally more aware of the limited nature of wealth, so they advocate using government coercion to limit behavioral choices in the hope that the cost of social welfare will be reduced too. Neither side is comfortable with giving people back the responsibility for paying the costs of their own choices, or relying on voluntary charity.

This leads us to the third reason. People, left to themselves, may not arrange their lives according to the best interests of the state. If people find more direct ways to satisfy their desires, they may not work as hard to fill the treasury. Therefore, substances that lessen people's desire to work hard are often attacked as threats to the fabric of civilization. A government needing lots of children to fight future wars will discourage prostitution because "prostitutes are the scabs who underbid the union wage." And we all know that gambling is evil--unless, of course, it fills the treasury directly.

Underlying these different assumptions about the function of government lies certain philosophical assumptions. One key assumption is found in peoples' definitions of freedom.

Two Different Definitions of Freedom

Throughout history, more people have died in the name of "freedom" than have ever stopped to think seriously about what freedom means. Freedom seems like a straight-forward term, but by the time philosophers get done with it, it can be virtually anything we want. (Kind of like love .)

Basically, there are two types of freedom. The first type of freedom was that envisioned by the founders of America. The essence of their version of freedom was freedom from . In other words, the freedom to be left alone and the freedom to go one's own way without interference from others.

Later, Karl Marx came along and offered an ingenious way to reframe the debate on freedom. Having observed that freedom, as envisioned by the forefathers, was freedom from , he concluded that theirs was a negative freedom . In response to the limitations of negative freedom, Mr. Marx suggested that people really need positive freedom --freedom to enjoy a minimum standard of material well-being, regardless of who will be forced to pay for it.

Any discussion of freedom is not complete without mentioning the issue of rights. Negative freedom implies the right to be left alone so long as one does not harm others. Negative rights mean the same thing. Accordingly, positive freedom implies positive rights .

Ultimately, we have to choose which type of freedom we prefer. "Being redistributive in character, positive rights interfere with and diminish negative rights. The government cannot simultaneously protect individual freedom and inject its coercive power to redistribute income from one group to another deemed more worthy."29 When we choose positive freedom, we exclude negative freedom. And should we elect to pursue negative freedom, we must let go of our quest for positive freedom.

Bridging the Chasm of "Ism":
Different Types of Government Considered

When it comes to differentiating between forms of government, there are three major guideposts to look for: control of tools and other material property , policies relating to charity , and locus of power and authority . When we use these concepts to analyze a government's type and function, it becomes apparent that there is not as much difference between governments as many would like to believe. Let us now look at them individually.

Control of Tools and Other Material Property

Let's consider the issue of tools. "Capitalism" is a term used daily by politicians and the media. In Chapter 2 , it was pointed out that we have three options for controlling tools: by private ownership , by government ownership , or by government control of citizens who hold title to tools. Also, the subject of capital-labor was explored in depth. One of the main conclusions arrived at was that any creature who uses some materials to modify other materials is a capitalist--a user of tools. From here it was deduced that the control of tools is the main issue, not the holding of a mere slip of paper.

Failing to discriminate between these three forms of tool-control can cause a lot of confusion in public debate (not to mention confusion in private thought). In America, "capitalism" is a term used daily by the politicians and the media. The primary concern of all this talk about capitalism seems to be about the failure of free-market capitalism .

In general, they are referring to the results of government policies controlling how American businesses use tools. By calling government-controlled capitalism "free-market capitalism," they then call for even more government intervention. Even conservative economist Paul Craig Roberts fell into this trap when he exclaimed that if government intervention in the marketplace continues to cause dislocations in the economy, it will prove to the world that "free-market capitalism" is a failure.30

Blaming one system for the consequences of using another system is very useful politically. In this sense, the words capitalism and love have much in common. A young man declares love, meaning he desires sex. The young woman hears adoration and celebration of her unique individuality and complies with his wishes. By the time the miscommunication is discovered, it is often too late.

Regarding capitalism, we need to ask this question: How can free-market capitalism fail when it is not even being tried? Of course, if the avowed defenders of free-market capitalism have fallen into this trap of definition-switching, what's to become of the rest of us?

What is capital? Capital is simply tools. Tools are created in moments when we are not engaged in consumable commodity production. (In terms of money, capital is that money not spent on consumption, and is therefore available for the purchase of tools.) With this in mind, every culture in the world is capitalist, as even the Aborigines use sticks and stones in lieu of fingernails and teeth.

As was mentioned earlier, there are three possible ways to control tools, and consequently, there are three types of capitalism: 1. tools are owned and controlled by private citizens--what is known as Free-Market Capitalism ; 2. government owns and controls tools--Government-Owned Capitalism --International Socialism or Communism; 3. private citizens hold title to tools, but government controls them--Government-Controlled Capitalism --National Socialism or Fascism. (Figure 5-1 gives a graphical representation of these three forms of capitalism.)

Now we are ready to consider each type of capitalism in greater depth.

Free-market Capitalism

Although there has never been a true free-market in history, the idea of a free-market still generates a lot of controversy. In modern times, the most popular use of the free-market is as a scapegoat to be used whenever something goes wrong in the economy. No matter how much an industry is shackled by regulation, when something goes wrong, it is declared to be a "failure of the free market."

The former Soviet Union is by their own admission trying to change from Communism to "socialism with a human face." While they have been paying lip- service to the free market, their policies betray a half-hearted commitment. They freed up the prices all at once but only freed a small portion of capital resources. Furthermore, they are using inflationary policies to keep state factories alive that should be allowed to go the way of the dinosaur. The resulting suffering may well be used as proof of the failure of the free market, should the Communist Party succeed in regaining power.

While it may be politically convenient to use the programs of one system, and then when they fail, to blame it on another system, the suffering for the common people remains the same.32 In Russia, it is little wonder that some people are remembering the Stalin era with a certain fondness. After 75 years of deadening the mind so as not to threaten the power elite (thereby escaping an early grave), it will be very tough to transition to a truly free market. That problem, plus the mirage of words which portray one system when in reality another system prevails, should be enough to bring the communists back in power in the next five to ten years.

Now that we've looked at what a free market isn't, we should look at what a free market is. A free market is one where people are free to own property, to use that property as they wish, and to dispose of their property as they see fit. The free-market form of ownership is not without limitations. The owner of property not only enjoys the opportunity of using property according to her own judgment, but also accrues liability when others are harmed by those activities.

People who promote the ideal of the free market sometimes claim that economic growth would be unlimited because the creativity of millions of people would be unleashed. Many who oppose the free market, oppose it for the same reason. They fear it would unleash a plague of human locusts onto the planet which would devour all resources within a single generation. Actually, the real world results of a true free market are not so easy to predict.

Given that the moral/ethical underpinnings of the free-market are free association among people, which implies a prohibition on the use of coercion to facilitate exchange, it does not automatically follow that economic growth would be faster than growth currently takes place under other systems.

"The concept of free and open markets," say Richard B. McKenzie and Gordon Tullock, ". . . can be defended on fairness grounds."33 The cold and impersonal nature of the market, which is abhorred by many who prefer the political allocation of resources, is the source from which a more level playing field is established. For instance, in a free market, all land would be privately owned. While "pride of ownership" would inspire people to work harder, that ownership would also come with responsibility.

As an example, let's say that someone wanted to build a factory whose design included dumping wastes in a river. In our current system, private ownership of land next to a river only extends to its banks. The river itself is considered public property . Control, and therefore beneficial ownership , thereby falls into the hands of a few politicians and bureaucrats. Consequently, we can expect more pollution simply because it is easier for a factory owner to buy a few politicians than it is to negotiate with a host of owners downstream. A few bribes or campaign contributions can do the job.

On the other hand, if hundreds of people had a property interest in the river, the costs to a factory wanting to dump chemicals or raw sewage into the river would become apparent very quickly. The multitude of owners downstream would require substantial compensation in exchange for the river's loss of value for other uses. In this case, the apparent costs would be known in advance and those wanting to build the factory would either have to find another use for the polluting materials, or they would have to forgo the project altogether.

Under a free market, development possibilities would not be foreclosed by legal fiat, but development would not be encouraged through legal fiat either. A free-market would also eliminate special privileges from government. Consequently, there would no longer be corporations in the sense that they enjoy limited liability or monopoly franchises. It would also mean that people who do not want to "progress" would not be forced to do so. (Without the power of "eminent domain," people could not be forcibly uprooted.)

In a free market, the first priority would be the requirement that transactions among people be voluntary, and from that ethical premise, growth may be facilitated on some occasions and limited on other occasions. It would certainly not be the function of government to either encourage growth or to stop it.

Were the property rights of natives in the rain forests respected, they and their habitat would not be disappearing so fast. Instead of burning out defenseless natives, those countries would have to look at the present system whose government policies disenfranchise all but a privileged few. (It is interesting to note that more concern is expressed for the flora and fauna than for the indigenous human beings who depend on the rain forest for survival. Were we to respect the rights of those people, the flora and fauna would benefit as a byproduct of our respect for human rights.)

For those to whom "growth is God," more government involvement may accomplish their goals better. The mercantilist policies of 16th Century Europe and modern Japan bear testament to the power of government resolve. Today's modern corporation and its limited liability owes its origin to the state's desire to encourage capital formation. (The essential feature of limited liability is the use of the force of law to shift risk from corporate officers and investors onto the general public.)

As for those opposed to economic growth for environmental and other reasons, the use of government coercion is also a popular remedy. Environmental regulations often demand that the actions of man produce fewer toxins than is found in nature.

Ultimately, people in both the pro-growth and the anti-growth camps, while they might visualize different ideal ends, share in common their insistence on using forceful means. Whereas Mercantilist policies artificially encourage growth, environmental policies can be expected to accomplish the opposite.

For those who prefer to use government to solve our problems, the free market is too uncertain an approach. However, life is uncertain by nature, so instead of competing for the minds and hearts of people through reason and persuasion, they compete with each other for control of the government so they can impose their will on everyone else. Because both pro-growth and anti-growth advocates prefer to rely on force instead of reason, the popularity of government economic controls is not likely to fade anytime soon.

In any case, we do not have to worry about being "taken over" and "exploited" by free-market capitalism any time soon. "The one thing people tend to forget about a perfectly competitive, free-market economy is that everybody participating in it hates it ."34 America may be fabled to be the land of the "rugged individual," yet as early as 1835, Alexis de Tocqueville wrote, "Americans are so enamored of equality that they would rather be equal in slavery than unequal in freedom."35 Much lofty talk about fighting for freedom is to be heard, yet, it often happens that ". . . their innermost desire is for an end to the 'free for all.' They want to eliminate free competition and the ruthless testing to which the individual is continually subjected in a free society."36 Consequently, if free-market capitalism is not appreciated in the land of the "free and the brave," we can be certain that it will be liked even less throughout the rest of the world. (Of course, the free-market will still come in handy . . . whenever governments need something to blame for their failed policies.)

Government-Owned Capitalism

Throughout the centuries, philosophers have offered us a vision of an ideal world where people work, not to own things, but to serve the interests of the community (defined as the state, the nation, or the world). According to this theory, man living under the system of "public" ownership would become a transcendental creature. He would be free of petty personal concerns and would instead soar upward to the plane of the universal, with the good of humankind at large as his only concern.

To actualize this ideal, it was declared that it was only necessary for government to own the "means of production." That way economic power would not concentrate in the hands of a few people at the expense of the masses. The notion perpetrated by Lord Action saying that "power corrupts and absolute power corrupts absolutely" was dismissed as applicable only to the bourgeois mind and its inherently deficient logical structure. The logical structure of the truly "proletarian" mind would not allow such an improper use of government force. Therefore, it was concluded that tools of destruction in the hands of the right people would create more benefits for humanity than tools of production in the hands of the wrong people.

Unfortunately, on the way to the "worker's paradise," something went wrong. Around the world, in the brief span of this century, it is estimated that at least 120 million people have gone to early graves as "necessary" sacrifices so the next generation could enjoy peace and prosperity.37 Of course, now there are some who are beginning to wonder if the sacrifice was worth it. Others, however, insist that government-owned capitalism is still a wonderful system. (Next time we simply need true proletarians to acquire power instead of ersatz proletarians like Lenin and Stalin.)

On the other hand, there was also a "benevolent" side to the oppression. Because people were relieved of the burden of property ownership, and they knew that they would be paid regardless of their level of production, they developed a clever saying: "We pretend like we are working and they pretend like they are paying us." Having understood the folly of hard work, they went directly after what deluded Westerners hope to attain only upon retirement--leisure.

Of course, Lenin and Stalin had declared they would change human nature. Human nature, however, did not change--it simply adapted. The focus of opportunity merely shifted from the arena of production to the arena of coercion. Recalling once again Max Eastman's words: "It did not occur to me that the new goal might be power--still less that the new rulers by getting power would manage to get most of the money as well. I had to learn also that power directly exercised can be more hostile to freedom, more ruthless, more evil in its effect upon the character of the wielder, than power wielded indirectly through a preponderance of wealth. . ."38 (If we must be abused, being abused by inexpensive, high-quality goods and services might be preferable to being abused by guns, clubs and forced-labor camps after all.)

Since the big experiment with government-owned capitalism didn't work out as many had hoped, some people are now suggesting that government should not own the tools of production. Instead, government should control the tools of production. People will hold title to property, and the government will simply tell them what to do with that property. This leads us to the popular ideal of the "mixed-economy," or Government-Controlled Capitalism .

One famous personage in recent history summed it up this way: "Our socialism is much deeper than Marxism. . . . It does not change the external order of things, but it orders solely the relationship of man to the state. . . . What do we care about income? Why do we need to socialize the banks and the factories? We are socializing people."39

Government-Controlled Capitalism

Of the three types of capitalism, government-controlled capitalism is the most popular, and is today being held out to us as the hope of the future. It is now considered common knowledge that the "excesses of capitalism" need to be curbed by wise and judicious government restraint. This type of system is also called a "mixed-economy"--part private initiative and part "public" control.

A mixed economy is an interesting concept. Ostensibly, its purpose is to correct abuses and inequities that have developed or might develop if the marketplace is not closely monitored. However, it remains a puzzle how we can rationally expect bureaucrats with no personal investment at risk, and who, in addition, enjoy sovereign immunity, to mind the store better than a private person who is faced with possible losses and the threat of liability.

Both politics and religions are famous for their "articles of faith." Some things apparently are not to be subject to logical scrutiny. In this case, the article of faith behind the mixed economy says, "people with guns (government power) always make better decisions than people with tools." As so often happens, we find ourselves incurring unintended consequences . "In a mixed economy, one of the two elements gradually withers away. That element is not the state."40

When government gets involved in the economy there develops the opportunity for "wealth without work."41 James Madison, in Federalist Paper #62, develops this idea further: "Every new regulation concerning commerce or revenue, or in any manner affecting the value of the different species of property, presents a new harvest to those who watch the change and can trace its consequences; a harvest, not reared by themselves but by the toils and cares of the great body of their fellow citizens."42

Of course, it doesn't take long for others to catch on, and competition soon starts to shift from producing real goods and services to lobbying government for the power to write laws. In the words of Gerald Skully, "This is when the process of rule space change sets in and rent-seeking begins."43 This process is nothing new. In the 1840s Frederick Bastiat outlined this sequence of events as follows:

See if the law benefits one citizen at the expense of another by doing what the citizen himself cannot do without committing a crime.
Then abolish this law without delay, for it is not only an evil itself, but also it is a fertile source for further evils because it invites reprisals. If such a law--which may be an isolated case--is not abolished immediately, it will spread, multiply, and develop into a system.
Since then, the world has seen this cycle many times. The most spectacular example being the German Weimar Republic, which transformed itself into Nazi Germany. At its peak, Weimar Germany was praised widely as the example of how the rest of the world should be. In this ideal society, people were expected to be wise enough to vote on each other's lives, liberty and property, and still somehow remain at peace with one another. This policy created special interest warfare in the capitals, fighting on the streets, and finally the election of a man who promised everyone everything.44

When the ideal of the mixed-economy starts to become popular, it is called "Democracy." The wisdom of "the people" is held to be superior to the market. The market is denigrated because it only serves the needs of individual human beings while the vote is praised because it somehow serves the "common good." Such thinking started Germany on its fateful journey. Bismarck initiated various social welfare programs in order to keep power out of the hands of the Socialist party. Nevertheless, government became accepted as society's primary problem-solver. The Weimar Constitution was kept loose and flexible so government would have the power it needed to respond to emergencies, as, supposedly, only a government can.

This progression established both the ethical and legal framework that paved the way for what was to come. Hitler quickly created the emergencies that those "emergency provisions" had been designed for. Governments need problems in order to justify expanding their power, and he made full use of "the old trick of turning every contingency into a resource for accumulating force in government."45 In this case, the German government acquired so much force that it took a world war to stop its further advance.

Today, Germany has decided to once again become a welfare state. This time for East Germany and for refugees from around the world. Not surprisingly, they are experiencing more contention among different groups. Hopefully, they will not start crying once again for a "good dictator". (Although they express sincere regret over Hitler's escapades, they still idealize the social policies that preceded his rise to power. Apparently, "A nation does not learn from disaster--only from discovering its cause."46)

As was discussed earlier, America started with a minimum of regulation. However, even in the 1800s, various observers predicted eventual self-destruction. In 1857, Lord Macaulay predicted: "Either some Caesar or Napoleon will seize the reins of government with a strong hand, or your Republic will be as fearfully plundered and laid waste as was the Roman Empire in the fifth century with this difference, that the Huns and vandals who ravaged the Roman Empire came from without, and that your Huns and vandals will have been engendered within your own country by your own institutions."47 Frederick Bastiat also had some doubts:

"These are the only two issues where, contrary to the general spirit of the republic of the United States, law has assumed the character of a plunderer. . . . Slavery is a violation, by law, of liberty. The protective tariff is a violation, by law, of property. . . . It is a most remarkable fact that this double legal crime--a sorrowful inheritance from the Old World--should be the only issue which can, and perhaps will, lead to the ruin of the Union."48

Today America is riddled with both special-interest warfare, and rising crime rates. Since the 1840s, Americans have embraced more and more ways of using government force in order to gain an advantage over their competitors. In the words of Jonathan R. T. Hughes: "Despite Fourth of July and political campaign oratory and the self-serving pronouncements of business leaders, the American distrusts the free market and accepts its decisions willingly only when they suit his needs."49 Popular mythology might call America a free-market economy, but 1500-plus government agencies and millions of regulations suggest something different.

From a historical perspective, this is probably to be expected. In the next chapter, issues relating to constitutional functions and structures will be addressed. While it is generally accepted that a totally free market causes problems due to economic exploitation, and that totalitarian nonmarket controls cause problems due to political exploitation, we have yet to figure out what is the proper balance between freedom and coercion.

Which type of tool-control is best? It depends on which is more scary: money or guns. (Money facilitates voluntary transactions--guns facilitate involuntary transactions.) Of the three types of capitalism, guns win out two-to-one over money. Of the governments that have ever been on the planet, guns have won out many times for each time money has prevailed.

Policies Relating to Charity

The second defining feature of government is how it provides for the needy. There are two ways a government can provide for the needy. The first is to allow private citizens to make donations as they see fit. The second approach is for government to determine both how much and where charity will be given. Needless to say, the second approach to managing charity is most popular.

One irony of this situation is that "heartless and cold-blooded" societies which leave charity to the fate of individual compassion often end up with less poverty. On the other hand, government-managed charity systems, while promising to return us to the garden through forced virtue have consistently failed to deliver on that promise. Generally, these economic and political systems have only made poverty more widespread, and as America embraces coercive charity, it, too, finds itself in decline.

This paradox has put many well-meaning and idealistic people in a quandary. "Humanization is for capitalism an unintended by-product, while it is for socialism an expected goal. Solidarity is for capitalism accidental; for socialism it is essential. In terms of their basic ethos, Christianity must criticize capitalism radically, in its fundamental intention, while it must criticize socialism functionally, in its failure to fulfill its purpose."50 Thus laments Jose Miquez-Bonino and others like him who do not realize that sweet words backed up by coercive measures can have no other outcome.

Charity has been held out to be the highest virtue since the beginning of civilization. Some people insist that charity should be a spontaneous expression of love and concern for the unfortunate. Others tend to follow the advice of Machiavelli, and insist on their right to engender fear in otherwise recalcitrant givers because fear is more reliable than love as a motivator for human action.

Earlier in this chapter, St. Francis was quoted. Nevertheless it is useful to review that quote again. "Charity is thus 'the mother and the root of all the virtues' and the moral life is really the life of charity. . . . Even theft must be seen in the full light of charity in order to determine which acts of appropriation are morally wrong. Inasmuch as material things are to be held in such a way as to be shared with others, the taking of the goods of another when one is in need is not really theft."51 If this passage were taken literally, we could all claim the right to confiscate wealth from others so long as we demonstrated sufficient "need".

So far, very few cultures have allowed a complete free-for-all in the wealth redistribution process. Instead, most have limited forced charity to the realm of government. If everyone were free to decide what constitutes need, society would quickly turn into a "war of all against all."

Although most cultures have judiciously excluded individuals from legally using coercion to promote charity, limiting the legal use of coercion to government has not been a panacea either. Modern concepts of needs and rights have been expanded drastically, and those demonstrating ability are starting to feel oppressed by those who specialize in demonstrating need. In America, some otherwise charitable souls are growing "weary of every desire and demand being elevated to a right--or, worse yet, a fundamental right."52

Karl Marx touched the hearts of millions with this formulation, "From all according to their ability, to all according to their need." It only seems fair that no one should ever be found wanting for at least the basic necessities of life. However, one must continue reading in order to discover the proposed means for achieving this ideal.

Throughout the centuries, arguments regarding the care of the poor have covered the range of possibilities. Having poor people languishing in the midst of active culture has never been comfortable. Throughout history we have had three ways to deal with poverty: accept that some people are poor, force people to stop being poor, or force those who are not poor to give enough so the poor will no longer be poor.

The first choice seems to be the hardest. Even though studies have pointed out that the bottom fifth quintile of the population will be poor regardless of whether a culture is free or totalitarian, many feel that something must be done to eliminate poverty. However, if poverty is a fact of life, as Christ indicated two-thousand years ago, would it be possible instead to simply avoid making their lives any worse? This, of course, would mean that we respect people's choices by not shielding them from the consequences of their choices.

Two millenniums ago, in response to Judas' questioning his indulgence in high-priced foot-washes, Christ declared that "The poor always ye have with you; but me ye have not always."53 Judas thought Christ's answer was pretty cold-blooded, so he ended up selling him for thirty pieces of silver. (This may be the origin of the ideal of coercive charity.) The story has it that because Christ was a divine being, Judas' coercive charity scheme blew up in his face immediately. We will see later that when non-divine beings are sacrificed, the plan still backfires--it just takes longer.

While schemes to force those who are not poor to give to the poor have predominated, there have also been schemes to force the poor to stop being poor. In Sixteenth Century England, the Tudors outlawed begging and individual charity, in effect treating poverty as a crime. The Puritans even executed some traveling Quaker preachers, having branded them as "sturdy beggars." In those times, the limits of wealth were very real. Writers like David Ricardo predicted the end of civilization if strict limits were not put on alms-giving: "If by law every human being wanting support could be sure to obtain it, and obtain it in such a degree as to make life tolerably comfortable, theory would lead us to expect that all other taxes together would be light compared with the single one of poor rates. The principle of gravitation is not more certain than the tendency of such laws to change wealth into misery and weakness, . . ."54

One can surmise that much of that harshness came from guilt. It was accepted that ideally the poor should be taken care of, but to honor the ideal faithfully would mean the destruction of society. Therefore, as is often the case, the sense of blame and failure that so often accompanies the acceptance of impossible ideals was projected onto the apparent cause of their discomfort.

Later, when the industrial revolution had started to offer conveniences to ordinary people which were previously unknown to even kings and pharaohs, the ideal of taking care of everyone began to appear possible. For some, however, wealth did not come fast enough. The wealthy sons of Europe, upon seeing the remaining poverty that the industrial revolution had not eliminated, declared that poverty was caused by the industrial revolution. (They apparently forgot that conditions were much worse for the common person prior to the industrial revolution.) Without understanding the process of wealth creation, they presumed that the problem was distribution , not production. From that assumption, they concluded that if people were too selfish to give up their possessions happily, they should be forced to do so.

Over the centuries attitudes have changed completely. Whereas people were formerly forced to avoid poverty so as not to become a burden on society, now people are forced to subsidize poverty in order to demonstrate the virtue of society. The only thing that has not changed is the insistence on using force to create the ideal society .

This brings us to the next question. Who, in reality, is helping whom? If the poor are lacking in productive skills, they will most likely be lacking in political skills as well. Consequently, someone has to decide that lobbying on behalf of the poor is either the "Christian thing to do" or that political advocacy of the poor is more lucrative than "working for a living." While most advocates will no doubt claim the former motivation, the actual outcome suggests the latter. (This could also be another example of Adam Smith's doctrine of "unintended consequences.")

Advocacy for the poor has some interesting dimensions. Estimates on the cost of "administrative expenses" to manage the dispensation of charity range from 70 84%. Consequently, for every ten shirts taken off the backs of productive people, only two or three shirts actually make it to the poor. This is often overlooked because we are conditioned to perceive the redistributer of wealth as morally superior to the creator of wealth: those who shuffle the shirts around enjoy higher social esteem than those who make the shirts.

William Tucker summed up what happened in America:

Upper-middle-class people soon found out that, as government began to gear up to the needs of the poor and disadvantaged, positions in the bureaucracy began to open up. These jobs usually involved white-collar skills and bureaucratic abilities, often with special twists such a "poverty specialists" and "urban studies." Educated, upper-class liberals were usually in the best position to fill them. A symbiotic relationship began to develop. What had already been done for the poor could be done for others as well. Different racial groups, linguistic minorities, the young, the elderly, the handicapped--almost anyone where some special need or difference could be identified, programs could be created. Liberal bureaucrats actually began to seek out such constituencies, knowing, however unconsciously, that as soon as some new physical or cultural "disadvantage" was discovered, it would be time to build a new wing on the bureaucratic establishment, and start filling new professional positions.55

Today, in modern America, some economists are starting to think that Ricardo was right. Writers such as William Simon, former Secretary of the Treasury of the United States, have gone so far as to suggest that the goose that lays the golden egg of prosperity might already be in the oven. These authors point to the numbers in order to inspire political action to stop deficit spending. Given that few people are motivated by bookkeeping entries or capable of mentally charting out long-term cause-and-effect relationships, such arguments generally lack force. Consequently, those who call for extreme sacrifices still enjoy the upper hand.

Extreme advocates of universal charity insist that a society incapable of honoring the ideal of universal charity does not deserve to survive anyway.56 For them, collapsing a civilization through deficit spending is not an issue. (Advocates of sacrifice are motivated by a different psychology. For instance, when Hitler saw he was losing the war, he sent soldiers on suicidal missions because he concluded Germany did not deserve to exist because it had failed to accomplish the impossible task he had set before it.)

In this age, when prohibitions against forced charity and an unlimited license to compel charity are both considered too extreme, we must once again find some kind of middle ground. Somehow we need to find a formula that will unerringly guide us to use just the proper amount of coercion and no more. So far, I am unable to find any such measures, except possibly one. P.J. O'Rourke has developed the ingenious "gray-haired mother test":

The other secret to balancing the budget is to remember that all tax revenue is the result of holding a gun to somebody's head. Not paying taxes is against the law. If you don't pay your taxes, you'll be fined. If you don't pay the fine, you'll be jailed. If you try to escape from jail, you'll be shot. Thus, I--in my role as citizen and voter--am going to shoot you--in your role as taxpayer and ripe suck--if you don't pay your share of the national tab. Therefore, every time the government spends money on anything, you have to ask yourself, "Would I kill my kindly, gray-haired mother for this?" In the case of defense spending, the argument is simple: "Come on, Ma, everybody's in this together. If those Canadian hordes come down over the border, we'll all be dead meat. Pony up." In the case of helping cripples, orphans and blind people, the argument is almost as persuasive: "Mother, I know you don't know these people from Adam, but we've got five thousand years of Judeo-Christian-Muslim-Buddhist-Hindu-Confucian-animist-jungle-God morality going here. Fork over the dough." But day care doesn't fly. "You're paying for the next-door neighbor's baby-sitter, or it's curtains for you, Mom."57

Of course, even this idea has limits. First, we must determine who will use the "gray-haired mother test," and under what conditions the results of such a test should be binding. Maybe we could form a second Supreme Court composed of nine children, one child from each Supreme Court justice. The number of government programs would then be determined on the basis of whether the Supreme Court justices are loved or hated by their children.

Locus of Political Power

Possibly the most important consideration in defining government type is by determining where the locus of power lies. Throughout history, humans have experimented with different forms of government, and have enjoyed varying degrees of peace and prosperity as a consequence of their choices.

According to Aristotle, there are three primary types of government: 1. Monarchy --rule by one; 2. Aristocracy --rule by a few; and 3. Democracy --rule by many.58 To these three, I have added Republic , which may be either "rule by a few" or "rule by many" depending on the constitutional structure that guides it. This approach gives us four basic categories: 1. Monarchy/Dictatorship , 2. Aristocracy/Oligarchy , 3. Republic , and 4. Democracy/Anarchy . (For an overview, please consider Figure 5-2. )

In order for any political system to remain viable, it must be thought legitimate by the people. This legitimacy can come from God, Geist , the "infallible collective wisdom" of man, or the rights of the individual human being. Whoever is most successful in claiming legitimacy through any one or more of these sources of authority will end up as the leader.


The earliest forms of government, at least for the larger civilizations, were monarchies. Ancient Egypt's pharaoh was the supreme representative of the other world. Because preparing for life after death was such an overwhelming preoccupation, the Pharaoh enjoyed a great deal of authority in the minds of the people. This was, in a sense, also a theocracy (although we are not accustomed to thinking of it in those terms). The Pharaoh not only controlled the people's destiny in this world but in the next world as well.

History is replete with regimes where the locus of authority has rested in one person. "The most common form of government from ancient times to the early part of the 20th century was monarchy, or rule by a hereditary king or queen."59 Over time, the emphasis has shifted back and forth: from the ruler being a secular leader enjoying the sanction of spiritual authorities, to being a spiritual leader by a "Divine Right of Kings" doctrine who enjoyed secular power too. In recent centuries the notion of kingship has fallen into disrepute--in name, but not in form.

While many people thought monarchy was on its way out, a more comprehensive form of monarchy was being born--dictatorship . Hegel proclaimed the authority of Geist --"the state is the march of God through history." Just as Neitschze was declaring that "God is dead,"60 Hegel and other German Metaphysical transcendentalist philosophers were creating a secular God for the masses to render sacrifices to. According to Hegel in Philosophy of Right , "A single person, I need hardly say, is something subordinate, and as such he must dedicate himself to the ethical whole. Hence if the state claims life, the individual must surrender it."61 Thanks in part to his writings, two political systems have developed, and much life has been claimed indeed.

Ludwig von Mises described Hegel and his doctrine this way: "He was a profound thinker and his writings are a treasury of stimulating ideas. But he was laboring under the delusion that Geist , the Absolute, revealed itself through his words. There was nothing in the universe that was hidden to Hegel. It was a pity that his language was so ambiguous that it could be interpreted in various ways. The right-wing Hegelians interpreted it as an endorsement of the Prussian system of autocratic government and of the dogmas of the Prussian Church. The left-wing Hegelians read out of it atheism, intransigent revolutionary radicalism, and anarchistic doctrines."62 The right-wing Hegelians evolved into the Third Reich, and the left-wing Hegelians developed the "people's republics" around the world. In both cases, those who successfully claimed the closest connection to the "irresistible force of destiny" acquired such power as had not been known on Earth for a long time.


Aristocracies have also been around for a long time. The term, "aristocracy," dates back to ancient Greece, and originally meant rule by the best people of the country. Probably the best known administrators chosen by merit were the Mandarins in Imperial China who underwent rigorous testing in order to be admitted to their privileged positions. (As good as they may have been, some sources suggest that the Glass Bead Game was developed in order to distract the Mandarins long enough for the people to get some work done.)

In recent centuries, aristocracy has come to mean "rule by any privileged group, usually a hereditary land-owning nobility. In a broader sense, aristocracy may mean 'a group that is superior in wealth, power, or intellect and is able to pass these on to successive generations.'"63 Typically, aristocracies are associated with higher social, economic and political status, however, there have been occasions where their status has survived as a social and political force even after losing their legal and economic privileges.

Historically, an aristocracy was like a royal monarchy in as much as political power could be passed from generation to generation. The modern version of aristocracy is generally called oligarchy --an elite cadre of ruling bureaucrats. While children often replace their parents in power, family training and political connections must now compensate for the fact that political power is no longer included in the list of "property rights" that were common for earlier aristocracies.


A republic can assume either form--"rule of a few" or "rule of many". In modern usage, the term republic can mean most anything, as the existence of the many "people's republics" around the world will attest to. Even the dictionary indicates that a government is a republic if only those who form it say it is. Consequently, we are obliged to once again resort to the use of adjectives. I call the republics mentioned above the other republics. The second type of republic is often called a constitutional republic. In this kind of republic, "rule of law" prevails, and government is limited "by the chains of the constitution."64

While it is true that the founders intended for people to have a vote--"No taxation without representation"--evidence indicates that they were not interested in pure democracy. When Benjamin Franklin left the Constitutional Convention someone asked him, "What have you given us." Mr. Franklin replied, "A republic, if you can keep it." While the long distances between states made consideration of public issues through elected representatives necessary, James Madison declared, "An elective despotism was not the government we fought for . . ."65 Further evidence suggests that they also envisioned a government that did not meddle in the daily affairs of the people. Thomas Paine summed it up: "The nearer any government approaches to a Republic, the less business there is for a King."66

The term "republic" can easily be taken to be synonymous with "democracy." The dictionary's primary definition of a republic is, "A political order in which the supreme power lies in a body of citizens who are entitled to vote for officers and representatives responsible to them."67 However, because the type of government the founders advocated so closely resembled the democracy that many of them opposed, we should not be surprised to find that many changes have been made, all in the name of the original intent of the founders. What started out as the right to vote on a limited number of issues has expanded to the right to vote on our neighbors' lives, liberties, and property.


This is the form of government that presently is being held out to the world as the hope of humankind. Ever since President Woodrow Wilson decided that Americans should fight World War I in order to "make the world safe for democracy,"68 wars have been justified on the basis of promoting this ideal. One would think, by listening to the propaganda, that merely calling a government a "democracy" will automatically solve our problems. As for those who might express skepticism, they are quickly reminded of the wisdom of Winston Churchill: "Democracy is the worst form of government, except for all the others."

Democracy has not always been held in such high esteem. Plato described it as a "charming form of government, full of variety and disorder, and dispensing a sort of equality to equals and unequals alike." Aristotle warned that democracy could degenerate into a form of "mob rule" if the political process be used to serve only selfish interests. James Madison warned that in a pure democracy, "there is nothing to check the inducements to sacrifice the weaker party or an obnoxious individual. Hence it is that such democracies have ever been spectacles of turbulence and contention; have ever been found incompatible with personal security or the rights of property; and have in general been as short in their lives as they have been violent in their deaths."69

Like any other form of government, if there are no ethical or philosophical limits placed on what government is allowed to do, we become "exposed to the same miseries by a Government, which we might expect to suffer in a country without a Government, . . ."70 Once everyone's life, liberty and property is up for a vote, all in the name of the democratic process, the fields and factories lose their allure and the halls of power become the primary hope for personal betterment. Special interest groups form, and soon "special interest warfare" becomes necessary for survival because people who are not allied with a group become easy targets for legal plunder.

According to an encyclopedia published in a highly democratic country, "The worst defect of democracy is that politicians are under constant pressure from the lobbyists . . . to support particular public policies. Because their future depends on winning elections, . . . [t]his weights the legislative process in favor of interest groups, especially the well organized and well funded. The sum of the benefits granted to these groups may be more than the society can afford. These kinds of expenses have contributed to the downfall of democratic governments--as has happened in various regions in the second half of the 20th century."71

In the 1920s, Weimar Germany represented the hope for the world and was held up as a vision for the future. The kind, caring policies that the rest of the world only talked about were being implemented there. They did not hesitate to use the power of the state for the good of humankind. Frederick C. Howe explained their commitment to fulfilling their ideal this way: "In the mind of the Germans the functions of the state are not susceptible of abstract, a priori deductions. Each proposal must be decided by the time and the conditions. If it seems advisable for the state to own an industry it should proceed to own it; if it is wise to curb any class or interest it should be curbed. Expediency or opportunism is the rule of statesmanship, not abstraction as to the philosophic nature of the state. . ."72 Without the impediments of moral prohibitions or constitutional restraints standing in the way, nothing was going to stop Germany from creating the long-awaited Utopia.

Unfortunately, on the way to paradise, something went wrong. Citizens who were expected to bow to government coercion (meant to make them virtuous), instead found ways to co-opt it for their own purposes. More and more people shifted their focus from working the factories and farms to lobbying the halls of political power. One consequence of this was the massive inflation of 1923. (When programs outdistance production, inflation is the natural result.) In time, some people who were afraid that special interest warfare might tear Germany apart started calling for a good dictator: "[This is a] robbers' state! . . . [W]e will no longer submit to a State which is built on the swindling idea of the majority. We want a dictatorship. . . ."73 As it turned out, Germany found a good dictator--Adolf Hitler. History does not speak kindly of Mr. Hitler, but he was good at doing what dictators usually do.

To some, this sequence of events comes as no surprise. C. Northcote Parkinson observed that the democratic process is "a more orderly process than rioting, but has only an even chance of producing the right answer."74 If we accomplish the shifts in wealth we believe should take place with ballots instead of bullets, what's to stop the bullets from coming out later.

Without referring to the moral or philosophical implications, Mr. Parkinson describes the expected outcome of Democracy: ". . . various forms of rule have tended to succeed one another in what might seem to have been a significant sequence, democracy showing a tendency to collapse into chaos from which dictatorship offers the only escape."75

What does this portend for the future of democracy? The United States is famous for saying, "it could never happen here." Yet, some observers have already noted similarities between Weimar Germany and America in recent decades. This leads us to another question. If democracy has a tendency to self-destruct, what is America doing trying to force other cultures to replace their dictatorships with democracy, which is only a brief respite between dictatorships? Before we worry about "making the world safe for democracy," maybe we need to consider whether or not democracy is safe for the world.


There is a brief period that exists between the fall of a democracy and the founding of a new dictatorship. That period is called "anarchy." Unfortunately, we usually recognize phenomena only when it reaches its most blatant extremes. If we plunder each other with ballots, that is heralded as democracy. We do not call it anarchy until the bullets start to replace the ballots.

The dictionary offers these definitions of anarchy. The first two definitions are, "1. Absence of any form of political authority," and "2. Political disorder and confusion." The third definition is, "3. Absence of any cohering principle, as a common standard or purpose."76 In my mind, the third definition should be first because it is the lack of principle that leads to the chaos, not the other way around. It is the absence of principles that often cause cultures to be "exposed to the same miseries by a Government , which we might expect to suffer in a country without a Government , . . ."77

While we are on the subject of political anarchy, we might do well to consider the concept of metaphysical anarchy. Given that humans are basically free to do as they please, one could say that anarchy is reality . We are mortal beings, living for a brief time under the conditions of nature in cooperation with other creatures like us, period. What we do with these basic facts is up to us. What gives us the illusion of a natural political order is that we are familiar with the system we are born under, and we believe, or at least hope, that the adults who are raising us have it all figured out. In time we discover, if we are lucky, that they do not have an instruction book either, and that our elders have been thrown onto this planet to survive on their own resources just as we have. This presents many of us with a crisis as we realize that our parents are simply who they are--not the infallible beings we imagined them to be in our childhood fantasies. (One of our major hurdles toward becoming happy and autonomous adults is learning to forgive our parents for not measuring up to our illusions, and to instead thank them for the gifts they gave in spite of their limitations.)

It is common for children to grow up questioning the wisdom of their parents, but they are not as likely to question the wisdom of their parent's parent--government. Adults, like children, often need to feel secure and isolated in a buffer zone from the harsh laws of life and nature. Consequently, when people suffer, they simply assume that government is not doing enough, and seldom does it occur to them that they might suffer because government is doing too much.

Nevertheless, if we can scrape away the illusions and buffers that give us that cocoon-like feeling, we will see that, ultimately, it is us and reality, period. Were everyone dropped on the planet at the same time, the nature of our situation would be immediately apparent. We would be tasked to study phenomena, chart cause and effect relationships in both the world of physics and the world of human relationships, and develop a code of ethics that embodies and encourages the types of behavior needed for survival on this planet. From there, political systems would be developed accordingly.

Rational Anarchy verses Irrational Anarchy

When we understand that metaphysical anarchy is inescapable, our choices will become more apparent and conscious. Without euphemisms to hide behind, we will have to decide openly whether to confront the demands of nature directly, or to enslave others and force them to confront nature on our behalf. Implicit in this choice is the choice between two types of anarchy: rational and irrational .

Earlier in this book, we considered the idea that as more people do their own work, and as fewer people try to enslave others, life in general gets better. However, it takes long-term vision to see the wisdom of refraining from seeking the short-term gains available through coercion.

If the people of a community elect to only use coercion against the predators in their midst, one can say that that community is a "rational anarchy." On the other hand, if a community elects to live by predatory standards, it is an "irrational anarchy"--whether or not it has a government.

Essence of Government Is More Important than Label

Very often words such as "democracy" and "communism" elicit an instantaneous response in the listener. These people assume that a simple label defines all that is either good or evil in government. Unfortunately, language used in this way generates confusion instead of understanding.

To keep it simple, it is good to remember that we are simply human creatures existing in nature with two choices: work, or force others to work for us. Regarding government, we can choose any label we like. Ultimately, government is what government does. As long we do not forget this, we will not be sidetracked by mere words.

To better understand government, we need to focus more on principles and less on words that are used loosely and/or interchangeably. The basic principle of government is the principle of force. The reason we have different types of government is that there are divergent opinions regarding how force should be used in society.

The Political Spectrum

In the final part of this chapter, we will consider the range of choices of government available to us. First, we will consider the spectrum presented by the media and education. Then we will consider a spectrum that includes even more choices.78

According to media and public education sources, our range of choices is defined within a spectrum of far left , far right , and the rational middle ground . The diagram looks something like this:

The far left is where those idealistic, but misguided communists hang out, and the far right is the dwelling place of those evil fascists. (Both of them use bullets as their primary means of directing public policy.) On the other hand, those in the "sane middle ground" seek many of the same ends as do the communists and fascists, but they are wise enough to use ballots instead of bullets. In theory, this prevents massive blood-letting every time political power changes hands. As long as the losers believe that they can regain power later by using the system, ballots will not be replaced by bullets.

What is interesting about this political spectrum is that all the choices presented imply some form of socialism. It is truly a masterpiece of debate strategy because it frames the debate in such a way that only one rational choice can be made. With all other choices excluded from consideration, the debate has been framed in advance and the conclusions are fore-ordained.

Another way of looking at our range of choices is in terms of the portion of government control of peoples' everyday lives:

In this figure, our range starts with total government on the left and ends with no government on the right. Like the other diagram, this diagram indicates that there is plenty of misery to be found on both ends of the spectrum. (Fred Holden suggests that the straight line should be changed to a horseshoe to reflect the misery that is the natural result of both extremes.)

Unlike Figure 5-3 , Figure 5-4 dramatically expands the conceptual framework by including more types of government. This is important because it is hard to make wise choices when we do not fully understand what our options are.

The Next Step: "There Oughta Be A Law"

The next subject that needs to be looked at is law . Law is the primary tool that the government uses to restrain the people. Conversely, a device called a constitution has been developed to help citizens restrain their governments. In practice, it often becomes difficult to tell the difference between them, and as governments become more totalitarian, the difference becomes ever more obscure.

While law and government are virtually synonymous, they need to be addressed separately because this chapter has already become one of the largest chapters in the book. Consequently, legal and constitutional issues have to be carried forward to the next chapter. See you there . . .


Quoted in Warren Hackett, It's Your Choice (New Rochelle, NY: America's Future, Inc., 1983), p. 6.


American Heritage Electronic Dictionary (Sausalito CA: Writing Tools Group, Inc., 1991).








Thomas Paine, edited by Moncure Daniel Conway, "Common Sense", The Writings of Thomas Paine (New York: G.P. Putnam's Sons, 1894), p. 69.


Alexander Hamilton, "The Federalist No. 15.," Ed. by Roy P. Fairfield, The Federalist Papers (Garden City, NY: Doubleday & Company, Inc., 1961), p. 34.


James Madison, "The Federalist No. 51.," Ed. by Roy P. Fairfield, Ibid., p. 160. [Italics mine.]


Quoted in Fred Holden, Total Power of One in America (Arvada, CO: Phoenix Enterprises, 1991), p. 310.


Frederick Bastiat, translation by Dean Russell, The Law (Irvington-On-Hudson: The Foundation for Economic Education, Inc., 1990), p.14.


Paul B. Lowney, Big Book of Gleeb (New York: Dodd, Mead and Company, 1968), p. 85.


Peter T. Bauer, "The United Nations and International Development Assistance," E. Berkeley Tompkins (ed.), The United Nations in Perspective (Stanford, CA: Hoover Institution Press, 1972), p. 40.


William E. Simon, A Time for Truth (New York: Reader's Digest Press, 1979), p. 71.


William Augustus Banner, Ethics: An Introduction to Moral Philosophy (New York: Scribner, 1968), p. 83. [Italics original.]


Benjamin A. Rogge quoted in Susan Love Brown, et. al., The Incredible Bread Machine (San Diego, CA: World Research, Inc., 1974), p. 153.


Eric Hoffer, The True Believer (New York: Harper & Row, 1951), p. 37.


Max Eastman quoted in Susan Love Brown, et. al., Ibid., p.118.


Shanti Swarup Gupta, The Economic Philosophy of Mahatma Gandhi (Delhi: Ashok Publishing House, 1968), p. 101.


Ibid., p. 88.


Phil Gailey, "CEO's Salaries: Up, Up and Away," St. Petersburg Times, 17 June 1991.


Gerald W. Skully, Constitutional Environments and Economic Growth (Princeton: Princeton University Press, 1992), p. 190.


Eric Hoffer, Op. Cit., p. 33.


Ibid., pp. 136-137.


Quoted in Christopher Morley, The Shorter Familiar Barlett's Quotations (New York: Pocket Books, 1964), p. 134Y.


Quoted in Fred Holden, The Power of One (Golden, CO: Economic Affairs, Adolf Coors Company, 1985), p. 23.


Norman H. Baynes, The Speeches of Adolph Hitler (New York: Howard Fertig, 1969), p. 104.


Aleksandr I. Solzhenitsyn, The Gulag Archipelago (New York: Harper & Row, 1973), pp. 83-86.


Eric Hoffer, Op. Cit., pp. 98-99.


Gerald W. Skully, Constitutional Environments and Economic Growth (Princeton: Princeton University Press, 1992), p. 116.


Paul Craig Roberts, "Big world traders steering rest of us into recession," Rocky Mountain News, March 10, 1993.


I found it tragically amusing to hear reports of Russian officials declaring that they couldn't sell state enterprises to Russian citizens because they did not have enough money. Instead, foreign capital would have to be brought in to purchase the assets for their "true worth." Given that their poverty was caused by government policies in the first place, it seems that justice would require state enterprises to be sold to them for whatever they could afford to pay.


Once again, it took two years for a newspaper columnist to call attention to that little discrepancy. A large portion of the inflation Russia is experiencing in due to subsidizing state factories that would have been sold for a few rubles if they were truly interested in trying the free market.


Richard B. McKenzie and Gordon Tullock, The Best of the New World of Economics (Homewood, Ill. : Irwin ,1989), p. 205.


William Tucker, Progress and Privilege: America in The Age of Environmentalism, (Garden City, NY: Anchor Press/Doubleday, 1982.), p. 68.


Alexis de Tocqueville, Democracy in America, 1835, volume II, part II, ch. I, quoted in Michael C. Thomsett, A Treasury of Business Quotations (New York: Ballantine Books, 1990), p. 80.


Eric Hoffer, Op. Cit., p. 37.


"According to the estimates of emigre Professor of Statistics Kurganov, this 'comparatively easy' internal repression cost us, from the beginning of the October Revolution up to 1959, a total of . . . sixty-six million&emdash;66,000,000&emdash;lives. We, of course, cannot vouch for this figure, but we have none other that is official." Aleksandr I. Solzhenitsyn, The Gulag Archipelago Two (New York: Harper & Row, 1975), p. 10. It has been further estimated that 50 million people have died in China since Mao Tse Tung came to power, and we can safely assume that at least 4 million more have died due to internal repression in the other various "people's states" around the world.


Quoted in Susan Love Brown, et. al., Op. Cit., p.118.


Adolf Hitler quoted in Mike W. Perry, "The Sound of the Machine," The Freeman, June 1988, p. 259.


Leonard Peikoff, Ominous Parallels (Briarcliff Manor, NY: Stein & Day, 1982), p. 273.


One of Gandhi's Seven Deadly Sins.


Roy P. Fairfield (ed.), Op. Cit., pp. 186-187.


Gerald W. Skully, Op. Cit., p. 95.


Frederick Bastiat, translation by Dean Russell, The Law (Irvington-On-Hudson: The Foundation for Economic Education, Inc., 1990), p.21.


James Madison quoted in Susan Love Brown, et. al., Op. Cit., p. 57.


Leonard Peikoff, Op. Cit., p. 315.


Quoted in Warren Hackett, Op. Cit., pp. 53-54.


Frederick Bastiat, translation by Dean Russell, Op. Cit., p.19.


Jonathan R.T. Hughes, The Governmental Habit (New York: Basic Books, 1977), p. 8.


Michael Novak, The Spirit of Democratic Capitalism (New York: Simon & Schuster, 1982), p. 295.


William Augustus Banner, Op. Cit., p. 83.


Lee McClarran, of Barrington, R.I., quoted in Clifford D. May, "Readers name their least favorite phrases," Rocky Mountain News, January 23, 1994., p. 3A.


John 12:8.


Quoted in Jonathan R.T. Hughes, Op. Cit., p. 45.


William Tucker, Op. Cit., pp. 24-25.


"Is it possible that a society which boasts of its humanity and its Christian inspiration should ignore the challenge? Is it conceivable that such a society, having done so, should deserve to survive?" &emdash;Barbara Ward, "The Economic Revolution," Adventures of the Mind from the Saturday Evening Post (New York: Alfred A Knopf, Inc., 1959, 1960, 1961) , p. 264.


P.J. O'Rourke, A Parliament of Whores: A Lone Humorist Attempts to Explain the Entire U.S. Government (New York: The Atlantic Monthly Press, 1991), p. 100.


Thomas B. Hartmann, "Government," The Academic American Encyclopedia, (New York: Grolier Electronic Publishing, Inc., 1993).




In all fairness to Neitschze, the complete quote in Thus Spake Zarathustra goes as follows: "God is dead. Of his pity for man hath he died." He was haranguing, and rightly so, at the degradation inherent in pity. The religious people who were horrified by that quote taken out of context would have been better off being alarmed at Zarathustra's calls for ordinary mass-man to "go under" to make way for the Superman.


Quoted in Leonard Peikoff, Op. Cit., p. 35.


Ludwig von Mises, Human Action: A Treatise on Economics (Chicago: Henry Regnery Company, 1966), p. 72.


"Aristocracy," The Academic American Encyclopedia, (New York: Grolier Electronic Publishing, Inc., 1993).


Thomas Jefferson quoted in Fred Holden, Total Power of One in America (Arvada, CO: Phoenix Enterprises, 1991), pp. 311-312.


James Madison, "The Federalist #48," Ed. by Roy P. Fairfield, Op. Cit., p. 149.


Thomas Paine, edited by Moncure Daniel Conway, "Common Sense", Op. Cit., p. 83


American Heritage Electronic Dictionary (Sausalito CA: Writing Tools Group, Inc., 1991).


Woodrow Wilson, Address to Congress, asking for a declaration of war [April 2, 1917]


Quoted in Leonard Peikoff, Op. Cit., p. 109.


Thomas Paine, edited by Moncure Daniel Conway, "Common Sense", Op. Cit., p. 69. [Italics original.]


William H. Riker, "Democracy," The Academic American Encyclopedia, (New York: Grolier Electronic Publishing, Inc., 1993)


Quoted in Richard M. Ebeling, "National Health Insurance and the Welfare State," Freedom Daily, January 1994


Quoted in Leonard Peikoff, Op. Cit., p. 176.


C. Northcote Parkinson, "Can Democracy Survive?," Adventures of the Mind from the Saturday Evening Post (New York: Alfred A Knopf, Inc., 1959, 1960, 1961), p. 493.


Ibid., p. 493.


American Heritage Electronic Dictionary (Sausalito CA: Writing Tools Group, Inc., 1991).


Thomas Paine, edited by Moncure Daniel Conway, "Common Sense", Op. Cit., p. 69.


Fred Holden, Total Power of One in America (Arvada, CO: Phoenix Enterprises, 1991), pp. 311-313.



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