Surprisingly (to me anyway) it's first recorded in the second enclosure wave of the 18th-19th centuries, but it's widely thought to originate in the first (16th-17th centuries). It's an objection not to state but to private ownership, specifically the conversion of common land (where all villagers shared rights, notably in letting their livestock feed) to individual property, a process dating back to the Tudor wool boom but renewed with rising agricultural returns in the 18th century.

So it's a rhyme of protest against social & economic inequality, invoking the particular plight of smallholders but adopted more generally among workers and radicals: here the state is with the landowners who dominated political life into the industrial period, but it's they (and by extension later privileged economic interests) rather than the state itself who are the real target.