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23. THE INNER CONTRADICTIONS OF THE STATE

A MAJOR PROBLEM WITH discussions of the necessity of government is the fact that all such discussions necessarily take place within a context of centuries of State existence and State rule—rule to which the public has become habituated. The wry coupling of the twin certainties in the popular motto “death and taxes” demonstrates that the public has resigned itself to the existence of the State as an evil but inescapable force of nature to which there is no alternative. The force of habit as the cement of State rule was seen as early as the sixteenth-century writings of de la Boetie. But, logically, and to cast off the scales of habit, we must not merely compare an existing State with an unknown quantity, but begin at the social zero point, in the logical fiction of the “state of nature,” and compare the relative arguments for the establishment of the State with those on behalf of a free society.

     Let us assume, for example, that a sizeable number of people suddenly arrive on Earth, and that they must now consider what sort of social arrangements to live under. One person or group of persons argues as follows (i.e., the typical argument for the State): “If each of us is allowed to remain free in all aspects, and particularly if each of us is allowed to retain weapons and the right of self-defense, then we will all war against each other, and society will be wrecked. Therefore, let us turn over all of our guns and all of our ultimate decision-making power and power to define and enforce our rights to the Jones family over there. The Jones family will guard us from our predatory instincts, keep social peace, and enforce justice.” Is it conceivable that any one (except perhaps the Jones family itself) would spend one moment considering this clearly absurd scheme? The cry of “who would guard us from the Jones family, especially when we are deprived of our weapons?” would suffice to shout down such a scheme. And yet, given the acquisition of legitimacy from the fact of longevity given the longtime rule of the “Jones family” this is precisely the type of argument to which we now blindly adhere. Employing the logical model of the state of nature aids us in casting off the fetters of habit to see the State plain—and to see that the Emperor, indeed, wears no clothes.

     If, in fact, we cast a cold and logical eye on the theory of “limited government,” we can see it for the chimera that it really is, for the unrealistic and inconsistent “Utopia” that it holds forth. In the first place, there is no reason to assume that a compulsory monopoly of violence, once acquired by the “Jones family” or by any State rulers, will remain “limited” to protection of person and property. Certainly, historically, no government has long remained “limited” in this way. And there are excellent reasons to suppose that it never will. First, once the cancerous principle of coercion—of coerced revenue and compulsory monopoly of violence—is established and legitimated at the very heart of society, there is every reason to suppose that this precedent will be expanded and embellished. In particular, it is in the economic interest of the State rulers to work actively for such expansion. The more the coercive powers of the State are expanded beyond the cherished limits of the laissez-faire theorists, the greater the power and pelf accruing to the ruling caste operating the State apparatus. Hence, the ruling caste, eager to maximize its power and wealth, will stretch State power—and will encounter only feeble opposition, given the legitimacy it and its allied intellectuals are gaining, and given the lack of any institutional free-market channels of resistance to the government’s monopoly of coercion and the power of ultimate decision-making. On the free market, it is a happy fact that the maximization of the wealth of one person or group redounds to the benefit of all; but in the political realm, the realm of the State, a maximization of income and wealth can only accrue parasitically to the State and its rulers at the expense of the rest of society.

     Advocates of a limited government often hold up the ideal of a government above the fray, refraining from taking sides or throwing its weight around, an “umpire” arbitrating impartially between contending factions in society. Yet why should the government do so? Given the unchecked power of the State, the State and its rulers will act to maximize their power and wealth, and hence inexorably expand beyond the supposed “limits.” The crucial point is that in the Utopia of limited government and laissez faire, there are no institutional mechanisms to keep the State limited. Surely the bloody record of States throughout history should have demonstrated that any power, once granted or acquired, will be used and therefore abused. Power corrupts, as the libertarian Lord Acton so wisely noted.

     Furthermore, apart from the absence of institutional mechanisms to keep the ultimate decision-maker and force-wielder “limited” to protection of rights, there is a grave inner contradiction inherent in the very ideal of a neutral or impartial State. For there can be no such thing as a “neutral” tax, a taxing system that will be neutral to the market as it would have been without taxation. As John C. Calhoun trenchantly pointed out in the early nineteenth century, the very existence of taxation negates any possibility of such neutrality. For, given any level of taxation, the least that will happen will be the creation of two antagonistic social classes: the “ruling” classes who gain by and live off taxation, and the “ruled” classes who pay the taxes. In short, conflicting classes of net tax-payers and net tax-consumers. At the very least, the government bureaucrats will necessarily be net tax-consumers; other such will be those persons and groups subsidized by the inevitable expenditures of government. As Calhoun put it:

[T]he agents and employees of the government constitute that portion of the community who are the exclusive recipients of the proceeds of the taxes. Whatever amount is taken from the community in the form of taxes, if not lost, goes to them in the shape of expenditures and disbursements. The two—disbursement and taxation—constitute the fiscal action of the government. They are correlatives. What the one takes from the community under the name of taxes is transferred to the portion of the community who are the recipients under that of disbursements. But as the recipients constitute only a portion of the community, it follows, taking the two parts of the fiscal process together, that its actions must be unequal between the payers of the taxes and the recipients of their proceeds. Nor can it be otherwise; unless what is collected from each individual in the shape of taxes shall be returned to him in that of disbursements, which would make the process nugatory and absurd. . . .

     The necessary result, then, of the unequal fiscal action of the government is to divide the community into two great classes: one consisting of those who, in reality, pay the taxes, and, of course, bear exclusively the burden of supporting the government; and the other, of those who are the recipients of their proceeds through disbursements, and who are, in fact, supported by the government; or, in fewer words, to divide it into tax-payers and tax-consumers.

     But the effect of this is to place them in antagonistic relations in reference to the fiscal action of the government—and the entire course of policy therewith connected. For the greater the taxes and disbursements, the greater the gain of the one and the loss of the other, and vice versa. . . . The effect, then, of every increase is to enrich and strengthen the one, and impoverish and weaken the other.1

     Calhoun goes on to point out that a Constitution will not be able to keep the government limited; for given a monopoly Supreme Court selected by the self-same government and granted the power of ultimate decision-making, the political “ins” will always favor a “broad” or loose interpretation of the wording of the Constitution serving to expand the powers of government over the citizenry; and, over time, the “ins” will inexorably tend to win out over the minority of “outs” who will argue vainly for a “strict” interpretation limiting State power.2

     But there are other fatal flaws and inconsistencies in the concept of limited, laissez-faire government. In the first place, it is generally accepted, by limited-government and by other political philosophers, that the State is necessary for the creation and development of law. But this is historically incorrect. For most law, but especially the most libertarian parts of the law, emerged not from the State, but out of non-State institutions: tribal custom, common-law judges and courts, the law merchant in mercantile courts, or admiralty law in tribunals set up by shippers themselves. In the case of competing common-law judges as well as elders of tribes, the judges were not engaged in making law, but in finding the law in existing and generally accepted principles, and then applying that law to specific cases or to new technological or institutional conditions.3 The same was true in private Roman law. Moreover, in ancient Ireland, a society existing for a thousand years until the conquest by Cromwell, “there was no trace of State-administered justice”; competing schools of professional jurists interpreted and applied the common body of customary law, with enforcement undertaken by competing and voluntarily supported tuatha, or insurance agencies. Furthermore, these customary rules were not haphazard or arbitrary but consciously rooted in natural law, discoverable by man’s reason.4

     But, in addition to the historical inaccuracy of the view that the State is needed for the development of law, Randy Barnett has brilliantly pointed out that the State by its very nature cannot obey its own legal rules. But if the State cannot obey its own legal rules, then it is necessarily deficient and self-contradictory as a maker of law. In an exegesis and critique of Lon L. Fuller’s seminal work The Morality of Law, Barnett notes that Professor Fuller sees in the current thinking of legal positivism a persistent error: “the assumption that law should be viewed as a . . . one-way projection of authority, originating with government and imposing itself upon the citizen.”5 Fuller points out that law is not simply “vertical”—a command from above from the State to its citizens, but also “horizontal,” arising from among the people themselves and applied to each other. Fuller points to international law, tribal law, private rules, etc. as pervasive examples of such “reciprocal” and non-State law. Fuller sees the positivist error as stemming from failure to recognize a crucial principle of proper law, namely that the lawmaker should itself obey its own rules that it lays down for its citizens, or, in Fuller’s words, “that enacted law itself presupposes a commitment by the government authority to abide by its own rules in dealing with its subjects.”6

     But Barnett correctly points out that Fuller errs significantly in failing to apply his own principle far enough: in limiting the principle to the procedural “rules by which laws are passed” rather than applying it to the substance of the laws themselves. Because of this failure to carry his principle to its logical conclusion, Fuller fails to see the inherent inner contradiction of the State as maker of law. As Barnett puts it,

Fuller fails in his attempt because he has not followed his own principle far enough. If he did, he would see that the state legal system does not conform to the principle of official congruence with its own rules. It is because the positivists see that the State inherently violates its own rules that they conclude, in a sense correctly that State-made law is sui generis.7

     However, Barnett adds, if Fuller’s principle were carried forward to assert that the “lawmaker must obey the substance of his own laws,” then Fuller would see “that the State by its nature must violate this commitment.”

     For Barnett correctly points out that the two unique and essential features of the State are its power to tax—to acquire its revenue by

coercion and hence robbery—and to prevent its subjects from hiring any other defense agency (compulsory monopoly of defense).8 But in doing so, the State violates its own laws that it sets down for its subjects. As Barnett explains,

For example, the State says that citizens may not take from another by force and against his will that which belongs to another. And yet the State through its power to tax “legit­imately” does just that. . . . More essentially, the State says that a person may use force upon another only in self-defense, i.e. only as a defense against another who initiated the use of force. To go beyond one’s right of self-defense would be to aggress on the rights of others, a violation of one’s legal duty. And yet the State by its claimed monopoly forcibly imposes its juris­diction on persons who may have done nothing wrong. By doing so it aggresses against the rights of its citizens, something which its rules say citizens may not do.

     The State, in short, may steal where its subjects may not and it may aggress (initiate the use of force) against its subjects while prohibiting them from exercising the same right. It is to this that the positivists look when they say that the law (meaning State-made law) is a one-way, vertical process. It is this that belies any claim of true reciprocity.9

Barnett concludes that, interpreted consistently, Fuller’s principle means that in a true and proper legal system, the lawmaker must “follow all of its rules, procedural and substantive alike.” Therefore, “to the degree that it does not and cannot do this it is not and cannot be a legal system and its acts are outside the law. The State qua state, therefore, is an illegal system.”10

     Another inner contradiction of the theory of laissez-faire government deals again with taxation. For if government is to be limited to “protection” of person and property, and taxation is to be “limited” to providing that service only, then how is the government to decide how much protection to provide and how much taxes to levy? For, contrary to the limited gov­ernment theory, “protection” is no more a collective, one-lump “thing” than any other good or service in society. Suppose, for example, that we might offer a competing theory, that government should be “limited” to supplying clothing free to all of its citizens. But this would scarcely be any sort of viable limit, apart from other flaws in the theory. For how much clothing, and at what cost? Must everyone be supplied with Balendaga originals, for example? And who is to decide how much and what quality of clothing each person is to receive? Indeed, “protection” could conceivably imply anything from one policeman for an entire country, to supplying an armed bodyguard and a tank for every citizen—a proposition which would bankrupt the society posthaste. But who is to decide on how much protection, since it is undeniable that every person would be better protected from theft and assault if provided with an armed bodyguard than if he is not? On the free market, decisions on how much and what quality of any good or service should be supplied to each person are made by means of voluntary purchases by each individual; but what criterion can be applied when the decision is made by government? The answer is none at all, and such governmental decisions can only be purely arbitrary.

     Secondly, one searches in vain in the writings of laissez-faire theorists for a cogent theory of taxation: not only how much taxation is to be levied, but also who is to be forced to pay. The commonly adopted “ability to pay” theory, for example, is, as the libertarian Frank Chodorov pointed out, the philosophy of the highway robber to extract as much loot from the victim as the robber can get away with—scarcely a cogent social philosophy, and at total variance, of course, from the system of payment on the free market. For if everyone were forced to pay for every good and service in proportion to his income, then there would be no pricing system at all, and no market system could work. (David Rockefeller, for example, might be forced to pay $1million for a loaf of bread.)11

     Next, no laissez-faire writer has ever provided a theory of the size of the State: if the State is to have a compulsory monopoly of force in a given territorial area, how large is that area to be? These theorists have not given full attention to the fact that the world has always lived in an “international anarchy,” with no one government, or compulsory monopoly of decision-making, between various countries. And yet, international relations between private citizens of different countries have generally functioned quite smoothly, despite the lack of a single government over them. Thus, a contractual or a tort dispute between a citizen of North Dakota and of Manitoba is usually handled quite smoothly, typically with the plaintiff suing or placing charges in his court, and the court of the other country recognizing the result. Wars and conflicts usually take place between the governments, rather than the private citizens, of the various counties.

     But more profoundly, would a laissez-fairist recognize the right of a region of a country to secede from that country? Is it legitimate for West Ruitania to secede from Ruritania? If not, why not? And if so, then how can there be a logical stopping-point to the secession? May not a small district secede, and then a city, and then a borough of that city, and then a block, and then finally a particular individual?12 Once admit any right of secession whatever, and there is no logical stopping-point short of the right of individual secession, which logically entails anarchism, since then individuals may secede and patronize their own defense agencies, and the State has crumbled.

     Finally there is a crucial inconsistency in the proffered criterion of laissez-faire itself: limiting the government to protection of person and property. For, if it is legitimate for a government to tax, why not tax its subjects to provide other goods and services that may be useful to consumers: why shouldn’t the government, for example, build steel plants, provide shoes, dams, postal service, etc.? For each of these goods and services is useful to consumers. If the laissez-fairists object that the government should not build steel plants or shoe factories and provide them to consumers (either free or for sale) because tax-coercion had been employed in constructing these plants, well then the same objection can of course be made to governmental police or judicial service. The government should be acting no more immorally from the laissez-faire point of view, when providing housing or steel than when providing police protection. Government limited to protection, then, cannot be sustained even within the laissez-faire ideal itself, much less from any other consideration. It is true that the laissez-faire ideal could still be employed to prevent such “second-degree” coercive activities of government (i.e., coercion beyond the initial coercion of taxation) as price control or outlawry of pornography; but the “limits” have now become flimsy indeed, and may be stretched to virtually complete collectivism, in which the government only supplies goods and services, yet supplies all of them.



1John C. Calhoun, A Disquisition on Government (New York: Liberal Arts Press, 1953), pp. 16–18.  

2Ibid., pp. 25–27.

3See Bruno Leoni, Freedom and the Law (Los Angeles: Nash Publishing, 1972); F.A. Hayek, Law, Legislation, and Liberty, vol. 1, Rules and Order (Chicago: University of Chicago Press, 1973), pp. 72–93, and Murray N. Rothbard, For A New Liberty, rev. ed. (New York: Macmillan, 1978), pp. 234–43.

4On ancient Ireland, see Joseph R. Peden, “Stateless Societies: Ancient Ireland,” The Libertarian Forum (April 1971): 3. Cf., and more extensively, Peden, “Property Rights in Celtic Irish Law,” Journal of Libertarian Studies 1(Spring 1977): 81–95. Also see Daniel A. Binchy, Anglo-Saxon and Irish Kingship (London: Oxford University Press, 1970); Myles Dillon, The Celtic Realms (London: George Weidenfeld and Nicholson, 1967), and idem, Early Irish Society (Dublin, 1954). Irish law as based on natural law is discussed in Charles Donahue, “Early Celtic Laws” (unpublished paper, delivered at the Columbia University Seminar on the History of Legal and Political Thought, Autumn, 1964), pp. 13ff. Also see Rothbard, For A New Liberty, pp. 239–43.

5Lon L. Fuller, The Morality of Law (New Haven, Conn.: Yale University Press), p. 204; quoted in Randy E. Barnett, “Fuller, Law, and Anarchism,” The Libertarian Forum (February 1976): 6.  

6Fuller, Morality of Law, p. 32.

7Barnett, “Fuller, Law, and Anarchism,” p. 66.

8Both features are essential to the historical category of the State; various Utopian schemes to dispense with the first trait and keep the second would still come under the present strictures as applied to the second trait.

9Barnett, “Fuller, Law, and Anarchism,” p. 7.

10Ibid.

11See Frank Chodorov, Out of Step (New York: Devin-Adair, 1962), p. 237. For a critique of the ability to pay and other attempts to provide canons of “justice” for taxation, see Murray N. Rothbard, Power and Market, 2nd ed. (Kansas City: Sheed Andrews and McMeel, 1977), pp. 135–67.  

12Mises recognized this point, and supported the right of each individual to secede in theory, stopping short of the individual for merely “technical considerations.” Ludwig von Mises, Liberalism, 2nd ed. (Kansas City: Sheed Andrews and McMeel, 1978), pp. 109–10.

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