carnes@gargoyle.UUCP (Richard Carnes) (10/04/85)
[Kolodney] >>The entire economy, without which the concept of wealth would be >>meaningless, is based on a governmentally created and controlled >>system of commerce. > >[nrh] >Governmentally Created? I find that MOST difficult to believe. What >records do you have to substantiate that government created commerce, >rather than distorting what was there? In particular, the use of >non-government-created money (such as gold) predates official money, >with (so far as I know) the first government inflation being that of >ancient Rome. > >Government "controlled"? Why yes, that's quite true, but it doesn't >explain why the Chinese starvation dropped when their government >began allowing folks to sell crops privately. In short, you've confused >"controlled", with "aided". I agree that governments have been the source of a huge amount of economic decline in the past and present. However, it is also true that government, or the state, is essential for economic growth. By "the state" I mean here an organization that has a comparative advantage in violence and which extends over a geographic area determined by its power to tax. Its comparative advantage in violence enables it to specify and enforce property rights. (This bears on the space colony Anarchia: assuming it can come into existence in the first place, how would property rights be specified and enforced, except by such an organization?) The creation of the state in antiquity was the necessary condition for all subsequent economic development. What the state does is to provide the basic rules of the game, almost any set of which is better than no rules. The rules have two objectives: 1. To provide a structure of property rights which specify the fundamental rules of competition and cooperation, in order to maximize the income of the ruler; in other words, to specify the ownership structure in factor and product markets. 2. Within this framework, to reduce transaction costs in order to maximize the output of society and thus increase tax revenues. The state does this by providing a set of goods and services (protection and justice) that lower the cost of specifying, negotiating, and enforcing the contracts which are basic to economic exchange. The economies of scale provided by systems of law, justice, and defense are basic to civilization. Individuals who have been given a choice between a state, however exploitative, and anarchy, have, throughout history, chosen the state. Libertarians need to be able to give a satisfactory explanation for this uncooperative fact. Note that there is a potential conflict between the first objective, designed to maximize the ruler's (or ruling class's) own income, and the second, designed to maximize the society's output. This may be the root cause of the failure of societies to achieve indefinitely sustained economic growth, although ancient Egypt, Greece, and Rome, as well as modern societies, all experienced lengthy periods of economic growth. This was made possible by the state's provision of a framework for economizing on the use of resources. -- Richard Carnes, ihnp4!gargoyle!carnes
usenet@ucbvax.ARPA (USENET News Administration) (10/05/85)
>Individuals who have been given a choice >between a state, however exploitative, and anarchy, have, throughout >history, chosen the state. First, thanks for an interesting article. Second, I find the excerpt above fascinating. Can you give some examples? Thanks, -Tom tedrick@berkeley
@ucbopal.BERKELEY.EDU (10/06/85)
In article <205@gargoyle.UUCP> carnes@gargoyle.UUCP (Richard Carnes) writes his usual insightful commentary. In this case, we have: >By >"the state" I mean here an organization that has a comparative >advantage in violence and which extends over a geographic area >determined by its power to tax. Its comparative advantage in >violence enables it to specify and enforce property rights. The last sentence is an important fact. This fact needs to be addressed by those libertarians who favor a collection of private police forces, a marketplace of governments, or anything without some supreme authority to define and enforce property rights. >What the state does is to >provide the basic rules of the game, almost any set of which is >better than no rules. Also true. However, what we have in reality is that the state can - and does - change the rules at will. For example, when the state decided that the oil companies were making to much money under the current rules, we added a new rule called "Windfall Profits Tax." Given this, it is no longer so clear that any set of rules is better than no rules. After all, the rules could - and do - change to a set that is not better than no rules. A free market is not "no rules" (assuming you have property rights enforced), it is merely one of the sets of rules, with the advantage that it is a fixed set. Any set of rules that allows the state to set the tax rate does not have that advantage; the tax rate can be changed so that optimal strategies also change (and I'm *not* going to venture into what the strategies are optimizing :-). As a final note, a progressive tax structure plus control of the monetary supply amounts to an ability to change the tax rate via bracket creep. <mike [Note to Carnes: statist (derogatory) n. 1) a supporter of the state in politics. 2) one who believe that the state should make decisno ion for individuals. statist adj. of the statist wing in politics. loosely synonymous with authoritarian.]
usenet@ucbvax.ARPA (USENET News Administration) (10/06/85)
I have some questions about Libertaria and war. It seems to me that an essential part in the evolution of war is the evolution of a coercive state which produces a powerful military force. As long as one nation is willing to follow this path any nation failing to follow suit is liable to be overrun and cease to exist.
nrh@inmet.UUCP (10/07/85)
>/* Written 6:18 pm Oct 3, 1985 by carnes@gargoyle in inmet:net.politics.t */ >/* ---------- "Role of the state in the economy" ---------- */ >[Kolodney] >>>The entire economy, without which the concept of wealth would be >>>meaningless, is based on a governmentally created and controlled >>>system of commerce. >> >>[nrh] >>Governmentally Created? I find that MOST difficult to believe. What >>records do you have to substantiate that government created commerce, >>rather than distorting what was there? In particular, the use of >>non-government-created money (such as gold) predates official money, >>with (so far as I know) the first government inflation being that of >>ancient Rome. >> >>Government "controlled"? Why yes, that's quite true, but it doesn't >>explain why the Chinese starvation dropped when their government >>began allowing folks to sell crops privately. In short, you've confused >>"controlled", with "aided". >[carnes] >I agree that governments have been the source of a huge amount of >economic decline in the past and present. However, it is also true >that government, or the state, is essential for economic growth. Hold on thar! Were it strictly true as you're saying it, then by definition there could be no WORLD growth in the economy (there being no world government). The points you make below about lowering transaction costs and providing standards surely do not hold BETWEEN nations, and yet I would think it incontestable that the world economy, and world trade have prospered and grown, WITHOUT WORLD GOVERNMENT. If you object that the growth has occurred because of the prosperity of component states, I object that it is clear, then, that governments need not control all trade to benefit from it, and obvious that even smaller states (perhaps libertarian co-operative agencies one could leave or join at will) could prosper as well. >By >"the state" I mean here an organization that has a comparative >advantage in violence and which extends over a geographic area >determined by its power to tax. Its comparative advantage in >violence enables it to specify and enforce property rights. (This >bears on the space colony Anarchia: assuming it can come into >existence in the first place, how would property rights be specified >and enforced, except by such an organization?) Hmmm.... Were Anarchia built, it would presumably be built by people who had some ideas about this. Two of the possible answers to your question: o Anarchia built by a private individual, and run that way, as his "property" -- the owner then spells out the "law" in agreements with the "clients". o Anarchia built by co-operating people, agreeing in advance what shall constitute property rights, and specifying how conflicts shall be resolved. >The creation of the state in antiquity was the necessary condition >for all subsequent economic development. "The creation of toenail-picking was ALSO the necessary condition for all subsequent economic development". Impossible to prove or disprove, just as with your statement. While we agree that toenail-picking has less to do with economics than does government, your statement implies that there would have been no "subsequent economic development" without government. I invite you to try to establish such a proposition. >What the state does is to >provide the basic rules of the game, almost any set of which is >better than no rules. The rules have two objectives: That "almost any set of which is better than no rules" strikes me as ludicrous. It would have brought grim smiles to the faces of the people starved to death by government edict (in Russia) or those overrun by the Germans in WWII. Face it kiddo, the reason one NEEDS governments is to IMPOSE certain sorts of behavior. People tend to go along with behavior they find profitable and just. People have to be forced to do things they find evil or harmful to themselves. Lacking government, you may only cause the latter sort of behavior when you can delude people. Given government, you have an enormous amount of leverage to force people to do bad things. >.... >Individuals who have been given a choice >between a state, however exploitative, and anarchy, have, throughout >history, chosen the state. This is a pretty empty statement. As near as I can tell, it suggests that, throughout history, at least two people (the plural of "individual" is used, but that's all we get for numbers) have chosen SOME sort of state over SOME sort of Anarchy. This doesn't say much. It could be, for example, that all but two of such individuals chose things the other way. If you MEAN that people mostly choose repressive states over anarchy, I invite you to establish THAT proposition, especially in view of the fact that ancient Ireland (which was essentially anarchic) had to be CONQUERED by England (somehow, the Tuathas just didn't choose things the way Richard wanted them to). >Libertarians need to be able to give a >satisfactory explanation for this uncooperative fact. What, that 2 people (or perhaps more) did this? Perversity, I guess.
janw@inmet.UUCP (10/07/85)
> [Richard Carnes : carnes@gargoyle] > The creation of the state in antiquity was the necessary condition > for all subsequent economic development. What the state does is to > provide the basic rules of the game, almost any set of which is > better than no rules. The rules have two objectives: > > 1. To provide a structure of property rights which specify the > fundamental rules of competition and cooperation, in order to > maximize the income of the ruler; in other words, to specify the > ownership structure in factor and product markets. > > 2. Within this framework, to reduce transaction costs in order to > maximize the output of society and thus increase tax revenues. The > state does this by providing a set of goods and services (protection > and justice) that lower the cost of specifying, negotiating, and > enforcing the contracts which are basic to economic exchange. The > economies of scale provided by systems of law, justice, and defense > are basic to civilization. ... > > Note that there is a potential conflict between the first objective, > designed to maximize the ruler's (or ruling class's) own income, and > the second, designed to maximize the society's output. This may be > the root cause of the failure of societies to achieve indefinitely > sustained economic growth, although ancient Egypt, Greece, and Rome, > as well as modern societies, all experienced lengthy periods of > economic growth. This was made possible by the state's provision of > a framework for economizing on the use of resources. Congratulations on a well-presented case. You realize, of course, that you are arguing as a pure-bred conservative: it was always done this way, you say, and for a good reason, so don't try to change it. And, of course, you are arguing at a tremen- dous advantage: most of empirical data is, of necessity, on your side. Minarchist and anarchist societies are, in history, few and far between; they are also *small* (even the world com- munity of states that Nat is citing, has few members, although these have many submembers). Every conservative has that advantage; but it should be largely discounted; if it is not, nothing new will ever have a chance. The only thing that a conservative, as such, has a right to demand of an innovator, as such, is that the latter proceed non-violently, and at first try out his ideas on a small scale. E.g., as test for socialism, a kibbutz is better than a Cuba. In this respect, libertarian ideas are singularly fortunate. Anarchist and minarchist communities abound: this net is one of them. (Other examples include the "republic of Letters", many clubs, some families, the stock exchange). Libertarian reforms can be introduced incrementally: e.g., airline deregulation. That libertarianism can only win through non-violent methods is almost self-evident from its basic principles: you can hardly coerce people to be free from coercion. Your text quoted above is an (admirable) formulation of a kind of Hobbesian model of society as applied to economics: an all-powerful "ruler" (or ruling class) treats society as so much livestock - and the society concurs because this is better than anarchy (which is identified with chaos). The only remaining interplay is between the ruler's own long-term and short-term interest (on which you make interesting historical observations). A useful simplification that has value beyond this discussion. But just as Hobbes could only deduce absolute monarchy from his model (this is true with some qualifications that would be out of place here), yours, too, has its limitations. In subsequent discussion I will ignore the fact that you only speak of the rules of *economic* game; I will extend it to *all* voluntary social activities. I do not see that it weakens or strenghthens your case. But if you see this as a straw man, just skip the next paragraph. Your thesis then becomes, more or less, that trade or any other kind of voluntary interaction between individuals has to proceed according to some rules, and the rules have to come from an external "ruler". They cannot be a product of the interaction itself. Possibly that, in your view, would im- ply a paradox; and certainly there would be a non-linearity. This is why Hobbes (as you) endows his "sovereign" with unlimited power: limiting him would make him *part* of the interplay of forces, and require another ruler to regulate this. However, you admit of a distributed "ruler" (ruling class); and this is true to life as we observe it. (In fact this class can include, with lesser or greater weight, most of the popula- tion). But if the "ruler" is not an individual, you run into the same kind of paradox (if paradox it be) as quoted above: the rules set by the "ruler" are themselves result of an interplay of forces, which interplay has to have rules, etc. So, collective self-regulating, uncoerced activity has to be possible; in fact it occurs all the time; this discussion is an example; children's play is another. The reason children obey rules of a game is not coercion; if they have a leader, they obey him (better than they do their parents), but he does not (usually) enforce his authority by punishments. The incentive is *for the game to go on*. The question remains: can a whole society function in a similar way? The answer is yes, such societies have existed. True, they were few and small - but the same has been routinely said, a few centuries ago, about *republican* government. It might be fit, it was argued, for a city state, and even there it was unstable. But a genuine, large nation like France must be a monarchy, or it will sink into chaos. Anyway, *your* argument does not impose a size limit; it seems to prove that economic development would be completely impossible without a strong state; thus it proves too much. Finally, a historical point. > Individuals who have been given a choice > between a state, however exploitative, and anarchy, have, throughout > history, chosen the state. Libertarians need to be able to give a > satisfactory explanation for this uncooperative fact. But some anarchist or almost-anarchist societies have histor- ically been *populated* with refugees from states. Examples: (1) early Iceland; (2) Cossack communities in south Russia and Polish Ukraine (15-17 centuries). Jan Wasilewsky