Misconceptions of Institutions


It may seem pointless to state the obvious fact that institutions are important. Whether it be media institutions, think tanks, Hollywood, universities, or the state itself, these institutions all influence society in certain ways, some good, some bad.

But although there is no shortage of complaints from all sides about the harm certain institutions are doing, there is a need for greater discussion on the very concept of an institution, especially among libertarians. Though we can all agree on the issues with the state as an institution, and there are debates on whether the state institution should be limited or abolished completely, there are vast differences in view of other institutions other than the state.

This is to be expected, since libertarians are united by their focus on state institutions. But the presence or absence of other institutions affects society’s relationship with the state (or the possibility of one).

Therefore, those opposed to the state must be conscious of the role institutions play in the relationship between the individual and the state.

In many settings, institutions take the place of the state, or vice versa. Prior to the rise of welfare states, religious institutions were the primary method of providing charity. Local churches maintained community cohesion and offered sanctuary and assistance to its members. Nowadays, the state is seen as providing a “social safety net” to those in need, with many of its defenders completely clueless as to how any non-state entity could replace the welfare state.

Though there are still private schools, the state is the primary provider of education, whether it be for basic K-12 education or university degrees. Very few universities still exist that do not accept any form of public funding. But the university as an institution has existed since 1088 (and other institutions for education existed long before that). And though several older institutions did receive funding through taxation, the average university then was much more independent from the state than the average university today. Thanks to the internet, there are now new revolutionary institutions like Khan Academy that provide better and alternative methods of education through funding from private institutions.

An issue with most universities being tied to the state is that they become subservient to the state. When the state attempts to increase its power, nonstate institutions are threatened by this. But institutions dependent on the state can benefit from it, and may lose funding if they challenge the state.

Even law itself was not entirely a state affair. Though states have always passed laws, they were not always the supreme law of the land. There were often competing institutions (the Catholic Church being the most famous example) that rivaled state institutions. Though dangerous when working together, the competition of separate institutional authorities was its own system of checks and balances.

A conclusion to draw from these few examples is that nonstate institutions can be a valuable resource against state omnipotence. It is true that a spontaneous order can develop institutions in areas outside the state’s control, but this means these institutions are competition against the state. When private institutions fail in performing an important societal role, the state will rush in to fill the void, and many people will welcome it with open arms. Which means that if the state can weaken or ruin an existing private institution, the state will benefit greatly.

Therefore much of the fight against leviathan is not simply about tearing down the state. People will cling to the state so long as it is an institution providing important societal functions. It is instead about rebuilding and maintaining fallen or compromised institutions that can outcompete the state. Even the ideal Rothbardian anarchist society will have governing institutions. Institutions that provide law, education, and charity will always exist. What matters is whether these institutions are subservient to the leviathan state, or independent and keeping other institutions in check.

If the state were to collapse tomorrow, without any private institutions ready to take its place, the people would simply beg for another state. To defeat the state, we must outcompete the state.

The following two tabs change content below.
Nathan A. Kreider is author of the Misconceptions column for Being Libertarian, and has written for the Austrian Economics Center, the Foundation for Economic Education, and the Liberalists. He also occasionally publishes a blog and video content, including short book reviews, which can be found on his website, nkreider.com. He can be contacted by email via [email protected]