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Protection and the State
But something can and obviously has happened that disrupts and distorts or even derails this normal, self-interest driven development. And this is of course the State, which I will define initially, rather abstractly, as a compulsorily-funded territorial monopolist of protection. That is, a monopolist of defense and the provision and enforcement of law and order.
Now how does a State originate? While this is generally, and I think intentionally, confused, it should be made clear right from the outset that law and order, or protection of property, and State law, and State order, and State protection are not one and the same thing; they are not identical things. Just as property and social cooperation based on the division of labor are natural, so the human desire to have one’s property protected against natural and social disasters, such as crime, is a completely natural desire. And in order to satisfy this desire, there is first and foremost self-protection. Precaution, insurance (individual or cooperative), vigilance, self-defense, and punishment.
And let there be absolutely no doubt as to the effectiveness of a protection system based on peoples willingness to defend themselves. This is how law and order was maintained for most of the time for most of mankind. In every village, even up to this day, law and order is basically maintained in this way. The American Wild West, which was not exactly “wild” as compared to the current situation, that’s the way law and order was maintained, by people being willing to defend themselves.
Moreover, the division of labor will then naturally affect the production of security and protection services. The higher standards of living grow, the more people will, besides relying on self-defense measures, also want to partake in the advantages of the division of labor, and attach themselves for protection to a specializes protector, to providers of law and order, justice, and protection. And naturally, every person will look for this particular task to persons or institutions who have something to protect themselves—who have the means to assure effective protection and have a reputation as just and impartial judges. In every society of more than the most minimal degree of complexity, there will quickly emerge specific individuals, who on account of having property to defend, having a good reputation and so forth, will assume the role of judges and peacemakers and protectors. And again, every single village up to this day, every small community, and even the Wild West of course, illustrate the truth of this conclusion.
Protection is also possible without a State. This should be absolutely obvious, but in an age of statist obfuscation and confusion, it is increasingly necessary to emphasize this elementary and yet as we will see, very dangerous insight. The decisive step in diverting human history from its natural course—the original sin of mankind, so to speak—occurs with the monopolization of the provision of protection, defense, security, and order: the monopolization of these tasks by a single one of these initially numerous protectors at the exclusion of all others. A protection monopoly exists once a single agency or a single person can effectively insist that everyone on a given territory must exclusively come to him for justice and protection. That is, that no one can rely exclusively or solely on self-defense, or attach himself for protection to somebody else. Once this monopoly is reached, then funding of this protector is no longer entirely voluntary, but in part becomes compulsory.
And, as standard Austrian economics predicts, once there is no longer free entry into the business of property protection, or any other business for that matter, the price of protection will rise, and the quality of protection will fall. The monopolist will become increasingly less of a protector of our property, and increasingly more a protection racket, or even a systematic exploiter of property owners. He will become an aggressor against and a destroyer of the people and their property that he was initially supposed to protect.
Now what is easily described in abstract terms (monopoly) is in practice a painstaking and lengthy task. How can anyone get away with barring all other protectors from competition? And why would the people and especially the excluded other potential peacemakers and judges allow such a thing to happen, that one individual monopolizes this service? Now the answer regarding the original of the State is in detail very complicated, but in its general structure is very easy to recognize.
First, every state, that is every monopolistic protection agency, must begin, or can only originate on an extremely small territorial level, such as a village. It is practically inconceivable that a world State, or a protection monopoly encompassing the entire world population could come into existence from scratch.
The second thing we have to notice is that not just anyone become a local protection monopoly. Rather, the local protection monopolists are initially members of the natural social elite. That is, they are initially accomplished and acknowledged members of society. They were also, before they reached the position of a monopolist, previously chosen voluntarily as protectors. Only as established and recognized elites, whose authority is essentially voluntary, is it possible for them to make this decisive step toward monopolization and get away with it.
That is to say, every initial local government or state originates in the form of personal or private lordships or of princely rule. No one would entrust just anyone with the maintenance of law, order, and justice, and in particular if this person or agency had a monopoly for this particular task. Instead, people would look for protection obviously from someone known, and known to be a knowledgeable person, and only such a person, a noble or an aristocrat, can possibly attain a monopoly position initially.
Historically, by the way, if one looks at modern or ancient history, States everywhere are basically first princely States, and only later do they become democratic States. And even though it is true that States must begin only locally and usually as princely States, it still took hundreds of years before anything resembling the modern State came into existence.