The Great Society: A Libertarian Critique

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Great Society Reader: The Failure of American Liberalism

The Great Society
is the lineal descendant and the intensification of those other
pretentiously named policies of 20th-century America: the Square
Deal, the New Freedom, the New Era, the New Deal, the Fair Deal,
and the New Frontier. All of these assorted Deals constituted a
basic and fundamental shift in American life – a shift from
a relatively laissez-faire economy and minimal state to a society
in which the state is unquestionably king.[1]

In the previous
century, the government could safely have been ignored by almost
everyone; now we have become a country in which the government is
the great and unending source of power and privilege. Once a country
in which each man could by and large make the decisions for his
own life, we have become a land where the state holds and exercises
life-and-death power over every person, group, and institution.
The great Moloch government, once confined and cabined, has burst
its feeble bonds to dominate us all.

The basic reason
for this development is not difficult to fathom. It was best summed
up by the great German sociologist Franz
; Oppenheimer wrote that there were fundamentally
two, and only two, paths to the acquisition of wealth. One route
is the production of a good or service and its voluntary exchange
for the goods or services produced by others. This method –
the method of the free market – Oppenheimer termed “the economic
means” to wealth. The other path, which avoids the necessity for
production and exchange, is for one or more persons to seize other
people’s products by the use of physical force. This method of robbing
the fruits of another man’s production was shrewdly named by Oppenheimer
the “political means.” Throughout history, men have been tempted
to employ the “political means” of seizing wealth rather than expend
effort in production and exchange. It should be clear that while
the market process multiplies production, the political, exploitative
means is parasitic and, as with all parasitic action, discourages
and drains off production and output in society. To regularize and
order a permanent system of predatory exploitation, men have created
the state, which Oppenheimer brilliantly defined as “the organization
of the political means.”[2]

Every act of
the state is necessarily an occasion for inflicting burdens and
assigning subsidies and privileges. By seizing revenue by means
of coercion and assigning rewards as it disburses the funds, the
state creates ruling and ruled “classes” or “castes”; for
one example, classes of what Calhoun discerned as net “taxpayers”
and “tax-consumers,” those who live off taxation.[3]
And since, by its nature, predation can only be supported out of
the surplus of production above subsistence, the ruling class must
constitute a minority of the citizenry.

Since the state,
nakedly observed, is a mighty engine of organized predation, state
rule, throughout its many millennia of recorded history, could be
preserved only by persuading the bulk of the public that its rule
has not really been exploitative – that, on the contrary, it
has been necessary, beneficent, even, as in the Oriental despotisms,
divine. Promoting this ideology among the masses has ever been a
prime function of intellectuals, a function that has created the
basis for co-opting a corps of intellectuals into a secure and permanent
berth in the state apparatus. In former centuries, these intellectuals
formed a priestly caste that was able to wrap a cloak of mystery
and quasi divinity about the actions of the state for a credulous
public. Nowadays, the apologia for the state takes on more subtle
and seemingly scientific forms. The process remains essentially
the same.[4]

In the United
States, a strong libertarian and antistatist tradition prevented
the process of statization from taking hold at a very rapid pace.
The major force in its propulsion has been that favorite theater
of state expansionism, brilliantly identified by Randolph Bourne
as “the health of the state,” namely, war. For although in wartime
various states find themselves in danger from one another, every
state has found war a fertile field for spreading the myth among
its subjects that they are the ones in deadly danger, from
which their state is protecting them. In this way states have been
able to dragoon their subjects into fighting and dying to save them
under the pretext that the subjects were being saved from
the dread foreign enemy. In the United States, the process of statization
began in earnest under cover of the Civil War (conscription, military
rule, income tax, excise taxes, high tariffs, national banking and
credit expansion for favored businesses, paper money, land grants
to railroads), and reached full flower as a result of World Wars
I and II, to finally culminate in the Great Society.

The recently
emerging group of “libertarian conservatives” in the United States
have grasped a part of the recent picture of accelerated statism,
but their analysis suffers from several fatal blind spots. One is
their complete failure to realize that war, culminating in the present
garrison state and military-industrial economy, has been the royal
road to aggravated statism in America. On the contrary, the surge
of reverent patriotism that war always brings to conservative hearts,
coupled with their eagerness to don buckler and armor against the
“international Communist conspiracy,” has made the conservatives
the most eager and enthusiastic partisans of the Cold War. Hence
their inability to see the enormous distortions and interventions
imposed upon the economy by the enormous system of war contracts.[5]

Another conservative
blind spot is their failure to identify which groups have
been responsible for the burgeoning of statism in the United States.
In the conservative demonology, the responsibility belongs only
to liberal intellectuals, aided and abetted by trade unions and
farmers. Big businessmen, on the other hand, are curiously exempt
from blame (farmers are small enough businessmen, apparently, to
be fair game for censure.) How, then, do conservatives deal with
the glaringly evident onrush of big businessmen to embrace Lyndon
Johnson and the Great Society? Either by mass stupidity (failure
to read the works of free-market economists), subversion by liberal
intellectuals (e.g., the education of the Rockefeller brothers at
Lincoln School), or craven cowardice (the failure to stand foursquare
for free-market principles in the face of governmental power).[6]
Almost never is interest pinpointed as an overriding reason
for statism among businessmen. This failure is all the more curious
in the light of the fact that the laissez-faire liberals of the
18th and 19th centuries (e.g., the Philosophical Radicals in England,
the Jacksonians in the United States) were never bashful about identifying
and attacking the web of special privileges granted to businessmen
in the mercantilism of their day.

In fact, one
of the main driving forces of the statist dynamic of 20th-century
America has been big businessmen, and this long before the Great
Society. Gabriel Kolko, in his path-breaking Triumph
of Conservatism
,[7] has
shown that the shift toward statism in the Progressive period was
impelled by the very big-business groups who were supposed, in the
liberal mythology, to be defeated and regulated by the Progressive
and New Freedom measures. Rather than a “people’s movement” to check
big business; the drive for regulatory measures, Kolko shows, stemmed
from big businessmen whose attempts at monopoly had been defeated
by the competitive market, and who then turned to the federal government
as a device for compulsory cartellization. This drive for cartellization
through government accelerated during the New Era of the 1920s and
reached its apex in Franklin Roosevelt’s NRA.
Significantly, this exercise in cartellizing collectivism was put
over by organized big business; after Herbert Hoover, who had done
much to organize and cartellize the economy, had balked at an NRA
as going too far toward an outright fascist economy, the US Chamber
of Commerce won a promise from FDR that he would adopt such a system.
The original inspiration was the corporate state of Mussolini’s

formal corporatism of the NRA is long gone, but the Great Society
retains much of its essence. The locus of social power has been
emphatically assumed by the state apparatus. Furthermore, that apparatus
is permanently governed by a coalition of big-business and big-labor
groupings, groups that use the state to operate and manage the national
economy. The usual tripartite rapprochement of big business,
big unions, and big government symbolizes the organization of society
by blocs, syndics, and corporations, regulated and privileged by
the federal, state, and local governments. What this all amounts
to in essence is the “corporate state,” which, during the 1920s,
served as a beacon light for big businessmen, big unions, and many
liberal intellectuals as the economic system proper to a 20th-century
industrial society.[9]

The indispensable
intellectual role of engineering popular consent for state rule
is played, for the Great Society, by the liberal intelligentsia,
who provide the rationale of “general welfare,” “humanity,” and
the “common good” (just as the conservative intellectuals work the
other side of the Great Society street by offering the rationale
of “national security” and “national interest”). The liberals, in
short, push the “welfare” part of our omnipresent welfare-warfare
state, while the conservatives stress the warfare side of the pie.
This analysis of the role of the liberal intellectuals puts into
more sophisticated perspective the seeming “sellout” of these intellectuals
as compared to their role during the 1930s. Thus, among numerous
other examples, there is the seeming anomaly of A.A. Berle and David
Lilienthal, cheered and damned as flaming progressives in the ’30s,
now writing tomes hailing the new reign of big business. Actually,
their basic views have not changed in the least. In the ’30s, these
theoreticians of the New Deal were concerned with condemning as
“reactionaries” those big businessmen who clung to older individualist
ideals and failed to understand or adhere to the new monopoly system
of the corporate state. But now, in the 1950s and 1960s, this battle
has been won; big businessmen are all eager to be privileged monopolists
in the new dispensation, and hence they can now be welcomed by such
theorists as Berle and Lilienthal as “responsible” and “enlightened,”
their “selfish” individualism a relic of the past.

The cruelest
myth fostered by the liberals is that the Great Society functions
as a great boon and benefit to the poor; in reality, when we cut
through the frothy appearances to the cold reality underneath, the
poor are the major victims of the welfare state. The poor are the
ones to be conscripted to fight and die at literally slave wages
in the Great Society’s imperial wars. The poor are the ones to lose
their homes to the bulldozer of urban renewal, that bulldozer that
operates for the benefit of real-estate and construction interests
to pulverize available low-cost housing.[10]

All this, of
course, in the name of “clearing the slums” and helping the aesthetics
of housing. The poor are the welfare clientele whose homes are unconstitutionally
but regularly invaded by government agents to ferret out sin in
the middle of the night. The poor (e.g., Negroes in the South) are
the ones disemployed by rising minimum-wage floors, put in for the
benefit of employers and unions in higher-wage areas (e.g., the
North) to prevent industry from moving to the low-wage areas. The
poor are cruelly victimized by an income tax that Left and Right
alike misconstrue as an egalitarian program to soak the rich; actually,
various tricks and exemptions insure that it is the poor and the
middle classes who are hit the hardest.[11]

The poor are
victimized too by a welfare state of which the cardinal macroeconomic
tenet is perpetual if controlled inflation. The inflation and the
heavy government spending favor the businesses of the military-industrial
complex, while the poor and the retired, those on fixed pensions
or Social Security, are hit the hardest. (Liberals have often scoffed
at the anti-inflationists’ stress on the “widows and orphans” as
major victims of inflation, but these remain major victims nevertheless.)
And the burgeoning of compulsory mass public education forces millions
of unwilling youth off the labor market for many years, and into
schools that serve more as houses of detention than as genuine centers
of education.[12]

programs that supposedly aid poor farmers actually serve the large
wealthy farmers at the expense of sharecropper and consumer alike;
and commissions that regulate industry serve to cartellize it. The
mass of workers is forced by governmental measures into trade unions
that tame and integrate the labor force into the toils of the accelerating
corporate state, there to be subjected to arbitrary wage “guidelines”
and ultimate compulsory arbitration.

The role of
the liberal intellectual and of liberal rhetoric is even more stark
in foreign economic policy. Ostensibly designed to “help the underdeveloped
countries,” foreign aid has served as a gigantic subsidy by the
American taxpayer of American export firms, a similar subsidy to
American foreign investment through guarantees and subsidized government
loans, an engine of inflation for the recipient country, and a form
of massive subsidy to the friends and clients of US imperialism
in the recipient country.

The symbiosis
between liberal intellectuals and despotic statism at home and abroad
is, furthermore, no accident; for at the heart of the welfarist
mentality is an enormous desire to “do good to” the mass of other
people, and since people don’t usually wish to be done good to –
since they have their own ideas of what they wish to do – the
liberal welfarist inevitably ends by reaching for the big stick
with which to push the ungrateful masses around. Hence, the liberal
ethos itself provides a powerful stimulant for the intellectuals
to seek state power and ally themselves with the other rulers of
the corporate state. The liberals thus become what Harry EImer Barnes
has aptly termed “totalitarian liberals.” Or, as Isabel
Paterson put it
a generation ago:

The humanitarian
wishes to be a prime mover in the lives of others. He cannot
admit either the divine or the natural order, by which men have
the power to help themselves. The humanitarian puts himself
in the place of God.

But he
is confronted by two awkward facts; first, that the competent
do not need his assistance; and second, that the majority of
people … positively do not want to be “done good” by the humanitarian….
Of course, what the humanitarian actually proposes is that he
shall do what he thinks is good for everybody. It is at this
point that the humanitarian sets up the guillotine.[13]

The rhetorical
role of welfarism in pushing people around may be seen clearly in
the Vietnam War, where American liberal planning for alleged Vietnamese
welfare has been particularly prominent, e.g., in the plans and
actions of Wolf Ladejinsky, Joseph Buttinger, and the Michigan State
group. And the result has been very much of an American-operated
“guillotine” for the Vietnamese people, North and South.[14]

And even Fortune
magazine invokes the spirit of humanitarian “idealism” as the justification
for the United States’ falling “heir to the onerous task of policing
these shattered colonies” of Western Europe, and exerting its might
all over the world. The will to make this exertion to the uttermost,
especially in Vietnam and perhaps China, constitutes for Fortune,
“the unending test of American idealism.”[15]
This liberal-welfarist syndrome may also be seen in the very different
area of civil rights, in the terribly pained indignation of white
liberals at the recent determination of Negroes to take the lead
in helping themselves, rather than to keep deferring to the Lords
and Ladies Bountiful of white liberalism.

In sum, the
most important fact about the Great Society under which we live
is the enormous disparity between rhetoric and content. In rhetoric,
America is the land of the free and the generous, enjoying the fused
blessings of a free market tempered by and joined to accelerating
social welfare, bountifully distributing its unstinting largesse
to the less fortunate in the world. In actual practice, the free
economy is virtually gone, replaced by an imperial corporate-state
Leviathan that organizes, commands, exploits the rest of society
and, indeed, the rest of the world, for its own power and pelf.
We have experienced, as Garet
Garrett keenly pointed out
over a decade ago, a “revolution
within the form.”[16] The old
limited republic has been replaced by empire, within and without
our borders.


Recent triumphal disclosures by economic historians that pure
laissez-faire did not exist in 19th-century America are beside
the point; no one ever claimed that it did. The point is that
state power in society was minimal, relative to other times and
countries, and that the general locus of decision making resided
therefore in the individuals making up society rather than in
the state. Cf. Robert Lively, “The American System,” Business
History Review, XXIX (1955), pp. 81–96.

Franz Oppenheimer, The
(New York, 1926), pp. 24–27. Or, as Albert Jay
Nock, heavily influenced by Oppenheimer’s analysis, concluded:
“The state claims and exercises the monopoly of crime” in its
territorial area. Albert Jay Nock, On
Doing the Right Thing, and Other Essays
(New York, 1928),
p. 143.

See John C. Calhoun, Disquisition
on Government
(Columbia, S. C., 1850). On the distinction
between this and the Marxian concept of the ruling class, see
Ludwig von Mises, Theory
and History
(New Haven, Conn., 1957), pp. 112 ff. Perhaps
the earliest users of this kind of class analysis were the French
libertarian writers of the Restoration period of the early 19th
century, Charles Comte and Charles Dunoyer. Cf. Elie Halevy, The
Era of Tyrannies
(Garden City. N. Y., 1965), pp. 23–34.

On various aspects of the alliance between intellectuals and the
state, see George B. de Huszar, ed., The
(Glencoe, Ill., 1960); Joseph A. Schumpeter,
Socialism, and Democracy
(New York, 1942), pp. 143–55;
Karl A. Wittfogel, Oriental
(New Haven, Conn., 1957); Howard K. Beale,
“The Professional Historian: His Theory and Practice,” The
Pacific Historical Review (August, 1953), pp. 227–55; Martin
Nicolaus, “The Professor, The Policeman and the Peasant,” Viet-Report
(June-July, 1966), pp. 15–19.

Thus, cf. H.L. Nieburg, In
the Name of Science
(Chicago, 1966); Seymour Melman,
Our Depleted Society (New York, 1965); C. Wright Mills,
The Power Elite (New York, 1958).

(Note by original editors referring to another essay in the collection.)

New York, 1963. Also see Kolko’s Railroads
and Regulation
(Princeton, N. J., 1965). The laudatory
review of the latter book by George W. Hilton (American Economic
Review) and George W. Wilson (Journal of Political Economy)
symbolize a potential alliance between “New Left” and free-market

The National Recovery Administration, one of the most important
creations of the early New Deal, was established by the National
Industrial Recovery Act of June, 1933. It prescribed and imposed
codes of “fair competition” upon industry. It was declared unconstitutional
by the Supreme Court in 1935. For an analysis of the inception
of the NRA, see my America’s
Great Depression
(Princeton, N.J., 1963).

Part of this story has been told in John P. Diggins, “Flirtation
with Fascism: American Pragmatic Liberals and Mussolini’s Italy,”
American Historical Review, LXXI (January, 1966), pp.

See Martin Anderson, The
Federal Bulldozer
(Cambridge, Mass., 1964).

Thus, see Gabriel Kolko, Wealth
and Power in America
(New York, 1962).

Thus, see Paul Goodman, Compulsory
Mis-Education and The Community of Scholars
(New York,
Vintage paperback edition, 1966).

Isabel Paterson, The
God of the Machine
(New York, 1943), p. 241.

See John McDermott, “Welfare Imperialism in Vietnam, ” The
Nation (July 25, 1966), pp. 76–88.

Fortune (August, 1965). As the right wing of the Great
Society Establishment, Fortune presumably passes the
Berle-Lilienthal test as spokesman for “enlightened” as opposed
to narrowly “selfish” capitalism.

Garet Garrett, The
People’s Pottage
(Caldwell, Idaho, 1953).

N. Rothbard
(1926–1995) was the author of Man,
Economy, and State
, Conceived
in Liberty
, What
Has Government Done to Our Money
, For
a New Liberty
, The
Case Against the Fed
, and many
other books and articles
. He
was also the editor – with Lew Rockwell – of The
Rothbard-Rockwell Report
, and academic vice president of
the Ludwig von Mises Institute.

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