Economy, Society, and History

The upshot of all my lectures is that the institution of the state represents somehow an error and a deviation from the normal and natural cause of civilization. And all errors are costly and have to be paid for. This is most obvious with errors concerning the laws of nature. If a person errs regarding the laws of nature, this person will not be able to reach his own goals. However, because a failure to do so must be borne by each individual, there prevails in the area of the natural sciences a universal desire to learn and to eliminate and correct one’s errors. On the other hand, moral errors are costly also, but unlike in the case of the natural sciences, the cost of moral errors may not be paid for by each and every person that commits this error.

For instance, take the error that we have talked about here in detail, take the error of believing that one agency, and only one agency, the state, has the right to tax and to ultimate decision-making. That is, that there must be different and unequal laws applying to masters and serfs, to the taxers and the taxed, to the legislators and the legislated. A society that believes in this error can, of course, exist and last, as we all know, but this error must be paid for too. But, the interesting thing is that not everyone holding this error must pay for it equally. Rather, some people will have to pay for the error, while others, maybe the agents of the state, actually benefit from the same error. Because of this, in this case, it would be mistaken to assume that there exists a universal desire to learn and to correct one’s error. Quite to the contrary, in this case, it will have to be assumed that some people instead of learning and promoting the truth, actually have a constant motive to lie, that is, to maintain and promote falsehoods, even if they themselves recognize them as such.

Let me explain this in a little bit more detail and repeat some of the basic insights that I tried to convey during these lectures. Once you accept the principle of government, namely that there must be a judicial monopoly and the power to tax, once you accept this principle incorrectly as a just principle, then any idea or any notion of restraining or limiting government power and safeguarding individual liberty and property becomes illusory. Rather, under monopolistic auspices, the price of justice and protection will continually rise, and the quality of justice and protection will continually fall. A tax-funded protection agency is a contradiction in terms. That is, it is an expropriating property protector. And such an institution will inevitably lead to more taxes and ever less protection, even if, as some classical liberals demand, a government were to limit its activities exclusively to the protection of preexisting private property rights. Then immediately the further question would arise, “How much security to produce and how many resources to spend on this particular good of protection?” And motivated, like everyone else, by self-interest, but equipped with the unique power to tax, a government agent’s answer will invariably be the same. That is, to maximize expenditures on protection (and, as you can imagine, almost the entire wealth of a nation can, in principle, be expended on protection. We just have to equip everyone with a personal bodyguard and tank with a flamethrower on top), and at the same time to minimize what they are supposed to do, that is, the production of protection. The more money you can spend and the less you must work for this money, the better off you are.

Now, in addition, a judicial monopoly will inevitably lead to a steady deterioration in the quality of justice and protection. If no one can appeal to justice except to the government, justice will invariably be perverted in favor of government, constitutions, and supreme courts notwithstanding. After all, constitutions and supreme courts are state constitutions and state agencies, and whatever limitations to state activities these institutions might find or contain, is invariably decided by agents of the very institution that is under consideration. It is easily predictable that the definition of property and the definition of protection will continually be altered and the range of jurisdiction expanded to the government’s advantage, until ultimately the notion of universal and immutable human rights, and in particular property rights, will disappear and will be replaced by that of law as government-made legislation and rights as government-given grants to people.

Now, the results are all before our own eyes and everyone can see them. The tax load that is imposed on property owners and producers has continually increased, making even the economic burden of slaves and serfs seem moderate in comparison. Government debt, and hence future tax obligations, has risen to breathtaking heights. Every detail of private life, of property, of trade, and of contract is regulated by ever higher mountains of paper laws. Yet, the only task that the government was ever supposed to assume, that of protecting life and property, it does not perform too well. To the contrary, the higher the expenditures on social welfare and national security have risen, the more our private property rights have been eroded, the more our property has been expropriated, confiscated, destroyed, and depreciated. The more paper laws have been produced, the more legal uncertainty and moral hazard has been created, and the more lawlessness has displaced law and order. Instead of protecting us from domestic crime and from foreign aggression, our government, which is equipped with enormous stockpiles of weapons of mass destruction, aggresses against ever new Hitlers and suspected Hitlerite sympathizers, anywhere and everywhere outside of its own territory. In short, while we have become ever more helpless, impoverished, threatened, and insecure, our state rulers have become increasingly more corrupt, arrogant, and dangerously armed.

Now, what can we do about all this? Let me begin by first pointing out something that I have mentioned already before, that is, we have to recognize that states, as powerful and as invincible as they might seem, ultimately owe their existence to ideas, and since ideas can in principle change instantaneously, states can be brought down and crumble practically overnight too. The representatives of the state are always and everywhere only just a small minority of the population over which they rule. The reason for this, as I explained, is as simple as it is fundamental. One hundred parasites can live comfortable lives if they suck out the lifeblood of thousands of productive hosts, but thousands of parasites cannot live comfortably off a host population of just a few hundred. Yet, if government agents are merely a small minority of the population, how can they enforce their will on this population and get away with it? The answer given by Rothbard, de La Boétie, Hume, and Mises is only by virtue of the voluntary cooperation of the majority of the subject population with the state.

Yet, how can the state secure such cooperation? And the answer is, only because and insofar as the majority of the population believes in the legitimacy of state rule, in the necessity of the institution of the state. This is not to say that the majority of the population must agree with every single state measure. In fact, it may well believe that many state policies are mistakes or even despicable. However, the majority of the population must believe in the justice of the institution of the state as such, and hence that even if a particular government goes wrong or makes particular mistakes, that these mistakes are merely accidents, which must be accepted and tolerated in view of some greater good provided by the institution of government. That is, people believe in the accident theory of government error instead of seeing that there is a systematic reason behind all of this. Yet, how can the majority of the population be brought to believe this accident theory? And the answer is, with the help of the intellectuals. In the old days, that meant trying to mold an alliance between the state and the church. In modern times, far more effectively, this means through the nationalization or the socialization of education, through state-run and state-subsidized schools and universities. The market demand for intellectual services, in particular in the area of the humanities and the social sciences, is not exactly high and also not exactly stable and secure. Intellectuals would be at the mercy of the values and choices of the masses and the masses are generally uninterested in intellectual and philosophical concerns. The state, on the other hand, as Rothbard has noted, accommodates their typically overinflated egos and is willing to offer the intellectuals a warm, secure, and permanent berth in its apparatus, a secure income and the panoply of prestige. And indeed, the modern democratic state in particular has created a massive oversupply of intellectuals.

Now, this accommodation does not guarantee correct statist thinking of course. Also, as generally overpaid as intellectuals are, they will continue to complain how little their “oh so important” work is appreciated by the powers that be. But it certainly helps in reaching the correct statist conclusions if one realizes that without the state, that is, without the institutions of taxation and legislation, one might be out of work entirely, and might have to try his hand at the mechanics of gas pump operation instead of concerning himself with such pressing problems as alienation and equity and exploitation and the deconstruction of gender and sex roles or the culture of the Eskimos, the Hopis and the Zulus. And even if one feels underappreciated by this or that incumbent government, intellectuals still realize that help can only come from another government, and certainly not from an intellectual assault on the legitimacy of the very institution of government as such. Thus, it is hardly surprising that, as a matter of empirical fact, the overwhelming majority of contemporary intellectuals are far-out lefties, and that even most conservative or free market intellectuals, such as, for instance, Milton Friedman or Friedrich von Hayek, are fundamentally and philosophically also statists.

Now, from this insight to the importance of ideas and the role of intellectuals as bodyguards of the state and of statism, it follows that the most decisive role in the process of liberation, that is, the restoration of justice and morality, must fall on the shoulders of what one might call anti-intellectual intellectuals. Yet, how can such anti-intellectual intellectuals possibly succeed in delegitimizing the state in public opinion, especially if the overwhelming majority of their colleagues are statists and will do everything in their power to isolate and discredit them as extremists and crackpots? The first thing is this. Because one must reckon with the vicious opposition from one’s colleagues, and in order to withstand this criticism and to shrug it off, it is of utmost importance to ground one’s own case, not just in economics and in utilitarian arguments, but in ethics and moral arguments, because only moral convictions provide one with the courage and the strength needed in ideological battle. Few people are inspired and willing to accept sacrifices if what they are opposed to is mere error and waste. More inspiration and more courage can be drawn from knowing that one is engaged in fighting evil and lies.

The second point I want to emphasize is this. It is equally important to recognize that one does not need to convert one’s colleagues, that is, that one does not need to persuade mainstream intellectuals. As Thomas Kuhn has shown, in particular, converting one’s colleagues is a rare enough event, even in the natural sciences. In the social sciences, conversions among established intellectuals from previously held views are almost unheard of. Now, instead, one should concentrate one’s efforts on the not yet intellectually committed young, whose idealism makes them particularly receptive to moral arguments and to moral rigorism. And likewise one should circumvent, as far as this is possible, pure academic institutions and reach out to the general public, which has some generally healthy anti-intellectual prejudices into which one can easily tap.

The third point is—and this makes me return to the importance of a moral attack on the state—it is essential to recognize that there can be no compromise on the level of theory. To be sure, one should not refuse to cooperate with people whose views are ultimately mistaken and confused, provided that their objectives can be classified clearly and unambiguously as a step in the right direction of a destatization of society. For instance, one would not want to refuse cooperation with people who seek to introduce a flat income tax of 10 percent. However, we would not want to cooperate with those who want to combine this measure with an increased sales tax in order to achieve revenue neutrality, for instance. Under no circumstances should such cooperation lead to compromising one’s principles. Either taxation is just or it isn’t, and once it is admitted that it is just, how is one then to oppose any increase in it? And the answer is, of course, that then one has no argument left over. Put differently, compromise, on the level of theory, as we find it, for instance, among moderate free marketeers, such as Hayek or Friedman, or even among some so-called minarchists, is not only philosophically flawed, but it is also practically ineffective and even counterproductive. Their ideas can be, and in fact are, easily co-opted and incorporated by the state rulers and by the statist ideology. In fact, how often do we hear nowadays from statists, in defense of a statist agenda, cries such as “even Hayek or Friedman says such and such” or “not even Hayek or Friedman would propose anything like this”?

Now, personally, Friedman and Hayek might not be happy about this, but there is no denying that their work lends itself to this very purpose, and hence, that they willy-nilly actually contributed to the continued and unabating power of the state. In other words, theoretical compromise and gradualism will only lead to the perpetuation of the falsehood, the evils, and the lies of statism, and only theoretical purism, radicalism, and intransigence can and will lead first to gradual practical reform and improvement and possibly also to final victory. Accordingly, as an anti-intellectual intellectual, in the Rothbardian sense, one can never be satisfied with criticizing various government follies. Although one might have to begin with criticizing such follies, one must always proceed from there onto a fundamental attack on the institution of the state as such, as a moral outrage, and on its representatives as moral as well as economic frauds, liars, and imposters, or as emperors without clothes. In particular, one must never hesitate to strike at the very heart of the legitimacy of the state and its alleged indispensable role as producer of private protection and security. I have already shown how ridiculous this claim is on theoretical grounds. How can an agency that may expropriate private property possibly claim to be a protector of private property?

But, hardly less important is it to attack the legitimacy of the state on empirical grounds, that is, to point out and hammer away on the subject that after all, states, which are supposed to protect us, are the very institution responsible for some estimated 170 million deaths in peacetime in the twentieth century alone; that is probably more than the victims of private crime in all of human history. And this number of victims of private crimes from which government did not protect us would have been even much lower if governments everywhere and at all times had not undertaken constant efforts to disarm its own citizens so that the governments, in turn, could become ever more effective killing machines. Instead of treating politicians with respect, then, one’s criticism of them should be significantly stepped up. Almost to a man—there might be a few exceptions—almost to a man, politicians are not only thieves, but in fact, mass murderers or at least assistants of mass murderers. And how do they dare to demand our respect and loyalty?

But, will a sharp and distinct logical radicalization bring about the results that we want to achieve? In this, I have very little doubt. Indeed, only radical and in fact, radically simple ideas can possibly stir the emotions of the dour and indolent masses and delegitimize government in their eyes. Let me quote Hayek to this effect and from this, you realize that even a guy who is fundamentally muddled and mistaken can have very important insights, and that we can learn very much also from those people who do not agree totally with us.

We must make the building of a free society once more an intellectual adventure, a deed of courage. What we lack is a liberal Utopia, a program which seems neither a mere defense of things as they are nor a diluted kind of socialism, but a truly liberal radicalism which does not spare the susceptibilities of the mighty (including the trade unions), which is not too severely practical and which does not confine itself to what appears today as politically possible. We need intellectual leaders who are prepared to resist the blandishments of power and influence and who are willing to work for an ideal, however small may be the prospects of its early realization. They must be men who are willing to stick to principles and to fight for their full realization, however remote. Free trade or the freedom of opportunity are ideas which still may arouse the imaginations of large numbers, but a mere “reasonable freedom of trade” or a mere “relaxation of controls” are neither intellectually respectable nor likely to inspire any enthusiasm.

Unless we can make the philosophical foundations of a free society once more a living intellectual issue and its implementation a task which challenges the ingenuity and imagination of our liveliest minds, the prospects of freedom are indeed dark. But if we can regain that belief in the power of ideas which was a mark of liberalism at its greatest, the battle is not lost.1

Now, Hayek, of course, did not heed his own advice to provide us with a consistent and inspiring theory. His utopia as developed, for instance, in his Constitution of Liberty, is instead the uninspiring vision of the Swedish welfare state. But, it is Rothbard, above all, who has done what Hayek recognized as necessary for the renewal of classical liberalism, that is, he had given us an inspiring utopia, something that is based on morals and is capable of invigorating, especially the young and intellectually uncommitted.

Now, let me end by also trying to offer some sort of inspiring utopia for intermediate goals, goals before we reach a fully destatized society. You realize that if we follow the logic of the state to its ultimate conclusion, then what we must demand is a world state, because as long as there is no world state, then according to the statist ideology itself, there will be perpetual war among states because they are, vis-à-vis each other, in a state of anarchy. The only ultimate solution would be that of a world state. This is precisely the vision that our leaders try to propagate. Of course, a world state under control of the United States, to be more precise, but in any case, it requires a world state. Instead, the utopia, the intermediate utopia that I would suggest takes its cues from what we have learned from the Middle Ages and from the peculiar organization of Europe which was responsible for the unique success of the Western world, that is, the quasi-anarchistic structure, the highly decentralized structure of Europe. What we can propose as an intermediate goal, which I think is more inspiring than the world state, is the view of a world composed of tens of thousands of Monacos and Liechtensteins and Swiss Cantons and Singapores and Hong Kongs and San Marinos and whatever small entities nowadays still exist. Recall, if we have a large number of small political entities, each of these entities will have to be relatively moderate and nice to its population, otherwise, people will simply run away from it.

Second, each one of these small units will have to engage almost necessarily in an open free trade policy. The United States, as a large country, can engage in protectionist measures because it has a large internal market. Even if it were to stop trading with the rest of the world, the United States population would experience a significant decline in standards of living, but people would not die. On the other hand, imagine Liechtenstein or Monaco or San Marino declaring no more trade, no more free trade with the outside world, or Hong Kong, places such as this. Then, of course, it would take a week or two and the entire population in these places would be wiped out. So, small units must, in order to avoid starving to death or losing, in particular, their most productive individuals in no time, must engage in classical liberal policies.

In addition, a large number of very small units would have to give up, of necessity, the institution of paper money because there cannot be tens of thousands of different paper monies issued by tens of thousands of different political units. We would basically be back to a system of barter if we were to do this. The smaller the units are, the greater is the pressure, in fact, that we will return also to a commodity money standard, which is entirely independent of government control.

What I would recommend, in particular, for the United States and so forth, is to realize that democracy will not abolish itself. The masses like to loot other people’s property. They will not give up the right to continue doing this. However, there are still, in the United States and in many other places, small islands of reasonable people, and it is possible that on small local levels, some people, some natural authorities can gain enough influence in order to induce them to secede from their central state. And if they do so, and if that accelerates, if it happens at many places simultaneously, it will be almost impossible for the central state to crush a movement such as this. Because in order to crush a movement such as this, again, public opinion has to be in favor of this and it would be difficult to persuade the public to attack to kill, to destroy small places that have done nothing other than to declare that they wish to be independent of the United States.

• 1Friedrich A. Hayek, The Constitution of Liberty (1978; Chicago: University of Chicago Press, 2005), p. 384.