The roots of limited government Term Paper

Limited Government

Oxford philosopher, journalist and refugee from communism Anthony de Jasay once commented that “Constitutions are the chastity belts on government promiscuity.” The problem, according to the Jasay, is that: “Government always has the key (a 21st corollary to that observation might be that they lost it and Ben Bernanke found the key later on) (“Domesticating the leviathan,” 2007).” The founding fathers of the United States drafted the most explicit self – limiting written constitution in human history. Throughout the 20th century and now ten years into a war on terrorism and Al-Qaeda, this question is more poignant than ever. One need only walk into an airport and wince while a government rent-a-cop body searches everyone. There is no question of innocence, guilt or propriety as all of our Fourth Amendment protections are stripped away with our clothing as we are subjected to more groping that our family doctor would feel appropriate. However, the subsequent expansions of the American government beyond the boundaries established in that Constitution points to a central political dilemma: Given the existence of public choice incentives and the impossibility of a self-enforcing constitution, can the government ever be effectively limited?

Central Question

One must ask foundation questions based upon a bit of common sense. In this course, we have been asked what we believe are the proper limits of government and how do we keep the government within those boundaries. Certainly, the government’s proper limits never seemed to be more of an issue now. When we can be searched, TSA style at airports, at checkpoints on roads and very soon at NFL games, one feels a bit like Rip Van Winkle but wonders if they woke up in the world of 1984. If they make a sheepish remark in the name of Winston Smith, they are somehow seen to be anti-American and unpatriotic. Luckily enough, some citizens actually do write letters to the editor (and some newspapers even print them). In a recent letter to the Joplin Independent, Kevin Johnson asks “How is the public going to take such continued invasion of privacy?” (Johnson, 2011). However, the mailed fist is only part of the problem. It has to be financed, and this financing is usually deficit financing. Such financing is usually creative, haphazard, and unplanned

If this author has to speak for Mr. Johnson, when asked how would we create a government and ensure that it did not exceed its proper authority, he might respond by asking “why not enforce my Bill of Rights?” Are not the structural elements or particular rules that included there good enough? Is not a model copied by and died for by revolutionaries for more centuries good enough? Why is it old fashioned? What happened to revolutionary slogan of “taxation without representation is tyranny”?Like Mr. Johnson, we are all being labeled as tight fisted, selfish and unpatriotic because we demand that government live up to this ideal.

What de Jasay describes is difficult, but possible. However, it is so rare. Certainly, good, limited, government that represents us is the rarity and its endurance upon the earth seems but a fortnight. It requires an educated, public with the chutzpah to openly confront an emerging national security state and tell it to keep its hands to itself its hands out of our wallets. It demands that “super congresses” have no validity and can not reduce deficits, but only to aggregate more power for the central government. The real question, and this is the one for the “Occupy Wall Street Protesters” is what next? Did we brave a police riot to say all capitalism is evil, when truly it has been beautiful in the past?

The idea of a limited government is sacred in the American experience and came out of the experience of unrepresentative government that invades too much into its citizens’ business. This tyranny begins as a financial tyranny, hence the term “no taxation without representation.” While Americans forget, democracy and democratic institutions were from the beginning.

During the founding period, Americans had a propertied sense of politics:

democracy was for stakeholders and stakeholders were those who owned property.

Later the poll tax reflected a similar view of democracy: Voting was for those with money.

In passing the Twenty-Fourth Amendment, the United States explicitly rejected the property theory of democracy, replacing with one that awarded citizenship rights regardless of income (Standt, 2010, 555).

Even though a legal connection between money and democracy no longer exists, the impulse to connect economic power with political rights seems natural. Certainly, if we have little money, we have less access to our rights. If the government is taxing us to the maximum, we have less free time and have to work harder and harder to keep our property and to pay the increase tax levies necessary to pay for government largesse. With the modern Tea Party movement, we can see a certain movement to “take back the country” and to limit government and its ability to spend beyond its means. Certainly, if government takes more and more of our money, then we have fewer political rights. Rather, it has assumed control of them.

Richard E. Wagner presents insights into the issue of taking back and limiting govenment in his book Parchment, Guns and Constitutional Order. The thesis of Wagner’s proposition is that most of the available literature on public governance has been focused largely on issues of incentives to the neglect of the study of how one can employ productive knowledge and then channel it to complement the workings of society that are based upon classical liberal principles. In essence, he exposes the failure of the American constitution to overcome the tyranny of the majority that so frightened the country’s Founding Fathers. In essence, the tyranny of the majority fails to be prevented by a constitutional parchment unless the institutions of that society are made to offer a complementary support system to limited government and the rule of law. The supplement, guns are not just about minimizing losses from a power hungry, overtaxing state. They are also about incentives that spark the discovery of previously unknown opportunities, in particular original value- creating wisdom. Therefore, parchment and guns and parchment are not to be separated. Rather, a properly functioning governmental structure is a structure where the knowledge relevant to a tasks and incentives to act on that same basic knowledge are aligned. The motivation of Wagner’s essay is thus basically to correct an imbalance in the study of public governance, what Knut Wicksell reckoned as the duty of being a protector of and not a dispenser of rights to the governed (Wagner, 1993, 52).

This is the particular mistake of the United States government and the deviation from classical American government and economy. However, this is only part of the picture. Obviously, the parchment has not been sufficient on its own to protect American democracy in the 21st century. What we need to do further is to promote competition among different private stakeholders (“guns”) in order to minimize the abuse or capture of parchment by anyone. We have been trained by our civics routines and history classes to think of checks and balances just in terms of government. However, checks-and-balances are not just limited to these familiar rules of democracy through our old-fashioned constitution. The checks-and-balances of a genuine modern democracy are also to be found among those promoting the natural rivalry of the capitalist market process that spontaneously and naturally guides self-interest in the right direction for the common good. We are not born angels and the angelic quality can not be legislated or taxed into existence. Self-interest must be taken into account. Therefore, we need both the knowledge (parchment) and the incentives (guns) to achieve and maintain the well-functioning governmental structure through time.

Also, government spending must be approved only in tandem with a strategy of how to finance it (ibid).

Of course, this flies directly in the face of classical Keynesian economics. Runaway government spending in our republic and in the Eurozone is destroying Western society with fractional reserve banking, fiat currencies and high deficits is brought on by the idea that government spending (social, military or otherwise) is somehow to be seen as engine of growth. The only antidote for the current malaise that the Obamas and the Bernankes can prescribe for the addict patient is the same economic heroin that is killing him. This money printing and tax machine is a creature of American system as it has developed in the twentieth century with the rise of the welfare state. Therefore, just returning to the former regime is not enough. Wagner maintains that

Something beyond a simple republic is required under these circumstances, as the American Founders recognized…both the Wicksellian enterprise and that of the American Founders recognize that constitutional processes will be driven by the interests of the participants, with the resulting consequences depending on the structure of the relationships created within the constitution (ibid, 53).

In Wagner’s estimation, we must go beyond written constitutions to restrain government. This is where incentives come in to play. Wagner quotes Rudolf Hickel who distinguishes between an entrepreneurial state and a tax state (our present state of affairs). Hickel and Schumpeter both see the tax state as acting outside the normal laws of contract and property to confiscate wealth. The entrepreneurial state is just the exact polar opposite of this. Corporatist principles that have been incorporated into this system. Corporate structures were in their infancy in 1787 when the U.S. Constitution was written, hence the lack of corporatist principles (ibid, 56-57). We must now incorporate the wisdom of two centuries of follow on experience.

These corporatist principles would turn a government entity like a city into a private corporation with stockholders that would provide services. In this view, government has created some markets. It is in the market already. Therefore, for us to bring the entrepreneurial state, we need to introduce market types of reforms and incentives into these structures to shrink and limit their growth. Much like a business, government would then not expand beyond its ability to finance itself and would not attack private property and contract to raise such resources. By doing this, one programs in the self-interest of the market into limiting the growth of government to a manageable level. Government could then be “contractual government” just as exists in the corporate world (ibid, 62-63). Such principles must be applied to county, state and federal governments as well. Of course, something like this will take time.

However, can it not be argued that the tax state will not give up so easily to the entrepreneurial state. Certainly, things will have to get very bad before the people, the real power of this government are desperate enough to take it back and bring about the entrepreneurial state. History shows though that crises, like we have now, can be the beginnings of reform. Only when there is an emergency will the public as a whole reform the entire American society to bring such a real capitalist state into being. The present security/taxation state did not emerge overnight. It will take a thorough going effort at not just dismantling the present governmental system and replacing it with entrepreneurial structures. Rather, we must also reform our own minds and societal expectations. We must change our own attitudes and realize that the tax state is an illusion, that wars and other engines of runaway government spending can not bring permanent, real, sustainable wealth. Only structures that are based upon a respect for contract, private property and the sponsorship of thrift and innovation. Certainly, no one doubts that events such as a constitutional convention and an overall political revolution is necessary. However, the present crisis is the best opportunity to attempt to bring the Wagnerian entrepreneurial state into being and replace the present crony capitalism that has grown like a fungus on the old constitutional system. The crisis has already brought about the reaction of demonstration and recognition that something is wrong. However, the demonstrator in the Wall Street area can not yet articulate a viable alternative to more and more taxation. The entrepreneurial state is that positive alternative. Unless we provide an alternative, we can not be taken seriously. Wagner’s book provides this alternative to the present crony capitalism that is killing us.


Effectively and for various reasons, massive changes in our effective constitution (not just our paper one) has been creeping in the direction that it has come to now over more than half a century. This effective transfer of power has had an incredible effect, greatly increasing the economic powers of the federal government, especially in the period since the founding of the current welfare state in the 1930’s and its military industrial corollary in the 1940s and after during the years of American empire. The present constitutional crisis brought about by an imperial president ruling by executive decree has have revived interest in the problems of deep political constitutional maintenance. This essay found that the conventional American theory of constitutional governmental maintenance will have to be overhauled through the institution of the entrepreneurial state to replace the current tax and national security state that we are now burdened with. The most important conclusion is that the present crisis has brought about reaction. It is now the job of libertarians to provide the positive solution in the institution of the entrepreneurial corporatist state where the market will work as a self-motivated incentive to reign in the power of government of the mob to confiscate the wealth of the toilers who work and make the society function. This effectively will provide the key for the chastity belt and give it back to the people where it belongs.

Works Cited

Barth, A. (1991, Feb ). The roots of limited government. Retrieved from

Domesticating the leviathan. (2007). Retrieved from

Johnson, K. (2011, November 9). Tsa’s expansion is questioned. Retrieved from

Standt, N. (2010). Taxation without representation. Evanston, IL: Northwestern University School of Wagner, R.E. (1993). Parchment, guns and constitutional order. Northamton, MA: Edward Elgar Pub.

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