In my first four rules of politics, I outlined the political challenges we face in the partisan battles for the soul of our country. In the next three rules, I talked about the institutional challenges of pursuing a freedom and small government agenda. The next rules will talk about the social challenges we face.
That leads me to the eighth rule of politics:
“The real battle in society is not, as Marx states it, between the working class and the rich. It is between the ruling class and the entrepreneurial class.”
There are two sources of power in any social structure. One is power obtained by wealth, the other is power gained at the end of a gun. There are also two forms of human interaction. The first is voluntary interaction, contracts, ownership and disposal of private property, and voluntary associations, like marriage, community groups and the like. The other is involuntary interactions, most easily described as transactions forced upon them by someone, either through criminal or reckless behavior, or use of government power.
Those who gather wealth by satisfying the needs and wants of others in society, the entrepreneurial class, do so by “voluntary” transactions. If an entrepreneur doesn’t meet the needs or expectations of those who voluntarily interact with them, they lose their wealth and their power. The entrepreneur and society benefit from the entrepreneur’s constant pursuit of ways to satisfy the needs and wants of others.
Involuntary transactions are those in which one party or the other is forced, by a gun or other means, to act contrary to their desires. Sometimes that is necessary. No one wants to be the victim of a crime, which is accomplish by the use of force. Government is necessary to prohibit or minimize the harm that comes from involuntary transactions, and government, by necessity, must use force to direct the energy of those subject to its jurisdiction in order to accomplish this task. That direction, though, is through the use of force by that government
A “good” government is one that pursues and enacts laws and policies that maximize voluntary transactions. Since voluntary transactions only occur if everyone involved in the transaction see a benefit to themselves of engaging in the transaction, the net result of an emphasis on voluntary transactions is an overall increase of the well being of all the members of the social structure.
A “bad” government is one that focuses on using the excuse of the harm caused by involuntary transaction to increase its power through the use of involuntary transactions by the government. Since government must use force to do the job assigned to it in a social structure, the more government uses its power, the more it increases the number of involuntary transactions, and thereby diminishes the overall well being of the society it is supposed to protect.
So why is the real battle in society between the ruling class and the entrepreneurial class?
When Marx described the battle in society as between the wealthy and the working class, he called upon the working class to seize the power of government to take the money and property of the wealthy. That increases the power of ruling class, who then become, through the use of involuntary transactions, the arbiters of wealth and power. Of course, they first distribute that wealth and power to themselves, no matter the cost of that to the rest of society. They don’t have to get the agreement of anyone else to take money and property, and those who wish to increase their own well being can only do so with the blessing of the ruling class.
An entrepreneurs can only maintain their wealth by persuading people to transact business with them. Wealth and power in the hands of the entrepreneurial class is the greatest threat to the power of the ruling class, so the ruling class is constantly looking for ways to diminish the power of entrepreneurial class by the use of force. That diminishes the wealth and well being of society as a whole.
Freedom and free enterprise increases the wealth and well being of everyone in the social structure. Increasing the size and scope of government diminishes the wealth and well being of everyone except the ruling class. It’s just that simple