Against the State: An Anarcho-Capitalist Manifesto

6

WHY NOT
LIMITED GOVERNMENT?

SO FAR, WE’VE SEEN THAT something is drastically wrong with the American State. The American State is a war state; it makes war both on foreign peoples and on our own people. The War on Drugs and the Patriot Act are only a few examples of what the State is doing to us. The Fed makes sure we have an unstable economy, and American Fascism is firmly locked in place. Things certainly look bad.

But why should we support anarchy? Isn’t anarcho-capitalism too risky a policy to adopt? Instead, why not just abandon the war system and return to the non-interventionist foreign policy of the Founding Fathers? In domestic affairs, why not return to a government of strictly limited powers, as Thomas Jefferson wanted?

This program won’t work. To begin with, we should be clear that American Fascism wasn’t something that FDR imposed on a totally free America. It had deep roots in the policies of Alexander Hamilton, Henry Clay, and Abraham Lincoln.

Tom DiLorenzo helps us to understand this unfortunate part of the American tradition. As he points out in his great book Hamilton’s Curse, Thomas Jefferson supported the American Revolution in order to promote individual liberty. To secure this end, it was essential that the central government be strictly limited in its powers. America, in the Jeffersonian view, was an alliance of sovereign states, and the adoption of the Constitution, though it increased the power of the national government, did not fundamentally change this arrangement.

Alexander Hamilton disagreed. He bemoaned the limited powers given to the central government under the Articles of Confederation and continually agitated for a new scheme of authority. At the Constitutional Convention, it became clear how radical were his plans. He favored a permanent president and senate and wanted the federal government to have the power to appoint state governors.

What was behind this radical plan of centralization, fortunately rejected by the majority of the convention? DiLorenzo follows up the brilliant suggestion of Cecilia Kenyon that Hamilton was the “Rousseau of the Right.” Rousseau thought that society should be guided by the “general will,” but what exactly that concept entailed has perplexed later commentators. It cannot be equated with what the majority of a certain society wishes: it is only when the people’s decisions properly reflect the common good, untrammeled by faction, that the general will operates. But if the general will need not result from straightforward voting, how is it to be determined? One answer, for which there is some textual support in Rousseau, is that a wise legislator will guide the people toward what they really want. Those who dissent will “be forced to be free.”

This was precisely Hamilton’s view. Government, directed by the wise such as himself, would guide the people toward what was good for them. Clinton Rossiter, a Cornell political scientist,

catalogued how some version of “the general will” appears hundreds of times in Hamilton’s speeches, letters, and writings. ... Hamilton more pointedly than any other political thinker of his time, introduced the concept of the “public good” into American thought.

Hamilton did not secure what he wanted at the Convention, and in his contributions to the Federalist Papers, he sometimes for purposes of propaganda defended the limited government that he really rejected. But with the onset of the new government in 1789, he by no means abandoned his goal of centralized power. He had been, during the American Revolution, George Washington’s military aide; and the new president appointed him secretary of the Treasury. In that capacity, he bombarded Washington with advice on interpreting the Constitution.

The powers of the central government in his view were not confined to those expressly delegated to it — far from it. The national government had also various powers “implied” by its express grants, though the logic of these implications escaped those not enamored of big government. “ ‘Implied powers’ are powers that are not actually in the Constitution but that statists like Hamilton wish were there.” The government also had “resulting” powers: these were not even present in the Constitution by implication but “resulted” from new situations. If, e.g., the government conquered new territory, it acquired sovereign power over it. “This would be rather the result from the whole mass of the government ... than a consequence of ... powers specially enumerated” (quoting Hamilton).

As if this were not enough, Hamilton did not scruple to interpret the words of the Constitution against their plain sense. Congress was granted the power to pass laws “necessary and proper” for its enumerated powers. To Hamilton, “necessary” meant “convenient”; what was the small matter of the dictionary to stand in the way of the public interest?

In other words, such powers should be made up, even fabricated, on the whims of politicians posing as guardians of the “public good.” Hamilton went on to say that any act of government is to be permitted if it is not expressly prohibited by the Constitution, something he forgot to mention in the Federalist Papers.

Thus, in his report to Washington on the constitutionality of a national bank, Hamilton held that, since Congress had the power to coin money, and in his opinion a national bank would be helpful for a monetary system, the bank passed the constitutional test. Jefferson disagreed. Regardless of whether Hamilton was right about the desirability of a bank — and Jefferson of course rejected Hamilton’s view of the matter — a bank was not “necessary” and hence had no constitutional warrant.

As his opinion on the bank suggests, much of Hamilton’s centralizing plans aimed at economic goals. Once more in contrast to Jefferson, he believed that the government should guide the economy. He returned to the mercantilist system famously condemned by Adam Smith in The Wealth of Nations (Murray Rothbard has noted that Smith failed completely to repudiate mercantilism; nevertheless, he strongly criticized the main planks of that system).

For Hamilton, economics and politics were tightly bound together. Here DiLorenzo follows Douglass Adair, perhaps the foremost twentieth-century student of the Federalist Papers. By tying members of the business elite of the states to the new central government, in large part through their involvement in government debt, the power of the national government would be secured.

With devious brilliance, Hamilton set out, by a program of class legislation, to unite the propertied interests of the eastern seaboard into a cohesive administration party, while at the same time he attempted to make the executive dominant over the Congress by a lavish use of the spoils system. (quoting Adair)

We have already alluded to two of the components of Hamilton’s economic system, a public debt and a national bank. Protective tariffs in his view were also vital. By tariffs, as well as “bounties,” the industrial power of the nation could be built up. But why does the growth of industry require the government’s help? In Hamilton’s famous argument, “infant industries” needed time to establish themselves before they were fit to face the rigors of international competition. DiLorenzo responds that in practice, the infants never reach maturity. The subsidies remain in perpetuity.

Unfortunately, Hamilton was not an aberration. He had many influential followers and successors; and DiLorenzo finds that efforts to centralize economic and political power run through our history, like the proverbial red thread in the ropes of the British navy. One of the foremost of DiLorenzo’s long list of villains is John Marshall, the third chief justice and, incidentally, Jefferson’s cousin. Marshall was avid to interpret the Constitution in accord with Hamilton’s passion for national power. In McCulloch v. Maryland, (1819) he upheld the constitutionality of the first Bank of the United States, agreeing with Hamilton on the lax interpretation of “necessary and proper.”

As the legal scholar Edwin S. Corwin pointed out, it is “well known” that for his written opinion in this case, Marshall depended on Alexander Hamilton’s earlier argument about the constitutionality of the BUS (Bank of the United States), which he had written on February 23, 1791.

In Fletcher v. Peck (1810), Marshall set aside state legislation as a violation of a valid contract, even though the “contract” in question was fraudulent. He did so in order to enhance federal supremacy.

Readers of DiLorenzo’s earlier books will not be surprised to find Henry Clay on the list of miscreants. All the basic elements of Clay’s famous American System came from Hamilton: high tariffs, government promotion of industry, and investment in “internal improvements” such as canals and turnpikes. “Henry Clay, leader of the Whig Party ... would adopt Hamilton’s agenda as his own under the rubric of ‘The American System,’ a slogan that Hamilton himself coined.” DiLorenzo points out that these programs made regional strife much worse, since they advanced the interests of the more industrialized Northern states at the expense of the South.

Of course Clay had a follower of his own — Abraham Lincoln, who viewed himself as Clay’s disciple. He too favored high tariffs, and his insistence on collecting the “duties and imposts,” as he put it in his First Inaugural, made inevitable the War Between the States. Once the war began, Lincoln proceeded to enact as much of the American System as he could, e.g., massive subsidies to railroads and continued high tariffs. To pay for the war and his nationalist economic program, a federal income tax was imposed in 1862.

The Fed and American Fascism just carried further and intensified the trend that Hamilton started.

Well, you might say, even if the statist, fascist tradition goes very far back in American history, can’t people reverse it? Can’t we return to limited government, as the Constitution mandates?

This solution can’t work. It suffers from a fatal flaw. The Constitution creates a government that is the judge of its own powers. The branches of the government, legislative, executive, and judicial, are in theory supposed to check and balance each other. The problem with this is that the Supreme Court, which as the Constitution has developed has become the highest arbiter of constitutional issues, is itself part of the federal government. In a dispute between the federal government and the people, it is unlikely to side against the government.

As Rothbard points out in The Anatomy of the State, one major political theorist who recognized — and largely in advance — the glaring loophole in a constitutional limit on government of placing the ultimate interpreting power in the Supreme Court was John C. Calhoun. In his Disquisition, Calhoun demonstrated the inherent tendency of the State to break through the limits of such a constitution:

A written constitution certainly has many and considerable advantages, but it is a great mistake to suppose that the mere insertion of provisions to restrict and limit the power of the government, without investing those for whose protection they are inserted with the means of enforcing their observance will be sufficient to prevent the major and dominant party from abusing its powers. Being the party in possession of the government, they will, from the same constitution of man which makes government necessary to protect society, be in favor of the powers granted by the constitution and opposed to the restrictions intended to limit them. ... The minor or weaker party, on the contrary, would take the opposite direction and regard them [the restrictions] as essential to their protection against the dominant party. ... But where there are no means by which they could compel the major party to observe the restrictions, the only resort left them would be a strict construction of the constitution. ... To this the major party would oppose a liberal construction. ... It would be construction against construction — the one to contract and the other to enlarge the powers of the government to the utmost. But of what possible avail could the strict construction of the minor party be, against the liberal construction of the major, when the one would have all the power of the government to carry its construction into effect and the other be deprived of all means of enforcing its construction? In a contest so unequal, the result would not be doubtful. The party in favor of the restrictions would be overpowered. ... The end of the contest would be the subversion of the constitution ... the restrictions would ultimately be annulled and the government be converted into one of unlimited powers.

“All right,” you might say, “we can’t rely on an agency within the government to limit the government. We can’t trust the government to limit itself. But isn’t there a solution to this problem that avoids so radical a step as anarchism? We already know what this is, because we have talked about it in the discussion of the Civil War. Isn’t States’ Rights the way to go? If a State can nullify an unconstitutional law, and if necessary secede from the Union, won’t this be an effective check to the federal government? Unlike our present system a branch of the federal government wouldn’t decide how much power the federal government should have.”

This would undoubtedly be better than what we have now, but this plan also suffers from an obvious problem. Rothbard diagnoses this problem in a way that has never been surpassed. He also leads us to the true solution.

In theory, the ensuing constitutional system would assure that the Federal Government check any state invasion of individual rights, while the states would check excessive Federal power over the individual. And yet, while limitations would undoubtedly be more effective than at present, there are many difficulties and problems in the Calhoun solution. If, indeed, a subordinate interest should rightfully have a veto over matters concerning it, then why stop with the states? Why not place veto power in counties, cities, wards? Furthermore, interests are not only sectional, they are also occupational, social, etc. What of bakers or taxi drivers or any other occupation? Should they not be permitted a veto power over their own lives? This brings us to the important point that the nullification theory confines its checks to agencies of government itself. Let us not forget that federal and state governments, and their respective branches, are still states, are still guided by their own state interests rather than by the interests of the private citizens. What is to prevent the Calhoun system from working in reverse, with states tyrannizing over their citizens and only vetoing the federal government when it tries to intervene to stop that state tyranny? Or for states to acquiesce in federal tyranny? What is to prevent federal and state governments from forming mutually profitable alliances for the joint exploitation of the citizenry? And even if the private occupational groupings were to be given some form of “functional” representation in government, what is to prevent them from using the State to gain subsidies and other special privileges for themselves or from imposing compulsory cartels on their own members?

In short, Calhoun does not push his pathbreaking theory on concurrence far enough: he does not push it down to the individual himself. If the individual, after all, is the one whose rights are to be protected, then a consistent theory of concurrence would imply veto power by every individual; that is, some form of “unanimity principle.” When Calhoun wrote that it should be “impossible to put or to keep it [the government] in action without the concurrent consent of all,” he was, perhaps unwittingly, implying just such a conclusion. But such speculation begins to take us away from our subject, for down this path lie political systems which could hardly be called “States” at all. For one thing, just as the right of nullification for a state logically implies its right of secession, so a right of individual nullification would imply the right of any individual to “secede” from the State under which he lives.”

In his great work Liberalism, Mises also recognized that the logic of secession requires that individuals have a right to secede. The right of self-determination in regard to the question of membership in a state thus means: whenever the inhabitants of a particular territory, whether it be a single village, a whole district, or a series of adjacent districts, make it known, by a freely conducted plebiscite, that they no longer wish to remain united to the state to which they belong at the time, but wish either to form an independent state or to attach themselves to some other state, their wishes are to be respected and complied with. This is the only feasible and effective way of preventing revolutions and civil and international wars.

If it were in any way possible to grant this right of self-determination to every individual person, it would have to be done.

It’s hardly surprising that those in control of the State evade Constitutional limits in order to extend their own power. Rulers have always done so, and at least since the time of Machiavelli, ideologists have not been wanting to support their grasp for power and disregard for moral virtue.

The Roman moralists of antiquity, and the Renaissance humanists who followed them, had urged that rulers had to possess a particular set of moral virtues. These were, first, the four cardinal virtues — cardinal from the Latin meaning “hinge”; hence all other virtues hinge on these — of courage, justice, temperance, and wisdom. Now all men were called to cultivate these virtues, but princes in particular were called to still others beyond these, such as princely magnanimity and liberality. These themes are developed in Cicero’s De Oficiis or On Duties, and in Seneca’s On Clemency and On Benefits.

The humanists anticipated the thesis Machiavelli would one day bring forth, namely that there ought to be a division between morality on the one hand and whatever happens to be expedient for the prince on the other. They answered it by cautioning that even if princely wickedness is not punished in this life, divine retribution in the next life would be fearsome and certain.

What made Machiavelli stand out so starkly was his radical departure from this traditional view of the prince’s moral obligations. As the great Machiavelli scholar Quentin Skinner points out, “When we turn to The Prince we find this aspect of humanist morality suddenly and violently overturned.”

The prince, says Machiavelli, must always “be prepared to act immorally when this becomes necessary.” And “in order to maintain his power,” he will — not just sometimes but often — be forced “to act treacherously, ruthlessly, and inhumanely.”

Most people will never interact with the prince themselves, hence Machiavelli’s note to the prince that “everyone can see what you appear to be” but “few have direct experience of what you really are.” “A skillful deceiver,” he continued, “always finds plenty of people who will let themselves be deceived.” We can surmise from this what kind of person the prince would have to be.

It is customary to object at this point that Machiavelli counseled that the prince pursue virtue when possible, and that he should not pursue evil for its own sake. Machiavelli does indeed make such an argument in chapter 15 of The Prince. But on the other hand, Machiavelli says that conduct considered virtuous by traditional morality and the general run of mankind merely “seems virtuous,” and that apparently wicked behavior that maintains one’s power only seems vicious.

Skinner poses, and answers, the historian’s natural question when faced with these moral claims:

But what of the Christian objection that this is a foolish as well as a wicked position to adopt, since it forgets the day of judgment on which all injustices will finally be punished? About this Machiavelli says nothing at all. His silence is eloquent, indeed epoch-making; it echoed around Christian Europe, at first eliciting a stunned silence in return, and then a howl of execration that has never finally died away.

Machiavelli’s view has sometimes been summarized as “the ends justify the means.” Such a distillation does not capture all aspects of Machiavelli’s thought, and no doubt this pithy summary irritates professors of political theory. But if the end in mind is the preservation of the prince’s power, then “the ends justify the means” is not an unfair description of Machiavelli’s counsel.

This principle, in turn, is what the collectivist State now appeals to in order to justify its own deviations from what people would otherwise consider moral and good. F.A. Hayek wrote,

The principle that the end justifies the means is in individualist ethics regarded as the denial of all morals. In collectivist ethics it becomes necessarily the supreme rule; there is literally nothing which the consistent collectivist must not be prepared to do if it serves “the good of the whole,” because the “good of the whole” is to him the only criterion of what ought to be done.

Collectivist ethics, he added, “knows no other limit than that set by expediency — the suitability of the particular act for the end in view.”

Almost everyone now accepts, at least implicitly, the claim that a different set of moral rules applies to the State, or that to one degree or another the State is above morality as traditionally understood. Even if they would not use some of the verbal formulations of Machiavelli, at some level they believe it is unreasonable to expect the State or its functionaries to behave the way the rest of us do. The State may preserve itself by methods that no private business, or household, or organization, or individual would be allowed to employ for their own preservation. We accept this as normal.

So far, we seem driven toward anarchism. But let’s look at another objection. What about democracy? Isn’t the reason for bloated and tyrannical government the lack of genuine democratic control?

Hans Hoppe, in his great book Democracy: The God That Failed shows why this alleged “solution” won’t work. In a democracy, the government will grab as much as it can, without regard to the future. Precisely because the holders of power do not own the government, they lack the incentive to look to the long run.

A democratic ruler can use the government apparatus to his personal advantage, but he does not own it ... [h]e owns the current use of government resources, but not their capital value. In distinct contrast to a king, a president will want to maximize not total government wealth (capital values and current income), but current income (regardless and at the expense of capital values).

Hoppe anticipates and dispatches an objection. If a democratic government acts as he indicates, will the people not remove it at the next election? The whole point of democracy, after all, is that seekers of power compete for the favor of the majority. Fear of removal will thus check the government’s predation.

Unfortunately, as Hoppe notes, a democratic government can easily disable this “check” on it. The rulers buy votes by promising to the poor extravagant welfare benefits. The rich pay the price for these, but their dissatisfaction cannot overturn the government. They number but few compared with the poor whom the government enlists in its support. Thus predation proceeds unhindered, to the government’s own advantage. 

Hoppe’s negative view of democracy has firm roots in the history of political thought. As he explains:

The central task ahead of those wanting to turn the tide and prevent an outright breakdown is the “delegitimation” of the idea of democracy as the root cause of the present state of progressive “decivilization.” To this purpose, one should first point out that it is difficult to find many proponents of democracy in the history of political theory. Almost all major thinkers had nothing but contempt for democracy. Even the Founding Fathers of the U.S., nowadays considered the model of a democracy, were strictly opposed to it. Without a single exception, they thought of democracy as nothing but mob-rule. They considered themselves to be members of a “natural aristocracy,” and rather than a democracy they advocated an aristocratic republic. Furthermore, even among the few theoretical defenders of democracy such as Rousseau, for instance, it is almost impossible to find anyone advocating democracy for anything but extremely small communities (villages or towns). Indeed, in small communities where everyone knows everyone else personally most people cannot but acknowledge that the position of the ‘haves’ is typically based on their superior personal achievement just as the position of the ‘have-nots’ finds its typical explanation in their personal deficiencies and inferiority. Under these circumstances, it is far more difficult to get away with trying to loot other people and their personal property to one’s advantage. In distinct contrast, in large territories encompassing millions or even hundreds of millions of people, where the potential looters do not know their victims, and vice versa, the human desire to enrich oneself at another’s expense is subject to little or no restraints.

More importantly, it must be made clear again that the idea of democracy is immoral as well as uneconomical. As for the moral status of majority rule, it must be pointed out that it allows for A and B to band together to rip off C, C and A in turn joining to rip off B, and then B and C conspiring against A, etc.

There is an even more fundamental objection to democracy. Suppose that we could overcome both problems: we could constrain the government to follow the will of the majority and we could prevent the majority from voting to despoil the rich. Democracy would still be a bad idea.

Even if the majority agrees to do something, what if you don’t? Why should the majority have the power to force you to do what it commands? As Lysander Spooner well put it,

The principle that the majority have a right to rule the minority, practically resolves all government into a mere contest between two bodies of men, as to which of them shall be masters, and which of them slaves; a contest, that — however bloody — can, in the nature of things, never be finally closed, so long as man refuses to be a slave.

Each person properly has the right to rule over himself, a right no majority can override. As Rothbard explains,

the society of absolute self-ownership for all rests on the primordial fact of natural self-ownership by every man, and on the fact that each man may only live and prosper as he exercises his natural freedom of choice, adopts values, learns how to achieve them, etc. By virtue of being a man, he must use his mind to adopt ends and means; if someone aggresses against him to change his freely-selected course, this violates his nature; it violates the way he must function. In short, an aggressor interposes violence to thwart the natural course of a man’s freely adopted ideas and values, and to thwart his actions based upon such values.

Once we accept this, we can see right away that no state, not even the most limited one, could be morally justified. The state gets its resources through taxation: it seizes our money and wealth. This is the whole point of the state. As the German sociologist Franz Oppenheimer long ago pointed out in The State,

There are two fundamentally opposed means whereby man, requiring sustenance, is impelled to obtain the necessary means for satisfying his desires. These are work and robbery, one’s own labor and the forcible appropriation of the labor of others. Robbery! Forcible appropriation! These words convey to us ideas of crime and the penitentiary, since we are the contemporaries of a developed civilization, specifically based on the inviolability of property. And this tang is not lost when we are convinced that land and sea robbery is the primitive relation of life, just as the warriors’ trade — which also for a long time is only organized mass robbery — constitutes the most respected of occupations. Both because of this, and also on account of the need of having, in the further development of this study, terse, clear, sharply opposing terms for these very important contrasts, I propose in the following discussion to call one’s own labor and the equivalent exchange of one’s own labor for the labor of others, the “economic means” for the satisfaction of needs, while the unrequited appropriation of the labor of others will be called the “political means.”

Albert Jay Nock, Oppenheimer’s chief American disciple and a founder of modern libertarianism, put the same point more pungently in his great book, Our Enemy, the State:

It is unfortunately none too well understood that, just as the State has no money of its own, so it has no power of its own. All the power it has is what society gives it, plus what it confiscates from time to time on one pretext or another; there is no other source from which State power can be drawn. Therefore every assumption of State power, whether by gift or seizure, leaves society with so much less power; there is never, nor can there be, any strengthening of State power without a corresponding and roughly equivalent depletion of social power. The general upshot of all this is that we see politicians of all schools and stripes behaving with the obscene depravity of degenerate children; like the loose-footed gangs that infest the railway-yards and purlieus of gas-houses, each group tries to circumvent another with respect to the fruit accruing to acts of public mischief.