This is a question that was posted to me by a journalist who has read my book and is following this website. He suggested I make it into a blog.
This essay is not directly about the fiat money crisis so it might at first look a bit “off message”, but I guess for everyone who has read Paper Money Collapse and has been reading this website, the connections are obvious enough. This is a big, big topic, and probably too ambitious for any single essay. Although the following is fairly long even by the standards of my website, it still cannot be an exhaustive treatment. Many questions will be left unanswered and many objections – including many I already anticipate – will not be addressed. I hope the reader still finds it worth the effort.
For a long time I considered myself a classical liberal – as did Ludwig von Mises who inspired much of my work. I no longer think that this position is logically consistent. The classical liberal position, although advocating a much smaller state than today’s political consensus, still assigns too many powers to the state. Nevertheless, it offers a good starting point for the discussion. So let us start here.
Utilitarian arguments for the strictly limited state
The classical liberal position on the role of the state can approximately be described as follows: the state should stay completely out of the economy. There is no role for the state in industry, banking or money. Money is gold, or any other commodity chosen by the trading public. The supply of money is thus outside of political control, and banking and finance are entirely free market businesses with no state support, no guarantee nor any explicit or implicit backstops. (For an explanation of why such a system is not only possible but indeed more stable than our present system, and why it is even the only system that is compatible with the free market economy, please see my book Paper Money Collapse.)
Additionally, all means of production are privately owned and their use is directed by market prices, and by the opportunity for profit and the risk of loss. Profit and loss are essential tools for the consumers to direct the activities of private enterprise so that they conform as much as possible to the wishes of the buying public. The state is not involved in education, healthcare or old age provision or any other so-called social services. All these activities are organized privately for the simple reason that all these activities require the use of scarce resource, including labor, and any rational allocation of scarce resources requires market prices. Only on the basis of market prices is rational economic planning possible. Only market prices convey the urgency that the public assigns to the various competing ends to which resources can be put at each point in time. But market prices can only be determined if the resources are privately owned and traded on free markets. Private property is thus the essential tool for extensive social co-operation. Private property allows trade and the formation of market prices. This then allows the rational and efficient employment of these resources by entrepreneurs. The whole process is the only one logically possible to facilitate an extensive division of labor and the constant accumulation of capital employed in private enterprise, and it is the system of extensive division of labor and the constant accumulation of capital that makes our high living standards and any further advances in living standards possible.
An example:
Britain’s National Health Service will never deliver a satisfactory service. This is not because the people who work in it are incompetent or lazy. They could be the most motivated, devoted and well-meaning people on the planet and they could still only deliver suboptimal results and do so at considerable cost. Why? Because the NHS has to deliver health services for an entire nation without the help of true market prices and profit and loss accounting. These are the tools of capitalism that – day in and day out – allow the private sector to make informed decisions about best resource use – ‘informed’ because they reflect the preferences and wishes of the customers, the consumers.
Despite the widespread sentimental attachment to the NHS and its superficially appealing motto of delivering health care “free of charge” (obviously not true for the majority of citizens), the fundamental shortcomings of any service organized along socialist lines should be glaringly obvious to anyone. While the still fairly unrestricted private mobile phone industry in Britain delivers the latest advances in telecommunications technology to people across the entire social spectrum with remarkable speed and at constantly falling prices, the nationalized health service bureaucracy has people wait in line even for many routine and long-established procedures and provides such service at ever more staggering cost to the taxpayer.
That health service and education are too important to be left to the private market is a common prejudice that puts economic logic on its head. Because they are important they should be allowed to employ the tools of the private market.
But what does that mean for those who are too poor or for whatever reason unable to obtain the market income to afford themselves even a minimum of these services? – I am not going to evade that question. It is, of course, a standard response. I will come back to it a bit later.
What does the argument so far mean for the size and role of the state? – The state would, of course, be rather small by today’s standard. It would only have one function: to protect private property, which necessarily includes property in ourselves. The state’s role would be to protect every citizen and his or her property from aggression, whether that aggression comes from inside the country or outside the country. The state would be reduced to what the German social democrats of the late 19th century derogatorily but still accurately called the ‘night-watchman state’. The state would provide security services, including police, army, courts and related services. Its only function would be to provide security and protection. Those citizens who do not transgress against other peoples’ person or property or those who are not being transgressed against, would hardly ever come into contact with the state and its representatives. This would indeed be a minimal state.
Thus far, we have argued on the basis of utilitarian considerations. A prosperous society requires high degrees of division of labor and efficient resource use, which in turn require market prices, which in turn require private property. Under utilitarianism, private property is first and foremost a social convention, a means to an end. And the function of the state is to secure this means: private property, the existence of every individual’s inviolable private domain, as the basis for voluntary contractual cooperation and the spontaneous growth of society.
Ethical arguments for the strictly limited state
But such a minimal state can also be constructed on ethical grounds and considerations of justice. Every state is an institution that is based on compulsion and coercion. It can be seen as a depository of legalized, institutionalized and regulated force or threat of force. But what type of force is ethically defendable and could therefore provide an acceptable conceptual basis for institutionalized force? Only defensive or protective force fulfils that requirement.
To answer questions of ethics we need to start with the acting individual. In an otherwise peaceful, cooperative society, at what point am I justified to apply force or the threat of force when dealing with other people? Only if and when these people threaten my life, health or my property. This does not mean that any type of violent response is deemed justified in such situations, but it is clear that if force and violence can be justified at all, it must be in situations of self-defense, which include defense of property. If I am justified to defend myself from attack, I must also be allowed to defend those material goods that I have obtained through my work by applying my own body and mind. If this were not the case and if others were allowed to avail themselves of the fruits of my labor by simply taking them from me, it would mean they could live off my work and thus practically enslave me, which would be equivalent to an attack on my person.
By transferring the individual’s right to self-protection and self-defense of life and property to a specialized organization that fulfils the task of looking after these rights for all members of the community, no new special rights have come into existence. It is not claimed that the state has any rights or powers that the individual citizen does not have already. In fact, the state’s legalized force would have its origin in a concept of natural rights that originate with the individual citizen and that that citizen would have even in a stateless society (although in such a society he would have to enforce these rights himself or in voluntary cooperation with others). The state could perhaps be thought of as a pooling of these individual rights to allow for their more organized, standardized and thus more predictable safeguarding.
The utilitarian case against the welfare state
We can now turn to the question of provision for poor citizens or for those who for any reason are unable to adequately support themselves. While good arguments can be made that those in society who are better off have moral obligations to give support to weaker members of society, it is clear from the reasoning above that the state should not enforce such support. Again, the state is an organization that operates through compulsion and coercion. By assuming ‘social’ responsibilities the state must redistribute income and property on an ongoing basis by application of force or the threat of force, and must thus be permanently in violation of its original mission, which was to protect rightfully gained private property from violent interference, and thus support the institution of private property that we identified as absolutely essential for any functioning society. The state cannot simply add a redistribution function to its property protection function – the former must always violate the latter. Both functions stand in logical conflict. Either the state is a property-protector or a property-re-distributor and property–re-allocator. The state cannot be both at the same time.
In the original concept of the state as organized force for the purpose of security provision, a person who rightfully obtained property through production or voluntary exchange with other members of the community should be able to rely on the state to protect his ownership from any violation by a third party. But the moment the state assumes any responsibilities for ‘social justice’ or ‘distributive justice’, the state has to become a private property invader itself, and every person has to fear that parts of their income and property – although lawfully obtained – will be taken by the state by force and reallocated to other members of the community.
It is clear that under a state that assumes ‘social’ responsibilities, any right to private property is ultimately conditional. Rights to property are only protected by the state as long as the state does not consider third parties more in need and morally more worthy of ownership of the property. Every piece of property in such a society is therefore under a cloud of uncertainty, and this stands in direct conflict to the original mission of the state. The element of uncertainty is magnified by the fact that while it is possible to lay down clear and universal rules for how property can be rightfully and legally obtained, and to therefore give every member of society clear rules that are known before the act of what constitutes rightful and what constitutes unlawful attainment of property, any notion of what constitutes ‘distributive justice’ after the acts of production and trade must necessarily be arbitrary and subject to considerable change over time. It should not be surprising that all states have greatly expanded their range of redistributive policies and social legislation and regulation in recent decades. Once the state has taken it upon itself to pursue the logically non-definable goal of social equality or justice, it can ask for ever more wide-reaching powers. The idea of a minimal state has now become utterly unrealistic.
By contrast, any redistribution of property or income through acts of charity stands in no conflict to the institution of private property. The giver and the recipient of charity both know who the rightful owner of the property is. The recipient is aware that he is being supported by the generosity of others. The giver also retains control over who he wants to support and to what extent he wants to support that person. All of this changes when the state as monopolist of legal coercion becomes the middleman. The recipient no longer considers himself dependent on the economic success and charity of others but now has a legal claim on support from the state – receiving support becomes the person’s legally enforceable right. With at least a minimum of income now secured, the incentives to change one’s behaviour to regain economic independence are weakened. The original owner of property, meanwhile, no longer has control over where his money goes and will probably lose any interest in the plight of those who require support. By having been taxed by the state, he considers all duties to society’s weaker members fully discharged of.
The defenders of the welfare state will argue that it is more just to introduce an element of uncertainty into the lives of the economically independent than to keep society’s weakest members subject to the complete uncertainty that poverty and dependency on charity inevitably entail. While this is an appealing argument and probably a widely shared sentiment, it cannot dispel concerns over the fundamental conflict between securing private property on the one hand and persistently redistributing private property on the other. A welfare state is, fundamentally and conceptually, a persistent threat to the notion of private property, and private property is undeniably the economic foundation of any society. Additionally, any concept of ‘social justice’ is by definition arbitrary and will be the source of tremendous strife whenever it is supposed to guide practical politics. Furthermore, a state that concerns itself with the distribution of income and property among its citizens will never be a small state, or even a limited state.
The ethical case against the welfare state
The argument has so far been based on utilitarian considerations. But we can base it also on theories of ethics and justice. We have argued that a state that confines itself to the protection of person and property of its citizens against any unprovoked acts of aggression bases its right to legal force on the rights to such force by its individual members. The state assumes no privileged position but simply exercises the rights that the individual citizen already has but that the citizen may consider to be secured and enforced better through a state organization. This view, however, is no longer tenable when the state enforces redistribution of income and property.
While it is certainly within generally accepted principles of justice if I use proportional force to stop my neighbor from stealing or damaging my property or from inflicting injury on me or anybody in my family, it is certainly outside the established norms of justice if I decided to force my neighbor to support third parties, chosen by me, who I think are deserving of my neighbor’s support. By making ‘social justice’ its goal, the state claims a right to legal force that none of its citizens has. The state has now become a law upon itself, a ‘higher’ entity whose standards of right and wrong no longer correspond to those of its individual citizens. Any idea that the state could simply represent a convenient and efficient pooling of individual rights for the purpose of their better protection is now untenable. The state can do and does what nobody outside the state can do. The state qua state defines its own notions of morality and forces them upon its citizens.
We have now explained why any state that assumes larger responsibilities than the minimal state which confines itself to articulating, clarifying and enforcing the rights of its individual citizens to their own life and property must be in violation of its citizens’ rights to their own life and property and can no longer justify its existence on the basis of any ‘social contract’, for such a contract can only ever encompass the rights that individuals already have and which they may then voluntarily transfer to the state entity as part of entering such a contract. We have also seen that a state that gets involved in the distribution of income and property among its citizens must undermine the institution of private property, which is essential for human cooperation in a market economy and the basis of any prosperous society.
From classical liberalism to anarcho-libertarianism
While such a minimal state – a pure protector of life and property of its citizens, an enforcer of laws and a provider of courts to facilitate the resolution of conflicts and the further development of the laws – would be a much better guarantor of individual liberty and of peaceful cooperation than today’s heavily interventionist, constantly meddling and increasingly authoritarian state, and while most libertarians today would be happy to see a return to this classical liberal vision of the minimal state, even this concept is still flawed for as long as the organization that calls itself a state claims to have a territorial monopoly on providing protection and security services and a monopoly of ultimate decision making in its territory (this is in fact a very good definition of the state by Hans-Hermann Hoppe). If the state not only uses legal force to protect life and property of its citizens but if the state, as all states presently do, uses force to stop citizens from voluntarily exiting the state’s framework and establishing or joining different and competing arrangements on its territory, then we will have to also reject this minimal state on the basis of the analysis above.
First, again, are utilitarian considerations. Providing security services also necessitates the use of scarce resources. How many resources are to be allocated to providing security, which resources should be used and to what extent, are essential questions. Without private property, market prices and free entry into the market of security provision, the results will again be far from optimal. Even in the area of security provision, market-based solutions are undoubtedly superior. This important argument was first developed by the 19th century Belgian economist, Gustave de Molinari.
Second, we have considerations of ethics and justice. If the state claims to derive its legitimacy to use force from the individual citizen’s right to use force to defend his own life and property, this must mean that the individual’s rights are the origin of the state’s rights, and that the latter can never supercede the former. To put this differently, a state that claims a territorial monopoly on security provision and conflict resolution must argue that the individual who had the right to use force for defence of life and property in the first place has, by pooling these rights into a state-like organization, now forfeited these rights forever and is not to be permitted to reclaim these rights and enforce them by alternative means. This is logically an untenable position.
It seems fair to assume that law and security provision have a lot in common with money in that they, too, are subject to network effects. Just as the co-existence of many parallel monies is suboptimal, the co-existence of many different legal frameworks and security arrangements is inefficient. But none of this means that individuals have not the right to make alternative arrangements if they deem present arrangements to be insufficient or even a threat to their own life and property. We conclude that at a very minimum the minimal state must concede a universal and inviolable right of every individual or group of individuals to secede at any time.
A lot of what I argued above may appear to many like idle libertarian theorizing with little relevance to present political reality. But a crisis of the present state fiat money system is now inevitable. This crisis is part of a broader crisis of the welfare state and, in fact, of democracy. As these crises unfold, people will again revisit some fundamental questions about the size and role of the state and its relationship to the individual. Against this backdrop, discussions like this one could become very relevant indeed. As states everywhere go broke, as the promises of the cradle-to-grave welfare state are defaulted on, and as politicians lose control over their overstretched fiat money empires, citizens will again consider looking for and establishing more suitable and functioning alternatives to present state apparatuses.
I will finish this easy with a short extract from Lysander Spooner’s outstanding pamphlet No Treason, NO II from 1867, in which he delivers a fascinating interpretation of the American constitution that is an excellent presentation of the points I was trying to make toward the end of the above essay. Here is Spooner:
The Constitution says:
‘We, the people of the United States, in order to form a more perfect union, establish justice, insure domestic tranquility, provide for the common defence, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity, do ordain and establish this Constitution for the United States of America.’
The meaning of this is simply: We, the people of the United States, acting freely and voluntarily as individuals, consent and agree that we will cooperate with each other in sustaining such a government as is provided for in this Constitution.
The necessity for the consent of “the people” is implied in this declaration. The whole authority of the Constitution rests upon it. If they did not consent, it was of no validity. Of course it had no validity, except as between those who actually consented. No one’s consent could be presumed against him, without his actual consent being given, any more than in the case of any other contract to pay money, or render service. And to make it binding upon any one, his signature, or other positive evidence of consent, was as necessary as in the case of any other contract. If the instrument meant to say that any of “the people of the United States” would be bound by it, who did not consent, it was a usurpation and a lie. The most that can be inferred from the form, “We, the people,” is, that the instrument offered membership to all “the people of the United States;” leaving it for them to accept or refuse it, at their pleasure.
The agreement is a simple one, like any other agreement. It is the same as one that should say: We, the people of the town of A━━, agree to sustain a church, a school, a hospital, or a theatre, for ourselves and our children.
Such an agreement clearly could have no validity, except as between those who actually consented to it. If a portion only of “the people of the town of A━━,” should assent to this contract, and should then proceed to compel contributions of money or service from those who had not consented, they would be mere robbers; and would deserve to be treated as such.
Neither the conduct nor the rights of these signers would be improved at all by their saying to the dissenters: We offer you equal rights with ourselves, in the benefits of the church, school, hospital, or theatre, which we propose to establish, and equal voice in the control of it. It would be a sufficient answer for the others to say: We want no share in the benefits, and no voice in the control of your institution; and will do nothing to support it.
This article was previously published at Paper Money Collapse.
The biggest objection to these kind of arguments is democracy itself. Ever since universal suffrage was introduced in the early 1900s, western democracies have moved from essentially a ‘night watchman’ state to one that includes a welfare state (in my opinion quite rightly so).
For example, it is inconceivable that today’s electorate would vote to have ‘free’ healthcare and education taken away from them, which would make a large section of the population far worse off than they are today. Therefore the argument presented here does indeed have little relevance to present political reality.
The real question I would like to see addressed by those pushing for a ‘classical liberal’ or ‘anarcho-libertarian’ state is: would such a state even be possible under the current political construct (representative democracy/universal suffrage)? And a more interesting question: if not, under what political construct would it be viable – and therefore what is the preferred political construct?
Once some thought is put into the implications of these questions, anarcho libertarians tend to fall silent…
Hi Dan,
I’ll answer from the ‘classical liberal’ perspective.
I agree that it’s inconceivable that today’s electorate would vote to have their benefits taken away, though I’m not convinced that they would suffer as a result, at least in the long term.
Universal suffrage is hard to justify, either from an ethical or a utilitarian perspective. Even if we accept some pooling of resources, and central control of those resources, it seems right that only those who contribute to the pot should have a say in how the money is spent. In practice, of course, it’s very difficult to establish who is a net beneficiary of the state. It would be easier if the state were minimal, but still quite tricky.
I wouldn’t say it’s impossible to have a minimal state with universal suffrage, but it would require a high level of education and basic morality. Thankfully I think we already have the latter. For most people, it isn’t threat of imprisonment that prevents them from committing crimes. People just need to come to realise that theft is still theft when conducted through a government intermediary.
Mrg,
I don’t see why universal suffrage is hard to justify from a utilitarian or ethical perspective. I admit it’s far from perfect, but as you point out it is hard to come up with an alternative that works.
Even if only people who were not net beneficiaries of the state were given the vote, there would still be a large section of the population who would not be very well off, and who would not vote to have their healthcare and education taken away from them.
Dan,
I don’t understand your questions:
“The real question I would like to see addressed by those pushing for a ‘classical liberal’ or ‘anarcho-libertarian’ state is: would such a state even be possible under the current political construct (representative democracy/universal suffrage)? And a more interesting question: if not, under what political construct would it be viable – and therefore what is the preferred political construct?”
Your “political construct” terminology is odd, but I’ll give this a shot.
There’s no such thing as an anarcho-libertarian state… It’s an oxymoron. That’s kinda the point of anarchism, you know?
Anarcho-libertarianism just is the preferred “political construct.”
Would a classical liberal state be possible under the current political construct (representative democracy/universal suffrage)? Sure. Why not? For a little while, at least. But a minimal state will never remain minimal; it will always grow into Leviathan eventually. Universal suffrage in a representative statist-democracy would tend to accelerate that. This is why we need to abolish the state.
“Once some thought is put into the implications of these questions, anarcho libertarians tend to fall silent…”
Probably because the questions are incoherent and confused.
Geoffrey, to clarify my points:
By ‘political construct’ I mean the type of government, i.e our government is a representative democracy elected by the people. At the other extreme is a dictatorship.
“Sure. Why not? For a little while, at least.”
I’ve already answered the ‘why not?’ above – why would people vote to have their benefits taken away from them?
What I was driving at, regarding the implications of these questions, is that if people will not vote for classical liberalism for example, then the only way of instituting such a limited state would be under a benevolent dictator. And we have painfully learned that one of those does not exist.
Dan,
The population doesn’t have to vote to have their benefits taken away. It is inevitable that the unsustainable State will collapse and any benefits disappear. When something cannot go on it has a tendency to stop.
Robert,
Collapse isn’t inevitable at all. What is more likely is reform to ensure that the state lives within its means. The state will always be able to tax and spend.
I guess I don’t have the same faith as you in the Government.
I would point out to you that the British Government has a massive pension liability that it will not be able pay. This means it will default on this obligation. Sure it probably won’t happen all at once. It will start with raising the pension age and reducing payments. But eventually it will be cancelled. Likewise with the NHS
Even if I grant you that the Government won’t collapse its programmes will, piece by piece. The Government simply doesn’t have the ability to manage itself or its programmes in a financially responsible manner.
And as a matter of fact, States do not live within their means. That is why they are in debt.
Dan, you raise some interesting points although I feel inclined to take issue with your view that Britain is a representative democracy. In theory yes, in reality that condition has largely passed. Government here is essentially that of bureaucratic fiat, primarily from bodies those based in Brussels, but with considerable assistance from our own Civil Service. This trend incorporates the trappings of disconnected diktat, the beginnings of dictatorship.
Barry, I agree that there are problems with our democracy. There is definitely a need for reform to reconnect people with government, and make people feel like they can actually make a difference with their vote.
I have faced this question many times myself and it is actually a leading question. The short answer is, if you cannot afford something you can’t have it, end of story.
Of course what Socialists are trying to do with this question is to imply responsibility on one person’s part for everybody else. But there is no rational reason why person A has responsibility for person B even apart from the fact that Socialists would steal from A to pay B.
It is unfortunate that some people cannot afford healthcare but it is neither the fault nor responsibility of those who can afford it. And ultimately, stealing money from one group in society to pay another will make everyone poorer. It will also increase the cost and lower the supply of healthcare to everyone.
A free economy is the way to enrich all in society and continuously lower the cost and increase the supply of privately provided healthcare.
Robert,
There are all sorts of problems with your view.
For example, say a child has an accident and is critically injured, or has a life threatening illness that needs expensive drugs to cure. His parents can’t afford the healthcare costs, so he is left to die. This goes against most peoples sense of decency and morality; so unless the majority suddenly completely change their view of morality and justice, there will always be some form of socialised healthcare.
Even if what you propose is optimal from an economic perspective (and I dispute that), economics can’t be considered in isolation from politics. This is the problem with the article, and the reason why it is wishful theorising rather than a serious proposition that reflects political reality.
Regarding your general point on socialism, see below for a repost of a comment I made a while back:
“I think that it is perfectly fair that the fortunate should pay for the less fortunate. My view is that much of what you are in life depends upon your natural abilities, and your start position in life, none of which you can claim to deserve. If you happen to be born into a rich family, you have a tremendous starting advantage in life compared to someone who is born into a broken home with parents who are penniless drug addicts. So in this sense it is not unfair that those who have been lucky in these things should give something back to those who have not.
My political philosophy is basically Rawlsian, so any economic inequalities are ok as long as they are to the benefit of the least well off.
You seem to assume that the state will keep on expanding. But why should this be the case? On the contrary, the state will have to shrink and begin to live within its means. This will mean such things as bringing market incentives into healthcare to make it more cost effective, raising retirement ages etc. I certainly don’t see any signs of the UK turning into a Soviet Union.
No, I can’t prove that there would be extreme levels of inequality in a truly free market. But there is certainly a historical pattern that when government has not intervened as much in the economy, inequality has been higher. In the states, inequality was much higher in the late 19th/early 20th century, and is in the present day, than it was in the ‘golden age’ of capitalism in the 50s and 60s.”
Dan,
I consider my view to be both reality and ethically based.
Reality based because if you don’t have the money you can’t buy the service. There is no argument with this simple fact. The scenario you outline is unfortunate but does not imply any responsibility on the part of anyone else. Furthermore, if we lived in a world where we were responsible for ourselves we would conduct our affairs with greater maturity, instead of expecting others to solve our (in many cases self-inflicted) problems. Speaking personally, NHS or not, I would make damn sure I was in a position to look after my children. Wouldn’t you?
Ethically based because theft is wrong, period. Stealing for good or for bad is still stealing. How lucky you were in being born is irrelevant and to use this as an argument for stealing from others is an argument born from envy.
Lastly, I would state, I am not callous. If the State did not steal more than 50% of my income I could afford to give far more of my income to charity, to aid people in unfortunate circumstances. Additionally, without Government interference in our health, healthcare costs would be significantly lower, and being able to keep 100% of their income, that unfortunate family could probably afford to take care of their child.
Dan,
“My view is that much of what you are in life depends upon your natural abilities, and your start position in life, none of which you can claim to deserve”
These are the exact words displayed above the gates to hell on earth – and you I suppose, would seek to be the arbiter of what each member of the hive does actually deserve, after of course, having taken into account each and every undeserving accident that individuality has to offer. The varying degrees of physical attraction we display – very unfair I’ve always thought, and the fact that we live varying lengths of life is surely an equal cause for concern. Conversely, but the flip side of the same coin, what about all the wasted talent? Should not the indolent amongst us be penalised for having failed or, god forbid, refused to meet their obligations to the collective?
“Once some thought is put into the implications of these questions……….” – yes indeed Sir, it is certainly to be hoped that you are capable of taking up your own advice. You might even be surprised at just how quickly words like ‘force’, ‘gulag’ and ‘death’ appear for worthy consideration.
Near two hundred years knee deep in corpses and still the spectre continues to haunt.
I think the article is perfect until it gets to the anarcho-capitalist point. Here we say that the path from minimalist State to Leviathan cannot be walked backwards; explanations offered sound like “State is definitely infected, it’s like a cankered leg, so we have to live without”.
From a historical point of view, maybe just USA were born by a unanimous expression of consent by people on the transferring of some individual rights (really? I remember of loyalists to the English empire, and lots of critics on USA independence eg by H.P. Lovecraft, and I hardly think he was alone). The history of the rest of the world is made by the extension of power and influence of specific lobbies or élites, so all the article says maybe right (“exact” in Mengerian terms) but of poor practical relevance (no rights to be hold back if no voluntary transfers had taken place before).
However justified by an ethic perspective, it is actually hard to think how, in practice, any society could manage the withdrawal of even one single person from the “contract” which transfers individual rights to the State. Several services (eg defense) cannot be “exclusive”. By a mere practical point of view the maintenance of State jurisdiction (or use of force, or tyranny, call it what you like) on a certain geographical context is necessary or, we better say, unavoidable. The real exit is “voting by feet” – which is a liberal point – ie let people go away to other States to force administrations, in order to keep human resources, to revise own setting. The continuous call for individual secession may be good as marketing but does not practically fix the problem of how to cope with the despotic State where you were born.
Then, I think Austrian libertarians tend too often to muddle up the economic side (especially money) with the political side (representativeness and use of force) of society. No doubts everything happens within (or around) a society causes effects spreading from one side to the other: human experience is a whole, we can detach subsets of experiences (eg economic from political ones) only to make research or awareness easier. Never the less, spheres must be taken separate not to jump to simplistic quick conclusions.
In the last paragraphs, the crisis of the fiat money system is taken as part of the crisis of the welfare system, of democracy, of the whole economy as we know… what we see today is the crisis of welfare state couple with a general economic crisis triggered by Austrian fiat-boom dynamics. I sincerely (and sadly) see no fiat money crisis at the moment, in the sense that no public debate on the nature of fiat money goes while the sustainability of welfare state is questioned. Ok ok it’s all connected (even solar tempests somehow affect economy, then), but the urgency of the debt crisis is far closer to a problem of ill managed public finances, then to the original sin of fiscal tyranny, and last to the economy generally weakened by ever-growing fiat money supply. Muddling everything up at once sounds like a “theory of everything” (like the communist Theory of the State) I do really fear.
My point is that starting with classical minimal State to saying that it’s all rotten ‘cause State despotism which implies fiat money then we must get into anarchy sounds really too stretched – I am sad, it sounds to me like biased reasoning (?) by Krugman to demonstrate that we are lacking Keynesian policies; if we had gold money, it couldn’t fix State despotism anyway, damages and problems would always occur (maybe busts and booms could be of smaller magnitude than what we are experiencing today, or faster power-regime changes could take place, but this is a quantitative difference, not qualitative). “State is definitely infected, it’s like a cankered leg, so we have to live without” ie no minimal State hypothesis is any longer viable, is a good way to assure Austrism is marginal in public debate even though Austrian economics has a lot to teach.