The State by Anthony de Jasay

by Anthony de Jasay

  Jean Elleinstein, Lettre ouverte aux Français de la Républiquedu Programme Commun, 1977, pp. 140-51. Like the gentleman in the Park who mistook the strolling Duke of Wellington for a certain Mr Smith ("Mr Smith, I believe?"-"If you believe that, Sir, you will believe anything"), Elleinstein manifestly believed that nationalization would do these things rather than their opposites. It is this trusting simplicity that best suits the state (and of course its leaders) in the difficult transition from democracy to socialism.

  To readers of J. Rawls's Theory of Justice, 1972, and ofchapter 3 of this book, these phrases will have a familiar ring.

  Schumpeter, Capitalism, Socialism, and Democracy, 5th edn,1977, pp. 146-51.

  If only it bore more lightly the burden of the influence ofGyörgy Lukács, whose hermetic and foggy style its authors tend to follow, The Road of the Intellectuals to Class Power, 1979, by the Hungarian sociologists G. Konrád and I. Szelényi, would be a very worthwhile contribution to an eventual answer to this question. Their original ideas can only be approximately discerned through the swirling Lukácsist obscurity.

  James O'Connor, The Fiscal Crisis of the State, 1973, ch. 7.

  J. S. Mill, On Liberty (ed. by A. D. Lindsay), 1910, p. 165. Itis edifying to reflect that it was none other than the Levellers who, in their democratic fervour, proposed to withhold the franchise from servants who, "depending on the will of other men," could not be trusted with the vote. Cf. C. B. Macpherson, The Political Theory of Possessive Individualism, 1962, pp. 107-36.

  Free entry, secret ballot and majority rule, combined withpreponderant state ownership of capital, means that tenure of state power and hence the role of universal employer, is awarded to the party offering higher wages and shorter hours than its rival. Productivity, discipline on the job, consumption, investment are all determined on the hustings. Political competition ensures their greatest possible incompatibility, resulting in a total shambles.

  The "Yugoslav road to socialism" can be interpreted as an attempt to get round the contradiction between state capitalism and bourgeois democracy, not by the obvious method of suppressing all political competition, but by taking it out at the level of the state and putting some of it back at the level of the individual state enterprise. Employees cannot elect the government, but they elect a workers' council and have some indirect say in the choice of the enterprise manager, the level of wages and profit-sharing bonuses and, hence, more indirectly still, in output and prices.

  To the extent that this is so, the enterprise tends to maximize value added per employee, i.e. it will generally try to use more machines and materials and fewer people, than are collectively available. The resulting tendencies to chronic inflation accompanied by unemployment, are fought with complex administrative means. Politically, the system breeds insider cliques, caucuses and deals. Economically, it is prevented from being a total shambles by individual enterprises having, at least in principle, to compete for a living with each other and with imports on a spontaneously operating market; there is "commodity production for exchange."

  Capital is said to be in social rather than in state ownership. It is impossible to find out what this means. It does not mean syndicalism, cooperative ownership or municipal socialism. It seems to me that it is intended to mean "good state ownership" in opposition to "bad state ownership" (in much the same way as "social" planning means good and "bureaucratic" planning means bad planning). Most of the owner's prerogatives are in practice exercised by state bureaux calling themselves "banks" rather than, as in orthodox socialist countries, "ministries" or "planning offices."

  If this hybrid system is less suffocatingly totalitarian than the thoroughbred state capitalist world to the northeast of it, this is perhaps due as much to history, character and accident as to "systemic" differences.

  57. One of the weakest of several weak reasons advanced byTrotsky why there is not and "there never will be" such a thing as state capitalism, was that "in its quality of universal repository of capitalist property, the state would be too tempting an object for social revolution" (Leon Trotsky, The Revolution Betrayed: What Is the Soviet Union and Where Is It Going?, 5th edn, 1972, p. 246). He has, however, a more compelling reason: in his order of ideas, state capitalism must be privately owned; the state, like some giant corporation, must belong to shareholders able to sell and bequeath their shares. If they cannot sell and their sons cannot inherit, the system is not state capitalism. (While being sure of what it was not Trotsky had some changes of mind about what it was. See also A. Ruehl-Gerstel, "Trotsky in Mexico," Encounter, April 1982.)

  It is sad to see a Marxist reduced to such a position. For Trotsky it ought to be "commodity production," the alienation of labour, its domination by capital and the mode of appropriation of surplus value which define the "relations of production," not whether shares are sold or inherited.

  It must be added that Lenin's use of "state capitalism" to designate a system of private enterprise under close state control, was no worthier of socialist respect. In particular, it is hard to see how the state, which (despite some "relative autonomy") must, by virtue of the relations of production, be controlled and dominated by private enterprise, nevertheless controls it.

  58. Some of these and related ideas are formalized in the powerfulessay "La logique de la frustration relative" by Raymond Boudon in his Effets pervers et ordre social, 2nd edn, 1979. Prof. Boudon seeks to establish that the good observed correlation of discontent and frustration with improved chances, need not depend on some particular psychological assumption, but can be deduced from rationality alone, along the lines of utility-maximization in the face of risk.

  At the other, non-rational end of the spectrum of human motives, Norman Cohn's classic work on medieval revolutionary mystics finds the same correlation between better conditions and prospects and revolutionary action. See his account of the German Peasant War of 1525: "The well-being of the German peasantry was greater than it had ever been... [the peasants] far from being driven on by sheer misery and desperation, belonged to a rising and self-confident class. They were people whose position was improving both socially and economically" (Norman Cohn, Pursuit of the Millennium, 1970, p. 245).

  There is by now a sizeable body of literature in support of the thesis that revolutions typically follow the relaxation of pressures, the brightening of outlook, reforms. It seems to me important to stress that there may well be other good reasons for this than the supposition that reform is a symptom of the state being "on the run," getting weaker, hence becoming fair game for prudent revolutionaries who calculate risk-reward ratios.

  59. It is interesting to find expressly non-Marxist reasons fordefining state capitalism in the Leninist spirit as "the symbiosis of state and corporations" (in P. J. D. Wiles, Economic Institutions Compared, 1979, p. 51). What, then, is private capitalism, and how do we tell it apart from state capitalism? Wiles considers that the latter term is "abusively applied" to the Soviet Union because it "certainly has an ideology which sets it quite apart from real state capitalism." Real state capitalism, being "more or less indifferent about property" is devoid of a proper ideology.

  This is true only in terms of a convention to define real state capitalism as one which is indifferent about property. Which actually existing systems, which countries would such a definition cover? Take the testimony of a prominent state capitalist, a member of one of the Grands Corps at the summit of the French civil service, later to become Minister of Industry: "no amount of dirigisme is worth a powerful public sector." (J-P. Chevènement, Le vieux, la crise, le neuf, 1977, p. 180, my translation.) His state capitalism is certainly not indifferent about property. If there are state capitalisms that are, they are not conspicuous. Are they, perhaps, too easy to mistake for private capitalisms?

  F. Engels, "Socialism: Utopian and Scientific," in K. Marxand F. Engels, Selected Works in One Volume, 1968, pp. 421-2, note.

  The word is used here in a very general and non-pejorativesense, to inc
lude the category of hired managers and administrators who man the bureaux. It refers to a role in society and is not meant to express any like or dislike for it.

  Cogitation and field research have, as I understand it, jointlyestablished that the technostructure is composed of people who make the decisions which require knowledge. (Obviously, few decisions are left for the rest of us to make.) The technostructure removes from ownership all reality of power. The "liturgical aspect" of economic life induces the technostructure to affirm the sanctity of private ownership. It is, however, equally adept at keeping in its place the private and the public shareholder. (Why, in that case, does it prefer to be faced by private shareholders, if only "liturgically"?) In any case, it would be "supreme foolishness" to fear one's shareholders. The technostructure is more interested in growth than in profit. And so on. These revelations are drawn from J. Kenneth Galbraith and N. Salinger, Almost Everyone's Guide to Economics, 1979, pp. 58-60.

  Lenin, "The State and Revolution," p. 292.

  Ibid., p. 340.

  Ibid., p. 345.

  A political philosopher of quiet distinction, whose "socio-economic origin" was at least consistent with some insight into these matters (for his father was the Premier of his country of origin) has disposed of the question in the following "holistic" terms: "Why should we suppose that... [institutions], when they have to choose between their corporate interests and the interests of the classes from which their leaders are mostly recruited, will ordinarily choose to sacrifice their corporate interests?" (John Plamenatz, Man and Society, 1963, vol. II, p. 370).

  The exiled Trotsky's social theory of the Soviet Union is thatin it, capital belongs to the workers' state (or, as he ended up by putting it, "the counter-revolutionary workers' state"), but the working class is prevented from exercising the owner's prerogatives by the bureaucracy, which has won control of the state. The reason why the bureaucracy succeeds in usurping the role of the ruling class is scarcity. Where people have to queue for what they need, there will be a policeman regulating the queue; he " ';knows' who is to get something and who is to wait" (The Revolution Betrayed, p. 112).

  That abundance is not the consequence but the enabling cause of socialism has always troubled socialist thought. It has led to much uneasy theorizing about the "transition period," classes in a classless state, the state withering away by getting stronger, etc.

  Readers are no doubt aware that making explicit a doctrinal inconsistency or awkwardness, as I have occasionally been moved to do, is severely condemned by Marxists as "reductionism."

  68. Gordon Tullock, in a paper of great clarity dealing with someof these issues ("The New Theory of Corporations," in Erich Streissler et al. [eds], Roads to Freedom, Essays in Honour of F.

  A. von Hayek, 1969), cites findings to the effect that apparentmanagerial deviation from profit-maximizing behaviour is greatest in regulated utilities and mutual savings-and-loan associations which have, so to speak, no owners or where regulatory barricades shield the sitting management from the owners.

  Cf. Peter F. Drucker, "Curbing Unfriendly Takeovers," TheWall Street Journal, 5 January, 1983. There is ample evidence of the tendency, noted with some alarm by Professor Drucker, that American corporate management is increasingly motivated by fear of the bidder. It is thus driven to instant profit maximizing behaviour, living from one quarterly earnings report to the next and having no time for the long view.

  This is a far cry from the contention that "owners want profit, managers growth," or "peer approval," or some other, discretionally chosen "managerial" maximand. In fact, the contrary contention is, if anything, closer the mark. Only owner-managers can afford to choose idiosyncratic ends. No hired chief executive could have ruled, as Henry Ford is supposed to have done, that "customers can have any colour car as long as it is black."

  Norbert Elias, The Civilizing Process, vol. II, State Formationand Civilization, 1982, pp. 104-16.

  K. Marx, Capital, 1959, vol. 1, p. 152.

  If the inputs of all butter-making and gun-making effortsdepended on the output of butter alone, there would be (at least) one ideal allocation of the labour force between the dairy and the armaments industries (which, incidentally, would have to start way back with the training of young people to be dairymaids and

  gunsmiths), ensuring the maximum output of guns. Putting too many people in the armaments industry would reduce the outputs of both butter and guns.

  However, gun production is only one of the ends entering into the maximand of the totalitarian state; some of its other ends may conflict with giving people the amount of butter they want, particularly if eating butter makes them more rebellious, or raises their cholesterol level and hence the costs of health care. Beyond these pragmatic considerations, the state may feel that indulging people is bad, and it is not for them to say how much butter they should have.

  It could be argued that managers of private capitalistenterprises are also serving two masters, the owner and the customer. However, those who are very successful at serving the latter do not, by their success, endanger the tenure of the former. Managers are not the owners' rivals.

  The case of Hungary which despite occasional backtrackinghas, since the late 1960s, gone quite a way towards decentralized profit maximization, meaningful prices and even the toleration of an undergrowth of private enterprise, is paradoxically enough a possible confirmation of this thesis. If the country is living proof that "market socialism works," it is so by virtue of the trauma of the 1956 rising, suppressed by Russia, which has created a tacit understanding between the regime and its subjects. After its reinstatement by Soviet armour, the Hungarian state had the intelligence to grasp that its security of tenure is assured by geography and need not be doubly assured by the belt-and-braces of a social system where everybody's livelihood is precarious. Civil society, having learnt its lesson, is treating politics with a shrug. Thus, although more and more managers of enterprises and spurious cooperatives, professional people, small businessmen

  and peasants are building independent livelihoods, there is no parallel rise in demands for political participation and self-government.

  In these rare and propitious circumstances, the Hungarian state can safely afford to concede as much economic freedom as it can get past its neighbours and especially, of course, Moscow. The one real constraint is Russian devotion to a number of socialist principles and the mounting irritation of Russian visitors at seeing their conquered colony wallowing in superior standards of life.

  Moscow, which has no larger neighbour's friendly tanks to invite in and "normalize" matters should the leading role of the party be challenged by self-confident technocrats, fat peasants, perpetual postgraduates and all the other independents who proliferate without control when the vestiges of decentralized economic power begin to reappear, would no doubt be rash to listen to all the expert advocacy of "economic reforms." It has more at stake than the greater efficiency of a self-regulating economy.

  On the other hand, it is less clear why Czechoslovakia, whose peoples received in 1968 an albeit bloodless but no doubt nearly as effective lesson in political geography as did the Hungarians in 1956, refuses to let in the invisible hand to wake up the economy from its comatose sleep. It must be supposed that the national propensity to stay on the safe side, is attracted by the double security of dependent subjects and fraternal aid.

  75. "Merit goods" are considered by the state good for people. IfA is a merit good, its supply is to be arranged in such a way that no one should be able to increase his consumption of any non-merit good B by reducing his consumption of A. It must not be possible, for instance, to swap school milk for lollipops, nor for beer for the child's father. This is achieved when school milk is on tap, with every child drinking as much as he wants.

  When beef cattle are fed from self-filling feed bins, they are believed to eat just enough. Likewise, when merit goods are on tap, the presumption is that people will consume just what they need. With some importan
t merit goods, this leads to ambiguous outcomes. Free health care and free university education are notorious cases in point. Because of emulation, jealousy or other reasons, the consumption of these goods tends to get out of hand and seems almost impossible to stabilize, let alone to reduce.

  76. Robert William Fogel and Stanley L. Engerman, Time on theCross: The Economics of American Negro Slavery, 1974, vol. 1,

  p. 202.

  End of Notes to Chapters 4-5.