This article originally appeared in Liberty Magazine, Vol. 4, No. 3 (January 1991)
There is no need to emphasize for this audience the world-historical significance of the changes that are taking place today in east-central Europe and, especially, in the Soviet Union. This great transformation has led many people to reconsider the merits of an ideology once thought to be obsolete — liberalism.
Today I wish to deal with liberalism as it has been understood historically, and to consider its connection with a certain strand of Marxist thought — a strand that may well be much more important now than other elements of Marxism that have been emphasized in the past.
Liberalism has, of course, many meanings. Without arguing the point here, I wish to maintain that the most authentic form of liberalism has been concerned above all with two things: first, the expansion of the free functioning of civil society, and, second, and increasingly, the restriction of the activity of the state. In other words, by liberalism, I will mean laissez-faire, "Manchester" liberalism, also known as "dogmatic," "doctrinaire," and "dog-eat-dog."
Liberalism arose in the 17th and 18th centuries as Europe and America’s response to monarchical absolutism. Where the monarchs by divine right claimed to control and direct all of the life of society, liberalism replied that, by and large, it is best to leave civil society to run itself — in religion, in thought and culture, and not least in economic life. The liberal slogan of laissez-faire, laissez-passer, le monde va de lui-meme ("the world goes by itself") encapsulated this philosophy.
Sometimes through revolution, more often through piecemeal reform, liberalism accomplished much of its program, building, of course, on the inheritance of free institutions and individualist values of earlier centuries. Throughout the Western world a system developed based on freedom of thought, freedom of labor, clear rights of private property, and free exchange. Nowhere — not even in England or America — was this system consistently realized in every aspect of life. Still, as the great Austrian economist Ludwig von Mises put it, it was enough to change the countenance of the world.
For the first time, mankind was able to escape the Malthusian trap. With the enormous increase in population came a steadily increasing per capita income. What this dry little fact meant in the lives of the many, many millions still awaits its poets and novelists. In reality, the only imaginative writer who has done justice to this vast transformation was the great novelist born in Leningrad, Alicia Rosenbaum, who came to America and wrote under the name of Ayn Rand.
But the bureaucratic-military state that had emerged in Europe in the early-modern period, though excluded from some areas of social life, remained entrenched. Soon it began once more to expand. By the early nineteenth century, independent thinkers all across the political spectrum, from conservatives to anarchists, were alarmed at the growth of the parasitic state. This was a problem that concerned also Karl Marx and Friedrich Engels.
As has been sometimes noted, Marxism contains two rather different views of the state: most conspicuously, it views the state as the instrument of domination by exploiting classes that are defined by their position within the process of social production, e.g., the capitalists. The state is simply "the executive committee of the ruling class."
Sometimes, however, Marx characterized the state itself as the exploiting agent. You will perhaps excuse me for quoting some passages from the works of Marx and Engels that are doubtless quite familiar to you. A brilliant passage occurs when Marx, in The Eighteenth Brumaire of Louis Bonaparte, comes to consider the state as it developed in France, and he refers to
this executive power, with its enormous bureaucracy and military organization, with it ingenious state machinery, embracing wide strata, with a host of officials. Numbering half a million, besides an army of another half million, this appalling parasitic body, which enmeshes the body of French society like a net and chokes all its pores. … All revolutions perfected this machine instead of smashing it. The parties that contended for domination regarded the possession of this huge state edifice as the principal spoils of the victor.
Some 20 years later, Marx speaks of the Paris Commune aiming at restoring "to the social body all the forces hitherto absorbed by the state parasite feeding upon and clogging the free movement of society." In 1891, Friedrich Engels, referring to the United States, wrote,
We find two great gangs of political speculators, who alternately take possession of the state power and exploit it by the most corrupt means for the most corrupt ends — the nation is powerless against these two great cartels of politicians who are ostensibly its servants, but in reality dominate and plunder it.
I am myself far from being a Marxist, but I must confess that I find more truth in this description of the American political scene by Friedrich Engels than I usually find on the editorial page of the New York Times. Thus, the conception of the "parasite state" is clearly enunciated by the founders of Marxism.
Several decades before they wrote, however, an influential group of French liberals had already singled out the parasitic state as the major example in modern society of the plundering and "devouring" spirit. This school of liberalism elaborated a doctrine of the conflict of classes, and in this respect had not only a logical, but also a historical, connection with Marxism — as Marx himself conceded and as was conceded in later years by Engels and the thinkers of the period of the Second International, including Lenin. This earlier liberal school can moreover be taken as virtually the ideal of authentic, radical liberalism.
Let me cite Adolphe Blanqui, from what is probably the first history of economic thought, published in 1837. Blanqui’s words will probably have a familiar ring to them:
In all the revolutions, there have always been but two parties opposing each other; that of the people who wish to live by their own labor, and that of those who would live by the labor of others. … Patricians and plebeians, slaves and freemen, guelphs and ghibellines, red roses and white roses, cavaliers and roundheads, liberals and serviles, are only varieties of the same species.
The school of authentic, radical liberals of which I spoke, and which influenced Blanqui, centered around a few young liberal intellectuals, Charles Dunoyer, Charles Comte, and Augustin Thierry. They can be considered the culmination of the tradition of French liberal thought. In turn, they continued to influence liberal thought up to the time of Herbert Spencer and beyond. They called their doctrine industrialisme.
The industrialists agreed with Jean-Baptiste Say, who held that wealth is comprised of what has value, and that value is based on utility. All those members of society who contribute to the creation of values by engaging in voluntary exchange are deemed productive. This class includes not only workers, peasants, and the scientists and artists who produce for the market, but also includes capitalists who advance funds for productive enterprise (but not rentiers off the government debt). Say awards pride of place, however, to the entrepreneur. J.-B. Say was perhaps the first to realize the boundless possibilities of a free economy, led by creative entrepreneurs.
But there exist classes of persons who merely consume wealth rather than produce it. These unproductive classes include the army, the government, and the state-supported clergy — what could be called the "reactionary" classes, associated by and large with the Old Regime.
However, Say was quite aware that antiproductive and antisocial activity was also possible, indeed altogether common, when otherwise productive elements employed state power to capture privileges.
The industrialist doctrine may be summarized in the statement that the history of all hitherto existing society is the history of struggles between the plundering and the producing classes.
The industrialist writers looked forward to "the extinction of the idle and devouring class" and to the emergence of a social order in which "the fortune of each would be nearly in direct ratio to his merit, that is, to his utility, and almost without exception, none would be destitute except the vicious and useless."
Augustin Thierry — whom Karl Marx later referred to as the "father of class struggle theory in French historical writing" — summarized the industrialist doctrine of strict laissez-faire:
Government should be good for the liberty of the governed, and that is when it governs to the least possible degree. It should be good for the wealth of the nation, and that is when it acts as little as possible upon the labor that produces it and when it consumes as little as possible. It should be good for the public security, and that is when it protects as much as possible, provided that the protection does not cost more than it brings in. … It is in losing their powers of action that governments improve. Each time that the governed gain space, there is progress.
The function of government is simply to ensure security from those who would disturb the liberal social order either from within or from without.
However, as increasing numbers of individuals aspire to government jobs, two tendencies emerge: government power expands, and the burden of government expenditures and taxation grows. In order to satisfy the new hordes of office-seekers, the government extends its scope in all directions; it begins to concern itself with the people’s education, health, intellectual life, and morals, sees to the adequacy of the food supply, and regulates industry, until "soon there will be no means of escape from its action for any activity, any thought, any portion" of the people’s existence. Functionaries have become "a class that is the enemy of the well-being of all the others."
The concept of a conflict of classes linked to the state is one that permeates the history of liberalism, from beginning to end. It was especially conspicuous at the time of the struggle against the old "feudal" powers, but it is by no means limited to the period of that struggle. The most radical and authentic of the liberals perceived the continuing existence of class exploitation by means of the state in the later 19th and in the 20th centuries as well.
As time went on, one area of state exploitation captured their attention more than any other — militarism and imperialism. A very long list of examples could be given of the liberals who opposed their governments’ overseas wars. The appropriation of the wealth created by the producing classes by the state’s military bureaucracy and its capitalist suppliers was the theme of the most "doctrinaire" and consistent liberals for generations. In the same spirit, present-day American writer Ernest Fitzgerald has identified the masses exploited by the military branch of the American state:
[I]t is undoubtedly true that subject population exploitation is a major objective of the military spending coalition. The people marked for exploitation, though, are not the masses of peasants in underdeveloped countries. The exploited masses are United States taxpayers, the most productive and easily managed subject population in the history of the world.
What are the implications of this analysis for contemporary problems?
As the French liberals knew, the expansion of government activity keeps pace with the increase in the number of state functionaries, who must somehow justify their incomes and jobs. And today, throughout the world, in every regime, the number of state functionaries continues to grow. According to reports in the West, most of the relatively few Soviet bureaucrats dismissed under perestroika have been rehired in new intermediate agencies, production or research associations, and so on, sometimes headed by the former minister himself. It is estimated that the number of Soviet bureaucrats has actually increased by 122,000, bringing the total to around 18,000,000.
But the experience of the hydra-headed bureaucracy is by no means limited to the Soviet Union. Administrations elected on platforms demanding the reduction of the legions of functionaries — whether in Brazil or the United States — seem somehow never to be able to realize their original intentions. It was good of Deputy Prime Minister Leonid I. Abalkin to point out that the US Department of Agriculture has more employees than the Soviet State Commission on Procurement and Food. The conclusion to be drawn, however, is hardly the one the deputy prime minister seems to favor — that even a market economy requires great armies of bureaucrats.
Most lucrative for the state has been war and preparations for war. In this connection, I must praise the courageous speech of Mr. Georgi Arbatov at the Second Congress of People’s Deputies, in which he assailed the "huge and fabulously expensive war machine" in the Soviet Union. This is an example that cries out to be emulated by influential commentators in the West.
With the emergence of the welfare state, the opportunities for the state "enmeshing society in a net and choking all its pores" become literally endless. There now flourishes, in every advanced country, a class of state-funded social scientists whose profession consists in discovering and defining — out of the infinite mass of human misery — particular "social problems," which will become the material for further state activity.
The monstrous growth of the state apparatus will not be stopped by those who, ignorant of economics and given to literary-moralistic musings, equate the private-property, market economy with totalitarianism. President Vaclav Havel of Czechoslovakia recently warned against "the stupefying dictatorship of consumerism and of pervasive commercialism."
This "dictatorship," President Havel feels, will tend to produce alienation, and, in the speech in which he discussed this problem, he appealed to German philosophers to help prevent this plunge into alienation by turning to "the service of renewing global human responsibility, the only possible salvation for the contemporary world."
I doubt that we require the help of German philosophers to remedy the "ills" caused by an overemphasis on the rights of the individual. In any case, what is this "dictatorship" of consumerism, this "mindless materialism," of which President Havel — and many other literary intellectuals in east-central Europe — speaks? Is it the provision of compact-disc electronic systems to tens and soon hundreds of millions of people, enabling them to listen to near-concert-hall-perfect versions of the music of Tchaikovsky, Rachmaninoff, and Shostakovich? Does it consist in making available, in every Western country, well-produced paperback editions of all the great works of literature and philosophy, and of all the modern works as well — especially those that attack the "materialism" of the capitalist system?
In America and other Western countries, there are millions of people who have attained the degree of affluence that permits them to interest themselves, in an amateurish way, in original works of art — in drawings, paintings, sculptures, and photographs. Their homes are filled with such works, by local artists for the most part. Is the affluence that permits this middle-class amateurism another example of "materialism"?
Here a touch of the old Marxist skepticism is in order, I think. For whom does President Havel speak when he derides "consumerism" and "commercialism"? Whose interests are served by eclipsing the market economy and the voluntary choices of consumers?
In the former socialist countries of east-central Europe, as elsewhere, there is in place, of course, a stratum of state-subsidized intellectuals, in the media, the arts, the press, and education. There is, moreover, a continuing process of the reproduction of this class. I suggest that their social position requires an ideology to justify the continuance of state funds. Perhaps the task of "renewing [sic] human global responsibility" — whatever that may be — will be at the center of it.
The "vulgar Marxism" that in the past dismissed liberal ideology as "nothing but" the rationalization of the interests of the bourgeoisie cannot stand the test of critical examination.
Moreover, if that notion were true, then there would be no reason for our Soviet friends to be here today, listening to the speeches of the "bourgeois ideologists" collected at this Cato conference.
I have stressed today a dimension of liberal ideology that clearly has great relevance for every nation in the world. A New Zealand scholar, J.C. Davis, has recently reflected on the rise of the Leviathan state during the past four hundred years, a process spanning the globe:
The comprehensive, collective state with its assumption of obligations in every aspect of human life, from health to employment, education to transport, defense to entertainment and leisure, is a feature of every advanced state, whether of the East or the West, and of the aspirations of most Third World governments. Curiously, both revolutionaries and reactionaries, by their demands that the state more closely control social processes, have furthered the growth of Leviathan.
This description is one with which both the great French liberals I have discussed and Karl Marx could have agreed. The question remains, what realistic alternative exists to state parasitism? The answer provided by a contemporary French author, Raymond Ruyer, represents my own point of view, and, I think, that of authentic liberalism:
One must fully recognize a great truth, which rings as a scandalous paradox and a challenge to the beliefs and quasi-religious faith of the intelligentsia, both in the West and the East, namely, that the only choice is between a bureaucratized political State, seeking power and glory in every domain, including those of art and science; and an "anarchical" regime of self-direction in every economic domain first of all, but also in culture. But the heart of the paradox is that it is only the liberal economic order that can promote "the withering away of the State" and of politics — or at least their limitation — it is not centralizing socialism.
 Karl Marx and Friedrich Engels, Selected Works in Three Volumes (Moscow: Progress Publishers, 1983), vol. 1, p. 477.
 Ibid., vol. 2, p. 188.
 Jérôme-Adolphe Blanqui, Histoire de l’économie politique en Europe depuis les anciens jusque’à nos jours (Paris: Guillaumin, 1837), p. x. (Italics in original.)
 Censeur Européen, 7:206 and 205.
 A. Ernest Fitzgerald, The High Priests of Waste (New York: Norton, 1972), p. xii.
 J.C. Davis, Utopia and the Ideal Society: A Study of English Utopian Writing, 1516—1700 (Cambridge: Cambridge University Press, 1981), pp. 8—9.
 Raymond Ruyer, Éloge de la société de consommation (Paris: Calmann-Lévy, 1969), pp. 266—67.
Reprinted from Mises.org.