How Welfare States Make Us Less Civilized

Authored by Per Bylund via The Mises Institute,

Throughout history, the state has justified itself on the grounds that it is necessary to protect us from others whose habits and beliefs — we are meant to believe — are dangerous. For millennia, this fiction was easy to maintain because most people interacted so little with people outside their nearly autarkic — and therefore impoverished — communities. 

But, with the rise of industrialization and international trade in recent centuries, the state's claim that it is necessary to keep us “safe” from outsiders has become increasingly undermined. 

Much of this is thanks to the fact that in order to benefit from the market, one must engage in activities designed to serve others and anticipate their needs. As a result, trade increases our understanding for both members of our community and even the stranger; it also makes us realize that other people are much like us. Even if they speak strange languages or have odd customs and traditions.

The Market Order and Civilization

This is in essence Say’s Law, or the Law of Markets, which states that in the market we produce in order to trade with others so that we can thereby, indirectly, satisfy our own wants: our demand for goods in the market is constituted by our supply of goods to it. In order to effectively satisfy other people’s wants we need to not only communicate with them, but understand them. If we don’t, then we’re wasting our productive efforts for a random result. Obviously, we’d benefit personally from learning what other people want, both their present wants and anticipated future wants, and then produce it for them.

So far so good. Most people (except for Keynesians) grasp this very simple point about the market — and how it contributes to civilization and peaceful interaction. But all people aren’t saints, so good, hard-working people risk being taken advantage of as they have nothing to set against such actions. Without a central power such as the state, who will protect us from such people?

Answer: the web of voluntary transactions aligns people’s interests. In the market, “bad people” are not only defrauding, stealing from, or robbing a single person or family. They are, in effect, attacking the community of interdependent producers and network of traders.

Imagine a town with a baker who specializes in baking bread that people in the town like, but that he doesn’t necessarily fancy himself. Instead, he sells the bread in order to earn money that he uses to buy from others what he truly wants. Others similarly specialize their production to produce what others want, including the baker, so that they can use part of their income to buy bread. When a thief steals from this baker, he negatively affects the town’s bread supply — and thereby also makes the baker unable to effectively demand goods from others. This affects a lot of people, not only the baker: it affects all people who wanted to but now can’t buy bread and all those who expected to but no longer can sell their goods to the baker.

The network of exchanges and the specialized production for others thus creates a community of interdependent producers whose interests are generally aligned: they have all increased their productive effort by supplying a single good that is in high demand, and thereby made everybody better off. But it also means it is in their own interest that no one is unjustly treated and disadvantaged, whether the victim of a “bad person” is an existing or potential supplier of goods they desire or existing or potential customer of the goods they produce.

They all benefit from this order, since their productive efforts are used where they do most good. But they are also all in it together — they are all affected if things go wrong. It is not strange, then, to see how towns used to spontaneously organize to deal with crime. Robbing the baker involves not only a robber and his victim: an attack on one is an attack on the community. The robber has by his very actions chosen to not partake in community — to be an outcast.

Effect of the Welfare State

What’s happened over the course of the last century with the rise of the democratic welfare state is that these market-based bonds between people within a community have been severed. With the growing state, more and more people have found positions in the economy and society where they do not need to serve others. In other words, the state has made it possible to live off what other people produce rather than contribute to satisfying everybody’s wants.

As these bonds between people are severed, the threshold to engage in criminal behavior becomes lower. But more importantly, as people do not need to rely on their ability to satisfy the wants of others, they don’t understand other people: they have no incentive to learn about their needs and wants, and they have nothing to gain personally from satisfying them. In other words, there is no interdependence and therefore less of a reason to stay away from destructive behavior.

This is exactly what we’ve seen over the course of the past century when the very large state has replaced civil society with centralized systems and market with power. The problem is that when people stop learning about each other, it is easier to resort to conflict rather than cooperation — and it is much easier to see other people as obstructions to your own happiness. Getting rid of them thus increases your share of the (now diminishing) pie, and using and exploiting others for your own benefit appears a means toward satisfaction of one’s own wants.

We increasingly see examples of this type of thinking among entrepreneurs and those who want to be entrepreneurs. They start businesses not as a means to make a living — that is, to indirectly benefit themselves according to the Law of Markets — but in order to do “what they like.” It’s a lifestyle choice that many seem to think they have a “right” to make. Even worse, sometimes they even blame their entrepreneurial failure on “society” for not being supportive enough and not appreciating what they’re offering at the price they’re demanding.

This is exactly backward: to be able to do what you like for a living is a privilege that you can enjoy only if you, by doing so, satisfy others. If you create value for others, you gain value for yourself.

In this type of society where the bonds between people are weakening, it is not strange that people find the idea of a decentralized, spontaneous order outrageously naïve. Competition is here not the sound striving to better serve others by trying different and differentiated ways of satisfying wants, but rather a zero-sum game where there are winners and losers. In this situation, whoever is willing to cut corners, lie, and deceive is immediately better off. The incentives, in other words, are for destroying value and to prioritize short-term gains even if they come at high long-term costs — because those costs may be another’s burden. It’s the very opposite of civilization and an existence that will, if left unchecked and unchanged, eventually degenerate into a Lord of the Flies-type tribalism.

It is not strange that people have a hard time understanding the harmony argument for markets in a time when the state has alienated them from productive interdependence as explained by Say’s Law. The market’s informal, spontaneous cooperation for mutual benefit has been replaced by a statist mindset, which seeks guarantees — and finds it only in formal power.

But it should be obvious from the discussion above that this is not in any sense a guarantee — especially against bad behavior. It is the opposite. Yet it should be recognized that the market also offers no guarantee, strictly speaking. But do we need one when people’s interests are aligned? All we need to trust is that people do what is good for themselves. That’s hardly naïve.



Creepy_Azz_Crackaah (not verified) Thu, 08/17/2017 - 17:18 Permalink

I know this will go against a minority of ZHers but productive work (yes, even if you "make somebody else rich") does bring happiness.

Sitting on your azz yelling for FREE $HIT just spirals you down the drain.

LawsofPhysics Creepy_Azz_Crackaah (not verified) Thu, 08/17/2017 - 17:23 Permalink

Remind me, how much value do bankers and financiers add?  Especially since the have/had access to billions of dollars for FREE (ZIRP/NIRP) money RISK FREE (thanks to bailouts) and without any COLLATERAL requirement?I think you better define "productive" motherfucker.How did their MBS "product" work out for us again?Yeah, go fuck yourself.Roll the motherfucking guillotines, NOTHING changes otherwise.

In reply to by Creepy_Azz_Crackaah (not verified)

Give us Stirli… LawsofPhysics Fri, 08/18/2017 - 11:09 Permalink

Wow, why all the downvotes. Do people here not understand that what is happenning to us is moreso a financial issue than a cultural one. Welfare by itself is fine, its when you tell black women that if they divorce and leave their husbands they will get MORE welfare benefits. Our FED and central banks are paying people to make BAD decisions and then these idiots keep living bad lifestyles because somebody is rewarding them. It's not about the welfare itself, its about what behaviors are being incentivised. Turn off the free money spigot from the FED so we can stop giving money to unproductive members of society.

In reply to by LawsofPhysics

Anteater Creepy_Azz_Crackaah (not verified) Thu, 08/17/2017 - 17:28 Permalink

Remember, in America, TBTF Banksters are the 'Makers',and you and me and our working families are the 'Takers'.Oh, and if you didn't catch it, now the TBTF are claimingthat 'The Chosen settled the Wild West!' Yes, I rememberOld Heimy Rothstein at the Battle of the Alamo, ha, ha.And that's what the Chosen will do. They will rewrite USAhistory, then indoctrinate your children in voucher schools.Then your children will believe that you are another Taker,and slam your lazy ass into some MIC 'hospice' warehouse,where the Makers will take every red cent you ever earned.WINNING!!

In reply to by Creepy_Azz_Crackaah (not verified)

Anteater Thu, 08/17/2017 - 17:21 Permalink

What an absolute load of horse crap.Saddam provided free medical and free education, with subsidized food and fuel.Iraq was a free state. Saddam was King of Arab States.Ghaddafi provided free medical and free education, with subsidized food and fuel.Libya was a free state. Gaddafi was King of North Africa.Let the bmobing begin!!!Now both those nations are failed Corporate:Central Bank Socialist states, like USA.There are still free states which share resource royalties with their citizens.Or, you can live in USA, where Mil.Gov loots and plunders your life savings.WINNING!!

The Cooler King (not verified) Anteater Thu, 08/17/2017 - 17:25 Permalink

@Anteater Neither of those had a Rothschild CENTRAL BANK. No doubt that EACH (Iraq & Libya) is on the path to prosperity now (that their former stacks of gold bars are now buried in a vault under Rothschild Blvd in TEL AVIV).

In reply to by Anteater

Give us Stirli… Crazy Or Not Fri, 08/18/2017 - 10:56 Permalink

We can have it all. Just stop letting the FED and CB's print infinite amounts of fake money forcing everyone to make bad decisions. Let the interest rate be determined by the actual market of people looking to borrow money. So long as interest rates are kept low its always better to borrow from them than another person, cause nobody will loan money out at zero interest.

In reply to by Crazy Or Not

The Cooler King (not verified) Thu, 08/17/2017 - 17:20 Permalink

Welfare State = Bolshevik Russia I know! If it doesn't work, just double the dose & try it again!

darkstar7646 Thu, 08/17/2017 - 17:24 Permalink

Then, to the author, you have no right to exist unless at the pleasure of others.So your solution is to eliminate the welfare state by killing all on it.

GRDguy Thu, 08/17/2017 - 17:27 Permalink

" whoever is willing to cut corners, lie, and deceive is immediately better off. "That's just another way of sayin' that lyin' stealin' and killin' are the only efforts truly rewarded in the major corporations.

HRH Feant2 (not verified) Thu, 08/17/2017 - 17:56 Permalink

I blame LBJ for the generational welfare shitshow he created. We pay women to not get married and to have more bastard children. Who the fuck back in 1960 thought this was going to work? Incentivize not getting married? Niggers in da hood have turned this into a lifestyle choice. One that the taxpayer funds. No. No more, cut them off!

When you feed vermin the only thing that happens is you end with an infestation and, eventually, have to hire a professional vermin killer to clean up the mess.

AurorusBorealus Thu, 08/17/2017 - 17:38 Permalink

There have been poor laws, such as Welfare, since the beginning of human civilzation.  Moses instructed the Jews, for example, to leave a portion of their harvest in the fields for the poor.  Egypt's granaries were opened to the people of ancient Egypt during times of famine.  Every manner of king and prince issued largesse to his poorest subjects, even those terrible tzars of Russia.The market is not going to solve every problem in the world.  The goal of individuals in a market is to achieve monopoly, thereby destroying the "market."  And most "markets," given time, results in the formation of monopolies, or at least oligopolies that "conspire in restraint of trade."  What solution does the Austrian school and libertarians propose for this problem?  Moreover, laissez-faire economics are not compatible with nation-states. Why?  Because capital will constantly seek to move the means of production (to use a Marxist phrase) to low-cost labor markets.  They will seek to exploit labor and will strip a nation of its productive capacity in their rapacious efforts to find cheaper labor.  This is precisely what has happened to the U.S. in recent years. This results (as Marx observed) in over-production.  The workers do not make enough money to purchase the products that they produce.  The result is an economic crash: factories shut down, workers laid off.  The solution to these problems in the modern world have been to grossly overvalue the U.S dollar, extend credit to everyone with a pulse, and create a massive debt bubble to continue consumption in an age when most industry has off-shored to China in order to exploit cheap labor.  This situation, as ZH has pointed out time and again, is not sustainable for the long term.Welfare is a modern "poor law" to offset the effects of low employment and low wages.  Welfare is not so much the problem as the way in which it is administered in most modern societies.  It is largely a subsidy to single mothers and has the effect of encouraging women to have promiscuous sex and have more children than they can support. Women get pregnant to increase their welfare check in many countries.   In its current form in most countries, Welfare causes a general debasement in the structure of the family and a general debasement of public morality, because children grow up unsupervised, without discipline, without the basic structures of morality, and without appreciating that productive labor is a virtue.What is needed is not an end to all poor laws.  These types of proposals are dogmatic, wrong-headed, and based on a theory as utopian as any Marxist fantasy.  What is needed is a restructuring of the poor laws so that they do not produce incentives to have more children than can be supported, encourage people to form stable families, and encourage people to return to the labor force as quickly as possible.

Batman11 Thu, 08/17/2017 - 17:38 Permalink

Small state, unregulated capitalism was what we had in the 19th century when employers maximised profits by housing workers in slums and getting men, women and children to work every hour god sent.The rich were very rich and the poor were very poor.This is what it’s like, this is where it started. 

BetterRalph Thu, 08/17/2017 - 17:49 Permalink

On the other end, MAKING WELFARE people in the first place.

The artificial drought California water restrictions (on paper by city council), Good luck producing produce, they're making it tough, I can understand when there is a real drought, but this is about control and water meters and profit. Ask an Engineer, these water meters are not needed in the SYSTEM. They are tearing up the streets for NOTHING

FrankHerbert Thu, 08/17/2017 - 18:44 Permalink

a welfare state encourages the worst, enabling non-producers to sit idly by consuming resources that must be produced by others and stolen from them by the force of government. anyone who could advocate that kind of mutually parasitic slavery should be flogged in public.

Stan Smith Thu, 08/17/2017 - 18:45 Permalink

The takers are out weighing the makers at this point.    Sad, but true.    Unfortunately, I dont see this changing a whole lot in my lifetime.    We're all minions now.

attila404 Thu, 08/17/2017 - 18:53 Permalink

The welfare state started once the women got the right to vote. Check out other western countries for that exact correlation.Take women's right to vote away, and you solved all the ailing problems we're being plagued with. That's the only thing men need to do. And they can do it tomorrow. Problem is the western man is a pussified cuck. 

Posa Thu, 08/17/2017 - 20:20 Permalink

Blah- blah. I guess ripping off a few trillion via the Fed is a minor inconvenience; better to let Tiny Tim starve in the gutter to propitiate the worship of Mammon by the Vienna-School fanatics at the Measels institute.

bloofer Thu, 08/17/2017 - 20:59 Permalink

The welfare state is one factor that destroys social bonds within communities and between communities. Another factor is that almost all economic activity in the US has been subsumed by corporate/government monopolies.In small communities made up of small businesses and small farmers, there are social bonds of interdependency that actually extend into bonds of affection and gratitude. Your neighbor (who may also be your friend) provides you with a good product at a fair price. He may hire your son or daughter. He supports your business by buying from you, and you may hire his son or daughter. You may be able to offer each other business opportunities. You contribute to each other's well being in many ways.When government/corporate monopolies (supported by taxes and regulations) are the main source of employment, your neighbor is the guy living off your tax dollars. Most likely he doesn't provide goods or services that contribute to your well being--or if he does, they are wildly overpriced--and you can't look for a better deal elsewhere, becaue government/corporate goods and services are a monopoly. He may be providing goods or services that are actually detrimental to you. You don't have a business that contributes to his well being, because taxes and regulations have made this impossible. You are his competitor in the job market. Your relationship has become adversarial.

AnarchistRex Thu, 08/17/2017 - 22:43 Permalink

You can take out the word welfare and just say "How states make us less civilized".

"Force and mind are opposites; morality ends where a gun begins." --Ayn Rand

When you give a monopoly on the use of force to ANY group, it becomes defacto State. And such power always corrupts - no exceptions. And, as with any corruption of this magnitude, civil society declines and shall eventually collapse unless the corruption is cleaned away.

Sadly when such 'cleaning' revolutions appear they almost always create a new State ... repeating the tragedy over and over again.

I can only hope and believe that technology will be the undoing of the State. The coming ability to be completely anonymous and to trade without censorship or taxation will give humanity the opportunity to choke the State of it's funding. When that day arrives I do hope that YOU will get on the wagon and move out of the State.

If you are curious about how technology could save humanity, please look into