3 posts tagged “statelessness”

The Politics of Obedience: The Discourse of Voluntary Servitude by Étienne de La Boétie (1530 - 1563) is a compelling monograph [PDF]. About a week ago I elatedly listened to the audio-book on my portable mp3 player. It contains what economist Jörg Guido Hülsmann calls "Boétie's Law" (see chapter 11 of The Myth of National Defense [PDF].) The great libertarian Murray N. Rothbard, in his luminous introduction to La Boétie's work, wrote:

THE DISCOURSE OF VOLUNTARY SERVITUDE is lucidly and coherently structured around a single axiom, a single percipient insight into the nature not only of tyranny, but implicitly of the State apparatus itself. Many medieval writers had attacked tyranny, but La Boétie delves especially deeply into its nature, and into the nature of State rule itself. This fundamental insight was that every tyranny must necessarily be grounded upon general popular acceptance. In short, the bulk of the people themselves, for whatever reason, acquiesce in their own subjection. If this were not the case, no tyranny, indeed no governmental rule, could long endure. Hence, a government does not have to be popularly elected to enjoy general public support; for general public support is in the very nature of all governments that endure, including the most oppressive of tyrannies.

In essence, government depends on a supportive public to exist; otherwise it would collapse because it is by necessity a minority of the population. Those that reason that the institution called "government" holds society together are in error. No institution by itself holds anything together, not even government. It is this general understanding that reveals how a private law society can develop. If the population engages in nonviolently resisting the government in a mass act of "disobedience," then such an institution----which constantly engages in expropriation and exploitation of private individuals and groups----will fall apart. Using violence is not necessary. The act of killing the king is not required. "For if tyranny really rests on mass consent," La Boétie wrote, "then the obvious means for its overthrow is simply by mass withdrawal of that consent." "Tyrants fall when the people withdraw their support." As a collective whole, men in society are chained because they allow themselves to be chained.

La Boétie:

Poor, wretched, and stupid peoples, nations determined on your own misfortune and blind to your own good! You let yourselves be deprived before your own eyes of the best part of your revenues; your fields are plundered, your homes robbed, your family heirlooms taken away. You live in such a way that you cannot claim a single thing as your own; and it would seem that you consider yourselves lucky to be loaned your property, your families, and your very lives. All this havoc, this misfortune, this ruin, descends upon you not from alien foes, but from the one enemy whom you yourselves render as powerful as he is, for whom you go bravely to war, for whose greatness you do not refuse to offer your own bodies unto death. He who thus domineers over you has only two eyes, only two hands, only one body, no more than is possessed by the least man among the infinite numbers dwelling in your cities; he has indeed nothing more than the power that you confer upon him to destroy you.

Indeed, how can the State do anything upon you and other men without first obtaining the power to do such ahead of time? How can this parasite----the State----do anything without first getting revenues from the productive? And how can it obtain such revenues from the productive majority without having a supportive public----a public which outnumbers men of government?

Back to La Boétie:

Resolve to serve no more, and you are at once freed. I do not ask that you place hands upon the tyrant to topple him over, but simply that you support him no longer; then you will behold him, like a great Colossus whose pedestal has been pulled away, fall of his own weight and break in pieces.

Clearly enough, the State needs to spread statist ideology for it to maintain its existence.

Rothbard in his brilliant essay "The Anatomy of the State" explains that, basically, there have been two things that have been done to encourage support. The first is simply by redistributing wealth within civil society, after taking some of that wealth for itself, and thus buying support. As a consequence, an enlarging number of men become dependent on the government. This increases man's support for government and further strengthens the position of government in society. The second is the buying of intellectual bodyguards to spread statist ideology. By offering them privileges that only the State has, because it works outside of the voluntary market, they are "handsomely rewarded for the important function they perform for the state rulers."

In earlier times, of course, ideological arguments stated that the rulers were divine or some such thing. Hence, they demanded man's obedience and subjugation. Arguments today, in contrast, often come from the scientific angle. It is claimed that the rulers are "scientifically" running society, and that without their "rationalistic" guidance chaos would ensue.

The apologists for statism, as Rothbard explained in the above essay, also make claims that the State is inevitable ("death and taxes") or that it is part of "tradition" (well, war can be said to be part of "tradition" too, so should we say that it is a blessing to society, etc.?). And those who advocate limiting government and expanding the private sphere are regularly denounced as advocating "selfishness" or "unrestrained greed." (Men of the State, I am sure, could never be said to be greedy, though!) In other words, said Rothbard, these denouncements are used to induce guilt on liberty advocates.

Another main thing that States have done is the creation of fear among the public. Fear of nearby States, for example. It is then claimed that only the given rulers can possibly protect them from these and other enemies.

Hans-Hermann Hoppe, a student of Rothbard's, has expanded this analysis. As he has written on extensively, government officials have an interest in expanding their position and wealth (like everyone else). But what they need is favorable public opinion. Thus the government tries to mold opinion to its advantage. It engages in the monopolization of education (in certification), it hires intellectuals, it engages in redistribution and regulation to gain public favor, and it democratizes itself.

As far as the last one is concerned, democratization helps to blur the line between the government and civil society. It makes men----who now have some share in decision making (even if it be practically zero from an individual's perspective) and who now have the possibility to run for office (versus monarchical rule)----less resistant to government expansion. Men who desire the power contained in government can now attempt to be a wielder of power under democracy. Whereas before the possibility of a man born outside the family of the monarch would have had practically zero chance in fulfilling his desires for power. Instead of being harmless, these particular men can now become dangerous. Men who would otherwise be resistant to a personal king become tolerant of democratic power. This kind of "open" entry sets the stage for men to become political animals.

Dr. Hoppe writes in A Theory of Socialism and Capitalism [PDF]:

Given an identical population and an identical state policy of the discriminatory provision of goods and services, a democratic state has more opportunities for increasing its own aggressively appropriated income. And mutatis mutandis, an autocracy must settle for a relative lower income. In terms of the classics of political thought, it must rule more wisely, i.e., rule less. Since it does not allow any will other than that of the autocrat, and perhaps his immediate advisors, to gain power or influence policy on a regular basis, its execution of power appears less tolerable to those ruled. Thus, its stability can only be secured if the overall degree of exploitation enacted by the state is relatively reduced.

[Modern dictatorship has always been the mass outgrowth of democracy. It has nothing to do with classical monarchy, as Dr. Hoppe has noted.]

After many years in slavery to the State, men become accustomed to it. Slavery is all man knows. Freedom is a foreign, strange, abstract idea. In The Politics of Obedience Étienne de La Boétie wrote:

Men are like handsome race horses who first bite the bit and later like it, and rearing under the saddle a while soon learn to enjoy displaying their harness and prance proudly beneath their trappings. Similarly men will grow accustomed to the idea that they have always been in subjection, that their fathers lived in the same way; they will think they are obliged to suffer this evil, and will persuade themselves by example and imitation of others, finally investing those who order them around with proprietary rights, based on the idea that it has always been that way.

Hope is not completely lost, however. There will always be a few elite men, said La Boétie, that will not settle for slavery. Even if they never experienced freedom, "such men would invent it." Albert Jay Nock, a radical gentleman of the Old Right, called this group "the Remnant."

In reply, Rothbard wrote: "The prime task of education, then, is not simply abstract insight into governmental 'errors' in advancing the general welfare,"

but debamboozling the public on the entire nature and procedures of the despotic State. In that task, La Boétie also speaks to us in his stress on the importance of a perceptive, vanguard elite of libertarian and anti-statist intellectuals. The role of this "cadre"----to grasp the essence of statism and to desanctify the State in the eyes and minds of the rest of the population----is crucial to the potential success of any movement to bring about a free society. It becomes, therefore, a prime libertarian task to discover, coalesce, nurture, and advance its cadre----a task of which all too many libertarians remain completely ignorant.

The Free Market Economy is the Engine of Civilization: From Barter to Money.

Money is a crucial feature to any advanced civilization, notwithstanding how much it is looked at negatively and portrayed as intrinsically a nasty thing in "progressive" culture. Now before man can attempt to answer questions, such as, What is money?, Why do we have it?, or How does money develop in society?, there first must be an understanding of why there is any trade at all.

Comprehending that is reasonably straightforward. After that, we all will endeavor to answer those questions raised in regards to money. In so doing, the important connection money has to civilization and liberty will be concretized in the mind. Finally, we will look at the forces that undermine money, and thereby undermine civilization and liberty.

But first, imagine, following the lead-----I'm just attempting (please understand!), as a midget, to stand on the shoulders of giants-----of Murray N. Rothbard's work, that egalitarianism was not a "revolt against nature." That is, if all men were exactly alike in every single way imaginable. That even land was distributed in a homogeneous way in which every acre of land had an exactly equal proportion of resources. And, also, imagine that Mother Nature behaved in a way in which her affects were always and everywhere the same across the world in a homogeneous-collective manner as against one in which her behavior, so to speak, was different at different locations. And so on. Man in this world would be little different than a robot produced out of a mass production factory. Every man, being of identical nature, confined to his land, being of identical nature as well, would produce and consume exactly the same thing, in the same proportions as every other man. Clearly a division of labor qua society would not develop. To quote Ludwig von Mises (as Rothbard did on this subject): "No social life could have arisen among men of equal natural capacity in a world which was geographically uniform."

The real world, in which we live, is not like this at all. Rothbard is therefore absolutely correct when he said that egalitarianism is a "revolt against nature." Men, on the contrary, differ vis-à-vis each other. Land, too, is heterogeneous. Neither is Mother Nature a fan of egalitarianism. As Erik von Kuehnelt-Leddihn wrote, "'Nature' (i.e., the absence of human intervention) is anything but egalitarian; if we want to establish a complete plain we have to blast the mountains away and fill the valleys; equality thus presupposes the continuous intervention of force, which as a principle, is opposed to freedom. Liberty and equality are in essence contradictory."

Man would obviously not trade with his neighbor if his neighbor had everything he had. Man instead trades with his neighbor because his neighbor has something he does not have. More fundamentally, it is recognizing that trade in the second of the two cases is better or more profitable than trying to produce everything in isolation. A world with an extreme household protectionism would have extremely low standards of living. The population number would be nowhere near the number it is today.

It is the fact that engaging in a market economy with others is more profitable than not to engage that explains why barter developed. Man's needs and wants can be better fulfilled in the market economy. It is based on exchange and in production----production to be used in future exchange. Society is hence not an end to itself; it's a means. Men come together to do things together.

Now explanations of this development, from famous economists like Adam Smith, according to economist Hans-Hermann Hoppe, that pronounce the market economy developed for reason that man has an instinct to it and an inborn like of other men is erroneous. Both of these assumptions are not needed to explicate the development.

Trade may take place between two men, who might actually dislike each other, who rationally, opposed to instinctively, see the advantages of this type of interaction. If these two men trade with each other, then it is because the first man has something the second man wants and the second man has something that the first man wants. (Feelings of friendship, when voluntary cooperation has been established, can then truly develop!) This is not, though, the consequence of them viewing what they trade as equal to each other. No trade would result if that was the case. The trade is the consequence of them viewing these traded goods as having a different worth. One man ranks one thing higher and the other man ranks the other thing higher. Hence both trade because they see themselves as becoming better off than not trading.

This is the beauty of what Robert Nozick called "capitalist acts between consenting adults" (whose line the economist Walter Block often quotes). The mutually beneficial nature of all capitalist acts inter partes is logically implied when they take place (ex ante). It is because it is logically implied----because it must be logically implied----that such acts take place. Voluntary exchanges all logically imply it. For this reason, no empirical testing is required (and how would man go about that testing?) and no empirical testing can show this to be false. This logical deduction of action is not technically observed, but is implied even for an observer----who is an actor----who wishes to observe anything----i.e., it is implied in the way one observes anything----and for this reason cannot be refuted. It is the prerequisite (or praxeological precondition) for any voluntary exchange to take place. It is the foundation of these exchanges.

("Socialist" acts, contrariwise, we can call "acts between non-consenting adults." They imply something quite different than capitalist acts. Whereas capitalist acts take place because they are seen as advantageous for both parties, socialist, non-consenting acts are acts where one party aggressively forces his will on another. One party benefits; the other party has a loss to what was taken away. Furthermore, institutionalizing socialism above individual acts of random physical invasion is to make matters even worse for a society than "unsystematic socialism." Since institutionalized socialism is a systematic attack or redistribution of wealth from those engaging in capitalist acts----who under systematic socialism cannot rightfully defend their property from attacks----to those engaging in socialist acts, the costs of engaging in capitalist acts will be higher, and therefore there will be less capitalist acts in society. Consequently, there will be less wealth and wealth creation.)

But, from the fact that these initial barter (direct) exchanges necessitate a situation where there is a double coincidence of wants (i.e., the first man has something the second man wants and the second man has something that the first man wants), there is a major hurdle to which man has to jump through to exchange with another. It might turn out, for example, that one man sees that another man has in his ownership something he himself very much wants, but cannot trade with him because he himself has nothing that this man wants. In each and every exchange there is this hurdle. The range of man's potential capitalist exchanges will be limited. Thus, the division of labor cannot be complex and diverse under barter. Specialization, like we have today, is not a possibility.

This is why indirect exchange develops. To fulfill man's desire to trade, as elucidated above, man must find ways to facilitate it in a way to overcome the difficulties of barter. Man wanting to expand his trading opportunities, by overcoming the lack of double coincidence of wants, must find goods that are greatly marketable. These are goods that are popular; that are in high demand; that many, many people want and value. By obtaining these goods a man has therefore opened up his trading opportunities to a higher degree. And the higher this degree is, the more wealth creation prospects he has. The value he places on these goods, unlike other goods, is that they help him in acquiring services and other goods. He values it for its exchange value as opposed to its potential use value. It also follows that he will have the incentive to find a marketable good that has divisibility (without losing value), which will allow him to divide it up so as to more easily purchase more than one item and to easily purchase both expensive and inexpensive items.

Uncertainty, it should be noted, is what pushes man to adopt money. It is the uncertainty of knowing whether or not one is able to trade. (Only a world of "perfect certainty" would money not be needed.) As long as at least one entrepreneurial man can perceive all of this, a society can then start to economically evolve out of the primitive barter stage. Other men will see this. They will see that he who does such progresses upward in the hierarchy of wealth. There will therefore be an increasing demand for goods qua a medium of exchange. The interconnection of the market will increasingly intensify. It will push other men, who otherwise might not be bright enough to see the advantage of doing so, to follow the lead. "The result is a reinforcing spiral," wrote Murray Rothbard. "[M]ore marketability causes wider use as a medium which causes more marketability, etc. Eventually, one or two commodities are used as general media----in almost all exchanges----and these are called money."

This reinforcing spiral will result in the choice of a commodity that is demanded (valued), dividable, durable, homogeneous, portable, scarce, stable in supply, etc. Money is dependent on man's valuing it in terms of its, to quote Rothbard, "preexisting prices on which to ground demand." It depends on its barter demand. Unwinding the spiral by a regression, one finds that the evolution of a good (or two) to the position of money is the result of it being originally valued by man as a good in itself to be consumed. Hence, money can only originally develop through the free market as a commodity. And, hence, the only way government can enter the picture of money is if it does so on top of the necessary market development of money. Fiat paper money, by itself (with or without government force), could never get off the ground; anymore than if you took a clean sheet of practically worthless paper, applied some ink to it, and tried to buy something with it. Money, like language, is a product of freedom. That is, of free interaction, association, and discrimination. The State did not create money; anymore than it created language.

With the development of money, to iterate, the severe limitations of barter go away. The market economy becomes integrated. "Capitalist acts between consenting adults" can happen right away with money. Practically everything can be bought and sold in terms of money, without the problem of double coincidence of wants. There will thus be more exchanges and productions of goods and services. The standard of living will thus rise.

Money, moreover, allows man to easily calculate. Cardinal calculations are possible. (But the development of this, which man has to place value on, is itself an ordinal choice or ordinal value. Further, it is the feature of a market money's homogeneity that makes these cardinal calculations possible.) Exchange ratios arise. The question of how to direct scarce resources to fulfill the most wanted desires of man becomes possible to answer with a common, universal medium of exchange. The entrepreneur can now more easily see what lines of production are (relatively) more profitable than others. He can compare them. Of course this, too, raises the standard of living exponentially. The businessman can see his profits and losses. He can calculate his capital and income. Money thus develops the pricing system, which helps direct the traffic of the market. Any complex society needs the pricing system to direct scarce resources which have alternative uses. The only alternative is chaos.

The Transformation of Capitalistic Money to Socialistic Money.

Increases in the supply of money, once money has been established in society, is of no particular importance in terms of net living standards. Unlike other goods and services, an increase does nothing to make society wealthier. Only insofar as an increase of the particular money confers a non-monetary benefit to be consumed (either directly or, as a capital good, in the production of a future consumer good), can such an increase be said to raise living standards. A greater supply of money, ceteris paribus, just means a smaller purchasing power. A lesser supply of money, ceteris paribus, just means a larger purchasing power.

Assuming that the money chosen was gold, as it has been in modern times, in a free "society, one can acquire money in only three ways," said Rothbard:

(a) by mining more gold [which, by the way, is an expensive and slow process that will generally not lead to "price inflation"---my note]; (b) by selling a good or service in exchange for gold owned by someone else; or (c) by receiving the gold as a voluntary gift or bequest from some other owner of gold. Each of these methods operates within a principle of strict defense of everyone's right to his private property.

In the world in which we live this might look a little foreign, no doubt. So obviously something happened to the development of capitalistic money to turn it into the socialistic money we have today. This is an involved subject, but economically speaking the transition follows a precise pattern.

Before this blog entry briefly gets into that, however, it is very important to understand that one can try to acquire wealth by counterfeiting money. This activity of fraud is in direct violation of private property rights. As such, it is not part of the three acceptable ways to obtain money, which Rothbard described above.

The societal development of money brings the formation of banks. Their job is the storage of money and to provide for increased transactions between savers and entrepreneurs. Banks can either obtain income legitimately, as covered above, or illegitimately. They can facilitate transactions between savers and entrepreneurs legitimately or illegitimately, as well. Fractional reserve banking is an example of illegitimacy. All banks might have the desire to engage in this activity, but their desire will be limited indeed as long as there is open entry into competition (with no government central bank regulating this away in which this limit or check is eliminated [see below]). In addition, with a free market it will be limited because of the possibility of bankruptcy. (Profit and loss is both salubrious and necessary for an economy. [Bank runs are beautiful.]) Only the government can change matters. It and only it can take away competition by force or can attempt to prevent bankruptcy when bankruptcy occurs. Either of the two interventions will create moral hazard (i.e., there will be more financially risky behavior) and encourage the practice of fractional reserve banking.

Fractional reserve banking occurs when a bank issues more paper receipts (titles) than actual commodity money they possess. A one-to-one ratio (one hundred percent reserve banking) does not exist. From this it should be straightforward to see that if a bank engages in the handing out of more paper receipts (called "fiduciary media") than gold it holds in storage, it is no different ethically than a garage storage place taking one's items away from their customers while they promise to guard them. This is a violation of private property and makes the given bank financially bankrupt. That is to say, if each and every customer would come to the bank to demand their money, the bank would not be able to fulfill its contracts. Those interested in a just and free society, then, must want the law-contract enforcement agents that be to prevent these kinds of practices.

Put in another way, there will be more titles representing money property than actual money property. It tries to make two equal to one. It is an attempt to create physical property from nothingness. Because these titles have no value except insofar as they serve as a function to represent what they are titles to, the notion of free and contractual fractional reserve banking seems to make little sense. When man A deposits x amount of money, it cannot be said that x amount of money is also owned by man B at the same time. Only if it was contractually loaned (or voluntarily given) to B can it be his, but it cannot be exclusively owned both by A and B at the same time.

But, as stated, it is free banking, with no central bank, that has a build-in major economic limitation to fractional reserve banking activity, even if the enforcers of law do nothing about it. Interactions do not just occur with one customer and his respected bank or two customers of the same respected bank. Interactions can happen between one customer of one bank and another customer of another bank. That is, one man of Bank A can write a check to a man of Bank B. The second bank, with the new check, will demand the money (all of it) from the first bank. If Bank A has been reckless in engaging in fractional reserve banking, it will not be able to fulfill Bank B's request. To cut to the chase, this associational environment will thus put a major constraint on this fraud. The more banks there are, the more this constraint will increase. (Another limitation is a public that is aware of fractional reserve banking and is very untrusting of any bank that engages in it.)

What is more, artificially increasing the supply of money (via, e.g., bank notes, bank deposits, or "checkbook money" that people can use in their daily affairs)----which, unhappily, costs virtually nothing----will lead to a host of unintended consequences. (More will be written on this a little later. The unintended consequences will be far more pronounced when this artificial increasing of the money supply is systematically implemented via government.) There will be a redistribution of wealth, as already indicated. The greater the supply of money, ceteris paribus, the less purchasing power it will have relative to all goods and services. However, the result of inflation (i.e., the increase of the money supply without "specie" or commodity backing) is a result that comes to pass in a way that trickles through the economy. It is not an instantaneous event. Those accordingly getting the fake new "money" get it at the parasitic expense of those who get it later or not at all. After this inflationary process has trickled its way through the economy, prices will have risen (ceteris paribus) to reflect the new condition of the larger money supply. It is this uneven process that results in what are called "Cantillon effects." Effects of which have the result of redistributing real wealth.

Government, wanting to expand its revenues, can see all of this. This is why governments have sought control over the supply of money and the making of an alliance with the banking industry. Such an alliance would be beneficial to both, if only they can ideologically corrupt the public to thinking that it is beneficial to them as well. That, sadly, is not too difficult taking into consideration that the public's knowledge of economics is abysmal. Both the government and the banking industry can then engage in robbing the wealth of the public by controlling the money supply. Government can then tax in a new way, an indirect and unseen way.

The monopolization of minting by government, in a nutshell, first occurs and then the debasement (coin-clipping) of money, which is enforced on the public by means of legal tender laws. This debasement it pockets to itself at the parasitic expense of everyone else. More coins are created by the debasement and then the public is forced to act like nothing has happened. Now given that government outlaws all competition, the government has no competition to keep it in check. Government can thus keep on providing a inferior money without worry of a competitor offering consumers a superior money. Moreover, any remaining superior money will be driven off the market, since government will be forcefully overvaluing inferior money and undervaluing any superior money.

Then the government has monopolized money paper titles (bank notes) and creates a central bank (à la the Federal Reserve System). Counterfeiting can then occur uniformly vis-à-vis the banks. The central bank becomes the "bankers' bank" and the "lender of last resort." Gold, as the commodity money, becomes nationalized. It starts to lose its role, in the minds of the public, as money. And banks can inflate, with the government's blessing, off of government's inflation through fractional reserve banking with bank deposits. They can no longer issue bank notes, since the central bank has monopolized their issue, but can still issue bank deposits as a way to inflate. In this monetary socialism, they can do this without too much worry, as long as the public does not wake up to what is happening (or hyperinflation occurs). The previous free banking constraints largely disappear. At this time the government will also have the desire to get off the gold standard completely, and thus allowing this check to go the way of the dinosaurs for it to fill its power and greed ambitions. Soon all that is left is a fiat paper money system----a system very easy to counterfeit with.

The government can inflate at will with the counterfeiting apparatus. All that is done, essentially, is that the central bank buys some, say, government bonds. This money is produced literally out of nothingness. The bond dealer takes it to deposit at a bank and the bank then deposits it at the central bank. This deposit is the bank's reserves. The bank can then make deposits, through fractional reserve banking, on top of these reserves, in the amount the government allows by law----i.e., the reserve ratio. A reserve ratio that is 10:1, for example, means that the bank can increase deposits by tenfold out of nothingness on top of that original money that, too, came from nothingness.

Additionally, in the U.S., there has been the further creation of other programs that give the false impression to the public that the banking system is a sound system; instead of it being seen as a house of cards. The making of the Federal Deposit Insurance Corporation (FDIC), for instance, is an example. However, wrote Rothbard, "the FDIC itself has less than one percent of the huge number of deposits it 'insures.'" He went on: "The very idea of 'deposit insurance' is a swindle; how does one insure an institution ... that is inherently insolvent, and which will fall apart whenever the public finally understands the swindle?" And the very existence of the FDIC makes the banking system more unstable by creating moral hazard and by relieving customers their responsibility to take good care of where they put their money.

Not only will this fascistic-statist system perpetually promote inflation, it will perpetually promote business cycles leading to recessions and depressions. By perpetually declining the purchasing power of money, this system will discourage savers and encourage non-savers and debtors. Consumption, leisure, short-term thinking and planning will be relatively encouraged. The cultural characteristics and work ethics that make a healthy economy are thus punished with this system; whereas the opposite is rewarded.* Many businesses will also be thrown off course because business calculations will be distorted as a result of inflation. There will be an overestimation of profits, during the initial effective stages of inflation, and this will misdirect many businesses, and might even lead them to use up their capital on these false signals. Just as the effects of inflation will reward bad financial behavior for the individual and for the family unit, it will do ditto for private enterprise.

It is the facilitating of transactions between savers and entrepreneurs by the artificial expansion of credit (via fiat money) that sets into motion mass business cycles. The initial "boom," in the higher-order capital goods industries----which basically operate on man's ability to develop roundabout methods of production, and willingness to hold off instant gratification so as to invest present goods in such capitalistic production, that aims at an output with a higher net total of goods (than not doing so) in the temporal future----that received the credit, is artificial and the resulting bust phase is simply the market trying to correct the distortions that the government and the banking system created. Simply put, the ratio of consumption to saving (qua investment**) in society will not be reflected. With an artificially greater supply of credit, the interest rate (i.e., the cost of the procurement of money or capital in the present) is lower than it otherwise would be on the market. Instead of it reflecting the actual time preference levels (i.e., the rate in which man prefers present consumption over the future) and, on the other side of the same coin, saving levels (vis-à-vis spending-consumption levels) that men have in society, the market is misdirected to act like the time preferences are lower than what they actually are and to act like savings are higher than what they actually are. That is, instead of the boom being created out of actual savings with a low time preference that is temporally sustainable, the "boom" is based on hot air. And, remember, an increase of fiat money most certainly does not increase wealth for society. It does not and cannot increase (real) savings or lower time preferences.

A shaky imbalance in investments is created between consumers' goods (of the lower-order) and capital goods (of the higher-order). A mass of malinvestments becomes inescapable. When the rate of interest lowers, there is a shift from lower-order to higher-order industries. There will thus be an artificially greater investment in higher-order capital goods and correspondingly less investment in lower-order consumer goods. If private property and the market was respected, then it would be just the opposite given the current time preference and saving levels. However they are not respected. Even moreover, men will be saving less as lenders (and, hence, consuming more) because the return will be artificially lower than it otherwise would be. Thomas E. Woods, Jr., an historian and economist, has pointed out that, in effect, the anti-market intervention is in a tug-of-war match in which the economy is being pushed in two opposite directions at the same time. But, in the long-run, the market will win because real resources are not there to keep the "boom" going. These resources are consumed. (Insufficient resources have been freed up for the future. Instead of saving, men have been consuming. And instead of entrepreneurs producing for such present oriented things, they were being pushed into future oriented things.) The prices of these capital goods at first go up. These investments are made to seem profitable. A bubble develops. But as the effects of inflation trickles through the economy and the bank credit expansion ends, these investments will be seen for what they are, viz., hot air investments. Now they are seen (correctly) as not profitable. The prices of consumer goods will go up (with the given ratio of consumption to saving), with a shortage of resources, relative to the capital goods and there will be a redirection, in which a recession or depression occurs, of investments back to where they would have gone (in terms of production order), and the higher-order investments dry up. Hence, this process will produce another inescapable result: wealth destruction. "In sum," wrote Rothbard,

businessmen were misled by bank credit inflation to invest too much in higher-order capital goods, which could only be prosperously sustained through lower time preferences and greater savings and investment; as soon as the inflation permeates to the mass of the people, the old consumption-investment proportion is reestablished, and business investments in the higher orders are seen to have been wasteful.

*(To note, the more wealth, the lower the time preference tends to be. That is because it is less difficult to save with more wealth than less. One would hence expect that, because there is more wealth, real interest rates would be lower than the last generation. As Hoppe notes in his must read Democracy - The God That Failed book, they are higher with today's generation. This can only be the result of a systematic increase in time preferences. That is, society is more "child-like" today. ...... Mises himself recognized that the particular statist intervention of inflation is a direct attack on what we can call "conservative" values: The cultural damage of inflation is "epically strong among the youth. They learn to live in the present and scorn those who try to teach them 'old-fashioned' morality and thrift.")

**(The issue of "hording" has no direct influence on this discussion and thus will be ignored. But understand that all this would do is increase the purchasing power of the "remaining" money in circulation. For a very quick look into the un-evilness, in both an ethical and economic sense, of misers see Walter Block's Defending the Undefendable.)

Transforming Socialistic Money Back to Capitalistic Money.

Money is an important cornerstone to civilization. It is, as Murray Rothbard said, the "lifeblood" of the economy. Because of this, when men look at the evil affect the State and their banking allies have on money (and all the side effects that are produced), this should be all we need to know about the State and how regulations are designed not to protect consumers but to protect special interests.

Apologists for the status quo, especially mainstream conservatives (who are not at all friends or allies of liberty----who would be aptly described as largely fascists), fail to recognize that much of big business and big media are intermingled with the government. These businesses get granted special privileges and benefits that mom-and-pop shops do not. On the other hand, mainstream liberals that respond that money is therefore to blame for this is equivalent to saying that water is to blame for the coerced drowning of a person, instead of the criminal that murdered the person with the employment of water.

In itself money, like water, is neutral. Usage can be for good and evil. As long as there is this central machine of democratic power it is only natural that those with more influence will direct its usage to their own benefit and at the expense of others. It is therefore nonsensical to think anything but rich people will have the most direct influence on government. These particular rich people want to go to the government because it has power and they do not. For this reason, the problem is not wealth or money. The problem is power. They do not go to the government because they have power but because they don't.

The banking industry got tied into the governmental system because that system has power. And government is all too happy to get more power and control. The control over money allows the State to implement an "inflation tax." The president of the Mises Institute, Llewellyn H. Rockwell, Jr., has as a result said that the central bank is "[t]he heart of the modern state." If you understand the economics of money and the outcome of statist intervention on money, then you understand the modern state.

The justifications for the existence of the U.S. Fed can only be described as hilarious: for example, the idea that the Fed "fights" inflation. But its very nature is inflation. Since the creation of the Fed, over 95 percent of the value of the dollar has been lost. Not exactly a "fighter!" "Not worth a Continental," comes to mind. Then there is the claim that the Fed stops business cycles. Again, its very nature is business cycles. We have business cycles all the time. Right now we are in one.

Perhaps it should be also quickly noted that the Fed, as many suggest, is not a "private" bank. What is needed is a private free market in the banking industry, not more of the same. The Fed was created and established by the government, it is maintained by government, the officials in the Fed are largely appointed by the government, etc. A "Fed" could not exist if it were truly private. Competition would drive it out of business in a blink of an eye by hyperinflation over the production of worthless pieces of paper, which cannot be money without monopolistic government aggression and force.

Those that favor either no government or a very small, decentralized government must then work for the separation of State and money. This means an end to central banking and an end to fractional reserve banking. It means a return to a free market commodity money. It means an end to the house of cards we have now. It means an end to artificial bubbles generating booms-and-busts in the economy. No central plan is needed to move back to a free market of money and banking. A free market is the lack of a central plan. Accordingly, what needs to be done is the elimination of legal tender laws, the allowance of man to be free to choose his money, deregulation, and, ultimately, the abolition of the Federal Reserve. (In a manner of speaking, the inverse of "Gresham's Law" would occur.) For a guide to follow, we can turn to the recommendations of Rep. Ron Paul, a scholar in the economics of monetary issues and author of Gold, Peace, and Prosperity and The Case for Gold. In times like ours, seeking fiscal sanity is more important than ever.

"Man cannot turn back the clock" might be the reply some men have to the idea of returning to a money of free market capitalism. But, to quote the great Richard M. Weaver, "I'm not turning it back; I'm setting it right."

References: I'm just striving to stand on the shoulders of giants. Hopefully I balanced the content in this blog entry successfully. Any shortcomings are my own. Above quotes of Rothbard's comes from, respectively, What Has Government Done to Our Money?, The Case Against the Fed, "Taking Money Back," and America's Great Depression. On egalitarianism, see his Egalitarianism As a Revolt Against Nature.

A number of essays and books have shaped by understanding of monetary issues (and my understanding is still being shaped). For those new to this subject, the first and best book to read is What Has Government Done to Our Money?. It is beautifully and clearly written. See the layman populist essay "Taking Money Back." Listen to this mp3 Rothbard lecture. And be sure to read his "Economic Depressions: Their Cause and Cure." Besides Rothbard, Bob Murphy provides a reading list here. Read "What You Should Know About Inflation" by Henry Hazlitt. Take a look at "The Business Cycle" in Jim Cox's The Concise Guide to Economics. See Hans Hoppe's "Banking, Nation States, and International Politics" and "How is Fiat Money Possible?." For something light and entertaining (although, slightly off topic), see "The Economics of Star Trek or What is Good for Business?" by Dmitry Chernikov.

If you just stumbled into The Paleo Blog and know little to nothing about economics, then the best book to read is Economics in One Lesson by Henry Hazlitt and then, if you are still interested, read Economics for Real People by Gene Callahan. Thomas DiLorenzo provides a more historical perspective on the importance of economic freedom in his great How Capitalism Saved America. I highly recommend it. For something a bit more advanced, but still short in size, see An Introduction to Austrian Economics by Thomas Taylor. 

I.

Libertarianism applies the general ethical code, which the majority of man believes as it relates to their personal activities and the actions of other private persons, consistently. It goes without saying that most men find things like robbery, rape, murder, and so on something that is hostile to any kind of "natural" code of ethical behavior as it relates to private interactions. We can rationally say, then, that this code is generally in the intuition of man because if this were not the case we could expect that the condition of the world would be something different than it is today. That condition would be a world where man would be nothing much more than an animal beast. Civilization as we know it could not exist anywhere.

This is why the majority of mankind finds it appalling, and rightfully and thankfully so, when man B goes out and kills his neighbor man A for no other reason than B hating A. Undoubtedly a civilization that found this acceptable would not last very long. On the contrary, most men believe that A has every right to defend himself from the invader, B. The only reason that this is so is because it is natural that A has a right to himself; since if he did not there would be no justification for his self -defense and -preservation, but that would be contradictive, not the least of which would include the fact that it would imply that B somehow has given rights that are not considered rights for mankind.

It is in the self-interest of mankind to recognize private property. This is because it allows mankind to earn the great awards and benefits from social cooperation in a division of labor. To trade X and Y implies an understanding of the principles of private property and how coercion is against those principles. As the great, late Murray N. Rothbard, one of my heroes, writes:

Man is born naked into the world, and needing to use his mind to learn how to take the resources given him by nature, and to transform them (for example, by investment in "capital") into shapes and forms and places where the resources can be used for the satisfaction of his wants and the advancement of his standard of living. The only way by which man can do this is by the use of his mind and energy to transform resources ("production") and to exchange these products for products created by others. Man has found that, through the process of voluntary, mutual exchange, the productivity and hence the living standards of all participants in exchange may increase enormously. The only "natural" course for man to survive and to attain wealth, therefore, is by using his mind and energy to engage in the production-and-exchange process. He does this, first, by finding natural resources, and then by transforming them (by "mixing his labor" with them, as Locke puts it), to make them his individual property, and then by exchanging this property for the similarly obtained property of others. The social path dictated by the requirements of man's nature, therefore, is the path of "property rights" and the "free market" of gift or exchange of such rights. Through this path, men have learned how to avoid the "jungle" methods of fighting over scarce resources so that A can only acquire them at the expense of B and, instead, to multiply those resources enormously in peaceful and harmonious production and exchange.

This, as Rothbard explicates, is what Franz Oppenheimer called the "economic means" to procure wealth. It is this method that adds to the overall wealth, meaning it is not parasitic on or subtractive from the overall wealth. This, unlike versus forms of socialism and aggression against private property, makes it meet the Pareto-criterion.

To iterate, a world without recognition of self-ownership and private property would be a world of chaos. Man would be in the jungle. There would be man constantly trying to take another man's possession of tangible property and the other man fighting to take it back. A civilized world, in contrast, could not stand for this. There is only one principle that works, and it works from the very beginning of mankind on, without running into contradictions and irresolvable conflicts; conflicts which are possible because of the reality of scarcity making any ethical theory by necessity a property theory.* This is the principle of self-ownership and the first-come principle of homesteading tangible property, i.e., taking a state of nature and transforming it into one's control and thus ownership. Implied in this is the right to voluntarily give away (or contractually rent-out) tangible property to others.

*If there was no scarcity, then conflict would not be possible. My usage of X would have no impact on my future supply of it or on anyone else's present or future supply. It is when X is scarce that conflict is possible and when there is, as a result, a need for rules in regards to X. [See A Theory of Socialism and Capitalism by Hans-Hermann Hoppe.]

II.

Man A has every right to his physical body. He is the first direct user of it (and the only possible direct user), and therefore just owner, whose spirit is "fused" into his body. In the case that man B attacks A, A has every right to defend himself against B because A has self-ownership and therefore has the right to deny B's attack. (Just imagine the logical consequences if this were not the case!)

The same private property rights are at play with A's tangible and alienable property he acquired either through homesteading or contractualism.

Good X is taken away from A by B. Is this necessarily theft? It of course depends on who has the real title ownership (A or B?). Assuming that A has the actual title ownership the answer would be that this would be a case of theft. A would have every right to take back X from B. He would also have the right to hire C to take back X from B.

Recovering stolen property does not mean, however, that A can go out and kill and/or rob C and D, as "collateral damage," to get X from B. This would make A either just as evil as B or perhaps even more evil than B. Nor can A take E and F and involuntarily draft them to go after B. Drafting, when we take away Orwellian language, being nothing more than slavery.

Neither is it acceptable for and ethical for A to engage in a "preemptive attack" against B because A feels B looks bellicose, muscular, and so forth. It would be evil for A to aggress against B because A just thinks that B will attack him sometime at an unknown date and time in the future.* This idea would allow for everyone to attack anyone else if they just think that another given person will attack them sometime down the road. All that this would infer is that everyone can attack everyone else whenever they feel like it. (If, say, Y were asked why he killed Z, he could then say that he just thought that Z was going to kill him in the future as the "justification.") Clearly a man who thinks and feels that another man will attack him in the future does not imply that it will actually happen. All a preemptive attack is, is a form of unjustifiable aggression. He who engages in it should suffer the same consequences as he who does violence against another man for other reasons.

The world with the "preemptive attack" rule being acceptable would make it that if A feels that B will attack him in the future, he will consequently start planning to attack B before that might happen. B will likely feel the same thing and get ready to attack A first. A, following the preemptive attack rule, would likewise keep the fact that B would be likely thinking about such a thing and as a consequence try to beat B by attacking him even sooner. And B would do likewise and so on. This madness would turn man into a savage and bring him to the jungle.

Preemptive attacks would not prevent conflicts or lower them. All that would be done is an increase of conflicts. Only the insanity of the modern age would think otherwise.

We can call a "Just War" one of private institutions and individuals who directly target their aggressing enemy, say made up of outlaw private (or State) institutions and individuals, who let us also say took by force a large amount of goods and land property. This Just War would be one of high discrimination between combatants and noncombatants. Killing innocent people** who had nothing to do with the original aggression would be considered murder. (See above.) A Just War would be voluntarily funded and the forgotten conservative laws of war from the past would have to be upheld.

*Now obviously there is nothing wrong with A arming himself, hiring private security guards, securing his house in one way or another, or something like this in case his emotional feelings turn out to be accurate.

**One might reply with an example from Walter Block and ask what about a terrorist armed with a bomb who has a hostage that is about to blow up a hospital. If a security guard killed the terrorist and was forced, by necessity, to do the same for the hostage, should this be prohibited? Dr. Block would reply that this is a case of "negative homesteading." For example, A grabs B. A threatens B and tells him to kill C. A tells B that if he (B) does not kill C he (A) will kill him (B). The libertarian answer appears to be that B must not kill C. He cannot "spread the misery." In the case of the hospital, if it is impossible to kill the terrorist without killing the hostage, Dr. Block would argue that this would be acceptable in this "extreme" case because the "misery cannot be spread."

III.

The very legitimacy of the State itself relies a great deal on the estimation that the solitary way to provide and supply security, law, and judicial services is with this institution. An institution that is unique compared to all other societal institutions in that it maintains itself by coercion as a monopoly and has the ability to unilaterally without permission to tax men over a certain geographical territory.

Unmistakably all States must share these defining characteristics. Competition over the ability to tax others would produce a situation where everyone could tax everyone else. A State must eliminate all competition, if taxation is to happen. Therefore the only way for a State to maintain itself is if it is in a monopolistic position. It is a monopoly of violence. Officials in the State must tell others that what they (qua State officials) do is acceptable and approvable but not for anyone else. For anyone else it is unacceptable and un-approvable. It is, actually, a great evil. They must be locked up.

And what does this say about the State itself? It exists in contradiction to the laws it makes because it, itself, does not abide by them.

Indeed, the State lives by its own laws that are detached from the laws that you or I live by or can live by. (They live in a state of "anarchy"!) And if the State was subject to the laws it says we must live by (e.g., no robbing, killing, beating, enslaving), then the State could not exist.

The injustice of taxation (and related things), which all States must have to maintain themselves as compulsory institutions, generally will not persuade the ethical and moral relativist to reject statism as an evil enterprise.

So libertarianism is unique in the fact that it applies the ethical code consistently. Robbery or slavery is not just wrong if a man in a dark alley commits such an act against another person who has the misfortune to meet him. It is also wrong for an organization or institution called "the State." We would not give a pass to Wal-Mart if it robbed people that entered its store; anymore than we would give it a pass if it went house-to-house to do likewise. Strangely enough, though, most people give the State a pass.

But it is said that the only way to have peace in society between persons is if there is a sovereign, otherwise man will live in the jungle. Firstly, the first main section of this blog entry seems to suggest that the idea of peace between private persons is generally a "natural" thing, more or less, that most men have, even though we will always have a small minority of thugs, con artists, murderers and the like. Mankind would probably have disappeared if this were incorrect. Secondly, in times of the Middle Ages, for example, the idea of sovereignty did not exist. It was then thought by all that everyone was under the law and that there was no "sovereign" above it. Thirdly, the idea of a sovereign creating peace or being the fountainhead of peace is illogical for several reasons.

For the second, we can turn to Marco Bassani and Carlo Lottiri. They write, in The Myth of National Defense, that the modern State is an example of modernity because in feudal times it did not exist. There was a libertarian "polycentric juridical order." Plus It was something very much compatible with old style conservatism.

there was no single source of law and order: the production of security was never considered a distinct institutional affair, but rather a concern of the while community. For several centuries, customs, traditions and ancient Roman laws worked together in assuring a juridical order. Law in the Middle Ages was a way of resolving conflicts, but it was kept a more or less private business. There was no organic conception of the "social body," and thus crime remained a private matter to be taken care of with well-defined rules. In other words, crime was never considered a social problem, a wound inflicted on the collective body. This, in turn, implied that the victims were the center of any lawsuit; redress was done from the point of the view of the victims, never of a supposedly wounded collectivity.

...Prior to the rise of the State, law and its interpreters had to recognize the existence of traditions, ethnic and family ties, and customs and culture. Law was mostly unwritten; it coincided with customs, and therefore it existed in a series of concrete cases that were outside the control of any political authority.

(For more examples of practically stateless societies, see the following: "The American Experiment in Anarcho-Capitalism" by Terry Anderson and P.J. Hill and "Property Rights in Celtic Irish Law" by Joseph R. Peden.)

For the third, following the lead of the work of Hans-Hermann Hoppe, if Hobbes was correct, then a sovereign State could never itself come into being.* For peace to be made between persons it is claimed that there must be a sovereign legally-binding force which would come about through agreement with the public. But how did the State come into being? There would have had to be some outside binding force to make the agreement happen to create the State, with Hobbesian logic. This assumes a State before a State. Hence, to have first created a State implies that peace is possible without a binding force.** Moreover, all States exist in more contradiction to this claim of the need for a State because they all exist in internal anarchy. Sovereignty is made between subjects under a State but not for those in the State. Internal rule is nothing more than a kind of "vigilante justice." This is because there is not another external binding making the binding within the State anarchy free.*** There is also external, international anarchy between different States because there is no World State. And even on the terms of Hobbes, no third independent party exists in conflicts dealing with a subject and a given government. It is the government that resolves conflicts that deals directly with itself. Thus, on Hobbesian terms, these conflicts cannot be resolved by a State. They require a outside independent party. However, if this is the case, then the party that resolves conflicts would not be a State by definition and, hence, an anarcho-capitalist position must be embraced.

In the attempt to get rid of international anarchy, for instance, would require a World State. Nonetheless getting rid of this anarchy would produce a greater chance of internal corruption within the World State and a greater chance that it will be more aggressive to its subjects. This is because no one can "vote with their feet" and move to less aggressive States as one can with international anarchy (smart entrepreneurs will especially do this). The greater number of States, and the smaller they are, produces a tendency for them to be less brutal to their subjects and requires them to avoid implementing protectionism. As there are less and less States, which get larger and larger, the incentive to be less brutal lowers and the incentive for protectionism increases (which is the promotion of economic disintegration). The same goes for moneys. A greater number of moneys means a greater competition and pressure for sound, commodity-based moneys. By lessening international anarchy there will thus be a tendency for more aggressive and brutal States. Greater international anarchy must then produce an indirect tendency for better conditions than less international anarchy.

And just like there is anarchy between different States in the world, there is anarchy between subjects of different States in the world. Conflict can happen between two subjects under one State and it can happen between subjects of different States. These kinds of disputes happen in international anarchy and are generally resolved, which again is in contradiction to Hobbes. (Below we will try to explore this more and relate it to how a natural order of private property would resolve disputes.)

Hopefully as you can see, one of the big lessons that should be learned from all of this is that a sovereign, monopolistic institution of security production is really only possible because of public and internal support of opinion. Furthermore, looking through the various holes of the State's existence and the various anarchies that by necessity exist helps show how a pluralistic system of private property agreements, free business enterprises, firms, voluntary associations, groups, covenants, localities, intermediate institutions, and things of this nature could fill the role of security provider and producer. I would also point out that this system is not based on the notion of some pseudo-idea that individuals are atoms. Instead it fully sees that they are a part of family and that their interactions in society are based on an institutional framework (which is anti-democratic and anti-egalitarian).

*And even if we reject Hobbesian logic here, as I do, he is still wrong. All social systems require public support. No organization by itself holds anything together, not even government. Government is a minority of the population which depends on a supportive public, otherwise it would collapse. Even given a government today, much of life is in what we could call a state of anarchy. The greater one can find anarchy in a given part of life, the greater that part of life is. See "What Is Anarchy?" by Butler Shaffer.

**It is funny that one would say this because it forgets that man is not an atom and is born into a family. How is peace possible there? Robert Nisbet writes: "The awful power that Hobbes gives to his Leviathan, as the only means of combating the forces of disintegration and anarchy, which, Hobbes thought, dominate man's life outside of Leviathan, has for its necessary consequence an elimination of all the differences and inequalities which compose the social order." Rousseau and his "General Will" was only the next natural thing after Hobbes.

***There might be a hierarchy to this, true. But this is the case with everything, and therefore the point remains accurate.

IV.

"It is in war," says Murray Rothbard,

that the State really comes into its own: swelling in power, in number, in pride, in absolute dominion over the economy and the society. Society becomes a herd, seeking to kill its alleged enemies, rooting out and suppressing all dissent from the official war effort, happily betraying truth for the supposed public interest. Society becomes an armed camp, with the values and the morale – as Albert Jay Nock once phrased it – of an "army on the march."

As Rothbard writes, war is without question the worst display of statism. It is mass murder on the grand scale. Nothing should be clearer to the genuine libertarian than this.

"Just War" and the State do not go together, for the State is an institution that monopolizes aggressive violence. Not only does it apply it on its "given" territory, i.e., "vertical violence," it many times even goes beyond its given territory to apply it on other places and other people, i.e., "horizontal violence." State rulers no doubt like the idea to expand their territory because they can then control a greater amount of people and tax them. The same is true with those in the business world that are connected with the State.

Increasingly in modern society there has been the idea, by both left-liberals and neoconservatives, that there is some kind of collectivist "world community," like the United Nations (or the United States, for that matter), that is supposed to organize States to police the world to freeze the status quo. State A attacks State B and then States C, D, and E are supposed to come to the defense of B.

There is an attempt to make this analogue to private persons by classifying these States as the actual just owners of the territories they occupy. The area a State occupies, however, is parasitic on the natural owners of private property. It is they that "own" the territory, not the State. On top of this, it should be pointed out that State territories are not something that is written in stone. It is something that is arbitrary and fuzzy. State A might have, in the past, had its control over the area that State B now has. In addition, in most of these wars who is the greater aggressor is ambiguous. (E.g., Japan's attack on the U.S. government was the result from previous provocation from the U.S. There has never been a legitimate case for U.S. warmongering with other States.)

What is more, if States C, D, and E do get involve, this will then increase aggression vertically in those respected areas with the people that live there, because taxes will have to be increased (if not directly, then indirectly through, e.g., inflation). Aggression would as a consequence expand. The idea of the world collective holding together the status quo would set into motion an ever enlarging amount of peoples getting forced into the conflict either directly or indirectly. It is for this reason that this must be opposed.

State wars, also, generally imply mass, democratic wars. When State A is fighting B the rulers know that B is dependent on its citizens in productive civil society. B knows the same is true for A. (I.e., that the funding of the war comes not from the State but those under it in the market.) Therefore statist wars produce a tendency for war against all and lose discriminatory features. This means that wars start to increase the number of mass bombings. These war measures are not targeted and will almost always imply the mass murdering of noncombatants. Because everyone is forced into paying taxes for the war, everyone becomes a target from the frame of reference of the opponent.

Given that States and wars do indeed exist, the most important thing that must be done is to limit war as far as possible. No State should be allowed to expand their monopolization of violence for the reason that this would only expand violence both for the given subject's tax payers and for those private citizens who would be caught in the war outside that group of tax payers. Subjects of a State should always put as much effort possible to prevent war or, if it has occurred, to end it.

To repeat, if war sadly breaks out, then it must be limited as possible. War must be as discriminatory and "conservative" as possible. No other State should get involved in the war by following "laws of neutrality." This implies that no State should ever give foreign aid to other States (because that would expand aggression in the given State, give more power to another State to be aggressive to their citizens, and will have other unintended consequences, viz., probable resentment and blowback).

"In condemning all wars," writes Rothbard,

regardless of motive, the libertarian knows that there may well be varying degrees of guilt among States for any specific war. But the overriding consideration for the libertarian is the condemnation of any State participation in war. Hence his policy is that of exerting pressure on all States not to start a war, to stop one that has begun, and to reduce the scope of any persisting war in injuring civilians of either side or no side.

Certain weapons, especially nuclear, must be condemned which imply the mass killing of innocent, since they cannot be targeted weapons. For this reason, as Rothbard says, getting rid of them must be high on the agenda. As the great conservative Richard Weaver said, the past use of these weapons "are so inimical to the foundations on which civilization is built that they cast into doubt the very possibility of recovery." A civilized world must do its best to get rid of them.

Zero tolerance can exist for any kind of imperialism or empire. This implies that if a private man, from State 1, goes to another State, he then takes the risk of going to S2. In the case that trouble happened in S2, S1 cannot come to his rescue.

Additionally this means that if during war State S1 invaded and now occupies part, P, of what was previously in control by S2, S2 has no right to take over P. On the other hand, those in P can have a targeted revolution (i.e., a vertical conflict) to unite with S2. Private groups in S2 could voluntarily help the revolutionists in P. Such vertical revolutions can theoretically be justified because they can be targeted against actual aggressors and be voluntary, whereas horizontal conflicts cannot be.

Also, S3 and S4 cannot target P for "liberation," for reasons covered above. Just as important, we cannot call "liberation" S3 getting rid of S1 to then put those previously under S1 under its own rule. Freeing another implies that man A frees B from the slavery of C. It does not mean that A frees B from C only to take B for his own domination.

V.

Rothbard explains in "Society without a State," a classic 1974 essay/speech, that we can look to both historic and modern day examples of how law and order can be handled without a State. To this end Rothbard turns to William C. Wooldridge and his book Uncle Sam, the Monopoly Man.

For example, a body of private law for merchants in the Middle Ages was developed that only used social ostracism. And, for modern examples, today we have seen the rise of many private insurance companies turning to private arbitration services through the American Arbitration Association (AAA). The advantages of the development of private law here is clear: the cost of time is lowered and arbitration, working in a division of labor, allows for specialization.

The very nature of States is aggressive violence and for this reason it seems that war is in their nature. There is no reason to blindly trust human goodness and incorruptibility, but this is what most do with the State. Since all States can externalize the costs of war (i.e., force people to collectively pay for these costs via taxation), States will be more likely to engage in war than other institutions. Any institutions that provide defense, law, and order voluntarily on the market (and accordingly are non-monopolistic) cannot externalize the costs and will, hence, be less likely to engage in war or any other kind of aggression against innocent persons.

One only has to think about Iraq. Imagine if individual and family households could withdraw paying taxes. How likely would the U.S. government still be in Iraq? The question answers itself.

The classical liberal minarchist, as Rothbard elucidates in Power and Market: Government and the Economy, who is both a supporter of the free market and the State as protector is "caught in an insoluble contradiction" because the minarchist "sanction[s] and advocate[s] massive invasion of property by the very agency (government) that is supposed to defend people against invasion!" This is what libertarianism avoids. Man and his family have a right to private property or they do not. Free markets are supreme or statism is.

In addition, Rothbard goes on, they are confused and tangled because they normally do not push their own logic to its ultimate conclusions. As we covered, there exists international anarchy. But if these minarchists complain about the "anarchy" of statelessness, surely they must then want to get rid of the anarchy between various nation-States. Nonetheless, "limited" State advocates hardly follow their own logic.

Conflict that happens between A, from S1, and B, from S2, is done through this anarchy without an ultimate sovereign. Both go to their respected courts. If both courts reach the same conclusion, then the verdict is in. If they reach different conclusions, they then go to arbitration and the case is resolved there.

Under a natural order of private property this is what would be resembled. Man A can be with private defense agent X and man B with agent Y. If X and Y disagreed, then what? What would result is the development of independent, third party arbitration services. Customers and private institutions knowing this possible situation, would work out these details in their contracts (generally) beforehand.* (This will happen as long as the majority of the public is not made up of warmongers. However, to repeat, with whatever level of warmongering ideology, the chance of battling out is more unlikely under the free market because it is very costly and it is impossible to externalize the costs of aggression. The incentive structure in terms of supporting aggression would change. See this.)

"Anarchy" would not likely break out for the reason that defense companies that had pre-agreements in inter-company conflicts would be more profitable than those that did not.

These third-party arbitration services would have to remain independent and fair because otherwise people or other protection agencies would not go to them in the future. This means there is a great incentive for fairness and independence. And, if the individual protection agencies become corrupted or whatnot, people could go into relationship with one of their competitors.

One reason that this is better than the current system is that arbitration in the free market really is a third-party, independent service. There exists no true arbitration service within a State controlled area. All such services are part of the same monopolistic institution. It is preferable to have competitive market conditions than to have a society stuck with one agent. One agent is an agent that can get away with more corruption. You cannot end the relationship. Everyone is forced into a relationship with it as agent, and because of this it can act more aggressively and at the same time need not worry about acting in an economic manner to cut costs. That is to say, it will tend to be less competent with judgeship and economically inefficient creating lots of extra expense for its "customers." What's more, a State provided law system gets to deal with cases in which directly involve itself. The outcome of which will be to award itself in these cases. Thus, statist management will then tend to be aggressive.

Oppositely, private defense agents, courts and arbitrators, like all other goods and services, would work on the open, free market and would be in constant competition with each other. The voluntary setting and the market competition would award those private enterprises that performed this best for the public and the others would be driven off the market. Earning profit and staying in business would require serving the needs of consumers, viz., sound judgment, impartiality, expertise, efficiency, low costs, etc. Under statist monopolistic conditions, we see the quality go down and the prices go up. But under free non-monopolistic conditions, we can expect to see the quality go up and the prices go down.

The allocation of government's protective and judicial functions will be uncoordinated and distorted because there are no profits-and-losses. There are no market price signals, which require free and private markets, which tell them how and where they should allocate their operations (or when to allocate to "where"). It can only be arbitrary and chaotic in terms of the various and diverse needs of consumers. The same is true for what, and how much of that "what," to input into their operations. On the market there is always an ex post test. This test, showing if there is profit or loss, is what helps guide the market. Socialism has no such test.

Complex societies, as you know, heavily rely on insurance and credit reports. It can be pretty much predicted that a free society would have develop private insurance defense companies. Being insurance companies they would insure one's property from outside aggression. This means that, if one is the victim of a thief, the insurance company would pay the victim. This is obviously not something that the insurance company would want to do. Consequently insurance companies would do their best to prevent aggression. They would have to do this to remain financially viable. These companies would also have great incentive to go after the thief and force him to pay the victim, so they do not have to.

Contrast this with the State: Do they lose money if they do not prevent crime? The answer is no. (Which is then better?)

The State is not only bad at preventing crime and recovering stolen property, it has progressively outlawed gun ownership making people helpless and more vulnerable vis-à-vis private criminals. What this has done is increased the State's power relative to civil society and greatly increased man's dependency on them (the State) for protection.

With private insurance companies: The better protected their customers, the better they are off as well.

For that reason private insurance would have the exact opposite incentive because a better protected customer is less likely to get attacked and thus less likely to be indemnified. (So those better protected---who, for example, own a gun---will be offered lower premiums.) Moreover, they would require their customers to engage in peaceful rules of conduct. This is because the only way to insure something is if it is more or less random and uncontrollable. To insure someone who engaged in aggression against someone else would be equivalent (as Hans Hoppe says) to insuring people from burning their own house on fire; an impossibility that would make the insurance company go bankrupt.

We have to remember that State courts do not provide or guarantee impartiality. There is nothing magical about them. Instead what they do provide as impartiality is for the State monopoly, as consumers are stuck to deal with them and only them. A free market is what provides real "checks-and-balances" because there is competition. Instead what we have today under a statist system is no checks-and-balances because the court is one monopoly. That is, all courts are part of the same institution. While corruption is possible in both a statist system and a non-statist system, since there is competition and market checks we can say that there would be less in a non-statist one.

To quote Patrick Tinsley in "Private Police":

In fact, it is the public police that stands to profit from look-the-other-way law enforcement. After all, arriving at its funding, as it does, from (coerced) tax revenues, the public police will not endure economic hardship if and when it fails to arrest the onslaught of crime. Therefore, it pay for its officers to accept bribes from the perpetrators of crime, offering in exchange clemency.

*Hans Hoppe says: "On the one hand, [this] system would allow for systematically increased variability and flexibility of law. Rather than imposing a uniform set of standards onto everyone (as under statist conditions), insurance agencies could and would compete against each other, not just via price but in particular also through product differentiation and development. ... There could and would exist side by side, for instance, Catholic insurers applying Canon law, Jewish insurers applying Mosaic law, . . . all of them sustained by and vying for a voluntarily paying clientele. . . . That is, no one would be forced to live under 'foreign' law . . ." And  "On the other hand, a system of insurers offering competition law codes would promote a tendency toward the unification of law..." in "foreign" conflicts.

VI.

In conclusion, the path to peace and good defense is a path to a stateless society. It is not the answer to all problems nor is it perfect, mankind always being what it is. But, Rothbard writes,

in a stateless society there would be no regular, legalized channel for crime and aggression, no government apparatus the control of which provides a secure monopoly for invasion of person and property. When a State exists, there does exist such a built-in channel, namely, the coercive taxation power, and the compulsory monopoly of forcible protection. In the purely free-market society, a would-be criminal police or judiciary would find it very difficult to take power, since there would be no organized State apparatus to seize and use as the instrumentality of command.