Power & Market

A Voluntaryist’s Addition to the State Capitalist Tradition

State capitalism is typically viewed as anathema to the voluntaryist tradition. However, there are takeaways from the idea that might prove useful for our tradition. Particularly, I am concerned with our inability to counter certain critiques coming from the “libertarian” left. In this article, I am proposing a new system of governance that would address these critiques.

Well, first let us start with what critiques need discarding. Among those to discard, parents who sell their young into labor and being underpaid or worked overtime. We should not dignify these questions; they detract from one major critique- that our society might empower a business entity to act and serve as a de facto government.

Now if there is no state, there is no rent seeking, and we very frequently point this out to our detractors. However, political ecosystems are organic and that makes self-interest a bending will in anarchy too. So, what is the alternative?

First, imagine there is a charter in the proposed society. A charter is a document that grants rights to the public, to individual constituents of that society. It is essentially a constitution for all intents and purposes. Now, this charter establishes a company. So, a chartered company does not define any limitation or minimum as to its size, but it does establish an unchangeable structure with its board of directors.

This chartered company would be classified as “the government.” It is where the semantics kill, as “the government” would be forbidden from obtaining and exercising police powers, taxation or anything else that implies infringement. It is in essence, a nominal government and placeholder at that. It is a placeholder, to preclude another company from acting as substitute authority and nothing more.

This is important, particularly as it pertains to a lack of power to tax. Why? Not only is taxation theft, but it also means a lack of fiscal responsibility or general merit. If the state can extort to cover its shortcomings, it isn’t incentivized to check itself. So, this problem is averted. This is averted, that matters because “the government” here will be operating like a business.

Why then define “the government” in my proposed system as a chartered company? If it is simply a state without a social contract, that question probably runs through your mind. Easy, it operates as a business does in the way it will sell its services. Think of welfare as a private good that competes with its competition on the market. If it has no power to extort to cover its losses, it must appeal to the consumer.

That is not irrelevant in the system I propose, because there are private businesses all around “the government.” “The government” does not have a monopoly, the way other forms of state capitalism do. So, it is certainly competing inside the marketplace, now it hopes to make a profit. These profits are a substitute for taxation. Profits, not taxation, make sure “the government” stays in-business.So for instance, one of the products that “the government” wants to sell is healthcare. It must do better than Aetna or Blue Cross, that is earn a bigger profit by catering to its audience and double-checking any loose expenses.

Simple enough, right? Aside from establishing “the government,” this charter document establishes a protocol for its own nationalization. Here, nationalization of “the government” means the assumption of direct democratic control over itself. The common public would oversee and operate for each transaction or managerial decision in “the government” by referendum, in other words. The protocol is this- a popular referendum may be called by any citizen, should “the government” fail in keeping its finances from bankruptcy.

This nationalization could only happen at that point. Further, any direct democratic control would be forbidden from changing the terms in the charter document. Purely, it gives them control over its operations and employment but nothing else. It is here, the fun begins as it is not meant to check against power. Rather, it is expected that nationalization could only reinforce a cyclical bankruptcy that empowers a growth of private competitors to outcompete “the government.”

Most important in all of this might be that it gives the “libertarian” leftist a sense of control with which to keep himself comfortable. Further, its “nationalization” protocol ensures that any demand that a state be invented should operate wholly within a controlled paradigm. Because any scandal or failure is easily exploited to that end, it is time that this be planned for.

Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.
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