By David M. Hart
Department of History, Stanford University
Gustave de Molinari (3 March 1819 – 28 January 1912) was an economist born in Belgium associated with French laissez-faire liberal economists such as Frédéric Bastiat and Hippolyte Castille. Living in Paris, in the 1840s, he took part in the “Ligue pour la Liberté des Échanges” (Free Trade League), animated by Frédéric Bastiat. On his death bed in 1850, Bastiat described Molinari as the continuator of his works. In 1849, shortly after the revolutions of the previous year, Molinari published two works: an essay, “The Production of Security”, and a book, Les Soirées de la Rue Saint-Lazare, describing how a market in justice and protection could advantageously replace the state.
Some anarcho-capitalists consider Molinari to be the first proponent of anarcho-capitalism. In the preface to the 1977 English translation Murray Rothbard called “The Production of Security” the “first presentation anywhere in human history of what is now called anarcho-capitalism” though admitting that “Molinari did not use the terminology, and probably would have balked at the name.” Austrian School economist Hans-Hermann Hoppe says that “the 1849 article “The Production of Security” is probably the single most important contribution to the modern theory of anarcho-capitalism.”In the past, Molinari influenced some of the political thoughts of individualist anarchist Benjamin Tucker and the Liberty circle. The market anarchist Molinari Institute, headed by philosopher Roderick Long, is named after Molinari, whom it calls the “originator of the theory of Market Anarchism.(http://en.wikipedia.org/wiki/Gustave_de_Molinari)
Remembering Gustave de Molinari: An Article from the mises institute: http://mises.org/daily/1758
The Development of Molinari’s Anti-statism:
Therefore I claim that if a community gave notice, after a certain interval–a year for example, that it would cease the payment of judges, soldiers and gendarmes, at the end of the year this community would not have fewer courts and governments ready to function. And I add that if, under this new regime, each person retained the right to freely engage in these two industries and to freely buy these services, security would he produced most economically and would be the best possible. Since the need for security is still very strong in our society, it would he profitable to found government enterprises. One would be assured of covering costs. How would these enterprises be founded? Separate individuals would not he able to do it, anymore than they can construct railroads, docks, etc. Vast companies would thus be established to produce security; they would procure the material and the workers that they would need. As soon as they were ready to function, these property insurance comounies would call for clients. Each Person would contract with the company which inspired in him the greatest confidence and whose conditions appeared the most favorable. -Molinari-
I. The Production of Security- 1849.
Molinari’s most original contribution to political and economic thought is his thesis that the market can provide more cheaply and more efficiently the service of police protection of life, liberty and property. Hitherto, this had been considered to be the monopoly of the state, and it was Molinari’s insight that the laws of political economy could and should be applied to the management of state functions.’ His attempt to apply economic laws to the state led him to conclude that the market could in fact replace the state monopoly of police as well as the provision of roads, lighting, garbage collection, sewerage and education. Molinari argued, in summary, that if the market was more efficient in providing people with shoes or bread then, for exactly the same reasons, it would be better to hand over all monopoly state functions to the market. Thus the argument is tacitly made that “proprietary anarchism”) is inherent in the logic of the free market and that consistency requires that one pursue the minimization of state power to its logical conclusion, i.e., no government at all.
As far as it can be determined, Molinari’s first efforts in applying the laws of political economy to the state were made in a short essay printed in the Courrier froncais in July 1846, in which he likened the state to a “grand mutual insurance company.” In his ideal state, individuals would only form a society in order to guarantee their security from outside threats. Only those who consent to “take part in a society” would become members of the association. Only those who realized the benefits of organized society would be prepared to make the sacrifices necessary to sustain it. The individual members of the society would be required to “contribute to the maintenance of the government charged by society with the maintenance of security for the profit of all [its members].”6 However, it is unclear whether Molinari accepted the idea that consent should be available to individuals who now compose the society (one of the major arguments of the anarchists) or whether this “act of incorporation” had taken place at one time in the past and was somehow binding on those living in the present. The latter thought seems to be implicit in this early essay, and it would not be until he published his essay “De la production de la securite” in 1849 that he would take the major step of abandoning the binding nature of the original social contract.
In Molinari’s future society “where nothing would interfere with the free use of human faculties,” each citizen would have an equal right to equal protection by the state but their contributions to the maintenance of the state would necessarily be unequal. Since each person’s attributes and skills were naturally different, the rewards that would come to them as a result of their labor would also be different. Each person would acquire differing quantities of property which the state would have to protect. Molinari thought that the expense of protecting property was proportional to the amount or value of the property to be protected: “to protect each property owner, it expends a sum proportional to the value it is protecting or insuring. The problem that he faced was in determining how much each citizen should pay the state to protect him and his property given that each had an equal right to equal protection and given the differing costs of providing the protection.
It was in order to solve this problem that Molinari compared the state to a mutual insurance company and the taxpaying citizens to “stockholders.” Thus, as with any insurance company, each should contribute “to the maintenance of society in proportion to the value of his investment, in proportion to the tax that he pays.”9 The rights of the shareholder should be proportional to the amount of his initial capital investment and should include the right to exercise some control over its use: In every well organized association, the rights of the stockholder are proportional to the value of his investment. An investment, in effect, represents a certain quantity of labor voluntarily alienated by the investor on the condition that he is able to direct and watch over its employment. If this power of direction and oversight does not correspond to the sacrifice of each member-if, for example, an investor had only as much power as someone who had invested one-half as much-we have a dear injustice, an inequality. In one case there is a diminution and in another an irrational augmentation of rights.
Molinari concluded that electoral rights, “the right to take part in the management of this great mutual insurance company which we call society,” must also be proportional to property owned and taxes paid. The alternatives to this “equitable and necessary” property requirement for participation in governing the state were two. Either the lesser property owners were excluded from their fair (proportional) share in the management of the state, thus allowing the rich to concentrate political power in their hands to the detriment of the weak; or if electoral rights were equal for all property owners, such as was the case in the United States, the more industrious would he “at the mercy of the mass of lazy and incompetent men” and there would be “no respect for earned rights, no effective protection of life and property of each.” His scheme was designed to secure the “equality of protection” from threats from above and below, a common theme of the free-trade liberals who feared the oligarchy of the rich and powerful just as much as the unrestricted democracy of the mob.
What distinguished Molinari’s criticism of democracy, the typical fear of the “displeasure of the people [which would paralyze] the free exercise of individual right^,” from that of a conservative, was his uncompromising defense of the liberty of the individual.” In Molinari’s eyes, the form of the government was not essential; rather it was the amount of liberty and the security of a person and property that a political system guaranteed that determined how it should be judged.’6 Without liberty for all, including the weak and poor, the powerful would seize the state for their own narrow interests and the result would be the perpetuation of inequality and the destruction of the equal right to protection.
Under such a system, we know what would result. The large share holders and those property owners in possession of the franchise would govern society for their own profit. The law which should protect all citizens equally would serve to increase the property of the strong shareholders at the expense of the weak. Political equality would be destroyed.
Few, if any, conservatives would be as concerned as Molinari for the protection of the property of the weak from the attacks of the rich. Such was his faith in the justice of the market that he even believed that only under a system of full liberty for all would the inequalities of nature begin to disappear and the condition of the masses improve: Whatever inequalities might have existed, inequalities which the extension of liberty would quickly tend to diminish, the rights of the masses would inevitably gain an immediate and serious satisfaction without any threat to the rights of the heretofore privileged minority.
The inevitable consequence of subjecting state monopolies to the close scrutiny of political economy was to question the state’s very right to have monopolies, and even to question the right of the state to exist at all. Between 1846, when he wrote “Le droit Clectoral,” and 1849, when the result of his inquiries into the nature of the state monopoly of protection was published in the Journal des Economistes, Molinari had been undergoing this revolution in his thought. Unfortunately, little is known about his activities during this period except for the fact that he had been giving some lectures at the Athenee royal de Paris in 1847 which were published in 1855 as his Cours d’dconomie politique. In the Cours, Molinari deals at length with the problem of state monopolies, and it is possible that he felt compelled to push political economy to its logical, anarchist limits as he organized his material for the introductory lectures at the Athenee royal. As he rethought the role of competition in the free market and the acknowledged weaknesses of state run enterprises, perhaps he was struck by the compelling logic that these universal, natural laws governing economic behavior should also apply to the state and its activities. The result was the historic 1849 essay “De la production de la securite.”
So radical was Molinari’s proposal that private, competitive insurance companies could and should replace the state for the provision of police protection of life and property, that the editor of the Journal des Economistes, Joseph Garnier, felt obliged to write a short defense of his decision to print the article. Although he criticized the article for “smacking of utopia in its conclusions,” he praised the attempt to delineate more clearly the true function of the state, which “up till now has been treated in a haphazard manner.” Few political theorists then, as now, were prepared to analyze the assumptions upon which their defense of the state rested. It is to the credit of the economistes that at least some of them were willing to do just that and this was recognized by Garnier. Those who “exaggerated the essence and properties of government”‘ had been challenged by Molinari to justify and defend their position, and it is indeed unfortunate that more did not come to adopt his position. The reasons they gave for rejecting Molinari’s views will be examined in more detail below, but it should be noted here that they did not squarely face the questions posed by Molinari’s radical challenge nor did they do justice to their own ideology. Molinari opened his essay with the bold and radical division of society into “natural” and “artificial” components. Following in the tradition of the young Edmund Burke, William Godwin, and the early nineteenth century French liberals Charles Comte and Charles Dunoyer,” Molinari viewed the state, or “political society,” as “organized in a purely factitious way by primitive lawgivers.” Once created, it could also be “amended by other law makers” as society progressed. The distinguishing feature of this society is that the government enjoys a considerable role because, as the repository of social authority, the task of modifying and reforming society on a day to-day basis falls to government.
This form of society is strikingly contrasted with “natural society” which is “a purely natural fact; like the earth which supports it, it lives and dies by virtue of pre-existent, general laws.” These laws of society required no other science than political economy to be explained, and it was the task of the economistes to describe the operation of this “natural, social organism.” Unlike “political society”, “natural society” arose spontaneously from the needs of individuals, which could be better satisfied by combining into groups. Once in a group, the law of the division of labor began to operate as individuals chose tasks they were better able to fulfill than others. Exchanges of goods immediately followed and a network of voluntary relations was established as each individual pursued his self-interest. Man is “fundamentally sociable” because he realizes that only in a group can he best satisfy some of his most pressing needs. One of these is the need for security, both from wild animals and from other human beings, and in response to this need came the “beginning of establishments for the purpose of guaranteeing to each the peaceful possession of his person and his goods,” to which is given the name of government. It was the fear of attack on their person or property that led men to organize themselves into societies and then to establish a government. Unfortunately, men erred when they allowed (either from ignorance of political economy or from physical weakness in the face of stronger, better-organized groups) the security business to be monopolized by one group or class. Men have suffered the consequences of this monopoly of government and, lacking a clear alternative, they “resign themselves to the harshest sacrifices rather than do without government, and thus security, never realizing the error of this calculation.”
Molinari believed that political economy provided an alternative to the sacrifices that men suffer under the expensive, inefficient and coercive government monopoly of security. He proceeded by stating two “truths” that had been established by political economy and deducing from them two conclusions about the function of government in a free society. If his conclusions followed from his “truths,” then his fellow economistes would be forced to accept his anarchism or reject two fundamental premises of their philosophy. The two truths were: In all things-for all the commodities which satisfy man’s material and immaterial needs it is to the benefit of the consumer that labor and trade remain free, for free labor and free trade mean a necessary and permanent reduction in the price of all goods. The interests of the consumer with regard to any commodity ought to take precedence over the interests of the producer.’ And from this he concluded that: In the interests of those who consume this service, the production of security ought to remain subject to the law of the free market. No government ought to have the right to prevent another government from setting up in competition with it, or to impose a monopoly of its services upon consumers.
The first conclusion can be reduced to the statement that all “immaterial,” or intangible commodity’s should be subjected to the law of free competition. This is true because all so-called intangible commodities require the use of tangible objects for their production or maintenance. For example, although the feeling of security is certainly intangible, the production of security requires physical objects such as vehicles, buildings, uniforms, weapons and the feeding and clothing of the men employed in its provision. All of these commodities have a price on the free market and, as Molinari would argue, these can be provided at the lowest price and highest quality only in a society with free competition. Similarly, in the twentieth century, the Austrian economist, Ludwig von Mises, has argued that whenever the state monopolizes an industry or even an entire economy (i.e.,socialism), it destroys pricing arrangements and creates pockets of chaos. Prices indicate to the entrepreneur the state of supply and the intensity of consumer demand, information which no number of advisers, planning authorities and experts can satisfactorily supply. To the extent that the state blocks competition and pricing agreements from being freely reached, it prevents the rational allocation of resources and keeps the desires of consumers from being met.
The second conclusion can be reduced to the statement that the government does not have the right to prevent any individuals from making any peaceful trade on the free market; nor should any individual be forced to deal with that government or with anyone else not freely chosen by that individual. This is based on the belief that each individual has a natural right to the free use of his person and justly acquired property. No group or individual, therefore, can interfere in anyone’s uncoercive activity nor can they deprive him of property unless he has committed a crime against the person or property of another individual. If a group of individuals wish to associate for some purpose (for example, for the provision of security), the government has no right to prevent them from doing so until such time as that group aggresses against the person or property of another. Such were the startling conclusions that Molinari’s rigorous logic reached. He even surprised himself and admitted that, I must say that until now I have recoiled fof the principle of free competition.
Molinari refused to accept any exceptions to the law of free competition and freedom to work and trade, which he considered to be a “complete and absolute” right of the individual.]’ If his colleagues refused to see the consistency of his position, then they were not “pure economists”; it was their responsibility to demonstrate why the production of security should be the sole exception to their dearly held economic principles. Laissez faire led a prior to anarchism, Molinari claimed, and if this was to be rejected then some other method of organizing the production of security would have to be found. The only two possible alternatives, in Molinari’s view, were monopoly or communism. There is nowhere in this world a single enterprise for the production of security, a single government, which is not based upon either monopoly or communism.”
Monopoly led inevitably to “an abusive surtax” and all monopolies, being maintained “necessarily by force,”3s were therefore abhorrent to those who wished to see force reduced to a minimum in all human relations.39 When a single commodity was monopolized, whether by a privileged individual or group or by the community itself, partial communism was the result. If all commodities were monopolized, then complete communism was the result.40 Initially the government had been seized by “the strongest, most bellicose races” and monopolized for their benefit. The only way they could expand their profits from this monopoly was to expand their market by conquest and seize more “coerced consumers.” Thus, War is the necessary, inevitable consequence of a monopoly of security…[and] this monopoly must give birth to all others.
Security had begun as the preserve of a privileged minority, “a caste,” but under the pressure of the oppressed masses’ demand for freedom, this monopoly was transformed into partial communism, a new monopoly ruled in the name of the masses. Thus gradually, with this important command post of the economy in the hands of vested interests, other sections of the economy became monopolized and communized by those who had the ear of the government. The monopoly of the use of force by the state is the means by which the other monopolies are maintained. The people, then, are faced with two choices, to move towards “total communism or total liberty.” If communistic methods of production are more efficient than those of the market, then all production, not just security, should be organized communally. If, on the other hand, the free market is better, then it is better in all areas of production and should be extended to police, law courts and defense. As far as Molinari was concerned “progress will inevitably consist in the replacement of communist production by free production.
Part 2: http://mises.org/document/1763/Gustave-de-Molinari-and-The-Antistatist-Liberal-Tradition-Part-2
Part 3: http://mises.org/document/1770/Gustave-de-Molinari-and-the-Tradition-Part-3
Part 1: http://mises.org/document/1754/Gustave-de-Molinari-and-the-Antistatist-Liberal-Tradition-Part-1