I have written much about the economic and social damage wrought by state action. In this post, I step back from particular instances of state action to explain, in general terms, how it damages the economic and social infrastructure that it is supposed to protect.
I begin with discussions of economic and social behavior and their intertwining. When I have laid that groundwork, I explain the destructiveness of state action when it goes beyond the protection of life, liberty, and property.
ECONOMIC BEHAVIOR
There is more to economic behavior than production and exchange at arm’s length. But it is those aspects of economic behavior that usually come to mind when one refers to “economics”. In the narrow view, economic behavior has these facets:
Sellers, anticipating demand from buyers, offer a variety of goods and services at prices that are calculated (roughly or precisely) to warrant the continued production of those goods and services.
Buyers allocate their disposable (after-tax) incomes among the various goods and services (and saving, where possible) according to their personal tastes and preferences, which are influenced by many things (e.g., socioeconomic status, family status, and cultural heritage).
Buyers and sellers interact in “markets” — physical or virtual places — where they fix the exact prices and quantities of goods and services changing hands. (Where sellers don’t bargain on price, their returns are driven by the quantities that buyers are willing to take at set price.)
Quantities and prices change across time, as tastes and preferences change; as goods and services change because of invention, innovation, and variations in resource prices; and as government intervention varies in type and intensity (usually waxing rather than waning).
All of these actions occur dynamically through time.
The main characteristic of economic behavior is its transactional nature. Two or more parties agree to exchange things (goods, money, other stores of value) in an effort by each party to gain satisfaction, pleasure, happiness, or utility (call it what you will). Transactional behavior is an aspect of some kinds of social behavior, in that it is cooperative and meant to be mutually beneficial. (There are kinds of social behavior — murder, theft, battery, etc. — which are neither cooperative nor mutually beneficial.)
ECONOMIC BEHAVIOR AS SOCIAL BEHAVIOR
The kinds of economic behavior listed above typically are studied as “economics,” which — until recent decades — was limited mainly to the explicit exchange of goods for goods or goods for money. But such transactions are not the whole of economic behavior, and are far from the whole of social behavior.
Some kinds of transactional behavior are considered deeply personal — and they are deeply personal — but they involve exchange, nonetheless. One such behavior is friendship; another is sex; a third is loyalty:
Friendship is mutual, so its economic nature should need no explanation.
So is sex mutual, when it is consensual. It may be given for many reasons other than monetary gain, but it is transactional: persons giving each other pleasure.
Loyalty arises from a kind of tacit exchange; that is, loyalty-inducing acts yield loyalty, which can be drawn upon (or not) at the behest of the person who commits loyalty-inducing acts. Loyalty may accompany friendship, but it also may exist apart from friendship.
These and other kinds of “personal” acts are not usually considered to be economic in nature, for three reasons: (a) the medium of exchange is far removed from money (or anything like it); (b) the transactions are so idiosyncratic as to defy the usual statistical-mathematical reductionism of economics; and (c) the transactions are far removed in character from, say, the buying and selling of potatoes. They have emotional content that is of a different kind than, say, allegiance to a particular make of automobile or brand of potato chips.
The distinction between economic and social behavior has almost vanished with the rise of behavioral economics. This brand of economics focuses on the psychological determinants of economic behavior. There is much research and speculation about how and why individuals choose as they do, not only in the spending of money but also in other, more “personal”, types of social interaction.
Formal economics aside, the essential character of economic behavior is, as I have said, transactional. Economic transactions — even those that are deeply personal — are cooperative. But not all social behavior is transactional. In that subtle distinction lies the difference between economic behavior and “pure” social behavior.
“PURE” SOCIAL BEHAVIOR
What is “pure” social behavior? A good example can be found in religion. Certainly, religion has transactional aspects, as in the “giving” of one’s belief in the hope of a heavenly afterlife. But religion, for billions of persons, is much more than that. So is sex in a loving marriage. So friendship can be.
What is this deeper aspect of “pure”, non-transactional (non-economic) social behavior? It is rooted in the capacity of humans for self-generated emotional satisfaction. This can manifest itself as a unidirectional attachment to another person or being, an attachment that does not depend on the actions of its subject. A mundane but not all-encompassing term for it is “unconditional love”. A perhaps more apt term is “needing to belong” to someone or something.
A unidirectional attachment becomes a “pure” social relationship when it is also a shared attachment, as in the case of a loving marriage or a close-knit family. These may encompass transactional relationships, but the bonds between the parties are deeply emotional and transcendent.
Other “pure” social relationships are possible. Especially those that are based on something above and beyond personal relationships. These include membership in a religion, a club, a patriotic organization, or even a neighborhood, where the attachment is to the neighborhood itself, instead of or in addition to neighborly friendships. Membership in such organizations — the feeling of belonging to something “bigger” than oneself — can complement and heighten the underlying unidirectional attachment felt by each member.
POLITICS
Politics, as I use the term here, is simply an aspect of social behavior. It is the working out of the rules (signals, customs, taboos) and roles that individual persons adopt in transactional and “pure” social relationships.
Some rules may be confined to particular relationships; others may spread widely through emulation and necessity. Necessity arises when there is a network of transactional and “pure” social relationships that comprises disparate local sub-groups. Common rules, in such a case, help to ensure that members are recognized, and that their behavior is consistent with the purpose of the social network.
Rules range from the use of secret handshakes (to signal membership in a particular organization) to shunning (as a signal that the target has been ejected from a particular social organization). In between, there are things like religious symbolism (e.g., the way in which the Sign of the Cross is made), deportment (stiff upper lip, and all that), the use of drugs (or not), and myriad other tokens of membership in the overlapping social groupings that comprise humanity. Such groupings include the fraternity of individualists, who despite their individualism, share an allegiance to it and the justifications for it.
Roles denote one’s standing in a social group. Roles are determined by rules and signaled by the observance of certain of them. The role of a wife in many cultures, for example, was (and remains) overt subservience to the edicts of the husband. Subservience is signaled by the observance of rules that include, for example, standing while the husband eats his meal, and eating only when he has finished. The extent to which a particular wife is truly subservient to her husband — bowing to his political judgments or, alternatively, influencing them — is a political matter that lies between them and depends very much on the persons involved.
Here, I must digress about the difference between voluntarily evolved social distinctions and dominance by force. Busybodies are quick to adopt the view that outward signs of subservience — and similar social phenomena that seem to create classes of individuals — indicate the forceful imposition of rules and roles. Busybodies, in other words, cannot (or do not wish to) tell the difference between something as abhorrent as slavery and a time-honored rule or role that, by facilitating social behavior, saves time and effort and reduces the likelihood of conflict. The role of a busybody is to question and challenge everything that is not done in the way he would do it; a busybody, in other words, is a person of limited empathy and imagination. (For more about the proper role of the state with respect to social behavior, see “The Principles of Actionable Harm”.)
THE INDIVISIBILITY OF SOCIAL AND ECONOMIC BEHAVIOR
Everything I have discussed to this point involves real politics: transactions for mutual benefit, within a framework of voluntarily evolved rules and roles, without the imposition or threat of force by the state.
For example, the dietary laws of Judaism, when observed strictly (as they are in certain sects) affect the kinds of foodstuffs that observant Jews will grow, raise, buy, or consume. Those of us who are old enough to remember when the three top-selling makes of automobile in the U.S. were Ford, Chevrolet, and Plymouth will also remember that the choice of which to buy was (in certain socioeconomic circles and age groups) a sign of membership in a loose affiliation of kindred auto owners. More generally, the demand for certain kinds of clothing, electronic equipment, beverages, automobiles, and so on is determined to some extent by socioeconomic status and group membership. Outsiders may mimic insiders in an effort to increase their standing with peers, to signal an aspiration to belong to a certain group, or as a sign of membership in an auxiliary group (e.g., a fan club, or whatever it is called now).
Thus we have real politics as the lubricant of social behavior. And we have economic behavior as an aspect of social behavior.
There is nevertheless a widely held view that economic behavior is distinct from social behavior. But when the state taxes or regulates “economic” activity, it shapes and channels related “social” activity. For example, the family that pays 25 percent of its income in taxes is that much less able to join and support organizations of its choice, to own and exhibit tokens of its socioeconomic status, to afford better education for its children, and so on. The immediate rejoinder will be that nothing has been changed if everyone is affected equally. But because of the complexity of tax laws and regulations, everyone is not affected equally. Moreover, even if everyone were deprived equally of the same kind of thing — a superior education, say — everyone would be that much worse off by having been deprived of opportunities to acquire remunerative knowledge and skills, productive relationships, and mental stimulation. Similarly, everyone would be that much worse off by being less well clothed, less well housed, and so on. Taxes and regulations, even if they could be applied in some absolutely neutral way (which they can’t be), have an inevitably deleterious effect on individuals.
In sum, there is no dividing line between economic and social behavior. What we call social and economic behavior are indivisible aspects of human striving to fulfill wants, both material and spiritual. The attempt to isolate and restrict one type of behavior is futile. It is all social behavior.
“POWER POLITICS”: OR, ENTER THE STATE
The activity that we usually call “politics” is not politics at all. Real politics, as I have said, is the voluntary working out of rules and roles, in the context of social behavior, which encompasses so-called economic behavior. With voice and exit, those who are unhappy with their lot can try to persuade the other members of their voluntary association to adopt different rules. If they fail, they can choose a more congenial social set (if one is available to them), which may involve moving to a different place. The ability to “vote with one’s feet” is an instrument of persuasion, as well, for it signals the group that one leaves (or credibly threatens to leave) of a defect that may cause others to leave, thus endangering the attainment of the group’s common objective.
What we usually call “politics” is entirely different from true politics. I call it “power politics”. It amounts to this:
A state is established, either by force alone or through a combination of consent, limited to certain social and/or interest groups, and force, imposed on dissenting and uninvolved persons.
The state enjoys a monopoly of force, which it may — in the beginning, at least — apply to limited purposes, usually the defense of its citizens from aggression, intimidation, fraud, and theft.
There is a constant struggle for control of the state, either by force or by the kind of “politics” endemic to the state. The “politics” amounts to non-violent but fierce and often acrimonious struggles for power between and among various social and/or interest groups.
Control of the state enables the winners to override the rules that arise voluntarily through social cooperation. Rules imposed by the state come in the form of statutes, regulations, executive orders, judicial decrees, and administrative decisions.
The effects of the various statutes, etc., are long-lasting because they often are not repealed when power changes hands. Instead, they remain in place, with the result that state power accrues and expands, while — as a result — the scope of social behavior shrinks and becomes less potent.
In other words, power in the hands of the state — and those who control it — is anti-social. Acts of the state are not acts of “society” or “community”. Those terms properly refer to consenting relationships among persons — relationships that are shaped by real politics.
The state, in its ideal form, upholds and defends “society” and “community”. But when it oversteps its legitimate bounds, it commits the very acts of aggression, intimidation, fraud, and theft that it is supposed to deter and prevent. Moreover, it undoes the fabric of “society” and “community” by unraveling the voluntarily evolved social rules that bind them and guide them in peaceful cooperation.