The myth of the minimal state

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By FRANCISCO TEIXEIRA*

The philosophy that liberalism defends the idea of ​​a minimal State finds no basis even in the world view of the founders of classical liberalism

François Quesnay and Adam Smith were, first and foremost, revolutionary thinkers. They were able to conceptually grasp the rationality of capitalist sociability in gestation, that is, not yet fully developed in its historical existence. They are children of an era marked by the clear presence of a feudal world, albeit in a marked process of disintegration. Therefore, they bet that the nascent society would come to fruition. A bet with results predicted to be certain, anticipated by a theory constructed to teach public affairs leaders how to successfully manage the emerging new order.

It was therefore up to statesmen to translate the laws that govern the new emerging order; and, thus, create the social and institutional conditions for the full development of the emerging society. Everything indicates that this was exactly what Quesnay thought, when he argued that, to ensure “the greatest possible prosperity of society, [it was] necessary […] for the sovereign authority, always enlightened by evidence, [to institute] the best laws and [ made] observe accurately”[I].

The laws that govern the new order would be natural laws; as true as the principle of gravitation. They cannot, therefore, be violated. It is up to the statesman to observe them accurately, translate them and assert his rationality. Therefore, warns Quesnay, these laws “can be violated only in a figurative sense, as in truth they are perpetual and unalterable (…). Men can ignore them, in the formulation of positive laws, with impunity: without observing them, society will never be able to achieve maximum well-being. Worse than that: by straying too far from the natural order, society will likely end up falling into decay and decomposition."[ii].

Hence, as Kuntz appropriately translates Quesnay's thought, he infers that “it is the economic order, well understood, that dictates the conditions in which the reason of State gains practical meaning. The logic of the statesman, to be effective, must be the logic of the economist.”[iii].

That's also how Adam Smith thought. For him, the economy is governed by a natural order, which cannot be ignored, under penalty of delaying the normal course of development, since each individual knows better than anyone else how to employ their capital. Free to make decisions for himself, “every individual,” says Smith, is capable of discovering “the most advantageous application of all the capital he possesses.” Although each person has only his own interest in mind, he is led “to prefer that application that brings the greatest advantages to society”[iv].

No one knows or even suspects this. He does not imagine that, by seeking to achieve his private interests, he ends up, unintentionally, promoting the general well-being of society. By aiming solely for profit, which he can obtain from the investment of his capital in a given activity, the individual “is led, as if by an invisible hand, to promote an objective that was not part of his intentions (…). In pursuing his own interests, the individual often promotes the interest of society much more effectively than when he actually intends to promote it. I have never heard that those who pretend to trade for the public good have accomplished great things for the country. In fact, it is a device that is not very common among traders, and it does not take many words to dissuade them from it.”[v].

Therefore, the best thing the State can do is not interfere in the economy. After all, for the author of The wealth of nations, “there is no commercial regulation that can increase the quantity of labor in any society beyond what capital is able to maintain. It may only divert part of that capital in a direction in which it would not otherwise have been channeled; Furthermore, there is by no means any certainty that this artificial direction could bring more advantages to society than it would if things proceeded spontaneously.”[vi].

Against the idea of ​​an intervening State, which participates in the production of wealth, Smith opposes the effectiveness of the market, as an instance capable of efficiently allocating society's resources. This is because, he says, “each individual, in the local situation in which he finds himself, is much better able than any statesman or legislator to judge for himself what type of national activity he can employ his capital in, and whose product has probability of reaching the maximum value. The statesman who attempted to direct private persons as to how they should employ their capital would not only burden himself with a highly unnecessary concern, but would also assume an authority which surely cannot be entrusted either to an individual person or even to some assembly or council, and which in nowhere would it be so dangerous as in the hands of a person with enough foolishness and presumption to imagine himself capable of exercising such authority.”[vii].

All this does not mean that the best the State can do is to do nothing. Quite the contrary, its intervention is fundamental to creating the social and institutional conditions for the development of free competition; to ensure, therefore, that the natural order can impose its laws to regulate the economy.

Among the most important functions of the State is that which guarantees the free negotiation of the purchase and sale of labor power.

In this regard, Smith leaves no doubt when he asks “What are the common or normal wages for work?”, to answer that “This depends on the contract normally made between the two parties, whose interests, in fact, are by no means the same. Workers want to earn as much as possible, employers want to pay as little as possible. The former try to associate with each other to raise labor wages, the bosses do the same to lower them”. In this dispute, adds Smith, “It is not difficult to predict which of the two parties normally has the advantage in the dispute and in the power to force the other to agree to their own clauses. Bosses, as they are fewer in number, can associate more easily; Furthermore, the law authorizes or at least does not prohibit them, whereas it prohibits them for workers. There are no laws of Parliament that prohibit employers from agreeing to reduce wages; However, there are many laws of Parliament that prohibit associations to increase wages.” Even if it is accepted that workers go on strike, they will always be at a disadvantage in negotiations with their employers. “In all these disputes,” says Smith, “the businessman has the capacity to hold out for much longer. A landowner, a farmer or a merchant, even without employing a single worker, would generally be able to live for a year or two with the wealth they have already accumulated. On the contrary, many workers would not be able to survive a week, few would be able to survive a month and hardly any would be able to survive a year without a job. In the long run, the worker may be as necessary to his boss as the latter is to the worker; However, this need is not so immediate.”[viii].

Anything that interferes with market laws is harmful to the economy. Why? Because, Smith responds, when the State grants a monopoly “to an individual or a trading company, it has the same effect as a commercial or industrial secret. Monopolists, by keeping the market always in short supply, by never fully supplying effective demand, sell their goods far above their natural price, earning profits — whether they consist of wages or profits — far above their natural rate.”[ix].

Smith goes further in his criticism against any type of artificial interference that interferes with the free play of market forces. It is radically against what he understands by “exclusive privileges held by corporations”. For him, “apprenticeship statutes and all laws that limit, in specific occupations, competition to a lower number than those who would otherwise compete, have the same tendency, although to a lesser extent. They constitute a kind of enlarged monopolies, being able often, during successive generations, and in entire categories of occupations, to maintain the market price of specific commodities above their natural price, and to maintain both the wages of labor and the profits of the capital employed in these commodities. Such increases in market prices may last as long as the regulations that gave rise to them last.”[X].

Ricardo doesn't think differently. His fight in defense of the determination of wages through the free play of market forces, made him an intransigent defender of the overthrow of the poor law, the so-called poor laws[xi]. For him, the trend of the poor laws is in total opposition to the objectives postulated by their defenders. It is not, he says, “as the legislators benevolently intended, to improve the lot of the poor, but to worsen the lot of both the poor and the rich. Instead of enriching the poor, they are designed to impoverish the rich; and as long as current laws remain in force, in the natural order of things, the poor maintenance fund will grow progressively, until it absorbs all of the country's net income, or, at least, everything that the State leaves us after satisfying its permanent demands for funds for public spending”[xii].

Supported by Malthus, Ricardo understands that “the pernicious tendency of these laws is no longer a mystery, and every friend of the poor should ardently desire their abolition”. For he had no doubt that “the comfort and well-being of the poor cannot be permanently secured without some interest on their part, or some effort on the part of the legislature, to regulate the increase of their number and to make it less frequent among them premature and improvident marriages. The existence of the poor law system has been directly contrary to this. These laws made all restraint superfluous and encouraged imprudence, offering part of the wages that should have gone to prudence and perseverance.”[xiii].

Therefore, Ricardo has no embarrassment in defending a realistic policy, according to which “no attempt to amend the poor laws deserves the slightest attention, if it does not have as its ultimate objective the abolition of these laws. He who shows how this objective can be achieved with greater security and with less violence will be the best friend of the poor and the cause of humanity. It is not by altering in one way or another the way in which the fund is obtained to support the poor, that evil can be mitigated. Not only would it not be an improvement, but it would constitute an aggravation of the evil that we wish to eliminate, if the amount of the fund were increased or were collected — as has been recently proposed — as a contribution from the entire country. The current method of collection and application has served to mitigate its harmful effects”[xiv].

As certain as the law of gravity, the action of the poor laws would tend to increasingly worsen the situation of the poor. “As true as the principle of gravitation,” says Ricardo, “is the tendency of such laws to transform wealth and power into misery and weakness, to divert the efforts of labor from any object other than providing mere subsistence, to blur any distinction as to intellectual faculties, to continually occupy the mind in meeting the needs of the body, until finally all classes are stricken with the plague of universal poverty. Fortunately, these laws have come into force during a period of increasing prosperity, during which funds to support work have increased regularly, naturally stimulating population growth. However, if our progress were to slow down, and if we reached a steady state, which I believe we are still a long way from, then the pernicious nature of these laws would become more evident and alarming. Then its revocation would be prevented by many additional difficulties[xv].

Using the analogy of the gravitational principle, Ricardo shows that the world of work would be much better if all the barriers imposed by the poor laws were torn down. Only in this way could the purchase and sale of labor power occur freely, that is, in accordance with the free play of market forces. All the State would have to do would just be to remove the stones from the path, that is, the poor laws, so that workers and capitalists could freely negotiate the value of wages. Without this providential intervention by the State, free competition would not take place. As presupposed by the principle of the invisible hand, which demands the end of any and all interference in the dynamics of the economy. This principle therefore imposes the need for free negotiation between workers and capitalists, freedom of international trade, an end to state regulations that interfere in the investment decision-making of economic agents, etc. The State must, therefore, remove all obstacles that disturb the normal course of laws, which regulate the performance of the economy. A State, therefore, is a State whose rationality is the translation of the natural legality that governs the creation of social wealth.

Without the diligent presence of the State, the principle of the invisible hand would be meaningless. In the absence of effective action by the State, to institute positive laws capable of faithfully translating the natural laws, by which the economy is governed, the principle of the invisible hand would lose its ordering force for the actions of individuals, who, together, when pursuing their interests individuals, end up unintentionally realizing the general interest of society.

But that still doesn't say everything. Without the strong arm of the State, permanently “raised to punish injustice”, that is, to punish those who lack the means to carry out their work, and who, therefore, invade other people’s property; Without the protection, therefore, of an all-powerful State, economic agents would not feel safe to invest their capital in those activities that they consider most advantageous. Even though men can live in society, without counting on the presence of the State, as Smith admits, he, however, confesses that this is nothing more than a chimera. For he is certain that the “avarice and ambition of the rich and, on the other hand, the aversion to work and the love of current tranquility and pleasure, on the part of the poor”, lead them to invade other people’s property, “acquired with the work of many years, perhaps of many generations.” Therefore, concludes the author of A Wealth of Nations, only “under the protection of the civil magistrate, the owner (…) can sleep safely at night”. After all, he adds, property owners are at all times surrounded “by unknown enemies, whom, although they have never [provoked], they can never appease, and from whose injustice only the strong arm of the civil magistrate can protect, an arm that is continually raised. to punish injustice. It is, therefore, the acquisition of valuable and extensive property that necessarily requires the establishment of a civil government.”[xvi].

Here, Smith follows the Lockean conception of the state literally. For the author of the Second Government Treaty, the main function of the State is to protect private property. To justify the state's defense of private property, Locke divides society into two classes: owners and non-owners. The latter he separates into two classes of servants: one made up of free men, who agree to live by selling their labor power in exchange for a salary; the other made up of slaves, whom he considers prisoners of war, and who, therefore, he says, “are subject, by right of nature, to the absolute domination and arbitrary power of their masters”. Having such men, he continues, “lost their life and with it their freedom, as well as their property, and not being capable of any possession in the state of slavery, they cannot consider themselves as forming part of civil society, whose main aim is the property preservation”[xvii].

 A more precise idea of ​​the power of the State, Locke presents it in the chapter in which he expounds what he calls “Of the Extension of the Legislative Power”, chapter XI. There he declares, loudly and clearly, that the Legislative power “is the supreme power of the community”, because it depends on it to institute positive laws, translated in accordance with natural laws. Among them, the main law of nature is the one that dictates that property is a natural right, therefore sacred, since property is the result of personal work. This right cannot be violated; on the contrary, it must be the landmark from which Locke draws the limits of how far the legislation of society's greatest power can go.

Firstly, the Legislature cannot be “exercised in an absolutely arbitrary manner over the lives and fortunes of people”. Even because, says Locke, “no one can transfer to another person more power than he himself possesses; and no one has an absolute arbitrary power over himself or any other to destroy his own life or deprive a third party of his life or property.” Therefore, the supreme power of society is “a power that has no other purpose than the preservation [of property], and therefore never has the right to destroy, enslave or, intentionally, impoverish its subjects”. After all, he concludes, “the obligations of the law of nature are not extinguished in society”, they “impose themselves as an eternal law on all men, on legislators as on everyone else. The rules to which they subject the actions of other men must, as well as their own actions and the actions of other men, be in accordance with the law of nature, that is, with the will of God, of which it is a declaration; as the fundamental law of nature is the preservation of men, there is no human sanction that proves valid or acceptable against it”[xviii].

Secondly, the legislative power or the supreme power “cannot arrogate to itself the power to govern by improvised arbitrary decrees, but is obliged to dispense justice and decide the rights of the subject through permanent laws already promulgated”. Here, Locke calls Hooker[xx], to clarify, in a footnote, number 19, that “human laws are measured in relation to the men whose actions they must direct”, since, continues his quote from Hooker, positive laws must be measured by “the law of God and the law of nature; so that they must make human laws in accordance with the general laws of nature and without contradiction to any positive law of Scripture; otherwise they would be poorly done.”[xx].

Thirdly, “the supreme power cannot take from any man any part of his property without his own consent. As the preservation of property is the aim of government, and the reason why man entered society, it necessarily supposes and requires that people must have property, otherwise it would be assumed that they lost it upon entering society, that which was theirs. objective that made them unite in society, that is, an absurdity too gross that no one would dare support.”[xxx].

These are the limits of society's supreme power, its obligations and responsibilities that were conferred on it “by society and by the law of God and nature”. Such limits show that sovereign power, that is, political power, as Norberto Bobbio rightly understands, must be at the service of economic power. After all, the State exists to protect the rights of property owners. Therefore, says Bobbio, “the supreme power can do nothing to deprive a citizen of his property. It can be said that, for Locke, property is sacred and inviolable, as stated in Article 17 of the Declaration of 1789 (…). To give irrefutable proof of this absolute limit of civil power vis-à-vis that of the owner, Locke goes so far as to say that even in the army, where discipline is more severe, the commander must impose on his soldiers the sacrifice of their own lives, but cannot take away give them a single penny out of their pocket without committing an abuse of power.”[xxiii].

Smith would not disagree at all with the idea that the State must be at the service of the economy, whose legality of its laws is the legality of the rationality of capital. In fact, as seen before, for the author of The wealth of nations, laws of parliament are created to protect owners against the power of workers' association. Created, therefore, to protect the owners of properties - acquired with the sweat of their own brow, over successive generations -, without which the auspicious providence of the invisible hand will not be able to harmonize private interests, with the achievement of general well-being. of society.

The State must therefore remove all obstacles that stand in the way of the invisible hand of the market.

The strong arm of the State extends to commercial relations between the metropolis and colonies. After all, for Smith, the colonial market was as advantageous for England as it was for its colonies. For the latter because, he says, in them “there is little labor for necessary manufactures and none for superfluous manufactures. As for most manufactured goods, both necessary and more luxurious, the colonies find it cheaper to buy them from other countries than to manufacture them themselves. It is above all by stimulating European manufactures that colonial trade indirectly encourages agriculture"[xxiii].

In addition to the economic advantages obtained by the colonies, they would also benefit from the administration promoted by the metropolis. Smith assumed that the colonies would not one day be capable of being “so administered as to collect from their constituents a public revenue sufficient, not only to maintain at any period their own civil and military government, but also to pay their adequate share of the expenditures of the general government of the British Empire”[xxv].

Furthermore, says Smith, “it cannot be assumed that the Assemblies of the colonies were capable of judging what is necessary for the defense and support of the Empire in its entirety, it is not their responsibility to take care of this defense and support (…). Only the Assembly which inspects and superintends the affairs of the entire Empire can judge what is necessary for the defense and support of the entire Empire and in what proportion each party should contribute towards it.”[xxiv].

Smith leaves no doubt: his liberal doctrine does not exclude a colonialist policy. In effect, his theory of “comparative advantages” recognizes an international division of labor, which condemns peripheral colonial countries to the subordinate condition of eternal sellers of raw materials and other primary products to European countries, in exchange for manufactured goods. It is an international trade proposal that is extremely harmful to regions on the capitalist periphery, as it leaves them with a condition of dependence in relation to central countries, in particular England, which, at the time, enjoyed the position of world power.

Ricardo is not far from what Smith thinks. For him, international trade was extremely important to provide progress and development for trading partners. On condition that the law of comparative advantages was observed, which dictates that each country must specialize in the production of those goods in which they are most competitive. In this direction, he demonstrated that it would be more advantageous for Portugal to produce wine and import fabrics from England. Both would win, because if Portugal decided to produce its fabrics, for example, it would have to give up part of its wine production, and thus pay a high cost to be able to produce fabrics. It would be much better, therefore, says Ricardo, if Portugal and England could enjoy the freedom to dedicate themselves to the production of those goods that would bring them greater competitive advantages.

It would be naive to imagine that peripheral economies would spontaneously decide to occupy a subordinate position in international trade. Ricardo had to face proof of this when he was forced to enter the debate to overthrow the Corn Laws, cereal laws. Against these laws, which prohibited the import of agricultural products, Ricardo defended the import of cereals, to regulate and lower domestic food prices and, thus, alleviate the pressure on the economy's falling profit rate.

A summary of the entire exposition of the theory of Classical Political Economy, developed so far, allows us to reach the following conclusion: the philosophy that liberalism defends the idea of ​​a minimum State, that is, the idea that the best thing that what the State must do is to do nothing finds no basis even in the world conception of the founders of classical liberalism.

*Francisco Teixeira He is a professor at the Regional University of Cariri (URCA) and a retired professor at the State University of Ceará (UECE). Author, among other books, of Thinking with Marx: a critical-commented reading of Capital (Rehearsal). [https://amzn.to/4cGbd26]

Notes


[I] Quesnay, François, apud Kuntz, Rolf N. Capitalism and nature: essay on the foundations of political economy. São Paulo: Brasiliense, 1982; p.13.

[ii] Idem.Ibidem.p.20

[iii] Kuntz. op.cit.p.124.

[iv] Smith, Adam. The Wealth of Nations: investigation into its nature and causes. – São Paulo: Nova Cultural, 1985.Vol.I, p.378.

[v] Idem.Ibidem.p.379/80.

[vi] Idem. Ibid. p.378.

[vii] Idem.Ibidem.p.380.

[viii] Idem. Ibidem.p.92/93.

[ix] Idem.Ibidem.p.88.

[X] Idem.ibidem.p.88. Polanyi, in his beautiful book, The great transformationp.109, clarifies that, “under the mercantile system, the organization of work in England was based on Poor Law and Statute of Artificers. The Poor Law, as applied to laws from 1536 to 1601, may be considered a true mistake, but it was it and subsequent amendments that constituted the goal of England's labor code. The other half consisted of Statute of Artificers of 1563. This concerned those who were employed, while the Poor Law applied to those who we can call unemployed and incapable of employment (in addition to the elderly and children). Later, as we have already seen, the Act of Settlement of 1662, relating to people’s legal domicile, which restricted their mobility as much as possible”. With the institution of Poor Law reform In 1834, the struggle of big capital to establish a labor market free from the constraints of the poor laws became reality. “If Speenharnland,” comments Pòlanyi, “had prevented the emergence of a working class, now poor workers were being formed into that class by the pressure of an insensitive mechanism. If during the period of Speenharnland the people were looked after as if they were not very precious animals, now they were expected to look after themselves, with all the odds against them. If Speenhamland meant the misery of sheltered degradation, now the worker was a man without a home in society. If Speenhamland had burdened the values ​​of community, family and rural environment, now man was cut off from home and family, torn from his roots and every environment of meaning to him. In short, if Speenhamland meant the decomposition of immobility, now the danger was death from exposure” [Polanyi, Karl. The great transformation: at the origins of our time. Rio de Janeiro: Campus, 2000.p.105/106].

 

[xii] Ricardo, David. Principles of political economy and taxation. – São Paulo: Nova Cultural, 1985.p.87.

[xiii] Ibidem.Ibidem.p.88.

[xiv] Idem.Ibidem. P. 88.

[xv] Idem.Ibidem.p. 89/89.

[xvi] Idem. Ibid. Vol.II.p.164.

[xvii] Locke, John. Second Treatise about Government. – São Paulo: Abril Cultural, 1978.p.66.

[xviii] Idem. Ibid. P. 86/87 [slightly altered translation].

[xx] There Locke refers to Richard Hooker, a 16th century English theologian, considered one of the founders of Anglican theological thought.

[xx] Idem. Ibid. P. 87.

[xxx] Idem. Ibid. P.88/89.

[xxiii] Bobbio, Norberto. Locke and natural law. – Brasília: Editora da Universidade de Brasília, 1977.p. 225.

[xxiii] Smith, Adam. op. cit. Vol.II.p.89.

[xxv] Idem. Ibid. P.95.

[xxiv] Idem. Ibid. P.96.

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