Delusions of Power: New Explorations of the State, War, and Economy

Delusions of Power: New Explorations of the State, War, and Economy

by Robert Higgs
Delusions of Power: New Explorations of the State, War, and Economy

Delusions of Power: New Explorations of the State, War, and Economy

by Robert Higgs


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Taking a close look at the dense fabric that our government weaves between war, state power, and economics, this collection of essays reveals the growing authority—and corruption—of the American state. Covering topics from the Lyndon Johnson presidency to the provocatively titled article “Military-Economic Fascism” on the military-industrial-congressional complex, it argues that the U.S. government consistently exploits national crises and then invents timely rhetoric that limits the rights and liberties of all citizens for the benefit of the few, be they political leaders or various industrialists in the areas of defense and security. As its title suggests, this book presents a clear narrative of trends and events—from the United States’ entry into World War II to the origins of income tax—causing individuals to question whether those in power are truly blind to the effects and causes of their policies.

Product Details

ISBN-13: 9781598130584
Publisher: Independent Institute, The
Publication date: 05/01/2012
Sold by: Barnes & Noble
Format: eBook
Pages: 336
File size: 985 KB

About the Author

Robert Higgs is senior fellow in political economy for the Independent Institute and the editor of the Institute’s quarterly journal, the Independent Review. He is also the author of several books, including Against Leviathan, Competition and Coercion, Neither Liberty Nor Safety, Resurgence of the Warfare State, and The Transformation of the American Economy 1865–1914, and the recipient of numerous awards, such as the Gary Schlarbaum Award for Lifetime Defense of Liberty and the Lysander Spooner Award for Advancing the Literature of Liberty. He lives in Covington, Louisiana.

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Delusions of Power

New Explorations of the State, War, and Economy

By Robert Higgs

The Independent Institute

Copyright © 2012 The Independent Institute
All rights reserved.
ISBN: 978-1-59813-058-4


If Men Were Angels

The Basic Analytics of the State versus Self-Government

IN THE FEDERALIST NO. 51, arguably the most important Federalist of all, James Madison wrote in defense of a proposed national constitution that would establish a structure of "checks and balances between the different departments" of the government and, as a result, constrain the government's oppression of the public. In making his argument, Madison penned the following paragraph, which comes close to being a short course in political science:

[T]he great security against a gradual concentration of the several powers in the same department, consists in giving to those who administer each department the necessary constitutional means and personal motives to resist encroachments of the others. The provision for defence must in this, as in all other cases, be made commensurate to the danger of attack. Ambition must be made to counteract ambition. The interest of the man must be connected with the constitutional rights of the place. It may be a reflection on human nature, that such devices should be necessary to control the abuses of government. But what is government itself, but the greatest of all reflections on human nature? If men were angels, no government would be necessary. If angels were to govern men, neither external nor internal controls on government would be necessary. In framing a government which is to be administered by men over men, the great difficulty lies in this: you must first enable the government to control the governed; and in the next place oblige it to control itself. A dependence on the people is, no doubt, the primary control on the government; but experience has taught mankind the necessity of auxiliary precautions.

The passage that refers to the angels is a rhetorical masterpiece, so memorable that it has become almost a cliché. In Madison's argument, however, it does more than emphasize that human nature is somewhat less than angelic. It also serves as a springboard that propels Madison directly into a consideration of "framing a government which is to be administered by men over men," which is "but the greatest of all reflections on human nature." In short, it moves Madison directly to a consideration of government as we have known it for the past several thousand years — a monopoly operating ultimately by threat or actual use of violence, making rules for and extracting tribute from the residents of the territory it controls. Henceforth, for clarity, I refer to this all-too-familiar type of organization as "the state."

Perhaps everyone will agree that if we all were angels, no state would be necessary, and if angels were the governors, they would require neither internal nor external constraints to ensure that they governed justly. In terms of table 1.1, we would be indifferent regarding the choice between the two cells in the first row.

In Madison's mind, the no-state option was inconceivable, for reasons he expressed obliquely when he wrote: "In a society under the forms of which the stronger faction can readily unite and oppress the weaker, anarchy may as truly be said to reign as in a state of nature, where the weaker individual is not secured against the violence of the stronger; and as, in the latter state, even the stronger individuals are prompted, by the uncertainty of their condition, to submit to a government which may protect the weak as well as themselves; so, in the former state, will the more powerful factions or parties be gradually induced, by a like motive, to wish for a government which will protect all parties, the weaker as well as the more powerful." Thus, Madison, apparently following John Locke, believed that individuals would not choose to remain in a stateless condition and would submit to the authority of a state in order to attain greater security of person and property. Countless other thinkers over the years have reasoned likewise, as Mancur Olson did in his final book when he concluded, "If a population acts to serve its common interest, it will never choose anarchy."

Disorder, Liberty, and the State

Nothing is more common than the assumption that without a state, a society will fall necessarily and immediately into violent disorder; indeed, anarchy and chaos are often used as synonyms. The Random House Dictionary gives the following four definitions for anarchy:

1. A state of society without government or law.

2. Political and social disorder due to absence of governmental control.

3. A theory that regards the absence of all direct or coercive government as a political ideal and that proposes the cooperative and voluntary association of individuals and groups as the principal mode of organized society.

4. Confusion; chaos; disorder.

Suppose, however, that the situation described by the third definition were not merely an ideal, but a genuine possibility, perhaps even a historically instantiated condition.

Locke, Madison, Olson, and nearly everybody else, of course, have concluded from their theoretical deliberations that the stateless option cannot exist — at least, not for long — because its deficiencies make it so manifestly inferior to life in a society under a state. The alleged absence of significant historical examples of large, stateless societies during the past several thousand years buttresses these theory-based conclusions: just as "the poor we have always with us," so, except among primitive peoples, society and the state are taken to have always coexisted.

One need not spend much time, however, to find theoretical arguments — some of them worked out in great detail and at considerable length — about why and how a stateless society can work successfully. Moreover, researchers have adduced historical examples of large stateless societies, ranging from the ancient Harappan civilization of the Indus Valley to Somalia during the greater part of the past decade and a half. Given the enormous literature that has accumulated on stateless societies in theory and in actual operation, we may conclude that, if nothing else, such societies are conceivable.

In this light, both cells in the second row of Madison's model must be seen as live options, whose most likely outcomes are, I suggest, as indicated in table 1.2, the "More Realistic Model."

Although I admit that the outcome in a stateless society will be bad because not only are people not angels, but many of them are irredeemably vicious in the extreme, I conjecture that the outcome in a society under a state will be worse, indeed much worse: first, because the most vicious people in society will tend to gain control of the state; and, second, because by virtue of this control over the state's powerful engines of death and destruction, they will wreak vastly more harm than they ever could have caused outside the state. It is unfortunate that some individuals commit crimes, but it is stunningly worse when such criminally inclined individuals wield state powers.

Lest anyone protest that the state's true "function" or "duty" or "end" is, as Locke, Madison, and countless others have argued, to protect individuals' rights to life, liberty, and property, the evidence of history clearly shows that, as a rule, real states do not behave accordingly. The idea that states actually function along such lines or that they strive to carry out such a duty or to achieve such an end resides in the realm of wishful thinking. Although some states in their own self-interest may sometimes protect some residents of their territories (other than the state's own functionaries), such protection is at best highly unreliable and all too often nothing but a solemn farce. Moreover, it is invariably mixed with crimes against the very people the state purports to protect because the state cannot exist at all without committing the crimes of extortion and robbery, which states call taxation, and, as a rule, this existential state crime is but the merest beginning of its assaults on the lives, liberties, and property of its resident population.

In the United States, for example, the state at one time or another during recent decades has confined millions of persons in dreadful steel cages because they had the temerity to engage in the wholly voluntary buying and selling or the mere possession of officially disapproved products. Compounding these state crimes (of kidnapping and unjust confinement) with impudence, state officials brazenly claim credit for their assaults on the victims of their so-called war on drugs. State functionaries have yet to explain how their rampant unprovoked crimes comport with the archetype described and justified in Locke's Second Treatise of Government. In vain do many of us yearn for relief from the state's duplicitous cruelty: Where is the state of nature when we really need it?

An Application of the Precautionary Principle

In pondering the suitability of the More Realistic Model, we might well apply the precautionary principle, which has been much discussed (and nearly always misapplied) in recent years in relation to environmental policy. This principle holds that if an action or policy might cause great irreparable harm, then, notwithstanding a lack of scientific consensus, those who support the action or policy should shoulder the burden of proof. In applying this principle to the state's establishment and operation, the state's supporters would appear to stagger under a burden of proof they cannot support with either logic or evidence. Everyone can see the immense harm the state causes day in and day out, not to mention its periodic orgies of mass death and destruction. In the past century alone, states caused hundreds of millions of deaths, not to the combatants on both sides of the many wars they launched, whose casualties loom large enough, but to "their own" populations, whom they chose to shoot, bomb, shell, hack, stab, beat, gas, starve, work to death, and otherwise obliterate in ways too grotesque to contemplate calmly.

Yet in an almost incomprehensible fashion, people fear that without the state's supposedly all-important protection, society will lapse into disorder, and people will suffer grave harm. Even an analyst so astute as Olson, who speaks frankly of "governments and all the good and bad things they do," proceeds immediately to contrast "the horrible anarchies that emerge in their absence," although he gives no examples or citations to support his characterization of anarchy. But the state's harms — "the bad things they do" — are here and now, undeniable, immense, and horrifying, whereas the harms allegedly to be suffered without the state are specters of the mind and almost entirely conjectural.

This debate would not appear to be evenly matched. Defending the continued existence of the state, despite having absolute certainty of a corresponding continuation of its intrinsic engagement in robbery, destruction, murder, and countless other crimes, requires that one imagine nonstate chaos, disorder, and death on a scale that nonstate actors seem incapable of causing. Nor, to my knowledge, does any historical example attest to such large-scale nonstate mayhem. With regard to large-scale death and destruction, no person, group, or private organization can even begin to compare to the state, which is easily the greatest instrument of destruction known to man. All nonstate threats to life, liberty, and property appear to be relatively petty and therefore can be dealt with. Only states can pose truly massive threats, and the horrors with which they menace mankind come invariably to pass sooner or later.

The lesson of the precautionary principle is plain: because people are vile and corruptible, the state, which holds by far the greatest potential for harm and tends to be captured by the worst of the worst, is much too risky for anyone to justify its continuation. To tolerate it is not simply to play with fire, but to chance the total destruction of the human race.

Dynamic Considerations

In thinking about the social disorder that so many people have been led to fear if the state is not present, we can organize our thoughts with reference to table 1.3, which shows the degree of disorder and the scope for liberties with and without the state over time. The notation in the table indexes the degree of social disorder (D) and the scope of liberties (L) in a society with no state (NS) and in a society with a state (S) at successive points in time 0, 1, 2, and so on.

Classic discussions of state versus nonstate societal outcomes usually involve static comparisons; they ignore the changes that occur systematically with the passage of time. Thus, for example, a Hobbesian or Lockean account stipulates that in a "state of nature," which has no governing state, a great deal of disorder prevails, and adoption of a state brings about a more orderly condition: in terms of my notation, D-NS(0) > D-S(0). Analysts recognize that the people sacrifice some of their liberties when they adopt a state; Hobbes goes so far as to suppose that the people sacrifice all their liberties to an omnipotent sovereign in exchange for his protection of their lives. Even if the trade-off is less severe, however, the inequality will be L-NS(0) > L-S(0) upon the establishment of a state. A ruler always assures his victims that their loss of liberties is the price they must pay for the additional security (order) he purports to establish.

Well might we question whether the ruler has either the intention or the capability to reduce the degree of social disorder. Plenty of evidence exhibits state-ridden societies boiling with disorder. In the United States, for example, a country brimming with official "protectors" of every imaginable stripe, the populace suffered in 2004, according to figures the government itself endorses, approximately 16,000 murders, 95,000 forcible rapes, 401,000 robberies, 855,000 aggravated assaults, 2,143,000 burglaries, 6,948,000 larcenies and thefts, and 1,237,000 motor vehicle thefts. The governments of the United States have taken the people's liberties — if you don't think so, you need to spend more time reading U.S. Statutes at Large and the Code of Federal Regulations, not to mention your state and local laws and ordinances — but where's the protective quid pro quo? They broke the egg of our liberties, without a doubt, but where's the bloody omelet of personal protection and social order?

Suppose, if only for purposes of discussion, we concede that the initial establishment of the state reduces the degree of social disorder. The obvious question, however seldom philosophers may have asked it, then becomes, What happens next? Does the degree of social disorder remain constant at D-S(0)? Everything we have discovered in theory and by observation flies in the face of such constancy. In fact, the likely progression over time is: D-S(0) < D-S(1) < D-S(2), and so forth. Under state domination, social disorder tends to increase.

This tendency exists because the state attempts in countless ways to compel people to act against their perceived self-interest, and the people respond by resorting to all sorts of evasions, black markets, and crimes. Consider, for example, what happened when the state ordered people not to make, sell, possess, or consume alcoholic beverages or certain narcotics — black markets and crime galore, including countless assaults and murders. Of course, the state's orders to pay stipulated taxes or fees have given rise to manifold evasive measures, some of them carrying violence against persons or the destruction of property in their train. Perhaps equally important, the state's concentration of its police forces on tax collection, enforcement of victimless crimes, and other measures at odds with the people's perceived self-interest diverts those forces from making any more than a token attempt to prevent such everyday crimes as murder, rape, robbery, and fraud, whose prevention the people actually value. Over time, the social misallocation of the state's "protective" resources grows as the state itself shifts more and more resources toward the enforcement of laws adverse to the people's genuine interests and as the people make "moving targets" of themselves in ways that augment the degree of social disorder.

If the degree of social disorder in a society under the state tends to increase, then even if the initial establishment of the state did reduce disorder, a time (t) will come when the degree of social disorder will exceed the disorder of the society with no state: that is, in my notation, D-S(t) > D-NS(0). If so, then — with the myth of a social contract momentarily taken for granted — the initial bargain the people struck will come to be seen as a pact with the devil, a bargain that held, at best, advantages in the short term but proved to be a disappointing deal all around in the longer term.


Excerpted from Delusions of Power by Robert Higgs. Copyright © 2012 The Independent Institute. Excerpted by permission of The Independent Institute.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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Table of Contents


PART I The Nature of the Status, Democracy, and Crisis Policymaking,
1 If Men Were Angels: The Basic Analytics of the State versus Self-Government,
2 Do Slavery and Government Rest on the Same Rationalizations?,
3 Democracy and Faits Accomplis,
4 Blame the People Who Elected Them?,
5 The Song That Is Irresistible: How the State Leads People to Their Own Destruction,
6 A Dozen Dangerous Presumptions of Crisis Policymaking,
7 The Political Economy of Crisis Opportunism,
8 War Is Horrible, but ...,
PART II Closer Looks at Key Actors and Critical Events,
9 Who Was Edward M. House?,
10 How U.S. Economic Warfare Provoked Japan's Attack on Pearl Harbor,
11 Truncating the Antecedents: How Americans Have Been Misled About World War II,
12 Wartime Origins of Modern Income-Tax Withholding,
13 A Revealing Window on the U.S. Economy in Depression and War: Hours Worked, 1929–1950,
14 The Economics of the Great Society: Theory, Policies, and Consequences,
15 Nixon's New Economic Plan,
PART III Economic Analysis, War, and Politicoeconomic Interactions,
16 Recession and Recovery: Six Fundamental Errors of the Current Orthodoxy,
17 Benefits and Costs of the U.S. Government's War Making,
18 To Fight or Not to Fight? War's Payoffs to U.S. Leaders and to the American People,
19 Military-Economic Fascism: How Business Corrupts Government and Vice Versa,
20 Caging the Dogs of War: How Major U.S. Neoimperialist Wars End,
21 Cumulating Policy Consequences, Frightened Overreactions, and the Current Surge of Government's Size, Scope, and Power,
22 Review of War, Revenue, and State Building: Financing the Development of the American State by Sheldon D. Pollack,
23 Review of New Deal or Raw Deal? How FDR's Economic Legacy Has Damaged America by Burton Folsom Jr.,
24 Review of Churchill, Hitler, and "the Unnecessary War": How Britain Lost Its Empire and the West Lost the World by Patrick J. Buchanan,
25 Review of The Pearl Harbor Myth: Rethinking the Unthinkable by George Victor,
26 Review of Unwarranted Influence: Dwight D. Eisenhower and the Military-Industrial Complex by James Ledbetter,
27 Review of Is War Necessary for Economic Growth? Military Procurement and Technology Development by Vernon W. Ruttan,
28 Review of After War: The Political Economy of Exporting Democracy by Christopher J. Coyne,
29 Review of Magic and Mayhem: The Delusions of American Foreign Policy from Korea to Afghanistan by Derek Leebaert,
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