By Anthony de Jasay
Though this book leans on political philosophy, economics, and history, it leans on each lightly enough to remain accessible to the educated general reader, for whom it is mainly intended. Its central theme—how state and society interact to disappoint and render each other miserable—may concern a rather wide public among both governors and governed. Most of the arguments are straightforward enough not to require for their exposition the rigour and the technical apparatus that only academic audiences can be expected to endure, let alone to enjoy…. [From the Preface]
First Pub. Date
Indianapolis, IN: Liberty Fund, Inc.
The text of this edition is under copyright. Picture courtesy of the author.
- Authors Note
- 1.1 Violence, Obedience, Preference
- 1.2 Title and Contract
- 1.3 The Contours of the Minimal State
- 1.4 If States Did Not Exist, Should They Be Invented
- 1.5 Inventing the State: The Social Contract
- 1.6 Inventing the State: The Instrument of Class Rule
- 1.7 Closing the Loop by False Consciousness
- 2.1 Repression, Legitimacy and Consent
- 2.2 Taking Sides
- 2.3 Tinker's Licence
- 2.4 The Revealed Preference of Governments
- 2.5 Interpersonal Justice
- 2.6 Unintended Effects of Producing Interpersonal Utility and Justice
- 3.1 Liberalism and Democracy
- 3.2 Through Equality to Utility
- 3.3 How Justice Overrides Contracts
- 3.4 Egalitarianism as Prudence
- 3.5 Love of Symmetry
- 3.6 Envy
- 4.1 Fixed Constitutions
- 4.2 Buying Consent
- 4.3 Addictive Redistribution
- 4.4 Rising Prices
- 4.5 Churning
- 4.5 Towards a Theory of the State
- 5.1 What Is to Be Done
- 5.2 The State as Class
- 5.3 On the Plantation
The State as Class
5. State Capitalism
The right bureaucracy may help make capitalism “responsible” and lend socialism “a human face.” Its control, however, is too precarious to shift the constants of either system.
If there must be class conflict in a world of scarcity, who but the universal capitalist can act out the role of dominant class?
It is hardly extravagant to claim that a pattern of ownership is well enough described by simply answering the question, “who owns what?” It is by a plain answer to this plain question that we can make the doctrinally least pretentious distinction between
state capitalism, and most easily understand alternative configurations of power in society.
*59 The hopeful assurance that when it is nationalized, capital is “socially owned,” for all that it is meaningless, can be a useful euphemism for policy purposes. The more ambitious claim, that there is some ascertainable difference between “state” and “social” or “socialist” ownership, so that the suspected despotic potential of
state ownership is not present in
social ownership, need not be taken seriously until it is shown how the operation of “society” exercising its property rights, differs from that of the state exercising them.
Anti-Duehring, Engels protests that mere state ownership is spurious socialism unless the means of production have “actually outgrown management by joint-stock companies,” for otherwise even state-owned brothels could be regarded as “socialistic institutions.”
*60 Just how large would brothels have to grow, then, to qualify as
socialist instead of merely
state-owned establishments? Seeking in size the magic quality which transforms state property into socialist property clearly will not do. The scientific socialist notion of the means of production “outgrowing” joint-stock company management has long since succumbed to the test of a century of industrial growth.
In fairness to Engels, it is his
Anti-Duehring again which provides the plainest formulation of a more durable Marxist alternative for identifying kinds of property and social systems. He explains that in a world of scarcity (
alias “in the realm of necessity”), the division of society into antagonistic classes must continue. Class conflict, of course, entails the existence of a state to ensure the dominance of one class. Thus the “socialist state” is not a contradiction in terms. The state which owns all the means of production is a repressive socialist state. As there are still classes, it could not yet have withered away, it must continue to repress the exploited on behalf of the exploiter. It can only wither away once abundance has replaced scarcity, i.e. when class conflict has ceased. (If socialism
never overcomes scarcity, a contingency Engels does not explicitly treat, the state will never wither away and it will, in perpetuity, own the means of production. As long, therefore, as the state does not succeed
too well in “setting free the forces of production” and hence does not
inadvertently bring on a world of abundance, it is safe.)
Pending abundance and the withering away of the state, “socialism in a world of scarcity” and “state capitalism” are, for practical purposes, synonymous. The division of labour is still a necessity; production is for exchange rather than for need; there are two functionally distinct classes, with the oppressor class appropriating the surplus value produced by the oppressed class. Unlike in private capitalism, the surplus is appropriated, albeit in spite of the oppressed class but in its long-term interest (or in that of the whole society). Who, however,
is the oppressor class?
Putting it in less moth-eaten language, the drama is ready to be played but an actor and a role do not match. The state owns, the oppressed do not, but nor do the presumable oppressors. There is no ruling class with a power base cemented in ownership. In its place, usurping its prerogatives, is supposed to stand a peculiar social category, a hermaphrodite body which has a class interest without being a class, which dominates without owning: the bureaucracy.
Before the bureaucracy can
rule, ownership must lose its significance. Hence schemes of social explanation built on the threesome of citizenry, bureaucracy and state always contain some variant of the familiar case about the “growing separation of ownership and control.” For this thesis, ownership has come to be reduced to a right to any (private or social) dividends the managing bureaucracy chooses to distribute. Control is, among other things, the
discretion to allocate people to capital and
vice versa in decisions to invest, hire and fire, and to judge the deserts of those concerned when allocating and distributing.
Each society will have bred its distinctive bureaucracy. England is credited with having an Establishment, France indisputably has her
grands corps (just as, the other way round, the
grands corps possess their France), Russia used to have the higher grades of the
tchin and now it has the
nomenklatura, remotely echoed in the USA by the top half-million lawyers and corporate officers. Without any risk of contradiction, all societies can be said to be governed by their “power elites”; much of modern industry is undoubtedly run by professional managers; while the intellectual demi-monde keeps unveiling such ruling entities as “the media,” “the bearers of authority” or the “technostructure.”
Granted the tacit assumption that
separation of ownership and control entails
loss of control by the owner, rather than the much less drastic
delegation of control with possibility of recall (an assumption I shall look at presently), rule by the bureaucracy can be deduced from a stripped-down version of Michels’s “iron law.” Every organization needs but a few organizers for many organized. It is the former who man the bureau. Once they are in, the bureaucrats rule because those outside are ill placed and insufficiently motivated to dislodge them.
In a very uncharacteristic utopian mood, Lenin assured us that one day administration will be so simple as to be “within everybody’s scope,” “easily performed by every literate person,”
*63 allowing “the complete abolition of bureaucracy,”
*64 where ” all will govern in turn.”
*65 (His practice, of course, was to discourage with the utmost firmness any attempt at “governing in turn.”) For the time being, however, administration is said to be getting, if anything, more complex. Though many of us are already bureaucrats, the prospect of the rest of us taking
turns at it is both impractical and unattractive. This supports the notion that the bureaucracy is a category apart.
The more literally one takes the assumption that ownership does not entail control over property, the larger loom the implications. Ownership of capital becomes irrelevant to power, both in the usual sense of power to make people do things and in the sense of power over the “appropriation of surplus value,” including the capitalist’s dividend. There is only a
grace-and-favour dividend to the putative owners, to “the people” in socialism, to “shareholders” in private capitalism. Why fight about property, then? Nationalization, the wrecking of the “private fortresses of bourgeois business” becomes a pointless and misguided endeavour. A bureaucracy controlling the instrument of the state and safely usurping some of the most important prerogatives of ownership, could with impunity steer society one way or another, enthrone private property or abolish it, or split the social system down the middle, without its interests being visibly better served by one course than by the other. Whether it took the “capitalist road” or the “socialist” one, or just chased its own tail, would be a toss-up.
In reality, however, bureaucracies usually have manifest reasons for coming down on the side of the status quo. They do not normally seek to change it. Indeed, Trotsky’s suspicion of Stalin preparing a new Thermidor “to restore capitalism,” would look less grotesque if he had found reasonable grounds for supposing that Stalin and the “bureaucracy” he directed would at least not lose the power, control or whatever they possessed and prized, if “capitalism were restored.” Yet almost in the same breath in which he uttered his bizarre accusation, Trotsky removed its possible ground by pointing out that the Soviet bureaucracy is “compelled” willy-nilly to protect the system of state ownership as the source of its power, implying logically that a system of private ownership would not have yielded as much power to it
even if the new private owners were to have come from its own ranks, with each deserving apparatchik becoming a top-hatted cigar-smoking capitalist.
The most interesting implication of the “ownership is not control” thesis, however, is the support it gives to the belief in our fate being largely a matter of the
mores and moods of the office-holders above us. Whether a social system is acceptable or awful, whether people are on the whole contented or miserable under it, depends very much on the variable personal traits of members of the bureaucracy. When the civil service is arrogant or corrupt or both, the managerial elite stony-hearted, the media mercenary and the “technostructure” soullessly specialist, we have the “unacceptable face of capitalism.” When those in charge genuinely want to serve the people and respect its “legitimate aspirations,” we get the Prague Spring and “socialism with a human face.” It is not so much systems of rule, configurations of power which are conducive to a good or bad life, but rather the sort of people administering them. If the bureaucracy is not “bureaucratic,” the corporate executive is “socially minded” and “community-conscious” and the party apparatchik “has not lost contact with the masses,” private or state capitalism can be equally tolerable.
This is a tempting belief and easy to adopt. In turn, it gives rise to a live concern with how to make sure, or at least how to shorten the odds, that the
right sort of people get to play the controlling, administering and managing roles. Each culture has its recipe for recruiting a good bureaucracy. Some place their faith in breeding and a stake in the land (England before the Second World War, as well as Prussia, spring to mind), others in the passing of examinations (France, Imperial China and lately perhaps the USA, are cases in point), while the socialist prescription recommends calloused hands or at least a credible claim to “working-class origins.” (Mixed and contradictory criteria should not surprise us. An aristocrat with the common touch, a welder who went on to get an MBA or conversely the graduate who learnt all about life by doing a stint at manual labour, are particularly acceptable recruits into the “power elite.” Among contradictory and mixed criteria, minor ones can in time become major. It is said that a contributory cause of Khrushchev’s downfall was the embarrassment felt by the Soviet public, especially
vis-à-vis the outside world, at his bumptiousness, clowning and lower-class Ukrainian accent.)
Hopeful ideas about the right way of recruiting the “power elite” and the difference its personnel makes between “savage” and “responsible” capitalism, “despotic” and “democratic” socialism, condition civil society’s approval of the composition of the bureaucracy. They also help explain the passionate interest of modern sociology in the statistical parameters of particular hierarchies, for if the behaviour of “power elites” depends critically on where their members come from, it must matter a great deal whose father did what and went to which school. This preoccupation with “socio-economic origins” is really the complete negation of the belief that existence determines consciousness and hence the bureau determines that of the bureaucrat.
*66 On the latter view, whether it is principally made up of the sons of toilers, schoolteachers or of other bureaucrats, the institutional
interest and hence the
conduct of a bureaucracy will be essentially the same, give and take minor cultural variations of style between the moderately nice and the rather nasty. For the former view to hold, the bureaucracy must be completely autonomous and obey no master, in order to be able to follow its own personal tastes and dispositions. For the latter, its master is its own existential, institutional interest, which may or may not happen to coincide with the “maximand” of the ultimate beneficiary the bureaucratic institution is supposed to serve—the state in state capitalism, shareholders in private capitalism. On either view, the bureaucracy calls the tune, though which tune it calls depends on the further particulars. Either view is contingent on the thesis that the owner does not control, the bureaucrat does. How good is this thesis?
In order for the separation of ownership and control to mean what its disparate proponents, from Berle and Means through Trotsky,
*67 Burnham and C. W. Mills to Marris and Penrose intend it to mean, it is trivial merely to show that the bureaucracy administers and the managers manage with little apparent reference to their ostensible masters. A more telling argument would be to establish that they have non-trivial discretionary power. Evidence for such discretion would be some measure (if a convenient one could be found) of a divergence between the owner’s presumable maximand and the maximand the managers seem in fact to be pursuing.
This is not really feasible if the future consequences of the manager’s present actions are uncertain, hence he can always be supposed to have aimed at consequence
A (best for his employer) rather than
B (best for him, less good for his employer), regardless of whether the actual result of his action turned out to be
B. For instance, Montgomery’s generalship in North Africa can be seen as self-serving, in that he would only really engage Rommel once his “bureaucratic” insistence on a large sufficiency of resources gave him odds-on chances of spectacular victories. Yet it can always be argued (and it is hard “objectively” to disprove) that though he earned fame at no risk by brazenly “hogging” resources for the Eighth Army, he was in effect serving Britain’s best long-term interest (e.g. because the resources he “hogged” would not have done any greater good to the war effort in any other theatre). Likewise, the corporate manager who, in apparent pursuit of self-aggrandizement, goes for market share at the expense of current profit, can always pretend to be making future profit larger than it would otherwise have been—the sort of business school or management consultancy waffle one can dismiss with a shrug but not refute with science.
Nevertheless, it is at least possible deductively to assert that only security of tenure provides the
sufficient condition for the state bureaucrat, the corporate manager or other hired power-elitist to exercise discretionary power regularly and in significant conflict with the owner’s interest. The corollary of secure tenure is that in
delegating control, the owner has somehow awarded it for keeps and has lost the faculty of recall, i.e. he has
lost control. The standard argument to this effect is that once ownership has become fragmented and many owners have delegated managerial power to a single tenant (a bureaucracy, a management), each owner has only an infinitesimal influence on the tenant’s tenure, and insufficient motivation to shoulder the cost of mobilizing fellow owners for joint action. In technical language, the bureaucratic tenant is protected by an “externality.”
Precisely such an externality may protect a state from its unorganized subjects. The sheer money value of liberty to the subjects of a despotic state may be much larger than the money cost of suborning the praetorian guard, buying arms, copying machines or whatever it may take to topple such a regime. Yet no political entrepreneur would come forth and shoulder the cost if he considered it impracticable to recover it from the liberated subjects. He would lose his outlay if their liberty were an externality for which they could not be made to pay (except by enslaving them again).
The most casual reader of the financial pages of newspapers knows, however, that there is no such obstacle to organizing revolt against self-serving or just plain unsuccessful corporate managements. The take-over bidder, conglomerator, “raider,” “asset stripper,” proxy solicitor have (despite the regulatory hurdles well-meaning authorities put in their way) several ways of “internalizing” some of the potential benefit accruing to the owners from the recall of the sitting management. These ways can be devious and unscrupulous, in keeping with the unscrupulous defences (such as “scorched earth,” self-denunciation on anti-trust grounds and “saturation bombing” with frivolous lawsuits) put up by sitting managements to “protect corporate property” from shareholders at the latter’s expense. All in all, “unfriendly” takeovers even in the face of desperate defences are often successful enough to shake the average hired management’s confidence in its security of tenure.
If the hold of the bureaucracy is precarious in the face of an unorganized multitude of dispersed owners, it is
a fortiori precarious in the face of a single, concentrated owner. No externality protects the bureaucracy
from the state it is supposed to serve. The discretionary power of a bureaucrat or a bureaucratic institution, no matter how important in the whole apparatus of the state, must not be confused with that of the state proper from which it is derived.
Nor is there much excuse for falling into traps of the “good king, bad councillors” or conversely the “wicked lord, kind-hearted bailiff” type. The bailiff may be kind-hearted, close to the villeins and especially to any relatives he may have among them, but his personal interest is seldom so far divorced from that of the lord as to make him let off the serfs all that lightly. He, too, wants the manor to function properly as a going concern. The reason the bureaucracy on the whole does serve the state’s ends is not only that it has to, on pain of losing its precarious place, but also that, except in rare and easily identified historical situations where state power has just passed to an invader, a usurper or at least a culturally alien contender, there is a large and genuine harmony between their respective maximands. The greater the discretionary power of the state, the more scope the bureaucrat is likely to have for the fulfilment of
his ends. He need not have the
same ends the state is striving to realize. It is sufficient that his ends should be non-competing or subordinated. A loyal bureaucracy will find much of its happiness in a strong state. It would take disloyalty, safety from being found out, or perhaps a credible excuse in terms of the “real,” “long-term” interest of the state, for it to side with civil society against its master. The chance of imposing its own will on
and civil society by acting the role of ruling class looks, for all these reasons, doubly remote.
The true place and role of the bureaucracy in relation to the state were suggestively summed up by the historian Norbert Elias in what he called the Monopoly Mechanism. The state is the monopolist of “the army, land and money” while the bureaucracy is the body of “dependents upon whom the monopolist depends.” Of course the dependents are important, of course their qualities, their human types are interrelated with the type of state which depends on them; in Elias’s example, while the free feudal nobility went with an earlier type, a later one produced the courtly nobility.
*70 In a less neat sequence, we might add the clerics, the lay legists and commoner court servants, the landless administrative nobility, Chinese mandarins, Prussian Junkers, French “enarques,” American congressional staffers, dollar-a-year men and socialist party apparatchiks. Within each type, there is no doubt room for human variations leaving their stamp on the life of the society they help administer. Undeniably, they can lend socialism a human face, or an inhuman one. It is very much a matter of each subject’s personal destiny what proves to be of greater import to him, the system or its face.
For any schema of social explanation which runs in terms of classes, however, putting the bureaucracy or some rough equivalent administrative, managerial, insider, expert and authority-carrying category in the place of the
ruling class is liable to prove confusing. Doing so is to attribute to such a category a durable and well-defined identity (“the New Class”?), a degree of discretionary power and a liberty of action which it can in general hardly possess. It is to lose sight of the political significance of the pattern of capital ownership, reducing it to irrelevance in terms of power over others. Finally, it is by implication to allot to the human qualities of this category an overriding influence on the quality of social life, as if the
variable disposition and character of office-holders could altogether swamp the systemic
constants which are the source of the power delegated to such offices. Confusion of this sort yields such gems of incomprehension as that a certain despotism was, or has resulted from, “bureaucratic distortion” or the “personality cult.” If the system of state capitalism is to be thought of in traditional class terms, the role of the ruling class can only be ascribed to the state itself. This imposes no anthropomorphism and does not require the state to be personified by a monarch, a dictator or the party elders. Nor need it be identified with a specific institution, assembly, central committee or cabinet. More non-committally and generally, it is sufficient for the state (to adapt a famous phrase of Marx) to be
armed force and capital endowed with consciousness and a will.*71
Economic Institutions Compared, 1979, p. 51). What, then, is
private capitalism, and how do we tell it apart from state capitalism? Wiles considers that the latter term is “abusively applied” to the Soviet Union because it “certainly has an ideology which sets it quite apart from real state capitalism.”
Real state capitalism,
being “more or less indifferent about property” is devoid of a proper ideology.
This is true only in terms of a convention to define real state capitalism as one which is indifferent about property. Which actually existing systems, which countries would such a definition cover? Take the testimony of a prominent state capitalist, a member of one of the Grands Corps at the summit of the French civil service, later to become Minister of Industry: “no amount of
dirigisme is worth a powerful public sector.” (J-P. Chevènement,
Le vieux, la crise, le neuf, 1977, p. 180, my translation.)
His state capitalism is certainly not indifferent about property. If there are
state capitalisms that
are, they are not conspicuous. Are they, perhaps, too easy to mistake for
Selected Works in One Volume, 1968, pp. 421-2, note.
Almost Everyone’s Guide to Economics, 1979, pp. 58-60.
Man and Society, 1963, vol. II, p. 370).
The Revolution Betrayed, p. 112).
That abundance is not the
consequence but the enabling
cause of socialism has always troubled socialist thought. It has led to much uneasy theorizing about the “transition period,” classes in a classless state, the state withering away by getting stronger, etc.
Readers are no doubt aware that making explicit a doctrinal inconsistency or awkwardness, as I have occasionally been moved to do, is severely condemned by Marxists as “reductionism.”
et al. [eds],
Roads to Freedom, Essays in Honour of F. A. von Hayek, 1969), cites findings to the effect that apparent managerial deviation from profit-maximizing behaviour is greatest in regulated utilities and mutual savings-and-loan associations which have, so to speak, no owners or where regulatory barricades shield the sitting management from the owners.
The Wall Street Journal, 5 January, 1983. There is ample evidence of the tendency, noted with some alarm by Professor Drucker, that American corporate management is increasingly motivated by fear of the bidder. It is thus driven to instant profit maximizing behaviour, living from one quarterly earnings report to the next and having no time for the long view.
This is a far cry from the contention that “owners want profit, managers growth,” or “peer approval,” or some other, discretionally chosen “managerial” maximand. In fact, the contrary contention is, if anything, closer the mark. Only owner-managers can afford to choose idiosyncratic ends. No
hired chief executive could have ruled, as Henry Ford is supposed to have done, that “customers can have any colour car as long as it is black.”
The Civilizing Process, vol. II,
State Formation and Civilization, 1982, pp. 104-16.
Capital, 1959, vol. 1, p. 152.