Voluntary Government as a Marketable Service: Reminiscences on the History of an Idea

By Alvin Lowi [1]

Back in 1954, when he was at the Foundation for Economic Education at Irvington-on-Hudson, New York, economist Baldy Harper called the idea of voluntary government a most radical one. [2] At that time, Harper said he could count on the fingers of one hand all the people he knew in the world who entertained the notion of a “total alternative” to tax-funded government. Spencer Heath, Spencer MacCallum, Robert LeFevre, and Murray Rothbard were the only ones who came to his mind. [3] Today, given the Internet, there are probably tens of thousands, maybe even millions, who entertain this notion, at least furtively. Yet, the history of the idea, its inception and spread, is sketchy and tentative.

My encounter with this idea began when my friend and colleague, Andrew J. Galambos, introduced me to Spencer Heath. [4] At the time, 1961, I was associated with Galambos and his Free Enterprise Institute. There, I was privileged to observe and participate in the development and exposition of such ideas. I had always known this was a unique opportunity, but until recently had not thought to memorialize the experience. I was prompted to do so when I recently discovered a reprint of J. Huston McCulloch’s 1977 translation from the French of a remarkable essay entitled THE PRODUCTION OF SECURITY. [5] I found the essay, written in 1849, a most compelling read in itself, and the inspiring introduction by Murray Rothbard made it virtually irresistible to put down. It brought to mind some of the experiences I had almost forgotten.

The author of the essay was an obscure laissez-faire economist from Belgium named Gustave de Molinari (1819-1912), a contemporary and intellectual kin of the better known French liberal political economist, Frederic Bastiat. Born in Belgium and educated there in the new academic field of economics, Molinari was associated with the French économistes, a group of laissez-faire liberals recognizable nowadays as a rare breed: pro-capitalist, non-political libertarians. Throughout his long life (he was 92 when he died), Molinari argued for peace, free trade, freedom of speech, freedom of association, and liberty in all its forms.

Molinari was unique among economists in his conviction that the economy did not need the slightest vestige of political protection, not even as represented by constitutionally limited, representative republican government. He was apparently the first person to realize that the market economy contained the means for its own protection and to advance a theory of a society entirely devoid of political regimentation, which is to say, a society without a state.

Molinari envisioned a stable and humane social paradigm. He took individual human liberty to the limit to see if it could stand on its own legs. Libertarians nowadays call this position individualist anarchy, market anarchism, or anarcho-capitalism. Society without political statecraft has also been referred to variously as economic government, voluntary government, or government via market-delivered property protection services.
The Free Enterprise Institute

My colleague Galambos came to think like Molinari about a century later . He did so apparently without a prompt from Molinari – but not without some prompting from his students. Even so, this was a remarkable transition for Galambos, who had no academic preparation in the humanities. He was an astronomer and astrophysicist who left the government-dominated defense industry in 1959, during the height of the Cold War, to return to academia to make the world safe for astrophysicists. In 1960, while still a tenured physics professor, he launched his campaign, “Capitalism, The Key to Survival.” This was a short-lived seminar at Whittier College where he taught, but it was soon transformed into a profit-seeking educational enterprise in Los Angeles under the banner of The Free Enterprise Institute (FEI) and continued for several decades. Galambos died in 1997 after a long illness. In 1999, some of his taped FEI lectures were transcribed and published in a volume entitled SIC ITUR AD ASTRA.

On founding FEI, Galambos embraced the limited government framework of classical liberalism. He was an enthusiastic promoter of the writings of Mises, Read, Hazlitt, Harper, Hayek, and Rothbard. In the early 1960s, he brought Read, Mises, and Harper to Southern California for well-attended seminars. Galambos was obsessed with American constitutionalism. He had a strong sentimental attachment to the American Revolution as fomented by Thomas Paine, which represented for him the break with old-world political despotism and elitism and especially the break-through in social technology that resulted, enabling the liberation and growth of humanity. He subscribed to the thesis of Alexis de Tocqueville and other admirers of this “American phenomenon.” [6]

Galambos approached the subject of government as an exercise in constitutionalism. This exercise he played as an intellectual game with organizational structures and political contrivances for limiting the scope of monopoly political government in keeping with the sentiments of the Declaration of Independence and other classical liberal arguments. However, no matter how liberal, creative, or ingenious were his schemes for controlling the political Leviathan, they were inevitably political and therefore authoritarian and collectivistic. The implications were not lost on Galambos’ students. And curiously, it was just such implications in Ayn Rand’s so-called “objective law,” republicanism, and Leonard Read’s libertarian GOVERNMENT: AN IDEAL CONCEPT, that later alienated Galambos from those otherwise congenial social movements. [7]

Galambos defended his approach to constitutional political government with the claim that adherence to scientific method could be relied upon to avert the usual political outcomes. The physicist cum economist would see to it, so he dreamed. He made the separation of economy and state a central feature of his scheme, which was an intriguing beginning. But the clincher would call for a lot more authentic social science not immediately in evidence and perhaps never forthcoming – at least to the extent that force could ever be justified.

Reading Molinari’s essay reminded me of the debates among Galambos’ students in those early days. Logical extrapolations of his teachings had begun to reveal inconsistencies in the classical liberal treatment of society in the tradition of John Locke, which called for a modicum of political government to maintain a legal framework of order based on private property protection. But such protection, predicated on a monopoly of institutionalized coercion, required an authority that was intrinsically superior to the market and the individual humans comprising it. More specifically, it called for a political state, a supernatural authority, which is alien to individual humans. The dilemma arose – how could mere humans delegate to a committee of other humans, authority they never possessed in the first place? In America, “The Constitution” replaced the king as the symbol of this supernatural authority, invoking as it did the myth of the omniscient and omnipotent majority.

About 1963, Robert LeFevre came onto the Free Enterprise Institute scene. His arguments reduced all political proceedings to absurdity. [8] They had been heard already by some of Galambos’ students who went to Colorado to attend LeFevre’s lectures at the Freedom School. Afterwards, these students introduced LeFevre’s arguments into the discussions at FEI class meetings. Galambos’ constitutionalism was severely tested.

But Galambos’ conception of government was fundamentally nothing more than the collection of services devoted to the protection of private property. [9] It should not have been such a huge leap of faith to dump the political paradigm altogether in favor of property protection services rendered volitionally for profit in the marketplace by competitive private enterprise, based on the authority of proprietorship. Yet, Galambos was not the first to leap. This idea began to catch on first among his students. The awakening began soon after the first offering of his Course 100 in which he had sanctioned limited political government. A sequence of discoveries occurred soon thereafter somewhat as follows.

Spencer Heath, author of CITADEL, MARKET AND ALTAR (1956) had already begun espousing government by proprietary administration, based on maintaining the integrity of private property by contract. His grandson, anthropologist Spencer Heath MacCallum gave a guest course for FEI in 1963 in which he introduced the idea of the proprietary community. [10] His approach followed the work of his grandfather, who would have presented the concept to Galambos’ students a year earlier but for the intervention of a health crisis that ended his long life. [11] MacCallum also introduced other provocative ideas of voluntary social organization to the FEI market, particularly those of E.C. Riegel, who suggested that laissez-faire competition in the marketplace is necessary and sufficient government. [12] Riegel was also the first to call for the complete separation of money and state and develop a concept of private enterprise money.[13]

In his FEI guest lectures that same year, F.A. Harper introduced Molinari’s vision of an unregimented society to Galambos’ market. He was able to offer the attendees of his seminar some rare copies of Molinari’s only book in English at the time, entitled SOCIETY OF TOMORROW. [14] Harper billed Molinari’s proposal as a “total alternative” to the status quo – an emergent “grand alternative” to political government.
The Insurance Industry

Out of this general exploration of the idea of a free market for government services there rapidly developed various private-enterprise extrapolations into community service and property protection. First, to my knowledge, was “the insurance industry as government” proposition of physicist-mathematician, entrepreneur-businessman and FEI contractor Piet (Peter) B. Bos. [15] Electrical engineer, entrepreneur, and FEI contractor Charles R. Estes next offered his vision of competing companies providing arbitration, dispute resolution, patrol, security technology, and bounty hunting services for fee or subscription. Estes also proposed various private-enterprise money and property restitution ventures. [16] Electrical engineer and FEI lecturer Richard A. Nesbit described a private-enterprise primary school system venture which he and several partners and their wives had set up in Southern California and were now operating as a business.

The following year, 1964, some FEI contractors teamed up with me and FEI to bring Robert LeFevre back to Los Angeles to give his freedom seminar. [17] By this time, many of Galambos’ students had already shunned political government, even as a transient lesser evil. Preferring to take their chances with self-government in the marketplace, they were enjoying a bonanza of leisure time liberated from the tedium of political participation in the Republican effort to elect Goldwater that year.

Galambos, himself, finally abandoned all political artifice. All constitutional games with incipient political despotism were demolished, as was any inclination to participate in politics. By the end of 1964, he was espousing purely free-market social organization in which government was defined as follows:
A government is a person or an organization that offers for sale products or services designed to protect property, to which the owner of that property may voluntarily subscribe. [18]
Galambos called attention to his use of the article “a” in this definition – “a” government, not “the” government, emphasizing the absence of monopoly as an essential attribute.

Then Galambos came out with his Course V-201 – “The Nature and Protection of Primary Property,” which he came to call his most important – out of the dozens developed in the years afterward. The course was controversial with existing students because of a new strict non-disclosure requirement. Here he brought out his concept of the pure contractual corporation operating a clearinghouse for businesses utilizing intellectual property for profit. This invention was to supersede coercive patent and copyright privileges issued by political governments, which his for-profit corporations would displace forever. In 2001, FEI contractor Robert Klassen published his treatise, ECONOMIC GOVERNMENT, showing in one of his chapters how Galambos’ royalty-clearinghouse business might be implemented with the aid of new computer technology. [19]

Up to the time of McCulloch’s translation of Molinari’s essay (1977), Galambos and Rothbard had been ideologically and intellectually congenial in most respects, but they became estranged over the fundamental question of politics and its place in the liberty movement. Their differences came into focus in the light of Molinari’s “two ways of considering society.” Molinari saw politics and society (force versus voluntary exchange) as worlds apart. That is where they belonged, according to Galambos, who was aligned on this point with his predecessor, Spencer Heath. [20] Galambos had developed similar notions to Heath’s non-political methodology in his business of promoting freedom. [21] Rothbard, on the contrary, had turned to politics for social salvation. He was influential in the formation of the Libertarian Party. [22].

While Rothbard and his libertarian colleagues were preoccupied with their political projects, Galambos was building a business developing ideological momentum for his non-political “natural republic” (a name which I had suggested). He described the “natural republic” as the societal condition comprised of voluntary entrepreneurial behavior based on economic and ethical knowledge developed via an authentic social science (dubbed “volitional science” by Jay S. Snelson, the Senior Lecturer at FEI for many years). Galambos believed his society of the future would be a technological achievement, one that would result in a wholly voluntary society in which every person would have 100% control over his or her own property, a condition which he defined as freedom.

Galambos envisioned society as an evolutionary process of voluntary human action developing entrepreneurially-delivered property protection services that would gradually supersede all coercive political institutions. The “natural republic” would be built in a step-by-step process according to a design rendered beforehand, much as an architect would build a skyscraper – an analogy Galambos attributed to his architect father, Joseph B. Galambos. [23] The builders of this social architecture would come to the task by way of an ideological program offered by the architect as a proprietary product, which as I have mentioned, Robert Klassen subsequently labeled “economic government.”

Although the nature of man and his government is a long-studied subject in the human curriculum, only a few original thinkers have contributed to Molinari’s blockbuster discovery that political government must be abandoned in favor of private enterprise property protection for a free society to prevail. Galambos was one of few thinkers who conceived of private, profit-seeking businesses providing comprehensive property protection services as the keystone of human society. His reliance on competitive private enterprise to deliver protective services – for a profit – is a monumental idea. While the practice is yet to come to fruition on a large scale, we now know that it is the only reliable method of obtaining property protection consistent with liberty. Since Galambos is no longer with us, it is up to us to pass along his ideas and manner of thinking to the next generation.

Readers of this article may be interested in this other historical essay dealing with related themes.
End Notes

[1] Alvin Lowi is a mechanical engineer and thermodynamicist in private practice in Rancho Palos Verdes, CA. This article was originally prepared in October 2014, and revised with help from Richard Boren and Carl Watner. Alvin Lowi has written many articles on free-market subjects. He was a friend, colleague, and business associate of Andrew J. Galambos for many years and lectured for Galambos’ Free Enterprise Institute in Los Angeles from 1961 to 1969. He taught Galambos’ original course “Capitalism, the Key to Survival” from 1961 through its final offering in 1965. That course was superseded by Galambos’ and Snelson’s more familiar Courses V-50 and V-201.
[2] F. A. “Baldy” Harper was professor of marketing at Cornell University and the first staff economist with the Foundation for Economic Education (FEE). He founded the Institute for Humane Studies, a community of libertarian scholars originally located in Menlo Park, California, now at George Mason University in Virginia.
[3] Spencer H. MacCallum, in a personal communication, wrote that he was present when Harper made this statement. Acknowledging the difficulty of tracing the propagation of ideas back to their source, Harper thought this perspective had come to him from a typescript of Heath’s CITADEL, MARKET AND ALTAR that John Chamberlain had sent him. He said the idea ruminated in his mind a full year before it became clearly planted. So the chain of custody may have been from Heath to Baldy and thence to LeFevre and Rothbard. Baldy suggested MacCallum ask Rothbard whether he thought the idea had come to him from Baldy, but MacCallum never did.
[4] Alvin Lowi, “The Legacy of Spencer Heath: A Former Student Remembers the Man and Offers Some Observations on the Scientific Orientation of His Work,” January 3, 2001. Available from alowi@earthlink.net.
[5] “Weekend Read, MisesDailyArticle.org, March 25, 2006. The complete essay in English is at http://mises.org/story/2088#6.
[6] Alexis de Tocqueville, DEMOCRACY IN AMERICA, Vintage Books, 1945.
[7] Leonard Read, GOVERNMENT – AN IDEAL CONCEPT, New York: The Foundation for Economic Education, 1954.
[8] Robert LeFevre, “Must We Depend on Political Protection? – ‘Yes,’ Edmund A. Opitz; ‘No,’ Robert LeFevre,” STUDIES IN HUMAN ACTION, Vol. II, No, 1, Colorado Springs: The Freedom School, Pine Tree Press, 1962.
[9] Andrew J. Galambos, SIC ITUR AD ASTRA, San Diego, CA: Universal Scientific Publishing Co., 1999, p. 29. See http://www.amazon.com/Sic-Itur-Ad-Astra-Volition/dp/0880780045/sr=1-2/qid=1160671190/ref=pd_bbs_2/102-3770766-9772913?ie=UTF8&s=books.
[10] Spencer H. MacCallum, THE ART OF COMMUNITY, Menlo Park, CA: Institute for Humane Studies, 1970.
[11] Spencer Heath, CITADEL, MARKET AND ALTAR, Baltimore: Science of Society Foundation, 1956.
[12] E.C. Riegel, THE NEW APPROACH TO FREEDOM, San Pedro, CA: Heather Foundation, 1976.
[13] E.C. Riegel, FLIGHT FROM INFLATION: THE MONETARY ALTERNATIVE, Los Angeles: Heather Foundation, 1978.
[14] Gustave de Molinari, THE SOCIETY OF TOMORROW, London: T. Fisher Unwin, 1904.
[15] Peter B. Bos, “The Societal Implications of Risk Sharing,” Draft of December 20, 1998. Available from Pbbos@aol.com.
[16] Charles R. Estes, VOLUNTARY EXCHANGE: KEYSTONE OF CIVILIZATION, San Diego, CA: Mary L. Estes, 1997.
[17] Robert LeFevre, “The Thinking Man’s Guide to Politics” Seminar, Los Angeles: Free Enterprise Institute, May 2, 1964.
[18] Galambos, op. cit, p. 138.
[19] Robert Klassen, ECONOMIC GOVERNMENT, San Jose: WRITERS CLUB PRESS, 2001.
[20] Spencer Heath, POLITICS VERSUS PROPRIETORSHIP, Self-published 1936. Available from Spencer H. MacCallum, sm@look.net. Heath was a lecturer at the Henry George School under the direction of Frank Chodorov in New York City at this time.
[21] Galambos actually launched his freedom business out of a licensed securities and insurance business, Universal Shares, Ltd., from which he sold mutual fund shares and insurance policies as a means of making money while selling laissez-faire capitalism along with personal property and financial security.
[22] J. Michael Oliver and Donald C. Stone, “Exclusive Interview with Murray Rothbard,” http://www.lewrockwell.com/rothbard/rothbard103.html. Originally published in The NEW BANNER: A FORTNIGHTLY LIBERTARIAN JOURNAL, February 25, 1972, Columbia, SC: New Banner Institute.
[23] Suzanne Galambos, MORE LASTING THAN BRONZE, Coronado, CA: Universal Scientific Publishing Co., 1991.