The American anarchist Henry David Thoreau presented what has become a popular conservative view of the effect of government on business: “Yet this government never of itself furthered any enterprise, but by the alacrity with which it got out of its way…Trade and commerce, if they were not made of India-rubber, would never manage to bounce over obstacles which legislators are continually putting in their way…” While this view of the role of the state in business is often taken as gospel by conservatives, there is the question of whether Thoreau is right. While I find his anarchism appealing, there are some problems with his view.

Thoreau is right that the government can be employed to thwart and impede enterprises. To illustrate, this can be done by granting special advantages and subsidies to certain companies or industries, thus impeding their competitors. However, he is mistaken in his claim that the government has never “furthered any enterprise.” I will begin with an easy and obvious reply to this claim.

Modern business could not exist without the physical and social infrastructure provided by the state. In terms of the physical infrastructure, businesses need the transportation infrastructure provided by the taxpayers. The most obvious aspect of this infrastructure is the system of roads that is paid for by the citizens and maintained by the government (citizens acting collectively). Without roads, most businesses could not operate as products could not be moved effectively, and customers would be hard pressed to reach the businesses.

Perhaps even more critical than the physical infrastructure is the social infrastructure created by the people acting collectively and through officials. The social infrastructure includes the legal system, laws, police services, military services, diplomatic services and so on for the structures that compose the governmental aspects of society.

For example, companies in the intellectual property business (which ranges from those dealing in the arts to pharmaceutical companies) require the legal system and law enforcement. For example, if the state did not enforce drug patents, the business model of the major pharmaceutical companies would be destroyed. As another example, if the state did not protect Disney’s intellectual property, their profits would suffer.

As a further illustration, companies that do business internationally require the government’s military and diplomatic services to enable their business activities. In some cases, this involves the use of the military to serve the interest of business. In other cases, it is the less bloody hand of diplomacy that advances American business around the world.

All businesses rely on the currency system made possible by the state and they are all protected by the police. While there are non-state currencies (such as bitcoin) and companies can hire mercenaries, these options are not viable for most businesses.  All of this shows the state plays a critical role in allowing business to even exist. This can, however, be countered.

It could be argued that while the state is necessary for business (after all, there is little business in the state of nature), it does nothing beyond that and should just get out of the way to avoid impeding business. To use an analogy, someone must build the stadium for the football game, but they need to get out of the way when it is time for the players to take the field. The obvious reply is to show how the state has played a very positive role in the development of business.

The United States has made a practice of subsidizing and supporting what the ruling class sees as key businesses. In the 1800s, the railroads were developed with the assistance of the state. The development of the oil industry depended on the state, as did the development of modern agriculture. It could, of course, be objected that this subsidizing and support are bad things. But they are certainly not bad for the businesses that benefit. Elon Musk, for example, profits greatly from taxpayer money. Presumably he was so focused on cutting support for others so even more of this public money could end up in his accounts.

Another area where the state has helped advance business is in funding and engaging in research. This is often research that would be too expensive for private industry and research that requires a long time to yield benefits. One example of this is the development of space technology that made satellites possible. Another example is the development of the internet, which is the nervous system of the modern economy. The BBC’s “50 Things that Made the Modern Economy” does an excellent analysis of the role of governments in developing the technology that made the iPhone possible (and all smart phones).  Unfortunately for business, the Trump administration is (from malice or ignorance) cutting support for research.

One reason the United States has been so successful in the modern economy has been the past commitment of public money to basic research. While not all research leads to successful commercial applications (such as computers), the ability of the collective (us acting as the state) to support long term and expensive research has been critical to the advancement of technology and civilization.

This is not to take away from private sector research, but much of it is built upon public sector foundations. As is expected, private sector research now tends to focus on short-term profits rather than long term research. Unfortunately, this view has infected the public sector as well. As public money for research is reduced, public institutions seek private money, and this money often comes with strings and the risk of corruption. For example, “research” might be funded to “prove” that a product is safe or effective. While this does yield short-term gains, it will lead to a long-term disaster.

The state also helps further enterprise through laws regulating business. While this might seem like a paradox, it is easily shown by using an analogy to the role of the state in regulating the behavior of citizens.

Allowing businesses to operate with no regulation is like allowing anyone to operate without regulations. While the idea of an unregulated life might seem appealing, individuals need protection from others who might threaten their life, liberty and property. To this end, laws are created and enforced to protect people. The same applies to protecting businesses from other businesses (and businesses from people and people from businesses). This is, of course, the stock argument for having government rather than the unregulated state of nature. As Hobbes noted, a lack of government can become a war of all against all and this ends badly for everyone. The freer the market gets, the closer it gets to this state of nature  and this is well worth remembering. The ruling class controlling business does want the citizens to be in the state of nature relative to them but they want to be protected from each other and the citizens by the coercive power of the state.

It might be assumed that I foolishly think that all government involvement in business is good and that all regulations are desirable. This is not the case. Governments can wreck their own economies through corruption, bad regulations and other failures. This has happened in the past and is probably happening now.

Regulations are like any law as they can be good or bad, depending on what they achieve. Some regulations, such as those that encourage fair competition in business, are good. Others, such as those that grant certain companies unfair legal and financial advantages (such as Monsanto here), are not.

While rhetorical bumper stickers about government, business and regulation are appealing in a simplistic way, the reality of the situation requires more thought and due consideration of the positive role the state can play, with due vigilance against the harms that it can do.