We know that other great crises will come. Whether they will be occasioned by foreign wars, economic collapse, or rampant terrorism, no one can predict with assurance. Yet in one form or another, great crises will surely come again, as they have from time to time throughout all human history. When they do, governments almost certainly will gain new powers over economic and social affairs. Everything that I have argued and documented in the preceding chapters points toward this conclusion. For those who cherish individual liberty and a free society, the prospect is deeply disheartening.
This is from the very last page of Higgs’s scholarly classic of libertarian thought. It was written in 1987, and is remarkable in its ability to look both backwards and forwards in constructing a plausible model to connect “critical episodes in the growth of American government.”
He calls it The Ratchet, and he creates a kind of academic treatise around it in the first section of the book. This is how he describes it in graph form:
Figure 4.1 presents a schematic representation of the ratchet over a single full episode … Each has five stages: (I) precrisis normality (line segment AB in Figure 4.1); (II) expansion (segment BC); (III) maturity (segment CD); (IV) retrenchment (segment DE); and (V) post-crisis normality (segment EF). In the figure the vertical axis measures the logarithm of an ideal index of the size of government, and the horizontal axis measures units if time; so the slope of the profile shows the government’s rate of growth.
In other words, government grows, always. This is the Leviathan mentioned in the book’s title, referencing, I believe, Hobbs’s use of the term. But when a crisis appears, the growth of government accelerates dramatically and, while there may be some retrenchment in the governmental powers assumed after the crisis, it never goes back to what its position was, or what its growth curve would have been, before the crisis.
It’s a compelling way to look at the history of the 20th century (and with Higgs’s blessing, I assume, that of the early 21st). Indeed, the longer second half of his book is exactly that--a useful, entertaining, and sometimes sobering look at how The Ratchet has created the Leviathan now recognizable as the U.S. federal government.
Very few Americans, I believe, really know how much has changed in those 100 years.
In the 1890s, ideology decisively influenced the government’s response to a multifarious national emergency. The dominant ideology held that less government is better than more except--and it is a critically important exception--where extraordinary action is required to maintain law and order, including the monetary order of the economy. The other side of a devotion to strong but limited government is a firm commitment to extensive, secure private property rights. In the late nineteenth century most activities, including virtually all purely economic-decision making, were considered “not the proper business of government”--especially the federal government. There was therefore no ideological contradiction whatever between the government’s complete lack of interest in work-relief programs or agricultural price-fixing schemes and its vigorous intervention in the labor disturbances at Chicago and elsewhere.
Higgs is writing partially here about the Grover Cleveland administration, and how it dealt--or refused to deal--with the economic and labor market crises of the 1890s. How and why things changed is a deep and interesting historical subject, related to the rise of Progressive politics in the early 1900s, and perhaps reaching the point of no return by the time of America’s entry into World War I.
Indeed, there was something about that conflict--and perhaps about the people who led the country at that time--that seemed to incontrovertibly set America on a new course.
The various efforts for preparedness culminated in the passage of two landmark statutes in the summer of 1916.
The first was the National Defense Act, which has been called “the most comprehensive piece of military legislation ever passed by Congress.” It authorized the President “in time of war or when war is imminent” to place obligatory orders that would “take precedence over all other orders and contracts.” Should the owner of the supply facility refuse to fill such orders “at a reasonable price as determined by the Secretary of War” the President was “authorized to take immediate possession of any such plant [and] … to manufacture therein … such product or material as may be required,” while the owner would be “deemed guilty of a felony.” The law gave the government extraordinarily sweeping powers. To compel factory owners, by threat of criminal sanctions, to produce munitions for the government at whatever prices the government might choose to pay simply demolished existing private property rights in such facilities; the form of private ownership remained, but the substance had been gutted.
Just 20 years previous such an action would have been unthinkable--the dominant ideology of that day effectively tying the hands of the federal government and keeping it from such displays of power. But manufacturing facilities were not the only target.
The Army Appropriations Act that became law on August 29, 1916, granted the President additional power to seize private property. Tucked inconspicuously in an act of some fifty pages … appeared the following extraordinary grant of power:
The President, in time of war, is empowered, through the Secretary of War, to take possession and assume control of any system or systems of transportation, or any part thereof, and to utilize the same, to the exclusion as far as may be necessary of all other traffic thereon, for the transfer or transportation of troops, war material and equipment, or for such other purposes connected with the emergency as may be needful or desirable.
Sixteen months later this provision would serve as the necessary and sufficient authority for the government’s takeover of the nation’s privately owned railroads.
What I find fascinating is not the libertarian’s revulsion to this act of unconstitutional federal power, but the circumstances in the country that allowed it to take place. The U.S. was at war, yes, and being at war is still today reason enough for many to imbue the government with additional, sweeping powers. But World War I was a war--as near as I can tell--that was so tenuously linked to the population’s sense of national pride and its fears for national security, that the only way to engage in it was to pass such grievously authoritarian laws. Why pass a law, after all, that allowed the President to seize control of manufacturing plants and transportation systems if the people who owned those enterprises as their private property supported the war effort as something intrinsically necessary for their enterprise’s and their nation’s survival?
Indeed, even the common man seemed to think this was not his fight.
Even after the declaration of war, volunteers came forward in a trickle. “Despite all the recruiting appeals of the press and of the leaders of opinion, from officials to society women and actresses, the Regular Army had enlisted 4,355 men, an average of 435 a day, in the first ten days after [U.S.] entry into the war.” Secretary Baker then announced that volunteers would not have to serve beyond the end of the war, but the promise has little effect. By April 24 only 32,000, just one-sixth of the War Department’s quota had joined.
Compare this to the waves of civilians that volunteered for the American Civil War, which, right or wrong, hundred of thousands (on both sides) saw as very much their fight.
The answer was, of course, conscription--a draft--making the federal government not just a thief but a kidnapper. Unfortunately, the Supreme Court did not share that interpretation. In 1918 it ruled that the draft was constitutional, with Chief Justice Edward White saying:
“It may not be doubted that the very conception of a just government and its duty to the citizen includes the reciprocal obligation of the citizen to render military service in case of need and the right to compel it.”
Obviously, the decision on the constitutionality of the draft had long-term ramifications for the use of federal power, but Higgs makes the argument that it was also the tip of an iceberg of other abuses, now “widely regarded as among the most deplorable in American constitutional history.” These are the Espionage and Sedition Acts of 1918, which were used to to put people in jail merely for questioning the constitutionality of the draft. A prevailing opinion seemed to be that of Justice Oliver Wendell Holmes, Jr.:
“When a nation is at war, many things that might be said in time of peace are such a hindrance to its effort that their utterance will not be endured so long as men fight and no Court could regard them as protected by any constitutional right.”
I would find the opinion quaint if it hadn’t been enshrined in the nation’s public consciousness, its descendant ideology remaining in some quarters to this very day. The idea that a free people has the right to disagree with its government--and that never is that right more necessary than when that nation is engaged in violence perpetrated in that people’s name--may be too abstract for those subsumed with “superheated patriotism” to recognize, but that doesn’t make it any less necessary for the preservation of actual liberty.
But let me get back to the idea that the President has the right to seize private property in times of national emergency or war. Higgs quotes contemporary economist John Maurice Clark to show that the rationale for this action was based upon another prevailing opinion:
“In time of war, the movements called for are so huge in quantity and the demand for speed so urgent, that if it were left to the incentives of increased prices and increased wages to bring about these changes, this could only be done at a huge increase in the returns to labor and capital.”
To which Higgs (and I) say, “Precisely.” The market is one of the most critical bellwethers we have to determine if a cause is just--if it is one that people are willing to sacrifice for. By circumventing it--by “requiring all people to do what but a few people wished”--one invites a kind of despotism of decision-making. It is no longer society-at-large that decides to commit itself, but a small handful of people, or even a single individual.
Objectively, that’s wrong. But there are times when people will willingly abdicate their collective decision-making for the actions of strong executive, and that seems as good an explanation as any for the continued increases in federal power Higgs continues to describe during the Great Depression.
In many ways, it was the “mother of all crises,” and as the Depression clung more and more tightly to more and more of American society, more and more people seemed willing to abandon the intellectual blessings of private property and rugged individualism for the concrete balms of social welfare and make-work government programs.
The economic crisis and the governmental responses to it “dissipated the distrust of the state” inherited from the eighteenth and nineteenth centuries. “Even Republicans who protested that Roosevelt’s policies were snuffing out liberty voted overwhelmingly in favor of coercive measures.” The great majority of Americans, regardless of party affiliation, “accepted and approved the new ideals of social welfare democracy.”
And Higgs’s conclusion hinges on that great bugaboo of libertarian thought--that none of the government programs instituted to combat the Great Depression (or, indeed, even to build up to take on Adolf Hitler and Emperor Hirohito) did anything to bring the economic crisis to an end--despite that fact that everyone believes it to be true.
The nation had weathered its worst storm. Always susceptible to the fallacy of post hoc ergo propter hoc, the masses concluded that Roosevelt and his policies had saved the country. It would never do, they thought, to risk a return to a regime of economic freedom, a regime most people believed responsible for the catastrophe of the Great Depression.
True or not, the crisis had finally created not just a Leviathan, but a Leviathan that most people desired, a Leviathan that today most people freely associate with an untarnished libertarian history of the proud American nation. Speaking out against the federal government has always been unpatriotic, hasn’t it? The United States has always had a standing army, hasn’t it? The U.S. President has always had the powers of a unitary executive, hasn’t he? To many people, the world we now live in is the same that has always existed--the one that our schoolyard heroes George Washington and Patrick Henry intended.
Which brings me to the most intriguing question posed by Higgs’s treatise, if not by Higgs himself than at least by me as I continued to read the assaults on iconoclastic liberty he continues to describe and document through the World War II years.
Crisis created the Leviathan. And the Leviathan is radically different than what the framers of our federal government intended. But which is worse--Crisis or Leviathan? In other words, if we hadn’t built the Leviathan, if we had instead dealt with each crisis on the terms dictated by the forms and functions of our original, constitutionally-limited federal government, how would we have fared? Would we have survived? And if so, would the judgment of history declare us better off than we are today?
These are questions I won’t attempt to answer definitively--but I will state that I believe a certain amount of leviathan-building is inevitable, that it is a natural by-product of human society, and not something that requires any kind of malicious intent.
Here’s an analogy to support that point, pulled directly from Higgs’s text, and representing another bugaboo of the libertarians.
Between the world wars, as during every other previous period of peace, the American armed forces struggled just to survive. … Congress normally authorized only the barest essentials of equipment and supply and minimal numbers of officers and men. Traditional apprehension about a peacetime standing army denied respect and high social status to the military profession, which remained a thankless calling until bullets began to fly.
After the capitulation of France in June 1940, these conditions changed marvelously. Abandoning its characteristic frugality in military appropriations, Congress approved the spending of billions, then tens of billions, and ultimately hundreds of billions of dollars; all told more than $300 billion was spent for war goods and services during 1941-1945--a classic case of solving a problem by “throwing money at it.” The associated procurement program has been described as a “buckshot operation.” Though much of the money was wasted, so much was spent that great things were accomplished anyhow. After 1941 the military procurement agencies operated virtually without a budget constraint.
Here was the beginning of the military industrial complex, something decried today by libertarian dogma as a system born from greed and the evil intent of business executives who put their profits above the desire for a peaceful world and the human lives destroyed by the lack of one. And, to certain degree, here also were the seeds of the unitary executive.
By more or less surrendering its power of the purse, Congress relinquished effective control of the military to the executive branch, where everything hinged on the President’s exercise and delegation of his war powers, including his decisions as Commander in Chief.
And what happened next seems in retrospect to confirm the libertarian’s accusations.
To procure military goods the Army and the Navy dealt mainly with big businesses. At the insistence of the military authorities, with whom FDR again sided, antitrust prosecutions were placed on the shelf for the duration of the war. There were more than eighteen thousand prime contractors, but a hundred firms got two-thirds of the war business; just thirty-three got about half; and General Motors alone got 8 percent.
Except...
No grand conspiracy produced the pattern. The military authorities wanted the goods, wanted them fast; price did not much matter to them but quality and reliability did. Big firms had the technical and managerial expertise and the large physical facilities to respond readily to the huge military demands. Besides, it was easier to deal with a few contractors than with many. If the services of smaller businesses were needed, they could be acquired under subcontracts by the prime contractors.
No grand conspiracy. Just a system of incentives acting in the context of a new challenge. Despite what the libertarians might say, the result was almost market-driven. The market created by the war demanded high quality goods, quickly shipped, and those that could provide them were rewarded in kind.
Still, there is a certain intellectual allure to the points Higgs seeks to make with the growth of the Leviathan during the World War II years.
As an example:
Historians typically consider the Japanese-American internment, which they almost universally regard as the most egregious episode in the twentieth-century history of American civil liberties, separately from the military draft and the government’s imposition of economic controls during the war. Many applaud the draft and the economic controls while deploring the internment. In fact, all were forged from the same metal: government suppression of private property rights, including the right of innocent persons to control the use of their own bodies. Hence no one should be surprised that the Supreme Court allowed all these invasions of individual rights to stand.
This much I think is true. A people who would not let their government create a compulsory draft or exert anti-libertarian controls over their economy would almost certainly not let it round up a subset of its citizens and put them into internment camps. If you consider the draft and the economic controls good things, then you probably have to view the internment at least partly as their unintended consequence.
Not out there enough for you? Try this last example on for size.
The term fascism, however, has a definite meaning; and one may employ it as an analytical concept independent of distasteful historical exemplars. As Charlotte Twight has shown, the essence of fascism is nationalistic collectivism, the affirmation that the “national interest” should take precedence over the rights of individuals. So deeply has the presumption of individual subservience to the state entered into the thinking of modern Americans that few people have noticed--and no doubt many would be offended by the suggestion--that fascism has colored countless declarations by public officials during the past fifty years. Unfortunately, as Friedrich Hayek noted during World War II, “many who think themselves infinitely superior to the aberrations of naziism, and sincerely hate all its manifestations, work at the same time for ideals whose realization would lead straight to the abhorred tyranny.”
And that, indeed, is what’s wrong with the unchecked Leviathan. The oppression its needs to bring upon the few or the obscure in order to deal with the Crisis can ultimately be used in greater and eventually intolerable measures. A little Leviathan many be exactly what the doctor ordered, but how can you keep the tadpole from becoming the frog? Higgs’s treatise seems the political equivalent of that unstoppable biological imperative. The tadpole may look different from the frog, but they are indeed creatures of the same kind.
Finally, the only recipe Higgs offers for battling the Leviathan seems to come from historian and political scientist Clinton Rossiter.
“The people with their overt or silent resistance, not the Court with its power of judicial review, will set the only practical limits to arrogance and abuse.”
It’s a potent reminder for those who might think that the Leviathan is capable--or, indeed, disposed--to check itself. It is not. And we would be remiss not to point out that resistance, either individually or in mass movements, will always first be perceived as the latest crisis, stirring a sleeping Leviathan back to its fighting weight.
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This post was written by Eric Lanke, an association executive, blogger and author. For more information, visit www.ericlanke.blogspot.com, follow him on Twitter @ericlanke or contact him at eric.lanke@gmail.com.
