[This is Chapter Nine of Murphey’s book Modern Social and Political Philosophies: Burkean Conservatism and Classical Liberalism.]

Chapter 9

THE STRUCTURE OF FREEDOM: GOVERNMENT

The state: Needed, but dangerous. Classical liberalism sees the state as necessary most fundamentally as the enforcing agency for the mutual rights of the individuals who compose the society. The state is a center of coercion that is charged with the function of reducing the coercion that exists elsewhere. "The state must have the power to coerce and it must have a monopoly of it if it is to discharge its first and primary duty ‑‑ the maintenance of order," according to John Van Sickle^.l The state is charged, in addition, with various supplemental and auxiliary functions supportive of a free society. I have argued that classical liberals would be well served if they were to take a more ample view of the role of the state than many have taken, since classical liberal theory’s too narrowly doctrinaire circumscription of its powers has caused them to be unable to make a convincing demonstration that a classical liberal model of society is workable. Just the same, I am satisfied that classical liberals have been amply justified in looking upon the state with fear and distrust. The state will always remain, at one and the same time, an essential institution and a major danger.

This attitude differs from that of other philosophies. It differs from both leftwing and rightwing anarchism by seeing the need for government. And more significantly, it differs from both Burkean conservatism and the many nonanarchist varieties of the Left by refusing to trust any particular form of powerful state on the premise that the preferred form can be tamed. Classical liberalism genuinely fears all coercive power. The only state that it is satisfied with is one that is limited, divided and decentralized

to the fullest extent that is consistent with the performance of its legitimate functions.

This concern about the power of the state is a preoccupation found in all classical liberal writing. It appears when Ayn Rand says that "a government is the most dangerous threat to man's rights,"² and when Milton Friedman adds that "freedom is a rare and delicate plant. Our minds tell us and history confirms, that the great threat to freedom is the concentration of power. Government is necessary . . . yet by concentrating power in political hands, it is also a threat to freedom."³ Two hundred years ago, Thomas Paine expressed the classical liberal perspective when he wrote that "government, even in its best state, is but a necessary evil; in its worst state an intolerable one."⁴ A few years later in England, Cobden wrote to Bright that "governments seem as a rule to be standing conspiracies to rob and bamboozle people." Relating this to the events of his own time, he asked "and why should that of Louis Napoleon be an exception?"⁵ Herbert Spencer remarked on the effects of human nature on government when he wrote: "Granting the proposition that men are selfish, we cannot avoid the corollary that those who possess authority will, if permitted, use it for selfish purposes."⁶ Lord Robbins expressed a view that was also voiced by John Stuart Mill and F. A. Hayek when he said that even "popular government carries with it very grave dangers."⁷ Majority rule, where it exists, doesn't eliminate the threat.

Early continental classical liberals took an approach that reflected different circumstances when they endorsed "enlightened despotism" as the way to move toward a free society. The French Physiocrat Francois Quesnay represented this view when he said that the "right to liberty implies as a corollary the right to property, and the duty of the state to defend it, ‑‑ in other words security. The guarantee of security is indeed the sole function of the state. To extend it would be to encroach on individual liberty. The state cannot be too strong for this purpose, ‑‑ any constitutional checks and balance of power would but weaken the central authority. The despotism of the state is to be tempered only by enlightened public opinion, which will revolt against any infraction of natural law, or rather render it impossible."⁸ In Russia, classical liberals tended after their unsuccessful Decembrist uprising in 1825, and especially in light of the visible dangers from the nihilism of the Left, to support those Czars, such as Alexander II, who were reformist. This continental experience suggests reason for serious reflection about the priorities that classical liberals hold: they would prefer a strong and even undemocratic government in situations where the circumstances of a country and the characteristics of a people are such as to destroy the viability of a truly classical liberal society. Under such below‑threshold conditions, their goal is to secure the sanctity of individual rights as much as possible and to provide the basis, if possible, for at least a slow transition to a fully free society. This is the situation today with regard to much of Asia, Africa and Latin America. By no means is it an ideal situation from the classical liberal point of view. The problem is how best to approximate classical liberal values even though the civilizational base for their full satisfaction is missing.

The importance of limits. A substantial portion of classical liberal theory deals with the appropriate limits of state power. Unlike other philosophies, it makes this a central issue. "There is no more important problem in politics," according to Macaulay, "than to ascertain the just mean between these two most pernicious extremes, to draw correctly the line which divides those cases in which it is the duty of the State to interfere from those cases in which it is the duty of the State to abstain from interference."⁹ In a book entitled The Limits of State Action, Wilhelm von Humboldt stressed that "the inquiry into the proper aims and limits of State agency must be of the highest importance ‑‑ perhaps greater importance than any other political question."¹⁰

The "nightwatchman" position. As we will see, all classical liberals consider it urgent for the state to protect private rights against force and fraud, to provide the forum for adjudicating disputes, and to defend the country militarily. However, there is a substantial body of thought within classical liberalism to the effect that these functions are all that the state may legitimately perform. This is often called the "nightwatchman" position because it would limit the state strictly to police‑type functions.

The reader may have noticed that in the quote from Quesnay it was said that "the guarantee of security is indeed the sole function of the state." This purports to exclude all other functions. Wilhelm von Humboldt made the same exclusion when he called upon the state to "pursue only that object which they [the people] cannot procure for themselves, namely security." This indicates that he thought that all other needs could be satisfied by the voluntary efforts of the public. In England, John Locke had earlier argued that "government has no other end but the preservation of property." (For this to be understood, we need to notice that he said that "I call by the general name 'property'... the mutual preservation of their [the people's] lives, liberties and estates.")¹¹ Even with his broad definition of "property," this is a highly limited statement of the functions of the state. In the United States, Jefferson expressed a similar doctrine when he said that "no man has a natural right to commit aggression on the equal rights of another, and this is all from which the laws ought to restrain him; every man is under the natural duty of contributing to the necessities of the society, and this is all the laws should enforce on him; and, no man having a natural right to be the judge between himself and another, it is his natural duty to submit to the umpirage of an impartial third. When the laws have declared and enforced all this, they have fulfilled their functions” (emphasis added).¹² Thomas Paine said the same: "Every man wishes to pursue his occupation, and to enjoy the fruits of his labors and the produce of his property in peace and safety, and with the least possible expense. When these things are accomplished, all the objects for which government ought to be established are answered."

More recently, Ayn Rand wrote that "the only function of the government . . . is the task of protecting man's rights, i.e., the task of protecting him from physical force."¹³ Amplifying this, she said that "the proper functions of government are: the police, to protect men from criminals; the military forces, to protect men from foreign invaders; and the law courts, to protect men's property and contracts from breach by force or fraud, and to settle disputes among men according to objectively defined laws." Leonard Read has urged that we "limit society's agency of organized force ‑‑ government ‑‑ to juridical and policing functions, tabulating the do‑nots and prescribing the penalties against unpeaceful actions; let the government do this and leave all else to the free, unfettered market!"¹⁴ And elsewhere he says that "government can be turned from offender to defender only as it is confined to codifying the taboos and enforcing them, to invoking a common justice, in a word, to keeping the peace." And then, in effect repeating Humboldt's view that people are able to do everything else: "The only things private citizens cannot properly do for themselves is to codify all destructive actions and prohibit them . . . This is a job for government; and it means that the sole function of government is to maintain law and order."¹⁵

The nightwatchman position, of course, needs to be discussed on the merits, which is something I have done and will be doing. But I would add ‑‑ not as an ad hominem attack, but for the purpose of understanding the historical development of classical liberalism ‑‑ that it is, at least in my opinion, an unsophisticated and doctrinaire position. It seems to have originated in the early stages of thought about the functions of government as the West emerged from the Age of Kings. Since then, it has been symptomatic of the effects of classical liberalism's having been on the defensive; it reflects the rigidity of a narrowly doctrinaire over-simplification. I don't see it as an adequate view of government even (or I probably should say especially) for a classical liberal society.

The recognition of broader functions. Even though we have seen that many have endorsed the nightwatchman position, it has also been rejected by a sizeable number of classical liberal thinkers. Lord Robbins has discussed the difference of viewpoint at length: "If we take it (the principle of laissez faire) in the sense in which it was originally made the basis of a general system, if, that is to say, we take it as meaning a state of affairs in which the functions of the state are restricted to those of a night-watchman and in which the law that is enforced consists in a very few simple prescriptions chiefly concerning property and contract, the rest being left to spontaneous co‑operation guided by the market, then we can say that it stands for a conception differing very greatly from the conceptions of liberal order that would be thought appropriate by those of us who follow the English Classical tradition, suitably modified to take account of the needs and the intellectual discoveries of this part of the twentieth century. It is true that both systems attach great importance to freedom as an objective. It is true that both systems depend upon recognition of the possibilities of order implicit in the institutions of property and the market. But their conceptions of the nature of this order and the functions of government necessary to bring it about are so different as to constitute two very different systems." About Hayek, he observed that "as befits one who derives so much from the great traditions of English Political Economy ‑‑ not only of the eighteenth century but also the nineteenth ‑‑ Professor Hayek's attitude is not one of laissez‑faire in the sense of leaving nothing to government but the functions of the night watchman."

Henry Hazlitt has written that "the most necessary function of government is to protect its citizens against force and fraud; but it does not follow that this is the sole legitimate function."¹⁶ John Stuart Mill especially took apart the nightwatchman view (although we will notice that Hazlitt rightly points to the need to put limits on the expansiveness of Mill's view): "In attempting to enumerate the necessary functions of government, we find them to be considerably more multifarious than most people are at first aware of, and not capable of being circumscribed by those very definite lines of demarcation which, in the inconsiderateness of popular discussion, it is often attempted to draw round them. We sometimes, for example, hear it said that governments ought to confine themselves to affording protection against force and fraud: that, these two things apart, people should be free agents, able to take care of themselves, and that so long as a person practices no violence or deception, to the injury of others in person or property, legislators and governments are in no way called on to concern themselves about him. But why should people be protected by their government, that is, by their own collective strength, against violence and fraud, and not against other evils, except that the expediency is more obvious? If nothing, but what people cannot possibly do for themselves, can be fit to be done for them by government, people might be required to protect themselves by their skill and courage even against force, or to beg or buy protection against it . . . and against fraud every one has the protection of his own wits . . . Under which of these heads, the repression of force or of fraud, are we to place the operation, for example, of the laws of inheritance? Some such laws must exist in all societies. . . Again, the legitimacy is conceded of repressing violence or treachery; but under which of these heads are we to place the obligation imposed on people to perform their contracts? Non‑performance does not necessarily imply fraud; the person who entered into the contract may have sincerely intended to fulfill it . . . The law preserves authentic evidence of facts to which legal consequences are attached, by keeping a registry of such facts; as of births, deaths, and marriages, of wills and contracts, and of judicial proceedings . . . The individual may be an infant, or a lunatic, or fallen into imbecility. The law surely must look after the interests of such persons. There is a multitude of cases in which governments with general approbation, assume powers and execute functions for which no reason can be assigned except the simple one, that they conduce to general convenience. We may take as an example, the function . . . of coining money. This is assumed for no more recondite purpose than that of saving to individuals the trouble, delay, and expense of weighing and assaying. No one, however, even of those most jealous of state interference, has objected to this as an improper exercise of the powers of government. Prescribing a set of standard weights and measures is another instance."¹⁷

Henry Hazlitt has correctly observed, though, that "few libertarians will follow him (Mill) when he goes on to declare that these examples 'might be indefinitely multiplied without intruding on any disputed ground,' and that the only justification needed for any specific government interference is its own individual 'expediency.'" I agree, as Hazlitt does, with a good deal of what Mill said; but I also agree that Mill didn't adequately limit the state's functions. The trouble with "expediency" as a principle is that it is no principle at all. It can be defined according to any governor's or majority's whim or worldview. Mill would be forced to agree that what Stalin, Mao or Hitler would have considered expedient would have differed widely from what he would allow. An assumption that is implicit in Mill's observation is that the expediency will be exercised in ways consistent with certain values that he hasn't articulated. But just the same, Mill made some telling points about the essential foolishness of the "force and fraud" rule.

Herbert Hoover was another classical liberal who acknowledged governmental functions far beyond the nightwatchman theory. This has caused Murray Rothbard, an anarcho‑capitalist, to charge that Hoover wasn't a liberatarian at all. Such a charge is ridiculous, though, when we consider Hoover's overall writings and see that his entire orientation was founded on the classical liberal perception of society.

Some Specific Functions

I cannot hope to be exhaustive, of course, in the following sections as I illustrate the classical liberal discussion of a number of governmental functions; but I think these will be enough to give us a good exercise in applying the classical liberal criteria to them.

Although the functions are difficult to classify, I have broken them down roughly into five categories:

• Functions that fulfill preconditions to life generally within a free society.

• Functions that establish the preconditions for a market economy.

• Functions that seek to meet needs or desires that the market can't very well satisfy.

• Certain ill‑advised functions that have been suggested by classical liberals themselves.

• Additional functions that, in my opinion, government should not perform.

1. Functions that establish the preconditions for life within a free society. A substantial number of governmental functions are called for to establish the preconditions for life in a community of free men in which each person enjoys equal rights with others and in which each is accordingly bound by the duties that correspond to those rights. If we were to look at the immense fabric of the law as it has come down to us from the English, we would see that most of the basic functions such as of property, tort, contract, crimes, procedure and the like would be of this kind. The vast web of civilized relations involves countless points of contact among people -‑ and many of them require a principled adjustment that will be in keeping with the organized sensibilities of the community as a whole.

In this connection, as well as in others, government is uniquely valuable because it has two qualities that only it can possess: first, that it embodies organized force, which in a free society will be objectively controlled by public feeling, the Rule of Law and the substantive considerations of libertarian principle; and, second, that it involves, through the aspects of "jurisdiction" and "sovereignty," the power to include everybody, and not just some, within its scope. As to the second of these, the state is able to apply its laws to the entire public and can call upon each person for his share of the needed contribution and support. It is because of these unique qualities, which by definition no private organization can possess, that certain functions can be performed only by government. When we discuss the functions that relate to "preconditions" of life generally or of the market economy, it will be worth noting that it isn't the fact that something is a "precondition" that makes it a proper function of government. The function becomes appropriate, instead, because it involves the sort of thing that can't be accomplished well without the use of either or both of the unique qualities of government. The fact that one or both of these qualities is needed means, in effect, that the thing is something that private individuals or associations cannot effectually do for themselves. And the fact that the thing is a precondition underscores its value and importance, making it something that does need doing. I don't mean to suggest that only values that rise to the level of "preconditions" merit being carried out by government, since there will be others that it will be convenient to a free society for the state to fulfill. But in all cases of state activity it is essential from a classical liberal point of view to weigh the advantage against the resulting level of taxation and of governmental power and presence.

I have already discussed some of the functions that might be counted as preconditions to life generally within a free society. In the preceding chapter we saw the need for a protected private sphere for each person. This included the individual's person and property. My discussion of the private sphere led, in addition, to a consideration of the need for a "commons" as a vitally necessary extension of the space within which the individual can exist and act. All of that discussion applies here; and we need to keep in mind the subtle questions inherent in it, since a voluntaristic system of "mutual rights" presupposes a concept of the entity that we call an individual. Far from being an easy "given," which is what we usually assume it to be, that concept itself presupposes a number of sensitive judgments about human beings and their relationships.

In the quotes I have cited that have stated the "nightwatchman" theory, we have seen the need for the state to use its coercive capability to protect the rights of individuals, to militate against force and fraud, to preserve the peace and to defend the country from foreign invaders. All classical liberals, and not just those who hold to the exclusiveness of the "nightwatchman" function, see essential functions of the state in these areas. Adam Smith wrote approvingly about "that security which the laws in Great Britain give to every man that he shall enjoy the fruits of his own labor."¹⁸ Joseph Hamburger reports that Jeremy Bentham "found the justification for government, exercising its power through the law, in the need to protect individuals from injuring one another."¹⁹ Thomas Paine conjectured that "were the impulses of conscience clear, uniform, and irresistibly obeyed, man would need no other lawgiver; but that not being the case, he finds it necessary to surrender up a part of his property to furnish the means for the protection of the rest . . . Here is the design and end of government, viz., freedom and security."

There are serious questions, however, about how this is to be done. Even the security function, when we think about it, proves not be to a "given." As with so many things, it involves a number of on‑going value judgments. The state, for example, could bring about a virtual elimination of crime if it employed ten times the number of police it now employs and if it were to obtain help from informants in every family and group. This indicates that the absolute fulfillment of this classical liberal ideal would require totalitarian methods, which in turn would be counterproductive to classical liberal values as a whole. A balance must, therefore, be struck between the satisfaction of the need for security and many other values. There is no precise formula, or principle, by which that balance is to be decided.

There are several issues relating to the security function that are worth discussing further:

• External defense. Even national defense raises serious issues. There is no small amount of judgment involved, for example, in determining how much a Communist takeover in Southeast Asia threatens our ultimate national security. Some people will say that government has no right to take action unless there is an imminent threat of invasion of our own country. I believe very much the opposite and think that our protection in the long‑run requires us to take a global view of the strategic situation. Certainly I am not persuaded that as a matter of libertarian principle a free society is required to sit back until the forces against it have stripped it of allies and sources of supply. The long term interest of a free society isn't served this way. I am not willing to deduce our appropriate national defense posture from any such single‑minded "libertarian" premise. All principles of a free society should come, instead, from a consideration of the totality of a free society's needs. The penetration of Asia, Africa, Latin America and Europe by totalitarian movements threatens classical liberal values everywhere. Military action against such penetration isn't inconsistent with the proper function of government in providing for the defense of the society. I say this even though I know that we can't hope to prevent such penetration by military means alone. The "alienation of the intellectual" in America, Europe, and the rest of the world, which has been one of the key dynamic factors during the past century and a half, has to be reversed if the spread of Communism or of some equally antibourgeois ideology is to be prevented.

. The draft. Classical liberals have discussed the legitimacy of conscription into military service at length, especially in recent years. I remember that in 1952 Senator Robert Taft opposed Eisenhower's concept of "universal military training" during their fight for the Republican presidential nomination. During the Vietnam War there was a strong movement in favor of a "volunteer army" ‑‑ and such an army was put into effect after the war.

At best, conscription is a necessary evil from the classical liberal point of view. It directly removes the individual from the free existence that classical liberalism values so highly; and a large military establishment is something a classical liberal would much prefer not to have as part of his model of society. (A good example of this preference is the Jacksonian opposition to the Whigs' desire for a standing army.) If the draft is justified in a free society, it will have to be because, on balance, the benefits outweigh these burdens.

There are times, in my opinion, when the benefits do indeed outweigh the undesirable aspects, again keeping in mind that they are to be evaluated in a calculus of classical liberal values. If the world were ever to adopt a general pattern of "normalcy," the draft would be clearly incompatible with a free society. But in the twentieth century, free societies haven't existed in a fundamentally hospitable world. Large‑scale military preparedness has been vitally important in a world characterized by such men as Adolf Hitler, Joseph Stalin and Mao Tse‑Tung. We can't foresee when it will cease being essential. The "spirit of Camp David" under Eisenhower, the "detente" under Nixon and the various appeasements under Carter have been manifestations of our intellectual division, lack of will, affluent complacency and moral relativism rather than the results of a true abatement of danger. These things tell us more about ourselves than about the world at large. Our own decadence even heightens the danger despite the appearance to the contrary that we enjoy because of our illusions.

Under such circumstances, at least three factors weigh in favor of the draft. First, it is essential that a free society have the manpower it needs to be prepared and to conduct the wars that it becomes engaged in. Volunteers may or may not appear in sufficient numbers and quality to meet this need. If they don't, the draft is imperative. The argument has been made that a reliance on voluntary service acts as a check against the government's ability to engage in unnecessary wars. This has at least a superficial appeal, and would in fact be true under conditions of "normalcy." But it should be considered suspect under conditions of worldwide Communist expansion. The extent to which Leftist ideology and the spiritual ennui of an age of affluence and of the common man have influenced the young is such that in all probability this would act far more as a check on military efforts that are unpopular with the Left than against really unjustified military "adventures." This would be disastrous. It is true that it might also serve as a check against fighting wars that we conduct interminably with only half a will to win, such as we did in Korea and Vietnam; but we need a solution for that lack of will other than one that will jeopardize our overall military capacity to respond in the "limited wars" that characterize the "protracted conflict" that is going on in Asia, Africa and Latin America.

Second, there is a question of principle about the equitable distribution of sacrifices for the preservation of a free society. The defense both of the society and of its freedoms is a value of the highest order. Its benefits accrue to everyone in the society. To use Milton Friedman's terminology, it has a "neighborhood effect." Its benefits are dispersed generally among the population, and the responsibility for it belongs to everyone rather than to a limited number of specific recipients. Surely the burdens it involves should be equitably borne. And it is a mistake to think of a "volunteer" as even presumptively someone who dislikes war less than others or who is eager for the adventure. Under many circumstances, the "volunteer" is simply the man who is most patriotic, who understands the need and who is most conscientious about helping fill it. If we say that our wars should be fought only by such men, we are saying in effect that only our best must die. All others, we will be saying, may enjoy the benefits of a free society without carrying their portion of the risks and horrors of war. It would be hard to imagine a more unjust and indefensible premise. I can't really think that a sound libertarian theory requires it.

The third factor is that there is a serious question about whether a large standing volunteer army is really more compatible with a free society than an army is that is composed mainly of men who are primarily civilian in orientation. When men come into military service by the draft, their outlook isn't fully integrated into that of the professional service. It is appropriate to think of them as "citizen soldiers," since most of them are passing through on relatively short terms of duty. An army of this sort is least inclined to become elitist or to become a political force in a sort of "banana republic" politics. This is something that the United States, fortunately, hasn't had to contend with; but we ought to keep it in mind in our political theory. In the United States right now there is the additional aspect that such a professional army may come to consist almost entirely of men of minority ethnic origin. Whether this poses any danger to the society will depend on the extent, if any, to which those minorities are susceptible to alienated ideology. That is a factor that needs to be judged empirically at any given point in time.

. Internal subversion. One of the angriest issues in the twentieth century has concerned the extent to which a government may legitimately protect itself and the society from internal subversion. Modern liberalism (which isn't to be confused with classical liberalism) has often argued that law or government can do very little, that it must wait until there are overt criminal acts before taking action (and that even then the moral sympathy of the intellectual community should strongly identify with the side of the rebel as against the police or the national guard). From the point of view of classical liberal theory, though, the question must be how best to accommodate several extremely diverse values. Classical liberalism cherishes the "open market‑place of ideas" and the widest possible diversity of action; its whole purpose is to leave people free. It fears the state and wants to keep the policing function as limited as possible. On the other hand, the totality of its values requires that its own internal logic not be carried to the point of allowing the destruction of everything it stands for. If the society and its institutions are torn apart, everything it aspires to is sacrificed. It is because of this that I have never felt it a principled necessity that a free society be impotent in its own self‑preservation. To the contrary, its defense, both external and internal, is the most sacred trust. The human values that classical liberalism hopes to serve have to be kept sight of, and the basic need for self‑preservation has to be assigned very great weight.

Nor can we afford to take the modern liberal's characteristic position that "internal subversion" is just a figment of the conservative's supposed paranoia. The civilization we live in is one that has suffered long‑term divisions and in which anti‑bourgeois alienation, with its many fervent ideological offshoots, is a fact of life. Our entire civilization is hardly "normal" in the sense that we can presuppose a deep consensus on values and institutions. And in this context the internal divisions within European and American society must be considered in light also of the existence of large totalitarian regimes and movements abroad. The problem of internal security is by no means divorced from these external dangers.

. Preventive measures. There is a classical liberal position, which I want to discuss for its own sake and not just because it has a bearing on the issue I have just considered, that government has no right to make any effort to prevent crime (or riot or revolution), but can only punish crime after it is committed. Wilhelm von Humboldt was among the earliest exponents of this view when he wrote that "I think that I may safely assert that the prevention of criminal actions is wholly outside the State's proper sphere of activity . . .The State must only adopt special arrangements for preventing crimes not yet committed, in so far as they avert their immediate perpetration. And all others, whether they are designed to counteract the causes of crime, or to prevent actions, harmless in themselves, but often leading to criminal offences, are wholly beyond the State's

sphere of action." The rationale for this position is immediately apparent; Humboldt and the others who have held this view are concerned about the expansion of governmental power and police activity that would accompany efforts of prevention. And various factors, including the on‑going operation of free discussion, may.intervene to prevent the crimes from occurring anyway. I must say, though, that I cannot subscribe to the limitation as a general principle such as Humboldt has described it. I think that he and the others of that school have too greatly lost sight of the potential victim, and of the fact that that victim has rights that in a free society the community has an obligation to secure. Many situations come to mind: Are we obliged, for example, to say that a mentally ill person who has shown dangerous tendencies toward others has to be allowed to go free until a tragedy occurs? Or that the reasons for incarcerating a criminal have to be limited to punishment and cannot include the need to deter others or to prevent this particular individual from committing further crimes? Or that threats of harm have to be tolerated until the actual act is imminent? Or that conspirators cannot be interfered with in meeting to make their plans for whatever future crimes they contemplate? Or that a mob has to be allowed to gather force until it commits its first real injury? Or that an injunction is never an appropriate remedy against an impending illegal act? Again, we are back to a methodological point: the decision about whether we are to judge things such as this in light of a single principle that is to be applied rigorously, or whether we can evaluate means and ends to reach a judgment about what is most serviceable to all of the values, considered together, of a free society. The premise that law should play no preventive function is decidedly unserviceable if judged by the latter of these methods. Many injuries can hardly be made whole by later punishment or even restitution. A widow or an orphan, say, cannot be "made whole" by any amount of monetary damages, even if they were collectible.

It isn't a sufficient answer to my point to say that “the illustrations you have cited by the questions in the last paragraph don't apply, since they refer to things that are crimes in their own right." My questions have involved crimes only because the law declares them so to prevent a further train of action. Their essence is preventive. The view that the criminal law cannot legitimately act in a preventive capacity is another

of the narrow, unpersuasive prescriptions that have been espoused by an unduly doctrinaire branch of classical liberalism. By lacking practicability, the position lacks soundness. And the effect has been to make the classical liberal model less acceptable to most people, who do care about realities.

• The death penalty. Still another controversial issue that is within the area of "providing security" relates to the death penalty. This has been hotly debated in recent years, with the intellectual community mostly opposed to the death penalty and with the majority of average people pretty clearly for it. In this debate, I have felt that the issue is obscured by the customary analysis that is made of the purposes of criminal punishment. It is often said that retribution or vengeance is an unworthy purpose and that emphasis should be centered on rehabilitation of the criminal. Deterrence is a third purpose, but the death penalty's opponents deny that it has any deterrent effect.

I have long thought that this is an inadequate analysis of the reasons for criminal punishment. When it is defined and considered in this way, "retribution" becomes a straw man that is easily knocked down. We are told that it is ignoble because it demonstrates our own lack of elevation, our inability to control our brutal passions and to look beyond the situation to a higher plane. This perspective is readily available in a culture in which the Christian doctrines of "love thine enemy" and "turn the other cheek" have been at least part of its moral heritage. But I feel real dissatisfaction with any such expectation that we "raise ourselves above" the crime that has been committed. If rehabilitation and deterrence are to be our only concerns, there is nothing in them that reflects back on the crime itself. The murder, the rape, the act of terrorism ‑‑ each of these is to be erased, once it is committed, from the mind as though it were a fated given from an irretrievable past. The victim is to go off to nurse his own sorrow and anger in his own unrequited way, perhaps without a person he loved, while the society turns its attention only to the reconstruction of the wrongdoer or to how future crimes can be averted. How fantastic! No more morally perverse a formulation is conceivable; and to think that it is put forward as the pronouncement of a saintly or noble morality! The crime is a fact. It cannot and should not be obliterated. Two great desiderata, both of them profoundly involved in civilized life, cry out to be satisfied. The first has to do with a consideration that in most other things we are quick to keep in mind: the need for an equitable parity between individuals, the primordial notion of equality of right that underlies the classical liberal concept of equal rights and the ancient concept of equity and fairness arising out of a parity of individuals and of values. Here a man comes home to find his wife strangled by a burglar: Is nothing to happen to the other man beyond rehabilitation and deterrence?

The equitable concept of parity is outraged if the balance isn't restored, and restored in good measure. The deceased victim has been deprived of life and of all the human values that go with it, and the surviving victims have been left with an aching void that was created by the wholly unnecessary and yet irreversible departure of the loved one. Are we really indulging a "lower passion" if we feel strongly that our notions of fairness and of equal right should be served by making the murderer suffer a loss of his own (at least equal to, but more justifiably even greater than the one that he has created, since an equal loss just "restores" the original parity without taking into account the deserved nature of his loss and the undeserved nature of that of his victims)?

The second desideratum has to do with the civilized community's vital interest in the moral order. We may shrug off the requirements of morality in some things, and in a relativistic age we do this far more than we should, but an outrageous breach is something else. The preservation of the moral order is an interest that is so profound, so intricately woven into the entire fabric of people's relations together that it is superficial in the extreme to reduce it to the limited notion of deterrence. Even in a secular age, the moral order needs to exist as a virtual metaphysic in the consensus that underlies the community. It is not appropriately a matter of simple statistics or of mundane cause‑and‑effect. It has to have a spiritual hold and to be felt, in the deeper identification that each civilized individual has with humanity as a whole, as something immutable and sacred. And how is this to be true if the most serious breaches of it don't give rise to any expression that recognizes the outrage that has been committed against it? One of the main functions of criminal punishment must be to symbolize the reestablishment of the moral order in its rightful primacy. Whether this continuing reenforcement of moral sensibility will show its effects directly in comparative statistics about the homicide rate can never be sure; the death penalty is only one factor among many that have a bearing on the incidence of serious crime. But that some such manifestation of the moral will and commitment of the community is desirable is clear on more pervasive grounds.

. "Victimless" crimes. Another issue that relates to “security" has to do with so‑called "victimless" crimes. This has been discussed a great deal recently in connection with the laws against smoking marijuana and the various laws about sexual relations between consenting adults. It is interesting how much these issues recur, since it was Wilhelm von Humboldt again who voiced the argument over a century ago: "To punish actions . . . which relate to the agent only, or which are done with the consent of the person who is affected by them, is forbidden" by libertarian principle. "None of the so‑called carnal crimes (rape excepted), whether creating offence or not, attempting suicide, etc., ought to be punished, and even taking away a man's life with his own consent should not be, unless the possibility of a dangerous abuse of this exemption should make a criminal law necessary." Jacob Burckhardt made much the same point: "It is a degeneration, it is philosophic and bureaucratic arrogance, for the State to attempt to fulfill moral purposes directly, for only society can and may do that."²⁰ John Stuart Mill discussed the issue in On Liberty: "The right inherent in society to ward off crimes against itself by antecedent precautions, suggests the obvious limitations to the maxim, that purely self‑regarding misconduct cannot properly be meddled with in the way of prevention or punishment. Drunkenness, for example, in ordinary cases, is not a fit subject for legislative interference; but I should deem it perfectly legitimate that a person who had once been convicted of any act of violence to others under the influence of drink, should be placed under a special legal restriction, personal to himself . . . The making himself drunk, in a person whom drunkenness excites to do harm to others, is a crime against others. So again, idleness, except in a person receiving support from the public, or except when it constitutes a breach of contract, cannot without tyranny be made a subject of legal punishment; but if, either from idleness or from any other avoidable cause, a man fails to perform his legal duties to others, as for instance to support his children, it is no tyranny to force him to fulfill that obligation . . . Again there are many acts which, being directly injurious only to the agents themselves, ought not to be legally interdicted, but which, if done publicly, are a violation of good manners, and coming thus within the category of offenses against others, may rightfully be prohibited . . . Fornication, for example, must be tolerated, and so must gambling."²¹ He then continued his discussion into several subtle areas.

Whether or not I agree with Mill in all of his conclusions, I am satisfied that his method was correct in starting with a strong presumption in favor of letting everyone do as he pleases and then weighing the injury or prospect of injury to others. His principle doesn't seem nearly so cut-and‑dried as is common with those who ordinarily base their argument on an opposition to the punishment of "victimless" crimes. If we saw clearly that a type of conduct is purely personal, with no injurious effects upon other people or upon the person's performance of his own responsibilities, then we could justifiably declare the conduct "victimless" and I would agree (subject to the limits that I will be expressing) that it would be an interference with freedom to declare it criminal. But few of the things that are often called "victimless" crimes are fully of that character. Even "fornication" isn't without damaging effects if we conclude, as I do, that the limitation of sex to marriage is of real importance to a free society. I oppose the pursuit of it through the criminal law not because I consider the conduct purely personal, but because an effective and fair administration of the law seems impossible.

As we have seen, Mill expressed the view that drinking is personal unless the drinker has shown that he is irresponsible or dangerous. I have a hard time agreeing with this assessment, especially in the age of the automobile (which is something Mill didn't have to consider). The killing of many thousands of people every year by drunk drivers is an egregious violation of the security of the public. Each person who is killed or maimed is to that extent deprived either of life or its enjoyment. When this enormity is fully considered, there is substantial weight on the side of Prohibition even in a libertarian calculus, although we are so used to accepting the statistics about automobile accidents that we don't often think of the issue in this light. Today, there is a good deal of insensitivity that has to go into any viewpoint that drinking is purely a personal matter. Just the same, I am opposed to Prohibition, since our national experience with it a few years ago indicated that it was thoroughly unenforceable and that it led to a widespread contempt for authority. Intermediate legal steps seem most justifiable after that experience. These could include a strict enforcement of penalties against drunk driving.

Libertarian principles have been cited for decriminalizing marijuana, but it seems to me that the situation is different in this instance than it is with alcohol. Marijuana is a relatively new development in American culture. We might yet hope that it isn't permanently established. Its use is currently prohibited and we aren't witnessing a public backlash at all comparable to the reaction against Prohibition. I don't accept the suggestion that marijuana is "victimless"; we shouldn't create a willful insensibility to the actual victims of drug abuse, as though they don't exist. If we truly keep in mind the many factors that have to be considered in the weighing of rights and obligations that are important to a free society, I personally believe that the long‑term interests of such a society will be well served if the use of marijuana is kept from becoming an established vice. This is another instance in which there is a conflict between the competing concepts of "freedom," even within libertarian thought. To me, freedom is less a matter of "doing your own thing" than of living within a principled framework of correlative rights and obligations. [Note in 2003: The “war against drugs” has proved so ineffectual, so expensive, and so damaging to traditionally accepted rights and legal procedure that I have now concluded that just the opposite approach should be taken to protect American society. I favor the legalization of pleasure drugs, a provision of them without cost by the government to the user, drug-treatment programs to seek to alleviate ensuing misuse, and severe criminal penalties against those who become addicts and/or who commit serious crimes while on drugs. A without-charge provision of drugs will take away all profit from those who now benefit from drugs’ cultivation and distribution. Agricultural interests in other countries will have nothing to gain by raising the crops; and pushers at all levels will have to seek other ways to make a living. Thus, the major impetus behind the existing use of pleasure drugs would be taken away. Only people who, on their own, want the drugs would take them – a much smaller number than those induced by pushers to take them today.]

It is possible to imagine a type of activity that would lead to no injuries to other people and to no unsupported families. Let us suppose that the conduct were only to be incapacitating or debilitating to the actor himself. In a really "victimless" situation of this sort, the argument for a laissez faire attitude on the part of the law would be strong, of course; but I would point out that even here it would be a mistake to apply an absolute principle. It is important that a free society recognize everyone's right to live his life badly as well as constructively, since any general paternalism would be a net loss to freedom, even with everything considered. But if we were to suppose that large numbers of people were to make themselves vegetables by becoming opium addicts ‑‑ even if they had no dependents, committed no injuries and somehow refrained from

appealing to the rest of society for relief ‑‑, we would have a situation that could weaken a free society so severely that considerations relating to the general health of the society would come into play. Here again, the appropriate classical liberal method would be to look not just to the individual himself, but to the overall preconditions of a free society. In exercising such judgment, however, we should seek an appropriate

balance; even the concern about "preconditions" can be overdone. All of the factors, centrifugal and centripetal, need to be given weight.

So far, I have discussed several issues that relate to the state's function of providing security, but they certainly haven't exhausted the subject. For example, my brief discussion of the death penalty barely touched the much larger subject of the administration of justice. In the rest of this section, we will examine a number of additional functions of government that pertain to the broad category of “security.” The reader will recall that the issues relating to it came up simply as parts of a larger concern about "the preconditions for life generally within a free society." I will be continuing my discussion of those preconditions.

. Establishing norms. There are broad areas of life in which a framework for human interaction can be established by setting legal norms. These norms can take the form of standards that meet the Rule of Law criteria, and as such they can become operating data that individuals can use in planning their activity. Since these norms establish a "common denominator" that applies to everybody participating in a certain activity, there is no comparative injury to anyone's competitive position, at least within the industry itself. Public health, sanitation, fire, building code, safety and ecological regulations can all be of this sort. They serve an important "framework" function. So that they don't involve a free substitution of judgment for the acting man's, there is value in having such regulations do no more than establish minimums or required objectives, leaving the means of accomplishing them to the actor. And they need to balance their benefits, on the one hand, and their costs and inhibiting effects, on the other. Without such balancing, they can be more injurious than beneficial. But if they are formulated with a wise balance, they can play a legitimate role in a free society. In some things, it will be a vitally necessary role. It would be a matter of valid complaint, by the possessors of other affected rights, if the norm were not established.

• Guaranteeing subsistence. Chapter 7 discussed the problem of human incapability and what the state may validly do to alleviate it. We saw that classical liberals have been divided over what sort of relief, if any, should be given. I felt that a guarantee of subsistence is sound if the system is politically decentralized and is kept sufficiently unattractive that the recipients are motivated to regain their independence. This offers the "social cement" of placing a floor under those in need, and at the same time avoids escalating into a politically manipulable paternalism. It meets basic human needs without approaching the massively abused system that we have today, which in effect provides "socialism for the poor." [Note in 2003: It now appears that vast displacement of labor will occur not just because of the competition of hundreds of millions of low-pay workers in a global market environment but even more because of non-labor-intensive technologies that are coming into being as part of the computer and scientific revolution. Unlike virtually all of my free-market-minded friends, I am convinced that this displacement will pose a vast challenge to the classical liberal vision. I have made recommendations in my book The Emerging Crisis of Economic Displacement (published to this Web side in early 2003) that are shocking to those friends but that I consider essential if classical liberalism is to remain relevant.]

• The judicial function. Still another function lies in the state's role as the final arbiter of disputes. The people involved in a dispute can't adequately be "judges in their own case." They need a socially objective source of judgment, which they can obtain either by agreeing upon an arbitrator or by submitting the case to decision by a court. The dispute needs to be resolved so that everybody can get on with his life and so that the rights of all concerned, including the community at large, aren't disturbed by on-going friction and perhaps violence. The (1) social consensus that supports the state combines with (2) its clearly predominant coercive power to make it the only agency that can put disputes definitively to rest. This function of the state has been favored by everyone except the anarchists. Anarcho-capitalists envision a society in which disputes will be handled by agreement and private forces; but instead of "minimizing coercion," I should think that arrangements such as those would escalate it. Instead of one delimiting force, there would be many contending centers of force. The expectation that people would see the foolishness of fighting and would acquiesce in reasonable arbitration seems to take an unduly optimistic view of human nature.

. Education. Considerable diversity has existed within classical liberal thought about the state's role in education. Advocates of the "nightwatchman" school have, of course, opposed any tax support for education. Herbert Spencer wrote, along these lines, that "inasmuch as the taking away, by government, of more of a man's property than is needful for maintaining his rights, is an infringement of his rights, and therefore a reversal of the government's function towards him; and inasmuch as the taking away of his property to educate his own or other people's children is not needful for the maintaining of his rights; the taking away of his property for such a purpose is wrong."²² This view was shared by Bastiat and Burckhardt; and recently Nathaniel Branden has written that "education should be liberated from the control or intervention of government, and turned over to profitmaking private enterprise."

Many classical liberals, however, have favored tax‑supported and compulsory education. Jefferson urged that we "establish and improve the law for educating the common people." He felt that a broad base of education was a necessary counterweight to elites: "Let our countrymen know that the people alone can protect us against these evils, and that the tax which will be paid for this purpose is not more than the thousandth part of what will be paid to kings, priests and nobles, who will rise up among us if we leave the people in ignorance." Still other benefits were apparent to Thomas Macaulay: "I believe, Sir, that it is the right and the duty of the State to provide means of education of the common people . . . (C)an it be denied that the education of the common people is a most effectual means of securing our persons and our property? Let Adam Smith answer that question for me. His authority, always high, is, on this subject, entitled to peculiar respect, because he extremely disliked busy, prying, interfering governments. He was for leaving literature, arts, sciences, to take care of themselves. He was not friendly to ecclesiastical establishments. He was of opinion, that the State ought not to meddle with the education of the rich. But he has expressly told us that a distinction is to be made, particularly in a commercial and highly civilised society, between the education of the rich and the education of the poor. The education of the poor, he says, is a matter which deeply concerns the commonwealth . . . This, then, is my argument. It is the duty of Government to protect our persons and property from danger. The gross ignorance of the common people is a principal cause of danger to our persons and property. Therefore, it is the duty of Government to take care that the common people shall not

be grossly ignorant." Along the same lines, Richard Cobden stressed the need for widespread education. He said that "nature does not produce such monsters as an ignorant or vicious community, and virtuous and wise leaders." He supported "the principle of State education." Lord Robbins added that "the educational function of the state has always figured large in the philosophy of the free society."

Milton Friedman made an excellent discussion of this subject in Capitalism and Freedom, considering it in the context of all the applicable classical liberal values. He argued that the use of tax resources for basic education was legitimate because of the "neighborhood effect" inherent in a widely dispersed literacy. "A stable and democratic society is impossible without a minimum degree of literacy and knowledge on the part of most citizens and without widespread acceptance of some common set of values . . . There is therefore a significant 'neighborhood effect.'" His conclusion was that "both the imposition of a minimum required level of schooling and the financing of this schooling by the state can be justified." But he distinguished between these elements and "public education" as such. "A third step, namely the actual administration of educational institutions by the government, the 'nationalization,' as it were, of the bulk of the 'education industry' is much more difficult to justify." He proposed a"voucher plan" as a way to accomplish the first two objectives without the government's actually running the schools. "Governments could require a minimum level of schooling financed by giving parents vouchers redeemable for a specified maximum sum per child per year if spent on 'approved' educational services. Parents would then be free to spend this sum and any additional sum they themselves provided for purchasing educational services from an 'approved' institution of their own choice. The educational services could be rendered by private enterprise for profit, or by non‑profit institutions. The role of government would be limited to insuring that the schools met certain minimum standards.” He didn't believe that the case for this sort of assistance was nearly so clear for higher education, however; and he sought ways to finance professional and vocational training that would involve having the individual who benefited from it repay its costs (on the ground that the training had, in effect, created an income-producing asset for which the individual could well afford, over a period of time, to pay).

In my opinion, Friedman's analysis is an outstanding example of how classical liberal desiderata should be considered and met ‑‑ and of how the power of the state shouldn't be built up beyond what is useful to a free society. His proposal takes into account the structural preconditions of a free society as they were stressed by Jefferson, Macaulay and Cobden. If the proposal were implemented, the general educational needs of the public would be provided for with whatever degree of liberality the public itself would determine. The level of financial support for education wouldn't need to be lower than it is today. But Friedman has been careful to keep the state's role as limited as possible, and to maximize the market and parental choice. (I would imagine that most Americans favor public education because they believe that it is the only way to obtain a broad education for the public. They haven't dissected the issue with the care that Friedman has. They would be surprised if they realized that their reason to support public education isn't the same as modern liberalism's. The contemporary "liberal" doesn't have any interest in the voucher plan. This would seem surprising if we were to start with the premise that he is mainly concerned about assuring that everyone gets an education. But it isn't suprising if we realize that he also wants the government, and preferably the federal government, to control the schools. One thing he doesn't do is to want the parents to have the primary control, with the diversity that that suggests. Since he mainly seeks a strong governmental role, his approach and Friedman's are irreconcilable. If the public understood these things, I would surmise that an overwhelming majority of the American people would agree with Friedman.) [Note in 2003: The modern liberal does not just want control by government; there is also the aspect of control by the professional elite that makes up what is today called the “educational establishment.” That establishment tends strongly to control schools even in a system decentralized fully to the local school board level. The voucher system, by giving parents a much greater say, would tend to jeopardize that establishment’s exclusive role. This is an important point for classical liberals to realize; it isn’t just “abuse by government” that is a problem; the Left’s “march through the institutions” broadens the problem in include much more than government alone.]

2. Functions that establish preconditions for a market economy. I don't intend to suggest that there is a sharp delineation between the preconditions I have been discussing and those I am about to discuss under this heading, since there is little reason to make a sharp dichotomy between the economy and the other aspects of life. The separation here is for convenience rather than because different principles apply.

• Anti‑trust. In the preceding chapter I discussed the relationship of the problem of "aggregates" to the classical liberal desire to reduce coercion as much as possible. One of the issues that related to aggregates pertained to monopolistic restraints on trade. Classical liberals have long been divided among themselves about whether legislation in this area is legitimate. Some consider monopoly a negligible problem in a free market in the absence of governmental favoritism; and they look upon refusals to deal, tying practices, price-fixing agreements, etc., as exercises in personal freedom. Ludwig von Mises wrote that "the great monopoly problem mankind has to face today is not an outgrowth of the operation of the market economy. It is a product of purposive action on the part of governments. It is not one of the evils inherent in capitalism as the demagogues trumpet."²³ Ayn Rand has added in the same vein that "the only actual factor required for the existence of free competition is: Laissez faire! ‑‑ which, in translation, means: Hands off!"

It is probably safe to say that virtually all classical liberals, including me, believe that the problem of concentration and monopolistic practice has been grossly exaggerated and misstated by the opponents of a market economy. Frank Knight has written that "the public misconceives its nature and grossly exaggerates the extent and power of business monopolies."²⁴ Milton Friedman has contradicted the Left's emphasis on the power of the top 200 corporations when he has observed that "the most important fact about enterprise monopoly is its relative unimportance from the point of view of the economy as a whole."

Just the same, there is a substantial school within classical liberalism (to which I again belong) that sees monopolistic restraints on trade as a genuine problem. This school believes that the state should act against such restraints to maintain the preconditions of a healthy market. Lord Robbins says "there is a real monopoly problem in free societies" and that "it is unwise to resign ourselves to doing nothing about it." Herbert Hoover shared this view, and it is worth noting Henry Simon's thoughts about enormous aggregates. Speaking of the "gigantic corporation," he said that "we may recognize, in the almost unlimited grants of powers to corporate bodies, one of the greatest sins of governments against the free enterprise system. There is simply no excuse, except with respect to a narrow and specialized class of enterprises, for allowing corporations to hold stock in other corporations ‑‑ and no reasonable excuse (the utilities apart) for hundred‑million-dollar corporations."²⁵

I share this point of view. The basis for my agreement lies in the theory I spelled out earlier: that coercion includes more than just violence; that the reduction of coercive potential is a goal that is optimized when men act as individuals, and that each aggregate must thereafter be scrutinized carefully for its effect on a free society; that there is, accordingly, more of a presumption against than in favor of aggregates; and that freedom in a market economy is violated if men have to live their economic lives subject to the coercive pressures of monopolies and combinations.

Classical liberals will be inclined to say that if a monopoly comes into being it will be a consequence of the old Protectionist economics against which the advocates of a free market fought for so long. They don't see monopoly as so much a problem of the market as of a tendency away from the market. At least to this point, I agree. A monopoly is contrary to the market and goes against its philosophy. It isn't the fault, properly speaking, of capitalism itself, but is rather its enemy. Nevertheless, we need to recognize that the drives toward collusion, undue growth and coercive exclusion of competitors exist as cancers within the nexus of the market and need to be fought there. Classical liberalism should itself lead this fight. Its principal opponent since 1848 has been socialism, but up until then the main enemy had been Mercantilist monopolies and protectionism. Classical liberalism fought hard to open things up, to remove regulations, barriers and exclusionary practices. It sought an economic system in which each person could pursue his own self‑interest and in doing so benefit everyone else; but this was to occur through the production and sale of goods in the market in open competition with others. There is a type of self‑aggrandizement that seeks the shelter of protected, favored sinecures; and it is alien to the classical liberal conception. During the century that classical liberalism has been on the defensive there has been a tendency to defend the existing market against all criticisms. This is an unfortunate position for classical liberalism to be in because as a philosophical movement it needs to retain a vital reformist relationship to any existing market or set of institutions. I don't mean reform in the sense of moving that market away from classical liberal values. Rather, I am referring to the need constantly to reassert those values.

• Providing information. The market presupposes a certain flow of information, and several functions of government relate to facilitating that flow. When the state issued coins under the old metallic standards, it was engaged in this function, since it was standardizing the weight and assay so that each recipient of the coin wouldn't have to determine those for himself. A "Bureau of Standards" that establishes common weights and measures similarly performs an informational function in aid of the market. It is able to do this especially well as a governmental agency because of the general social consensus about its disinterestedness and its authoritativeness. When our county governments maintain "clerk and recorder" offices to maintain records of deeds and other official or important private documents, they create a trustworthy source of information that is accessible to everybody. A Secretary of State's office, which serves as a central filing place for corporate, limited partnership and other business entity documents, performs a like function.

These functions are “in aid of the market” by establishing an informational framework for action within it. The legitimacy of government's role with regard to them has hardly been questioned, except that the "nightwatchman" school's blanket rhetoric denies them and the anarcho‑capitalist would argue that they could be done by private agencies. A classical liberal will prefer that anything be done by private enterprise if it can be (and we see this in the area of real estate titles when private abstract companies perform many of the services that might otherwise be done by the county recorder's office). We need to weigh, though, whether a given function can be accomplished as well through private action, and we won't always find that it can be. The "central filing" functions would require either a natural monopoly or a difficult pooling arrangement to share the information. Standardizing weights and measures requires a continuingly authoritative source, which is something that may or may not be possible for a private enterprise. In these connections, a question emerges about how jealously a classical liberal should guard against state functions that are both innocuous and arguably necessary. The anarcho‑capitalist must do so to sustain his case against all government. But a classical liberal is primarily concerned with formulating principles to prevent the abuse of government. An undue concern with issues such as I have just discussed can hurt his ability to convince others that he is willing to support a system that will be demonstrably workable.

• A body of law. The framework for the market includes the courts' enforcement of contracts and of the rules of tort and criminal law. The entire body of property and commercial law ‑- which deals with such things as mortgages, liens, easements, water rights, etc. ‑‑ is also part of the framework. A complex economic system such as ours couldn't exist without a major on‑going authoritative system for articulating and applying such principles.

• The monetary system. Members of the "nightwatchman” school have argued that the state doesn't legitimately have the function of providing the market with a monetary system. They argue that commodity money, such as the precious metals, is better and that a system of "free banking," which would be policed by the circumspection people would show as they entrusted their money only to honest and conservative bankers, would be sufficient. Several years ago, I studied under Ludwig von Mises for a brief period for the purpose of finding out more about his "free banking" idea, which isn't fully explained in his writings; but I wasn't able to obtain any further explanation of it [due to circumstances that weren’t anyones fault in particular. For that reason, I don't want to oppose it totally, since it may have a soundness that I don't see. But, subject to this hesitation, here are some of the flaws that I believe are present in the concept: (a) It is hardly practicable from the standpoint of the average individual. Such a person can't be knowledgeable about everything. If, for example, he is a fine dentist, he can hardly be expected to "wear a large number of other hats" well, such as also to be a conscientious citizen, a devoted father, an auto mechanic, a trained gardener, etc., all of which the modern period expects us all to know a lot about ‑‑ and beyond those things to be able to judge adequately the inner workings of his local banks. Even if he made the ideal choice for the bank he should trust, he couldn't keep abreast of changes in management, ownership or policy. If he is to be well served in conducting his own life as a self-reliant individual, which is something that classical liberalism rightly expects of him, he needs a stable, dependable banking system that he can virtually take for granted as a given. This calls at least for a regulatory framework for banking. (b) I was never able to satisfy myself that a system of "free banking" would avoid the recurrent cycles of expansion and contraction that have been characteristic of the past. This is what I had hoped to discuss with Dr. Mises. It is not enough to say that "cycles are a fact of life that wouldn't have too severe an effect if the market were free to adjust quickly in the downward phase." Such a premise is inappropriate to classical liberalism, since it fails to take into account the extent to which the business cycle falsifies some major underlying assumptions upon which the market economy is based. Classical liberalism appropriately stresses the moral imperative to save, work hard and accumulate property to become self-reliant. But what does this say to industrious men who lose their jobs because of recession or depression, which is something totally beyond their individual control; or to people who prepare adequately for their old age, only to see inflation eat away the value of their savings; or to families who lose their homes to foreclosure during economic crisis? I think strongly that the business cycle is something that classical liberalism has had to solve, at least in an overall sense, if the individualism that it values is to be workable and is not to have an important element of sham in it. A stable economy is so vital a precondition to individual effort that we cannot possibly accept "periodic adjustments" if they amount to severe dislocations. (c) We can view the issue theoretically, but it is also imperative to see it in its historic context. If a workable "free banking" system is possible, the historic opportunity for classical liberalism to have implemented it was during Van Buren's day in 1837. The issue is largely academic today. The question right now has to do with how we can address the issue in light of contemporary economic and political realities. (W. H. Hutt has written an excellent monograph in which he points out that many of the differences among political thinkers arise because of the differing extent to which they are relating their thought to current possibilities. He makes the point that it would be helpful if thinkers always made it clear just how close they are attempting to stay to the realities of their time, since what is acceptable at one level of abstraction won't necessarily be acceptable at another.)²⁶

The assurance of adequate institutions for a stable monetary system, including the system of banking and credit, is an important function of government. This is a function that governments have performed with conspicuous dishonesty and ineptitude for thousands of years. A sound classical liberalism should, in my opinion, see to it that government does the job and does it conscientiously. Frank Knight observed that "up to a point, socialistic critics have been right in regarding cycles and depressions as an inherent feature of 'capitalism.' Such a system must use money, and the circulation of money is not a phenomenon which naturally tends to establish and maintain an equilibrium level." He suggested that "remedial action is a matter of economic understanding and of political intelligence and administrative competence, in matters of an essentially technical character." Fortunately, the technical answers are available. It isn't as though economic theory didn't have the solutions. I consider Milton Friedman's proposals sound. [Note in 2003: It is no longer clear to me that Friedman or anyone else “has the answers” about trade cycle theory. In the mid-1980s, Friedman predicted runaway inflation because of what the Federal Reserve was doing. That did not occur, and it is evident that something was lacking from his theory. It appeared during the 1990s that Alan Greenspan and those who advised him were masters at the art of fine-tuning the economy; but then, as the decade came to a close, all of that seeming mastery was lost. I return, thus, to the situation I found myself in before attending Ludwig von Mises’ seminar, of thinking that a problem existed at the heart of a market economy that desperately needed resolution.] They are to provide central monetary management with a statutorily fixed responsibility to maintain the volume of money and credit at a stable level, with only such increase as will approximate the real growth of the economy and thereby avoid a slow fall of the price level; or more radically to go to a 100% reserve banking system that wouldn't be subject to expansion and contraction. The trouble lies, even with these proposals that are much closer to what is possible today, in the fact that fundamental classical liberal reforms are not likely to be made in an age in which a "modern liberal" Zeitgeist prevails. Perhaps an even more insuperable difficulty lies in the existence of a large and politically powerful labor union movement ‑‑ and in the concomitant fact that our society is not about to face up squarely and honestly to its implications. The chronic setting of wage rates above the market rate, both by collective bargaining and by minimum wage legislation's effect on the entire pay scale, causes continuing unemployment which isn't blamed on those actual causes, but which is blamed on insufficient economic activity. This in turn leads to a hue and cry for "easy money," with the resulting inflationary spiral. The eventual crackdown leads to recession. This has been the pattern during the Keynesian years following World War II. There is no way to achieve a stable monetary system until the ideological factors that underlie unions and minimum wage legislation are changed. The inability of contemporary society to cope with reality is a "contradiction" similar to those of which Marx was fond of speaking. During the Nixon years, it led into the morass of price and wage controls. The prospect today is that it won't lead to the adoption of classical liberal reforms, but rather of socialistic solutions, such as is contained in the suggestion that government should be the "employer of last resort" to hire anyone who can't get a job. [Note in 2003: My much more recent perception that the displacement of work will create a crisis for a market economy (as well as for all other systems) has precisely led me, reluctantly, to what I clearly would have considered a socialistic solution when I wrote this passage: that of a guaranteed income through shared ownership of the economy as a whole. See my book The Emerging Crisis of Economic Displacement. Careful readers will note that I have always been conscientiously concerned with whether a free society “works for people,” so the concerns I voice in this recent book are not of a new character to me.]

The solution doesn't lie entirely in technical competence, as my quote from Knight (which is perhaps too much out of its context for this purpose) would suggest. If we were to rely on governments to "fine tune" the economy on a continuing‑adjustment basis even with stability as the objective, we would probably wind up with little stability indeed. Friedman's goals will be better assured if the techniques for stability are required by a legal norm that will amount to a Rule of Law for the subject and when that norm becomes sanctified by a cultural and political untouchability similar to that which the supporters of the gold standard felt was necessary to keep nations on gold. We can easily see from this just how far we are from attaining such a goal.

Licensure. Licensure is one of the economic functions of government. It has grown rapidly, but from a classical liberal point of view not soundly, during recent years. The overwhelming number of undertakings now require a license, and often the law prohibits anybody who doesn't have a license from engaging in it. This limits freedom and represents a major movement backward into a status society. Milton Friedman has included a perceptive discussion of licensure in Capitalism and Freedom. He distinguishes between three different levels of regulation: registration, certification and licensure. I am more persuaded than he is by the usefulness of certification, by which a governmental agency certifies quality or competence; but I agree with him that there is little excuse in a free society for the state's declaring that only people who hold a license may operate legally. This amounts to a denial of consumer choice and a presumptuous assertion of governmental infallibility. It says, in effect, that the public should have no right to use someone's product or services even though it has had ample warning about him because of his failure to obtain certification. We need to remember that any exclusive prerogative, such as is given to licensees, is rarely motivated out of a pure desire to protect the public, since certification would be sufficient for that purpose. Behind the scenes, there lurks the self‑interest of those who benefit by being shielded from competition and of the politicians who play upon the support of vested interests. The movement toward increasing licensure is only partly a result of a growing desire to raise standards. At least as much, it manifests the "grab‑bag" nature of our pork‑barrel politics in an age of public apathy and of active special-interest groups.

• Free trade. Classical liberal intellectuals, as distinguished from many conservatives in the general population, have long favored an overall system of "free trade," opposing trade restrictions such as tariffs or quotas. Cobden and Bright a century and a half ago in England favored a unilateral removal of tariff barriers, which means that they favored it even if such a policy weren't reciprocated by other nations. Much more recently, Milton Friedman endorsed the same approach when he wrote that "our tariffs hurt us as well as other countries. We would be benefited by dispensing with our tariffs even if other countries did not." It is well known that the Jeffersonian‑Jacksonian party in American history, which was philosophically classical liberal, opposed tariffs as an instrument of protectionism. They favored the tariff only to the extent needed for revenue. John Stuart Mill opposed tariffs in their protectionist aspect, with one exception: "The only case in which, on mere principles of political economy, protecting duties can be defensible, is when they are imposed temporarily (especially in a young and rising nation) in hopes of naturalizing a foreign industry, in itself perfectly suitable to the circumstances of the country. The superiority of one country over another in a branch of production, often arises only from having begun it sooner." A second exception stems from the need to maintain the viability of certain industries vital to the national defense. Although these businesses wouldn't prove economic on an ordinary consumers' market, they are of such a nature that it is important to have them operating quickly in time of war. Classical liberals will arrive at their assessment about a specific industry at a certain point in time after wrestling with ambivalent desiderata: they are anxious to support whatever is needed for national defense, but they don't want this exception to become a facade for protectionism, which it easily could unless the protection is convincingly related to the national defense objective. [Note in 2003: My later discussion of the theoretical basis for free trade vs. protectionism in Chapter 18 of The Emerging Crisis of Economic Displacement takes the reasoning considerably further than the rationale expressed here, and arrives at somewhat different conclusions. See that chapter, also, for some very different thoughts on the subject of taxation and redistribution.]

• Taxation. Needless to say, classical liberal tax policy is far removed from the system that now exists in the United States. Its policy would oppose using taxation to redistribute income or wealth. The consensus within classical liberalism heavily favors the principle of proportionality, which would have each taxpayer pay the same percentage of his income. People with higher income would pay a higher amount in absolute terms, in keeping with their greater ability to pay; but they wouldn't pay a larger proportion. Proportionality avoids the threat of becoming con