# Crosscurrents (Vol. 6 No. 1) **URL:** **Published:** October 1, 1988 --- “The Institute for Humane Studies has produced a useful annotated bibliography of classical liberalism for students and scholars.” ## Bibliographical Guide Available The Institute for Humane Studies has produced a useful annotated bibliography of classical liberalism for students and scholars. A _Student’s Guide to Classical Liberal Scholarship_ begins with a brief introduction to the tradition of classical liberal scholarship and includes a description of the Institute’s various seminars, fellowships, and other academic programs and a guide to resource centers throughout the world. These are followed by sections devoted to particular subjects. Each section lists a number of books and journal articles (including full publication information) with short descriptions of each work and how it might be used in a term paper, research program, or other academic effort. The major sections of the bibliography are: The Heritage of Classical Liberalism, History, Economics, Philosophy and Social Theory, and Property Rights. These broad topics are followed by selected issues: Environment; Urban Issues; Race and Ethnic Conflict; International Trade and Relations; Poverty and Self-Help; Economic Development; Social Analysis; Cartels: Business and Labor; Depressions and Economic Cycles; The Industrial Revolution; Feminism; Public Goods; Privatization; Law and the Free Society; Education; Health, Safety, and Regulation; Personal Liberties; Freedom of Expression; Socialism and State Economic Planning; and Liberty and Language. The booklet, assembled by Tom G. Palmer, editor of _Humane Studies Review_, is intended to introduce students to the wide range of classical liberal scholarship. It is organized so that students can use the books and articles in their own work for school; using the insights and information contained in these works can make the difference between an “A” paper and a “B” paper. In addition, they provide opportunities to combine school work with attaining a richer understanding of social, economic, and political processes. Friends of IHS are encouraged to get copies of the guide for themselves and to give copies to students who have some interest in classical liberalism. Readers of _Humane Studies Review_ who want to receive copies should write to The Editor, _Humane Studies Review_, Institute for Humane Studies, George Mason University, 4400 University Drive, Fairfax, VA 22030. Individual copies are free; requests for additional copies will be considered when accompanied by letters explaining how they will be used.♦ ## New Work on the State A new book offering a predatory theory of state power is now available. Margaret Levi’s _Of Rule and Revenue_ (Berkeley: University of California Press, 1988) is an important addition to a growing literature on the relationship between state power and the extraction of wealth from the producers in society. (See the related discussion in Jack A. Goldstone’s essay “Revolutions,” _Humane Studies Review_ \[5\] Spring 1988.) Levi’s work, a major expansion of the thesis offered in her essay “The Predatory Theory of Rule” (_Politics and Society_ \[10\] 1981), is heavily influenced by “rational choice” theory and also draws on public-choice economics, comparative politics, and case studies. Levi combines both theoretical and historical argument in support of her case that rulers—including the executives of modern democratic states—“are predatory in the sense that they are revenue maximizers.” As Levi argues, “The history of state revenue production is the history of the evolution of the state.” Her work could be profitably read along with Geoffrey Parker’s essay on the development of modern financial systems (“The Emergence of Modern Finance in Europe, 1500–1730” in Carlo Cipolla, ed., _The Fontana Economic History of Europe_, Vol. 2 \[New York: Barnes and Noble, 1977\]) and Edward Miller’s essay “War, Taxation and the English Economy in the Late Thirteenth and Early Fourteenth Centuries” in J. M. Winter, ed., _War and Economic Development_ (Cambridge: Cambridge University Press, 1975). Students of social analysis will also find provocative Charles Tilly’s essay “War Making and State Making as Organized Crime” (in Peter B. Evans, Dietrich Rueschemeyer, and Theda Skocpol, eds., _Bringing the State Back In_ \[Cambridge: Cambridge University Press, 1985\]), in which Tilly draws on and applies the model set forth by the economic historian Frederic C. Lane. (See Lane’s “Economic Consequences of Organized Violence,” _Journal of Economic History_ \[18\] 1958, and “The Economic Meaning of War and Protection,” in _Venice and History: The Collected Papers of Frederic C. Lane_ \[Baltimore: Johns Hopkins University Press, 1966\].) Levi provides a useful framework for interpreting such historical work. At the same time, her use of the theories of rational choice may sometimes be questionable, especially regarding the theory of exploitation. The careful reader, however, will surely benefit from a close consideration of _Of Rule and Revenue_. Classical liberal writers have pioneered the theory of predatory state behavior. They include Jeffersonian Republican theorists such as John Taylor of Caroline; the French économistes Charles Comte, Charles Dunoyer, and Augustin Thierry; the Italian fiscal theorists such as Vilfredo Pareto and Giovanni Montemartini; sociologists such as Franz Oppenheimer and Alexander Rüstow; and modern public-choice economists such as Gordon Tullock, James Buchanan, Walter Williams, and Jennifer Roback. In general, these writers have highlighted the ability of the state—through its monopoly or near monopoly of organized violence—to impose diffuse costs on large numbers of people and concentrate the resulting benefits on smaller numbers of people. Many of the insights of these liberal theorists of social conflict and predatory rule are readily available to contemporary students of history and political economy. For the Jeffersonian Republicans, students should consult Charles A. Beard’s _Economic Origins of Jeffersonian Democracy_ (1915; New York: Macmillan, 1949), especially chapter twelve on John Taylor of Caroline. Taylor’s major work, _An Inquiry into the Principles and Policy of the Government of the United States_ (1814) presents his analysis of the political and social forces of the modern world, including the emerging “aristocracy of paper” built on government debt that was replacing the older feudal aristocracy; Taylor’s work is widely available in libraries. The work of the French liberal theorists is less widely available in English. Augustin Thierry’s _History of the Conquest of England by the Normans_ (1825; New York: E.P. Dutton, 1927) offers his history of the formation of European states and their foundation on conquest and violence. An IHS working paper by Tom G. Palmer, “Classical Liberalism, Marxism, and the Conflict of Classes” (IHS Working Paper 88/1), explores the important work of the French liberals and its misappropriation and distortion by Marx. (Copies available on request; write to The Editor, _Humane Studies Review_, care of the Institute for Humane Studies.) The Italian fiscal theorists added greatly to our understanding of such processes as “fiscal illusion” and other means of extracting revenue out of taxpayers. The best introduction to these thinkers is James M. Buchanan’s essay, “‘La Scienza della Finanze:’ The Italian Tradition in Fiscal Theory,” (in his _Fiscal Theory and Political Economy: Selected Essays_ \[Chapel Hill: University of North Carolina Press, 1960\]). An excellent statement of this approach, offering a theory of political entrepreneurship, is Giovanni Montemartini’s essay “The Fundamental Principles of a Pure Theory of Public Finance” (in Richard A. Musgrave and Alan T. Peacock, eds., _Classics in the Theory of Public Finance_ \[New York: St. Martin’s Press, 1967\]). The Italian economist Vilfredo Pareto’s writings on “spoliation” are contained in S. E. Finer, ed., _Vilfredo Pareto: Sociological Writings_ (Totowa, N.J.: Rowman and Littlefield, 1976), esp. pp. 114-120, 137-142, 162-164, 276-278, 315, and 317-318. German sociologists such as Franz Oppenheimer (_The State_ \[1914; New York: Free Life Editions, 1975\]) and Alexander Rüstow (_Freedom and Domination: A Historical Critique of Culture_ \[Princeton: Princeton University Press, 1980\]) have explored the history of the state and its function as an instrument of domination and exploitation; Oppenheimer distinguished the “political” and the “economic” means of attaining wealth, while Rüstow offered a grand historical view of the development of state power. (Interestingly, the American writer Albert Jay Nock, in his _Our Enemy, the State_ \[1935; New York: Libertarian Review Foundation, 1989\], combined Oppenheimer’s insights into the political and economic means of gaining wealth with the political analysis of the Jeffersonian Republicans described above.) The work of the modern public-choice economists on “rent seeking” (the pursuit of wealth through the political means) is extensive and deserves careful reading; in many ways it is a powerful extension of the insights of the Italian fiscal theorists. Serious students of classical liberalism should investigate the tradition of classical liberal social analysis for the powerful insights it provides; it is one of the most important keys to understanding the world of human interaction, both past and present. ## Invitation to History Ralph Raico, a professor of history and a Senior Fellow of the Institute for Humane Studies, has written a useful look from a classical liberal perspective at recent work in history. Originally delivered at a Liberty Fund Symposium on “Liberty and Current Issues in the Humane Sciences,” Raico’s paper has been reproduced as an Institute working paper. The paper, “Some Aspects of Recent Historical Writing” (IHS Working Paper, 88/2), takes as its point of departure the historian Gertrude Himmelfarb’s book _The New History and the Old_ (Cambridge, Mass.: Harvard University Press, 1987). From cliometrics to class analysis in history to the history of slavery and the rise of collectivism, Raico surveys various schools, historians, and works. This is an excellent introduction to the study of history that should be read by every current or prospective history student interested in classical liberalism. History students aren’t the only ones who should be aware of Raico’s subject. Students in all the humane sciences will benefit from a better understanding of history. It will enrich their own disciplines and make them better scholars. Another work that serves as an excellent introduction to classical liberal historiography is Sheilagh Ogilvie’s essay “Toward a Critical Classical Liberal History” (_Humane Studies Review_, \[4\] Spring 1987). (Individual copies of each essay are available at no charge; requests should be directed to The Editor, _Humane Studies Review_.) ## Development Studies What is the relationship between economic development—or its absence—and political structures? This is an important question for classical liberal scholars and an exciting field in which to apply insights drawn from economics, political science, history, and anthropology. In many cases, economists have merely recommended that developing nations substitute free markets for statist controls, without addressing the political factors that have led to the substitution of coercion for voluntary exchange. _Toward a Political Economy of Development: A Rational Choice Perspective_ (Robert H. Bates, ed., Berkeley: University of California Press, 1988) offers an approach that integrates insights from economics with political science to form a system of political economy. Bates contributed a very good essay on “Government and Agricultural Markets in Africa” demonstrating that “the pattern of price interventions...represents the terms of a political pact among organized political interests, the costs of which are transferred to unorganized interests who are excluded from the price-setting coalition. Members of the pact are labor, industry, and government; small-scale farmers constitute its victims and large-scale farmers stand as passive allies, politically neutralized through subsidy programs.” The result has been plummeting agricultural production, followed by shortage-induced shifts in the price-setting coalition that may lead to further changes in the political situation. Other noteworthy essays in the volume include Samuel Popkin’s on “Public Choice and Peasant Organization” (Popkin is the author of the highly recommended _The Rational Peasant: The Political Economy of Rural Society in Vietnam_ \[Berkeley: University of California Press, 1979\]), and David Feeny’s on “Property Rights in Land: A Comparative Study,” in which the emergence of institutional property-rights arrangements in South and Southeast Asia is examined. The quality of the essays is uneven and they don’t always agree, but the collection is a laudable attempt to bring together insights drawn from economic science with careful attention to political structures and incentives. (Readers should also consult the Spring 1988 issue of _Humane Studies Review_ for the essay by George B. N. Ayittey on “African Peasants and the Market System”; copies are available by writing to the Institute.) One economist who has integrated economics and politics in his studies is P. T. Bauer. His early pioneering work, _West African Trade: A Study of Competition, Oligopoly and Monopoly in a Changing Economy_ (Cambridge: Cambridge University Press, 1954; reprinted, New York: Augustus M. Kelley, 1963), deserves careful consideration by students of African development. In addition, the role of kleptocracy (rule by thieves) in African underdevelopment has been examined by the sociologist Stanislav Andreski in his work _The African Predicament: A Study in the Pathology of Modernization_ (New York: Atherton Press, 1969). An important recent work that attempts to integrate an understanding of economic (under)development with insights into indigenous politics is Richard Sandbrook’s _The Politics of Africa’s Economic Stagnation_ (Cambridge: Cambridge University Press, 1985). As Sandbrook argues, while most African states are not fully collectivist, “African states are not, in any real sense, capitalist states. The peculiar conditions of postcolonial Africa impel an adaptation of colonial-inspired political structures and processes in a patrimonial, or rather neopatrimonial, direction. The omnipresent danger in this adaptation is a degeneration of neopatrimonialism into an economically irrational form of ‘personal rule.’ This decay, manifest in political instability, systemic corruption and maladministration, introduces irrationalities into economic life, but nonetheless is shaped by a particular political logic. These political phenomena cannot, therefore, simply be dismissed as mismanagement or ineptitude.” Sandbrook may place too much weight on the positive role of the state in western economic development, but his approach to understanding African economic stagnation is most enlightening. Sandbrook’s book could be profitably read in conjunction with Grace Goodell’s insightful article “The Importance of Political Participation for Sustained Capitalist Development” (_European Journal of Sociology_ \[26\] 1985), in which Goodell argues that “only through participation which is structured and rooted in actual behavior (not just voting, etc.) can society acquire and maintain the requisites for sustained capitalist development....” The real patterns of African economic life (in contrast to the virtually meaningless statistics studied by foreign-aid analysts) are also examined by economic anthropologist Polly Hill in her works _Rural Capitalism in West Africa_ (Cambridge: Cambridge University Press, 1970) and _Development Economics on Trial_ (Cambridge: Cambridge University Press, 1986). ## Law, Defense, and Voluntarism A recently published book on the history of the American vigilante movement sheds a great deal of light on the history of the voluntary provision of law and order in the United States. Patrick B. Nolan’s _Vigilantes on the Middle Border: A Study of Self-Appointed Law Enforcement in the States of the Upper Mississippi from 1840 to 1880_ (New York: Garland Publishing, 1987) provides a detailed look at the various Regulator Movements, Committees of Vigilance, Anti-Horse Thief Associations, and other organizations that provided law and order in the absence of effective governmental anticrime efforts. Contrary to popular myth, vigilante movements were not solely frontier phenomena; such organizations were rather principally rural and were found in many areas where the frontier was long past. Nolan looks at the role of vigilante groups in providing community in rural areas that experienced a great deal of social mobility (contrary to the myth of “organic rural community,” American rural society was highly fluid in the nineteenth century), and in providing effective protection of life and property at a cost lower than government. Nongovernmental provision of justice on the frontier is examined by Terry Anderson and P. J. Hill in their essay “An American Experiment in Anarcho-Capitalism: The Not So Wild, Wild West” (_Journal of Libertarian Studies_ \[3\]). The authors show how, in the absence of effective government, “Private agencies provided the necessary basis for an orderly society in which property was protected and conflicts were resolved. These agencies often did not qualify as governments because they did not have a legal monopoly on ‘keeping order.’ “ Anderson and Hill look at the historical record, focusing on land clubs, cattlemen’s associations, mining camps, and wagon trains, and conclude that “in the absence of formal government, the western frontier was not as wild as legend would have us believe.” Our understanding of this area has also been substantially advanced by Bruce L. Benson, whose forthcoming book _Crime, Police, and the Courts: Privatization and the Failure of Government_ (San Francisco: Pacific Research Institute) examines the voluntary provision of law and order through history, skillfully applying economic insights to explain how law can emerge from lawlessness without a central source of power and coercion. (On the spontaneous generation of order and rules of conduct, see also Robert Sugden’s _The Economics of Rights, Co-operation, and Welfare_ \[New York: Basil Blackwell, 1986\].) Finally, the jurisprudence of a spontaneously evolving and polycentric legal order is examined in Randy Barnett’s two-part article “Pursuing Justice in a Free Society” (“Part I: Power vs. Liberty”; “Part II: Crime Prevention and Legal Order” in _Criminal Justice Ethics_, Summer/Fall 1985, Winter/Spring 1986). (Copies of the Anderson-Hill and Barnett articles are available by writing to The Editor, Humane Studies Review.) ## Complex Systems A problem faces those involved in the quest for artificial intelligence: How can a system be designed that incorporates greater competence than the designers themselves are capable of? Two computer scientists have drawn insights from the spontaneous-ordering processes of the market to address this problem. Mark S. Miller of the Xerox Palo Alto Research Center and K. Eric Drexler of the MIT Artificial Intelligence Laboratory (also visiting scholar at Stanford University) together have written two articles that draw on the work of Robert Axelrod on the evolution of cooperation within computer simulated games (see _The Evolution of Cooperation_, New York: Basic Books, 1984), F. A. Hayek on the evolution of complex social systems, and Ronald Coase on the nature of the firm and its function in the market. The articles appear in _The Ecology of Computation_ (B. A. Huberman, ed., New York: Elsevier Science Publishers, 1988). In “Comparative Ecology: A Computational Perspective,” they compare various evolutionary ecosystems, including biological systems; Axelrod’s computer-game tournaments; and what they term “direct” and “indirect” markets, drawing analogies for use in designing evolutionary computational systems. In “Markets and Computation: Agoric Open Systems,” they point out the “fundamental parallels between the problems of social and computational organization” and propose “the wholesale importation of economic models and metaphors into the computational domain, at least on a trial basis.” The results would be computational systems with greater effective intelligence than could be designed by “planners” (i.e., programmers). These essays demonstrate the widespread applicability of models of spontaneous order (biology, social systems, and now electronic computation) and should prove useful to students in computer science, political economy, economics, and choice theory, among other fields. ## Economics Dictionary Scrutinized Thousands of university libraries around the world have added to their collections _The New Palgrave: A Dictionary of Economics_ (4 vols., New York: Macmillan, 1987). The work, aspiring to be the standard compilation of economic wisdom, has, however, come under withering criticism from scholars generally more sympathetic to the free market than are _The New Palgrave_’s editors. Arthur Seldon of the Institute of Economic Affairs (IEA) in London has written a two-part critique of _The New Palgrave_ for _Economic Affairs_ (February/March and April/May 1988), and IEA has published Mark Blaug’s monograph _Economics Through the Looking Glass: The Distorted Perspective of The New Palgrave Dictionary of Economics_ (London: Institute of Economic Affairs, 1988). A copy of Seldon’s two-part article, including information on how to order Blaug’s book, is available by writing to The Editor, _Humane Studies Review_. ## Trust and Cooperation The emergence of cooperation, on which any degree of civilization is dependent, requires the development of a significant degree of trust. Examinaton of the development of trust and cooperation has been central to several studies of spontaneous order, including Robert Axelrod’s pioneering book _The Evolution of Cooperation_ (New York: Basic Books, 1984). A new book, _Trust: Making and Breaking Cooperative Relations_ (Diego Gambetta, ed., New York: Basil Blackwell, 1988) offers several essays, both theoretical and historical, on this topic. The range is appropriately interdisciplinary, including contributions by philosophers, social psychologists, biologists, historians, anthropologists, political scientists, and economists; they look not only at how trust is built up, but how it is destroyed, as well. This volume should prove useful to students interested in the emergence and maintenance of social order. ## The Morality of Commerce Many works on business ethics assume not merely that ethical standards are needed to govern business conduct, but that commerce and those engaged in it are inherently predisposed to unethical behavior, in contrast to “public spirited” civil servants. _Commerce and Morality_ (Tibor Machan, ed., Totowa, N.J.: Rowman and Littlefield, 1988) offers a different perspective: business practice is “one of the numerous, legitimate, morally justified areas of human conduct” within which special ethical problems may arise, but commerce in itself is “quite proper.” Among the issues treated in the volume are: managerial ethics; the ethics of advertising; employment and ethics; corporate social responsibility; morality and markets; and government regulation. This work is recommended for students of moral and social philosophy, business, and law. ## Public Goods and “Market Failure” The free society has been subjected to withering, if one-sided, criticism for an alleged inability to produce certain goods, called “public,” or “collective,” goods. Such goods are characterized by 1) the impossibility or costliness of excluding nonpurchasers or 2) “jointness of consumption” (meaning that consumption by one consumer does not diminish consumption of the same good by another; the picture on my television set does not become dimmer when you turn yours on, but my taking a bite out of an apple does leave less for you). The market’s alleged inability to produce adequate quantities of such goods is called “market failure.” For many years this has provided the standard rationale for coercive government intervention into the market, whether in the form of regulation or of tax-supported provision of some goods. (Many if not most such “publicly” provided goods are not collective goods at all, but purely private goods the costs of which are shifted through coercion from their consumers to the public at large.) Recent decades, however, have seen a major change in attitudes regarding the role of the state in providing collective goods. First, scholars have begun to apply to government the same standards that have been applied so unfavorably to the free market; numerous examples of “government failure” have been found. This has shifted the emphasis: instead of comparing the market to “perfection,” finding that it falls short, and then jumping to the conclusion that state action is necessary, it is seen as more realistic to use a “comparative institutions” approach. The market is compared directly with the state, rather than comparing the market with pure perfection and then assuming that the state is preferable. Second, scholars have begun to question the foundations of the traditional theory of public goods, in which it is assumed that “publicness” is an inherent characteristic of some goods _per se_, rather than a characteristic of their mode of production. (When political authorities choose, for example, to produce a good in a nonexclusive manner, the good is defined in terms of its availability to all; when this happens, market provision based on alternative forms of excluding nonpurchasers is ruled out by definition.) Economist Tyler Cowen, a former IHS Claude R. Lambe Fellow and now assistant professor of economics at the University of California at Irvine, has collected many of the classic articles in the theory of market failure into an accessible and useful volume. _The Theory of Market Failure: A Critical Examination_ (Fairfax, Va.: George Mason University Press, 1988) is divided into three sections. The first includes classic essays setting forth the market-failure perspective. The second section (“Developments in the Theory of Markets”) is exceptionally rich with insights, including new approaches to the problem of collective goods. The third section (“Case Studies”) includes studies of education, fire protection, lighthouses, and other services. Cowen also provides a fine essay that guides the reader through the history and the central issues of the theory of market failure. The essays in this book will illuminate many other issues in history, economics, and social theory, including the rise of the market, the rule of law, the growth of cities, and the current trend toward privatization. Every serious student of classical liberalism should read this book. (_The Theory of Market Failure_ is available from Laissez Faire Books, 532 Broadway, 7th Floor, New York, NY 10012; the price is $21.75 plus $2.00 for postage and handling in the U.S., $3.50 for postage outside of the U.S.)