Originally posted by Joshua Mawhorter at Mises.org:
As the DOGE revelations continue to emerge—revealing everything from the hilarious to the outrageous projects that Americans have been forced to fund—we should not be surprised by the shrieking of the political caste, the castes who benefit from it, or the rare true believer who receives none of this money, is angry at the exposure of this spending, and believes it is necessary and just. Predictably, the true needy are put forward as “shields” for the system and, unsurprisingly, the political caste will not allow the grift to go without a fight, as Tho Bishop explains,
…the billions spent on USAID money is a network of administrators, directors, and consultants who have been able to create lucrative lives for themselves by embedding themselves into a network of patronage entirely reliant upon the regime’s plunder of the public.
In such times, we should be reminded and remind others of the coherence of libertarian caste analysis. While the political caste, its beneficiaries, and others benefit from the concept of “class struggle”—in which groups of people are supposed to exist within inherently conflictual, unfixable relationships because of their belonging to several intersecting groups that possess or lack privilege/power, where every difference or disparity conveniently necessitates state intervention—we should pursue a superior alternative.
The coherent concept of “class” is rather caste analysis. Exploitation takes place when an individual or group—by coercion or threat—unjustly expropriates the production of another person or group for the expropriator’s benefit, especially when achieved through the legal apparatus (instead of being justly illegal). Exploitation can take place between individuals and groups, but a caste is created through state legal power. A caste is created when a class-group is “privileged or burdened by the state.”
Libertarianism has a rich tradition of class-caste analysis. Mises said one of Marx’s main errors was that he “[confused] the notion of caste and class.” In fact, Marx borrowed from libertarian caste analysis, but then substituted his own meaningless concept of “class.” Ralph Raico summarized the classical liberal/libertarian caste theory: “The history of all hitherto existing society is the history of struggles between the plundering and the producing classes.” Again, Mises asserted that “every kind of special privilege for particular groups and classes of the population is detrimental to the common good and must be eliminated.” David Gordon likewise argues the importance of “class conflict” (rightly defined) in history,
It remain [sic] true, nevertheless, that class conflict is a fundamental motor of history. Marx and Engels were not altogether wrong when in the Manifesto they said, “The history of all hitherto existing society is the history of class struggles.” But the conflict lies not among conflicting groups in the free market but rather between producers and those who seize their wealth, principally through statist predation.
The Tax-Paying Caste versus the Tax-Consuming Caste
One of the most evident—though not only—ways to determine the societal castes is the net transfer of revenue or production between groups achieved via the state. On net, who pays the taxes and who consumes the taxes? Those are the true castes.
John C. Calhoun
This reality was noted in A Disquisition on Government by John C. Calhoun, whom Rothbard also referenced on this matter. (Though Calhoun is not technically in the camp of classical liberalism, his analysis on this point is similar to the classical liberal critique.) He observed that the political elites and bureaucrats are the main consumers of taxation, but rarely does government just transfer wealth to itself through taxation, it taxes, keeps and consumes some, and disburses to others.
Calhoun observes further, “What the one takes from the community, under the name of taxes, is transferred to the portion of the community who are the recipients,…” It would be impossible and senseless for taxes taken to be equally disbursed to the entire community, therefore, government must necessarily take taxes from people and transfer them, on net, to others. On net, some necessarily pay more than they receive and some receive more than they pay. These are the castes:
The necessary result, then, of the unequal fiscal action of the government is to divide the community into two great classes: one consisting of those who, in reality, pay the taxes and, of course, bear exclusively the burthen of supporting the government; and the other, of those who are the recipients of their proceeds through disbursements, and who are, in fact, supported by the government; or, in fewer words, to divide it into tax-payers and tax- consumers.
But the effect of this is to place them in antagonistic relations in reference to the fiscal action of the government…. For the greater the taxes and disbursements, the greater the gain of the one and the loss of the other,—and vice versa….
Frederic Bastiat
Frederic Bastiat also explained that, rather than naked theft and plunder—which the current recipients of state patronage don’t have the boldness to commit themselves—the state apparatus is put into the “service of the plunderer, and treats the plundered party, when he defends himself, as the criminal.” How do we distinguish cases of caste exploitation or plunder? According to Bastiat, this is easy:
See whether the law takes from some persons that which belongs to them, to give to others what does not belong to them. See whether the law performs, for the profit of one citizen, and, to the injury of others, an act that this citizen cannot perform without committing a crime.
He warns us that when such funding is removed from a beneficiary that they are prone to “exclaim loudly” or defend the legitimacy of such patronage (see X, government workers, bureaucrats, and recipients, and the legacy media), so, “Take care not to listen to this sophistry…” Such special pleading led to the delusion of the day: “to enrich all classes at the expense of each other;…to generalize plunder under pretense of organizing it.” Bastiat called the state “the great fictitious entity” by which everyone tries to use plunder to live at the expense of everyone else.
Murray Rothbard
Rothbard, working from previous thought, asks, “Who benefits from taxation? It is clear that the primary beneficiaries are those who live full-time off the proceeds, e.g., the politicians and the bureaucracy.”
He also clarifies that bureaucrats—while they may write a check to the IRS and pay income taxes—actually, on net, pay no taxes. He continues, “Additional beneficiaries of government revenue are those in society subsidized by the government; these are the part-time rulers.” This includes not only political elites who receive a paycheck, but others who receive money—or in-kind transfers or favorable regulation—from the state:
…the State must separate society into two classes, or castes: the taxpaying caste and the tax-consuming caste. The tax consumers consist of the full-time bureaucracy and politicians in power, as well as the groups which receive net subsidies, i.e., which receive more from the government than they pay to the government. (Rothbard, Power and Market)
While claiming to protect us from “class conflict,” the government is the creator and driver of caste conflict. In fact, they are the largest, most privileged caste. State elites have the unique privilege of being the legal takers, rearrangers, and “givers.” Additionally, while doing this, they somehow gain the reputation of the neutral, even virtuous, creator-rearranger of resources. They may also use the proceeds of their plunder to “buy” allies who will support the system because the government “gives them” all kinds of benefits. In short, they offer to give what they do rightly possess in exchange for power. Rothbard explains,
Where government intervenes…caste conflict is thereby created, for one man benefits at the expense of another. This is most clearly seen in the case of government transfer subsidies paid from tax or inflation funds—an obvious taking from Peter to give to Paul. Let the subsidy method become general, then, and everyone will rush to gain control of the government. Production will be more and more neglected, as people divert their energies to the political struggles, to the scramble for loot. It is obvious that production and general living standards are lowered in two ways: (1) by the diversion of energy from production to politics, and (2) by the fact that the government inevitably burdens the producers with the incubus of an inefficient, privileged group…. Those who succeed on the free market, in economic life, will therefore be those most adept at production and at serving their fellowmen; those who succeed in the political struggle will be those most adept at employing coercion and winning favors from wielders of coercion.
Through taxes, government spending, debt, inflation, and regulations, not only are both the structure of production and prices distorted, instability exacerbated, resources consumed and wasted contrary to consumer preferences, and inequality worsened, but the causes of these things are concealed, and caste conflict is created. The political caste and the castes of their beneficiaries add insult to injury by trying to highlight all sorts of “class” differences between people, to which the state apparatus is inevitably proposed as the solution. In reality, the state is the originator of caste conflict:
…only when some classes are privileged by state coercion, while other classes are restricted or burdened by state coercion. Ludwig von Mises perceptively used the term “caste” to identify groups either privileged or burdened by the state, as distinguished from “classes”, which are simply groups of people on the free market in no sense in inherent conflict.