The State by Anthony de Jasay

by Anthony de Jasay

  If all the world's goods were divided up into random bundles belonging to nobody, and if everybody were blindfolded and could pick one bundle, and when the blindfolds were taken off all could see their own and anyone else's bundle, we would have a properly translucent setting for the interaction of free contracts, status and just contracts. If some of the bundles contained beaver hats, and some people liked beaver hats more than other things while for other people it was the other way round, after some scurrying about they could all end up holding what they liked best, subject of course to the constraints of feasibility fixed by the initial bundles. If (as used to be the case before the late seventeenth-century flooding of the European market with Canadian pelts), people below a certain status were then forbidden to wear beaver hats, their price in terms of other things would decline and even so a number of swaps of hats for other things would be prevented from taking place, for some people of the requisite high status but not so keen on beaver, would halfheartedly hang on to the hats they found in their bundles. If, in addition, there was an authority entitled to outlaw unjust contracts and it felt that the just price of beaver was what it has always been, the number of mutually agreeable exchanges would be further restricted, only people of the requisite status and very keen on beaver being prepared to pay the just price. A number of hats would go begging, their holders being unable either to wear or to swap them.

  Analogous, though less outlandish, problems arise when we imagine bundles made up of all sorts of talents, skills, knowledge

  and muscle-power, and various job opportunities, outlets for this talent, needs for that skill or muscle. As we can expect from a random distribution, there would be a hopeless mismatch within each bundle between talents and opportunities, skills and the occasions for using them. Status rules and the banning of unjust bargains, e.g. the setting of minimum wages or of a "rate for the job," would prevent at least a part of the possible matching between bundles from taking place. In this context, the capitalist state is naturally one that will not enforce status-related and justice-related rules and constraints on the freedom of contract,*13 passively allowing the ideas which gave rise to them to be eroded by the tide (when such a tide is running) of the capitalist ideology and the exigencies of capitalist business practice. The state which will actually outlaw and suppress such rules, however, may learn to like outlawing and suppressing in a general way, and may not remain a capitalist state for very long.

  1.2.10 Pareto has laid down the precise sense in which the voluntary reshuffling by their owners of the contents of random bundles, results in the "best" distribution of the world's goods. If two consenting adults close a contract, and there is no independent evidence of duress (i.e. evidence other than the contract looking unfavourable to one party), we accept a prima facie case that they like the terms of this contract better than not entering into a contract with each other. (The precise condition, in fact, is that one of them prefers and the other either prefers, or is indifferent to, contracting.) There is also an (albeit weaker) case for holding that there is no other contract which these two people, given their respective situations, could have concluded instead such that it would be preferred by one of them to the contract they did conclude, while leaving the other party at worst indifferent. If, then, it cannot be shown that their contract violates the rights of a third party (it may violate his interests), no one-neither the third party, nor anyone purporting to defend his interests-has the right to hinder them in executing their contract as agreed. Overriding the contract, or forcibly amending its terms ex post, let alone insisting that, as amended, it is still binding on the parties, are the ways of "hindering" typically reserved for the state (cf. pp. 112-3).

  The condition "it cannot be shown that their contract violates the rights of a third party" is, however, obviously neither straightforward nor easy, though it is putting the onus of proof where it belongs. Sometimes the onus is allowed to shift the other way, the contracting parties having to prove that they are not violating third-party rights. This is not an unfair characterization, for instance, of the practice of some American regulatory agencies. Norms for judging the rights of someone in relation to a contract to which he is not a party cannot be laid down independently of culture and ideology and may, even so, remain contentious. For instance, to stay safely in a realm of capitalist culture and ideology, does it violate the rights of the lowest bidder if he is not awarded the contract, assuming that the tender specified no explicit rule about accepting the lowest bid? Must the best qualified candidate for a job get it? Can land use be changed if it spoils the view for the neighbours? Different capitalist answers appear to be possible. Different capitalist jurisprudence might interpret the "third party" condition in a more or less austere manner, and careful thought may be needed before one can say that a particular state is not respecting the freedom of contract and is, on this ground, an adversary of capitalism.

  What, on the other hand, is an unambiguous denial of the freedom of contract is the interdiction or forcible amendment of a contract (in order, for example, to tilt its terms in favour of one of the parties) on grounds not involving the rights of third parties.

  Admission of such grounds appears to presuppose that a person, in entering into a contract, is capable of violating his own rights and it is incumbent upon the state, whose proper function is the defence of recognized rights, to prevent him from doing so. This is the key to a whole boxful of cases where it can be claimed that a person needs to be protected against himself. One oft-cited case (which involves other problems, too) is the puzzle about a man's freedom (in the sense of right) to sell himself into slavery.*14 A fundamentally different case for denying the freedom of contract arises out of the claim that, in agreeing to a certain set of terms, a person would be mistaking his own preference or interest. The ground for stopping him is no longer one of his right, and a fortiori not one of a conflict between two of his rights, but of his utility as seen from the outside by the sympathetic observer. On this ground, prohibition stops a man from buying whisky because his real (or "rational," "true," "long-term" or "unconfused" as it is sometimes called to distinguish it from plain) preference is for sobriety. The weakness-of-will argument may have to be invoked to justify the distinction between plain revealed preference for whisky and unconfused long-term preference for a sober life. However, much the same distinction must be agreed to support other applications of the principle of paternalism: the payment of wages in kind, the provision by the state of welfare services (e.g. health) in kind, compulsory insurance, education, etc., each of these in contra-distinction to giving the recipient cash in lieu, to be spent as he saw fit.

  1.2.13 Another's conception of a person's good or utility, another's diagnosis of his real preference or long-term interest, is adequate ground for interfering with his freedom to enter into contracts a consenting adult partner is prepared to agree to if, and only if, it is accepted that it is a proper function of the state to use its monopoly power of coercion to enforce A's conception of B's good. Now A may be anybody, or the sympathetic observer, or the majority of voters, or the foremost socio-psycho-economic research institute, or the state itself. Different kinds of states could be distinguished according to which of these potential sources they would profess to follow. The test of the capitalist state is that it follows neither source, for it gives priority to the freedom of contract, including under it the extremely important freedom not to contract at all. Anticipating chapter 2, I might say broadly that other states profess to follow one or more of the possible sources. The choice of "sources," whose conception of the good is to be listened to, is inevitably determined by the state's own conception of the good; it will choose to be guided by congenial spirits, kindred intellects. Selection of the adviser, no less than selection of what advice to accept, is tantamount to doing what one wanted to do all along. In choosing to promote B's good, the state is in effect pursuing its own ends. This, to be sure, is a quasi-tautology; it calls for more attention to the nature
of the state's ends.

  1.2.14

  Author: Jasay, Anthony de Title: The State

  Anthony de Jasay

  Advanced Search 1. The Capitalist StateThe Contours of the Minimal State

  Indifference to the satisfactions of governing gives rise to self-imposed limits on the scope of the state.

  It is strange but not patently irrational for the state to minimize itself.

  A theory, or at least an approximative definition, of the capitalist state, which requires it to respect the freedom of two parties to enter into contracts that do not violate the rights of a third, looks incomplete, as is-by customary standards-the state in question. For what are the third-party rights which the state ought to protect and what are mere pretensions which it ought to ignore? There is a virtually limitless list of potential claims which third parties could make against the terms of a given contract. Laws must be made and administered both to define the category of claims that shall be treated as justified and to reduce the area of doubt (and hence of arbitrariness) between those that shall and those that shall not be so treated. Once there is a state, it is incumbent upon it to deal with these tasks.

  There is some presumption that in the state of nature a spontaneous cooperative arrangement would arise and fulfil this function, for the same general reasons which let us suppose that other functions habitually regarded as proper to the state would also be looked after, though there is neither a certitude that they

  would be nor a definition of the particular shape they would take. Once a state is formed, however, at least some of these non-coercive arrangements are liable to become unworkable and may, indeed, be impossible to bring about in the first place. In the state of nature, anyone disliking the way a voluntary arrangement is working, has only two choices: to accept the way it works, or to bargain for its amendment, a breakdown in bargaining carrying the danger of the whole arrangement breaking down and its benefits being lost.*15 The risk of such an outcome provides some incentive for everyone to keep things going by reciprocal accommodation.

  In the presence of a state, however, the dissident member of a voluntary arrangement has an added reason to be intransigent (and the other members an added reason to call his bluff), i.e. the faculty of recourse to the state. If he cannot get his way, he can still appeal to the state to uphold the justice of his case, and so can the other cooperators. Whoever wins, the voluntary arrangement is transformed into a coerced one. Turned upside down, this is the same logic as the one in Kant's argument about the subject's right to disagree with the sovereign. If there were such a right (which Kant denies), there would have to be an arbiter to whom the disagreement could be referred. The sovereign would then cease to be the sovereign, and the arbiter would take his place. Conversely, if there is a sovereign he will get disagreements referred to him, for there is less reason to yield in private compromise if an instance of appeal exists. What the state must do, to make its life and that of its less litigious subjects tolerable, is to lay down as clearly as possible the laws predicting how it would rule if cases of a given description were appealed to it (thus warding off many appeals), as well as a general description of the cases in which it would not hear an appeal at all.*16

  Admitting, then, that if the state exists at all, it will somehow or other assume the task of sorting out disputes arising out of third-party claims, what are the guidelines the capitalist state would adopt for doing so while still remaining capitalist, an upholder of the freedom of contract? There is no question of drawing up a design, a sort of code capitaliste for the laws of such a state, the less so as it is reasonable to believe that more than one such code, containing significant variations on the same themes, could each be consistent with the basic capitalist conditions relating to unconditional property and free contract. Perhaps the most economical way of grasping the spirit common to all such possible codes, is to consider that if there is a state (which is not the same as claiming that there could really be one) which is prepared to agree to these basic conditions, it must be one which finds its satisfactions elsewhere than in governing.

  Such a statement may look obscure and require a little elaboration. When we reflect about choice, we incline at least tacitly to suppose that "behind" the choice there is a purpose, an end. It used even to be said, for instance, that consumers seek satisfaction and producers seek profit, and their choices can be thought of as rational (or not) in terms of a corresponding maximization assumption. But what end or ends does the state pursue, the maximization of what can qualify its conduct as rational? Various answers of varying degrees of sincerity and seriousness could be proposed: the sum of the satisfactions of its citizens, the well-being of a particular class, the gross national product, the might and glory of the nation, the state budget, taxes, order and symmetry, the security of its own tenure of power, etc. (I address the question more seriously on pp. 267-70.) The likely maximands all seem on closer scrutiny to require that the state possess some specialized capacity, equipment to attain them. In

  addition, greater rather than lesser capacity looks desirable for guiding the course of events, dominating the environment, and actively working upon the maximand (increasing the pay-off, e.g. enlarging the dominion rather than merely the power over a given dominion). Even if there are maximands which do not require a vast capacity to act for their attainment-unworldly objectives like, say, the peaceful observation of rare butterflies-would it not be pointless for the state pursuing them, voluntarily to bind its hands and renounce in advance the use of a fully-fledged apparatus for exercising power, of the richest possible set of "policy tools"? Might they not come in handy one day?

  My definition of the capitalist state, however, requires it to opt for a sort of unilateral disarmament, for a self-denying ordinance concerning the property of its subjects and their freedom to negotiate contracts with each other. A state whose objectives needed, for their realization, a strong capacity to govern, would not willingly adopt such a self-denying ordinance. This is the sense in which we say that the ends of the capitalist state, whatever they are (we need not even seek to find their particular content) lie outside government.

  What, then, is the point for the state in being a state? If it finds its satisfaction in what we could term "metagovernmental" maximands, rare butterflies or plain peace and quiet, why not resign and stop governing? The only plausible answer that suggests itself is to keep them out, to stop them from getting hold of the levers of the state and spoiling it, the butterflies, the peace and all. The very special rationale of being a minimal state is to leave few levers for the zealots to get hold of and upset things with if, by the perversity of fate or of the electorate, they manage to become the state.

  Inheriting a strong, centralized state apparatus is part of the secret of the successes both of the Jacobin terror and of Bonaparte. In what are, perhaps, the climactic passages of L'ancien régime et la révolution (Book III, ch. VIII), Tocqueville blames the prerevolutionary French state for having set over everyone the government as "preceptor, guardian and, if need be, oppressor," and for having created "prodigious facilities," a set of egalitarian institutions lending themselves to despotic use, which the new absolutism found, all ready and serviceable, among the debris of the old.

  Marx, too, is perfectly clear about the value to the revolution of the "enormous bureaucratic and military organization, with its ingenious state machinery" put in place by the regime it had overthrown. "This appalling parasitic body, which enmeshes the body of French society like a net and chokes all its pores, sprang up in the days of the absolute monarchy.... The seignorial privileges of the landowners and towns became transformed into so many attributes of the state power.... The first French Revolution... was bound to develop what the absolute monarchy had begun: centralization, but at the same time the extent, the attributes and the agents of governmental power. Napoleon perfected this state machinery."*17 Thus, it is not the state that mistrusts itself and would rather not have levers or powerful tools les
t it should misuse them. It knows that it could not possibly be tempted to misuse power. It is its rivals for state power who would, by the nature of their ambition, misuse it. (The minimal state may even be aware that if it was succeeded by a rival with contestable ends in mind, the latter would need but a little time to put in place the rudiments of an apparatus of non-minimal government. However, even gaining a little time, and hence hope,

  would be better than handing it a ready-made system of pulleys and levers.) Seeking, as it does, aims which positive government is incapable of promoting, and fearing its capacity for wrongdoing in profane hands, the capitalist state is rational in adopting the contours of the minimal state.

  1.3.10 Recalling the regimes of Walpole, Metternich, Melbourne or Louis Philippe (only more so), with a blend of indifference, benign neglect and a liking for amenities and comforts, the capitalist state must have sufficient hauteur not to want to be bothered by petty disputes among its subjects. The more quietly they get on with their business, the better, and it may occasionally, and a little reluctantly, use a heavy hand to make them do so. Its distance from the mundane concerns of its subjects does not, on the other hand, imply the sort of heroic hauteur which a Nietzsche or a Treitschke wished to find in the state, which reaches out for some high purpose, risking in avoidable war the life and property of the subject; nor the hauteur of utilitarian ethics, which sees the subject and his property as legitimate means to a greater common good. In a seeming paradox, the capitalist state is aristocratic because remote, yet with enough bourgeois overtones to recall the governments of the July Monarchy of 1830-48 in France. At any event, it is a state which is very unlikely to be a republic. As a digression, it is worth remembering, though it may not prove much, that Alexander Hamilton was a convinced royalist. His is a good example of how little the essence of capitalism is understood by the public. If people were asked who was the most capitalist American statesman, some may be tempted to say "Grant" and think of railroad land grants, "Garfield" and think of the Gilded Age, perhaps "McKinley" and think of Mark Hanna and tariffs, "Harding" and the Teapot Dome scandal and the Ohio Gang. Such answers miss the point. These Presidents caused or condoned corruption and scandal by favouring some interests over others, which means using state power for their ends. If any American statesman was good for capitalism, which is not evident, it was Alexander Hamilton.