December 2, 2013
A great many people – more than ever, probably – describe themselves as supporters of the free market today, in spite of the unrelenting propaganda against it. And that’s great. Those statements of support, however, are followed by the inevitable but: but we need government to provide physical security and dispute resolution, the most critical services of all.
Almost without a thought, people who otherwise support the market want to assign to government the production of the most important goods and services. Many favor a government or government-delegated monopoly on the production of money, and all support a government monopoly on the production of law and protection services.
This isn’t to say these folks are stupid or doltish. Nearly all of us passed through a limited-government – or “minarchist” – period, and it simply never occurred to us to examine our premises closely.
To begin with, a few basic economic principles ought to give us pause before we assume government activity is advisable:
- Monopolies (of which government itself is a prime example) lead to higher prices and poorer service over time.
- The free market’s price system is constantly directing resources into such a pattern that the desires of the consumers are served in a least-cost way in terms of opportunities foregone.
- Government, by contrast, cannot be “run like a business,” as Ludwig von Mises explained in Bureaucracy. Without the profit-and-loss test, by which society ratifies allocation decisions, a government agency has no idea what to produce, in what quantities, in what location, using what methods. Their every decision is arbitrary, in a way directly analogous to the problem facing the socialist planning board (as Mises also discussed, this time in his famous essay “Economic Calculation in the Socialist Commonwealth”).
In other words, when it comes to government provision of anything, we have good reason to expect poor quality, high prices, and arbitrary and wasteful resource allocation.
There are plenty of other reasons that the market, the arena of voluntary interactions between individuals, deserves the benefit of the doubt over the state, and why we ought not assume the state is indispensable without first seriously investigating to what degree human ingenuity and the economic harmonies of the market can get by without it. For instance:
- The state acquires its revenue by aggressing against peaceful individuals.
- The state encourages the public to believe there are two sets of moral rules: one set that we learn as children, involving the abstention from violence and theft, and another set that applies only to government, which alone may aggress against peaceful individuals in all kinds of ways.
- The educational system, which governments invariably come to dominate, encourages the people to consider the state’s predation morally legitimate, and the world of voluntary exchange morally suspect.
- The government sector is dominated by concentrated interests that ( I don’t think “interests” would be taken as meaning people) lobby for special benefits at the expense of the general public, while success in the private sector comes only by pleasing the general public.
- The desire to please organized pressure groups nearly always outweighs the desire to please people who would like to see government spending reduced (and most of those people, it turns out, want it reduced only marginally anyway).
- In the United States, the government judiciary has been churning out preposterous decisions, with little to no connection to “original intent,” for more than two centuries.
- Governments teach their subjects to wave flags and sing songs in their honor, thereby contributing to the idea that resisting its expropriations and enormities is treason.
This list could go on indefinitely.
It’s understandable, to be sure, that people may not understand how law, which they assume must be provided in top-down fashion, could emerge absent the state, although there is plenty of good historical work demonstrating precisely this. But if government had historically monopolized the production of any good or service, we would hear panicked objections to the privatization of that good or service. Had government monopolized light bulb production, for example, we’d be told that the private sector couldn’t possibly produce light bulbs. The private sector won’t produce the size or wattage people want, critics would insist. The private sector won’t produce specialty bulbs with only a limited market, since there would be little profit in that. The private sector will produce dangerous, exploding bulbs. And so on.