The State by Anthony de Jasay (53 page)

That abundance is not the consequence but the enabling cause of socialism has always troubled socialist thought. It has led to much uneasy theorizing about the "transition period," classes in a classless state, the state withering away by getting stronger, etc.

Readers are no doubt aware that making explicit a doctrinal inconsistency or awkwardness, as I have occasionally been moved to do, is severely condemned by Marxists as "reductionism."

68.
Gordon Tullock, in a paper of great clarity dealing with someof these issues ("The New Theory of Corporations," in Erich Streissler et al. [eds], Roads to Freedom, Essays in Honour of F.

A.
von Hayek, 1969), cites findings to the effect that apparentmanagerial deviation from profit-maximizing behaviour is greatest in regulated utilities and mutual savings-and-loan associations which have, so to speak, no owners or where regulatory barricades shield the sitting management from the owners.

1. Cf. Peter F. Drucker, "Curbing Unfriendly Takeovers," TheWall Street Journal, 5 January, 1983. There is ample evidence of the tendency, noted with some alarm by Professor Drucker, that American corporate management is increasingly motivated by fear of the bidder. It is thus driven to instant profit maximizing behaviour, living from one quarterly earnings report to the next and having no time for the long view.
   
 

2. This is a far cry from the contention that "owners want profit, managers growth," or "peer approval," or some other, discretionally chosen "managerial" maximand. In fact, the contrary contention is, if anything, closer the mark. Only owner-managers can afford to choose idiosyncratic ends. No hired chief executive could have ruled, as Henry Ford is supposed to have done, that "customers can have any colour car as long as it is black."
   
 

1. Norbert Elias, The Civilizing Process, vol. II, State Formationand Civilization, 1982, pp. 104-16.
   
 

2. K. Marx, Capital, 1959, vol. 1, p. 152.
   
 

3. If the inputs of all butter-making and gun-making effortsdepended on the output of butter alone, there would be (at least) one ideal allocation of the labour force between the dairy and the armaments industries (which, incidentally, would have to start way back with the training of young people to be dairymaids and
   

gunsmiths), ensuring the maximum output of guns. Putting too many people in the armaments industry would reduce the outputs of both butter and guns.

However, gun production is only one of the ends entering into the maximand of the totalitarian state; some of its other ends may conflict with giving people the amount of butter they want, particularly if eating butter makes them more rebellious, or raises their cholesterol level and hence the costs of health care. Beyond these pragmatic considerations, the state may feel that indulging people is bad, and it is not for them to say how much butter they should have.

1. It could be argued that managers of private capitalistenterprises are also serving two masters, the owner and the customer. However, those who are very successful at serving the latter do not, by their success, endanger the tenure of the former. Managers are not the owners' rivals.
   
 

2. The case of Hungary which despite occasional backtrackinghas, since the late 1960s, gone quite a way towards decentralized profit maximization, meaningful prices and even the toleration of an undergrowth of private enterprise, is paradoxically enough a possible confirmation of this thesis. If the country is living proof that "market socialism works," it is so by virtue of the trauma of the 1956 rising, suppressed by Russia, which has created a tacit understanding between the regime and its subjects. After its reinstatement by Soviet armour, the Hungarian state had the intelligence to grasp that its security of tenure is assured by geography and need not be doubly assured by the belt-and-braces of a social system where everybody's livelihood is precarious. Civil society, having learnt its lesson, is treating politics with a shrug. Thus, although more and more managers of enterprises and spurious cooperatives, professional people, small businessmen
   

and peasants are building independent livelihoods, there is no parallel rise in demands for political participation and self-government.

In these rare and propitious circumstances, the Hungarian state can safely afford to concede as much economic freedom as it can get past its neighbours and especially, of course, Moscow. The one real constraint is Russian devotion to a number of socialist principles and the mounting irritation of Russian visitors at seeing their conquered colony wallowing in superior standards of life.

Moscow, which has no larger neighbour's friendly tanks to invite in and "normalize" matters should the leading role of the party be challenged by self-confident technocrats, fat peasants, perpetual postgraduates and all the other independents who proliferate without control when the vestiges of decentralized economic power begin to reappear, would no doubt be rash to listen to all the expert advocacy of "economic reforms." It has more at stake than the greater efficiency of a self-regulating economy.

On the other hand, it is less clear why Czechoslovakia, whose peoples received in 1968 an albeit bloodless but no doubt nearly as effective lesson in political geography as did the Hungarians in 1956, refuses to let in the invisible hand to wake up the economy from its comatose sleep. It must be supposed that the national propensity to stay on the safe side, is attracted by the double security of dependent subjects and fraternal aid.

75. "Merit goods" are considered by the state good for people. IfA is a merit good, its supply is to be arranged in such a way that no one should be able to increase his consumption of any non-merit good B by reducing his consumption of A. It must not be possible, for instance, to swap school milk for lollipops, nor for
beer for the child's father. This is achieved when school milk is on tap, with every child drinking as much as he wants.

When beef cattle are fed from self-filling feed bins, they are believed to eat just enough. Likewise, when merit goods are on tap, the presumption is that people will consume just what they need. With some important merit goods, this leads to ambiguous outcomes. Free health care and free university education are notorious cases in point. Because of emulation, jealousy or other reasons, the consumption of these goods tends to get out of hand and seems almost impossible to stabilize, let alone to reduce.

76.
Robert William Fogel and Stanley L. Engerman, Time on theCross: The Economics of American Negro Slavery, 1974, vol. 1,

p.
202.

End of Notes to Chapters 4-5.