The theory of the state: An economic perspective

Findlay, Ronald E.; Wellisz, Stanislaw H.

The principle of laissez-faire, so closely associated with Adam Smith and the classical economists, should certainly not be considered an endorsement of anarchy as the ideal form of social order. Despite the theological overtones of divine providence in the imagery of the "invisible hand", Smith and his followers did not regard the market and the price mechanism as a spontaneous form of natural order that would prevail in any social group. Political organization in some form is necessary to provide the framework of law and order within which justice could be maintained and contracts enforced. Thus even one of their harshest critics, Thomas Carlyle, described their system not as anarchy, but as "anarchy plus the constable". The necessity of the "state" in the sense of the institution that claims a monopoly of the legitimate use of force over a given territory, or as Max Weber (1964, p. 154) defined it, for the proper functioning of "the market" and indeed of all forms of civilized human endeavor, can be traced back to the seminal influence of The Leviathan, the foundation of modern political thought laid by Thomas Hobbes (1651).


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Academic Units
Department of Economics, Columbia University
Department of Economics Discussion Papers, 0203-25
Published Here
March 24, 2011


September 2003