D.1 Why does state intervention occur?

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 section C.7), in practice the state can only try to postpone them and ameliorate their severity. Let's begin with the need for social intervention.

Capitalism is based on turning both labour and land into commodities. As Karl Polyani points out, however, "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." [The Great Transformation, p. 71] And this means that "human society has become an accessory to the economic system," with humanity placing itself fully in the hands of supply and demand. But such a situation "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." [Ibid., pp. 41-42]

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.

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 section I).

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 "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." [World Orders, Old and New, p. 114]

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).

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. "Only in the mid-nineteenth century, when it had become powerful enough to overcome any competition, did England [sic!] embrace free trade." [Noam Chomsky, Op. Cit., 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 "Pentagon System" in the USA (see section D.8).

State intervention has been a feature of capitalism from the start. As Kropotkin argued, "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 always 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. And it could not be otherwise. To do so was one of the functions -- the chief mission -- of the State." [Evolution and Environment, 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, "[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." ["Anarchism, Marxism and Hope for the Future", Red and Black Revolution, issue 2]

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 "an accessory to the economic system"; (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.

State intervention is as natural to capitalism as wage labour. As Polyani summarises, "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." [Op. Cit., pp. 149-150] For "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." [Errico Malatesta, Anarchy, p. 22]

And neither should it be forgotten that state intervention was required to create the "free" market in the first place. To quote Polyani again, "[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." [Op. Cit., p. 149] Protectionism and subsidy (mercantilism) -- along with the liberal use of state violence against the working class -- was required to create and protect capitalism and industry in the first place (see section F.8 - What role did the state take in the creation of capitalism?).

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.

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!

D.1.1 Does state intervention cause the problems to begin with?

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 not to have bad effects. State intervention can and does make bad situations worse in many cases. As Malatesta notes, "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." [Anarchy, p. 21].

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.

But such a position is illogical, for "whoever says regulation says limitation: now, how conceive of limiting privilege before it existed? ... [I]t would be an effect without a cause" and so "regulation was a corrective to privilege" and not vice versa. [P-J Proudhon, System of Economic Contradictions, p. 371] As Polyani explains, the neo-liberal premise is false, because state intervention always "dealt with some problem arising out of modern industrial conditions or, at any rate, in the market method of dealing with them." [Karl Polyani, Op. Cit., 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).

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, "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" ["The Nation-state and the Market," p. 48, Society and Nature, Vol. 3, pp. 44-45].

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 "[a]t the beginning of the Depression, Europe had been in the heyday of free trade" [Polyani, Op. Cit., p. 216]. State intervention came about in response to the social disruptions resulting from laissez-faire. It did not cause them.

Similarly, it is a fallacy to state, as Ludwig Von Mises does, that "as long as unemployment benefit is paid, unemployment must exist." This statement is not only ahistoric but ignores the existence of the involuntary 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.

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: "a social calamity is primarily a cultural not an economic phenomenon that can be measured by income figures" [Op. Cit., p. 157]. And it is the nature of capitalism to ignore and despise what cannot be measured.

D.1.2 Is state intervention the result of democracy?

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.

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 "[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" ["The Nation-state and the Market", p. 55, Society and Nature, Vol. 3, pp. 44-45]

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.

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."

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.

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).

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 reductio ad absurdum of that premise as well as going against the facts of history.

D.1.3 Is state intervention socialistic?

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 both agreed upon. However, as we'll see in section H.3.13, "state socialism" is in reality just state capitalism-- the turning of the world into "one office and one factory" (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?

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.

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, "[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" [The Chomsky Reader, p. 184]. "Welfare equals socialism" is nonsense.

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, "If you don't give the people social reforms they are going to give you social revolution." 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, "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" [Vernon Richards, ed., Neither Nationalisation nor Privatisation -- Selections from Freedom 1945-1950, p. 9].

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 is an evil).

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 can 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 J.5.15 for anarchist perspectives on the welfare state).

One problem with state intervention, as Kropotkin saw, is that the state's absorption of social functions "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" [Mutual Aid, p. 183]. In the case of state "social functions," such as the British National Health Service, although they were created as a result of the social atomisation caused by capitalism, they have tended to reinforce 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 J.5.16).

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 "really consolidating the old individual capitalist class into a new and efficient class of managers to run. . . state capitalism" by "installing the really creative industrialists in dictatorial managerial positions" [Vernon Richards, Op. Cit., p. 10].

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 our desires and interests. We have seen how vulnerable state welfare is to pressures from the capitalist class to see that this is a truism.