CRISIS AND LEVIATHAN

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Robert Higgs on a Century of Crisis and Leviathan - YouTube
► 60:01► 60:01	www.youtube.com/watch?v=uyghW5C8y2M2012년 1월 25일 - 60분 - 업로더: independentinstitute Original talk given on August 5, 2011 at the 2011 Challenge of Liberty College Summer Seminar.

CRISIS AND LEVIATHAN
Critical Episodes in the Growth of American Government
By Robert Higgs
Foreword by Arthur A. Ekirch, Jr.

ISBN:	978019505900
Binding:	PB
Page Length:	384
Date Published:	1989
Publisher:	Oxford University Press
Dimensions:	6" x 9"

ISBN:	978019505900
Binding:	PB
Page Length:	384
Date Published:	1989
Publisher:	Oxford University Press
Dimensions:	6" x 9"

Everyone knows that government has continually grown in size and scope during this past century, but how and why has it done so? Is this growth inherent in the nature of government or because of some greater social needs, or are there other causes?

In Crisis and Leviathan, Robert Higgs shows that the main reason lies in government’s responses to national “crises” (real or imagined), including economic upheavals (e.g., the Great Depression) and especially war (e.g., World Wars I and II, Cold War, etc.). The result is ever increasing government power which endures long after each crisis has passed, impinging on both civil and economic liberties and fostering extensive corporate welfare and pork. As government power grows, writes Higgs, it achieves a form of autonomy, making it ever more difficult to decrease its size and scope, and to resist its further efforts to increase its reach, so long as the citizenry remain uninformed of its true effects.

One of the most important books ever written on the nature of government power, Crisis and Leviathan is a potent book whose message becomes more trenchant with every passing day.

Table of Contents

Part I. Framework

Chapter 1. The Sources of Big Government: A Critical Survey of Hypotheses

Explanations of the Growth of Government
Modernization/Public Goods/The Welfare State/Political
Redistribution/Ideology/Crisis
Conclusions

Chapter 2. How Much Has Government Grown? Conventional Measures and an Alternative View

Conventional Measures of the Growth of Government
The Essence of Big Government: An Alternative View
Ratchets: Conventional Measures versus Fundamentals
Conclusions

Chapter 3. On Ideology as an Analytical Concept in the Study of Political Economy

What Is Ideology?
Ideology and Political Action
Ideology in Analysis
Ideology and Rhetoric
Ideology: Exogenous or Endogenous?
Conclusions

Chapter 4. Crisis, Bigger Government, and Ideological Change: Toward an Understanding of the Ratchet

A Schematic View of the Problem
Why Stage II? A Cost-Concealment Hypothesis
Why State IV? A (Partial) Hypothesis on Ideological Change
Recapitulation: Why the Ratchet?
The Task Ahead

Part II. History

Chapter 5. Crisis Under the Old Regime, 1893-1896

Creative Destruction Ideologically Sustained, 1865-1893
Depression and Social Unrest, 1893-1896
Serving the Gold Standard
Maintaining Law and Order in the Labor Market
Striking Down the Income Tax
Conclusions

Chapter 6. The Progressive Era: A Bridge to Modern Times

Economic Development and Political Change, 1898-1916
The Ideological Winds Shift
End and Beginning: The Railroad Labor Troubles, 1916-1917
Conclusions

Chapter 7. The Political Economy of War, 1916-1918

Neutral Prosperity and the Shipping Crisis
The Preparedness Controversy and New Governmental Powers
War and Conscription
Manipulating the Market Economy: The Major Agencies
Labor Problems and the Railroad Takeover
Supreme Court Rulings on War Measures
Legacies, Institutional and Ideological
Conclusions

Chapter 8. The Great Depression: “An Emergency More Serious Than War”

Economic Rise and Fall, 1922-1933
What Did Hoover Do?
Interregnum of Despair
Emergency, Emergency!
Planting the First New Deal: The Hundred Days
Cultivating and Pruning the First New Deal: The Supreme Court
Legacies, Institutional and Ideological
Conclusions

Chapter 9. The Political Economy of War, 1940-1945

De Jure Neutrality, De Factor Belligerency, 1939-1941
More Powers and Price Controls
The Armed Forces and the Economy
Work or Fight
The Supreme Court Also Goes to War
Legacies, Institutional and Ideological
Conclusions

Chapter 10. Crisis and Leviathan: From World War II to the 1980s

The Mixed Economy: March into Socialism or Fascism?
Crisis and Leviathan: The Recent Episodes
Conclusions

Chapter 11. Retrospect and Prospect

Retrospect
Prospect

Appendices
Notes
Select Bibliography
Index

Praise for Crisis and Leviathan

“Crisis and Leviathan is a book of major importance, thoroughly researched, closely argued, and meticulously documented. It should be high on the reading list of every serious student of the American political system.”
—Political Science Quarterly

“Crisis and Leviathan is an important, powerful, and profoundly disturbing book.”
—James M. Buchanan, Nobel Laureate in Economic Sciences, Journal of Economic History

“By focusing on certain critical episodes in American history, Robert Higgs has documented the remarkable and alarming growth of Big Government. His ambitious work covers the subject in great detail and in a way that will appeal to both scholars and a more general audience. . . . The conclusion of Higgs’s analysis is a thoughtful but disturbing view of American prospects. Whether traditional constitutional restraints or the unique operation of a mixed economy can avert what he and others fear as a march into socialism or fascism no one knows. As we consider the future, Higgs offers enlightenment if not optimism.”
—Arthur A. Ekirch, Jr., Professor of History, State University of New York, Albany

“Insightful, compelling, and clear, Higgs breaks new ground in explicating the most important socio-political trend of our time—the growth of American government.”
—The Freeman

“What is most exciting and intriguing about Crisis and Leviathan is that Higgs is now working within the tradition of economic history exemplified by Schumpeter and Polanyi. Like them, and unlike the new economic historians, Higgs refuses to treat political, cultural, or ideological aspects of historical reality as irrelevant to the study of economic development.”
—Reviews in American History

“Crisis and Leviathan is a thoughtful and challenging work.”
—Harper’s Magazine

“How big government gets that way: It takes over new turf in time of crisis, then hangs on to much of it after the crisis is over.”
—Fortune

“That big government grew from crises is not a new idea, but just how that happened is an astounding story, and the superb account that Higgs gives of that process may come as something of a shock to his readers.”
—Jonathan R. T. Hughes, Professor of Economics, Northwestern University

Crisis and Leviathan is a blockbuster of a book, one of the most important of the last decade. It is that wondrous and rare combination: scholarly and hard-hitting, lucid and libertarian as well.”
—Liberty

“Robert Higgs is a first-rate economist and economic historian who sets out a provocative thesis—namely, that governments exploit crises (real and fabricated) as excuses to grow and to strip people of their wealth and liberties. In Crisis and Leviathan, Higgs skillfully and carefully tests this thesis against history. The thesis stands. Governments do indeed exploit crises as opportunities to confiscate ever-greater powers. After each crisis, the amount of power recently added to government’s stock might shrink somewhat, but very seldom back to what it was prior to the crisis. This is one of the most important and compelling books published during the 1980s.”
—Donald J. Boudreaux, Professor of Economics, George Mason University

“I can think of no more important reading than Crisis and Leviathan, aside from the Constitution itself.”
—The American Spectator

“I just read Crisis and Leviathan. Wonderful work! I will try to stem the tide of emergency on Capitol Hill with your inspiration!”
—Michael Spence, U. S. Congressman

“The most masterful and persuasive treatment of the role of war in making big government bigger and liberty less secure is Robert Higgs’s book, Crisis and Leviathan: Critical Episodes in the Growth of American Government. Times of crisis, including economic depressions but mainly wars, give governments license to invoke numerous emergency powers. After the crisis or war is over government power recedes somewhat, but never to its previous, more limited size or scope.”
—Orange County Register

“Crisis and Leviathan is a blockbuster of a book, one of the most important of the last decade. It is that rare and wondrous combination: scholarly and hard-hitting, lucidly written and libertarian as well. To Professor Higgs, being thorough and erudite does not mean timorously qualifying every statement, or torpidly and "judiciously" picking one's way through the minefields of ideology. Higgs's depth and breadth of learning has only intensified his commitment to truth, liberty, and the identification its enemies. Robert Higgs, a noted economic historian, set about to answer a longstanding and vital question: why has the State grown so ominously in power in the United States during the 20th century? Why did we begin as a quasi-laissez-faire country in the 19th century and end up in our current mess? What were the processes of change? . . . One great accomplishment of Professor Higgs is to vindicate the role of ideas in history; more specifically, the role of ideology in bringing about statism in the 20th century. He has rescued the discipline of economic history from the Chicago variant of economic determinism. But this is scarcely all. For in virtually every free-market economist of our time, there is one great big hole, one big gap in his critique of statism: war. War is sacrosanct, considered necessary, inevitable, and good; and so while free-market economists will devote a great deal of energy to the evils of government intervention in oil, or forestry, or the retail trade, there is little or nothing said about the horrors and distortions imposed by the Pentagon and the war-making Leviathan State. In Crisis and Leviathan, Higgs identifies war as the critical key to the growth of statism, making his achievement all the more remarkable. . . . Not the least of the joys of Crisis and Leviathan is the love of liberty and the hatred of its enemies that shines through the scholarly apparatus of the book. . . . What a treasure, then, when an erudite scholar and distinguished economic historian such as Robert Higgs, conveys a passionate intensity in favor of liberty and against the depredations of the State! . . . We live in an age of outrageous hype, when publishers and book dealers tout every other book in print as "the greatest of all time." So what are we to do when a book of genuine greatness comes along? I say this about very few books: make this your top priority this year; rush out and read the book. And then proclaim it throughout the land.”
—Murray N. Rothbard, late S.J. Hall Distinguished Professor of Economics, University of Nevada, Las Vegas

http://www.independent.org/store/book.asp?id=15

David Ethan Kennerly. 14 May 2004.

The Major Themes of Crisis and Leviathan

In 1987, Robert Higgs, a professor of economics at the time, wrote a book on political science entitled Crisis and Leviathan: Critical Episodes in the Growth of American Government.  Despite his academic title, this book is classified as, and is, primarily a text of political science.  In it he used fundamentals of economics, politics, and history to explain the nature of the expansion of American government.  He determined that each was necessary to explain one of the primary political problems: in what manners and methods the scope of government grows.  In this brief essay, let us begin to appreciate what his entire book is about and briefly appraise its ability to predict future behavior.  He spends several pages clearly defining several key terms that become the major concepts with which he develops his thesis.  He develops, for about the first third of the book, a consistent framework of these concepts.  For a cursory overview, let us call these key concepts: scope, quasi-autonomy, and ideology.  Due to his precision, the terms as he defines them and then employs them, do not retain all their layman's connotations.  Let us then assimilate his definition of each in two passes, first for definition of terms, and a second pass for a summary of their usage in the analysis of government.

Higgs defines scope as an abstract measure of the amount of behavior in a society that is coercively controlled by a government.  This does not equate to a naive tabulation of the budget of a government, because

"... to equate government's role in economic life with the size of its budget ... is obviously wrong since many government activities (for example, statutes and administrative rules) redirect resources just as surely as taxation and spending" (Sam Peltzman qtd. 31).

So a government that affects many areas of life, through the invasive laws, yet appears to have an overtly small budget is still a large government.  Such a government takes with law what a fully private institution must pay with money.  This introduces complexity and admitted non-quantitative nature of to the analysis.  Unless each law can be eval‎uated for its hidden costs to society, the analysis cannot be quantitative.  As an aside, throughout the book Higgs effectively weaves poignant quotations, such as this one from Sam Peltzman, into his explanation. 

Although Higgs does not expressly coin the term quasi-autonomy, let us use it to summarize what he spends several chapters explaining.  A quasi-autonomous institution is able to act with a mitigated degree of impunity, without effective recourse from the rest of society.  It is somewhere midway between subservient and fully autonomous.  As he develops and we shall summarize later, American government is quasi-autonomous.  The quasi-autonomist paradigm differs from the pluralist and classist paradigms.  Briefly put, pluralism maintains that government is a neutral agent that mediates many biased agents, called special interest groups.  Classism maintains that a single class, an ill-defined quasi-agent, dominates the other agents, so therefore government is mostly an instrument of a class.  Quasi-autonomism maintains that government itself is an active agent with as much bias for its own members as any non-government agent.  Peter Navarro summarized the difference between pluralism and quasi-autonomism,

"[G]overnment is not only the target of special interest pressure but also one of its biggest instigators" (qtd. 63).

As an example, some labor unions lobby Congress for pay raises, health care or pensions; whereas, Congress directly votes raises, excellent health plans and luxurious pensions, even for members removed from office (Baum). This has dramatically different implications when combined with an understanding of scope and ideology. 

Ideology is a contested term in political science.  Higgs develops a precise definition of ideology for the purpose of his explanation.  Essential to his definition:

"... [A]ll [ideologies] contain unverified and--far more significant--unverifiable elements, including their fundamental commitments to certain values" (38).

In this book, an ideology means a system of opinions and preferences that are maintained by its adherents without proof because the nature of the problem is beyond the comprehension of the vast majority, or all, of its adherents.  An ideology is an inescapable construct of decision-making in an uncertain world.  This is because "knowledge is always and everywhere a scarce resource, costly to acquire and hence rarely possessed in abundance" (35).  Since full and complete knowledge of the world is beyond comprehension, an ideology contains some element of faith, which is an unverifiable opinion.  Higgs further defines that an ideology has cognitive, affective, programmatic, and solidary components (37).  An ideology includes cognitive opinions that affect a person's moral eval‎uation.  These opinions and values partially program a person's behavior, including which social groups a person identifies (solidarity) with.  Higgs maintains that this definition of ideology is necessary to explain political behavior. 

So, Higgs studies the expanded scope of a quasi-autonomous government and cites the ideologies that constrain this expansion.  Higgs wields the prior concepts of quasi-autonomy, scope, and ideology to draw some insightful conclusions.  The concepts themselves have several assumptions that warrant further attention.  Now that we have a basic understanding of what Higgs means by scope, quasi-autonomy, and ideology, we may analyze their usage in the explanation of government. 

Justifying quasi-autonomy in a democratic society is not intuitive.  American children, in government schools, are taught that democracy means rule by the people, which implies a pluralistic paradigm.  Yet there is an omission of a key fact, which is:

"[F]or better or worse a government is itself human: it is simply the collectivity of persons who exercise legal authority" (6).

Even in a democracy, some of the people sit in a seat of authority and some do not.  The same children are taught, in government schools, that democratic elections are a safeguard against quasi-autonomy.  Yet,

"... almost any politician can, within rather wide limits, behave contrary to the interests of his constituents without suffering predictable harm" (James Buchanan qtd. 14).

A voter must make many decisions based on ideology instead of facts.  Through a postelection poll, Congressman Pete McCloskey discovered, "that 5% of the people voted for me because they agreed with my views; 11% voted for me even though they disagreed with my views, and 84% didn't have any idea what the hell my views were" (qtd. 14).  Even within their own ideology, twice as many (11%) voted for an opponent as supporters (5%) and the vast majority voted in ignorance.  Due to the constraints of ideology and knowledge, ignorance is not fully amenable by education.  Due to this fundamental lack of accountability modern American governmental redistribution "degenerates into an absurd two-way pumping of money when state robs nearly everybody and pays nearly everybody, so that no one knows in the end whether he has gained or lost in the game" (Wilhelm Ropke qtd. 12).  Therefore, American government behaves with in quasi-autonomy in respect to the governed.

Due to government's quasi-autonomy, governmental scope, once temporarily expanded, tends not to withdraw.  This is because, "bureaucratic services generate constituencies that oppose their liquidation" (Francis Rourke qtd. 67).  Even, and especially, during temporary crises government tends to permanently grow.  Jack Hirshleifer explained that:

"Wars and defense crises that require gigantic budgetary expansions leave in their wake a mass of officeholders, with sufficient political clout to resist budgetary contraction when the crises pass" (qtd. 68).

This scope has a dramatic implications for the future of society, because it is the scope, and not the budget, that determines the long-term impact on the citizens.  Once government has acquired an authority, and thus a citizenry has abdicated a freedom, the long-term budget will convert this expanded scope into benefit for the government at the expense of the governed.  As Higgs argues, "Authority comes first: no authority, then no taxing, spending, or employment.  Authority arises from executive orders, statutes, court decisions, and the directives of regulatory agencies" (32).

Higgs employs concepts of economics to reveal the hidden costs of authority, because the government legislates preferential economic treatment.  Unlike a market economy which reveals costs, a command economy conceals them (66). Unlike a pecuniary cost, which is obvious, such as a tax bill or bill of sales, government employs fiscal illusions (65).  Higgs maintains that: "Some spending that has been accounted as private has actually been coerced by regulation, so ought to be accounted as the result of public policy and counted as an extension of the size of the government" (29).  Some examples of governmental cost-concealment include military draft, appropriations, and price controls.  Like a magician, government presents the illusion that a private institution is creating a cost, when that private institution is actually suffering the burden of the government regulation or tax. 

Because of the government's quasi-autonomy, it does not suffer from these costs.  Therefore, the costs are distributed most heavily to the politically weak (65).  Thereby government empowers prejudice and private corruption.  During World War I, Southern draft boards "flagrantly discriminated against blacks" (Baker qtd. 133).  Since the public scorned the local boards, instead of their Federal controllers, these local boards served as buffers to absorb dissatisfaction instead of the Federal government (Crowder qtd. 133-4).  Thus Federal government performed a superb con job:  It gained the labor of its draftees at sub-market prices and concealed its responsibility.  In another example, the Food Administration authorized local volunteers who "forced their neighbors to comply with numerous food regulations. ... Naturally the operation of thousands of petty tyrannies caused unpopular people to suffer harassment at the hands of those who wielded the government's profusely scattered authority" (137).  Thereby Federal government ate its cake and had it, too:  It acquisitioned food to be exported overseas at an enormous profit during World War I without appearing to be the cause of this robbery.  Yet, not only did citizens pay the economic cost and loss of economic civil liberties, it also paid the cost in social injustice, the cost in personal civil liberties, especially racism and other categories of unpopular persons. 

Despite the naive belief to the contrary, governmental regulations also empower private corruption.  Big Business can buy privileges at lower costs to itself, and higher costs to everyone else through regulations of a quasi-autonomous government.  Since the government is operating with quasi-autonomy, it has a surplus of coercive power to regulate which it can employ with some degree of arbitrary choice.  Each individual politician can rent his authority for a bribe.  But an entire political agency can rent its authority, through public regulation, without giving the appearance of bribery.  As Richard Hofstadter put it, "Before business learned to buy statesmen at wholesale, it had to buy privileges at retail" (qtd. 81).  All of these regulations are ultimately enforced by violence or the mere implied consequence of failure to comply will result in violence, revealing "... the underlying essence of government, which is coercive power" (27).

Yet the growth of American government has not fully explained by impersonal economic concepts.  Higgs maintains that ideologies, both of the office holders and the populace, have constrained the expansion of governmental scope.  Political behavior often defies the economic concept of a utility function, which has only goods and services to explain an agent's measure of well-being.  Higgs inserts into the utility function the additional factor of ideology (43).  Both conservatives and liberals defend deep economic stances not on pragmatic grounds, but logically indefensible ideological grounds (44).  Higgs further maintains that there are a few ideologies in a society, although in America there seems to be less evidence of consistent conservative-liberal ideologies.  Since surveyed Americans did not behave consistently with conservative/liberal ideological categories, Maddox and Lilie created a fourfold categorization: populist, conservative, liberal, and libertarian.  In addition to the well known conservative and liberal ideologies, each of which supports its own pet regulations, populists support most any government regulation and libertarians oppose most any government regulations.  Given these four categories, many Americans in the survey did have a consistent ideology (46). 

During a time of crisis, the ideology determines if and where government, like a huge creature, expands its tentacles of coercive power.  During a crisis the populace cries for a quick fix.  Depending on the ideology of the governmental officials, the government will respond and take advantage of the populace's naivety to create a permanently broader scope, as a bloated flea on the back of the people.  Only this flea is now man-size.  Since there is no suitable laboratory to perform national political experiments within, Higgs goes on for the second part of the book to examine historical examples and the fitness of his multi-causal explanation. 

This reader found the work highly worthwhile.  Higgs no doubt has his own ideological biases, such as his academic perspective.  Yet he demonstrates a powerful case that incidentally provides criticism on all the ideologies mentioned: populist, conservative, liberal, and libertarian.  The logic employed and the far-reach of his research is outstanding.  Yet the proof of any hypothesis is its ability to predict the result of an experiment.  The subject of experiment is the American government.  Since Higg's authorship in 1987, a number of relevant political trends may be appraised.  Let me briefly mention two.

First, the nature of California state government during the California energy crisis during 2000 and 2001?  This has often been cited as a market failure.  Many blamed private producers for limiting their supply (Baum).  But, using Higg's explanation of cost concealment and further research into the actual details of the crisis, the picture differs.  California energy regulations subsidize government-owned energy stations, and thereby penalize private energy providers (Elwood).  Additionally, California's quoted "deregulation" actually added several new regulations.  Energy providers were required to meet fixed price.  Since government providers were funded by the government, they could operate at a price loss.  In essence, the citizens of California were paying for government privilege.  Yet private providers had no such privilege.  Their only recourse to the sub-market price, was to reduce output in order to cut their losses.  This is how government created the energy shortage.  At the threat of violence, it diverted public money toward its own providers and forced non-privileged private providers to compete against this impossible advantage--none of which the Californian consumers wanted.  This illustrates Higg's theory of government scope (in regulation), quasi-autonomy (in self-serving behavior at the expense of citizens without electricity), and cost concealment (in convincing uninformed citizens that private businesses had caused their crisis). 

A second case to test Higg's hypothesis: did the Federal government permanently grow in response to the 9/11 crisis?  As Higg's hypothesis suggests, Americans cried out that government do something.  And the Federal government responded by increasing its scope.  It took away citizen determination over some aspects of their own lives through regulation.  As an example, the newly created Transportation Security Administration required airports to fire all private airline security and then forced them to rehire the same actual persons back as federal employees.  Everyday each American on a flight spends over one additional hour boarding due to the methods employed by these federal employees.  The cost of which, if bought at market price, would amount to billions of dollars a year.  Yet through regulation, government pays each traveler nothing in return, not even a provably higher level of actual security from terrorism.  The Federal government created the Patriot Act, which defies several civil liberties, including rights to privacy and freedom from unjustified detention.  The Federal government has begun to intellectually profile its citizens, by mandating all public libraries to forward records on what books each person is reading.  The Federal government has hoodwinked Americans into supporting an invasion and subsequent occupation of a country half way around the world under false pretenses. Federal officers claimed Weapons of Mass Destruction, connections to Al Queda, and the general threat that Iraq poses to the US.  Yet the US overshadows Iraq in military might by 280 to 1.  As a final example, although the stereotype has been that conservatives do not favor public spending, Republicans and Democrats in office are revealing their populist ideologies by supporting for greater social and military spending.  In short, more spending of every kind, spending of citizens' money, of course.  Social spending under the Bush administration has exceeded the Clinton administration.  Higgs seems to have predicted this quasi-autonomous response, to increase the scope in accordance with the ideology of many Americans. 

Given these examples, other evidence, and much further consideration outside the breadth of this essay, this reader agrees with the major themes and their major implications.  This reader's body of personal wisdom agrees with leaf preceding the first page, which states:

"Any society that entails the strengthening of the state apparatus by giving it unchecked control over the economy, and re-unites the polity and the economy, is an historical regression.  In it there is no more future for the public, or for the freedoms it supported, than there was under feudalism" (Alvin W. Gouldner qtd. xxi).

Works Cited

Baum, Richard.  "American Government." Political science lectures. San Francisco, May 2004.

Higgs, Robert. Crisis and Leviathan: Critical Episodes in the Growth of American Government. New York: Oxford University Press, 1987.

Elwood, James R. "California Greening: The Real Cause of the New Energy Crisis".  Freedom Network News, Number 61, Jan-Mar 2001.

http://finegamedesign.com/politics/crisis_and_leviathan.htm