Henry Hazlitt (1894–1993) was the author of Economics in One Lesson, the Failure of the “New Economics,” Man versus the Welfare State, Time Will Run Back, and many other books. This article first appeared in Modern Age, Fall 1976.
H. L. Mencken was fond of saying that most of the problems men agonize over are inherently insoluble. A haphazard search among his books has failed to turn up a supporting quotation, and perhaps my memory misleads me. He may merely have said “some,” not “most” problems. In the latter case, at any rate, I agree with him. I would include at least two whole categories of problems among the insoluble ones. First, all problems commonly classed as metaphysical, ontological or cosmological – such as “How can we tell the really real from the apparently real?” or “What was the First Cause?,” or “What is mankind here for?,” or “What is the purpose of the universe?” And so on. The second category contains all the really basic political problems.
There are differences, of course, in what is meant by “insolubility” as applied to each of these sets of problems. The metaphysical problems are forever insoluble because man’s limited five senses, narrow experience, and finite mind cannot possibly encompass eternity, “ultimate” reality, or infinity. The basic political problems on the other hand, are insoluble because . . . well, for one thing, because we are not even sure what we mean by a “solution.”
Suppose we address ourselves to this problem first. What is a “solution”? It is easy to cite an illustration. A man’s car fails to start on a cold morning. He finds that his battery is dead, or that his spark plugs are fouled, or that a wire is disconnected, or that the carburetor is flooded, or that he has run out of gas. Once this basic “cause” is discovered, he probably knows how to fix it or have it fixed. Or, again, the man feels some distress; and his doctor identifies it as diabetes and prescribes insulin. Once a doctor has correctly diagnosed a disease with a known palliative or cure, he has “solved” his problem.
In the physical sciences, then, the problems commonly arise because something is working unsatisfactorily, and if we have identified A as the cause and M as the solution, we know we have found the cause and the cure if we can in that and similar cases make things work satisfactorily once again.
But when we turn to the social sciences, and particularly to politics, this kind of certainty or confidence is no longer to be found. Let’s take a typical broad problem: What should the state do about the poor and the needy? Historically the answers have run from nothing to everything. The nothing answer has run typically like this: “It is not the function of the state to try to help the needy or provide relief. The proper function of the state is simply to prevent force, theft, and fraud, and maintain internal and external peace.”
Such an answer immediately confronts obstacles of several sorts. The first concerns its humanity or even its practicality. Suppose, for example, that a child has been hit by an automobile and is found bleeding and unconscious in the street. Are we to hope that whoever finds him proves to be a Good Samaritan? And also well enough off to have the child driven to a hospital and to guarantee to pay the bill if the parents are not found or are unable to do so?
“All right,” the answer may come, “let the state at least provide for emergency help of this sort.” But how far shall we carry this answer? How far shall we extend the definition of “emergency” help? Should the state pay every hospital bill of everybody who claims he cannot pay? Should it put everybody on relief who claims he cannot find a job? How high should the relief be? At just what level will it seriously undermine the incentives to find or hold jobs? At just what level will it undermine the incentives to work and save of the taxpayers who are asked to support the idle? At just what level will it bankrupt the state?
Government and the Needy
There are people who are untroubled by these questions. They want to “guarantee everybody a decent job,” or a minimum income, or even equality of income, regardless of all individual differences of effort, ability, or contribution, regardless of the effect on incentives, regardless of any other social consequence. So, in fact, not only historically but today, the answers to the question, “What shall government do about the needy?” still run from nothing to practically everything.
Most people who have given serious thought to the problem have proposed or accepted some compromise. A typical compromise proposal is that we should assure the needy or the unemployed an “adequate” relief payment for a “reasonable” time, but not enough to “undermine their incentives” to find jobs or improve themselves, and not enough to undermine the incentives of the working and productive taxpayers who are being asked to shoulder the bill.
There are inherent difficulties in this compromise. It is something of a self-contradiction. If the relief recipient himself considers his dole “adequate,” this is almost equivalent to saying that he has no incentive to take a job or otherwise expend effort to increase it. At all events, the compromise lacks any precision. On the one hand, even a high standard dole may fail to meet the urgent needs of some families. On the other hand, almost any dole of any amount may tend to undermine some people’s incentive to a certain extent. As a result of such difficulties, it is hard to get any two people to agree on what should be the amount of a proposal or actual dole, or on who should be eligible for it, or how long or under what conditions it should continue to be paid. So there are hundreds of different answers to these questions.
I do not use this last figure rhetorically but literally. It can be illustrated even within our own country. If we take the federally financed program of Aid to Families with Dependent Children, we find that the average monthly payment per recipient in August, 1975, for example, was different for each of the fifty states, ranging from $14.41 in Mississippi to $105.39 in Alaska. In the “general assistance” program we find a similar range of variation for the same month – from $11.94 per recipient in Mississippi to $144.95 in the District of Columbia. And when we turn to state unemployment insurance systems, even though these also are federally aided, we find not only a similar wide range in weekly benefits, but in the proportion that the benefits bear to the recipient’s previous wages, and in the number of weeks in each year for which such benefits are payable.
When we come to comparing not only different states in our own country but different countries, we encounter an enormously greater range of differences in both the amounts and formulas used for calculating relief or so-called unemployment insurance payments. Great Britain, for example, pays its unemployed three-quarters of their previous salaries (which makes its recent prolonged unemployment rate not surprising). In many countries, on the other hand, nothing whatever is paid for unemployment insurance or even relief – not primarily because national sentiment does not favor it, but because the funds do not exist.
If we turn from relief to, say, education, we find a similar wide range of opinion and practice among national governments concerning how much education to make compulsory or how much the state should pay for. It ranges from governments that provide no education at all, through those that provide free public schools, or free high schools, or subsidized college and university education. The prescribed age ranges for compulsory education are similarly wide.
There is one generalization we can make that applies both to relief and education, and, in fact, to any other intervention of the state, once the principle has been granted that it should be allowed to undertake that function at all. The intervention will tend to be indefinitely expanded. The individual amount of relief will tend to grow, the period of payment to be lengthened, the eligibility requirements to be relaxed, the number of recipients to be enlarged, and additional forms of relief to be piled on to those already offered. The like will tend to apply to the length and coverage of state education. Public expenditures will always tend to grow. Because of the politicians’ fear of increasing taxation correspondingly, deficits will be increasingly tolerated and rationalized, and inflation will appear and tend to accelerate.
The Limits of the State
In the last hundred years the historic tendency nearly everywhere has been a constant increase in government intervention in the economy, a constant increase in government paternalism and in government power: Each new power that any government has acquired has almost inevitably been used by it to obtain still further powers. It is hardly to be wondered at that a small but perceptibly growing number of political thinkers are beginning in desperation to go beyond even their previous belief that the role of the state should be limited to trying merely to prevent force and fraud, and have begun to advocate a complete abolition of the state.
It is hard not to feel some sympathy with them. It is pleasant, indeed, to draw up attractive pictures of what an ideal anarchistic society would be like. But all these dreams would be shattered by the almost certain outcome. If there were no established government, the country would be taken over by the criminals and gangsters. Eventually one gang would subdue or wipe out its rivals, and that gang would become the new de facto government. It would systematically exact tribute from all the rest of us, only this would again in time be called taxes. In brief, it is impossible to maintain a peaceful anarchy unless some authority is set up to enforce it.
This points, indeed, to the probable origin of the state. We need look no further back than the middle of the last century, when the “vigilance committees” were formed in our own wild West. One of these, for example, was organized in San Francisco in 1851, and promptly arrested, tried, and hanged a goodly number of desperadoes. If this and similar committees had not been formed in California and elsewhere, the desperadoes themselves would no doubt in time have become the de facto government.
But we need not speculate afresh at this time concerning the probable origin of government. That has already been done quite satisfactorily, and by no one better than by David Hume in his essay “Of the Origin of Government” in the mid-eighteenth century. His conjectures are at once so simple and plausible that they warrant direct quotation:
It is probable that the first ascendant of one man over multitudes began during a state of war, where the superiority of courage and of genius discovers itself most visibly, where unanimity and concert are most requisite, and where the pernicious effects of disorder are most sensibly felt. The long continuance of that state, an incident common among savage tribes, inured the people to submission; and if the chieftain possessed as much equity as prudence and valor, he became, even during peace, the arbiter of all differences, and could gradually, by a mixture of force and consent, establish his authority. The benefit sensibly felt from his influence made it cherished by the people, at least by the peaceable and well-disposed among them; and if his son enjoyed the same good qualities, government advanced the sooner to maturity and perfection; but was still in a feeble state till the farther progress of improvement procured the magistrate a revenue, and enabled him to bestow rewards on the several instruments of his administration, and to inflict punishments on the refractory and disobedient. Before that period, each exertion of his influence must have been particular, and founded on the peculiar circumstances of the case. After it, submission was no longer a matter of choice in the bulk of the community, but was rigorously exacted by the authority of the supreme magistrate.
There may have been somewhere, as a few eighteenth-century philosophers dreamed, a group of peaceful men who got together one evening after work and drew up a Social Contract to form the state. But nobody has been able to find an actual record of it. Practically all the governments whose origins are historically established were the result of conquest – of one tribe by another, one city by another, one people by another. Of course there have been constitutional conventions, but they merely changed the working rules of governments already in being.
But however the state may have originated historically, we confront a fundamental dilemma: No small group of men, and certainly no single man, can be completely trusted with the power to rule, yet somebody must be trusted with that power. And if we cannot peacefully agree on who is to be granted that power, and how much, somebody is going to seize it by force, and impose whatever coercion he finds expedient. So some limited power must be voluntarily granted to somebody to rule. But this one practical conclusion merely presents us with a score of further problems. What limits should we set on this power? How can we hold the selected rulers within these limits? Who is to do the selecting? By what process? For how long a term?
Concerning most of these problems we have been able to arrive, at best, at only makeshift and temporary agreement. In addition, in politics we confront, so to speak, a double layer of problems. Suppose one of us is able to devise an ideal form of government. Suppose he has found exactly where to draw the limits around the powers that ought to be granted to a government. How does he convince a majority of his fellow citizens that his answers are right? And what dependable devices does he propose to hold government powers within the limits he has prescribed?
In the West there is some semblance of political agreement because most of us accepted some time ago a magic password – democracy. If it were not the best of all conceivable forms of government, then, as the comfortable joke went, it was at any rate the “least worst.” Yet we never quite arrived at any agreement even about the meaning of the word. Does it mean merely government by majority consent, or must there be majority “participation”? And which majority? Of the whole population? Of adults? Of male adults? Of “eligible” voters? And what should be the requirements for voting eligibility – of age, property, literacy, language? Hardly any two governments set exactly the same standards.
And does democracy mean presidential government or a parliamentary form? Here, again, in practice, we find endless variety. I implied, a while back, that democracy has become almost a religion; yet perhaps this statement should be put in the past tense. Even a superficial observer can begin to detect a declining faith in it. Almost everywhere we look in Latin America, Africa, Asia, Eastern Europe – we find a similar pattern or cycle repeating itself: full democracy – the welfare state – inflationism – a trend toward socialism or Communism – and then a military dictatorship either to preserve or reverse the trend. Even in recent months we have seen the great subcontinent of India changed almost overnight, and without a shot being fired, from an apparent democracy to one-woman rule . . . .
Americans have come a long way since 1917, when they went to war, under Woodrow Wilson’s slogan, “to make the world safe for democracy.” Yet if many in the West have been losing their faith, and beginning to wonder how to make the world safe from democracy, they have found no definite alternative. There are today more than 130 separate nations. Some of them have parliamentary governments, some presidential; some of them are extreme democracies, some absolute dictatorships. But no government is precisely like the other. In fact, few of them are precisely like they were a little while ago or will be in a little while from now.
It is not merely that nations are constantly changing the particular persons or parties in power; they seem to be chronically dissatisfied with the very nature of their governments. Thumb through an annual like The Statesman’s YearBook at haphazard. You will find Costa Rica: “The constitution, promulgated on 7 Dec. 1871, has been modified very frequently, last in 1949.” Or Nicaragua: It had a new constitution in 1963. “On 31 August 1971 the Congress voted in favor of dissolution of the Constitution. A 100-member Constituent Assembly started its discussions on a new Constitution in May 1972.” Or Guatemala: “Following the revolution of June 1954 the Constitution of 1945 was replaced in August 1954 by a ‘Political Statute.’ On 1 March 1956 a new Constitution came into force. This Constitution was in 1963 replaced by a Fundamental Charter of Government. A new constitution was promulgated on 15 September 1965 with effect from 6 May 1966.”
We seem to have made very little advance since the sixteenth century, when the Reverend Richard Hooker was writing: “He that goeth about to persuade a multitude that they are not so well governed as they ought to be, shall never want [for] attentive and favorable hearers.”
So where are we left? Generations of mankind, and great philosophers, have wrestled with these basic political problems, and said some penetrating things about them – Plato, Aristotle, Machiavelli, Hobbes, Locke, Montesquieu, Hume, Rousseau, Burke, Bentham, the Mills, Spencer, Dicey, Acton . . . . But have they come up with anything that the majority of our contemporaries are willing to accept as definitive? And can their successors ever hope to do so? Is it possible to lay down in politics any propositions to which we can confidently add: Q.E.D.? Can we prove anything? In brief, is such a thing as political science possible?
Raising this question reminds me that at least one of the great philosophers mentioned above, Hume, published an essay in 1752 with the very title: “That Politics May be Reduced to a Science.” That a philosopher remembered chiefly for his skepticism would venture to raise such a hope seems especially encouraging. Yet a modern reader will find the argument of Hume’s essay vague and disappointing, consisting of a few generalizations, drawn partly from a priori grounds and partly from history, that strike one as plausible but hardly as proved.
And yet – there may be examples in one or two other social disciplines to give us reasons for hope. By the reasoning and research of scholars, and more particularly by thousands of judicial decisions, jurisprudence, or legal philosophy, has been raised to the level of a near-science. We find there an increasing area of accepted and established principle, and neither the enormous diversity in theory or practice that we find in the wider area of politics.
Still more promising is what has been achieved in economics. Since the eighteenth century a series of great thinkers – including Hume, Adam Smith, Ricardo, Bentham, Menger, Bohm-Bawerk, and Ludwig von Mises – have succeeded in creating a genuine social science. As described by Mises: “Economics is the youngest of all sciences . . . . It opened to human science a domain previously inaccessible and never thought of.”1 It “deals with a regularity in the concatenation and sequence of phenomena that is valid in the whole field of human action.”2 Economics, in fact, is merely a branch, though the hitherto best elaborated branch, of “praxeology” – the science of human action. “In all its branches this science is a priori, not empirical. Like logic and mathematics, it is not derived from experience; it is prior to experience. It is, as it were, the logic of action and deed.”3 “It is a science that aims at the ascertainment of universally valid laws of human conduct.”4
True, this is not the description of economics that we commonly get. It is – or at least once was – almost peculiar to Mises. But it correctly describes, I think, the nature of modern economics, which was not put on a truly scientific basis until the appearance of the so-called Austrian school of thinkers. It is very important to keep in mind, of course, what kind of science economics is. It has its own methodology. It is a mistake to try to turn it into an imitation of the physical sciences. It is an absurdity to assume, for example, that we can use it to predict the general economic future, and say what the course of profits or employment or GNP is going to be in the next six months or the next year – though hundreds of professional forecasters pretend that they can do just that. There are too many thousands of imponderable factors to be taken into account. All such predictions must forever remain mere guesswork.
But predictions of a certain kind – ways with the proviso “other things remaining equal” – can confidently be made. We know, for instance, that if the government attempts to fix the price of any commodity or service below what the unhampered market would produce, then – “other things remaining equal” – it will inevitably bring about a shortage of that commodity or service. We know that if a government issues more money faster than more goods are produced, it will bring about inflation and raise prices. We know that if a government makes its own irredeemable paper money legal tender, while gold or silver coin remain outstanding, people will pay off their debts in the irredeemable paper money and hold on to their coins: “Bad money drives good money out of circulation.” And we can make hundreds of other predictions of the same kind. We know that any government intervention in the market must in the long run produce results unforeseen by its advocates, and usually less satisfactory even in their judgment than the situation they were trying to improve. And we know this not because that was the result of a previous similar intervention, but inevitably from the inherent nature of the action.
Any hopes for the future, however, based on the analogy of what we have achieved in economics, cannot excuse us from recognizing the present, still wretched state of the theory of politics. Can we some day get beyond such basic dilemmas as the one we formulated earlier – that no small group of men, and no single man, can be completely trusted with the power to rule, yet that someone must be trusted with at least some power to rule? Can we eventually build up a series of interconnected propositions, a solid edifice of theory, that will be entitled one day to be recognized as a science? Perhaps. But right now that day seems far, far distant.
Notes
- Human Action, p. 1.
- Theory and History, p. 203.
- Epistemological Problems of Economics, pp. 12–13.
- Ibid., p. 68.
