• The Great Society: A Libertarian Critique

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    published in
    The Great Society Reader: The Failure of American Liberalism,
    edited by Marvin E. Gettleman and David Mermelstein (New York:
    Vintage, 1967).

    The Great
    Society is the lineal descendant and the intensification of those
    other pretentiously named polities of twentieth-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.
    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

    The basic
    reason for this development is not difficult to fathom. It was
    best summed up by the great German sociologist Franz Oppenheimer;
    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 eighteenth and nineteenth 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 twentieth
    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 Italy.8

    The 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 twentieth 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 thirties, now
    writing tomes hailing the new reign of big business. Actually,
    their basic views have not changed in the least. In the thirties,
    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
    macro-economic 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
    Farm 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

    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:

    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.

    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.


    1 Recent triumphal disclosures by economic historians that pure laissez-faire
    did not exist in nineteenth 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.

    2 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.

    3 See John C. Calhoun, Disquisition
    (Columbia, S. C., 1850). On the distinction between this and
    the Marxian concept of the ruling class, see Ludwig von Mises,
    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 nineteenth
    century, Charles Comte and Charles Dunoyer. Cf. Elie Halevy,
    The Era of Tyrannies (Garden City. N. Y., 1965), pp.

    4 On various aspects of the alliance between intellectuals and the
    State, see George B. de Huszar, ed., The Intellectuals (Glencoe,
    Ill., 1960); Joseph A. Schumpeter, Capitalism,
    Socialism, and Democracy
    (New York, 1942), pp. 143–55;
    Karl A. Wittfogel, Oriental Despotism (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.

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

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

    7 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 historiography.

    8 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. An analysis
    of the inception of the NRA, see my America’s
    Great Depression
    (Princeton, N. J., 1963).

    9 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.

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

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

    12 Thus, see Paul Goodman, Compulsory
    The Community of Scholars
    (New York, Vintage
    paperback edition, 1966).

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

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

    15 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.

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

    N. Rothbard (1926–1995), the founder of modern libertarianism
    and the dean of the Austrian School of economics, was the author
    of The
    Ethics of Liberty
    and For
    a New Liberty
    and many
    other books and articles
    . He was also academic vice president
    of the Ludwig von Mises Institute and the Center for Libertarian
    Studies, and the editor – with Lew Rockwell – of The
    Rothbard-Rockwell Report

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