Commercial state

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The commercial state concept (and its important variants, commercial society and commercial republic) is sometimes associated with Adam Ferguson's concept of civil society and refers to a government or political state devoted primarily to the promotion and advancement of commercial interests. Ferguson, Adam Smith and other representatives of the Scottish Enlightenment (and who referred to themselves as the literati) were more likely to use the term commercial society. The underlying idea of the commercial state can also be linked to the American School of Economics (and in particular to the legacy of the political and economic approach of Alexander Hamilton). In its modern manifestation, national, state and local governments which pursue business and commercial development and other forms of economic and industrial development through tax policies and forms of positive incentives and inducements may properly be termed commercial states. Practical commercial state activities include governmental economic development efforts including encouraging plant relocations, tax rebates, zoning easements and assorted other incentives and concessions.

Several lines of thought and action (e.g. Mercantilism ) run from ancient Greek and Roman philosophy through the 18th century revivals of Ferguson and Adam Smith. A similar model of the commercial role of the state can be traced through the Federalist party of Alexander Hamilton in the U.S. and more recently in the thought of Austrian economists such as Ludwig von Mises and Frederick Hayek and other 20th century theorists including Milton Friedman and Murray Rothbard, who argue not only for a limited role for government, but also that residual role is heavily commercial. The modern Republican Party (United States) and Democratic Party in the U.S. both include significant factions of adherents of the commercial state, although commercial state rhetoric is usually much more evident in the former. (See, for example, discussions of Reaganomics in Ronald Reagan and the Republican Party (United States).)

The Hibernia Affair

The underlying issue of the commercial state was an important one for nineteenth century German government officials who saw themselves as holding the line against encroaching industrialism. This is illustrated, for example, in the Hibernia Affair in which the Prussian nobility and bureaucracy sought to curtail the growing power of the industrial middle class. According to Charles Medalen, "The Hibernia Affair of 1904 was nominally a struggle between Prussian 'state socialism' and private enterprise. Neither position was clearly defined....Nonetheless Prussia's attempt to nationalize the Hibernia Coal Company revived fundamental issues which had once divided the bourgeoisie and the traditional rulers of Prussia, issues which many had thought resolved by social empiricalism and Weltpolitic." In blocking the takeover of Hibernia, heavy industry sought to reestablish limits to the government's growing encroachment upon the private sphere. [1]

In this context, the commercial state as it was seen to exist in Britain and the U.S. was contrasted with the majesty of the traditional Prussian state (and the Holy Roman Empire): "The Prussian state was not an autonomous factor in society, as proclaimed by its official myth. But neither was it the simple tool of the bourgeois as some Marxists would have it. With a heavy ballast of history, a vague and pervasive ideology, and a bureaucracy jealous of its power, the state had a massive momentum of its own. The Hibernia affair was a symbolic struggle over the political destinies of Prussia and Germany. Would 'the state' control the economy, or would the economy overwhelm the state? Did the government, allied to the capitalist bourgeoisie and willy-nilly committed to industrial society have the power to alter the direction of German economic development? Or would a belated bourgeois revolution occur, would the traditional 'state' prove powerless to stop capitalist monopolies from imposing their will on society? Would the government become an auxiliary service to business, as it seemed to be in Britain and America? The fate of Hibernia itself was of secondary importance, but it was a harbinger of the future, and the protagonists fought with a bitterness born of that knowledge." [2]


  1. Medalen, 1978, p. 82
  2. Medalen, 1978, p. 93