For a number of reasons, I have recently had to look more closely than ever into the literature on the pros and cons of 'the state'. Being more widely read than I used to be, I am frankly surprised just how naive, unsophisticated and one-sided the approach tends to be that is taken by anarcho-capitalists and many libertarians.
Today, quite incidentally, during work breaks, I have posted the below comments at Cafe Hayek. I intend to write more extensively on the subject matter in the near future. So look at these propositions as a mere prelude:
Great economists like Alchian, Demsetz, North etc. having helped us
overcome the neoclassical ignorance of politics and the state, we are
faced with compelling economic reasons for the indispensable position of
the state in the progress of civilization. Differentiating good
governance structures from bad ones seems to me a more promising, yet a
less uplifting and far more cumbersome and intricate proposition than a
general hankering after a stateless utopia.
There could never have been an extensive division of labour without the state. Of course, one is free to wish away advanced levels of the division of labour as they have enabled human beings to commit the most terrible atrocities. Who would do that, sensibly? But that is analogous to wishing away "the state".
Neither markets nor liberty can self-generate their indispensable preconditions - these depend on politics, and as long as politics remains even just a residuum there will be organised power and the state.
Constraining state power is likely to be best we can achieve.
In fact, adjusted to scale, I would not be surprised if pre-state human communities betrayed at least as enormous and as systematic a propensity for atrocities and other morally outrageous activities as can be discerned in a history of the state. With uneven success, admittedly, progress in terms of peace and humaneness seems inseparable from the presence of state structures and impossible to deliver by more rudimentary forms of human association. And indeed, if one mentions the misery and carnage attributable to the human instrument called 'the state', one ought to give consideration to opposite effects as well: how many (billions of) human beings were able to live to begin with thanks to the presence of a civilizational package containing the 'state' element, and not just live, but live lifes of significantly increasing quality? See also A Hard Day's Work.
As a classical liberal, I am exceedingly suspicious of the state. However, the very generic term that I have just used ('the state') gives rise to problematic misconceptions. It suggests a degree of uniformity of the phenomenon that is misleading, while in fact the state is a highly differentiated, amorphous and ambivalent structure. On this account, Higgs (whom I greatly admire) seems to go wrong where many libertarians and especially anarcho-capitalists go wrong: they do not consider that 'the state' is an inescapable package deal, whose welcome aspects cannot be reliably separated from its horrendous potential. However, in order to remedy the situation (and perhaps eventually arrive at highly effective procedures for neutralising the toxic potential of the state) it is not useful to pretend the state is naturally and absolutely dysfunctional and evil.
There has never been a civilization in history that did not require the state. There are profound reasons why this is so. We ought to study these grounds with open eyes and as little affective bias as possible, rather than effectively ignoring the momentous challenge by treating the state as if it were easily dispensable, yet gratuitously held on to by the nasty ones and the obtusive amongst us. In fact, I believe classical liberalism is fundamentally a theory of the (successfully constrained) state. Classical liberals are - in a way - statists, and ought to be. Incidentally, for those willing to pursue the suggested course of research, I recommend Douglass C. North, who has made inestimable contributions to a sober economic (and interdisciplinary) analysis of the phenomenon of the state.