“Leviathan government” refers to a state that behaves like a self-interested giant, growing as large as it can and extracting as much revenue as possible from its citizens. The term borrows from Thomas Hobbes’s seventeenth-century image of the all-powerful sovereign, but its modern meaning in political economy is more specific: it describes governments modeled as revenue maximizers rather than public servants. Whether this framing is a useful warning or an ideological caricature depends on who you ask, but the concept has shaped decades of debate about taxation, public spending, and the institutional checks that keep state power from swallowing everything in its path.
Where the Idea Comes From
Thomas Hobbes published Leviathan in 1651, arguing that people in a “state of nature” would live in constant fear and violence, and that the rational solution was to surrender individual power to an absolute sovereign. That sovereign, the Leviathan, would maintain order through unchallenged authority. Hobbes was not especially worried about the sovereign abusing its power; to him, almost any government was better than anarchy.
The modern “Leviathan government” concept flips this emphasis. Economists Geoffrey Brennan and James Buchanan developed what has been called a “Neo-Hobbesian” model of public finance, treating government as a revenue-maximizing Leviathan while departing from the strict Hobbesian view by assuming that constitutional rules can partially constrain it.1The Social Science Journal. Brennan and Buchanan’s Leviathan models In their framework, politicians and bureaucrats do not selflessly pursue the public good. They pursue budgets, power, and re-election, and the question becomes how institutions can cage those impulses. This is a deliberately pessimistic assumption, meant as a stress test for constitutional design: if we assume the worst about those in power, what rules would still protect citizens?
A parallel line of thinking came from political scientist Mancur Olson, who offered a different origin story for the state. Olson argued that roving bandits who settled down and monopolized theft in a given territory would eventually limit their own extractions, protect their victims from rival bandits, and possibly even provide public goods, effectively transforming themselves into autocratic rulers.2Political Studies Review. Theft by Bandits and Taxation by Kings: A Critique of Mancur Olson on State-Formation The implication is darkly pragmatic: a “stationary bandit” who plans to keep extracting from the same population year after year has a rational incentive to leave the population productive enough to keep paying. The Leviathan, in this telling, is not a monster that destroys everything. It is a monster that farms.
Why Governments Keep Growing
One of the central anxieties behind the Leviathan metaphor is the observation that government spending, measured as a share of the economy, has risen dramatically across developed nations over the past century and a half. In the mid-1800s, government spending in most Western countries hovered around ten percent of national output. Today it commonly sits between 30 and 50 percent. Several explanations compete for why.
The most enduring is known as Wagner’s Law, named after the nineteenth-century economist Adolph Wagner, who predicted that industrialization and rising incomes would drive citizens to demand more from their governments. Studies across OECD countries have found a structural positive correlation between public spending and per-capita GDP, with a long-run elasticity greater than one, meaning government spending tends to grow faster than the economy itself.3German Economic Review. Increasing Public Expenditure: Wagner’s Law in OECD Countries Research examining individual countries has confirmed a causal direction running from GDP growth to government spending in several cases, suggesting that richer societies genuinely demand more public services rather than merely being stuck with them.4Journal of Policy Modeling. Wagner on government spending and national income: A new look at an old relationship
A second driver is what economists call Baumol’s cost disease. Most government services are labor-intensive: teaching, policing, social work, healthcare delivery. Unlike manufacturing, these activities cannot easily be automated or made dramatically more efficient with technology. But public-sector wages still have to keep pace with private-sector wages to attract workers. The result is that the cost of delivering the same level of public services rises over time relative to the rest of the economy. A study of U.S. state and local government costs from 1980 to 2009 found robust evidence that Baumol’s cost disease does account for some of the growth in public spending, and that unless service delivery becomes significantly more capital-intensive or shifts to the private sector, government will inevitably consume a larger share of state and local economies over time.5Social Science Quarterly. Does Baumol’s Cost Disease Account for Nonfederal Public-Sector Cost Growth in the United States? A New Test of an Old Idea
A third force is war and external threat. The historian Charles Tilly famously argued that “war made the state, and the state made the war,” describing how European states grew powerful by extracting resources to fight each other. Some scholars have extended this argument to developing countries, contending that without the pressure of severe external conflict, fundamental changes in economic structures and societal organization are extremely difficult to achieve.6The Korean Journal of International Studies. Revisiting Tilly’s Thesis: Is War Still Useful for State-making and State-consolidation? Wars tend to ratchet government up: taxes and agencies created during wartime rarely shrink back to their pre-war size once peace returns. This ratchet effect has been observed after both World Wars and, to a lesser degree, after the Cold War buildup.
Is There an Optimal Government Size?
If some government spending helps and too much hurts, there should be a sweet spot. This idea is captured by the Armey curve, which proposes an inverted-U relationship between government spending and economic growth. At very low levels of spending, government provides essential infrastructure, rule of law, and public goods that enable private activity to flourish. Beyond a certain point, though, additional spending starts to drag on growth through higher taxation, bureaucratic inefficiency, and crowding out of private investment.7Procedia – Social and Behavioral Sciences. The Relationship between Optimal Size of Government and Economic Growth: Empirical Evidence from Turkey, Romania and Bulgaria
Pinning down where the peak sits is the hard part, and the answer varies by country. One study of Spain estimated the optimal government spending level at about 40 percent of GDP, roughly five percentage points below the actual size of Spain’s public sector in 2016.8Advances in Social Sciences Research Journal. Optimal government size and economic growth in Spain. Evidences through the Armey Curve (1980-2016) That might sound precise, but estimates from other countries land in different places depending on institutional quality, the composition of spending, and how efficiently the public sector operates. The Armey curve is better understood as a reminder that more government is not always better (and neither is less) than as a calculator that spits out a universal target number.
This is where Leviathan skeptics and defenders of the welfare state talk past each other most often. The skeptic sees every percentage point above the optimum as evidence of a self-feeding bureaucracy. The defender points out that Scandinavian countries manage high spending levels alongside high growth and life satisfaction, arguing that spending quality matters more than spending quantity. Both sides can cite evidence, and neither is entirely wrong.
What Keeps the Leviathan in Check
Brennan and Buchanan’s original argument was not that Leviathan government is inevitable. It was that the right constitutional architecture can prevent it. They proposed several institutional brakes on state growth, and the evidence on each is mixed.
The most discussed is federalism and decentralization. The theory is straightforward: when citizens can “vote with their feet” by moving between jurisdictions, state and local governments compete for residents and cannot tax as rapaciously as a single centralized government could. Whether this actually works in practice is contested. Some cross-country comparisons suggest decentralized countries have smaller public sectors, but the relationship depends heavily on what you count as decentralization and which countries you compare.
Constitutional constraints on spending and taxation are another proposed check. Balanced-budget requirements, debt ceilings, and supermajority rules for tax increases all aim to prevent legislators from expanding the state beyond what voters have explicitly approved. These rules can be effective, but they can also be gamed through off-balance-sheet spending, creative accounting, or simply by redefining categories of expenditure.
Tax competition between countries may also discipline governments. When capital and high-income individuals can move across borders, governments that set rates too high risk losing their tax base. Research on corporate income tax reforms across the EU and G7 found that countries engaged in decades of tax-cutting and base-broadening, keeping effective rates on typical investments fairly stable while lowering rates on the most profitable ones.9Economic Policy. Corporate income tax reforms and international tax competition International tax competition, in other words, has reshaped how governments collect revenue even if it has not clearly shrunk the overall amount they collect.
The Narrow Corridor Between Too Little and Too Much
The Leviathan framework tends to treat the state as inherently dangerous and society as inherently virtuous. But a more nuanced view recognizes that weak states can be just as harmful as overbearing ones. In countries where the government lacks the capacity to enforce contracts, provide basic security, or deliver clean water, citizens suffer not from too much Leviathan but from too little.
Economists Daron Acemoglu and James Robinson have argued that political liberty emerges only in what they call the “narrow corridor,” a fragile zone where a capable state is balanced by an organized and empowered society.10International Journal of Peace and Conflict Research (IJPCR). Book Review: Daron Acemoglu ve James A. Robinson, The Narrow Corridor In their telling, there is a constant tussle between state, which maintains order but grows oppressive, and society, which wants liberty but cannot sustain order on its own.11Journal of Economic Literature. “Somewhere in the Middle You Can Survive”: Review of The Narrow Corridor by Daron Acemoglu and James Robinson Countries that fall outside this corridor end up either as “absent Leviathans” with weak or failing states, or as “despotic Leviathans” where the state crushes civic life. Only where both sides are strong enough to check each other does freedom actually hold.
This framework reframes the whole Leviathan debate. The question is not simply “how do we make government smaller?” It is “how do we keep the balance?” A government too hobbled by constitutional constraints to respond to pandemics, build infrastructure, or regulate financial markets is not a victory against the Leviathan. It is a different kind of failure. The corridor between order and liberty is narrow, and you can fall off either side.
Democracy, Rent-Seeking, and the U-Shaped Surprise
A common assumption is that democracy straightforwardly restrains the Leviathan by giving citizens the vote to punish overreach. The reality is messier. Research modeling the relationship between democracy and growth has found something counterintuitive: both very young and mature democracies tend to grow faster than countries in the middle stages of democratization.12Journal of Public Economics. Democracy, rent seeking, public spending and growth
The proposed mechanism is rent-seeking. In newly opened political systems, interest groups that previously had no access to power rush in to capture government resources. As democracy broadens, the number of rent-seekers multiplies, and aggregate rents (resources diverted from productive use to political favors) climb. But eventually a crowding effect kicks in: with so many groups competing for favors, the returns to any individual rent-seeker decline, competition among them intensifies, and the overall drag on growth diminishes. Mature democracies, in this model, are not free of rent-seeking. They have simply moved past the worst of it through sheer competitive pressure among interest groups.
This U-shaped pattern is worth keeping in mind when people argue that democratization alone will tame the Leviathan. In the messy middle, where institutions are open enough for interest groups to capture resources but not mature enough for competitive pressure to limit that capture, democratic governments can behave in remarkably Leviathan-like ways. The patronage networks that thrive in partially democratic states often extract more inefficiently than a straightforward autocracy would.
Trust and the Tax Bargain
One underappreciated ingredient in the Leviathan story is social trust. Citizens who trust their government are more willing to pay taxes and support public services, which allows the state to grow larger. But there is a catch: the resulting tax burden can itself erode the voluntary compliance that makes the system work. Research on this dynamic has found that while a trusting citizenry enables larger government, the tax burden it requires tends to wear down the rule-obedient behavior taxpayers exhibit toward the state.13NBER Working Paper. Trust in Public Finance
This creates a subtle feedback loop. High-trust societies like those in Scandinavia can sustain large welfare states because citizens believe their tax dollars are being spent well. But if government expands beyond what citizens perceive as fair or efficient, trust declines, tax evasion rises, and the fiscal base weakens. The Leviathan, paradoxically, depends on goodwill to feed itself, and overeating destroys the goodwill. Countries with low social trust often end up with smaller formal tax bases but higher levels of corruption and informal extraction, which can amount to a different kind of Leviathan that is harder to see in the official statistics.
This also helps explain why debates about government size often feel like they are happening in different universes depending on the country. An American skeptic of “big government” is reacting to a specific institutional context: a federal system with fragmented accountability, significant military spending, and middling trust in public institutions. A Dane defending their welfare state is reacting to a completely different context: high administrative efficiency, strong social trust, and transparent governance. Both are talking about the Leviathan, but the creature they are describing barely resembles the other.
When Leviathan Goes Digital
The original Leviathan debates were about budgets and taxes. The twenty-first-century version increasingly involves data and surveillance. Governments that might not extract historically unusual amounts of revenue can still accumulate enormous power through digital infrastructure: identity databases, internet monitoring, facial recognition, social media controls, and centralized digital payment systems. A state with a modest tax-to-GDP ratio but comprehensive surveillance of its citizens arguably fits the Leviathan description more accurately than a high-spending welfare state with strong civil liberties protections.
This digital dimension complicates the traditional metrics. Public-choice economists originally measured Leviathan by the size of the public sector relative to GDP. But a government that spends 25 percent of GDP while tracking every citizen’s location, communications, and financial transactions wields a kind of power that a government spending 50 percent of GDP without such tools does not. The constitutional constraints Brennan and Buchanan proposed were designed for a world where the primary instrument of state power was taxation. Whether those same constraints can effectively limit a state whose primary instrument is information remains an open and urgent question.
Privacy regulations, independent courts, press freedom, and decentralized technology infrastructure are emerging as the modern equivalents of constitutional tax limits. Just as the original Leviathan theorists argued that the right institutional design could cage the revenue-maximizing state, a new generation of scholars and activists is wrestling with how to cage the data-maximizing one. The monster has adapted. The cage needs updating too.