Tonight I am to spend thirty minutes discussing what is, perhaps, the most important, and certainly the most complex, public issue which faces us today. What is the correct relationship between the state and society as a whole? Or, more precisely, how big should government be? And what should it do? Let me plunge straight into the problem by listing the three essential activities of government, with which no one but an anarchist would quarrel. First, the state has an absolute obligation to protect the nation's territorial and political integrity. Second, it must maintain internal order and administer justice impartially among its citizens. Third, it must issue and maintain a legal currency.

It is at this point that the argument begins: What, in addition to these three basics, should the state do? Now here immediately we come to a widely held and profoundly mistaken belief. This is that the state, from its inception to the present day, has slowly and systematically added to its functions--that the expansion of the scope of government is itself a reflection of intellectual advance and moral progress. Nothing could be further from the historical truth. The earliest states were totalitarian. In the first of them, Egypt, the theocratic monarchy controlled all long-distance commerce and large-scale manufacturers. Three thousand years before Christ, it already had a bureaucracy, fiercely defending its entrenched interests. An apprentice bureaucrat was taught to copy: "Put writing in thy heart, so that thou mayest protect thine own person from any kind of labor, and be a respected official." The Code of Hammurabi, the earliest law code, from 2100 b.c., has no less than seventeen provisions fixing wages and prices.[1] Now that the deciphering of the Linear-B script allows us to examine the copious state archives of the Mycenaean-age cities of Greece, we wonder how such a slender agricultural and trading base could support such a prodigious bureaucratic superstructure. But the answer, of course, is that it eventually failed to do so. The societies of antiquity were frequently destroyed by the growth of the state and its parasites. The successive empires of Greece and Rome were the creation of a new spirit of individual enterprise, and it was the extinction of this spirit by bureaucratic growth which brought about their decline. That decline was already well under way by the time that the Emperor Diocletian issued his famous edict to control wages and prices.[2] Rome's successor, Byzantium, was the bureaucratic state par excellence, in which the government had a monopoly of all industry and trade; and Byzantium was essentially destroyed, not by the guns of the Ottoman Turks, but by the competition of free-enterprise Venice.

At all periods, the monster-state is associated with archaic notions and is ultimately the progenitor of economic decline and military ruin. I know of no historical exception to this rule. Conversely, the growth of possessive individualism, at the expense of the state, is always associated with economic advance. It is no accident that the Industrial Revolution, which began in England in the 1760s, took place against the background of the "minimum state," when government confined itself very largely to discharging its three basic functions. The coming of industrial capitalism, not only the most important event in secular history but the most beneficial, took place not because of the state but despite it; and its worldwide spread was made possible largely by the withdrawal of government from economic affairs. During the nineteenth century in every country which was industrializing itself, public expenditure, as a proportion of gross national product, fell steadily. In Britain, for instance, during the sixty years 1830–1890--the longest sustained period of rising living standards in British history--public expenditure as a proportion of GNP fell from 15 percent to 8 percent.[3] In the United States, the figures are even more striking. Up to 1914, America's GNP was expanding at about four times the speed of government. The state performed merely a nightwatchman's role. In the age of Lincoln and Gladstone, the minimum state was seen as a vital element in the stream of progress, because it was associated--and rightly associated--not only with the economic betterment of the individual but with his growing liberty.

Indeed, no student of history can doubt that, in the long run, the direction of mankind is towards greater individual freedom. We have moved progressively from the collectivist communities of antiquity to societies in which the uniqueness of the individual is conceded, theoretically at least, and the universality of human rights is given formal recognition. Few now officially deny the rights of man; virtually all agree, as self-evident truth, that freedom is a public good. Just as hypocrisy is the tribute vice pays to virtue, so constitutions, endorsing human rights, are the homage which the most obdurate and enduring tyranny feels obliged to lay at freedom's feet. Even the most depraved African despot sports some utopian certificate to give his regime a spurious legitimacy, while the Soviet Union, the most authoritarian and restrictive system of government ever devised, flaunts a constitution of exemplary benevolence.

Of course such documents are fraudulent. Who can honestly claim that the total of human freedom has been enlarged in our century? Two horrifying world wars, in which the high liberal civilization of Europe and the Western world came close to committing suicide, have dulled our sensibilities and debauched our instinct for justice. Worst of all, these wars gave birth to that historical throwback, the modern Frankenstein state. Governments have developed not only unprecedented new means to destroy, but new instruments of oppression and new ways to lie. All over the world, the state has gorged itself on the evil novelties human ingenuity constantly makes available. It is the state which has been the principal beneficiary of our twentieth-century horrors. True, all but one of the old empires have been dismantled; but the states which replaced them have eagerly embraced and zealously fostered all the imperialist vices, especially militarism and bureaucracy, while abandoning such virtues, above all, respect for the rule of law, which imperialism sometimes possessed. In all these states, government has become ubiquitous and menacing, mendacious and corrupt, and in consequence arbitrary and destructive of private happiness and property. As for the last and least liberal of the empires, Russia, it is in rude and brutal health; it has enormously enlarged its boundaries, it constantly expands its sphere of influence, it arms without cease, and, within its totalitarian entrails, it furtively breeds the ever-expanding organism of police terror.

What is still more disturbing is that, even in the liberal democracies of the Western tradition, the Frankenstein state has contrived to establish itself. It is alive, well, living amongst us and flexing its muscles, looking forward with boundless confidence and insatiable appetite to an indefinite career of growth and consumption. The monster is at large all over Western Europe; and in the United States it is the last, boldest, and most insolent of all the immigrants to clamber onto her shores.

If I spend a little time on the British experience, it is partly that in Britain the Frankenstein state has done the most extensive and obvious damage, but still more because I detect unmistakable signs that almost every aspect of the British disease is spreading to the United States. I can assure you that, wherever you are now heading, we have been there before. Take warning from our bitter experience. We ourselves were warned, in vain. In 1861, when Mr. Gladstone established the Public Accounts Committee, as a parliamentary watchdog on the growth of government, he warned: "An excess in the public expenditure, beyond the legitimate wants of the country, is not only a pecuniary waste but a great political and, above all, a great moral evil. And it is characteristic of the mischiefs that arise from financial prodigality that they creep onwards with a noiseless and stealthy step, that they commonly remain unseen and unfelt until they have reached a magnitude absolutely overwhelming."[4]

This unheeded warning has been proved justified in every particular. Year after year we in Britain have handed over more and more responsibilities to the state. To paraphrase the Bible: We have rendered unto Caesar the things that are not Caesar's. In Mr. Gladstone's day, the British government employed only 75,000 people, most of them in the Customs and Excise and Post Office. In the central departments of civil government there were only 1,628 officials.[5] By 1974 there were nearly a million of them, and there were more than 8 million employees in the public sector as a whole--27 percent of the entire working population.[6] By the time public opinion woke up to the magnitude in the rise of public expenditure, in the last two years, it had become what might well be called "absolutely overwhelming." In Mr. Gladstone's day we spent 8 percent of the GNP on government. By 1974 it had reached nearly 50 percent, and it was on a rising curve.[7]

By this point, all rational sense had been lost as to what the government should or should not do. It was--is--doing a bit of everything. One middle-ranking civil servant, taking over new responsibilities, found that in his area alone, government employees were running a gravel pit, a sawmill, a sign-writing center, a road-sweeping service, nurseries producing shrubs and trees, a domestic water-supply plant, and a machine-maintenance business. The elements of this little empire had only one thing in common: all were "totally uneconomic." In every case, he wrote, "we could buy the same services or the same products for a fraction of the cost elsewhere, even without making allowance for the concealed capital investment which was nearly always involved."[8]

This pattern is repeated, on a gigantic scale, at the national level. By the middle of last year, the British government found itself owning, wholly or in part, 1,104 businesses--the great majority of them running at a loss. Apart from that, they seem to have nothing in common. They include businesses making concrete, asbestos, electrical equipment, chemicals, ships, aircraft, and marine equipment; businesses engaged in printing, publishing, construction, civil engineering, cold storage, furniture-removals, nuclear power, oil, gas, rolling mills, quarries, canals, harbors, every conceivable kind of transport, hotels, motels, safari lodges, catering, communications of all kinds, textiles, cotton, sugar, tea, cocoa and coffee estates, waste-incineration, laboratories, tanneries, finance companies, movie studios--everything including a chain of bars, a string of racehorses, and a football team.[9] You name it; we own it, and it runs at a loss.

As for government agencies--in addition to the main government departments--we have expanded them from less than 10 in 1900 to (at the latest count) 3,068. Among other things, they tell us how to grow apples and pears, market milk, cure alcoholism, make movies, organize supporting activities, dig china clay, train midwives, fix dentistry rates, preserve the Welsh language, make hearing aids, run the herring industry, control detergents, and grow hops. They give advice and enforce laws concerned with horseracing, beer, meat, metrication, medical supplies, pigs, potatoes, red deer, theaters, libraries, and water sports--and a thousand other activities. They include a Consultative Council on Badgers, a Commission for Motor Rallies, and a Working Group on Back Pain. In 1975, the last date for which I have full figures, these agencies--Quangos as we call them--employed 184,000 people and cost the taxpayer nearly $5 billion.[10]

The spread of government activities has brought into existence whole new categories of workpeople, whose very existence was undreamed of even fifteen or twenty years ago. Here, in the field of social welfare alone, are some of the new officials, using the standard government nomenclature: "Intake Social Workers, Home Help Organizers, Juvenile Delinquency Project Coordinators, Senior Social Workers, Residential Child Care Officers, Deputy Community Education and Recreation Officers, Social Workers for Alcoholics Recovery Projects, Locum Development Workers, Youth Project Leaders, Day-Care Advisers, Senior Playleaders, Houseparents, Group Controllers of Domiciliary Services, Supervising Wardens for Traveller's Sites, Team Leaders, Adventure Playground Leaders, Area Coordinators for Self-help Projects, Long Term Play Leaders, Care Coordinators and Play Specialists."[11] All these people, I may say, are full-time employees, entitled to life tenure and comprehensive civil service benefits, including noncontributory index-linked pensions. And I should add that, when all the social workers in the east London area went on strike in 1978–1979, and were absent from duty for nearly a whole year, it appears to have made no perceptible difference and led to no recorded complaints among the people they were paid to serve.

This is not just a case of Ye Olde Englishe customs. The Frankenstein state is America's most recent immigrant, but I have the impression that it is growing even more rapidly over here than in Britain. Between 1971 and 1976, welfare programs in the United States expanded at the annual rate of more than 25 percent--two and one-half times the growth of the gross national product. Estimated welfare expenditures in 1977 were $210 billion and in 1979 were $250 billion, so that growth rate is being well maintained, despite President Carter's so-called reform program.[12]

Indeed, I detect areas in which the United States is already outstripping Britain in the nurturing of the Frankenstein state. One excellent index of bureaucracy is the level of paperwork generated by central government. I see that federal expenditure on paperwork doubled between 1955 and 1966 and nearly doubled again by 1973, and that in the four years 1973–1977, it leapt by a further 186 percent, to reach a total of $45 billion a year. A great part of this terrifying increase springs from new or greatly expanded utopian programs, such as Basic Educational Opportunity, Equal Employment Opportunity, Environmental Protection, Occupational Safety and Health, Food Stamps, Student Loans, Price Controls, Supplemental Security Income, and so on. The paperwork involved in licensing a nuclear power plant, for instance, now frequently exceeds 15,000 pages--the size of a multivolume encyclopedia--and may cost $15 million to the utility which makes the application.[13] Last year the U.S. Comptroller General calculated that U.S. businesses, in fulfilling over 2,100 federal reporting requirements, have to spend nearly 70 million hours a year on government paperwork at a cost of over $1 billion.[14]

This rapid growth of the public sector is not only an evil in itself: it breeds further evils. It corrupts the political system. We calculated that at Britain's last general election in May, considerably more than half of all Labour voters were either government workers or in receipt of government assistance. It is now not only technically possible, but even likely that Labour may be able to win an election entirely by the votes of nonproductive workers and welfare recipients. In the United States the position is different, but only in degree, not in kind. You already have a welfare industry composed of 5 million public and private welfare workers, distributing government payments and services to 50 million people.[15]

By far the most important consequence, though it is little discussed, is that when the state begins to do the things that are not Caesar's, it inevitably begins to neglect Caesar's primary duties. It is not a question of the state taking on additional roles; beyond a certain point, it is a question of alternatives--of either/or. Let us take the government's basic duties in turn. First, the stability of the currency. As long ago as 1945, the British economist Colin Clark argued that a democratic state in peacetime could not take more than 25 percent out of the GNP without generating increasingly rapid inflation. Everything that has happened in the last decade shows how right he was. In the 1970s, the British state was not only grabbing half of the GNP, but in one year, 1976, its borrowing requirements alone were 11 percent of GNP. The result was hyperinflation. The state reneged on its basic obligation to maintain an honest currency. The United States is now undergoing exactly the same experience, and for exactly the same reasons.

Of course, the value of the currency is the index of the health of the economy--in my opinion, the only true index in the long run. If the state plunders the nation's resources, the wealth-generating sector must suffer. And it suffers in a fundamental way, by being starved of investment. The studies of Robert Bacon and Walter Etis in Britain have proved beyond any rational doubt that the growth of the state sector is the primary reason why investment in British industry is so low, and therefore productivity so stagnant.[16] With the growth of the Frankenstein state here, America's recent productivity record has been worse even than Britain's; and as last month's OECD report made plain, this is due to reduced private investment, a lower ratio of research as a proportion of GNP, and increased government regulation.[17]

But why do we need to be told these obvious truths? They were spelled out with admirable clarity by Adam Smith two hundred years ago. One of the central themes of his Wealth of Nations is that private individuals create wealth, and government consumes it.[18] The more the government consumes, the less the private sector has to invest. So wealth accumulates more slowly, or not at all, or even declines. Of course, Smith was thinking in terms of the court of Versailles, the largest, the most ostentatious, and prodigal of the governments of his day. But in economic terms, there is no difference between an eighteenth-century court government and a modern welfare bureaucracy. Whether Louis XV gives the cash to Madame du Barry or President Carter spends it on Equal Opportunity programs, the damaging effects on productive investment are exactly the same. Near where I live, our local government bureaucrats have, in fact, just built themselves a palace, even larger than Versailles, at a cost of $50 million. Of course it is not called a palace, but a "Community Center." It does not have a Hall of Mirrors, but it has air–conditioning and an ultramodern "communications system." Our bureaucrats do not see themselves as parasites. Nor did the Versailles courtiers, who also argued that they performed indispensable functions. And the courtiers at least did not have unions to protect and swell their numbers and increase their stipends and privileges. The old–style court, as a vested interest, was a fairly fragile corporation. The modern welfare bureaucracy, by contrast, has powerful institutional defenses and a noisy moral ideology.

The second of the state's obligations is the dispensing of justice. Here again, the Frankenstein state makes it increasingly difficult for the primary duty to be discharged. In the United States and Britain, the ideology of the hyperactive state is the promotion of social justice. But there is no such thing as social justice; or rather, it is a contradiction in terms. What is meant, of course, is social engineering, for the only form of justice is individual justice. The sole aspect of equality which the state has a right, indeed an overwhelming duty, to promote is equality before the law. The pursuit of social and economic equality is, and must be, the enemy of justice. Positive discrimination, for instance, does and must mean injustice to individuals, and in almost every case to underprivileged individuals. Social engineering in education must mean injustice to individuals; indeed, it is deliberately designed to produce it. In that model welfare state, Denmark, the notorious state plan, called U-90, produced by the Ministry of Education, states explicitly that particularly bright and well-motivated children should be discouraged from learning, and taught that their individual success and the pursuit of their personal interests is unfair to others and should be suppressed.[19] These methods have been practiced for some years in Sweden and are already reflected in the lamentable economic decline of that bureaucratic country; they are implicit in much educational theory already applied in British and American state schools.

There are other ways in which the monster state actually impedes its own primary functions of enforcing the law. In Britain, and, indeed, in America too, it is now a commonplace for social workers to spend much of their time locked in battle with the police and other law-enforcement agencies. In Britain, the state-financed Community Law Centers--in situations we borrowed from America--regard the police and other government bodies as their natural and inveterate enemies, to be fought with every taxpayer's penny they can command. Two of our newest and most active state agencies, the Equal Opportunities Commission and the Race Relations Commission, spend a great and growing proportion of their time "investigating" and suing government departments. We have in Britain, and you will shortly be getting in America, a Frankenstein state so big that it fights internal pitched battles and civil wars, and in which government officials incite and assist citizens to break laws which other government officials are paid to enforce.

The monster state, indeed, is taking us along a road toward a divided and querulous society in which everyone pursues rights and no one accepts duties. In both our countries, government agencies encourage a maximist attitude to rights--that they must be exacted always, to the limit, and regardless of the cost to the community. In Britain, the legal luminaries of the Labour party now demand a comprehensive and free state legal service, on the grounds that, if rights are guaranteed by law, "effective means of enforcing them should also be provided." They define such rights as "security in home and employment, minimum income, right to liberty and freedom from physical attack and injury."[20] I would argue that these are rights that no state can truthfully guarantee and no legal system effectively enforce. Similar demands are made here. It is a formula for a litigational society. Such a society cannot produce an extension of rights. It can only end in producing a conflict of rights, since the sum of all our national rights is greater than the amount of freedom available to accommodate them. And a conflict of rights which society is powerless to resolve is bound to end in violence.

The final paradox of the democratic monster state is not only that it destroys its own currency, not only that it undermines its own framework of law and order, but that it cannot even defend its vital interests and the lives of its citizens from external outrage and murder. In Britain and America, while the proportion of the GNP the state takes has been rising steadily, the proportion of that income it spends on defense has been falling. The results are becoming painfully and visibly apparent. You cannot relieve a beleaguered American embassy by airlifting a regiment of welfare workers. You cannot frighten Mr. Brezhnev with food stamps. The more the state attempts to invest its citizen with the illusory rights of utopia, the less able it becomes to guarantee him the ones that really matter--life, liberty, and the enjoyment of what he has earned. The more the state expands, the more it loses its credibility as a benevolent and paternal protector. When Caesar becomes a nursemaid, he ceases to be a soldier. The monster state, with its prodigal waste, its promotion of injustice in the name of equality, and its muscle-bound impotence, cannot inspire respect, let alone love: in the last resort the only emotional response it evokes is fear. The citizen becomes a mere subject. Patriotism is replaced by indifference--or even hatred.

I once regarded the state as a means whereby the less fortunate among us could be enabled to achieve the self-expression and moral fulfillment which is their aspiration as creatures made in God's image. While continuing to desire the end, I no longer have any confidence in the state as the means. On the contrary, I have come to see it as the biggest single obstacle to the individual self-expression and moral maturity of all of us, and not least the poor, the weak, the humble, and the passive.

My change of view has been brought about by experience, notably the grim record of the last decade in Britain, where the cumulative evils fed by the growth of collective power and state expansion have become overwhelmingly manifest. But it has also been brought about by historical study. History is a powerful antidote to contemporary arrogance. It is humbling to discover how many of our glib assumptions, which seem to us so novel and plausible, have been tested before, not once but many times and in innumerable guises, and discovered to be, at great human cost, wholly false. It is sobering, too, to find huge and frightening errors constantly repeated; lessons painfully learned, forgotten in the space of a generation; and the accumulated wisdom of the past heedlessly ignored, in every society, and at all times.

Of all those lessons, the one which history most earnestly presses upon us, and which we most persistently brush aside, is: "Beware the state." Man, as history shows only too clearly, has that element of the divine in him, the element which causes him ceaselessly to strive for the ideal. It is his glory and his ruin. For in his utopian quest he embraces the political process as the road to perfection. But the political process is itself a delusion, more likely to lead to hell than to heaven. If a society is unlucky, the political process, pursued relentlessly enough, will carry it straight to Auschwitz or the Gulag Archipelago. But even the most fortunate societies, such as ours, will find nothing at the end of that dusty track but the same man-made monster, the state, as greedy and unfeeling as it was when man first invented it in the third millennium before Christ, with its cavernous mouth, its lungs of brass, its implacable appetite and unappeasable stomach, but with no heart, no brain, and no soul.

I believe it is possible to detect, on both sides of the Atlantic, hopeful signs that we are learning this lesson. The claims of the monster state are being exposed, one by one, as fraudulent, and the evil consequences of its expansion are being examined and publicized. In those parts of the world where debate is still free, the advocates of collectivism are already on the defensive. We are winning the battle of the intellect, and in time we shall win the battle of government too. By the end of this century, if Western civilization exists at all, it will have resumed its progress toward the liberation of human spirit and genius. When we look back from the year 2000, I think we shall see the end of the 1970s as the turning point, when the civilized world, not without pain and grief, returned to its senses, and the democratic state ceased to be our master and became again the servant of the people.

Notes

1.Chilperic Edwards, The Hammurabi Code and the Sinaitic Legislation (New York, 1904), pp. 67–73.

2. Roland G. Kent, "The Edict of Diocletian Fixing Maximum Prices," University of Pennsylvania Law Review (1920), pp. 35–47; quoted in Robert L. Schuettinger and Eamon F. Butler, Forty Centuries of Wages and Price Controls (Washington, D.C., 1979).

3. Richard Rose and Guy Peters, Can Governments Go Broke? (London, 1979).

4. See "Public Accounts," Parliamentary Debates (Hansard), House of Commons, Monday, December 4, 1978, cols. 1036ff.

5. 1861 census returns.

6. Economic Trends, No. 268, HMSO, February 1976; C. Sanford and A. Robinson, "Public Spending: A Decade of Unprecedented Peacetime Growth," The Banker, No. 125 (1975).

7. Geoffrey K. Fry, The Growth of Government (London, 1979), p. 232.

8. Leslie Chapman, Your Disobedient Servant (London, 1978), p. 51.

9. Susan Warnhurst, State Interest in British Industry (London, 1978).

10. Philip Holland, Quango, Quango, Quango: The Full Dossier on Patronage in Britain (London, 1979); Gordon Bowen, Survey of Fringe Bodies, Civil Service Department (London, 1978).

11. Selection from public appointments advertised in a single issue of the journal New Society (June 1978).

12. Charles D. Hobbs, "The Goals of the Welfare Industry," Policy Review (Spring 1978).

13. U.S. Commission on Federal Paperwork, Final Summary Report, U.S. Government Printing Office (Washington, D.C., 1977); Janet T. Bennett and Maxwell H. Johnson, "The Political Economy of U.S. Government Paperwork," Policy Review (Winter 1979).

14. Report of the Comptroller General of the United States, Federal Paperwork: Its Impact on American Businesses, November 17, 1978.

15. Hobbs, "Goals of the Welfare Industry."

16. Robert Bacon and Walter Eltis, Britain's Economic Problem: Too Few Producers (London, 1976); and the subsequent discussion in Economic Journal (June 1979).

17. Christopher Lorenz, "Now America Needs its Own Miracle," Financial Times, November 21, 1979.

18. Especially Bk. 2, Chap.3.

19. David Gress, "Trends in the Scandinavian Left," paper presented at the Institute for European Studies Conference, Milton Hill House, Oxfordshire, November 1979.

20. Submission by the Society of Labour Lawyers to the Royal Commission on Legal Services, London, 1978.

Paul Johnson is the recipient of the AEI Francis Boyer Award for 1979.