krebscycle

Economists, even liberal economists, generally consider the United Kingdom in the 1820s to be the exemplar of the minimal state which is a strange way to view a gigantic empire that ruled half the world thanks to a dominating military. In reality, the Imperial State was tyrannical and huge, its empire and military were financed by giant government debt and the highest tax burden in Europe, plus piracy, slavery, and looting. The UK government even ran the worlds biggest manufacturing and R&D plant, where it developed the machine tools that powered the industrial revolution and the military technology that it used to power the empire – all at public expense. The Imperial State:

• Protected the UK textile industry first with import bans on better and cheaper Indian textiles and then with military force and taxation after it invaded India.
• Ran a harsh police force and legal system to
  • Crush labor unions (combination acts), hanging, imprisoning, deporting and otherwise punishing workers who stepped out of line.
  • Imprison people without jobs (“paupers”) in forced labor work camps. One of the most notorious sent male prisoners to break bones from slaughterhouses (unpaid, of course) and the famished workers often fought each other over tasty bits of marrow they could find.
  • Fill a vast system of prisons – including decommissioned navy ships converted to large scale prisons and mass deportations to labor camps in Australia and elsewhere .
• Privatized gangs and naval patrols that would kidnap civilians and drag them off to forced labor in navy ships (impressment) where any resistance was met with flogging and persistent resistance was met with execution.
• Confiscated “customary” property from poor people in rural areas and handed it over to politically connected elites (enclosure).
• Violently kidnapped Africans for slaves and put down revolts.
• Starved half the inhabitants of Ireland to death.

To see how the free market operated in those days consider the period in the 1850s when UK industry was unable to compete against Chinese consumer manufacturing of goods like porcelain (which is why we call china, china). This caused a drain on hard currency from the UK to China. So, left on its own, UK manufacturing innovated, reorganized, improved efficiencies and – oh sorry that’s not what happened. What happened was that a British government supported narcotics cartel scaled up opium production in India (using punitive taxation to encourage cultivation) and sold it in China where Chinese government objections to drug dealing were overcome by heavy artillery – shell a few civilian cities, burn some, steal, extort payments, etc. . You can still see some of the loot in the British Museum.

Nobody at the time had any illusions that this massive state which ruled with an iron hand was minimal or anything less than a ferocious imperial machine that altered the lives of more than half the people on the planet – a Leviathan that crushed anything in its path. Economists have reimagined Leviathan as a minimal state that left the economy to operate under its own command and private initiative. By positioning the imperial state as minimal, economists were able to complain that public schools, public investment in housing, efforts to reduce inequality, and similar were expansions of government power that interfered with the “natural” functioning of the market – in contrast to the free functioning of forced labor under the gun and whip of the world empire. According to these economists, the “nanny state” reached to trample liberty by taxing to pay for day care, unlike the “minimal state” that operated a brutal narcotics cartel to fix a balance of payments problem and sent labor unionists to the hangman. This ideological sleight of hand has been so successful that it influences even liberal economists

[Adam] Smith claims that the system of natural liberty; with government restricted to the rule of law, infrastructure, defense, and education; is the best of all social arrangements.  Brad Delong.

Only! law, infrastructure, military, and education!!! Hardly there at all, and pretty much invisible to economists if not to historians or, for example, kidnapped people worked to death by terror enforced labor in sugar cane fields. During the Obama administration supposedly liberal economists like Robert Reich and Christina Romer attacked the rescue of the auto industry and efforts to revive manufacturing (successful ones) as interfering with the proper structure of financial markets because even liberal/left economists have internalized the mythology that the Imperial Leviathan didn’t manage the economy.

see also Robert Reichś Paper Wizard Economcs and Hayek’s fraud.