2. Types of Intervention

On the free market, all individuals are free to act entirely as they choose, providing they don’t initiate violent actions.  All exchanges are made voluntarily and property rights are always respected.  We have seen that a free society will automatically organize itself into the most productive arrangement possible for satisfying consumer desires.

Government, by definition, cannot exist on the free market.  Government is defined as a group with rights over and above those of the individuals in the group, which assumes the sole authority to initiate violent actions, or, interventions, in a society. 

Intervention is the intrusion of aggressive physical force into society.  The analysis of intervention is identical whether the aggressor is a thief or robber or fraudster, or whether it is the government itself.  Government violence differs from criminal violence only in that is “legal”, institutionalized, rationalized, widespread and accepted.  We shall focus our attention on interventions by governments.

There are three basic types of intervention:

• Autistic intervention – when the aggressor uses force on an individual such that no one else is affected.
• Binary intervention – when the aggressor establishes a hegemonic relationship between himself and the victim.
  • Taxation
  • Government spending
  • Inflation and business cycles
• Triangular intervention – when the aggressor uses force to alter the relations between a pair of subjects.
  • Price control
  • Product control (regulations)

In this chapter we will analyze the effects of each type of government intervention, starting with the intimately connected interventions of taxation and spending.  They are closely connected because all government spending requires taxation.

Inflation is really just a particularly nasty form of taxation, but it also gives rise to the business cycle, and we shall look at these subjects in more detail in the next chapter.