# D.1 Why does state intervention occur?

The most obvious interaction between statism and capitalism is when the state intervenes in the economy. Indeed, the full range of capitalist politics is expressed in how much someone thinks this should happen. At one extreme, there are the right-wing liberals (sometimes mistakenly called "libertarians") who seek to reduce the state to a defender of private property rights. At the other, there are those who seek the state to assume full ownership and control of the economy (i.e. state capitalists who are usually mistakenly called "socialists"). In practice, the level of state intervention lies between these two extremes, moving back and forth along the spectrum as necessity requires.

For anarchists, capitalism as an economy requires state intervention. There is, and cannot be, a capitalist economy which does not exhibit some form of state action within it. The state is forced to intervene in society for three reasons:

1. To bolster the power of capital as a whole within society.
2. To benefit certain sections of the capitalist class against others.
3. To counteract the anti-social effects of capitalism.

From our discussion of the state and its role in section B.2, the first two reasons are unexpected and straight forward. The state is an instrument of class rule and, as such, acts to favour the continuation of the system as a whole. The state, therefore, has always intervened in the capitalist economy, usually to distort the market in favour of the capitalist class within its borders as against the working class and foreign competitors. This is done by means of taxes, tariffs, subsidies and so forth.

State intervention has been a feature of capitalism from the start. As Kropotkin argued, "nowhere has the system of 'non-intervention of the State' ever existed. Everywhere the State has been, and still is, the main pillar and the creator, direct and indirect, of Capitalism and its powers over the masses. Nowhere, since States have grown up, have the masses had the freedom of resisting the oppression by capitalists. . . The state has always interfered in the economic life in favour of the capitalist exploiter. It has always granted him protection in robbery, given aid and support for further enrichment. And it could not be otherwise. To do so was one of the functions -- the chief mission -- of the State." [Evolution and Environment, pp. 97-8]

In addition to this role, the state has also regulated certain industries and, at times, directly involved itself in employing wage labour to product goods and services. The classic example of the latter is the construction and maintenance of a transport network in order to facilitate the physical circulation of goods. As Colin Ward noted, transport "is an activity heavily regulated by government. This regulation was introduced, not in the interests of the commercial transport operators, but in the face of their intense opposition, as well as that of the ideologists of 'free' enterprise." He gives the example of the railways, which were "built at a time when it was believed that market forces would reward the good and useful and eliminate the bad or socially useless." However, "it was found necessary as early as 1840 for the government's Board of Trade to regulate and supervise them, simply for the protection of the public." [Freedom to Go, p. 7 and pp. 7-8]

This sort of intervention was to ensure that no one capitalist or group of capitalists had a virtual monopoly over the others which would allow them to charge excessive prices. Thus the need to bolster capital as a whole may involve regulating or expropriating certain capitalists and sections of that class. Also, state ownership was and is a key means of rationalising production methods, either directly by state ownership or indirectly by paying for Research and Development. That certain sections of the ruling class may seek advantages over others by control of the state is, likewise, a truism.

All in all, the idea that capitalism is a system without state intervention is a myth. The rich use the state to bolster their wealth and power, as would be expected. Yet even if such a thing as a truly "laissez-faire" capitalist state were possible, it would still be protecting capitalist property rights and the hierarchical social relations these produce against those subject to them. This means, as Kropotkin stressed, it "has never practised" the idea of laissez faire. In fact, "while all Governments have given the capitalists and monopolists full liberty to enrich themselves with the underpaid labour of working men [and women] . . . they have never, nowhere given the working [people] the liberty of opposing that exploitation. Never has any Government applied the 'leave things alone' principle to the exploited masses. It reserved it for the exploiters only." [Op. Cit., p. 96] As such, under pure "free market" capitalism state intervention would still exist but it would be limited to repressing the working class (see section D.1.4 for more discussion).

Then there is the last reason, namely counteracting the destructive effects of capitalism itself. As Chomsky puts it, "in a predatory capitalist economy, state intervention would be an absolute necessity to preserve human existence and to prevent the destruction of the physical environment -- I speak optimistically . . . social protection . . . [is] therefore a minimal necessity to constrain the irrational and destructive workings of the classical free market." [Chomsky on Anarchism, p. 111] This kind of intervention is required simply because "government cannot want society to break up, for it would mean that it and the dominant class would be deprived of sources of exploitation; nor can it leave society to maintain itself without official intervention, for then people would soon realise that government serves only to defend property owners . . . and they would hasten to rid themselves of both." [Malatesta, Anarchy, p. 25]

So while many ideologues of capitalism thunder against state intervention (for the benefit of the masses), the fact is that capitalism itself produces the need for such intervention. The abstractly individualistic theory on which capitalism is based ("everyone for themselves") results in a high degree of statism since the economic system itself contains no means to combat its own socially destructive workings. The state must also intervene in the economy, not only to protect the interests of the ruling class but also to protect society from the atomising and destructive impact of capitalism. Moreover, capitalism has an inherent tendency toward periodic recessions or depressions, and the attempt to prevent them has become part of the state's function. However, since preventing them is impossible (they are built into the system -- see section C.7), in practice the state can only try to postpone them and ameliorate their severity. Let's begin with the need for social intervention.

Capitalism is based on turning both labour and land into commodities. As socialist Karl Polanyi points out, however, "labour and land are no other than the human beings themselves of which every society consists and the natural surroundings in which it exists; to include labour and land in the market mechanism means to subordinate the substance of society itself to the laws of the market." And this means that "human society has become an accessory to the economic system," with humanity placing itself fully in the hands of supply and demand. But such a situation "could not exist for any length of time without annihilating the human and natural substance of society; it would have physically destroyed man and transformed his surroundings into a wilderness." This, inevitably, provokes a reaction in order to defend the basis of society and the environment that capitalism needs, but ruthlessly exploits. As Polanyi summarises, "the countermove against economic liberalism and laissez-faire possessed all the unmistakable characteristics of a spontaneous reaction . . . [A] closely similar change from laissez-faire to 'collectivism' took place in various countries at a definite stage of their industrial development, pointing to the depth and independence of the underlying causes of the process." [The Great Transformation, p. 71, pp. 41-42 and pp. 149-150]

To expect that a community would remain indifferent to the scourge of unemployment, dangerous working conditions, 16-hour working days, the shifting of industries and occupations, and the moral and psychological disruption accompanying them -- merely because economic effects, in the long run, might be better -- is an absurdity. Similarly, for workers to remain indifferent to, for example, poor working conditions, peacefully waiting for a new boss to offer them better conditions, or for citizens to wait passively for capitalists to start voluntarily acting responsibly toward the environment, is to assume a servile and apathetic role for humanity. Luckily, labour refuses to be a commodity and citizens refuse to stand idly by while the planet's ecosystems are destroyed.

In other words, the state and many of its various policies are not imposed from outside of the capitalist system. It is not some alien body but rather has evolved in response to clear failings within capitalism itself (either from the perspective of the ruling elite or from the general population). It contrast, as the likes of von Hayek did, to the "spontaneous" order of the market versus a "designed" order associated with state fails to understand that the latter can come about in response to the former. In other words, as Polanyi noted, state intervention can be a "spontaneous reaction" and so be a product of social evolution itself. While the notion of a spontaneous order may be useful to attack undesired forms of state intervention (usually social welfare, in the case of von Hayek), it fails to note this process at work nor the fact that the state itself played a key role in the creation of capitalism in the first place as well as specifying the rules for the operation and so evolution of the market itself.

Therefore state intervention occurs as a form of protection against the workings of the market. As capitalism is based on atomising society in the name of "freedom" on the competitive market, it is hardly surprising that defence against the anti-social workings of the market should take statist forms -- there being few other structures capable of providing such defence (as such social institutions have been undermined, if not crushed, by the rise of capitalism in the first place). Thus, ironically, "individualism" produces a "collectivist" tendency within society as capitalism destroys communal forms of social organisation in favour of ones based on abstract individualism, authority, and hierarchy -- all qualities embodied in the state, the sole remaining agent of collective action in the capitalist worldview. Strangely, conservatives and other right-wingers fail to see this, instead spouting on about "traditional values" while, at the same time, glorifying the "free market." This is one of the (many) ironic aspects of free market dogma, namely that it is often supported by people who are at the forefront of attacking the effects of it. Thus we see conservatives bemoaning the breakdown of traditional values while, at the same time, advocating the economic system whose operation weakens family life, breaks up communities, undermines social bonds and places individual gain above all else, particularly "traditional values" and "community." They seem blissfully unaware that capitalism destroys the traditions they claim to support and recognises only monetary values.

In addition to social protection, state intervention is required to protect a country's economy (and so the economic interests of the ruling class). As Noam Chomsky points out, even the USA, home of "free enterprise," was marked by "large-scale intervention in the economy after independence, and conquest of resources and markets. . . [while] a centralised developmental state [was constructed] committed to [the] creation and entrenchment of domestic manufacture and commerce, subsidising local production and barring cheaper British imports, constructing a legal basis for private corporate power, and in numerous other ways providing an escape from the stranglehold of comparative advantage." [World Orders, Old and New, p. 114] State intervention is as natural to capitalism as wage labour.

In the case of Britain and a host of other countries (and more recently in the cases of Japan and the Newly Industrialising Countries of the Far East, like Korea) state intervention was the key to development and success in the "free market." (see, for example, Robert Wade's Governing the Market). In other "developing" countries which have had the misfortune to be subjected to "free-market reforms" (e.g. neo-liberal Structural Adjustment Programs) rather than following the interventionist Japanese and Korean models, the results have been devastating for the vast majority, with drastic increases in poverty, homelessness, malnutrition, etc. (for the elite, the results are somewhat different of course). In the nineteenth century, states only turned to laissez-faire once they could benefit from it and had a strong enough economy to survive it: "Only in the mid-nineteenth century, when it had become powerful enough to overcome any competition, did England [sic!] embrace free trade." [Chomsky, Op. Cit., p. 115] Before this, protectionism and other methods were used to nurture economic development. And once laissez-faire started to undermine a country's economy, it was quickly revoked. For example, protectionism is often used to protect a fragile economy and militarism has always been a favourite way for the ruling elite to help the economy, as is still the case, for example, in the "Pentagon System" in the USA (see section D.8).

Therefore, contrary to conventional wisdom, state intervention will always be associated with capitalism due to: (1) its authoritarian nature; (2) its inability to prevent the anti-social results of the competitive market; (3) its fallacious assumption that society should be "an accessory to the economic system"; (4) the class interests of the ruling elite; and (5) the need to impose its authoritarian social relationships upon an unwilling population in the first place. Thus the contradictions of capitalism necessitate government intervention. The more the economy grows, the greater become the contradictions and the greater the contradictions, the greater the need for state intervention. The development of capitalism as a system provides amble empirical support for this theoretical assessment.

Part of the problem is that the assumption that "pure" capitalism does not need the state is shared by both Marxists and supporters of capitalism. "So long as capital is still weak," Marx wrote, "it supports itself by leaning on the crutches of past, or disappearing, modes of production. As soon as it begins to feel itself strong, it throws away these crutches and moves about in accordance with its own laws of motion. But as soon as it begins to feel itself as a hindrance to further development and is recognised as such, it adapts forms of behaviour through the harnessing of competition which seemingly indicate its absolute rule but actually point to its decay and dissolution." [quoted by Paul Mattick, Marx and Keynes, p. 96] Council Communist Paul Mattick comments that a "healthy" capitalism "is a strictly competitive capitalism, and the imperfections of competition in the early and late stages of its development must be regarded as the ailments of an infantile and of a senile capitalism. For a capitalism which restricts competition cannot find its indirect 'regulation' in the price and market movements which derive from the value relations in the production process." [Op. Cit., p. 97]

However, this gives capitalism far too much credit -- as well as ignoring how far the reality of that system is from the theory. State intervention has always been a constant aspect of economic life under capitalism. Its limited attempts at laissez-faire have always been failures, resulting in a return to its statist roots. The process of selective laissez-faire and collectivism has been as much a feature of capitalism in the past as it is now. Indeed, as Noam Chomsky argues, "[w]hat is called 'capitalism' is basically a system of corporate mercantilism, with huge and largely unaccountable private tyrannies exercising vast control over the economy, political systems, and social and cultural life, operating in close co-operation with powerful states that intervene massively in the domestic economy and international society. That is dramatically true of the United States, contrary to much illusion. The rich and privileged are no more willing to face market discipline than they have been in the past, though they consider it just fine for the general population." [Marxism, Anarchism, and Alternative Futures, p. 784] As Kropotkin put it:

> "What, then is the use of taking, with Marx, about the 'primitive accumulation' -- as if this 'push' given to capitalists were a thing of the past? . . . In short, nowhere has the system of 'non-intervention of the State' ever existed . . . Nowhere, since States have grown up, have the masses had the freedom of resisting the oppression by capitalists. The few rights they have now they have gained only by determination and endless sacrifice.

> "To speak therefore of 'non-intervention of the State' may be all right for middle-class economists, who try to persuade the workers that their misery is 'a law of Nature.' But -- how can Socialists use such language?" [Op. Cit., pp. 97-8]

In other words, while Marx was right to note that the "silent compulsion of economic relations sets the seal on the domination of the capitalist over the worker" he was wrong to state that "[d]irect extra-economic force is still of course used, but only in exceptional cases." The ruling class rarely lives up to its own rhetoric and while "rely[ing] on his [the workers'] dependence on capital" it always supplements that with state intervention. As such, Marx was wrong to state it was "otherwise during the historical genesis of capitalist production." It is not only the "rising bourgeoisie" which "needs the power of the state" nor is it just "an essential aspect of so-called primitive accumulation." [Capital, vol. 1, pp. 899-900]

The enthusiasm for the "free market" since the 1970s is in fact the product of the extended boom, which in turn was a product of a state co-ordinated war economy and highly interventionist Keynesian economics (a boom that the apologists of capitalism use, ironically, as "evidence" that "capitalism" works) plus an unhealthy dose of nostalgia for a past that never existed. It's strange how a system that has never existed has produced so much! When the Keynesian system went into crisis, the ideologues of "free market" capitalism seized their chance and found many in the ruling class willing to utilise their rhetoric to reduce or end those aspects of state intervention which benefited the many or inconvenienced themselves. However, state intervention, while reduced, did not end. It simply became more focused in the interests of the elite (i.e. the natural order). As Chomsky stresses, the "minimal state" rhetoric of the capitalists is a lie, for they will "never get rid of the state because they need it for their own purposes, but they love to use this as an ideological weapon against everyone else." They are "not going to survive without a massive state subsidy, so they want a powerful state." [Chomsky on Anarchism, p. 215]

And neither should it be forgotten that state intervention was required to create the "free" market in the first place. To quote Polanyi again, "[f]or as long as [the market] system is not established, economic liberals must and will unhesitatingly call for the intervention of the state in order to establish it, and once established, in order to maintain it." [Op. Cit., p. 149] Protectionism and subsidy (mercantilism) -- along with the liberal use of state violence against the working class -- was required to create and protect capitalism and industry in the first place (see section F.8 for details).

In short, although laissez-faire may be the ideological basis of capitalism -- the religion that justifies the system -- it has rarely if ever been actually practised. So, while the ideologues are praising "free enterprise" as the fountainhead of modern prosperity, the corporations and companies are gorging at the table of the State. As such, it would be wrong to suggest that anarchists are somehow "in favour" of state intervention. This is not true. We are "in favour" of reality, not ideology. The reality of capitalism is that it needs state intervention to be created and needs state intervention to continue (both to secure the exploitation of labour and to protect society from the effects of the market system). That we have no truck with the myths of "free market" economics does not mean we "support" state intervention beyond recognising it as a fact of a system we want to end and that some forms of state intervention are better than others.

## D.1.1 Does state intervention cause the problems to begin with?

It depends. In the case of state intervention on behalf of the ruling class, the answer is always yes! However, in terms of social intervention the answer is usually no.

However, for classical liberals (or, as we would call them today, neo-liberals, right-wing "libertarians" or "conservatives"), state intervention is the root of all evil. It is difficult for anarchists to take such argument that seriously. Firstly, it is easily concluded from their arguments that they are only opposed to state intervention on behalf of the working class (i.e. the welfare state or legal support for trade unionism). They either ignore or downplay state intervention on behalf of the ruling class (a few do consistently oppose all state intervention beyond that required to defend private property, but these unsurprisingly have little influence beyond appropriation of some rhetoric and arguments by those seeking to bolster the ruling elite). So most of the right attack the social or regulatory activities of the government, but fail to attack those bureaucratic activities (like defence, protection of property) which they agree with. As such, their arguments are so selective as to be little more than self-serving special pleading. Secondly, it does appear that their concern for social problems is limited simply to their utility for attacking those aspects of state intervention which claim to help those most harmed by the current system. They usually show greater compassion for the welfare of the elite and industry than for the working class. For former, they are in favour of state aid, for the latter the benefits of economic growth is all that counts.

So what to make of claims that it is precisely the state's interference with the market which causes the problems that society blames on the market? For anarchists, such a position is illogical, for "whoever says regulation says limitation: now, how conceive of limiting privilege before it existed?" It "would be an effect without a cause" and so "regulation was a corrective to privilege" and not vice versa. "In logic as well as in history, everything is appropriated and monopolised when laws and regulations arrive." [Proudhon, System of Economic Contradictions, p. 371] As economist Edward Herman notes:

> "The growth of government has closely followed perceived failings of the private market system, especially in terms of market instability, income insecurity, and the proliferation of negative externalities. Some of these deficiencies of the market can be attributed to its very success, which have generated more threatening externalities and created demands for things the market is not well suited to provide. It may also be true that the growth of the government further weakens the market. This does not alter the fact that powerful underlying forces -- not power hungry bureaucrats or frustrated intellectuals -- are determining the main drift." [Edward Herman, Corporate Control, Corporate Power, pp. 300-1]

In other words, state intervention is the result of the problems caused by capitalism rather than their cause. To say otherwise is like arguing that murder is the result of passing laws against it.

As Polanyi explains, the neo-liberal premise is false, because state intervention always "dealt with some problem arising out of modern industrial conditions or, at any rate, in the market method of dealing with them." In fact, most of these "collectivist" measures were carried out by "convinced supporters of laissez-faire . . . [and who] were as a rule uncompromising opponents of [state] socialism or any other form of collectivism." [Op. Cit., p. 146] Sometimes such measures were introduced to undermine support for socialist ideas caused by the excesses of "free market" capitalism but usually there were introduced due to a pressing social need or problem which capitalism created but could not meet or solve. This means that key to understanding state intervention, therefore, is to recognise that politics is a not matter of free will on behalf of politicians or the electorate. Rather they are the outcome of the development of capitalism itself and result from social, economic or environmental pressures which the state has to acknowledge and act upon as they were harming the viability of the system as a whole.

Thus state intervention did not spring out of thin air, but occurred in response to pressing social and economic needs. This can be observed in the mid 19th century, which saw the closest approximation to laissez-faire in the history of capitalism. As Takis Fotopoulos argues, "the attempt to establish pure economic liberalism, in the sense of free trade, a competitive labour market and the Gold Standard, did not last more than 40 years, and by the 1870s and 1880s, protectionist legislation was back . . . It was also significant. . . [that all major capitalist powers] passed through a period of free trade and laissez-faire, followed by a period of anti-liberal legislation." ["The Nation-state and the Market", pp. 37-80, Society and Nature, Vol. 2, No. 2, p. 48]

For example, the reason for the return of protectionist legislation was the Depression of 1873-86, which marked the end of the first experiment with pure economic liberalism. Paradoxically, then, the attempt to liberalise the markets led to more regulation. In light of our previous analysis, this is not surprising. Neither the owners of the country nor the politicians desired to see society destroyed, the result to which unhindered laissez-faire leads. Apologists of capitalism overlook the fact that "[a]t the beginning of the Depression, Europe had been in the heyday of free trade." [Polanyi, Op. Cit., p. 216] State intervention came about in response to the social disruptions resulting from laissez-faire. It did not cause them.

Similarly, it is a fallacy to state, as Ludwig von Mises did, that "as long as unemployment benefit is paid, unemployment must exist." [quoted by Polanyi, Op. Cit., p. 283] This statement is not only ahistoric but ignores the existence of the involuntary unemployment (the purer capitalism of the nineteenth century regularly experienced periods of economic crisis and mass unemployment). Even such a die-hard exponent of the minimal state as Milton Friedman recognised involuntary unemployment existed:

> "The growth of government transfer payments in the form of unemployment insurance, food stamps, welfare, social security, and so on, has reduced drastically the suffering associated with involuntary unemployment. . . most laid-off workers . . . may enjoy nearly as high an income when unemployed as when employed . . . At the very least, he need not be so desperate to find another job as his counterpart in the 1930's. He can afford to be choosy and to wait until he is either recalled or a more attractive job turns up." [quoted by Elton Rayack, Not so Free to Choose, p. 130]

Which, ironically, contradicts Friedman's own claims as regards the welfare state. In an attempt to show that being unemployed is not as bad as people believe Friedman "glaringly contradicts two of his main theses, (1) that the worker is free to choose and (2) that no government social programs have achieved the results promised by its proponents." As Rayack notes, by "admitting the existence of involuntary unemployment, Friedman is, in essence, denying that . . . the market protects the worker's freedom to choose. . . In addition, since those social programs have made it possible for the worker to be 'choosy; in seeking employment, to that extent the welfare state has increased his freedom." [Op. Cit., p. 130] But, of course, the likes of von Mises will dismiss Friedman as a "socialist" and no further thought is required.

That governments started to pay out unemployment benefit is not surprising, given that mass unemployment can produce mass discontent. This caused the state to start paying out a dole in order eliminate the possibility of crime as well as working class self-help, which could conceivably have undermined the status quo. The elite was well aware of the danger in workers organising for their own benefit and tried to counter-act it. What the likes of von Mises forget is that the state has to consider the long term viability of the system rather than the ideologically correct position produced by logically deducting abstract principles.

Sadly, in pursuing of ideologically correct answers, capitalist apologists often ignore common sense. If one believes people exist for the economy and not the economy for people, one becomes willing to sacrifice people and their society today for the supposed economic benefit of future generations (in reality, current profits). If one accepts the ethics of mathematics, a future increase in the size of the economy is more important than current social disruption. Thus Polanyi again: "a social calamity is primarily a cultural not an economic phenomenon that can be measured by income figures." [Op. Cit., p. 157] And it is the nature of capitalism to ignore or despise what cannot be measured.

This does not mean that state intervention cannot have bad effects on the economy or society. Given the state's centralised, bureaucratic nature, it would be impossible for it not to have some bad effects. State intervention can and does make bad situations worse in some cases. It also has a tendency for self-perpetuation. As Elisee Reclus put it:

> "As soon as an institution is established, even if it should be only to combat flagrant abuses, it creates them anew through its very existence. It has to adapt to its bad environment, and in order to function, it must do so in a pathological way. Whereas the creators of the institution follow only noble ideals, the employees that they appoint must consider above all their remuneration and the continuation of their employment." ["The Modern State", pp. 201-15, John P Clark and Camille Martin (eds.), Anarchy, Geography, Modernity, p. 207]

As such, welfare within a bureaucratic system will have problems but getting rid of it will hardly reduce inequality (as proven by the onslaught on it by Thatcher and Reagan). This is unsurprising, for while the state bureaucracy can never eliminate poverty, it can and does reduce it -- if only to keep the bureaucrats secure in employment by showing some results.

Moreover, as Malatesta notes, "the practical evidence [is] that whatever governments do is always motivated by the desire to dominate, and is always geared to defending, extending and perpetuating its privileges and those of the class of which it is both the representative and defender." [Anarchy, p. 24] In such circumstances, it would be amazing that state intervention did not have negative effects. However, to criticise those negative effects while ignoring or downplaying the far worse social problems which produced the intervention in the first place is both staggeringly illogical and deeply hypocritical. As we discuss later, in section D.1.5, the anarchist approach to reforms and state intervention is based on this awareness.

## D.1.2 Is state intervention the result of democracy?

No. Social and economic intervention by the modern state began long before universal suffrage became widespread. While this intervention was usually in the interests of the capitalist class, it was sometimes done explicitly in the name of the general welfare and the public interest. Needless to say, while the former usually goes unmentioned by defenders of capitalism, the latter is denounced and attacked as violations of the natural order (often in terms of the sinister sounding "collectivist" measures).

That democracy is not the root cause for the state's interference in the market is easily seen from the fact that non-democratic capitalist states presided over by defenders of "free market" capitalism have done so. For example, in Britain, acts of state intervention were introduced when property and sexual restrictions on voting rights still existed. More recently, taking Pinochet's neo-liberal dictatorship in Chile, we find that the state, as would be expected, "often intervened on behalf of private and foreign business interests." Given the history of capitalism, this is to be expected. However, the state also practised social intervention at times, partly to diffuse popular disaffection with the economic realities the system generated (disaffection that state oppression could not control) and partly to counter-act the negative effects of its own dogmas. As such, "[f]ree-market ideologues are reluctant to acknowledge that even the Pinochet government intervened in many cases in the market-place in last-minute attempts to offset the havoc wrecked by its free-market policies (low-income housing, air quality, public health, etc.)" [Joseph Collins and John Lear, Chile's Free-Market Miracle: A Second Look, p. 254]

The notion that it is "democracy" which causes politicians to promise the electorate state action in return for office is based on a naive viewpoint of representative democracy. The centralist and hierarchical nature of "representative" democracy means that the population at large has little real control over politicians, who are far more influenced by big business, business lobby groups, and the state bureaucracy. This means that truly popular and democratic pressures are limited within the capitalist state and the interests of elites are far more decisive in explaining state actions.

Obviously anarchists are well aware that the state does say it intervenes to protect the interests of the general public, not the elite. While much of this is often rhetoric to hide policies which (in reality) benefit corporate interests far more than the general public, it cannot be denied that such intervention does exist, to some degree. However, even here the evidence supports the anarchist claim that the state is an instrument of class rule, not a representative of the general interest. This is because such reforms have, in general, been few and far between compared to those laws which benefit the few.

Moreover, historically when politicians have made legal changes favouring the general public rather than the elite they have done so only after intense social pressure from below. For examples, the state only passed pro-union laws only when the alternative was disruptive industrial conflict. In the US, the federal government, at best, ignored or, at worse, actively suppressed labour unions during the 19th century. It was only when mineworkers were able to shut down the anthracite coal fields for months in 1902, threatening disruption of heating supplies around the country, that Teddy Roosevelt supported union demands for binding arbitration to raise wages. He was the first President in American history to intervene in a strike in a positive manner on behalf of workers.

This can be seen from the "New Deal" and related measures of limited state intervention to stimulate economic recovery during the Great Depression. These were motivated by more material reasons than democracy. Thus Takis Fotopoulos argues that "[t]he fact . . .that 'business confidence' was at its lowest could go a long way in explaining the much more tolerant attitude of those controlling production towards measures encroaching on their economic power and profits. In fact, it was only when -- and as long as -- state interventionism had the approval of those actually controlling production that it was successful." ["The Nation-state and the Market", Op. Cit., p. 55] As anarchist Sam Dolgoff notes, the New Deal in America (and similar policies elsewhere) was introduced, in part, because the "whole system of human exploitation was threatened. The political state saved itself, and all that was essential to capitalism, doing what 'private enterprise' could not do. Concessions were made to the workers, the farmers, the middle-class, while the private capitalists were deprived of some of their power." [The American Labor Movement, pp. 25-6] Much the same can be said of the post-war Keynesianism consensus, which combined state aid to the capitalist class with social reforms. These reforms were rarely the result of generous politicians but rather the product of social pressures from below and the needs of the system as a whole. For example, the extensive reforms made by the 1945 Labour Government in the UK was the direct result of ruling class fear, not socialism. As Quentin Hogg, a Conservative M.P., put it in the House of Parliament in 1943: "If you do not give the people social reforms, they are going to give you revolution." Memories of the near revolutions across Europe after the First World War were obviously in many minds, on both sides.

Needless to say, when the ruling class considered a specific reform to be against its interests, it will be abolished or restricted. An example of this can be seen in the 1934 Wagner Act in the USA, which gave US labour its first and last political victory. The Act was passed due to the upsurge in wildcat strikes, factory occupations and successful union organising drives which were spreading throughout the country. Its purpose was specifically to calm this struggle in order to preserve "labour peace." The act made it legal for unions to organise, but this placed labour struggles within the boundaries of legal procedures and so meant that they could be more easily controlled. In addition, this concession was a form of appeasement whose effect was to make those involved in union actions less likely to start questioning the fundamental bases of the capitalist system. Once the fear of a militant labour movement had passed, the Wagner Act was undermined and made powerless by new laws, laws which made illegal the tactics which forced the politicians to pass the law in the first place and increased the powers of bosses over workers. The same can be said of other countries.

The pattern is clear. It is always the case that things need to change on the ground first and then the law acknowledges the changes. Any state intervention on behalf of the general public or workers have all followed people and workers organising and fighting for their rights. If labour or social "peace" exists because of too little organising and protesting or because of lack of strength in the workplace by unions, politicians will feel no real pressure to change the law and, consequently, refuse to. As Malatesta put it, the "only limit to the oppression of government is that power with which the people show themselves capable of opposing it . . . When the people meekly submit to the law, or their protests are feeble and confined to words, the government studies its own interests and ignores the needs of the people; when the protests are lively, insistent, threatening, the government . . . gives way or resorts to repression." [Errico Malatesta: His Life and Ideas, p. 196]

Needless to say, the implication of classical liberal ideology that popular democracy is a threat to capitalism is the root of the fallacy that democracy leads to state intervention. The notion that by limiting the franchise the rich will make laws which benefit all says more about the classical liberals' touching faith in the altruism of the rich than it does about their understanding of human nature, the realities of both state and capitalism and their grasp of history. The fact that they can join with John Locke and claim with a straight face that all must abide by the rules that only the elite make says a lot about their concept of "freedom."

Some of the more modern classical liberals (for example, many right-wing "libertarians") advocate a "democratic" state which cannot intervene in economic matters. This is no solution, however, as it only gets rid of the statist response to real and pressing social problems caused by capitalism without supplying anything better in its place. This is a form of paternalism, as the elite determines what is, and is not, intervention and what the masses should, and should not, be able to do (in their interests, of course). Then there is the obvious conclusion that any such regime would have to exclude change. After all, if people can change the regime they are under they may change it in ways that the right does not support. The provision for ending economic and other reforms would effectively ban most opposition parties as, by definition, they could do nothing once in power. How this differs from a dictatorship would be hard to say -- after all, most dictatorships have parliamentary bodies which have no power but which can talk a lot.

Needless to say, the right often justify this position by appealing to the likes of Adam Smith but this, needless to say, fails to appreciate the changing political and economic situation since those days. As market socialist Allan Engler argues:

> "In Smith's day government was openly and unashamedly an instrument of wealth owners. Less than 10 per cent of British men -- and no women at all -- had the right to vote. When Smith opposed government interference in the economy, he was opposing the imposition of wealth owners' interests on everybody else. Today, when neoconservatives oppose state interference, their aim to the opposite: to stop the representatives of the people from interfering with the interests of wealth owners." [Apostles of Greed, p. 104]

As well as the changing political situation, Smith's society was without the concentrations of economic power that marks capitalism as a developed system. Whether Smith would have been happy to see his name appropriated to defend corporate power is, obviously, a moot point. However, he had no illusions that the state of his time interfered to bolster the elite, not the many (for example: "Whenever the law has attempted to regulate the wages of workmen, it has always been rather to lower them than to raise them." [The Wealth of Nations, p. 119]). As such, it is doubtful he would have agreed with those who involve his name to defend corporate power and trusts while advocating the restriction of trade unions as is the case with modern day neo-liberalism:

> "Whenever the legislature attempts to regulate the differences between masters and their workmen, its counsellors are always masters. When the regulation, therefore, is in favour of the workmen, it is always just and equitable . . . When masters combine together in order to reduce the wages of their workmen, they commonly enter into a private bond or agreement . . . Were the workmen to enter into a contrary combination of the same kind. not to accept of a certain wage under a certain penalty, the law would punish them very severely; and if dealt impartially, it would treat the masters in the same way." [Op. Cit., p. 129]

The interest of merchants and master manufacturers, Smith stressed, "is always in some respects different from, and even opposite to, that of the public . . . The proposal of any new law or regulation of commerce which comes from this order ought always to be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention. It comes from an order of men whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it." [Op. Cit., pp. 231-2] These days Smith would have likely argued that this position applies equally to attempts by big business to revoke laws and regulations!

To view the state intervention as simply implementing the wishes of the majority is to assume that classes and other social hierarchies do not exist, that one class does not oppress and exploit another and that they share common interests. It means ignoring the realities of the current political system as well as economic, for political parties will need to seek funds to campaign and that means private cash. Unsurprisingly, they will do what their backers demands and this dependence the wealthy changes the laws all obey. This means that any government will tend to favour business and the wealthy as the parties are funded by them and so they get some say over what is done. Only those parties which internalise the values and interests of their donors will prosper and so the wealthy acquire an unspoken veto power over government policy. In other words, parties need to beg the rich for election funds. Some parties do, of course, have trade union funding, but this is easily counteracted by pressure from big business (i.e., that useful euphemism, "the markets") and the state bureaucracy. This explains why the unions in, say, Britain spend a large part of their time under Labour governments trying to influence it by means of strikes and lobbying.

The defenders of "free market" capitalism appear oblivious as to the reasons why the state has approved regulations and nationalisations as well as why trade unions, (libertarian and statist) socialist and populist movements came about in the first place. Writing all these off as the products of ideology and/or economic ignorance is far too facile an explanation, as is the idea of power hungry bureaucrats seeking to extend their reach. The truth is much more simple and lies at the heart of the current system. The reasons why various "anti-capitalist" social movements and state interventions arise with such regular periodicity is because of the effects of an economic system which is inherently unstable and exploitative. For example, social movements arose in the 19th century because workers, artisans and farmers were suffering the effects of a state busy creating the necessary conditions for capitalism. They were losing their independence and had become, or were being turned, into wage slaves and, naturally, hated it. They saw the negative effects of capitalism on their lives and communities and tried to stop it.

In terms of social regulation, the fact is that they were often the result of pressing needs. Epidemics, for example, do not respect property rights and the periodic deep recessions that marked 19th century capitalism made the desire to avoid them an understandable one on the part of the ruling elite. Unlike their ideological followers in the latter part of the century and onwards, the political economists of the first half of the nineteenth century were too intelligent and too well informed to advocate out-and-out laissez-faire. They grasped the realities of the economic system in which they worked and thought and, as a result, were aware of clash between the logic of pure abstract theory and the demands of social life and morality. While they stressed the pure theory, the usually did so in order to justify the need for state intervention in some particular aspect of social or economic life. John Stuart Mill's famous chapter on "the grounds and limits of the laissez-faire and non-interference principle" in his Principles of Political Economy is, perhaps, the most obvious example of this dichotomy (unsurprisingly, von Mises dismissed Mill as a "socialist" -- recognising the problems which capitalism itself generates will make you ideologically suspect to the true believer).

To abolish these reforms without first abolishing capitalism is to return to the social conditions which produced the social movements in the first place. In other words, to return to the horrors of the 19th century. We can see this in the USA today, where this process of turning back the clock is most advanced: mass criminality, lower life expectancy, gated communities, increased work hours, and a fortune spent on security. However, this should not blind us to the limitations of these movements and reforms which, while coming about as a means to overcome the negative effects of corporate capitalism upon the population, preserved that system. In terms of successful popular reform movements, the policies they lead to were (usually) the minimum standard agreed upon by the capitalists themselves to offset social unrest.

Unsurprisingly, most opponents of state intervention are equally opposed to popular movements and the pressures they subject the state to. However trying to weaken (or even get rid of) the social movements which have helped reform capitalism ironically helps bolster the power and centralisation of the state. This is because to get rid of working class organisations means eliminating a key counter-balance to the might of the state. Atomised individuals not only cannot fight capitalist exploitation and oppression, they also cannot fight and restrict the might of the state nor attempt to influence it even a fraction of what the wealthy elite can via the stock market and management investment decisions. As such, von Hayek's assertion that "it is inexcusable to pretend that . . . the pressure which can be brought by the large firms or corporation is comparable to that of the organisation of labour" is right, but in the exact opposite way he intended. [Law, Legislation and Liberty, vol. III, p. 89] Outside the imagination of conservatives and right-wing liberals, big business has much greater influence than trade unions on government policy (see section D.2 for some details). While trade union and other forms of popular action are more visible than elite pressures, it does not mean that the form does not exist or less influential. Quite the reverse. The latter may be more noticeable, true, but is only because it has to be in order to be effective and because the former is so prevalent.

The reality of the situation can be seen from looking at the US, a political system where union influence is minimal while business influence and lobbying is large scale (and has been since the 1980s). A poll of popular attitudes about the 2005 US budget "revealed that popular attitudes are virtually the inverse of policy." In general, there is a "dramatic divide between public opinion and public policy," but public opinion has little impact on state officials. Unsurprisingly, the general population "do not feel that the government is responsive to the public will." The key to evaluating whether a state is a functioning democracy is dependent on "what public opinion is on major issues" and "how it relates to public policy." In the case of the US, business interests are supreme and, as such, "[n]ot only does the US government stand apart from the rest of the world on many crucial issues, but even from its own population." The state "pursues the strategic and economic interests of dominant sectors of the domestic population," unless forced otherwise by the people (for "rights are not likely to be granted by benevolent authorities" but rather by "education and organising"). In summary, governments implement policies which benefit "the short-term interests of narrow sectors of power and wealth . . . It takes wilful blindness not to see how these commitments guide . . . policy." [Chomsky, Failed States, p. 234, p. 235, p. 228, p. 229, p. 262, p. 263 and p. 211] A clearer example of how capitalist "democracy" works can hardly be found.

Von Hayek showed his grasp of reality by stating that the real problem is "not the selfish action of individual firms but the selfishness of organised groups" and so "the real exploiters in our present society are not egotistic capitalists . . . but organisations which derive their power from the moral support of collective action and the feeling of group loyalty." [Op. Cit., p. 96] So (autocratic) firms and (state privileged) corporations are part of the natural order, but (self-organised and, at worse, relatively democratic) unions are not. Ignoring the factual issues of the power and influence of wealth and business, the logical problem with this opinion is clear. Companies are, of course, "organised groups" and based around "collective action". The difference is that the actions and groups are dictated by the few individuals at the top. As would be expected, the application of his ideas by the Thatcher government not only bolstered capitalist power and resulted in increased inequality and exploitation (see section J.4.2) but also a strengthening and centralisation of state power. One aspect of this the introduction of government regulation of unions as well as new legislation which increase police powers to restrict the right to strike and protest (both of which were, in part, due opposition to free market policies by the population).

Anarchists may agree that the state, due to its centralisation and bureaucracy, crushes the spontaneous nature of society and is a handicap to social progress and evolution. However, leaving the market alone to work its course fallaciously assumes that people will happily sit back and let market forces rip apart their communities and environment. Getting rid of state intervention without getting rid of capitalism and creating a free society would mean that the need for social self-protection would still exist but that there would be even less means of achieving it than now. The results of such a policy, as history shows, would be a catastrophe for the working class (and the environment, we must add) and beneficial only for the elite (as intended, of course).

Ultimately, the implication of the false premise that democracy leads to state intervention is that the state exists for the benefit of the majority, which uses the state to exploit the elite! Amazingly, many capitalist apologists accept this as a valid inference from their premise, even though it's obviously a reductio ad absurdum of that premise as well as going against the facts of history. That the ruling elite is sometimes forced to accept state intervention outside its preferred area of aid for itself simply means that, firstly, capitalism is an unstable system which undermines its own social and ecological basis and, secondly, that they recognise that reform is preferable to revolution (unlike their cheerleaders).

## D.1.3 Is state intervention socialistic?

No. Libertarian socialism is about self-liberation and self-management of one's activities. Getting the state to act for us is the opposite of these ideals. In addition, the question implies that socialism is connected with its nemesis, statism, and that socialism means even more bureaucratic control and centralisation ("socialism is the contrary of governmentalism." [Proudhon, No Gods, No Masters, vol. 1, p. 63]). As Kropotkin stressed: "State bureaucracy and centralisation are as irreconcilable with socialism as was autocracy with capitalist rule." [Evolution and Environment, p. 185] The history of both social democracy and state socialism proved this, with the former merely reforming some aspects of capitalism while keeping the system intact while the latter created an even worse form of class system.

The identification of socialism with the state is something that social democrats, Stalinists and capitalist apologists all agree upon. However, as we'll see in section H.3.13, "state socialism" is in reality just state capitalism -- the turning of the world into "one office and one factory" (to use Lenin's expression). Little wonder that most sane people join with anarchists in rejecting it. Who wants to work under a system in which, if one does not like the boss (i.e. the state), one cannot even quit?

The theory that state intervention is "creeping socialism" takes the laissez-faire ideology of capitalism at its face value, not realising that it is ideology rather than reality. Capitalism is a dynamic system and evolves over time, but this does not mean that by moving away from its theoretical starting point it is negating its essential nature and becoming socialistic. Capitalism was born from state intervention, and except for a very short period of laissez-faire which ended in depression has always depended on state intervention for its existence. As such, while there "may be a residual sense to the notion that the state serves as an equaliser, in that without its intervention the destructive powers of capitalism would demolish social existence and the physical environment, a fact that has been well understood by the masters of the private economy who have regularly called upon the state to restrain and organise these forces. But the common idea that the government acts as a social equaliser can hardly be put forth as a general principle." [Noam Chomsky, The Chomsky Reader, p. 185]

The list of state aid to business is lengthy and can hardly be considered as socialistic or egalitarian is aim (regardless of its supporters saying it is about creating "jobs" rather than securing profits, the reality of the situation). Government subsidies to arms companies and agribusiness, its subsidy of research and development work undertaken by government-supported universities, its spending to ensure a favourable international climate for business operations, its defence of intellectual property rights, its tort reform (i.e. the business agenda of limiting citizen power to sue corporations), its manipulation of unemployment rates, and so forth, are all examples of state intervention which can, by no stretch of the imagination be considered as "socialistic." As left-liberal economist Dean Baker notes:

> "The key flaw in the stance that most progressives have taken on economic issues is that they have accepted a framing whereby conservatives are assumed to support market outcomes, while progressives want to rely on the government . . . The reality is that conservatives have been quite actively using the power of the government to shape market outcomes in ways that redistribute income upward. However, conservatives have been clever enough to not own up to their role in this process, pretending all along that everything is just the natural working of the market. And, progressives have been foolish enough to go along with this view." [The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer, p. v]

He stresses, that "both conservatives and liberals want government intervention. The difference between them is the goal of government intervention, and the fact that conservatives are smart enough to conceal their dependence on the government." They "want to use the government to distribute income upward to higher paid workers, business owners, and investors. They support the establishment of rules and structures that have this effect." Dean discusses numerous examples of right-wing forms of state action, and notes that "[i]n these areas of public policy . . . conservatives are enthusiastic promoters of big government. They are happy to have the government intervene into the inner workings of the economy to make sure that money flows in the direction they like -- upward. It is accurate to say that conservatives don't like big government social programs, but not because they don't like big government. The problem with big government social programs is that they tend to distribute money downward, or provide benefits to large numbers of people." It seems redundant to note that "conservatives don't own up to the fact that the policies they favour are forms of government intervention. Conservatives do their best to portray the forms of government intervention that they favour, for example, patent and copyright protection, as simply part of the natural order of things." [Op. Cit., p. 1 and p. 2]

This, it should be stressed, is unexpected. As we explained in section B.2, the state is an instrument of minority rule. As such, it strains belief that state intervention would be socialist in nature. After all, if the state is an agent of a self-interesting ruling class, then its laws are inevitably biased in its favour. The ultimate purpose of the state and its laws are the protection of private property and so the form of law is a class weapon while its content is the protection of class interests. They are inseparable.

So the state and its institutions can "challenge the use of authority by other institutions, such as cruel parents, greedy landlords, brutal bosses, violent criminals" as well as "promot[ing] desirable social activities, such as public works, disaster relief, communications and transport systems, poor relief, education and broadcasting." Anarchists argue, though, the state remains "primarily . . . oppressive" and its "main function is in fact to hold down the people, to limit freedom" and that "all the benevolent functions of the state can be exercised and often have been exercised by voluntary associations." Moreover, "the essential function of the state is to maintain the existing inequality" and so "cannot redistribute wealth fairly because it is the main agency of the unfair distribution." This is because it is "the political expression of the economic structure, that it is the representative of the people who own or control the wealth of the community and the oppressor of the people who do the work which creates wealth." [Walters, About Anarchism, p. 36 and p. 37]

The claim that state intervention is "socialist" also ignores the realities of power concentration under capitalism. Real socialism equalises power by redistributing it to the people, but, as Noam Chomsky points out, "[i]n a highly inegalitarian society, it is most unlikely that government programs will be equalisers. Rather, it is to be expected that they will be designed and manipulated by private power for their own benefits; and to a significant degree the expectation is fulfilled. It is not very likely that matters could be otherwise in the absence of mass popular organisations that are prepared to struggle for their rights and interests." [Op. Cit., p. 184] The notion that "welfare equals socialism" is nonsense, although it can reduce poverty and economic inequality somewhat. As Colin Ward notes, "when socialists have achieved power" they have produced nothing more than "[m]onopoly capitalism with a veneer of social welfare as a substitute for social justice." [Anarchy in Action, p. 18]

This analysis applies to state ownership and control of industry. Britain, for example, saw the nationalisation of roughly 20% of the economy by the 1945 Labour Government. These were the most unprofitable sections of the economy but, at the time, essential for the economy as a whole. By taking it into state ownership, these sections could be rationalised and developed at public expense. Rather than nationalisation being feared as "socialism," the capitalist class had no real issue with it. As anarchists at the time noted, "the real opinions of capitalists can be seen from Stock Exchange conditions and statements of industrialists [rather] than the Tory Front bench . . . [and from these we] see that the owning class is not at all displeased with the record and tendency of the Labour Party." [Vernon Richards (ed.), Neither Nationalisation nor Privatisation -- Selections from Freedom 1945-1950, p. 9]

Moreover, the example of nationalised industries is a good indicator of the non-socialist nature of state intervention. Nationalisation meant replacing the capitalist bureaucrat with a state one, with little real improvement for those subjected to the "new" regime. At the height of the British Labour Party's post-war nationalisations, anarchists were pointing out its anti-socialist nature. Nationalisation was "really consolidating the old individual capitalist class into a new and efficient class of managers to run . . . state capitalism" by "installing the really creative industrialists in dictatorial managerial positions." [Vernon Richards (ed.), Op. Cit., p. 10] Thus, in practice, the real examples of nationalisation confirmed Kropotkin's prediction that it would be "an exchange of present capitalism for state-capitalism" and simply be "nothing but a new, perhaps improved, but still undesirable form of the wage system." [Evolution and Environment, p. 193 and p. 171] The nationalised industries were expected, of course, to make a profit, partly for "repaying the generous compensation plus interest to the former owners of the mainly bankrupt industries that the Labour government had taken over." [Richards, Op. Cit., p. 7]

Ultimately, state ownership at local or national level is hardly socialistic in principle or in practice. As Kropotkin stressed, "no reasonable man [or woman] will expect that Municipal Socialism, any more than Co-operation, could solve to any extent the Social problem." This was because it was "self-evident that [the capitalists] will not let themselves be expropriated without opposing resistance. They may favour municipal [or state] enterprise for a time; but the moment they see that it really begins to reduce the number of paupers . . . or gives them regular employment, and consequently threatens to reduce the profits of the exploiters, they will soon put an end to it." [Act for Yourselves, p. 94 and p. 95] The rise of Monetarism in the 1970s and the subsequent enthronement of the "Natural Rate" of unemployment thesis proves this argument.

While state intervention is hardly socialistic, what can be said is that "the positive feature of welfare legislation is that, contrary to the capitalist ethic, it is a testament to human solidarity. The negative feature is precisely that it is an arm of the state." [Colin Ward, Talking Anarchy, p. 79] For anarchists, while "we are certainly in full sympathy with all that is being done to widen the attributes of city life and to introduce communistic conceptions into it. But it is only through a Social Revolution, made by the workers themselves, that the present exploitation of Labour by Capital can be altered." [Kropotkin, Op. Cit., pp. 95-6] As British anarchists stressed during the first post-war Labour Government:

> "The fact that the alternative, under capitalism, is destitution and the sharper anomalies of poverty, does not make the Liberal-Socialistic alternative a sound proposition."

> "The only rational insurance against the evils of poverty and industrialism and old age under the wages system is the abolition of poverty and the wages system, and the transformation of industrialism to serve human ends instead of grinding up human beings." [Vernon Richards (ed.), World War - Cold War, p. 347]

In reality, rather than genuine socialism we had reformists "operating capitalism while trying to give it a socialist gloss." [Op. Cit., p. 353] The fact is that the ruling class oppose those forms of state intervention which aim, at least in rhetoric, to help working class people. This does not make such reforms socialistic. The much more substantial state intervention for the elite and business are simply part of the natural order and go unmentioned. That this amounts to a welfare state for the wealthy or socialism for the rich is, of course, one of the great unspeakable truths of capitalism.

## D.1.4 Is laissez-faire capitalism actually without state intervention?

The underlying assumption in the neo-liberal and conservative attacks against state intervention is the assumption that their minimal state is without it. The reality of the situation is, of course, different. Even the minimal state of the ideologues dreams intervenes on behalf of the ruling class in order to defend capitalist power and the property and property rights this flows from.

This means that the laissez-faire position is a form of state intervention as well. State "neutrality" considered as simply enforcing property rights (the "minimal state") instantly raises the question of whose conception of property rights, popular ones or capitalist ones? Unsurprisingly, the capitalist state enforces capitalist notions of property. In other words, it sanctions and supports economic inequality and the privileges and power of those who own property and, of course, the social relationships such a system generates. Yet by defending capitalist property, the state can hardly remain "neutral" with regards to ownership and the power it generates. In other words, the "neutral" state has to intervene to defend the authority of the boss or landlord over the workers they exploit and oppress. It is not a "public body" defending some mythical "public interest" but rather a defender of class society and the socio-economic relationships such a system creates. Political power, therefore, reflects and defends economic and social power.

As Kropotkin argued, the "major portion" of laws have "but one object -- to protect private property, i.e. wealth acquired by the exploitation of man by man. Their aim is to open to capital fresh fields for exploitation, and to sanction the new forms which that exploitation continually assumes, as capital swallows up another branch of human activity . . . They exist to keep up the machinery of government which serves to secure to capital the exploitation and monopoly of wealth produced." This means that all modern states "all serve one God -- capital; all have but one object -- to facilitate the exploitation of the worker by the capitalist." [Anarchism, p. 210]

Given that the capitalist market is marked by inequalities of power, any legal framework will defend that power. The state simply allows the interaction between parties to determine the norms of conduct in any contract. This ensures that the more powerful party to impose its desires on the weaker one as the market, by definition, does not and cannot have any protections against the imposition of private power. The state (or legal code) by enforcing the norms agreed to by the exchange is just as much a form of state intervention as more obvious forms of state action. In other words, the state's monopoly of power and coercion is used to enforce the contracts reached between the powerful and powerless. As such contracts will hardly be neutral, the state cannot be a neutral arbiter when presiding over capitalism. The net result is simply that the state allows the more powerful party to an exchange to have authority over the weaker party -- all under the fiction of equality and freedom. And, as Malatesta stressed, state power and centralisation will have to increase:

> "liberalism, is in theory a kind of anarchy without socialism, and therefore is simply a lie, for freedom is not possible without equality, and real anarchy cannot exist without solidarity, without socialism. The criticism liberals direct at government consists of wanting to deprive it of some of its functions and to call upon the capitalists to fight it out among themselves, but it cannot attack the repressive functions which are of its essence: for with the gendarme the property owner could not exist, indeed the government's powers of repression must perforce increase as free competition results in more discord and inequality." [Anarchy, p. 46]

His comments were more than confirmed by the rise of neo-liberalism nearly a century later which combined the "free(r) market" with a strong state marked by more extensive centralisation and police powers.

This is unsurprising, as laissez-faire capitalism being "unable to solve its celebrated problem of the harmony of interests, [is forced] to impose laws, if only provisional ones, and abdicates in its turn before this new authority that is incompatible with the practice of liberty." [Proudhon, quoted by Alan Ritter, The Political Thought of Pierre-Joseph Proudhon, p. 122] Thus capitalism always has to rely on the state, on political coercion, if only the minimal state, to assure its survival. The capitalist market has to, in other words, resort to the coercion it claims to avoid once people start to question its shortcomings. Of course, this coercion need not be monopolised in the form of state police and armed forces. It has been enforced successfully by private police forces and security guards, but it does not change the fact that force is required to maintain capitalist property, power and property rights.

In summary, all forms of capitalism rest on the superior force of economic elites who have the backing of the state to defend the sources of that power as well as any contracts it has agreed to. In other words, "laissez-faire" capitalism does not end state intervention, it simply creates a situation where the state leaves the market process to the domination of those who occupy superior market positions. As Kropotkin put it, capitalism "is called the freedom of transactions but it is more truly called the freedom of exploitation." [Words of a Rebel, p. 119]

Given this, it may be objected that in this case there is no reason for the ruling class to interfere with the economy. If economic coercion is sufficient, then the elite has no need to turn to the state for aid. This objection, however, fails to appreciate that the state has to interfere to counteract the negative impacts of capitalism. Moreover, as we discussed in section C.7, economic coercion becomes less pressing during periods of low unemployment and these tend to provoke a slump. It is in the interests of the ruling elite to use state action to reduce the power of the working classes in society. Thus we find the Federal Reserve in the USA studying economic statistics to see if workers are increasing their bargaining power on the labour market (i.e. are in a position to demand more wages or better conditions). If so, then interest rates are increased and the resulting unemployment and job insecurity make workers more likely to put up with low pay and do what their bosses demand. As Doug Henwood notes, "policy makers are exceedingly obsessed with wage increases and the state of labour militancy. They're not only concerned with the state of the macroeconomy, conventionally defined, they're also concerned with the state of the class struggle, to use the old-fashioned language." [Wall Street, p. 219] Little wonder the ruling class and its high priests within the "science" of economics have embraced the concept of a "natural rate" of unemployment (see section C.9 on this and as we indicated in section C.6, this has been very enriching for the ruling class since 1980).

Ultimately, the business class wants the state to intervene in the economy beyond the minimum desired by a few ideologues of capitalism simply to ensure it gets even more wealth and power -- and to ensure that the system does not implode. Ironically, to get capitalism to work as some of its defenders want it to would require a revolution in itself -- against the capitalists! Yet if we go to the trouble of fighting public tyranny (the state), why should we stop there? Why should private tyranny (capitalism, its autocratic structures and hierarchical social relationships) remain untouched? Particularly, as Chomsky notes, under capitalism "minimising the state means strengthening the private sectors. It narrows the domain within which public influence can be expressed. That's not an anarchist goal . . . It's minimising the state and increasing an even worse power," namely capitalist firms and corporations which are "private totalitarian organisations." [Chomsky on Anarchism, p. 214 and p. 213] In other words, if a government "privatises" some government function, it is not substituting a market for a bureaucracy. It is substituting a private bureaucracy for a public one, usually at rock-bottom prices, so that some more capitalists can make a profit. All the economic mumbo-jumbo is just a smokescreen for this fact.

## D.1.5 Do anarchists support state intervention?

So where do anarchists stand on state intervention? This question does not present a short answer simply because it is a complex issue. On the one hand, as Proudhon stressed, the state exists to "maintain order in society, by consecrating and sanctifying obedience of the citizens to the State, subordination of the poor to the rich, of the common people to the upper class, of the worker to the idler." [The General Idea of the Revolution, p. 243] In such circumstances, appealing to the state makes little sense. On the other hand, the modern state does do some good things (to varying degrees). As a result of past popular struggles, there is a basic welfare system in some countries which does help the poorest sections of society. That aspect of state intervention is what is under attack by the right under the slogan of "minimising the state."

In the long term, of course, the real solution is to abolish capitalism "and both citizens and communities will have no need of the intervention of the State." [Proudhon, Op. Cit., p. 268] In a free society, social self-defence would not be statist but would be similar in nature to trade unionism, co-operatives and pressure groups -- individuals working together in voluntary associations to ensure a free and just society -- within the context of an egalitarian, decentralised and participatory system which eliminates or reduces the problems in the first place (see section I).

However, that does not answer the question of what we do in the here and now when faced with demands that the welfare state (for the working class, not corporate welfare) and other reforms be rolled back. This attack has been on going since the 1970s, accelerating since 1980. We should be clear that claims to be minimising the state should be taken with a massive pitch of salt as the likes of Reagan were "elected to office promising to downsize government and to 'get the government off the people's back,' even though what he meant was to deregulate big business, and make them free to exploit the workers and make larger profits." [Lorenzo Kom'boa Ervin, Anarchism and the Black Revolution, p. 100] As such, it would be a big mistake to confuse anarchist hostility to the state with the rhetoric of right-wing politicians seeking to reduce social spending (Brian Oliver Sheppard discusses this issue well in his article "Anarchism vs. Right-Wing 'Anti-Statism'" [Anarcho-Syndicalist Review, no. 31, Spring 2001]). Chomsky puts it well:

> "State authority is now under severe attack in the more democratic societies, but not because it conflicts with the libertarian vision. Rather the opposite: because it offers (weak) protection to some aspects of that vision. Governments have a fatal flaw: unlike the private tyrannies, the institutions of state power and authority offer to the despised public an opportunity to play some role, however limited, in managing their own affairs. That defect is intolerable to the masters . . . the goals of a committed anarchist should be to defend some state institutions from the attack against them, while trying at the same time to pry them open to more meaningful public participation -- and, ultimately, to dismantle them in a much more free society, of the appropriate circumstances can be achieved." [Chomsky on Anarchism, p. 193 and p. 194]

There is, of course, a tension in this position. The state may be influenced by popular struggle but it remains an instrument of capitalist rule. It may intervene in society as a result of people power and by the necessity to keep the system as a whole going, but it is bureaucratic and influenced by the wealthy and big business. Indeed, the onslaught on the welfare state by both Thatcher and Reagan was conducted under a "democratic" mandate although, in fact, these governments took advantage of the lack of real accountability between elections. They took advantage of an aspect of the state which anarchists had been warning of for decades, being "well aware that [the politician] can now commit crimes with immunity, [and so] the elected official finds himself immediately exposed to all sorts of seductions on behalf of the ruling classes" and so implemented policies "solicited by big industry, high officials, and above all, by international finance." [Elisee Reclus, The Modern State, p. 208 and pp. 208-9]

As such, while anarchists are against the state, our position on state intervention depends on the specific issue at hand. Most of us think state health care services and unemployment benefits (for example) are more socially useful than arms production, and in lieu of more anarchistic solutions, better than the alternative of "free market" capitalism. This does not mean we are happy with state intervention, which in practice undermines working class self-help, mutual aid and autonomy. Also, state intervention of the "social" nature is often paternalistic, run by and for the "middle classes" (i.e. professional/managerial types and other self-proclaimed "experts"). However, until such time as a viable anarchist counterculture is created, we have little option but to "support" the lesser evil (and make no mistake, it is an evil).

Taking the issue of privatisation of state owned and run industry, the anarchist position is opposition to both. As we noted in section D.1.3, the anarchist prediction that if you substitute government ownership for private ownership, "nothing is changed but the stockholders and the management; beyond that, there is not the least difference in the position of the workers." [Proudhon, quoted by Ritter, Op. Cit., pp. 167-8] However, privatisation is a rip-off of the general public for the benefit of the wealthy:

> "Privatisation of public services -- whether it is through the direct sale of utilities or through indirect methods such as PFI and PPP -- involves a massive transfer of wealth from taxpayers to the pockets of private business interests. It negates the concept of there being such a thing as 'public service' and subjects everything to the bottom line of profit. In other words it seeks to maximise the profits of a few at the expense of wages and social obligations. Furthermore, privatisation inevitably leads to an attack on wages and working conditions - conditions which have been fought for through years of trade union agitation are done away with at the scratch of a pen." [Gregor Kerr, "Privatisation: the rip-off of public resources", pp. 14-18, Black and Red Revolution, no. 11, p. 16]

In response to such "reforms", anarchists propose an alternatives to both options. Anarchists aim not at state ownership but to "transfer all that is needed for production . . . from the hands of the individual capitalists into those of the communities of producers and consumers." [Kropotkin, Environment and Evolution, pp. 169-70] In other words, while "[i]n today's world 'public sector' has come to mean 'government.' It is only if 'public sector' can be made to mean 'people's ownership' in a real sense that the call for public ownership can be a truly radical one." [Kerr, Op. Cit., p. 18] This is based on a common-sense conclusion from the analysis of the state as an instrument of the ruling class:

> "While anarchists oppose the privatisation of state assets and services for the reasons discussed above, we do not call -- as some on the left do -- for the 'nationalisation' of services as a solution to problems . . . We'd be expecting the same politicians who are busily implementing the neo-liberal agenda to now take on the role of workers' protectors . . . it is important to point out that the 'nationalise it' or 'take it into public ownership' slogan is far too often spun out by people on the left without their taking into account that there is a massive difference between state control/ownership and workers' control/ownership . . . we all know that even if the revenues . . . were still in state ownership, spending it on housing the homeless or reducing hospital waiting lists would not top the agenda of the government.

> "Put simply, state ownership does not equal workers' ownership . . . we are sold the lie that the resource . . . is 'public property.' The reality however is that far from being in the ownership of 'the public,' ordinary people have no direct say in the allocation of these resources. Just as working class people are consistently alienated from the product of their labour, this selling of the idea of 'public ownership' over which the public have no real say leads to an increase in apathy and a sense of helplessness among ordinary people. It is much more likely that the political establishment who control the purse strings supposedly 'in the public interest' will actually spend revenues generated from these 'public assets' on measures that will have the long-term effect of re-enforcing rather than alleviating social division. Public policy consistently results in an increase in the gap between the well-off and the poor." [Kerr, Opt. Cit., pp. 16-7 and p. 17]

Thus an anarchist approach to this issue would be to reject both privatisation and nationalisation in favour of socialisation, i.e. placing nationalised firms under workers' self-management. In the terms of public utilities, such as water and power suppliers, they could be self-managed by their workers in association with municipal co-operatives -- based on one member, one vote -- which would be a much better alternative than privatising what is obviously a natural monopoly (which, as experience shows, simply facilitates the fleecing of the public for massive private profit). Christie and Meltzer state the obvious:

> "It is true that government takes over the control of certain necessary social functions. It does not follow that only the state could assume such control. The postmen are 'civil servants' only because the State makes them such. The railways were not always run by the state, They belonged to the capitalists [and do once more, at least in the UK], and could as easily have been run by the railway workers.

> "The opponents of anarchism assure us that if we put government under a ban, there would be no education, for the state controls the schools. There would be no hospitals - where would the money come from? Nobody would work -- who would pay their wages? . . . But in reality, not . . . the state, but the people provide what the people have. If the people do not provide for themselves, the state cannot help them. It only appears to do so because it is in control. Those who have power may apportion work or regulate the standard of living, but this is part of the attack upon the people, not something undertaken on their behalf." [The Floodgates of Anarchy, p. 148-149]

Much the same can be said of other aspects of state intervention. For example, if we look at state education or welfare an anarchist solution could be to press for "workers' control by all the people involved" in an institution, in other words "the extension of the principle of freedom from the economic to the political side of the health [and education] system[s]." [Nicholas Walters, About Anarchism, p. 76] The aim is to create "new forms of organisation for the social functions that the state fulfils through the bureaucracy." [Colin Ward, Anarchy in Action, p. 19] This means that anarchists, as part of the wider socialist, labour and social movements seek "to counterbalance as much as we [can] the centralistic, bureaucratic ambitions of Social Democracy." [Kropotkin, Act for Yourselves, p. 120] This applies both to the organisation and tactics of popular movements as well as the proposed reforms and how they are implemented.

In terms of social reforms, anarchists stress that it cannot be left in the hands of politicians (i.e. the agents of the ruling class). It should be obvious that if you let the ruling class decide (on the basis of their own needs and priorities) which reforms to introduce you can guess which ones will be implemented. If the state establishes what is and is not a "reform", then it will implement those which it favours in a manner which benefits itself and the capitalist class. Such top-down "liberalisation" will only increase the power and freedom of the capitalist class and make capitalist and statist exploitation more efficient. It will not undermine the restrictions on liberty for the many which ensure the profits, property and power of the few in the first place. That is, there will be minor changes around the edges of the state system in order to give more "freedom" to landlords and employers to lord it over their tenants and workers. This can be seen from the experience of neo-liberalism across the world.

This means that the decision of what aspects of statism to dismantle first should never be handed over to politicians and bureaucrats who are inevitably agents of the capitalist class. It should be decided from below and guided by an overall strategy of dismantling capitalism as a system. That means that any reforms should be aimed at those forms of state intervention which bolster the profits and power of the ruling class and long before addressing those laws which are aimed at making exploitation and oppression tolerable for the working class. If this is not done, then any "reforms" will be directed by the representatives of the business class and, consequently, aim to cut social programmes people actually need while leaving welfare for the rich in place. As such, anarchists argue that pressure from below is required to prioritise reforms based on genuine need rather than the interests of capital. For example, in the UK this would involve, say, urging the privatisation of the Royal Family before even thinking about "reforming" the National Health Service or fighting for the state to "get off the backs" of the unions trying to deregulate business. The key is that people reject a "naive appeal to the legislators and high officials, waiting for salvation through their deliberations and decrees." In reality "freedom does not come begging, but rather must be conquered." [Reclus, Op. Cit., p. 210] This is not done, then the results will simply confirm Voltairine de Cleyre's insight:

> "Nearly all laws which were originally framed with the intention of benefiting workers, have either turned into weapons in their enemies' hands, or become dead letters unless the workers through their organisations have directly enforced their observance. So that in the end, it is direct action that has to be relied on anyway." [The Voltairine de Cleyre Reader, p. 59]

A classic example of the former are the anti-trust laws in America, originally aimed at breaking the power of capitalist monopoly but were soon turned against labour unions and strikers. De Cleyre's second point is a truism and, obviously, means that anarchists aim to strengthen popular organisations and create mass movements which use direct action to defend their rights. Just because there are laws protecting workers, for example, there is no guarantee that they will be enforced -- unless workers themselves are strong enough to make sure the bosses comply with the law.

Anarchists are in favour of self-directed activity and direct action to get improvements and defend reforms in the here and now. By organising strikes and protests ourselves, we can improve our lives. This does not mean that using direct action to get favourable laws passed or less-favourable ones revoked is a waste of time. Far from it. However, unless ordinary people use their own strength and grassroots organisations to enforce the law, the state and employers will honour any disliked law purely in the breach. By trusting the state, social self-protection against the market and power concentrations becomes hollow. In the end, what the state gives (or, more correctly, is pressurised into giving), it can take away but what we create and run ourselves is always responsive to our desires and interests. We have seen how vulnerable state welfare is to pressures from the capitalist class to see that this is a truism.

This is not to deny that in many ways such state "support" can be used as a means of regaining some of the power and labour stolen from us by capitalists in the first place. State intervention can give working people more options than they otherwise would have. If state action could not be used in this way, it is doubtful that capitalists and their hired "experts" would spend so much time trying to undermine and limit it. As the capitalist class happily uses the state to enforce its power and property rights, working people making whatever use they can of it is to be expected. Be that as it may, this does not blind anarchists to the negative aspects of the welfare state and other forms of state intervention (see section J.5.15 for anarchist perspectives on the welfare state).

One problem with state intervention, as Kropotkin saw, is that the state's absorption of social functions "necessarily favoured the development of an unbridled, narrow-minded individualism. In proportion as the obligations towards the State grew in numbers, the citizens were evidently relieved from their obligations towards each other." [Mutual Aid, p. 183] In the case of state "social functions," such as the British National Health Service, although they were created as a result of the social atomisation caused by capitalism, they have tended to reinforce the individualism and lack of personal and social responsibility that produced the need for such action in the first place. The pressing need, therefore, is for working class people need "independent control . . . of their own welfare programs. Mutual aid and welfare arrangements are necessary." [Sam Dolgoff, The American Labour Movement, p. 26] Specific forms of community and social self-help and their historical precedents are discussed in section J.5.16.

This means that the anarchist task is building popular resistance to the state and capitalism and that may, at time, involves resisting attempts to impose "reforms" which harm the working class and enrich and empower the ruling class. As such, few anarchists subscribe to the notion that we should support capitalism inspired "minimising" of the state in the believe that this will increase poverty and inequality and so speed up the arrival of a social revolution. However, such a position fails to appreciate that social change is only possible when the hope for a better future has not been completely destroyed:

> "Like many others I have believed in my youth that as social conditions became worse, those who suffered so much would come to realise the deeper causes of their poverty and suffering. I have since been convinced that such a belief is a dangerous illusion . . . There is a pitch of material and spiritual degradation from which a man can no longer rise. Those who have been born into misery and never knew a better state are rarely able to resist and revolt . . . Certainly the old slogan, 'The worse the better', was based on an erroneous assumption. Like that other slogan, 'All or nothing', which made many radical oppose any improvement in the lot of the workers, even when the workers demanded it, on the ground that it would distract the mind of the proletariat, and turn it away from the road which leads to social emancipation. It is contrary to all the experience of history and of psychology; people who are not prepared to fight for the betterment of their living conditions are not likely to fight for social emancipation. Slogans of this kind are like a cancer in the revolutionary movement." [Rudolf Rocker, London Years, pp. 25-6]

The anarchist position is, therefore, a practical one based on the specific situation rather than a simplistic application of what is ideologically correct. Rolling back the state in the abstract is not without problems in a class and hierarchy ridden system where opportunities in life are immensely unequal. As such, any "effort to develop and implement government programs that really were equalisers would lead to a form of class war, and in the present state of popular organisations and distribution of effective power, there can hardly be much doubt as to who would win." [Chomsky, The Chomsky Reader, p. 184] Anarchists seek to build the grassroots resistance for politicians like Reagan, Bush Snr and Jnr, Thatcher and so on do not get elected without some serious institutional forces at work. It would be insane to think that once a particularly right-wing politician leaves office those forces will go away or stop trying to influence the political decision making process.

The task of anarchists therefore is not to abstractly oppose state intervention but rather contribute to popular self-organisation and struggle, creating pressures from the streets and workplaces that governments cannot ignore or defy. This means supporting direct action rather than electioneering (see section J.2) for the "make-up of the government, the names, persons and political tendencies which rubbed shoulders in it, were incapable of effecting the slightest amendment to the enduring quintessence of the state organism . . . And the price of entering the of strengthening the state is always unfailingly paid in the currency of a weakening of the forces offering it their assistance. For every reinforcement of state power there is always . . . a corresponding debilitation of grassroots elements. Men may come and go, but the state remains." [Jose Peirats, The CNT in the Spanish Revolution, vol. 2, p. 150]