[This article was first published in German in Schweizer Monat, 5 August 2026]
The world’s highest per-capita incomes are found in small political units—such as Monaco, Liechtenstein, Luxembourg, Switzerland, Singapore, and the Cayman Islands. Economically, the finding is easy to explain: small political units are not autarkic; they compete internationally for talent and capital. That is why they must treat their residents and firms well and offer attractive living conditions and a business-friendly framework. Above all, small political units must keep the tax burden low, remain peaceful toward their neighbors, and refrain from military adventures.
Yet even small political units are not immune to the abuse of state power. The state remains a territorial monopolist of coercion with the final say over every conflict on its territory. Precisely for that reason the state can easily become the problem itself—for instance when state power falls into the hands of actors who use it, say, to benefit organized special-interest groups.
The Right of Secession
To get this fundamental problem of the state under control, the Austrian economist Ludwig von Mises (1881–1973) already proposed in 1927 that groups of people be granted a right of exit from the state. According to Mises, such a “right of secession” would force majorities in a country not to lose sight of minority concerns. Otherwise the dissatisfied can vote with their feet and, whether the majorities like it or not, leave the state. Mises’s idea of secession kills two birds with one stone: it gives the majority an incentive to treat the minority decently, and it effectively dismantles the state’s “territorial monopoly of coercion and violence,” placing clear limits on its power.
How practical and workable this idea is can be seen in the Principality of Liechtenstein. At the initiative of Prince Hans-Adam II, the country, in a constitutional revision in 2003, enshrined a special right of exit for its municipalities. Article 4, paragraph 2 of the national constitution allows them to initiate a procedure for leaving the state association. It is not, however, an absolute, unilateral right of secession. A municipality can at first only start the exit procedure. Actual secession still requires the consent of the Diet and the Prince. If the electorate launches a referendum or parliament orders a popular vote, the eligible voters in the “Ländle” must also approve.
To date, no municipality has made use of this right. Nevertheless, Liechtenstein has, with this exit option, set a barely overstated and far-sighted signal of individual freedom—one that radiates far beyond its own borders.
The Problem of Size
The question of the “optimal size of the state” has long arisen internationally. Many of the large political units—one need only think of the United States of America, China, the state cartel called the European Union, or nation-states such as Germany, France, and Great Britain—have long been heading toward economic, financial, and cultural bankruptcy. They are over-indebted, economic growth is declining, the outlook for prosperity disappointing. Mismanagement and corruption are spreading. At the same time, state-sponsored socialist-communist ideologies increasingly attack the family and Christianity, hollow out the rule of law, and endanger public security. That is also why many countries are racing unbraked toward a demographic Armageddon.
A realistic and practicable solution to all these problems lies in scaling large political units back into smaller ones. What stands in the way, however, is that constituent states, regions, and municipalities in most European countries have no unilateral right of secession. Yet precisely enforcing such a right is the way forward: granting constituent states, regions, cities, or municipalities the right to leave the higher-level state association if they so wish. After all, there is no convincing reason why people should remain subject against their will to a federation and its rules.
“A Europe of a Thousand Liechtensteins”
The guiding principle of secession is therefore this: municipalities should be allowed to secede from a city they no longer wish to belong to. The same applies to regions or constituent states: if their inhabitants want to leave the higher state entity, they should be able to do so. This “radical decentralization” would of course have to be combined with a “reversal of the hierarchy of law,” so that henceforth municipal law overrides regional law, and regional law overrides nationwide law.
The law of the smaller political unit would take precedence over the law of the next higher unit. And that would have thoroughly positive consequences, because it would strengthen competition for the best living and working conditions. At the same time it would cut off the destructive opportunities for exploitation that today predominate in large political units organized as majority democracies. The economist and philosopher Hans-Hermann Hoppe has aptly popularized this program under the now-familiar heading of “a Europe of a thousand Liechtensteins.”
“Radical decentralization” ultimately paves the way from a polity based on coercion and violence toward a private-law society. The aim is to help bring into being a community of people in which the same private law applies to everyone and in which, consequently, there is no longer any public law standing above private law. That said, a private-law society is nothing more and nothing less than a community of people who organize their coexistence on the basis of voluntarily concluded contracts rather than, as is the case with the state today, by resorting to unwanted coercion and unasked-for violence.
Limiting Power Through Decentralization
The idea of radical decentralization is by no means new. A historical example is the Holy Roman Empire of the German Nation, which existed from 962 to 1806 and thus ranked among Europe’s longest-lived political formations. Its “fragmentation” was a bulwark against the centralization of power and its abuse by princes and kings. At the same time it fostered competition among the many small territories, promoting innovation, urban life, the economy, and culture.
Even after the severe conflicts of the Reformation and the Thirty Years’ War, the parties repeatedly found compromises to restore peace—for instance in the Peace of Augsburg of 1555 and the Peace of Westphalia of 1648. When Emperor Francis II, who was also Austrian Emperor Francis I (1768–1835), declared the Empire at an end in 1806, this was not because of the dysfunction of the decentralized imperial association, but as a result of “Napoleonic state terror.”
That same experience shows unmistakably, however, that even small, decentralized political units must organize their defense against external aggressors effectively. Unlike then, they now have, thanks to technological progress, many options: self-armament, alliances with other small political units, and protection contracts with insurance companies and security firms. None of this, incidentally, requires a state. Protection and defense services can be organized efficiently on the free market. Consequently, as early as 1849 the economist Gustave de Molinari (1819–1912), in his essay “De la production de la sécurité,” called for the privatization of security and defense.
The Human Dimension
Anyone who wants peace and prosperity must limit the state as strongly as possible. This insight can be derived incontestably from sound economics. The case for small rather than large political units therefore does not spring from an arbitrary notion, but from a deep chain of reasoning. This central insight is not new—even if it is widely-overlooked and ignored today.
In conclusion, therefore, one should recall the philosopher Leopold Kohr (1909–1994), whose thought revolved around the “philosophy of size” and the human scale. He concluded: “Whenever something is wrong, it is too big.” How true: anyone who looks at the world with open eyes sees that things are especially bad in large political units and much better in small ones. In short: anyone who wants freedom, peace, and prosperity for humanity must work to break large political units down into many small ones—led by people who wish to shape their affairs in the world voluntarily and peacefully.
