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<html>
<head>
<title>D.1 Why does state intervention occur?
</title>
</head>
<body>
<p>
<H1>D.1 Why does state intervention occur?</H1>
<p>
The state is forced to intervene in society because of the anti-social
effects of capitalism. The abstractly individualistic theory on which
capitalism is based ("everyone for themselves") results in a high degree
of statism since the economic system itself contains no means to combat
its own socially destructive workings. The state must also intervene in
the economy, not only to protect the interests of the ruling class but
also to protect society from the atomising and destructive impact of
capitalism. Moreover, capitalism has an inherent tendency toward 
periodic recessions or depressions, and the attempt to prevent them has 
become part of the state's function. However, since preventing them is 
impossible (they are built into the system -- see <a href="secC7.html">
section C.7</a>), in 
practice the state can only try to postpone them and ameliorate their 
severity. Let's begin with the need for social intervention. 
<p>
Capitalism is based on turning both labour and land into commodities. As
Karl Polyani points out, however, <i>"labour and land are no other than the
human beings themselves of which every society consists and the natural
surroundings in which it exists; to include labour and land in the market
mechanism means to subordinate the substance of society itself to the laws
of the market."</i> [<b>The Great Transformation</b>, p. 71] And this means that
<i>"human society has become an accessory to the economic system,"</i> with
humanity placing itself fully in the hands of supply and demand. But such
a situation <i>"could not exist for any length of time without annihilating
the human and natural substance of society; it would have physically
destroyed man and transformed his surroundings into a wilderness."</i> [<b>Ibid.</b>,
pp. 41-42]
<p>
To expect that a community would remain indifferent to the scourge of
unemployment, dangerous working conditions, 16-hour working days, the
shifting of industries and occupations, and the moral and psychological
disruption accompanying them -- merely because economic effects, in the
long run, might be better -- is an absurdity. Similarly, for workers to 
remain indifferent to, for example, poor working conditions, peacefully 
waiting for a new boss to offer them better conditions, or for citizens 
to wait passively for capitalists to start voluntarily acting responsibly 
toward the environment, is to assume a servile and apathetic role 
for humanity. Luckily, labour power refuses to be a commodity and 
citizens refuse to stand idly by while the planet's ecosystems are
destroyed. 
<p>
Therefore state intervention occurs as a form of protection against the
workings of the market. As capitalism is based on atomising society in
the name of "freedom" on the competitive market, it is hardly surprising that
defence against the anti-social workings of the market should take
statist forms -- there being few other structures capable of providing
such defence (as such social institutions have been undermined, if not
crushed, by the rise of capitalism in the first place). Thus, ironically, 
"individualism" produces a "collectivist" tendency within society as 
capitalism destroys communal forms of social organisation in favour of 
ones based on abstract individualism, authority, and hierarchy -- all 
qualities embodied in the state. In a free (i.e. communal) society, 
social self-defence would not be statist but would be similar in nature 
to trade unionism and co-operatives -- individuals working together in 
voluntary associations to ensure a free and just society (see 
<a href="secIcon.html">section I</a>).
<p>
In addition to social protection, state intervention is required to
protect a country's economy (and so the economic interests of the ruling
class). As Noam Chomsky points out, even the USA, home of "free
enterprise," was marked by <i>"large-scale intervention in the economy after
independence, and conquest of resources and markets. . . [while] a
centralised developmental state [was constructed] committed to [the]
creation and entrenchment of domestic manufacture and commerce,
subsidising local production and barring cheaper British imports,
constructing a legal basis for private corporate power, and in numerous
other ways providing an escape from the stranglehold of comparative
advantage."</i> [<b>World Orders, Old and New</b>, p. 114]
<p>
In the case of Britain and a host of other countries (and more recently in
the cases of Japan and the Newly Industrialising Countries of the Far
East, like Korea) state intervention was, oddly enough, the key to
development and success in the "free market." In other "developing"
countries which have had the misfortune to be subjected to "free-market
reforms" (e.g. neo-liberal Structural Adjustment Programs) rather
than following the interventionist Japanese and Korean models, the
results have been devastating for the vast majority, with drastic
increases in poverty, homelessness, malnutrition, etc. (for the elite,
the results are somewhat different of course).
<p>
In the nineteenth century, states only turned to laissez-faire once they
could benefit from it and had a strong enough economy to survive it. <i>"Only
in the mid-nineteenth century, when it had become powerful enough to
overcome any competition, did England [sic!] embrace free trade."</i> [Noam
Chomsky, <b>Op. Cit.</b>, p. 115] Before this, protectionism and other methods
were used to nurture economic development. And once laissez-faire started to
undermine a country's economy, it was quickly revoked. For example, 
protectionism is often used to protect a fragile economy and militarism 
has always been a favourite way for the ruling elite to help the economy, 
as is still the case, for example, in the <b><i>"Pentagon System"</b></i> in the USA 
(see <a href="secD8.html">section D.8</a>).
<p>
State intervention has been a feature of capitalism from the start. As 
Kropotkin argued, <i>"nowhere has the system of 'non-intervention of the State' ever existed. 
Everywhere the State has been, and still is, the main pillar and the creator, direct and 
indirect, of Capitalism and its powers over the masses. Nowhere, since States have grown 
up, have the masses had the freedom of resisting the oppression by capitalists. . . The state 
has <b>always</b> interfered in the economic life in favour of the capitalist exploiter. It has 
always granted him protection in robbery, given aid and support for further enrichment. 
<b>And it could not be otherwise.</b> To do so was one of the functions -- the chief mission -- 
of the State."</i> [<b>Evolution and Environment</b>, pp. 97-8] Its limited attempts at 
laissez-faire have always been failures, resulting in a
return to its statist roots. The process of selective laissez-faire and
collectivism has been as much a feature of capitalism in the past as it is
now. Indeed, as Noam Chomsky argues, <i>"[w]hat is called 'capitalism' is
basically a system of corporate mercantilism, with huge and largely
unaccountable private tyrannies exercising vast control over the economy,
political systems, and social and cultural life, operating in close
co-operation with powerful states that intervene massively in the domestic
economy and international society. That is dramatically true of the United
States, contrary to much illusion. The rich and privileged are no more
willing to face market discipline than they have been in the past, though
they consider it just fine for the general population."</i> 
[<i>"Anarchism, Marxism and Hope for the Future"</i>, <b>Red and Black
Revolution</b>, issue 2]
<p>
Therefore, contrary to conventional wisdom, state intervention will always
be associated with capitalism due to: (1) its authoritarian nature; (2) its
inability to prevent the anti-social results of the competitive market; 
(3) its fallacious assumption that society should be <i>"an accessory to 
the economic system"</i>; (4) the class interests of the ruling elite; and
(5) the need to impose its authoritarian social relationships upon an
unwilling population in the first place.
<p>
State intervention is as natural to capitalism as wage labour. As Polyani
summarises, <i>"the countermove against economic liberalism and laissez-faire
possessed all the unmistakable characteristics of a spontaneous reaction. .
. [and] a closely similar change from laissez-faire to 'collectivism' took
place in various countries at a definite stage of their industrial
development, pointing to the depth and independence of the underlying
causes of the process."</i> [<b>Op. Cit.</b>, pp. 149-150] For <i>"government cannot
want society to break up, for it would mean that it and the dominant class
would be deprived of sources of exploitation; nor can it leave society to
maintain itself without official intervention, for then people would
soon realise that government serves only to defend property owners. . .
and they would hasten to rid themselves of both."</i> [Errico Malatesta,
<b>Anarchy</b>, p. 22]
<p>
And neither should it be forgotten that state intervention was required to 
create the "free" market in the first place. To quote Polyani again, 
<i>"[f]or as long as [the market] system is not established, economic 
liberals must and will unhesitatingly call for the intervention of the 
state in order to establish it, and once established, in order to maintain 
it."</i> [<b>Op. Cit.</b>, p. 149] Protectionism and subsidy (mercantilism) 
-- along with the liberal use of state viollence against the working
class -- was required to create and protect capitalism and industry 
in the first place (see 
section F.8 - <a href="secF8.html">What role did the state take in the creation of capitalism?</a>). 
<p>
In short, although laissez-faire may be the ideological basis of capitalism
-- the religion that justifies the system --- it has rarely if ever been 
actually practised. So, while the ideologues are praising "free enterprise" 
as the fountainhead of modern prosperity, corporations and companies 
are gorging at the table of the State.
<p>
The recent enthusiasm for the "free market" is in fact the product of an
extended boom, which in turn was a product of a state co-ordinated war
economy and highly interventionist Keynesian economics (a boom that the
apologists of capitalism use, ironically, as "evidence" that "capitalism"
works) plus an unhealthy dose of nostalgia for a past that never existed. 
It's strange how a system that has never existed has produced so much!
<p>
<a name="secd11"><h2>D.1.1 Does state intervention cause the problems to begin with?</h2>
<p>
Usually, no. This does not mean that state intervention cannot have bad
effects on the economy or society. Given the state's centralised, 
bureaucratic nature, it would be impossible for it <b>not</b> to have bad 
effects. State intervention can and does make bad situations worse in 
many cases. As Malatesta notes, <i>"the practical evidence [is] that whatever
governments do is always motivated by the desire to dominate, and is
always geared to defending, extending and perpetuating its privileges
and those of the class of which it is both the representative and
defender."</i> [<b>Anarchy</b>, p. 21].
<p>
However, for economic liberals (or, as we would call them today,
neo-liberals or "conservatives"), state intervention is the root of all
evil, and for them, it is precisely the state's interference with the
market which causes the problems that society blames on the market. 
<p>
But such a position is illogical, for <i>"whoever says regulation says
limitation: now, how conceive of limiting privilege before it existed?
... [I]t would be an effect without a cause"</i> and so <i>"regulation was a
corrective to privilege"</i> and not vice versa. [P-J Proudhon, <b>System of
Economic Contradictions</b>, p. 371] As Polyani explains, the neo-liberal 
premise is false, because state intervention always <i>"dealt with some 
problem arising out of modern industrial conditions or, at any rate, 
in the market method of dealing with them."</i> [Karl Polyani, <b>Op. Cit.</b>, 
p. 146] In fact, these "collectivist" measures were usually carried 
out by convinced supporters of laissez-faire, who were as a rule 
uncompromising opponents of all forms of socialism (and often 
introduced to undermine support for socialist ideas caused by the
excesses of "free market" capitalism).
<p>
Thus state intervention did not spring out of thin air, but occurred in
response to pressing social and economic needs. This can be observed in
the mid 19th century, which saw the closest approximation to laissez-faire
in the history of capitalism. As Takis Fotopoules argues, <i>"the attempt to
establish pure economic liberalism, in the sense of free trade, a
competitive labour market and the Gold Standard, did not last more than 40
years, and by the 1870s and 1880s, protectionist legislation was back. . .
. It was also significant. . . [that all major capitalist powers] passed
through a period of free trade and laissez-faire, followed by a period of
anti-liberal legislation"</i> [<i>"The Nation-state and the Market,"</i> p. 48,
<b>Society and Nature</b>, Vol. 3, pp. 44-45].
<p>
The reason for the return of protectionist legislation was the Depression
of 1873-86, which marked the end of the first experiment with pure
economic liberalism. Paradoxically, then, the attempt to liberalise the
markets led to more regulation. In light of our previous analysis, this
is not surprising. Neither the owners of the country nor the politicians
desired to see society destroyed, the result to which unhindered
laissez-faire leads. Apologists of capitalism overlook the fact that <i>"[a]t
the beginning of the Depression, Europe had been in the heyday of free
trade"</i> [Polyani, <b>Op. Cit.</b>, p. 216]. State intervention came about in
response to the social disruptions resulting from laissez-faire. It did
not cause them.
<p>
Similarly, it is a fallacy to state, as Ludwig Von Mises does, that <i>"as
long as unemployment benefit is paid, unemployment must exist."</i> This
statement is not only ahistoric but ignores the existence of the
<b>involuntary</b> unemployment which caused the state to start paying out a
dole in order eliminate the possibility of crime as well as working class 
self-help, which could conceivably have undermined the status quo. The 
elite was well aware of the danger in workers organising for their own 
benefit. 
<p>
Sadly, in pursuing of ideologically correct answers, capitalist apologists
often ignore common sense. If one believes people exist for the economy
and not the economy for people, one becomes willing to sacrifice people
and their society today for the supposed economic benefit of future
generations (in reality, current profits). If one accepts the ethics of 
mathematics, a future increase in the size of the economy is more important 
than current social disruption. Thus Polyani again: <i>"a social calamity is 
primarily a cultural not an economic phenomenon that can be measured by income 
figures"</i> [<b>Op. Cit.</b>, p. 157]. And it is the nature of capitalism to ignore and
despise what cannot be measured.
<p>
<a name="secd12"><h2>D.1.2 Is state intervention the result of democracy?</h2>
<p>
No. Social and economic intervention by the modern state began long 
before universal suffrage became widespread. For example, in Britain,
"collectivist" measures were introduced when property and sexual 
restrictions on voting rights still existed. The centralist and 
hierarchical nature of "representative" democracy means that the 
population at large has little real control over politicians, who 
are far more influenced by big business, business lobby groups, and 
the state bureaucracy. This means that truly popular and democratic
pressures are limited within the capitalist state and the interests
of elites are far more decisive in explaining state actions.
<p>
The "New Deal" and the post-war Keynesianism measures of limited state
intervention to stimulate economic recovery from the Depression were
motivated by more material reasons than democracy. Thus Takis Fotopoules
argues that <i>"[t]he fact . . .that 'business confidence' was at its lowest
could go a long way in explaining the much more tolerant attitude of those
controlling production towards measures encroaching on their economic
power and profits. In fact, it was only when -- and as long as -- state
interventionism had the approval of those actually controlling production
that it was successful"</i> [<i>"The Nation-state and the Market"</i>, p. 55,
<b>Society and Nature</b>, Vol. 3, pp. 44-45]
<p>
An example of this principle can be seen in the 1934 Wagner Act in the
USA, which gave US labour its first and last political victory. The act
made it legal for unions to organise, but this placed labour struggles
within the boundaries of legal procedures and so meant that they could be
more easily controlled. In addition, this concession was a form of
appeasement whose effect was to make those involved in union actions less
likely to start questioning the fundamental bases of the capitalist
system. Once the fear of a militant labour movement had passed, the
Wagner Act was undermined and made powerless by new laws, laws which
made illegal the tactics which forced the politicians to pass the
Wagner Act in the first place and increased the powers of bosses over
workers.
<p>
Needless to say, the implication of classical liberal ideology that
popular democracy is a threat to capitalism is the root of the fallacy
that democracy leads to state intervention. The notion that by limiting
the franchise the rich will make laws which benefit all says more about
the classical liberals' touching faith in the altruism of the rich than it
does about their understanding of human nature or their grasp of history. 
The fact that they can join with John Locke and claim with a straight face
that all must abide by the rules that only the few make also says a lot
about their concept of "freedom." 
<p>
Of course some of the more modern classical liberals (for example,
right-wing libertarians) advocate a "democratic state" which cannot
intervene in economic matters. This is no solution, however, as it only
gets rid of the statist response to real and pressing social problems
caused by capitalism without supplying anything better in its place. 
<p>
Anarchists agree that the state, due to its centralisation and
bureaucracy, crushes the spontaneous nature of society and is a handicap
to social progress and evolution. However, leaving the market alone to
work its course fallaciously assumes that people will happily sit back and
let market forces rip apart their communities and environment. Getting
rid of state intervention without getting rid of capitalism and creating a
free, communal society would mean that the need for social self-protection
would still exist but that there would be even less means of achieving it
than now. The results of such a policy, as history shows, would be a
catastrophe for the working class (and the environment, we must add) 
and beneficial only for the elite (as intended, of course).
<p>
The implication of the false premise that democracy leads to state
intervention is that the state exists for the benefit of the majority,
which uses the state to exploit the rich minority! Amazingly, many
capitalist apologists accept this as a valid inference from their
premise, even though it's obviously a <i>reductio ad absurdum</i> of that
premise as well as going against the facts of history. 
<p>
<a name="secd13"><H2>D.1.3 Is state intervention socialistic?</H2>
<p>
No. Libertarian socialism is about self-liberation and self-management of
one's activities. Getting the state to act for us is the opposite of
these ideals. In addition, the question implies that socialism is
connected with its nemesis, statism, and that socialism means even more
bureaucratic control and centralisation. The identification of socialism
with the state is something that Stalinists and capitalist apologists
<b>both</b> agreed upon. However, as we'll see in section <a href="secH3.html">H.3</a>, 
"state socialism" is in
reality just state capitalism-- the turning of the world into <i>"one 
office and one factory"</i> (to use Lenin's expression). Little wonder 
that most sane people join with anarchists in rejecting it. Who wants to 
work under a system in which, if one does not like the boss (i.e. the state), 
one cannot even
quit? 
<p>
The theory that state intervention is "creeping socialism" takes the
laissez-faire ideology of capitalism at its face value, not realising that
it is ideology rather than reality. Capitalism is a dynamic system and
evolves over time, but this does not mean that by moving away from its
theoretical starting point it is negating its essential nature and
becoming socialistic. Capitalism was born from state intervention, and
except for a very short period of laissez-faire which ended in depression,
has always depended on state intervention for its existence.
<p>
The claim that state intervention is "socialist" also ignores the
realities of power concentration under capitalism. Real socialism
equalises power by redistributing it to the people, but as Noam Chomsky
points out, <i>"[in] a highly inegalitarian society, it is most unlikely that
government programs will be equalisers. Rather, it is to be expected that
they will be designed and manipulated by private power for their own
benefits; and to a significant degree the expectation is fulfilled"</i> [<b>The
Chomsky Reader</b>, p. 184]. "Welfare equals socialism" is nonsense.
<p>
Similarly, in Britain and the nationalisation of roughly 20% of the
economy (the most unprofitable sections of it as well) in 1945 by the
Labour Government was the direct result of ruling class fear, not
socialism. As Quintin Hogg, a Tory M.P. at the time, said, <i>"If you don't
give the people social reforms they are going to give you social
revolution."</i> Memories of the near revolutions across Europe after the
First World War were obviously in many minds, on both sides. Not that
nationalisation was particularly feared as "socialism." As anarchists at
the time noted, <i>"the real opinions of capitalists can be seen from Stock
Exchange conditions and statements of industrialists [rather] than the
Tory Front bench. . . [and from these we] see that the owning class is not
at all displeased with the record and tendency of the Labour Party"</i>
[Vernon Richards, ed., <b>Neither Nationalisation nor Privatisation --
Selections from <i>Freedom</i> 1945-1950</b>, p. 9].
<p>
So where do anarchists stand on state intervention? Usually we are
against it, although most of us think state health care services and
unemployment benefits (for example) are more socially useful than arms
production, and in lieu of more anarchistic solutions, better than the
alternative of "free market" capitalism. This does not mean we are happy
with state intervention, which in practice undermines working class
self-help, mutual aid and autonomy. Also, state intervention of the
"social" nature is often paternalistic, run by and for the "middle classes"
(i.e. professional/managerial types and other self-proclaimed "experts").
However, until such time as a viable anarchist counterculture is created,
we have little option but to "support" the lesser evil (but let's make no
mistake, it <b>is</b> an evil).
<p>
This is not to deny that in many ways such state "support" can be used as
a means of regaining some of the power and labour stolen from us by
capitalists in the first place. State intervention <b>can</b> give working 
people more options than they otherwise would have. If state action could
not be used in this way, it is doubtful that capitalists and their hired
"experts" would spend so much time trying to undermine and limit it. As 
the capitalist class happily uses the state to enforce its power and 
property rights, working people making whatever use they can of it is 
to be expected. Be that as it may, this does not blind anarchists to 
the negative aspects of the welfare state and other forms of state 
intervention (see section <a href="secJ5.html#secj515">J.5.15</a> for anarchist perspectives on the
welfare state).
<p>
One problem with state intervention, as Kropotkin saw, is that the state's
absorption of social functions <i>"necessarily favoured the development of an 
unbridled, narrow-minded individualism. In proportion as the obligations 
towards the State grew in numbers, the citizens were evidently relieved 
from their obligations towards each other"</i> [<b>Mutual Aid</b>, p. 183]. In 
the case of state "social functions," such as the British National 
Health Service, although they were created as a <b>result</b> of the social
atomisation caused by capitalism, they have tended to <b>reinforce</b> the
individualism and lack of personal and social responsibility that produced
the need for such action in the first place. (Forms of community and
social self-help and their historical precedents will be discussed in
section <a href="secJ5.html#secj516">J.5.16</a>).
<p>
The example of nationalised industries is a good indicator of the
non-socialist nature of state intervention. Nationalisation meant
replacing the capitalist bureaucrat with a state one, with little real
improvement for those subjected to the "new" regime. At the height of the
British Labour Party's post-war nationalisations, anarchists were pointing
out its anti-socialist nature. Nationalisation was <i>"really consolidating
the old individual capitalist class into a new and efficient class of
managers to run. . . state capitalism"</i> by <i>"installing the really creative
industrialists in dictatorial managerial positions"</i> [Vernon Richards, 
<b>Op. Cit.</b>, p. 10].
<p>
Anarchists are in favour of self-directed activity and direct action to
get improvements and defend reforms in the here and now. By organising
strikes and protests ourselves, we can improve our lives. This does not
mean that using direct action to get favourable laws passed or 
less-favourable ones revoked is a waste of time. Far from it. However, 
unless ordinary people use their own strength and grassroots organisations 
to enforce the law, the state and employers will honour any disliked law 
purely in the breach. By trusting the state, social self-protection 
against the market and power concentrations becomes hollow. In the end,
what the state gives (or is pressurised into giving), it can take away
but what we create and run ourselves is always responsive to <b>our</b> 
desires and interests. We have seen how vulnerable state welfare 
is to pressures from the capitalist class to see that this is a 
truism.
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