Albert Jay Nock was an American libertarian who wrote in the 1920's when there was no Libertarian Party and very few people expressing libertarian ideas. In his book Our Enemy the State he made a division of all mankind into two classes: the exploited and the exploiters. If this seems to have a Marxist ring, wait a moment: the exploited class are those who trade their goods and services with others on the free market, and who are forced to turn over a portion of their earnings to government. This includes farmers, laborers, managers, industrialists—everyone who is a part of the vast machine of production. The exploiters are those who are on the receiving end of this bounty, which the work of the producing class makes possible; this includes everyone who receives a government check, whether in the form of government subsidies or in the form of wages to sustain the coercive machinery of government, particularly the government bureaucrats who administer the looting of the productive class and determine how and upon whom the expropriated income is to be spent.
The history of nations is finally decided by the relation between these two groups of people. History is a tug-of-war between the two classes: the one, who want to retain the fruits of their labor, and the other, who would forcibly take it away from them; the one, who would prefer to determine the course of their own lives by their own free choices, and the other, who want to determine it for them via taxation and regulation, and use the victims' earnings to do it.
In dictatorships, the dominance of government is achieved through the barrel of a gun, and the populace has very little to say about it. But in a democratic state, where at least some of the officials of government must be voted into office, the people have to be led into thinking that big government is good for them—they must be convinced that it is needed for protection, or for the promotion of their welfare, or for handouts which they would not otherwise receive.
Throughout history, the tendency of governments once established is to take an ever higher percentage of the earnings of the productive class and appropriate it for use by their own class, under the guise of providing security for everyone. After all, government already has the physical power to take by force, and it always finds an occasion for extending the scope of its own activities and thus narrowing the scope (and the freedom) of the productive citizens whose incomes they must tap in order to remain in existence. The tendency of the parasites is to swell to a larger size than those upon whom they are parasitic. Though the exploiters depend totally upon the activities of the exploited—who provide the food, the shelter, the thousand daily needs of the citizens, including the salaries of the exploiters—the exploiters nevertheless do not hesitate to expand their own activities of taxation and regulation, thereby leaving the exploited less liberty and less economic means by which to live.
But when this process of swelling parasitism has reached a certain point, the entire nation suffers economic collapse because the government tries to provide for its own employees and their cronies, and the large bloc of voters who perpetuate them in office, more of the fruits of production than the productive class are able to deliver. And when it is no longer worth the producers' while to produce, when they are taxed so highly to keep the politicians and their friends on the public payroll that they themselves no longer have a reasonable chance of success in any economic enterprise, then of course production grinds to a halt. Everyone tends to limit their production to what they need for their daily consumption, and the goods no longer reach the marketplace. When this happens, when the producers can no longer sustain on their backs the increasing load of the parasites, then the activities of the parasites must stop also, but usually not before they have brought down the entire social structure which the producers' activities have created. When the organism dies, the parasite necessarily dies too, but not until the organism has paid for the presence of the parasite with its life. It is in just this way that the major civilizations of the world have collapsed.
The Founding Fathers of the United States were very much aware of this fatal tendency of governments to expand and thus dry up the sources on which they depend. That is why they limited the operation of the American government to certain specific delimited functions: a legislative branch to pass laws in limited areas, an executive branch to enforce them, and a judicial branch to arbitrate disputes. And that's about all. They specified certain functions under these headings, such as the minting of money, the establishment of legal tender, and the creation of a Federal post office—all of which I think were mistakes; I don't think that government can be trusted with any of these activities. At any rate, the Federal Government was limited to only those functions explicitly provided for in the Constitution, and as for the rest, the attitude was "Hands off! We don't trust you!"
But as we all know 200 years later, the functions of government in the United States have constantly expanded through the years. The Constitution has been continually violated, and the courts have usually upheld the violators. As the American statesman John C. Calhoun noted in his treatise On Government, the courts, particularly the Supreme Court, are themselves branches of government, and can usually be depended on to vote for an expansion of the power of the governmental structure of which they themselves are a part. And so, government is now in the business of education, of agriculture, of welfare, of regulation of everybody, of subsidies in all directions to every group that screams for money earned by others, and of a thousand projects so ridiculous that only the mentalities of bureaucrats could conceive and execute them. The regulations under which every farmer, every worker, and every businessman today must operate are so detailed, so all-encompassing, so demoralizing, and often so unintelligible, that if any of the Founding Fathers were to read the 1974 tax laws they would exclaim, "Is this what's happening under our Constitution? Is this really the United States of America?"
All these programs, these subsidies to special interest groups, these robbings of Peter to pay Paul, as well as the regulations that tie the hands of one group supposedly to benefit another, seem to me thoroughly and completely unconstitutional. I find nothing in the Constitution which grants the Federal Government such powers. The "general welfare" clause does not, and was never intended to, permit the Federal Government to take billions from some who work to give to others who do not. As for the subsidies to special interest groups, they are simply an obscenity. When a farmer was fined for raising more grain than the Dept. of Agriculture said he was permitted to, he was taken to court, and the Supreme Court of the United States sustained the indictment against him, saying, "The Federal Government has the right to regulate that which it subsidizes." This shocking verdict, which has been a precedent for many others like it, has permitted government to enter into virtually every line of human endeavor. (Incidentally, what gave government the right to subsidize in the first place?) And what do you suppose the Founding Fathers would have thought had they known that many citizens would work 6, 8, or even 10 months out of every year to support not themselves but the government?
Yes, the America of today would be simply unrecognizable to those living only a century ago. Gradually liberty has been destroyed in favor of security—or the illusion of security, since of course there is no true security like that which you can provide for yourself, independently of the promises and threats of governments. But those who have grown up in the last two decades seldom see the danger—they have never experienced anything but the American socialist state, and as a rule they are not even aware that any alternatives exist.
And so the government, now grown fat and bloated like a huge clumsy hippopotamus, accustomed to being fed the first fruits of all our labors, wants to exact more and more from us with every passing year. In fact, if one examines the projected figures in some of the government planning bureaus, it now would like to take from us more than with all our combined efforts we are able to produce. The kidnapper demands a larger ransom than our entire assets can provide. And we, who have lived our lives on the assumption that we can plan for the future and get a fair return for our labor, are caught in the crush. Our day to day decisions, our very lives, are now in the hands of the regulators who determine who gets how much of what and for whom.
How, we may wonder, has all this happened to a political structure which was designed to ensure the very opposite? How has the citizen's servant grown into an all-devouring monster? Obviously, it didn't happen overnight. Through the years mistake has been piled on mistake, blunder upon blunder, shortsighted expediency on top of confused judgment, until today it would require tons of blasting just to get the barnacles off the ship of state. After the waste of billions of dollars under the New Deal, followed by the great expenditures of World War II, it was thought that the cost of government operations would at last decline. Instead, they kept creeping upward, as one pressure group after another attached itself to the spigot of government funds. The war hadn't been paid for, the New Deal hadn't been paid for (in fact they haven't been paid for to this day!), but the Congress nevertheless appropriated more money for vast new spending programs without even having paid for the old ones: the Office of Economic Opportunity, the Job Corps, the huge interlocking network of welfare agencies in H.E.W. by which the same person can claim unearned benefits from as many as 13 different government agencies at the same time—all were enacted into law, and of course they all required tremendous amounts of money, yours and mine.
Where was it all going to come from? (1) There are limits to direct taxation. If all of 1975's expenses had to be paid for out of 1975 taxes, people would see that they had very little left for themselves, and in a fury of indignation they would throw out of office the government that passed such laws. People had to be fed the delusion that they were getting something but not really paying for it. (2) The national debt was also increased. What this means is that you consume now and your children and grandchildren will be stuck with the bill. We have now been doing that for a little more than a generation, living on credit and piling up new debts when the old ones become due. (3) But the third and principal source of revenue is inflation—innumerable reams of printing-press money. Most people haven't read any history or economics; they don't know that inflation is the biggest killer of civilizations, even more than war itself. Besides, inflation is very tempting because its effects are not felt immediately. And so, you get a central bank (the U.S. got this in 1913 when the Federal Reserve was created), you endow it with great powers, you have it expand the money supply every time Congress appropriates (that is, expropriates) more money than the treasury contains. But as we know, every time you do this the money is worth less, and the appropriations get higher, and more inflation follows, and so on in a vicious cycle.
By 1962 the U.S. government had arrived at approximately the point that Great Britain had with the advent of the Labor Government in 1945. An upper limit to taxation had been reached, at least for a democracy. "Soak the rich" policies had been in operation for some time, but pretty soon the rich had been fairly well soaked—today even if every millionaire were soaked 100 percent of his annual income, this wouldn't run the government for half a day out of the whole year. So what could you do? To whom now can you turn to replace the cookies that one group after another has stolen out of the cookie-jar? The obvious answer would be: don't take more cookies out—cut the spending.
SOMETHING FOR NOTHING
But now there was a problem. By this time there were millions of people demanding government relief, government education, government subsidies for their own projects, and all these people would scream their heads off and vote you out of office if you turned off the tap of expropriated money; in fact they expected you to give them more benefits while still not raising their taxes. And so the government was involved in a dilemma which it created but could no longer control. People had learned to demand things for nothing from government and were not about to take any diminution in their standard of living without a murmur. And the planners had made their plans far in advance: H.E.W. Sec. Casper Weinberger said in a magazine interview that over 80 percent of the entire Federal budget is committed far in advance—for example, there are Federal housing projects already contracted for through the year 2015.
So there wasn't much future, apparently, in trying to reduce government expenditures. But it was equally awkward to have to pay for them. Caught in this bind, there seemed to be only one way out: continue the expenditures and inflate the currency. Unhappily this very "solution" had been thought of many times before in human history, and it is the time-bomb that has destroyed many previously flourishing civilizations. Nevertheless this brilliant solution kept moving into higher gear during the Johnson "Great Society" years, and Johnson was reelected in a landslide as more and more people got a piece of the plunder. Inflation kept moving upward as the money supply increased, but most people still didn't see the connection between the spending and the inflation. By and large they accepted the government line that big business, big labor, and unidentified villainous speculators were to blame for the inflation—though nobody explained quite how. If only government would get rid of these greedy businessmen, people thought, things would be all right again.
Meanwhile the number of people feeding at the government trough kept increasing. Not all of them wanted to, but in these matters a chain-reaction sets in: A says, "If B and C and D are getting it, I may as well go in for some too while the getting is good. Besides, it's partly my earnings they're getting." Federal deficits amounted to a little over 12 billion dollars during the decade of the 1950's; they more than quadrupled during the 1960's; and they were almost 90 billion during Nixon's administration alone. But even these stupendous amounts were not enough to finance the ballooning requirements of the American socialist state. Today there are over 13 million bureaucrats on the government payroll eating up your income, and since they've got by with it thus far they want to expand their operations and eat up even more. Today there are almost 20 million people receiving welfare checks—more than twice that number if you consider all kinds of welfare—and this number too keeps increasing, as well as the amount they receive each month, and all this comes out of your pocketbook—you have to work that much harder every week just to stay where you were, because of what they take out of what you produce. And there are almost 40 million people receiving social security checks—and in spite of every worker and every employer being forced to pay more every year into this fund, its total balance is zero: the money has all been spent, and the whole system is a bunch of IOU's drawn against the power to tax in the future. It is estimated that the claims on the social security fund by those who are now paying into it will amount to over a trillion dollars. How is it going to be supplied?
For the immediate future, it will come primarily from inflation, with consequent dollar-erosion. The steam-roller cannot stop as long as the government spending programs continue. And the Houses of Congress, even in the face of fiscal disaster, show not the slightest sign of cutting the spending. Far from cutting spending, they are embarked on new programs for spending still more, such as nationalized medical care, which if enacted will cost incalculable billions through the years. Government has caused such dislocations in the economy that it has created most of the poverty that exists, and yet in order to "correct" that poverty it proposes to spend still more—and most of the populace blindly goes along: if even a small cut in the schemes of legalized looting were made, the screaming would be so loud that the heavens would crack at the noise.
So, for the present at least, water will continue to run downhill and inflation will continue. But as it does, the danger mounts. People's earnings shrivel up and turn worthless in their hands; and some of them will discover where the blame really lies. Meanwhile, more people start to catch on: they see how their real savings evaporate, and so the flight from paper money begins. They don't want to be stuck with life insurance policies and retirement plans which will pay them back in worthless dollars, in return for the hard-earned dollars they put in. So they stock up on what products they can now while these are still obtainable at present prices. People begin to see that the money they've saved through the years won't even keep them in dill pickles when the crunch comes, and so the greatest of all American economic institutions, private saving, begins to dry up. They observe too that the rate of interest doesn't keep up with the cost of living—so why lend money at interest?—and accordingly whole enterprises which depend on long-term loans, such as the building industry, begin to collapse, and countless people are laid off and businesses go bankrupt because of these economic dislocations brought about by government.
Where will it all end? It can end in the total destruction of the currency, the market being reduced to primitive barter of products in lieu of money. But I suspect that we shall not go that far: at the brink of the precipice the government may enact currency reform and curtail its spending. Perhaps the widely rumored redbacks already printed will replace the present greenbacks at 1 for 100. And cutting the inflation will necessarily mean a depression, as the economy readjusts itself after more than four decades of a drunken orgy of spending. In such a depression most of the present bloated spending programs will have to go: there won't be enough water falling over the dam to keep the energy going beyond a trickle, and all those eagerly waiting below just can't be supplied. And all this will be very painful, very hard on many people, especially those who had placed their faith in government to sustain them in time of need—and most of the people who will be wiped out just won't understand. They will probably blame capitalism again, just as they did in 1929, and of course the government officials will encourage them in this belief, just as they did then. And if this piece of vicious propaganda leads to more legislation against the producing class, already beaten down, the depression will be prolonged for perhaps a generation. After all, when productive enterprises are shackled, they can't produce efficiently, and quite understandably they don't have much motivation to do so—why should they put forth the effort and the planning and the risk of capital when the government simply skims the cream off of all their labors and takes most of the milk besides? So if the parasites clobber the producers again, it may be curtains for both of them, just as it was for Greece and Rome.
But we did recover from the 1929 depression, didn't we? Yes, we did, in a way—if you can call the economy of credit, recovery. But there are several ominous differences between today and 1929. (1) In 1929 the U.S. had gold to back up its paper; today the currency is covered by gold only by about three percent. Not much to bargain with on the international market, is it? If you were an Arab would you accept this trade from an American: "Give us your oil and we'll give you our green paper in exchange, in fact we'll even print up some more of it for you"? (2) In 1929 there was no gigantic Federal debt; today of course there is, and the interest payments alone on that debt amount to almost 20 billion dollars a year; goodness knows when we'll get around to the principal. (3) But most important of all, the climate of opinion is vastly different from what it was in 1929; the whole mentality is different. There have now been over 40 years of the welfare state; people who grew up and lived in liberty and independence have died off, and been replaced by those who expect the government to support them, and militantly demand this as their right. They will keep fighting each other for more at the public trough even as the supply is running dry. Even when the productive class has been squeezed of all it can deliver, these recipients will curse the producers for not providing more. Students in state colleges and universities, paying little or no tuition and living in subsidized dormitories, will demand to continue being supported in the style to which they have become accustomed. They will probably burn down buildings rather than see these benefits stop coming. And what do you think it likely that people on the receiving end of government checks will do? Will they passively give them up, saying, "Well, it was nice while it lasted"? No, I think they will not be peaceful as they were in the 1929 depression; they will riot in the streets, loot and if necessary kill, if the benefits they demand don't keep coming their way. They don't understand that they themselves have dried up the sources; they haven't learned that there's no such thing as a free lunch.
And if this happens, how will Washington respond? If it responds by squeezing the last drop out of the producing class, even the trickle of production will stop, and there will be widespread want and starvation because there will be no one to supply these needs in the marketplace. More likely, they will leave the producers just enough to keep them producing, even though at a minimum level of efficiency. But the creative minds will not go into production any more—not of building or food or medical supplies or new research, or other necessities or luxuries of life—because the government will siphon off the fruits of the marketplace at their source.
In fact, faced with violence and looting, many of the producers themselves will turn to the government in order to get "law and order" even if they can no longer get prosperity or even a fair return for their labor. There is ample historical precedent for this last step, with the controlled society replacing the free society because of the violence of the looters when there is no longer enough left to loot. Producers would usually rather settle for a poverty-stricken existence than risk no existence at all.
The details may vary because of a thousand unforeseeable circumstances, but we can see what the general pattern is. The parasites (i.e. the looters) take more and more from the producers upon whom they depend, until they control their lives and their work, allowing them to retain just enough to keep them producing; and thus the parasites stay in power, and either the whole structure collapses through the destruction of the productive class, or the productive machine keeps functioning at a low level of efficiency.
There is only one way I know of to break this pattern; this is to have an educated citizenry—educated enough in at least the economic facts-of-life to know what the danger signals are, and never give in to the slightest temptation to violate the right of each person to the product of his labor. But it is certain that the American citizenry is not acquainted with these facts-of-life today—no, not in the streets, nor in the shops, nor in the state capitals, nor in Washington, nor on the college campuses of America. The welfare mentality continues to flourish.
Is this, then, the end of the American dream? Beginning with control by each individual over his own life, must it end with control by government over his life? No, the end is not inevitable: people have free-will, and they have the power to throw out of office every politician who votes the measures which are leading our country to the brink of the fatal precipice. But let us ask in all honesty, is it likely that the voters of America today will do this? Unfortunately it seems to me that it is not. A great deal more suffering will have to take place before dire necessity forces the looters to relinquish their stranglehold. How likely do you think it is at this moment, with every pressure group clamoring for more subsidies from government, and threatening not to re-elect their congressmen if they don't get what they want, that the congressmen will vote to abolish or even reduce the subsidies? Once the welfare mentality has begun, it is next to impossible to reverse it. The only real sign of reversal that I see on the horizon lies in the Libertarian Party. At the moment, though it is growing, it is not yet able to change the course of our culture; in another couple of decades, hopefully it will be. But it is a race against time, and by that time economic catastrophe may already have overtaken us.
For the immediate present, we face more regulation, more strangulation by government, more control over our activities, more inflation, and consequently the gradual worthlessness of everything we have saved for the future. What a legacy this is to leave to our children! What will the next generation of Americans think (those who think at all) of this one for what has been done to them before their lives were fairly started? Under what handicaps will they live, what loss of liberty will they suffer, because of the tragic mistakes, hundreds of them one after another, of those in power in America in the 1930's, 40's, 50's and 60's?
Well, the producers tried. They tried like Atlas to support the world, shackled as they were, and as a reward their shackles were doubled. And if you are a producer and you see the trend, and if in the end the worst happens, don't ever forget what happened, and who did it to you!
One last thought: don't blame only the politicians and bureaucrats. Behind the bureaucrat lies the politician who created his job, and behind the politician lies the voter who elected him to office—perhaps out of blind ignorance, perhaps in hopes of getting some of his own free loot from the public trough. While we are condemning the acts of the looters' governments, let's not forget all those people whose votes put into power the governments that performed these acts. Among the millions of voters who helped get the avalanche started, were there, perhaps, once upon a time, you and I?
Contributing editor John Hospers is a professor of philosophy at the University of Southern California. Author of many books, including Libertarianism, he has been the Libertarian Party's candidate for both governor of California and President of the United States. This article is adapted from a speech given by Dr. Hospers at a Libertarian Party Fourth of July rally in Los Angeles.