Unlike socialism, the conception of the welfare state has no precise meaning. The phrase is sometimes used to describe any state that “concerns” itself in any manner with problems other than those of the maintenance of law and order. But, though a few theorists have demanded that the activities of government should be limited to the maintenance of law and order, such a stand cannot be justified by the principle of liberty. Only the coercive measures of government need be strictly limited. We have already seen that there is undeniably a wide field for non-coercive activities of government and that there is a clear need for financing them by taxation.
Indeed, no government in modern times has ever confined itself to the “individualist minimum” which has occasionally been described, nor has such confinement of governmental activity been advocated by the “orthodox” classical economists. All modern governments have made provision for the indigent, unfortunate, and disabled and have concerned themselves with questions of health and the dissemination of knowledge. There is no reason why the volume of these pure service activities should not increase with the general growth of wealth. There are common needs that can be satisfied only by collective action and which can be thus provided for without restricting individual liberty. It can hardly be denied that, as we grow richer, that minimum of sustenance which the community has always provided for those not able to look after themselves, and which can be provided outside the market, will gradually rise, or that government may, usefully and without doing any harm, assist or even lead in such endeavors. There is little reason why the government should not also play some role, or even take the initiative, in such areas as social insurance and education, or temporarily subsidize certain experimental developments. Our problem here is not so much the aims as the methods of government action.
References are often made to those modest and innocent aims of governmental activity to show how unreasonable is any opposition to the welfare state as such. But, once the rigid position that government should not concern itself at all with such matters is abandoned—a position which is defensible but has little to do with freedom—the defenders of liberty commonly discover that the program of the welfare state comprises a great deal more that is represented as equally legitimate and unobjectionable. If, for instance, they admit that they have no objection to pure-food laws, this is taken to imply that they should not object to any government activity directed toward a desirable end.
Those who attempt to delimit the functions of government in terms of aims rather than methods thus regularly find themselves in the position of having to oppose state action which appears to have only desirable consequences or of having to admit that they have no general rule on which to base their objections to measures which, though effective for particular purposes, would in their aggregate effect destroy a free society.
Though the position that the state should have nothing to do with matters not related to the maintenance of law and order may seem logical so long as we think of the state solely as a coercive apparatus, we must recognize that, as a service agency, it may assist without harm in the achievement of desirable aims which perhaps could not be achieved otherwise. The reason why many of the new welfare activities of government are a threat to freedom, then, is that, though they are presented as mere service activities, they really constitute an exercise of the coercive powers of government and rest on its claiming exclusive rights in certain fields…
There are all kinds of public amenities which it may be in the interest of all members of the community to provide by common effort, such as parks and museums, theaters and facilities for sports—though there are strong reasons why they should be provided by local rather than national authorities.
There is then the important issue of security, of protection against risks common to all, where government can often either reduce these risks or assist people to provide against them. Here, however, an important distinction has to be drawn between two conceptions of security: a limited security which can be achieved for all and which is, therefore, no privilege, and absolute security, which in a free society cannot be achieved for all. The first of these is security against severe physical privation, the assurance of a given minimum of sustenance for all; and the second is the assurance of a given standard of life, which is determined by comparing the standard enjoyed by a person or a group with that of others.
The distinction, then, is that between the security of an equal minimum income for all and the security of a particular income that a person is thought to deserve. The latter is closely related to the third main ambition that inspires the welfare state: the desire to use the powers of government to insure a more even or more just distribution of goods. Insofar as this means that the coercive powers of government are to be used to insure that particular people get particular things, it requires a kind of discrimination between, and an unequal treatment of, different people which is irreconcilable with a free society. This is the kind of welfare state that aims at “social justice” and becomes “primarily a redistributor of income.” It is bound to lead back to socialism and its coercive and essentially arbitrary methods.