The State of the State
The Global Contest for the Future of Government
John Micklethwait and Adrian Wooldridge
JOHN MICKLETHWAIT is Editor in Chief of The Economist. ADRIAN WOOLDRIDGE is Management Editor ofThe Economist and writes the magazine’s “Schumpeter” column. They are the authors of The Fourth Revolution: The Global Race to Reinvent the State [1] (Penguin Press, 2014), from which this essay is adapted. Copyright © 2014 by John Micklethwait and Adrian Wooldridge. Reprinted by arrangement with the Penguin Press.
The state is the most precious of human possessions,” the economist Alfred Marshall remarked in 1919, toward the end of his life, “and no care can be too great to be spent on enabling it to do its work in the best way.” For Marshall, one of the founders of modern economics and a mentor to John Maynard Keynes, this truth was self-evident. Marshall believed that the best way to solve the central paradox of capitalism -- the existence of poverty among plenty -- was to improve the quality of the state. And the best way to improve the quality of the state was to produce the best ideas. That is why Marshall read political theorists as well as economists, John Locke as well as Adam Smith, confident that studying politics might lead not only to a fuller understanding of the state but also to practical steps to improve governance.
In today’s established and emerging democracies, few people seem to share Marshall’s sentiment and regard government as precious. Fewer still care about the theory behind it. Many instead see government as the root of many of the problems that plague their societies and express their contempt in protest movements and elections that sometimes seem more antigovernment than pro-reform. In Brazil and Turkey in recent years, huge numbers of protesters have marched in the streets against the corruption and incompetence of their rulers. In Italy, since 2011, three prime ministers have found themselves defenestrated, and in last year’s national elections, voters awarded the largest share of votes to a party led by a former comedian. In May’s elections for the European Parliament, millions of British, Dutch, and French voters, frustrated with their countries’ political elites, chose to support right-wing nationalist parties -- just as legions of Indian voters turned to Narendra Modi during elections this past spring. In November, Americans will trudge to the polls more full of anger than hope.
Much of this dissatisfaction is rooted in a despairing belief that when it comes to government, nothing is going to change. This cynicism has become commonplace -- and yet it is actually rather odd. It assumes that the public sector will remain immune from the technological advances and forces of globalization that have ripped apart the private sector. It also ignores the lessons of history: government -- and particularly Western government -- has changed dramatically over the past few centuries, usually because committed people possessed by big ideas have worked hard to change it.
It’s not only ordinary citizens in the democratic world who have lost sight of the fact that government can, in fact, change: their leaders have, as well. Somewhat ironically, these days it’s China’s authoritarian rulers, and not their Western counterparts, who are more likely to understand Marshall’s insights into the preciousness and malleability of the state. Chinese leaders study the great Western political theorists -- Alexis de Tocqueville is a particular favorite -- and their bureaucrats scour the world for the best ideas about governance. The Chinese, it seems, realize that government is the reason why the West has been so successful. Until the sixteenth century, China represented the most advanced civilization in the world; after that, the West pulled ahead, thanks in part to three (and a half) revolutions in government that leveraged the power of technology and the force of ideas. Now, a fourth revolution has begun, but it isn’t yet clear which countries will shape it and whether they will draw mostly from the ascendant tradition of Western liberal democracy or from newer forms of authoritarian rule that have emerged in recent decades.
YOU'RE GONNA NEED A BIGGER STATE
Providing a comprehensive account of the political development of Europe and North America would be a monumental undertaking: the historian Samuel Finer died before finishing his attempt, and the book he left behind,The History of Government From the Earliest Times, still runs to 1,701 pages. That said, one can briefly sketch out the three major developments that give the story its basic shape: the appearance of nation-states in the sixteenth and seventeenth centuries, which brought internal order and external competition to Europe; the liberal revolution of the late eighteenth and nineteenth centuries, which replaced patronage systems with meritocratic and often much smaller government; and the Fabian revolution in the early twentieth century, which created the modern welfare state. The return of market-oriented governance, embodied by British Prime Minister Margaret Thatcher and U.S. President Ronald Reagan, represents a smaller but equally significant shift -- something like a half revolution. Each one of these revolutions tried to answer a basic question: What is the state for? And the best way to understand each revolution is to examine the answers to that question formulated by four thinkers: Thomas Hobbes, John Stuart Mill, Beatrice Webb, and Milton Friedman.
Hobbes, the founder of modern political theory and the author of Leviathan, was born in England in 1588. At the time, Europe was a blood-drenched backwater. The world’s most powerful and advanced countries were all in Asia. Imperial China was then about the same size as Europe but was unified by a vast system of canals that connected its great rivers to various population centers. Its government was similarly constructed: a country that was at least as geographically diverse as Europe was ruled by a single person, the emperor. At a time when only three European cities -- London, Paris, and Naples -- could boast 300,000 inhabitants, Beijing’s imperial quarter alone housed that many people, including many of the mandarins who helped the emperor rule his vast kingdom. These civil servants represented the best that China could produce, and they were regularly selected through open examinations.
For Hobbes, as for most Europeans, life was far less orderly. Hobbes was born prematurely, supposedly because his mother was terrified by the combination of a violent storm and a rumor that the Spanish Armada had landed on English shores. (“Fear and I were born twins together,” he wrote in his autobiography.) Hobbes grew up in a time of religious conflict, rebellions, and political plots. The dominant event of his life, the civil war between Charles I and his Puritan foes in Parliament (1642–51), claimed the lives of a larger proportion of the British population than would World War I.
In Leviathan, published in 1651, Hobbes deconstructed society into its component parts in much the same way that a mechanic might deconstruct a car in order to discover how it works. He did this by asking what life would be like in the “state of nature.” The answer was not encouraging: men, he argued, were constantly trying to get the better of one another, trapped in a “war of every man against every man.” The only way to escape from perpetual conflict and the prospect of a “nasty, brutish, and short” life was for one to give up his natural rights to do as he pleased and construct an artificial sovereign: namely, a state. The state’s function was to wield power: its legitimacy lay in its effectiveness, its opinions defined the truth, and its orders represented justice.
It is not hard to see why Europe’s monarchs welcomed that idea. But Leviathan also featured a subversive dash of liberalism. Hobbes was the first political theorist to base his argument on the principle of a social contract. He had no time for the divine right of kings or dynastic succession: his Leviathan could take the form of a parliament, and its essence lay in the nation-state rather than in family-owned territories. The central actors in Hobbes’ world were rational individuals trying to balance their desire for self-promotion and their fear of self-destruction. They gave up some rights in order to secure the more important goal of self-preservation. The state was ultimately made for (and of) the subjects, rather than the subjects for the state: the original frontispiece of Leviathan shows a mighty king constructed out of thousands of tiny men.
This mixture of firm control with a touch of liberalism helps explain why Europe’s nation-states surged ahead. Beginning in the sixteenth century, across the continent, monarchs established monopolies of power within their own borders, progressively subordinating rival centers of authority, including the princes of the church. Kings promoted powerful bureaucrats, such as Cardinal Richelieu in France and the Count-Duke of Olivares in Spain, who expanded the reach of the central government and built efficient tax-gathering machines. This shift allowed Europe to escape from the problem that had doomed Indian civilization to impotence: a state that was so weak that society constantly dissolved into petty principalities that inevitably fell prey to more powerful invaders. Yet Europe also avoided the problem that had plagued the Chinese state: too much centralized control over too vast a region. Even Europe’s most imposing monarchs were far less powerful than the Chinese emperor, whose enormous bureaucracy faced no opposition from China’s landed aristocracy or its urban middle classes and thus fell prey to self-satisfied decadence.
The birth of the modern state was reinforced in Europe by technological and economic advances. The Industrial Revolution gathered people into massive cities and accelerated the speed of communication. The emergence of railroads transformed not only transportation but also governance: in earlier eras, it had made sense for royal authorities to delegate power over the countryside to the nobility and the gentry. But now that any place was just a short ride away, it made more sense to concentrate power in the hands of an efficient central bureaucracy.
THE NIGHT-WATCHMAN STATE
The centralization of the modern state paved the way for the liberal revolution of the late eighteenth and nineteenth centuries. The transformation began with the American and French revolutions in the late eighteenth century and eventually spread across Europe, as reformers replaced regal patronage systems with more meritocratic and accountable governments. But the political shift that seems most pertinent today occurred more peacefully, in the United Kingdom during the nineteenth century. British liberals took a decrepit old system and reformed it, establishing a professional civil service, attacking cronyism, opening up markets, and restricting the state’s right to subvert liberty. The British state shrunk in size even as it dealt with the problems of a fast-industrializing society and a rapidly expanding global empire. Gross income from all forms of taxation fell from just under 80 million pounds in 1816 to well under 60 million pounds in 1846, despite a nearly 50 percent increase in the size of the population. The vast network of patronage appointees who made up the unreformed state was rolled up and replaced by a much smaller cadre of carefully selected civil servants. The British Empire built a “night-watchman state,” as it was termed by the German socialist Ferdinand Lasalle, which was both smaller and more competent than its rivals across the English Channel.
The thinker who best articulated these changes was John Stuart Mill, who strove to place freedom, rather than security, at the heart of governance. He belonged to a very different England than the one Hobbes inhabited, one shaped more by reform and optimism than by dysfunction and fear. Mill had no experience of civil war, and the only revolution he witnessed was the peaceful transfer of power from a narrow landed aristocracy to a much broader educated elite. Thus, Mill’s central political concern was not how to create order out of chaos but how to ensure that the beneficiaries of order could achieve self-fulfillment. For Mill, the test of a state’s virtue was the degree to which it allowed each person to fully develop his or her abilities. And the surest mechanism for doing this was for government to get out of the way. In On Liberty, published in 1859, he argued that the only justification for state interference was to prevent people from doing harm to others. For Mill, freedom marched hand in hand with efficiency: the more open trade was, the more prosperous a country would become, and the less money the state would need to confiscate from private citizens. He also believed in the open competition of ideas, trusting that the unfettered clash of opinions would reduce error, persuade people to take a more active role in society, and provide citizens with moral training.
For most of the nineteenth century, the British state did a remarkably good job of embodying Mill’s principles. A succession of British governments dismantled old systems of privilege and patronage and replaced them with a capitalist state. Government, the Victorians believed, should solve problems rather than simply collect rents. They built railways, paved roads, and furnished cities with sewage systems and policemen, known as “bobbies,” after their inventor, Sir Robert Peel.
Throughout the nineteenth century, this kind of lean-government liberalism spread throughout Europe and across the Atlantic to the United States. Yet its moment did not last long. Mill himself typified the change. The older he grew, the more troubled he became by some profound questions, mainly to do with the persistence of poverty among plenty. How could a society judge each individual on his or her own merits when rich dunces enjoyed the best educations and poor geniuses left school as children to work as chimney sweeps? How could individuals achieve their full potential unless society played a role in providing them with a fair start? The state, he came to feel, had to do more. By its third edition, Mill’s Principles of Political Economy, the bible of British liberalism, had begun to look ever more collectivist.
Mill was not alone: the late Victorians (and their imitators around the world) increasingly questioned the laissez-faire certainties of their predecessors, on two grounds. First, the night-watchman state stigmatized the poor: they were deprived of the vote and consigned to workhouses in order to discourage idleness and provide incentives to work and save. In his 1854 novel, Hard Times, Charles Dickens turned “utilitarianism,” the term most commonly attached to Mill’s thought, into a byword for heartless calculation. Second, British critics of liberalism argued that the only way to outcompete other nations, especially Prussia, was to expand the state. Confronted with Prussia’s world-class public educational system and effective tariffs, the British elite fretted about the naivety of free trade and the quality of their country’s breeding stock. In 1917, Prime Minister David Lloyd George worried aloud that the United Kingdom could not run “an A1 empire” with “a C3 population.”
During the first decades of the twentieth century, as the cities and factories of the West expanded, collectivism, compassion, and nationalism fused together into a call for a more potent Leviathan. If Henry Ford could invent a huge mechanistic assembly line for business, surely it was possible to do the same for government: to apply scientific management to the business of running the state and training its citizens. The collectivist dream of a new society also became a technocratic dream of a new state bent on national efficiency and global competition.
