Cyclopædia of Political Science, Political Economy, and the Political History of the United States

Edited by: Lalor, John J.
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New York: Maynard, Merrill, and Co.
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Includes articles by Frédéric Bastiat, Gustave de Molinari, Henry George, J. B. Say, Francis A. Walker, and more.
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GOVERNMENT INTERVENTION, Political Economy of. Upon this question political economists, and others who take an interest in social subjects, are divided into two great parties. On the one side, there are those who wish that the state should do very much more for the people: on the other side, there are those who think that the influence now exerted by the government should be greatly curtailed. There are, consequently, two distinct phases of thought, each most ably and powerfully represented. The first party may generally be said to be composed of some of the most enterprising, intelligent and politically active of the working classes. It also embraces most of those who have strong philanthropic tendencies, but who have not directed systematic thought to the consideration of the true causes that produce the suffering which excites in them such generous sympathy. Among those who desire to see government intervention greatly curtailed, there are to be found a comparatively small number of exceptionably thoughtful working men. The most consistent and thorough-going upholders of these doctrines, however, belong to a certain philosophic school, the distinguished leader of which is Mr. Herbert Spencer. His writings contain probably by far the most powerful and exhaustive statement of the arguments against over-legislation, and against the growing tendency to rely upon state assistance. These opinions generally receive the designation of laissez faire. In a very circuitous way it has, as it were, accidentally happened that laissez faire is popularly supposed to derive authority and sanction from the principles of political economy. The advocates of free trade in England had to attack one kind of government interference; and, in abolishing protection, they undoubtedly released commerce from numberless fetters which had been imposed by the state in that country. The sympathy which the free traders were thus naturally led to feel for laissez faire soon became increased by another circumstance. The English factory acts, when first proposed, were vehemently resisted by the manufacturers as an unwarrantable interference with industrial freedom. The majority of these manufacturers were leading free traders, and were also prominent members of what is known as the Manchester school. As, however, the abolition of protection and opposition to the factory acts were both defended on the ground of hostility to state interference, there soon arose a connection between the Manchester school and laissez faire. During the anti-corn-law agitation, the advocates of free trade so repeatedly appealed to the principles of political economy that there was assumed to be a peculiar connection between this science and the Manchester school. As, however, this school had identified itself with the doctrine of laissez faire, it was soon popularly supposed that laissez faire and political economy were intimately associated with each other. It has been thought advisable to explain the origin of this association of ideas, because when its accidental character is clearly perceived it is more easy to understand that political economy gives no sanction whatever to the doctrine of laissez faire. In fact, there is nothing whatever in the principles of economic science to lead to the establishment of any general conclusion with regard to the advantages or disadvantages of state interference.


—Error and confusion are sure to result if we seek to lay down some rule as applicable to every proposed case of government intervention. Although the main object I have in view is to point out the evils resulting from an undue reliance upon the state, yet it seems to me that those who exhibit this tendency scarcely adopt a more erroneous course than those who are such extreme advocates of laissez faire, that under all circumstances they condemn government interference without inquiring into the nature of the particular instance to which it is to be applied. As an example of this it may be mentioned that those who are most thoroughly indoctrinated with laissez faire apparently consider that they are bound to oppose compulsory education because it involves state interference. Such opposition affords an instructive warning against the danger of offering too implicit obedience to any general principle. A moment's consideration will suffice to show that interference on behalf of children and interference on behalf of grown-up persons rest on entirely different grounds. The latter kind of interference may be objected to because it impedes the freedom or men's actions, is antagonistic to individual liberty, and, in the words of Wilhelm von Humboldt, "prevents the harmonious development of the human character." The child, however, independently of all government interference, must be under the control of a parent or a guardian. It is therefore idle to talk of his individual liberty and of his freedom of action; these must be more or less completely surrendered to his parent or guardian. It is therefore evident that the question of state intervention must be regarded from an entirely different point of view when it is applied on behalf of children. It most generally happens that they require the aid of the state when those who are constituted their natural protectors neglect their duty or abuse their power. The extent to which there is such an abuse of power or such a neglect of duty must be the chief element in determining the limits to which it is desirable that the state should extend its protection to children. A child having no power to provide itself with food and clothing, it will be generally admitted that the state ought to take some action if a parent either can not or will not supply his children with the necessaries of life. Although this is a case in which the necessity of some interference will at once be acknowledged, yet the conditions under which such interference should take place suggest considerations of the utmost importance. The history of the English poor law abundantly shows that if the state renders aid to neglected children with too great liberality, and if at the same time parents, who are responsible for these neglected children, are treated with undue leniency, a most disastrous encouragement is given to improvidence and immorality. Then again, it would probably be admitted by the most enthusiastic friends of compulsory education that, in order to justify it, it ought, in the first instance, to be proved that every one who is born in a civilized country is entitled to claim from his parents a certain amount of mental training, and that, if this claim is ignored by the parents, it is the duty of the state to enforce it. No one would be prepared to say that interference between the parent and the child, in reference to education, is good in itself; it would not be needed if the social condition of the country were more satisfactory; and those who are among the foremost to recognize the importance of compulsory education confidently hope that it will gradually be rendered unnecessary as nations advance in social improvement. Here then is a case in which the right or wrong of government interference can not be determined by a priori considerations; a trust worthy decision can only be arrived at on the point by ascertaining to what extent parents neglect the duty which they owe to their children of providing them with a certain amount of mental instruction.


—Another illustration of the importance of deciding each proposed case of government interference upon its merits, is afforded by considering the circumstances under which it is desirable that the state should attempt to regulate the hours of labor. Such interference is ordinarily condemned on some such ground as the following: It is said to be contrary to individual freedom; it is urged that if it is legitimate that the state should say how many hours a man should work with his hands, it would be equally legitimate to decree the amount of mental labor that should be permitted. A government official would consequently have to visit every study; a man would have to be watched in his daily avocations; the time when he retired to rest and when he rose from slumber might have to be noted. Life with all this worry and watching would scarcely be worth having. Then again, it is said that a legal limitation of the hours of labor might so cripple productive industry as to reader successful competition with foreign countries impossible. The trade of a country might thus be lost, and the people be deprived of the chief source of their maintenance. Fully admitting the force of these and other considerations, I view with as much disfavor as any one can, the cry which is raised in favor of a law fixing a legal limit of so many hours for the day's work. But those who are strongly opposed to such legislation should be careful to avoid the not unfrequent error of hastily concluding that the state can never be justified under any circumstances in regulating the hours of labor. It certainly appears to me that it is quite as desirable to pass a law limiting the number of hours which a child is permitted to work, as it would be undesirable to impose similar restrictions upon men and women. If grown-up persons over-work themselves they do it of their own free will. They can not be compelled to labor more hours than they please unless they are either held in subjection as slaves, or unless they are in some other way deprived of personal liberty. A child, however, is not permitted to exercise freedom of judgment; he does not himself decide at what age he shall begin work, and the number of hours he shall each day labor. All this is determined for him by others. If, therefore, it can be shown, as it has undoubtedly been shown in England, that, through the cupidity and mistaken economy of employers, and through the selfishness, avarice and poverty of parents, large numbers of children are worked too young and are also greatly over-worked, then it seems to me that one of the clearest cases that can be imagined is made out in favor of state intervention. Under the circumstances just described it is only by state intervention that the child can be protected against what may prove to be an incalculable and irreparable injury. The only argument of weight which has been suggested against such interference has been urged by those who say that to deprive a parent of a portion of his children's earnings, is certainly unjust upon those parents who are extremely poor. We here simply say that, after making due allowance for the difficulties associated with the poverty of parents, we believe it can be proved that the balance of argument strongly preponderates in favor of the state interfering on behalf of over-worked children.


—It is not necessary to quote other instances to show that state interference on behalf of children is usually to be defended on grounds entirely different from those which would be brought forward to justify similar interference on behalf of grown-up persons. I will, therefore, proceed to state some of the considerations which have to be taken into account when government intervention is applied to adults. It will be useful, in the first instance, to mention certain principles, to the truth of which scarcely any will refuse assent. It will, for instance, be generally admitted that government intervention is not a good thing in itself; the more it can be avoided the better. Probably the best measure which can be obtained of the welfare of a community is to ascertain to what extent each member of it can, with advantage to all the rest, be permitted to have freedom of action. It is obvious that this freedom will be curtailed in proportion to the extent to which the authority of the state has to be introduced into private life. The following considerations will probably suffice to show that the well-being of a community may be estimated in the manner just suggested. Nothing, for example, brings such manifold evils upon a nation as wide-spread ignorance among its people. No one would think of advocating compulsory education if children generally received an adequate amount of instruction. Consequently the extent to which the necessity exists of the state interfering with education may be regarded as a measure of popular ignorance; and the amount of this ignorance indicates the difference between the present condition of a country and the welfare it might enjoy. If another example is required to corroborate what has been stated, we may revert to the instance of the state interfering in reference to the employment of children. As previously stated, children are sent to work too soon, or are worked too many hours a day, chiefly in consequence of the cupidity and mistaken economy of employers, or in consequence of the selfishness, avarice or poverty of parents. With the decline in the force of these agencies there would be a corresponding diminution in the necessity for this particular kind of government interference. But could there be more conclusive evidence of a marked improvement in the general condition of a country than would be supplied by the fact that the agencies to which allusion has just been made were exerting less influence? A moral and intellectual advance would be indicated by the circumstance that cupidity and mistaken economy were much more rare among employers. Again, still more striking evidence would be afforded of general advancement, if parents were so little avaricious or selfish, and if so little poverty existed among them, that they were rarely or never tempted to permit their children to be over-worked.


—It is, however, not necessary to say more with a view of showing that government interference is not good in itself, but that it must be regarded rather as a disagreeable remedy which has to be applied in order to cure or counteract various defects in the social condition of a country. The remedy is not only a disagreeable one, but it may be compared to some of those strong medicines which not unfrequently leave behind after consequences of a serious kind; these medicines can not be given to a patient without some risk; they should always be used with the utmost caution and discrimination. Statesmen, therefore, when they are pressed to extend the area of government intervention, should consider that they occupy a position not unlike that of a physician who has to decide whether he will give to a patient some extremely dangerous drug. The physician, if he is at all worthy of his profession, will endeavor to ascertain the exact state of his patient, and will carefully note all his symptoms. If he does not do this, but if, on the contrary, he adopts whatever course he believes will give most immediate satisfaction to the patient and his friends, mischief is almost sure to ensue, and he forfeits all claim to confidence and respect. In a similar way, statesmen, when they are asked to use state intervention, should not forget that it is a perilous experiment, and should do all in their power to ascertain the exact circumstances under which it is applied, in order to estimate, with as much correctness as possible, what will be its future consequences. If states-men do not do this, but if, on the contrary, they adopt that course which they believe will most promote the interests of party, and give them the most immediate popularity, then the gravest misfortunes may be brought upon their country.


—It is impossible to dwell with too great earnestness upon the demoralization and mischief which would ensue if some of the demands which are now so constantly urged for state assistance should be conceded. Of all these demands none are so insidious, none so dangerous, as those which would call in the aid of a central authority to enable one section of the community to levy contributions for its own advantage from the rest of the nation. This has already been done to a most alarming extent, and a powerful influence would be exerted in the same direction by many of the social movements which now receive popular favor. As a proof of what has just been stated, it will be sufficient to remark, without discussing the subject with further detail here, that about £9,000,000 are annually levied in England and Wales for the relief of the poor. This great sum represents a heavy tax imposed on industry, and no small portion of the amount is taken from the industrious and provident to be distributed among those who have brought poverty upon themselves by indolence and improvidence. As if the harm already done by thus encouraging recklessness and discouraging thrift had not been sufficiently great, an appeal has often been influentially put forward to administer the poor law with greater liberality. This simply means that the industrious should be still more heavily fined, in order that a more liberal reward might be given to improvidence. Some of the best-intentioned people are thus unconsciously advocating schemes which would bring a similar baneful influence into operation. Proposed chimerical measures of relief have numerous and powerful advocates. Like the English poor law, however, they may all be regarded as developments of the principle that it is not simply by the sweat of the brow or by the labor of the brain that men must support themselves, but that they have a right not only to look to others to provide them with maintenance, but, as far as possible, to protect them against the consequences of their own voluntary acts. But although the principle, just referred to, can not, in my opinion, be too strongly condemned, yet it must not be supposed that we should be justified in at once rushing hastily to the conclusion that there should be no poor laws whatever, that under no circumstances should free education be given, that the state should never assist emigration, and that neglected children should not be cared for. The important question which has to be considered is this: If any of these things ought to be done, under what circumstances, and in what particular manner should they be done? In attempting to come to a decision on this point, it is above all things essential to keep in view that the utmost discouragement should be given to improvidence. For instance, it has been proved that out door relief is often simply regarded as a gift, the acceptance of which entails no disagreeable consequences. Residence in a workhouse in England is, on the contrary, generally looked upon as a somewhat serious punishment. It is, therefore, obvious that in-door relief discourages voluntary pauperism, whereas it is greatly stimulated by out-door relief. Consequently England, without abolishing her poor law, may in the future avoid much of the harm which it has done in the past if the granting of outdoor relief were to be either altogether forbidden, or only permitted in very exceptional cases. Again, with regard to emigration, although reasons will afterward be stated which lead to the conclusion that it would be most unwise for England to undertake to pay the passage-money of all who might wish to settle in foreign countries, yet in the case of some great emergency it might be advisable for her, as an exceptional measure, to resort to state emigration. In a similar way, although I believe that a general system of free education ought to be resisted because it would weaken the sense of parental obligation, yet, in my opinion, no child ought to be permitted to grow up in ignorance because his school fees are not forthcoming. It would be scarcely less unjust for a parent to make others pay for the education of his children than it would be to make others pay for their food and clothing. The state very properly orders local authorities to undertake the maintenance of children if they are unprovided with the necessaries of life; but if a parent willfully refuses to feed and clothe his children, then he is criminally punished. If, however, it is not a voluntary act, then he is treated as a pauper. In a similar way, I think, a parent ought to be punished if he makes other people pay for the education of his children, it, order that he may have something more to spend in his own enjoyment. If, however, he is too poor to pay the school fees, then there is just as much reason why he should be treated as a pauper as if he were unable to feed and clothe his children.


—Enough has now probably been said to show with what extreme caution any scheme should be viewed which proposes to benefit a class by the expenditure of money obtained by taxation. As previously remarked, the objections to be urged against such proposals assume greatly increased force when, as is not unfrequently the case, the class among whom the money is chiefly to be distributed are not to contribute toward the extra taxation which the additional expenditure will necessitate. Thus, the carrying out of the social and economic changes advocated by the international society would involve a heavy outlay of public money. At the same time it is to be observed that it is one of the cardinal principles of this association to raise all taxation by a graduated property tax.


—There are, however, other instances of government intervention which do not directly involve expenditure of public money. If an attempt is made to ascertain the effects of such interference, it will be found that considerations of a very complicated character are often involved. At the outset of such an investigation, certain principles can be laid down which will greatly assist us in arriving at a right decision in any particular case, although they will not furnish any general conclusions of universal applicability. Sanitary legislation affords an instance in which the interference of the state will most generally be admitted to be both just and desirable. A man who neglects drainage and other matters upon which the preservation of health depends, not only injures himself and those who are dependent upon him, but may become the centre and source of wide-spread disease. Because it is thus comparatively easy to decide in favor of a compulsory system of drainage of houses and compulsory purification of rivers from sewage, it is not unfrequently supposed that, for similar reasons, the state ought to interpose in such a matter as restricting, if not prohibiting, the sale of intoxicating liquors. Thus, it is said that intemperance is not less injurious to health than defective sanitary arrangements, and it is argued that if it is within the appropriate functions of the state to secure good drainage, it must be quite as much within its legitimate functions to impede or forbid the sale of intoxicating liquors. But in order to justify such a conclusion it would be necessary to prove that as imperfect drainage is bad in itself, so all consumption of alcohol must be deleterious; the extent to which it is deleterious merely varying with the amount of consumption. The analogy, however, at once breaks down if it is admitted, as it generally will be, that beer, wine and other alcoholic beverages, if taken in due moderation, need not be pernicious, but, on the contrary, may be beneficial. It is, however, argued by the advocates of a prohibitory liquor law, that the mischief resulting from drunkenness is not confined to the drunkard himself; he often so much injures his family as to reduce them and himself to pauperism; sometimes he is led into crime; in this way, consequently, intemperance greatly increases pauperism and crime. It thus inflicts a serious loss upon the community, and adds much to the taxation of the country. Such considerations as these induce many people to think that as the whole community is injured by drunkenness, the state should give the majority the right to restrict or prohibit the sale of intoxicating liquors. The demand for the exercise of such a power obviously suggests considerations different from those which are associated with enforcing a certain sanitary scheme, such, for instance, as the carrying out of a uniform system of drainage. No one can be benefited by having a place imperfectly drained, whereas all who, for example, drink beer and wine in judicious moderation may be subjected to great inconvenience, and may even be injured if the sale of these articles is forbidden or greatly impeded. Thus, if it were enacted, as has been so often proposed in England, that there should be only one public house for each 1,000 or 2,000 people, many men, if they wanted to purchase a glass of beer, would have perhaps to walk a couple of miles. They would have to submit to this trouble and inconvenience not through any fault of their own, but solely because certain people do not practice self-restraint. Then again, if the number of public houses were artificially limited in the manner proposed, a great industry would manifestly have to be carried on as a monopoly. It is difficult to imagine any trade conducted as a strict monopoly without causing abuse and unfairness. It would be almost impossible to find any authority who might with safety be entrusted to select the persons who should enjoy the privilege of exercising this monopoly. Competition in the trade would also be to a great extent destroyed, and competition is the best security for fair prices and a good article. It has, however, been suggested that the monopoly should be put up to auction; but if this were done, the large brewers would be able to outbid less wealthy competitors, and the trade would be thrown more completely than it is now into the hands of a limited class. Again, it is obvious that those who pay a large price for the privilege of exercising monopoly would recoup themselves with handsome interest for their outlay; they would do this by charging an additional price for all the articles sold. It thus appears that one of the results of carrying out such a policy of restriction would be to subject temperate people to great inconvenience. They might have to walk a considerable distance for every glass of beer they wished to purchase, and they would be obliged to pay an additional price for it. There certainly seems to be good reason for condemning government intervention when it subjects all who can exercise self-restraint to loss and inconvenience, in order that the force of temptation may be somewhat reduced to the self-indulgent.


—It will, perhaps, however, be urged that if these suggested legislative restrictions should cause annoyance to temperate people, they would be abundantly compensated both for their additional trouble and for the additional price they might have to pay for beer, by the stimulus which would be given to the prosperity of the country, and by the reduction which might be effected in its taxation if drunkenness were diminished. But before the individual liberty of a whole community is interfered with, because some abuse freedom of action, justice and policy alike demand that everything should be done to see whether such abuse could not be checked by punishing those who do not exercise self-restraint. Thus, before any legislation is sanctioned which would impose upon temperate people many vexatious restrictions, a far more decided effort should be made than has ever yet been attempted to punish intemperance, and make the drunkard more directly bear the consequence of his acts. At the present time an exactly opposite course is adopted. It seems to be a recognized principle of the law of England that crimes committed by persons while they are drunk should be treated with exceptional leniency. It is hardly possible to take up a paper without seeing cases in which magistrates either altogether excuse the perpetrator of some dastardly assault, or greatly mitigate the usual punishment, on the ground that the accused was drunk at the time the offense was committed.


—The subject of the liquor traffic has been alluded to here, chiefly for the purpose of showing that the problem of government interference involves so many complicated and difficult considerations that each demand for it should be separately investigated, in order that the special circumstances involved in each particular case should be carefully weighed. It would have been foreign to the immediate purpose of this article to attempt anything like a complete discussion of the questions involved in greatly restricting or prohibiting the sale of intoxicating liquors. If it had been my intention to enter upon such a discussion, it would have been necessary, among other things, to have referred to the experience which is afforded by America of the working of a prohibitory liquor law in that country. The evidence of those must have been examined who assert that the demoralization which ensues from the gross and systematic evasion of this law, far more than counterbalances any good which may result from the slight effect produced in somewhat diminishing intemperance.


—I have, however, already entered into what may probably appear to be a too detailed consideration of the general subject of state intervention. I have been chiefly induced to do so because one of the most characteristic features of modern socialism is the growing tendency which it displays to demand state assistance, especially in the form of grants of public money to carry out social and economic reforms. These general remarks on government intervention will moreover render a not unimportant assistance in discussing various social questions.


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