§1. We have now completed the survey, commenced in Chap. III., of the internal operations of government, and the principles on which these operations ought to be conducted. We first adopted the assumption, generally accepted in modern political thought, and realised in modern systems of law, that what the adult members of any State require from their Government is mainly security from mischief and interference caused by other men, including breach of engagements freely contracted;---security given primarily by maintaining laws that prohibit all such mischief or interference, and inflicting punishment or exacting damages for their violation. We then examined the different general considerations which appear to justify various kinds and degrees of further governmental interference with industry, and with the action of private individuals generally; sometimes to carry out more effectively the principle of protecting individuals from mischief caused by others; sometimes, though rarely, in the interest of the individuals interfered with; sometimes, again, to secure for the community---either by regulating or by undertaking industrial operations---certain utilities which private competition doers not tend to provide satisfactorily; sometimes to enable the poorer members of the community to apply their labour more productively, thus compensating for the encroachment on equality of opportunity which the appropriation of natural agents necessarily involves; sometimes, finally, to save those defeated in the struggle for existence from the worst consequences of their defeat. The need of some kind of interference under all these heads is generally recognised in the practice of modern communities; but our discussion will have made it evident that very wide divergences are possible as to the proper limits of such interference, even in well-ordered communities of civilised men, of which the governments are aiming in an intelligent and reasonable manner at the wellbeing of the community.
These divergences are most manifest in the classes of governmental interference distinguished as ``indirectly individualistic'', ``paternal'', and ``socialistic''; but they would still exist even if the operations of government were strictly confined to the ``individualistic minimum''. Thus, in trying to define the content of the right of property, from the point of view of the strictest individualism, we have had to recognise a considerable margin of doubt,---for instance, in the important cases of property in land, and property in the results of intellectual labour; and we have noted a similar doubtful margin, in considering the limits of contractual obligation. In the same way many doubtful points of importance occur---as the last chapter has shown---in determining the distribution of the burden of providing Government with the resources necessary for the performance of its functions. Considering these actual doubts and disagreements,---and taking further into account the continual alterations in human relations and circumstances which may be expected to accompany the development of industry and of civilisation generally,---we must expect that important changes will occur from time to time in the legislative operations of Government, even in the most peaceful and well-ordered communities; and that such changes may materially affect the interests of individuals and frustrate expectations founded on the existing law. Further, even apart from any such general changes, the most effective attainment of the ends, of Government in some particular case may require---or appear to require---an encroachment on the rights normally secured to individuals. But by such encroachments on the legitimate expectations of individuals, governments are obviously in danger of causing pain of disappointment, and more widely diffused evils of insecurity, similar to those that would be caused by the private invasion of legal rights which it is the primary concern of Government to prevent. Hence, if it be admitted that such encroachments are inevitable, it becomes important to consider how far their bad effects can be, and ought to be, neutralised or reduced, by compensation to the individuals whom they tend to injure.
A systematic discussion of this question requires us to distinguish carefully the chief ways in which Government is liable to encroach on the interests of individuals. I shall first consider cases of encroachment on private property that may occur without any change in the general rules of governmental interference; as when a private owner is compulsorily deprived of some particular portion of wealth, on account of some special governmental need, or of its special fitness for governmental purposes, without any general change in the law relating to this kind of property. I shall then proceed to discuss the effects of those changes in the general rules of governmental action which I have chiefly had in view in the preceding paragraph. Here it will be convenient to distinguish three cases: (1) changes in laws (exclusive of rules of taxation), which affect detrimentally the legally secured interests of individuals; (2) changes in taxation, either to obtain an increase of supply, or for more equitable distribution of the burden, or for some economic or technical advantage; (3) changes in some action of government in relation to industry, other than legal regulation or taxation. The chief example of this third case is the undertaking by government of certain branches of industry, whether to supply governmental needs---as (e.g.) the need of military equipment or apparatus---or to furnish certain commodities to the public generally, as in the case of the Post-Office.
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