24 Lester Ward: Why Government Regulation is Beneficial

 To judge from the tone of the popular press, the country would seem to be between the devil of state interference and the deep sea of gold. The two epithets “plutocracy” and “paternalism,” so freely applied, are intended to characterize the worst tendencies of the times in these two opposite directions, and are calculated to engender the bitterest feelings in the public mind. If such a thing were possible, it would certainly be useful, standing aloof from the contest, to make a cool, unbiased analysis of the true meaning of these terms in their relation to the existing state of affairs….

Justly or unjustly, society has made wealth a measure of work. It is easy on general principles to prove that it is not such a measure. Everyone is personally cognizant to cases to the contrary. All will admit that, taken in the abstract, the principle is unsound, and yet all act upon it. Not rationally, not perhaps consciously, but still they do it. It is “human nature” to respect those who have, and to care little for those who have not. There is a sort of feeling that if one is destitute there must be a reason for it. It is inevitably ascribed to some personal deficit. In a word, absence of means is, in one form or another, made to stand for absence of merit. Its cause is looked for in character. This is most clearly seen in the marked contrast between the indisposition to help the unsuccessful, and the willingness to help the successful. Aside from the prospect of a quid pro quo, no one wants to waste time, energy, or money on what is worthless—and possession is the primary test of worth….

Thus it comes about that wealth, in the existing state of society, is a tremendous power. It gives not only ease, plenty, luxury, but, what is infinitely more, the respect of all and the envy of the less favored. It gives, in a word, superiority; and the strongest craving of a man’s nature is, in one way or another, to be set over his fellows. When all this is considered, the futility of the proposal if certain reformers to eradicate the passion for proprietary acquisition becomes apparent. It may be assumed that this passion will continue for an indefinite period to be the ruling element of the industrial state. That is has done and is still doing incalculable service to society few will deny. That is may continue to be useful to the end of our present industrial era will probably be admitted by all but a small class….

So much for plutocracy. Let us now turn to the other pole of public opinion and inquire into the meaning of “paternalism.” Literally, of course, paternalism in government would be restricted to cases in which the governing power is vested in a single person, who may be regarded as well-disposed and seeking to rule his subjects for their own good, as a father governs his children. But a ruling family, or even a large ruling class, may be supposed to govern from similar motives. In either case the governed are not supposed to have any voice in the matter, but are cared for like children by the assumed wisdom of their rulers. How far from true paternalism is anything that exists in this or any other civilized country today may therefore be readily seen. No one will claim that there is any danger, in a representative government with universal suffrage, of any such state being brought about. This shows at the outset that the term is not used in its original and correct sense, but is merely borrowed and applied as a stigma to certain tendencies in republican governments which the users of it do not approve. What are these tendencies? In general it may be said that they are tendencies toward the assumption by the state of functions that are now entrusted to private enterprise.

One the one hand, it is logically argued that the indefinite extension of such powers would eventuate in the most extreme socialistic system—the conduct of all business by the state. On the other hand it is shown with equal logic that the entire relinquishment of the functions which the state has already assumed would be the abolition of the state itself. The extremists of one party would land us in socialism; those of the other, in anarchy. But on one side it is said by the more moderate that the true function of government is the protection of society, to which it is replied by the other that such extension of governmental powers is in the interest of production, viz., protection against the undue rapacity of private enterprise. Here, as almost everywhere else in the realm of politics, it is a question of quantity and not of quality. It is not a difference in principle, but in policy. It is the degree to which the fundamental principle of all government is to be carried out….

The first law of economics is that everyone may be depended upon at all times to seek his greatest gain. It is both natural and right that the individual should be ever seeking to acquire for himself and his; and this rather irrespective of the rest of the world. It was so in the olden time, when physical strength was almost the only force.  It is so today, when business shrewdness is practically supreme. Government was instituted to protect the weak from the strong in this universal struggle to possess; or, what is the same thing, to protect society at large. Originally it was occupied solely with abuses caused by brute force. It is still, so far as this primary function of enforcing justice is concerned … but any advantage gained by cunning, by superior knowledge—if it be only technicalities of the law—is not a crime, though its spirit be as bad as that of highway robbery and its consequences a thousand times worse.

From this point of view, then, modern society is suffering from the very opposite of paternalism, from under-government, from the failure of government to keep pace with the change which civilization has wrought in substituting intellectual for physical qualities as the workers of injustice. Government today is powerless to perform its primary and original function of protecting society. There was a time when brigandage stalked abroad throughout Europe and no one was safe in life or property…. Plutocracy is the modern brigandage and can be dislodged only by the same power, the power of the state. All the evils of society are the result of the free flow of natural propensities. The purpose of government is, as far as may be, to prevent this from causing injustice. The physical passions of men are natural and healthy, but they cannot be allowed to go unbridled…. The true function of government is not to fetter but to liberate the forces of society, not to diminish but to increase their effectiveness. Unbridled competition destroys itself. The only competition that endures is that which goes on under judicious regulation.

If, then, the danger of plutocracy is so largely due to insufficient government, where is the tendency to paternalism in the sense of too much government? This opens up the last and most important aspect of the subject. If there were no influences at work in society but those of unaided nature; if we had a pure physiocracy or government of nature, such as prevails among wild animals, and the weak were thereby sacrificed that the strong might survive to beget the strong, and thus elevate the race along the lines of evolution—however great this hardship, we might resign ourselves to it as part of the great cosmic scheme. But … in the actual state of society it is not even those who, from this biological point of view, are the fittest, that become in fact the recipients of the greatest favors at the hands of society. That is due to the creation, by society itself, of artificial conditions that destroy the balance of forces and completely nullify all the beneficial effects that are secured by the operation of the natural law on the lower plane….

What, in the last analysis, are these social conditions? They are at bottom integral parts of government. They are embodied in law. Largely they consist of statute law. Where this is wanting they rest on judicial decisions, often immemorial, and belonging to the lex non scripta. In a word, they constitute the great system of jurisprudence relating to property and business, gradually built up through the ages to make men secure in their possessions and safe in their business transactions, but which in our day, owing to entirely changed industrial conditions, had become the means of throwing unlimited opportunities in the way of some and of barring out all the rest from all opportunities…. It legalizes and promotes trusts and combinations; subsidizes corporations, and then absolves them from their obligations; sustains stock-watering schemes and all forms of speculation; grants without compensation the most valuable franchise, often in perpetuity….

One of the greatest needs of an industrious people is a safe and profitable investment of their surplus earnings. In the existing condition of things they are driven into the stock market. In a few rare cases the stocks taken prove good. In still rarer cases—such as the first telephone shares—they become enormously productive. But in the great majority of cases they first fluctuate and finally fall below par, often to mere nominal value.  There seems to be nothing to prevent the directors of these concerns from manipulating the shares so as first to enrich themselves and then to leave the business a wreck…. If the state cannot really require a safe guarantee to investors, or prohibit such insecure organizations, it can at least offer, in the form of national savings banks, an opportunity for prudent people to make a safe disposition of their surplus funds; and this has been done in nearly every country except the United States….

The very possession of wealth is only made possible by government. The safe conduct of all business depends upon the certain protection of law. The most powerful business combinations take place under legal forms. Even dishonest and swindling schemes, so long as they violate no penal statute, are protected by law. Speculation in the necessaries of life is legitimate business, and is upheld by the officers of the law though it result in famine….

And now, mark: The charge of paternalism is chiefly made by the class that enjoys the largest share of government protection. Those who denounce state interference are the ones who most frequently and successfully invoke it. The cry of laissez faire mainly goes up from the ones who, if really “let alone,” would instantly lose their wealth-absorbing power….

Nothing is more obvious today than the signal inability of capital and private enterprise to take care of themselves unaided by the state; and while they are incessantly denouncing “paternalism”—by which they mean the claim of the defenseless laborer and artisan to a share in this lavish state protection—they are all the while besieging legislatures for relief from their own incompetency, and “pleading the baby act” through a trained body of lawyers and lobbyists. The dispensing of national pap to this class should rather be called “maternalism,” to which a square, open and dignified paternalism would be infinitely preferable….

The degree to which the citizen is protected in the secure enjoyment of his possessions is a fair measure of the state of civilization, but this protection must apply as rigidly to the poor man’s possessions as to those of the rich man, In the present system the latter is not only encouraged, but actually tempted to exploit the former…. [T]he time has arrived when a part at least of this paternal solicitude on the part of government should be diverted from the monopolistic element and bestowed upon the general public. If we must have paternalism, there should be no partiality shown in the family.