July 25, 2000
Gustave de Molinari (1819-1912) was born in Belgium but spent much of his life in France as a member of the French laissez faire liberal school of economists. This school, which dominated economics in France during the 19th century, built upon the work of Jean-Baptiste Say, a far better economist than Adam Smith and a thorough-going classical liberal. Charles Comte, Charles Dunoyer, and Frédéric Bastiat were leading members. Their "welfare analysis" ran as follows: private property and free markets are the basis of freedom, prosperity, and civilization. Their policy recommendations, therefore, were what many modern folk would think of as wickedly "negative" economic freedom coupled with real limits on the power of states to disrupt the market process through taxation, interventions, war, redistribution, creation of special privilege, and the like.
In this radical school of economists Molinari stood out as the most radical. He appears to have been the first writer to draw the conclusion that government could, in effect, be replaced by competing companies or agencies offering to provide security and protection. He first set out this notion in the Journal des Économistes, of which he was editor, in 1849. Although his colleagues were somewhat shocked at this exercise in consistency, he was not purged or banished from the respectable economic profession for pursuing his argument to its end.
When one of Molinari's later works appeared in English in 1904 as The Society of To-Morrow, a reviewer in Benjamin Tucker's individualist anarchist paper Liberty found it very interesting indeed, even though Molinari had backed off a bit from his views of 1849. The reviewer warned Molinari that if he visited "the land of the free and brave people" the United States he would be subject to arrest and deportation as a dangerous anarchist under existing numbskull American legislation.1
By sometime in the 1950s, the late Murray Rothbard was aware of Molinari's heresies concerning stateless market society and their parallel with the system advocated by Tucker and his associates in the U.S. Rothbard, of course, went on to integrate this "utopian" notion with the Austrian economics of Ludwig von Mises.
As I said in my first column on Murray Rothbard, we need not resolve such questions here. The point is that a classical liberal so averse to seeing states as genuine protectors or saviors much less as Hegelian embodiments of Reason would likely have some interesting views on states and wars. He did indeed.
In The Society of Tomorrow,2 Molinari first unfolds his thoughts on human nature and the role of economic activity in human society. Under conditions of primitive scarcity it may have paid some people to fight and kill their neighbors and take their goods. In time, such murderous raiding gave way to more organized exploitation, "once the more astute spoiler of his neighbour comprehend[ed] the position." Then, "[t]hose who had previously ravaged now conquered the land to possess it" (p. 8). Now they enslaved instead of killing. Such conquerors "began to devise systems for the better exploitation of territories and of the populations which were enslaved" (p. 9). These were the first primitive states.3
Rulers "owners," as Molinari says of early states could make higher political profits by either extracting more wealth from existing subjects or by conquering new lands and new subjects. Given low levels of productivity, the first way was unfeasible. The second was more tempting but meant conflict with other states in a word, "war" as opposed to mere raiding (pp. 10-12).
With economic progress, rulers could take higher profits at home, but much of this growing surplus had to be spent on armies and materiel in order to avoid defeat at the hands of other states and to make possible successful seizure of others' lands. This is the same upward spiral in which Martin Van Creveld spies the rise of the modern or "true" state.
This spiral of war-making and war readiness destroyed life and capital and, "worst burden of all, the persistency of war obliges every nation to maintain a vast permanent machinery of destruction," a policy made more costly by scientific/technical progress and the need to "keep pace with the armaments of its neighbours" (p. 18).
Over the last few decades some economists have taken to viewing states as firms in the business of providing security. Unhappily, these economists are not in Molinari's line and overlook important distinctions between real firms and states. Molinari says that states are enterprises "which produce internal and external security" (p. 19). But as "owners" of territorial monopolies grounded on force, state rulers and functionaries aggrandize their profits by seizing the property of businesses at home, and "abroad they enlarge their domination by a policy of territorial expansion" (p. 20).
But even if we can describe state behavior in economic terms, we must remember with Molinari that "this relation of government and nation, as producer and consumer, is not a free market" (p. 20, my emphasis). This is precisely what neoclassical optimists disregard in their conventionalized discussions of states as firms. Molinari adds that constitutional governments are those in which society has some leeway to negotiate the price of the state's monopoly provision of security. Even so, as of his writing, the trend was for states to "refrain [less] from abusing" their monopoly, while peoples were less "interested in, and perhaps less capable of, guarding against such abuse" (p. 21).
Molinari notes that so-called popular sovereignty had not altered matters in principle. Constitutions and separation of powers had merely unleashed political parties "actual armies which have been trained to pursue power" (p. 26) raising up a fierce competition for temporary "ownership" (so to speak) of the power to exploit society in the name of protecting it. This is a good time to recall Molinari's role as mentor to the great Italian economist and sociologist Vilfredo Pareto, whose critiques of parliamentary systems and "pluto-democracy" are well known.
Despite the supposed checks on power afforded by constitutions, press freedom, and so forth, it was clear to Molinari that the liberal republican program had failed to reduce government expenditures and make major wars less likely. Worse, "popular sovereignty" ownership of the state apparatus by the people considered as an abstract, i.e., imaginary and impossible, entity made territorial conquests more problematic and peaceful secession impossible (pp. 52-53). The individual had not necessarily gained by his theoretical possession, in France, of one thirty-eight-millionth share in the national sovereignty. Persecution of ethnic minorities also followed logically from the "democratic" theory of the state.
Under whatever forms, state provision of judicial and protective services had and would continue to center on the interests of the real owners of the state. Their security against resistance, revolt, and loss of power and political profit would come first and the wants of the "customers" dead last.
In spelling out his hopes for a peaceful and productive future state of society (pp. 77-95), Molinari speaks of "individual sovereignty" as the goal. Taxes will be replaced by "contributions" made to a national "agency" charged with external defense against aggression. There might an "agency" in each locality to handle a few "public goods" like sewer systems. Molinari sees these agencies operating on the model of insurance companies to which each person pays a premium. Those Republican Party worthies who prate about putting government on a businesslike basis would flee in horror from Molinari's framing of the issue.
There would be no incentive for such a defensive agency to wage wars of conquest. The only test would be whether such agencies could actually defend their clients from neighboring raiders and states. Certainly, as Molinari says, such agencies would be much cheaper. Having no charter to provide anything beyond security, they would have no basis for interference in markets, property, society, family matters, religion, and so on. Here we have no Hegelian monstrosity or touchy-feely therapeutic state bent on social reconstruction. Edmund Burke famously said that the state should not be viewed as a mere business partnership dealing with "low concerns" such as calico and tea. By now, we might well wish that it had been. Actually, our hypothetical defense agencies have no business fooling with calico or tea, either, but had such agencies taken care of real defense of real clients and nothing else, it would have been a nicer century.
Of course, Molinari has made one big concession relative to his maximum position of 1849. His "retreat" is this: under the spell of the notion of indivisible public goods, he has reintroduced the notion of territorial monopoly into his pure-market theory of defense. The question naturally arises whether or not this little opening is big enough for the full-blown state to drive its eighteen-wheeler back through it. Rothbard thought it was. Certainly, real limitation of the power over society of those who are supposedly protecting it is the key problem in political thought, at least for those who wish to live in free and prosperous commonwealths. As I noted in my third column, on Indo-European myth, the problem is as old as society itself.
Gustave de Molinari made a impressive contribution to the discussion, whether his later partial "retreat" was mistaken or not.
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