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Statism is a term to describe an economic system where a government implements a significant degree of centralized economic planning or government intervention, as opposed to a system where the overwhelming majority of economic planning occurs at a decentralized level by individuals in a relatively free market. According to libertarians, statism is the antithesis of capitalism.

It should be noted that term "statism," can refer to various opposing ideologies but that share the commonality of having centralized economic planning conducted by the state. "Statism" is frequently used by advocates of economic liberalism to describe any social or political system that implements, what they believe to be, an unreasonable degree of centralized planning by government. At the extreme, some of them believe that any such planning is unreasonable. In this context, "statist" may describe any government that does not embrace the ideal of Laissez-faire.

"Socialism and communism are often broadly classified under "statism", however, it must be noted that there are a few types of socialism and communism that are stateless and therefore would not be rightfully included in the category. For example:

  • there are several branches of socialism which reject the state;
  • for many communists, especially Trotskyists, the state is only a necessary evil that must wither away or be eventually eliminated in order to establish a communist society. Indeed, this is part of Marx's original conception of a communist future; as he saw the state as an instrument of oppression of the masses, the takeover of the masses would eventually render that instrument irrelevant.

Support and Criticisms of Statism

The term "statism" is often used polemically and provocatively, by opponents of state intervention, to argue that the legitimate powers of individuals have been illegitimately absorbed by the state. These opponents of statism argue that restricting individual freedom is intrinsically immoral. However, others reject statism in favor of lassiez-faire economic policy simply because they believe decentralized economic planning by individuals in a free market produces superior economic results. Supporters of statism will argue that centralized economic planning, rather than a free market, produces greater economic benefits for everyone.

Discussion on the Morality of Statism

Some modern political philosophies hold that individual rights are in no way natural or absolute, but that they are social constructs; in other words, rights and freedoms are not assigned by nature or some other higher authority, but by human society itself. For example, we have the right to life not because there is anything natural about it (after all, nature does not condemn murder), but because the majority of the human population has agreed that it is in their common interest to respect this right. Therefore, individual rights cannot be separated from the public good, since the public good is the reason why individual rights exist in the first place. If one accepts that a state is necessary to protect individual rights, then one also accepts that a state is necessary to carry out other actions for the public good. This is the foundation of the majority of "statist" philosophies.

On the other hand, it could be considered that while the concept of "rights" is created by society, freedom is not. This rests on the perception that man is free in nature, outside of the state. If so, perhaps, the purpose of the state may not be to create freedom through creating "rights", but to put limitations, and privileges, on individuals for the purpose of the protection of freedoms.

Individualists believe the most basic right is the right to be left alone. This right only requires a mutual understanding among individuals, something that occurs spontaneously and does not need to be codified in law. Statists argue that an agreement not codified in law can be easily disregarded or violated.

Another concept that should be noted is that of the social contract, first put forward by Jean-Jacques Rousseau. This line of thought holds that the state arises as the result of an implicit contract between free human beings. The state is set up by human beings who decide that they wish to establish an organisation with the power to guarantee their safety and welfare. They invest the state with power, and in return the state pledges to work for the common good. The authority of the state is as wide or as narrow as the people wish it to be. By living under a certain government and reaping the benefits of being a member of that society, you implicitly accept a social contract with your government (in much the same way as you implicitly accept the End User Licence Agreement with a software manufacturer by using a piece of software). If you do not wish to accept the social contract with your government, you are free to sign a contract with another government (by moving to a different country).

In contrast to this view, another concept should be noted. Some idealists suggest states are bodies that force cooperation, and are organizations composed of an involuntary membership. While the idea of a contract may be feasible, one would have to consider whether the idea of a social contract consists of both an offer and acceptance on an individual level; how practical is it, for example to reject one's country of birth and move abroad; or for an individual to substantially influence government? Some philosophers consider such a theory flawed for that very reason.



Reading material

Nejatullah Siddiqi (1968), The Ideal of Statism. Islamic Public Economics.

Last updated: 02-07-2005 02:39:51
Last updated: 04-25-2005 03:06:01