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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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