CHAPTER VIII

A Possible Way Out

THE AMERICAN brand of socialism known as the New Deal was made possible by the income tax. But with the advent of income taxation, socialism was unavoidable.

CHAPTER IX

Competition in Government

THE AMERICAN political terrain, so to speak, is most favorable for a fight for freedom. The tradition of home rule, supported by the constitutional doctrine of States’ Bights, presents a formidable obstacle, if properly exploited, to the forces of collectivism. We have their own admission to that fact.

CHAPTER X

Union Forever

THE CIVIL WAR did not abolish the autonomy of the states. All that was settled by that conflict was the questions of secession and nullification; no state could pull out of the Union or disregard a regularly enacted national law. After 1865, as before, the states were still the depositories of all powers not specifically delegated to the federal government, as stipulated in the Constitution.

CHAPTER XI

For Freedom’s Sake

REPEAL OF the Sixteenth Amendment would not be a reform; it would be a revolution.

Denationalisation
of Money

—The Argument Refined

An Analysis of the Theory

and Practice of Concurrent Currencies

F. A. HAYEK

Nobel Laureate 1974

Diseases desperate grown,

By desperate appliances are reli’ved,

Or not at all.

WILLIAM SHAKESPEARE

(Hamlet, Act iv, Scene iii)

THIRD EDITION

First published in October 1976

Second Edition, revised and enlarged, February 1978

Third Edition, with a new Introduction, October 1990

by

THE INSTITUTE OF ECONOMIC AFFAIRS

2 Lord North Street, Westminster,
London SW1P 3LB

© THE INSTITUTE OF ECONOMIC AFFAIRS 1976, 1978, 1990

Hobart Paper (Special) 70

The Hobart Papers are intended to contribute a stream of authoritative, independent and lucid analyses to understanding the application of economic thinking to private and governmental activity. Their characteristic concern has been the optimum use of scarce resources to satisfy consumer preferences and the extent to which it can be achieved in markets within the appropriate legal/institutional framework created by government or by other arrangements.

For the Second (extended) Edition Professor Hayek has written many and sometimes lengthy additions to refine and amplify the argument. In all he has added about a third to two-fifths to the original text. (To identify the self-contained additions, both long and short, a single star is placed at the beginning and two stars at the end. There are in addition many other refinements of words, phrases and sentences, including numerous footnotes, passim.)

For in every country of the world, I believe, the avarice and injustice of princes and sovereign states abusing the confidence of their subjects, have by degrees diminished the real quality of the metal, which had been originally contained in their coins,

ADAM SMITH

(The Wealth of Nations (1776), I. iv, Glasgow edn.,

Oxford, 1976, p. 43.)