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When markets fail to allocate resources justly and efficiently, society is harmed. It is the role of government to prevent harm. John Stuart Mill articulated when it is appropriate and inappropriate for government to use its coercive powers and contravene upon individuals' decision making freedom in his classic On Liberty: Whenever... there is a definite damage, or definite risk of damage, either to an individual or to the public, the case is taken out of the province of liberty, and placed in that of morality or law. But with regard to the merely contingent... injury... to society, by conduct which neither violates any specific duty to the public, nor occasions perceptible to any assignable individual except himself; the inconvenience is one which society can afford to bear, for the sake of the greater good of human freedom. (p. 54) Excessive inequality and failures to met basic needs, which causes injustice and inefficiency, constitute "definite damage," or at least a "definite risk of damage." When the market fails, the state has the right and responsibility to use its coercive powers to bring about a more just and efficient distribution of resources. To briefly illustrate the theoretical need for state intervention I will focus on the four most prominent functions of the welfare state: redistribution, health care, education and social insurance - redistribution being an overarching concept, achieved partially through the other three welfare state functions. But what keeps the state in check? It is important to note that active state involvement in the economy does not signal descent into a totalitarian system of government. It is fallacious to suggest that unless people abstain from supporting only the most meager of welfare states, excessive state control with negative effects outweighing the benefits of government intervention will follow. Arguing, as Hayek did, that interventions for the sake of social justice will result in government control over the economy to the point where such will destroy "personal freedom," is a slippery slope fallacy. Furthermore, this fallacious line of reasoning ignores the mechanism in place to curb state power. As introductory political science textbooks tells students (e.g. Henschen & Sidlow, 2000) a system of checks and balances, a hard to amend constitution and the democratic system itself are designed to curb run-away government intervention and prevent the "tyranny of majority." The modern liberal viewpoint sees these mechanisms as guarding against excessive state power. As Starr (2007), a prominent modern liberal scholar put it, A state... can be strong but constrained - strong because constrained... Rights to education and other requirements for human development and security aim to advance equal opportunity and personal dignity and to promote a creative and productive society. To guarantee those rights, liberals have supported a wider social and economic role for the state, counterbalanced by more robust guarantees of civil liberties and a wider social system of checks and balances anchored in an independent press and pluralistic society. (p. 21) There is no reason to believe that the modern welfare state and assertive fiscal policy will mark an inevitable move towards authoritarian rule. If it was true, as Hayek argued, that "government intervention... [generates] the need for additional corrective intervention... [leading] to a larger role for government [which] will eventually push society toward socialism" (Clark, 1998, p. 46) then one would have to wonder why the developed countries, all of whom have maintain mixed economies for the better part of the 20th century, have not yet succumb to totalitarian socialism a la Soviet Union.
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