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The production of security - Gustave de Molinari

Thursday, 8 August 2013

[...] Among the needs of man, there is on particular type which plays an immense role in the history of humanity, namely the need for security.

What is this need?

Whether they live in isolation or in society, men are, above all, interested in preserving their existence and the fruits of their labor. If the sense of justice were universally prevalent on earth; if, consequently, each man confined himself to laboring and exchanging the fruits of his labor, without wishing to take away, by violence or fraud, the fruits of other men's labor; if everyone had, in one word, an instinctive horror of any act harmful to another person, it is certain that security would exist naturally on earth, and that no artificial institution would be necessary to establish it. Unfortunately this is not the way things are. The sense of justice seems to be the perquisite of only a few eminent and exceptional temperaments. Among the inferior races, it exists only in a rudimentary state. Hence the innumerable criminal attempts, ever since the beginning of the world, since the days of Cain and Abel, against the lives and property of individuals.

Hence also the creation of establishments whose object is to guarantee to everyone the peaceful possession of his person and his goods.

These establishments were called governments.

Everywhere, even among the least enlightened tribes, one encounters a government, so universal and urgent is the need for security provided by government.

Everywhere, men resign themselves to the most extreme sacrifices rather than do without government and hence security, without realizing that in so doing, they misjudge their alternatives.

Suppose that a man found his person and his means of survival incessantly menaced; wouldn't his first and constant preoccupation be to protect himself from the dangers that surround him? This preoccupation, these efforts, this labor, would necessarily absorb the greater portion of his time, as well as the most energetic and active faculties of his intelligence. In consequence, he could only devote insufficient and uncertain efforts, and his divided attention, to the satisfaction of his other needs.

Even though this man might be asked to surrender a very considerable portion of his time and of his labor to someone who takes it upon himself to guarantee the peaceful possession of his person and his goods, wouldn't it be to his advantage to conclude this bargain?

Still, it would obviously be no less in his self-interest to procure his security at the lowest price possible.

If there is one well-established truth in political economy, it is this:

That in all cases, for all commodities that serve to provide for the tangible or intangible needs of the consumer, it is in the consumer's best interest that labor and trade remain free, because the freedom of labor and of trade have as their necessary and permanent result the maximum reduction of price.

And this:

That the interests of the consumer of any commodity whatsoever should always prevail over the interests of the producer.

Now in pursuing these principles, one arrives at this rigorous conclusion:

That the production of security should, in the interests of the consumers of this intangible commodity, remain subject to the law of free competition.

Whence it follows:

That no government should have the right to prevent another government from going into competition with it, or to require consumers of security to come exclusively to it for this commodity.

[...] But why should there be an exception relative to security? What special reason is there that the production of security cannot be relegated to free competition? Why should it be subjected to a different principle and organized according to a different system? [...] We are consequently led to ask ourselves whether his exception is well founded, in the eyes of the economist.

It offends reason to believe that a well established natural law can admit of exceptions. A natural law must hold everywhere and always, or be invalid. I cannot believe, for example, that the universal law of gravitation, which governs the physical world, is ever suspended in any instance or at any point of the universe. Now I consider economic laws comparable to natural laws, and I have just as much faith in the principle of the division of labor as I have in the universal law of gravitation. I believe that while these principles can be disturbed, they admit of no exceptions.

But, if this is the case, the production of security should not be removed from the jurisdiction of free competition; and if it is removed, society as a whole suffers a loss.

Either this is logical and true, or else the principles on which economic science is based are invalid.

It thus has been demonstrated a priori, to those of us who have faith in the principles of economic science, that the exception indicated above is not justified, and that the production of security, like anything else, should be subject to the law of free competition.

Once we have acquired this conviction, what remains for us to do? It remains for us to investigate how it has come about that the production of security has not been subjected to the law of free competition, but rather has been subjected to different principles.

What are those principles?

Those of monopoly and communism.

In the entire world, there is not a single establishment of the security industry that is not based on monopoly or on communism. [...] Take salt for example. Suppose that a man or a group of men succeed in having the exclusive production and sale of salt assigned to themselves. It is apparent that this man or group could arise the price of this commodity well above its value, well above the price it would have under a regime of free competition.

One will then say that this man or this group possesses a monopoly, and that the price of salt is a monopoly price.

But it is obvious that the consumers will not consent freely to paying the abusive monopoly surtax. It will be necessary to compel them to pay it, and in order to compel them, the employment of force will be necessary.

Every monopoly necessarily rests on force.

When the monopolists are no longer as strong as the consumers they exploit, what happens?

In every instance, the monopoly finally disappears either violently or as the outcome of an amicable transaction. What is it replaced with?

If the roused and insurgent consumers secure the means of production of the salt industry, in all probability they will confiscate this industry for their own profit, and their first thought will be, not to relegate it to free competition, but rather to exploit it, in common, for their own account. They will then name a director or a directive committee to operate the saltworks, to whom they will allocate the funds necessary to defray the costs of salt production. then, since the experience of the past will have made them suspicious and distrustful, since they will be afraid that the director named by them will seize production for his own benefit, and simply reconstitute by open or hidden means the old monopoly for his own profit, they will elect delegates, representatives entrusted with appropriating the funds necessary for production, with watching over their use, and with making sure that the salt produced is equally distributed to those entitled to it. The production of salt will be organized in this manner.

This form of the organization of production has been named communism.

When this organization is applied to a single commodity, the communism is said to be partial.

When it is applied to all commodities, the communism is said to be complete.

But whether communism is partial or complete, political economy is no more tolerant of it than it is of monopoly, of which it is merely an extension.Isn't what has just been said about salt applicable to security? Isn't this the history of all monarchies and all republics?

Everywhere, the production of security began by being organized as a monopoly, and everywhere, nowadays, it tends to be organized communistically.

Here is why.

Among the tangible and intangible commodities necessary to man, none, with the possible exception of wheat, is more indispensable, and therefore none can support quite so large a monopoly duty.

Nor is any quite so prone to monopolization.

What, indeed, is the situation of men who need security? Weakness. What is the situation of those who undertake to provide them with this necessary security? Strength. If it were otherwise, if the consumers of security were stronger than the producers, they obviously would dispense with their assistance.

Now, if the producers of security are originally stronger than the consumers, won't it be easy for the former to impose a monopoly on the latter?

Everywhere, when societies originate, we see the strongest, most warlike races seizing the exclusive government of the society. Everywhere we see these races seizing a monopoly on security within certain more or less extensive boundaries, depending on their number and strength.

And, this monopoly being, by its very nature, extraordinarily profitable, everywhere we see the races invested with the monopoly on security devoting themselves to bitter struggles, in order to add to the extent of their market, the number of their forced consumers, and hence the amount of their gains.

War has been the necessary and inevitable consequence of the establishment of a monopoly on security.

Another inevitable consequence has been that this monopoly has engendered all other monopolies.

When they saw the situation of the monopolizers of security, the producers of other commodities could not help but notice that nothing in the world is more advantageous than monopoly. They, in turn, were consequently tempted to add to the gains from their own industry by the same process. But what did they require in order to monopolize, to the detriment of the consumers, the commodity they produced? They required force. However, they did not possess the force necessary to constrain the consumers in question. What did they do? They borrowed it, for a consideration, from those who had it. They petitioned and obtained, at the price of an agreed upon fee, the exclusive privilege of carrying on their industry within certain determined boundaries. Since the fees for these privileges brought the producers of security a goodly sum of money, the world was soon covered with monopolies. Labor and trade were everywhere shackled, enchained, and the condition of the masses remained as miserable as possible.

Nevertheless, after long centuries of suffering, as enlightenment spread through the world little by little, the masses who had been smothered under this nexus of privileges began to rebel against the privileged, and to demand liberty, that is to say, the suppression of monopolies.

This process took many forms. What happened in England, for example? Originally, the race which governed the country and which was militarily organized (the aristocracy), having at its head a hereditary leader (the king), and an equally hereditary administrative council (the House of Lords), set the price of security, which it had monopolized, at whatever rate it pleased. There was no negotiation between the producers of security and the consumers. This was the rule of absolutism. But as time passed, the consumers, having become aware of their numbers and strength, arose against the purely arbitrary regime, and they obtained the right to negotiate with the producers over the price of the commodity. For this purpose, they sent delegates to the House of Commons to discuss the level of taxes, the price of security. They were thus able to improve their lot somewhat. Nevertheless, the producers of security had a direct say in the naming of the members of the House of Commons, so that debate was not entirely open, and the price of the commodity remained above its natural value. One day the exploited consumers rose against the producers and dispossessed them of their industry. They then undertook to carry on this industry by themselves and chose for this purpose a director of operations assisted by a Council. Thus communism replaced monopoly. But the scheme did not work, and twenty years later, primitive monopoly was re-established. Only this time the monopolists were wise enough not to restore the rule of absolutism; they accepted free debate over taxes, being careful, all the while, incessantly to corrupt the delegates of the opposition party. They gave these delegates control over various posts in the administration of security, and they even went so far as to allow the most influential into the bosom of their superior Council. Nothing could have been more clever than thus behavior. Nevertheless, the consumers of security finally became aware of these abuses, and demanded the reform of Parliament. This long contested reform was finally achieved, and since that time, the consumers have won a significant lightening of their burdens.

In France, the monopoly on security, after having similarly undergone frequent vicissitudes and various modifications, has just been overthrown for the second time. [De Molinari was writing one year after the revolutions of 1848 — Tr.] As once happened in England, monopoly for the benefit of one caste, and then in the name of a certain class of society, was finally replaced by communal production. The consumers as a whole, behaving like shareholders, named a director responsible for supervising the actions of the director and of his administration.

We will content ourselves with making one simple observation on the subject of this new regime.

Just as the monopoly on security logically had to spawn universal monopoly, so communistic security must logically spawn universal communism.

In reality, we have a choice of two things:

Either communistic production is superior to free production, or it is not.

If it is, then it must be for all things, not just for security.

If not, progress requires that it be replaced by free production.

Complete communism or complete liberty: that is the alternative!

[...] Let us imagine a new-born society: The men who compose it are busy working and exchanging the fruits of their labor. A natural instinct reveals to these men that their persons, the land they occupy and cultivate, the fruits of their labor, are their property, and that no one, except themselves, has the right to dispose of or touch this property. This instinct is not hypothetical; it exists. But man being an imperfect creature, this awareness of the right of everyone to his person and his goods will not be found to the same degree in every soul, and certain individuals will make criminal attempts, by violence or by fraud, against the persons or the property of others.

Hence, the need for an industry that prevents or suppresses these forcible or fraudulent aggressions.

Let us suppose that a man or a combination of men comes and says:

For a recompense, I will undertake to prevent or suppress criminal attempts against persons and property.

Let those who wish their persons and property to be sheltered from all aggression apply to me.

Before striking a bargain with this producer of security, what will the consumers do?

In the first place, they will check if he is really strong enough to protect them.

In the second place, whether his character is such that they will not have to worry about his instigating the very aggressions he is supposed to suppress.

In the third place, whether any other producer of security, offering equal guarantees, is disposed to offer them this commodity on better terms.

These terms are of various kinds.

In order to be able to guarantee the consumers full security of their persons and property, and, in case of harm, to give them a compensation proportioned to the loss suffered, it would be necessary, indeed:

  1. That the producer establish certain penalties against the offenders of persons and the violators of property, and that the consumers agree to submit to these penalties, in case they themselves commit offenses;
  2. That he impose certain inconveniences on the consumers, with the object of facilitating the discovery of the authors of offenses;
  3. That he regularly gather, in order to cover his costs of production as well as an appropriate return for his efforts, a certain sum, variable according to the situation of the consumers, the particular occupations they engage in, and the extent, value, and nature of their properties.

If these terms, necessary for carrying on this industry, are agreeable to the consumers, a bargain will be struck. Otherwise the consumers will either do without security, or else apply to another producer.

Now if we consider the particular nature of the security industry, it is apparent that the producers will necessarily restrict their clientele to certain territorial boundaries. They would be unable to cover their costs if they tried to provide police services in localities comprising only a few clients. Their clientele will naturally be clustered around the center of their activities. They would nevertheless be unable to abuse this situation by dictating to the consumers. In the event of an abusive rise in the price of security, the consumers would always have the option of giving their patronage to a new entrepreneur, or to a neighboring entrepreneur.

This option the consumer retains of being able to buy security wherever he pleases brings about a constant emulation among all the producers, each producer striving to maintain or augment his clientele with the attraction of cheapness or of faster, more complete and better justice.

If, on the contrary, the consumer is not free to buy security wherever he pleases, you forthwith see open up a large profession dedicated to arbitrariness and bad management. justice becomes slow and costly, the police vexatious, individual liberty is no longer respected, the price of security is abusively inflated and inequitably apportioned, according to the power and influence of this or that class of consumers. The protectors engage in bitter struggles to wrest customers from one another. In a word, all the abuses inherent in monopoly or in communism crop up.

Under the rule of free competition, war between the producers of security entirely loses its justification. Why would they make war? To conquer consumers? But the consumers would not allow themselves to be conquered. They would be careful not to allow themselves to be protected by men who would unscrupulously attack the persons and property of their rivals. If some audacious conqueror tried to become dictator, they would immediately call tot heir aid all the free consumers menaced by this aggression, and they would treat him as he deserved. Just as war is the natural consequence of monopoly, peace us the natural consequence of liberty.

[...]
It will undoubtedly be disputed whether such a hypothetical situation is realizable. But, at the risk of being considered utopian, we affirm that this is not disputable, that a careful examination of the facts will decide the problem of government more and more in favor of liberty, just as it does all other economic problems. We are convinced, so far as we are concerned, that one day societies will be established to agitate for the freedom of government, as they have already been established on behalf of the freedom of commerce.





Source: https://mises.org/page/1432

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