The State by Anthony de Jasay (36 page)

1. Consequently, if state-of-nature interest groups do get formed and the whole group burden is being carried by somebody or other, despite the incentive selfish group members have to ride free, at least one of three conditions needs to hold (though they may not suffice without other circumstances being propitious too).
   
 

(a)
Some members of the group are altruistic and actually preferto bear the "others' share" of the burden or let the others have "their share" of the reward. The others can accordingly ride free to some extent, though not necessarily scot-free.

4.3.1
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(b) Though all members are selfish, some are non-envious. If theymust, they will carry more than their share of the burden of group action rather than allow the group to fail altogether, because the
burden they assume does not, at the margin, exceed the reward accruing to them, and they do not grudge the free riders' getting a better deal still.

4.3.2
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(c)
All group members are both selfish and envious. Free ridingmust somehow have been kept below the critical level at which the grudge felt by the envious "paying passengers" against the free riders would have outweighed the net benefit they derived from carrying on with and for the group.

1. Case (a) corresponds to volunteer civic action, self-sacrificing pioneer effort, "leading your troops from the front," and, perhaps, also to political activism and busybodyness; other satisfactions than the good of the group may also not be totally absent.
   
 

2. Case (b) underlies, for example, the creation of external economies, which would not come about if those whose (costly) action calls them forth would greatly resent their inability to keep others, who bear no cost, from also benefiting.
   
 

3. Case (c) is the most demanding; here the free-rider problem becomes critical to the formation and survival of the group. A cooperative solution must here repose upon two supports. To start with the second, there must be in the cooperative solution reached by selfish and envious members of an interest group, enforcement involving an effective threat of punishment, retaliation.*19 Where access to the group reward is technically easy to control,
   

enforcement is passive. It resembles a coin-operated turnstile. If you pay your coin, you are in; if not, not. More awkward situations call for the invention of active, possibly complex methods of enforcement. Social ostracism of the blackleg, harassment of the employer, "blacking" of his goods and his supplies may be necessary before a new (or old but not very strong) union can impose the closed shop. Retaliation against a price-cutter and cartel-breaker may take the most cunning forms. Even so, it is not invariably effective. John D. Rockefeller, who was a great practitioner of these cunning methods, had so little confidence in their reliability that he eventually resorted to amalgamation of ownership instead-hence the creation of Standard Oil. Summary justice in the American West against violators of vital group understandings (e.g. that range cattle and horses are not stolen, mining claims are not jumped and lonely women are not molested), was an attempt to shore up a precarious way of life whose viability greatly depended on no "free riding," on everybody playing the game.

4.3.24 Before enforcement, there must be understandings, agreed terms to be enforced. What will be the share of each in the group burden, and how will the common reward be shared out (unless, of course, it is totally indivisible)? The immediate reflex for most of us would be to say "equitably," "justly" or "fairly." As these are not descriptive but evaluative terms, however, there is no assurance that most group members will judge any given allocation as equitable, just, etc. Still less is it certain that if they did, the equitable, etc. set of terms would also be the most likely to secure adoption in the "cooperative solution," i.e. to ensure group cohesion. Strategically placed members, "hold-outs" or bargaining sub-groups may have to be conceded very much better terms than members who "have nowhere else to go." Manifestly, the better the terms a member or sub-group can extort from the
rest of the group, the more nearly will it have approached free-rider status and, hence, also the limits within which the group can carry free riders without breaking down.

1. It may be thought that once it was up against such limits, threatened with breakdown, the group would seek to preserve itself by recourse to new, more effective methods of enforcement of group understandings, cost and reward allocations or codes of conduct and would retaliate more vigorously against its free riders. Some such tightening up may in fact be feasible. But the group is not the state; it lacks most or all of the state's repressive powers; its ascendancy over its members is different in kind, as is their faculty to opt out if pressed.*20 A group's capacity to develop enforcement is heavily conditioned by the nature of the reward it is designed to produce, and of the sort of burden that must be carried to make the reward accrue. There is no presumption that it will be always, or very often, adequate for controlling the free-rider problem and enabling the group to survive or, indeed, to form in the first place.
   
 

2. If so, it is reasonable to impute to the state of nature-as to an ecological system containing prey, predator, and parasite-some equilibrium in the group structure of society. Equilibrium hinges on the destructive potential of the free-rider phenomenon. The latter limits the number and size of interest groups which manage to form. The resulting universe of groups, in turn, determines the tolerated number of free riders, and the actual volume of their "parasitical" gains consistent with group survival.
   
 

3. Interest groups extracting rewards not available to single individuals from transactions with others, are benign or malign
   

depending principally on the observer's values. If their transactions are wholly or mainly with other interest groups, the extra rewards secured by one group may be seen by the disinterested observer as being at the end of the day broadly compensated by the extra benefits the other groups manage to secure at its expense. This is roughly the "pluralistic," "end-of-ideology" view of how modern society works. Instead of classes struggling for dominance and surplus value, interest groups bargain each other to a standstill. Though modern society does not actually work like this, there is perhaps some presumption that state-of-nature society might. If it is comprehensively organized, net gains and losses due to cohesive group action can be hoped to be small (though "on paper" everybody gains as an organized producer at the expense of his own alter-ego, the un-organized consumer). Moreover, "excessively" hard bargaining by a group vis-à-vis other groups in poorer bargaining positions, is liable to set up some of the same sort of self-regulating, self-balancing effects as "excessive" free riding does within a group, so that as group formation remains within limits, so does the inordinate exploitation of group strength bordering on free riding.

4.3.28 Our framework is now ready for inserting the state. We want to answer the question, What difference does the functioning of the state make to the equilibrium group structure of society? Clearly, where a state exists, sovereign command is added to contract as the means for extracting group reward from others. In addition to market-oriented groups, rational incentives arise for state-oriented ones to be formed, or for groups to start facing both ways, towards their market and towards the state. The greater the reach of the state, the greater is the scope for profiting from its commands, and as Marx has not failed to notice, the state was "growing in the same measure as the division of labour within bourgeois society
created new groups of interests, and, therefore, new material for state administration."*21

1. When society consists only of persons, families and at worst perhaps very small groups, they give or withhold their consent in democracy to the state's rule in response to the available incentives. They are, so to speak, perfectly competitive "sellers" of their consent-in George J. Stigler's clever term, "price-takers." The "price" they accept or decline is contained in the global redistributive offer the state designs to buy a majority in the face of rival offer(s). A state-oriented interest group, however, instead of merely reacting to the going offer, actively bargains, and trades the votes and clout it represents against a better redistributive deal than its individual members would get without coalescing. The group reward, then, is the excess redistribution it manages to extract by virtue of its cohesion. Like any other "price-maker," it can to a certain extent influence, in its own favour, the price it gets. In the political context, the price it sets is for its allegiance, support.
   
 

2. The reward-a subsidy, tax exemption, tariff, quota, public works project, research grant, army procurement contract, a measure of "industrial policy," regional development (not to speak of Kultur-politik!)-is only in a proximate sense "given" by the state. This is plainly visible in the pure, taxing-Peter-to-help-Paul type of redistribution, but becomes more masked in its more impure (and more usual) forms, particularly when the redistributive effect is produced jointly with other effects (e.g. industrialization). The ultimate "donors"-taxpayers, consumers of this or that article, competitors, rival classes and strata, groups or regions which might have been, but were not, favoured by some policy-are hidden from the beneficiaries both by the insoluble mysteries of
   

true incidence (Who "really" ends up by paying, say, for price control? Who bears the burden of a tax concession? Who is deprived of what when the nation's athletes get a new stadium?), and by the very size and thickness of the buffer that public sector finances constitute between the perceptions of the gainers and losers.

1. A given group which, by lobbying and bargaining, succeeds in extracting some advantage from the state, would typically and not unreasonably, consider that its cost is infinitesimal by any sensible yardstick that men used to public affairs might apply:*22 the aggregate of all such special advantages already conceded to others, or the great good it will do, or the total state budget, etc. Like the cartoon tramp holding out his hat-"Could you spare 1 per cent of gross national product, lady?"-the group will feel induced to formulate demands by the perfectly sensible recognition that granting them is a matter of small change to the state. It might never put a demand for unrequited aid, even of a much lesser order of magnitude, to persons or other groups, for it would not care to ask for charity. At the same time, if it did bring itself to do so, how far would it get with 1 per cent of the income of Peter and Paul? And how would it go about successfully begging from enough people to make it worth-while? Given the choice, it is an inferior tactic for a group to address its claims to another group rather than to the state. The reasons have to do with the nature of the "quid pro quo," as well as with the fact that the state alone disposes of the panoply of "policy tools" for diffusing and smoothing out the incidence of the cost. There is only one instrument, the state, whose position of universal intermediary enables the successful postulant to get, not at some suitably modest fraction of some people's income, but at that of a whole nation.
   
2. There are yet more potent ways in which the chance of obtaining rewards "from" the state rather than through the market, directly from persons or groups in civil society, transforms the environment in which interest groups get organized and survive. A given pay-off may be significant enough to a potential group to incite it to form and engage in the joint action required to get it. Its corresponding cost, by virtue of the intermediary role of the state, is apt to be so widely diluted across society and so difficult to trace as to its incidence, that "nobody really feels it," "everybody can afford it." The state-oriented group, by extracting a benefit whose cost is borne by the rest of society, is acting out the role of the free rider vis-à-vis society in precisely the same way as the member of a group vis-à-vis the rest of his group.
   
 

3. Unlike the individual free rider who beyond a certain point either meets some resistance, or destroys his group, however, and unlike the market-oriented "free-riding" group which is resisted by those who are expected to concede its excessive contract terms, the state-oriented group meets not resistance, but complicity. It is dealing with the state, for which condoning its free-rider behaviour is part and parcel of building the base of consent on which it has (whether wisely or foolishly) chosen to rest its power. Consent-building by redistribution is closely moulded by the pressure of political competition. The state, competing with its opposition, will have only limited discretionary choice about whose demands it will grant and to what extent. It will rapidly find itself presiding over a redistributive pattern of increasing complexity and lack of transparency. When another "free rider" is allowed to come on board, the "paying passengers" have every chance of remaining oblivious of the fact, as well as of its incidence on the "fares" they have to pay. Though they will hardly fail to gain some general awareness of free riding going on and