Government and the Mode of Prodution

Karl Marx stated that the form of government is determined by our relationship to the means of production.  I suspect that there is some truth to this, although his further claim that history will inevitably progress in certain stages, as he laid them out, is probably wrong.  Much of his reasoning is very difficult to follow.  If by dictatorship of the proletariat he meant universal adult suffrage, then I suppose you could say that the industrial revolution has led to this.  However, the result has not been socialism, as he predicted.

I think a clearer explanation for what is going on is that large scale industrialization has led to the creation of an urbanized proletariat, which was much more difficult to repress than the rural peasantry that preceded it as the poorest class.  Political repression in this case became so difficult that it was not even practical to prevent female suffrage, which nearly all societies had managed to do prior to the industrial revolution.

Another factor to consider is that the proportion of production that was done for purposes of trade has increased.  In the more primitive, agrarian societies, subsistence farming was a rather practical method of production.  Thus the government was unable to extract as large of a proportion of what was produced in taxes.

The combination of these two factors, universal adult suffrage including women and a state that was able to extract a much larger proportion of the economy, led to the formation of the social welfare state.  In many countries, about half of everything that is produced goes to the government to be distributed as transfer payments, or to provide goods and services.  The U.S. with its system of checks and balances slows down the growth of these social programs so that spending is quite a bit less than this.  Spending would also probably be a bit less if voters were able to control it directly through a system of initiatives and referenda, as is the case in Switzerland.  Nevertheless, the differences under these various forms of government may lower the proportion spent to 35% of GDP, as opposed to about 50%.  This is much less than the difference between the 3-5% peacetime budgets in agrarian societies and the 35-50% that we see for modern social welfare states.

So the major factors leading to the change in the government are large scale production and urbanization.  Where are we likely to go from here?  I see two possibilities.  One is that we will simply see more of the same.  We might see a slight decrease in the size of government relative to the economy if initiatives and referenda become more widespread.  Urbanization is likely to continue.  Large scale industry may as well.

On the other hand, it could be that technological advances will lead to smaller scale production, perhaps to the point where industrial production by the user becomes attractive.  The development of 3-D printers is an example of a technology that could change our relationship to the means of production in this way.  There would be a reduction in the proportion of economic output consisting of goods produced for the purpose of trade.  This would result in a reduction in the amount that the government could collect in taxes.  I would predict that this would not have much impact on urbanization, as production would require access to the internet, which would be much better in urban areas, particularly if the decline in the proportion of economic output that the government could tax made it difficult for the government to subsidize rural access to the internet.

Hence urbanization is likely to continue, ensuring that democracy is likely to thrive, but production is likely to move to a smaller scale, where production for use can easily replace production for trade.  Thus the social welfare state will not thrive.  Actual production for use is not necessary in order for the tax rates to decline.  Merely the threat of production for use would do.  The government would have to be aware that higher tax rates would lead to a sharper shift toward production for use as opposed to production for trade.