[This article is excerpted from Liberalism, Chapter 1]
In seeking to demonstrate the social function and necessity of private ownership of the means of production and of the concomitant inequality in the distribution of income and wealth, we are at the same time providing proof of the moral justification for private property and for the capitalist social order based upon it.
Morality consists in the regard for the necessary requirements of social existence that must be demanded of each individual member of society. A man living in isolation has no moral rules to follow. He need have no qualms about doing anything he finds it to his advantage to do, for he does not have to consider whether he is not thereby injuring others. But as a member of society, a man must take into consideration, in everything he does, not only his own immediate advantage, but also the necessity, in every action, of affirming society as such. For the life of the individual in society is possible only by virtue of social cooperation, and every individual would be most seriously harmed if the social organization of life and of production were to break down. In requiring of the individual that he should take society into consideration in all his actions, that he should forgo an action that, while advantageous to him, would be detrimental to social life, society does not demand that he sacrifice himself to the interests of others. For the sacrifice that it imposes is only a provisional one: the renunciation of an immediate and relatively minor advantage in exchange for a much greater ultimate benefit. The continued existence of society as the association of persons working in cooperation and sharing a common way of life is in the interest of every individual. Whoever gives up a momentary advantage in order to avoid imperiling the continued existence of society is sacrificing a lesser gain for a greater one.
The meaning of this regard for the general social interest has frequently been misunderstood. Its moral value was believed to consist in the fact of the sacrifice itself, in the renunciation of an immediate gratification. One refused to see that what is morally valuable is not the sacrifice, but the end served by the sacrifice, and one insisted on ascribing moral value to sacrifice, to renunciation, in and for itself alone. But sacrificing is moral only when it serves a moral end. There is a world of difference between a man who risks his life and property for a good cause and the man who sacrifices them without benefiting society in any way.
Everything that serves to preserve the social order is moral; everything that is detrimental to it is immoral. Accordingly, when we reach the conclusion that an institution is beneficial to society, one can no longer object that it is immoral. There may possibly be a difference of opinion about whether a particular institution is socially beneficial or harmful. But once it has been judged beneficial, one can no longer contend that, for some inexplicable reason, it must be condemned as immoral.
The observance of the moral law is in the ultimate interest of every individual, because everyone benefits from the preservation of social cooperation; yet it imposes on everyone a sacrifice, even though only a provisional one that is more than counterbalanced by a greater gain. To perceive this, however, requires a certain insight into the connection between things, and to conform one’s actions in accordance with this perception demands a certain strength of will. Those who lack the perception, or, having the perception, lack the necessary will power to put it to use, are not able to conform to the moral law voluntarily. The situation here is no different from that involved in the observance of the rules of hygiene that the individual ought to follow in the interest of his own well-being,. Someone may give himself over to unwholesome dissipation, such as indulgence in narcotics, whether because he does not know the consequences, or because he considers them less disadvantageous than the renunciation of the momentary pleasure, or because he lacks the requisite will power to adjust his behavior to his knowledge. There are people who consider that society is justified in resorting to coercive measures to set such a person on the right path and to correct anyone whose heedless actions imperil his own life and health. They advocate that alcoholics and drug addicts be forcibly deterred from indulging their vices and compelled to protect their good health.
The question whether compulsion really answers the purpose in such cases we shall reserve for later consideration. What concerns us here is something quite different, namely, the question whether people whose actions endanger the continued existence of society should be compelled to refrain from doing so. The alcoholic and the drug addict harm only themselves by their behavior; the person who violates the rules of morality governing man’s life in society harms not only himself, but everyone. Life in society would be quite impossible if the people who desire its continued existence and who conduct themselves accordingly had to forgo the use of force and compulsion against those who are prepared to undermine society by their behavior. A small number of antisocial individuals, i.e., persons who are not willing or able to make the temporary sacrifices that society demands of them, could make all society impossible. Without the application of compulsion and coercion against the enemies of society, there could not be any life in society.
We call the social apparatus of compulsion and coercion that induces people to abide by the rules of life in society, the state; the rules according to which the state proceeds, law; and the organs charged with the responsibility of administering the apparatus of compulsion, government.
There is, to be sure, a sect that believes that one could quite safely dispense with every form of compulsion and base society entirely on the voluntary observance of the moral code. The anarchists consider state, law, and government as superfluous institutions in a social order that would really serve the good of all, and not just the special interests of a privileged few. Only because the present social order is based on private ownership of the means of production is it necessary to resort to compulsion and coercion in its defense. If private property were abolished, then everyone, without exception, would spontaneously observe the rules demanded by social cooperation.
It has already been pointed out that this doctrine is mistaken in so far as it concerns the character of private ownership of the means of production. But even apart from this, it is altogether untenable. The anarchist, rightly enough, does not deny that every form of human cooperation in a society based on the division of labor demands the observance of some rules of conduct that are not always agreeable to the individual, since they impose on him a sacrifice, only temporary, it is true, but, for all that, at least for the moment, painful. But the anarchist is mistaken in assuming that everyone, without exception, will be willing to observe these rules voluntarily. There are dyspeptics who, though they know very well that indulgence in a certain food will, after a short time, cause them severe, even scarcely bearable pains, are nevertheless unable to forgo the enjoyment of the delectable dish. Now the interrelationships of life in society are not as easy to trace as the physiological effects of a food, nor do the consequences follow so quickly and, above all, so palpably for the evildoer. Can it, then, be assumed, without falling completely into absurdity, that, in spite of all this, every individual in an anarchist society will have greater foresight and will power than a gluttonous dyspeptic? In an anarchist society is the possibility entirely to be excluded that someone may negligently throw away a lighted match and start a fire or, in a fit of anger, jealousy, or revenge, inflict injury on his fellow man? Anarchism misunderstands the real nature of man. It would be practicable only in a world of angels and saints.
Liberalism is not anarchism, nor has it anything whatsoever to do with anarchism. The liberal understands quite clearly that without resort to compulsion, the existence of society would be endangered and that behind the rules of conduct whose observance is necessary to assure peaceful human cooperation must stand the threat of force if the whole edifice of society is not to be continually at the mercy of any one of its members. One must be in a position to compel the person who will not respect the lives, health, personal freedom, or private property of others to acquiesce in the rules of life in society. This is the function that the liberal doctrine assigns to the state: the protection of property, liberty, and peace.
The German socialist, Ferdinand Lassalle, tried to make the conception of a government limited exclusively to this sphere appear ridiculous by calling the state constituted on the basis of liberal principles the “night-watchman state.” But it is difficult to see why the night-watchman state should be any more ridiculous or worse than the state that concerns itself with the preparation of sauerkraut, with the manufacture of trouser buttons, or with the publication of newspapers. In order to understand the impression that Lassalle was seeking to create with this witticism, one must keep in mind that the Germans of his time had not yet forgotten the state of the monarchical despots, with its vast multiplicity of administrative and regulatory functions, and that they were still very much under the influence of the philosophy of Hegel, which had elevated the state to the position of a divine entity. If one looked upon the state, with Hegel, as “the self-conscious moral, substance,” as the “Universal in and for itself, the rationality of the will,” then, of course, one had to view as blasphemous any attempt to limit the function of the state to that of serving as a night watchman.
It is only thus that one can understand how it was possible for people to go so far as to reproach liberalism for its “hostility” or enmity towards the state. If I am of the opinion that it is inexpedient to assign to the government the task of operating railroads, hotels, or mines, I am not an “enemy of the state” any more than I can be called an enemy of sulfuric acid because I am of the opinion that, useful though it may be for many purposes, it is not suitable either for drinking, or for washing one’s hands.
It is incorrect to represent the attitude of liberalism toward the state by saying that it wishes to restrict the latter’s sphere of possible activity or that it abhors, in principle, all activity on the part of the state in relation to economic life. Such an interpretation is altogether out of the question. The stand that liberalism takes in regard to the problem of the function of the state is the necessary consequence of its advocacy of private ownership of the means of production. If one is in favor of the latter, one cannot, of course, also be in favor of communal ownership of the means of production, i.e., of placing them at the disposition of the government rather than of individual owners. Thus, the advocacy of private ownership of the means of production already implies a very severe circumscription of the functions assigned to the state.
The socialists are sometimes wont to reproach liberalism with a lack of consistency, It is, they maintain, illogical to restrict the activity of the state in the economic sphere exclusively to the protection of property. It is difficult to see why, if the state is not to remain completely neutral, its intervention has to be limited to protecting the rights of property owners.
This reproach would be justified only if the opposition of liberalism to all governmental activity in the economic sphere going beyond the protection of property stemmed from an aversion in principle against any activity on the part of the state. But that is by no means the case. The reason why liberalism opposes a further extension of the sphere of governmental activity is precisely that this would, in effect, abolish private ownership of the means of production. And in private property the liberal sees the principle most suitable for the organization of man’s life in society.
Liberalism is therefore far from disputing the necessity of a machinery of state, a system of law, and a government. It is a grave misunderstanding to associate it in any way with the idea of anarchism. For the liberal, the state is an absolute necessity, since the most important tasks are incumbent upon it: the protection not only of private property, but also of peace, for in the absence of the latter the full benefits of private property cannot be reaped.
These considerations alone suffice to determine the conditions that a state must fulfill in order to correspond to the liberal ideal. It must not only be able to protect private property; it must also be so constituted that the smooth and peaceful course of its development is never interrupted by civil wars, revolutions, or insurrections.
Many people are still haunted by the idea, which dates back to the preliberal era, that a certain nobility and dignity attaches to the exercise of governmental functions. Up to very recently public officials in Germany enjoyed, and indeed still enjoy even today, a prestige that has made the most highly respected career that of a civil servant. The social esteem in which a young “assessor”  or lieutenant is held far exceeds that of a businessman or an attorney grown old in honest labor. Writers, scholars, and artists whose fame and glory have spread far beyond Germany enjoy in their own homeland only the respect corresponding to the often rather modest rank they occupied in the bureaucratic hierarchy.
There is no rational basis for this overestimation of the activities carried on in the offices of the administrative authorities. It is a form of atavism, a vestige from the days when the burgher had to fear the prince and his knights because at any moment he might be spoliated by them. In itself it is no finer, nobler, or more honorable to spend one’s days in a government office filling out documents than, for example, to work in the blueprint room of a machine factory. The tax collector has no more distinguished an occupation than those who are engaged in creating wealth directly, a part of which is skimmed off in the form of taxes to defray the expenses of the apparatus of government.
This notion of the special distinction and dignity attaching to the exercise of all the functions of government is what constitutes the basis of the pseudodemocratic theory of the state. According to this doctrine, it is shameful for anyone to allow himself to be ruled by others. Its ideal is a constitution in which the whole people rules and governs. This, of course, never has been, never can be, and never will be possible, not even under the conditions prevailing in a small state. It was once thought that this ideal had been realized in the Greek city-states of antiquity and in the small cantons of the Swiss mountains. This too was a mistake. In Greece only a part of the populace, the free citizens, had any share in the government; the metics and slaves had none. In the Swiss cantons only certain matters of a purely local character were and still are settled on the constitutional principle of direct democracy; all affairs transcending these narrow territorial bounds are managed by the Federation, whose government by no means corresponds to the ideal of direct democracy.
It is not at all shameful for a man to allow himself to be ruled by others. Government and administration, the enforcement of police regulations and similar ordinances, also require specialists: professional civil servants and professional politicians. The principle of the division of labor does not stop short even of the functions of government. One cannot be an engineer and a policeman at the same time. It in no way detracts from my dignity, my well-being, or my freedom that I am not myself a policeman. It is no more undemocratic for a few people to have the responsibility of providing protection for everyone else than it is for a few people to undertake to produce shoes for everyone else. There is not the slightest reason to object to professional politicians and professional civil servants if the institutions of the state are democratic. But democracy is something, entirely different from what the romantic visionaries who prattle about direct democracy imagine.
Government by a handful of people?and the rulers are always as much in the minority as against those ruled as the producers of shoes are as against the consumers of shoes?depends on the consent of the governed, i.e., on their acceptance of the existing administration. They may see it only as the lesser evil, or as an unavoidable evil, yet they must be of the opinion that a change in the existing, situation would have no purpose. But once the majority of the governed becomes convinced that it is necessary and possible to change the form of government and to replace the old regime and the old personnel with a new regime and new personnel, the days of the former are numbered. The majority will have the power to carry out its wishes by force even against the will of the old regime. In the long run no government can maintain itself in power if it does not have public opinion behind it, i.e., if those governed are not convinced that the government is good. The force to which the government resorts in order to make refractory spirits compliant can be successfully applied only as long as the majority does not stand solidly in opposition.
There is, therefore, in every form of polity a means for making the government at least ultimately dependent on the will of the governed, viz,, civil war, revolution, insurrection. But it is just this expedient that liberalism wants to avoid. There can be no lasting economic improvement if the peaceful course of affairs is continually interrupted by internal struggles. A political situation such as existed in England at the time of the Wars of the Roses would plunge modern England in a few years into the deepest and most dreadful misery. The present level of economic development would never have been attained if no solution had been found to the problem of preventing the continual outbreak of civil wars. A fratricidal struggle like the French Revolution of 1789 cost a heavy loss in life and property. Our present economy could no longer endure such convulsions. The population of a modern metropolis would have to suffer so frightfully from a revolutionary uprising that could bar the importation of food and coal and cut off the flow of electricity, gas, and water that even the fear that such disturbances might break out would paralyze the life of the city.
Here is where the social function performed by democracy finds its point of application. Democracy is that form of political constitution which makes possible the adaptation of the government to the wishes of the governed without violent struggles. If in a democratic state the government is no longer being conducted as the majority of the population would have it, no civil war is necessary to put into office those who are willing to work to suit the majority. By means of elections and parliamentary arrangements, the change of government is executed smoothly and without friction, violence, or bloodshed.