Independent Institutions and Private Force

Harvard University is a great private institution, albeit too enmeshed in our naive political zeitgeist. At least two PhD graduates from that university—and in economics, of all fields!—occupy senior positions in Trump’s entourage. About one of them, Elon Musk said that he is “dumber than a sack of bricks,” to which I would not strenuously object. Note that Harvard University is not just a factory of “radical leftists”; it also produces collectivists of the right. And the VERITAS (“truth”) motto on its coat of arms is reassuring, even if it must look like Chinese in the White House.

My main point, however, is that as a wealthy and influential private organization, Harvard University can provide a barrier to the power grab within the federal government and the centralization of power in this country. It is true that, like all large private universities, Harvard has imprudently become dependent on federal government money, but this was under the tacit, albeit naive, understanding that the government was motivated by education, research, and a love of free inquiry and the people.

I wouldn’t say that the Federal Reserve System is a great institution, as its creation was at best a diversion from an overregulated and thus fragile banking system. Moreover, the organization is only marginally private through its regional components, each of which is an association of mostly private regional banks but with only a minority of private bankers on its Board of Directors. As a sort of central planning bureau, the Federal Reserve System flies blind in manipulating the money supply and meddling with interest rates, not to mention its growing regulatory mandates. Yet it introduces a crucial element of decentralization in the City of Command (as Bertrand de Jouvenel called the seats of modern Leviathans). Imagine if Donald Trump held the levers of monetary policy (or if Joe Biden had, to add the mandatory qualification “But Biden.”)

I take an institution to be a set of rules, like when we say that the family or the free market are useful institutions. Some institutions double as organizations or generate organizations, in the sense of structured entities with goals, agents, and representatives: Harvard is an organization within the institution of higher education and research. In a free society, institutions and accompanying organizations help coordinate independent individual actions.

Many institutional barriers to power exist in the private sector (private property, large companies, a free press, financial markets, and so forth, including even organizations that can be otherwise detrimental such as trade unions) and in the public sector (independent courts, federalism, separation of power, inspectors general, FOIA, etc.). In the public sector, Montesquieu noted that to prevent the abuse of power, “it is necessary [that] from the very [arrangement] of things, power should be a check to power.” (I think that “arrangement” is a better translation than “nature.”) Strong private institutions constitute essential barriers to the expansion of political power outside its domain.

Anthony de Jasay, a classical liberal anarchist, believed that the domain of political power can and should be reduced to zero or, at least, as close to zero as possible. The current functions of governments could be assumed by private institutions, notably private property and free markets. Their accompanying organizations would provide private producers of “public goods.” Which leads to an observation we find in his seminal book, The State:

Self-imposed limits on sovereign power can disarm mistrust, but provide no guarantee of liberty and property beyond those afforded by the balance between state and private force.

A model often invoked by other theorists is the decentralized armed power of the High Middle Ages, where lords were able to protect their domains and even resist the king’s power. Of course, local political power can only approximate private force—if it does not degenerate into roving bandits, which the Church effectively prevented. (See William Salter and Andrew T. Young, The Medieval Constitution of Liberty [University of Michigan Press, 2023]; and also Jouvenel.)

This balance of force may have lasted until the 16th century in England. In his History of England (Volume 1), Thomas Babington Macaulay offers a qualified statement:

It was, however, impossible for the Tudors to carry oppression beyond a certain point: for they had no armed force, and they were surrounded by an armed people.

Two centuries later, in his Commentaries on the Laws of England (Volume 1), British jurist William Blackstone extended the private force barrier to the armed force of common people:

The fifth and last auxiliary right of the subject, that I shall at present mention, is that of having arms for their defence, suitable to their condition and degree, and such as are allowed by law. Which is also declared by the same statute, 1 W. and M. st. 2, c. 2, and is indeed a public allowance, under due restrictions, of the natural right of resistance and self-preservation, when the sanctions of society and laws are found insufficient to restrain the violence of oppression.

It is true that—especially today—individuals armed with handguns or assault rifles could not easily resist our heavily armed Leviathans, but what often matters is the marginal cost of imposing tyranny: What cost (including in political capital and public support) is the government willing to support to climb another rung on the ladder of tyranny?

De Jasay, who was an admirer of the liberal 19th century, was no doubt closer to (a more radical) Blackstone than to medieval lords. Powerful private organizations, backed by a general belief in private property and in a strict limitation of political power, would hold a potential of private force in the literal sense. Whether large capitalist corporations would ever actualize this potential to physically resist tyranny is uncertain, and therefore so is the solidity of this barrier. They could still, however, resist in indirect ways like employing unpopular dissidents as Hollywood studios did during the McCarthyist persecutions (as noted by Milton Friedman in his Capitalism and Freedom).

Decentralized government and its internal barriers to power can sometimes be detrimental, as when southern American states resisted attempts by the central state to stop the public discrimination they imposed. No political system is perfect, but central tyranny is more dangerous than localized tyranny—unambiguously so when free movement of people is possible at relatively low cost. As Montesquieu noted,

Since a despotic government is productive of the most dreadful calamities to human nature, the very evil that restrains it is beneficial to the subject.

[French original] Comme le despotisme cause à la nature humaine des maux effroyables, le mal même qui le limite est un bien.

In short, private institutions, especially large private organizations, provide a barrier to government power, even if their “private force” is limited. Public or quasi-public organizations can play a similar role as long as they are not subverted by the central power. When these countervailing organizations are enfeebled, liberties become more fragile.

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