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On « Ulcerous government”

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From the Archives : Originally published March 28th, 2013
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Category : Fundamental Ideas

 

 

 

 

Introduction to this extract, by David Hart

These are the concluding pages of Molinari’s 2 volume treatise on political economy which he published in 1855 and revised in a second edition in 1863 while he was teaching and working in Belgium. He continued to develop and expand the ideas he first presented on this topic on “the production of security” and the “liberty of government” in the mid and late 1840s. As he says in a footnote, he is willing to claim priority in formulating these “fanciful” ideas.

The passage which caught my eye is this one:

Thus, by the very fact of their anti-economic constitution, governments have become the ulcers of societies (“les ulcères des sociétés”), to use the strong expression coined by J.B. Say. As population and wealth increase, thanks to the progressive development [531] of competitive industries, a growing mass of vital energy is sucked out of society by the suction pump which are taxes and debts, in order to subsidise the costs of production of public services, or to put it in a better way, to subsidise the support and easy enrichment of the particular class which controls the monopoly of the production of these services.

Following Molinari's reference to Say I tried to find the source of Molinari's idea that the state is an ulcer on the body politic of society (or rather, body economic) but the passage from Say he cites has no reference to ulcers or any any disease. So it appears Molinari might the originator of this expression, although I recall that a similar use of the expression can be found in an article in the Dictionnaire de l'économie politique (1852) (I need to track this down!).


On « Ulcerous government”


Viewed from the point of view of the useful distribution of services, the lack of understanding of the division of labour (spécialités) and free trade gives rise to an inevitable inequality between the division of public services and the costs of their production, in that it allows a part of the cost of services supplied to the present generation to be thrown onto future generations. In effect, on the one hand, no one can know which is his share of the distribution of public services and which is his share of the cost. One can always state that the poorest classes, being the least influential group in the State, are the ones who receive the smallest portion of public services, and yet contribute to paying for them in the greatest proportion. On the other hand, the sum total of receipts, from whatever source they come, are only quite rarely sufficient to cover the sum total of the costs. All governments are regularly forced to borrow in order to make up for the ever re-emerging and increasing deficits in the areas of activity which they have monopolised. At the present moment their combined debt (without counting those of the sub-governments in the provinces, cantons, and communes) surpass 60 billion and they are increasing year by year.1 What does this mean? It means that a part of the costs of production of public services is charged to future generations instead of being paid in good faith by the [530] generation which consumed these services. Doesn’t this mean that the immoral ease with which a part of the costs of present consumption are thrown onto future generations has the inevitable result of encouraging governments to constantly increase their expenditure? We can see what will happen by looking at a practical example taken from private consumption: what debts one could run up with one’s grocer, taylor, boot maker if one were authorized as a general principle to impose the obligation to pay these debts onto “the future generations”! One of two things can happen, either the future generations will collapse one day under the burden of these accumulated debts, or they will refuse to pay them, as is their right, or in other words, they will declare bankruptcy.


Thus, by the very fact of their anti-economic constitution, governments have become the ulcers of societies (“les ulcères des sociétés”), to use the strong expression coined by J.B. Say.2 As population and wealth increase, thanks to the progressive development [531] of competitive industries, a growing mass of vital energy is sucked out of society by the suction pump which are taxes and debts, in order to subsidise the costs of production of public services, or to put it in a better way, to subsidise the support and easy enrichment of the particular class which controls the monopoly of the production of these services. Not only that, but governments every day make us pay more for the necessary functions which they have cornered. And furthermore, they engage in harmful enterprises on a more and more colossal scale such as wars, at a time when war has ceased to have any raison d’être and has become the most barbarous and odious of anachronisms.3


As progress has given rise to the vital forces of society, what is the cure for this ulcer which devours them?


If, as I have tried to demonstrate, the problem comes from the anti-economic constitution of governments, the cure obviously consists in making this constitution conform to the essential principles which it does not understand, namely to make it economic. To achieve this it is necessary in the first instance to rid the governments of all those functions which have been annexed to their natural function of being producers of security, by making them return education, religion, the coining of money, transportation, etc., to the private sector, to the law of competition.

Already, the cause of the simplification of the functions of government has been won in theory [532] even if it has not been won in practice.4 On the other hand, the idea of subjecting governments to the regime of competition is still generally regarded as being fanciful.5 On this point perhaps the facts are advancing ahead of the theory. The “right of secession” has paved the way in the world and will have the necessary consequence of establishing the liberty of government. The day will come when this right will be recognised and applied throughout its natural range and political competition will serve as a complement to competition in agriculture, industry and commerce.


Doubtless, this progress will be slow to be accomplished. But it is thus with all progress. When one considers the mass of interests and prejudices which are obstacles to progress, one even despairs of ever seeing them realised. Lets us hear what [533] Adam Smith had to say last century about commercial liberty:


To expect, indeed, that the freedom of trade should ever be entirely restored in Great Britain, is as absurd as to expect that an Oceana or Utopia should ever be established in it. Not only the prejudices of the publick, but what is much more unconquerable, the private interests of many individuals, irresistibly oppose it. Were the officers of the army to oppose with the same zeal and unanimity any reduction in the number of forces, with which master manufacturers set themselves against every law that is likely to increase the number of their rivals in the home market; were the former to animate their soldiers, in the same manner as the latter enflame their workmen, to attack with violence and outrage the proposers of any such regulation; to attempt to reduce the army would be as dangerous as it has now become to attempt to diminish in any respect the monopoly which our manufacturers have obtained against us. This monopoly has so much increased the number of some particular tribes of them, that, like an overgrown standing army, they have become formidable to the government, and upon many occasions intimidate the legislature. The member of parliament who supports every proposal for strengthening this monopoly, is sure to acquire not only the reputation of understanding trade, but great popularity and influence with an order of men whose numbers and wealth render them of great importance. If he opposes them, on the contrary, and still more if he has authority enough to be able to thwart them, neither the most acknowledged probity, nor the highest rank, nor the greatest publick services can protect him from the most infamous abuse and detraction, from personal insults, nor sometimes from real danger, arising from the insolent outrage of furious and disappointed monopolists.6


However, commercial liberty ended up being right over the objections of the “furious monopolists” which the father of political economy spoke about and one can still hope today, without abandoning oneself to utopian dreams, that before the passing of a century the protectionist system will only exist as a bad memory in the memory of man. Why wouldn’t political monopolies disappear in their turn just as industrial and commercial monopolies are in the process of disappearing now? If the political monopolies wield formidable power, the interests whom they harm are also growing in number and in power every day. Their time will come one day and Economic Unity will be established in the (historical) stage of competition, just as the community and monopoly stages had their time in preceding periods. Then, the production and distribution of services in all areas of human activity will be able to function in the most useful manner, when at last they are fully subject to the government of economic laws.


 Endnotes

1 J. E. Horn, Annuaire international du crédit public pour 1860. [to be completed]


2 J.B. Say, Traité d'économie politique. Liv. III, chap. X. [to be completed]


3 See on this subject the article “Paix” in the Dictionnaire de l'économie politique, and the Introduction to L'abbé de Saint-Piètre, sa vie et ses œuvres.


4 Our two previous works, les Soirées de la rue Saint-Lazare and Questions d'économie politique et de droit public, which we take the liberty of bringing to the attention of our readers, are almost entirely devoted to demonstrating the harm of government intervention. We founded the journal l'Economiste belge with the same aim in mind.


5 We think no less it our duty to claim, perhaps rashly, the priority of coming up with this so-called fanciful idea. See Questions d'économie politique et de droit public. La liberté du gouvernement. T. II, p. 245, and les Soirées de la rue Saint-Lazare. 11e soirée. P. 303. Consult further the developments in L'Économiste Belge, le Sentiment et l'intérêt en matière de nationalité, n° du 24 mai 1862, polémique avec M. Hyac. Deheselle sur le même sujet, n°s des 4 et 21 juin, 5 et 19 juillet, le Principe du sécessionisme, 30 août; Lettres à un Russe sur l'établissement d'une constitution en Russie, 2 et 30 août; 19 septembre 1862; la Crise américaine, 17 janvier 1863 ; un nouveau Crédit Mobilier, 14 février; une Solution pacifique de la question polonaise, 9 mai, etc., etc.


6 Adam Smith, An Inquiry Into the Nature and Causes of the Wealth of Nations, Vol. I ed. R. H. Campbell and A. S. Skinner, vol. II of the Glasgow Edition of the Works and Correspondence of Adam Smith (Indianapolis: Liberty Fund, 1981). Chapter: [IV.ii.43] CHAPTER II: Of Restraints upon the Importation a from foreign Countries of such Goods a as can be produced at Home. http://oll.libertyfund.org/title/220/217458/2313890

 

Translation : David Hart


 

 

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Gustave de Molinari was born in Liège on March 3, 1819 and died in Adinkerque on January 28, 1912. He was the leading representative of the laissez-faire school of classical liberalism in France in the second half of the 19th century and was still campaigning against protectionism, statism, militarism, colonialism, and socialism into his 90s on the eve of the First World War
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