Monday, July 27, 2015

Why we should abandon the State

Revisionism, according to Harry Elmer Barnes, is bringing history into accord with the facts.  Why would history and factual evidence be at odds?  Because governments, per Orwell, falsify the past to keep the population subservient.  If people really knew what governments had done they would want less of it than they have.

How much less is the question Lew Rockwell addresses in his book, Against the State: An Anarcho-Capitalist Manifesto, released in May, 2014.  As the title makes clear, Rockwell argues for the complete elimination of the State.

Many people otherwise favoring unfettered freedom will qualify their position with an inevitable “but” — “but we need government to provide physical security and dispute resolution, the most critical services of all.”

Really?

If the free market is the “arena of voluntary interactions between individuals” that has proven so fruitful over the past 250 years, why does it need a coercive monopoly — the State — providing its most critical services?  Monopolies, he reminds us, are characterized by higher prices and poorer service.  Furthermore, the State, because it lacks the profit and loss test for allocating resources, “has no idea what to produce, in what quantities, in what location, using what methods.”  Given the importance of physical security and dispute resolution why do we assign its provision to such a thoroughly flawed institution?

Morally, the state fails in every way we consider moral, Rockwell points out. Instead of acquiring revenue through voluntary trade it steals from us and calls it taxation; it not only steals it tells us it’s our duty to comply if we want a civilized society.  If this sounds fishy we better get with it because this is the only way we can keep barbarians outside the gates and criminals from breaking into our homes.  Instead of attempting to provide for the general public, the state greases the squeaky wheels that lobby for special favors in exchange for votes or campaign contributions.  

To paraphrase Major General Smedley Butler, the State is a racket, the oldest and easily the most profitable, and surely the most vicious.

Yet we are indoctrinated to view the State from an early age as a positive force, thanks to its control of the educational system.  We are encouraged “to consider the State’s predation morally acceptable, and the world of voluntary exchange morally suspect.”

But even if one agrees that the State is an unwanted invader in our lives, does it necessarily follow that it should be eliminated?  Isn’t it instead a strong candidate for reform?  Rockwell says reform is futile.
Governments have no interest in staying limited, when they can expand their power and wealth by instead increasing their scope.  
The next time you find yourself insisting that we need to keep government limited, ask yourself why it never, ever stays that way. Might you be chasing a unicorn? 
What about “the people”? Can’t they be trusted to keep government limited? The answer to that question is all around you.
The State’s wars

If war is the health of the state, then the U.S. state has achieved a remarkable degree of well-being.  As Rockwell argues, the State’s health does not produce a corresponding degree of health in Americans or people in other countries it is allegedly trying to help.  Quite the opposite.

In demonstrating the State’s disregard for actual human beings, he cites the 60 Minutes interview in 1996 with then UN Ambassador Madeleine Albright, with her infamous remark about the deaths of half a million Iraqi children being “worth” the price of UN economic sanctions.   That Albright did not dispute the statistic has been taken by sanctions opponents that it was legitimate.  At the time, the US-led sanctions were an attempt to compel Iraq “to disclose and eliminate any weapons of mass destruction.”

Estimates of the number of Iraqi deaths during the first four years of the Iraq War range from 151,000 to over one million, with Rockwell emphasizing the latter figure.  These are only estimates because the U.S. did not think it worthwhile to track Iraqi (or Afghan) deaths.  In the frank words of U.S. General Tommy Franks, “we don’t do body counts.”  

Whichever figures are closer to the truth, the so-called Operation Iraqi Freedom resulted in Operation Iraqi Death and Destruction.

Rockwell attributes American indifference to Iraqi suffering to “this mysterious thing called nationalism.”
[It] makes an ideological religion of the nation’s wars. We are god-like liberators. They are devil-like terrorists. No amount of data or contrary information seems to make a dent in this irreligious faith. So it is in every country and in all times. Here is the intellectual blindness that war generates.
And the blindness is ideological, not technological.  We are the good guys.  “Every nation believes that about itself, but freedom is well served by the few who dare to think critically.”

He continues:
Something at the heart of American culture leads us to believe that everyone in the world would be pleased to be ruled by us. We seem to have great difficulty in sympathizing with the victims of US foreign policy. In addition, the whole of modern life seems to teach us that force is the answer to all problems. This is the basis of all domestic policy as recommended by both right and left. The Iraq War is nothing but an extension of this model.  (My emphasis)
Rockwell goes on to examine other wars in our history, particularly the Civil War and World War II, and shows that the government was not fighting to defend the freedom of Americans.  In the first case, Lincoln, as he threatened to do in his first inaugural, invaded the South to force it to collect a high federal tariff, which was an attempt to force southerners to subsidize northern manufacturers.  World War II was the capstone of two previous government disasters, World War I and the Great Depression, and it took government treachery to get the Japanese to strike the first blow and change Americans' attitude about entering the fray.

Wars against Americans

The government doesn’t limit itself to wars against other states.  The War on Drugs is manifestly a war on American civilians that “needlessly puts thousands of people in jail and discriminates against blacks, for a completely illegitimate purpose.” 
Almost everybody today realizes that Prohibition was a failure: the attempt to regulate alcohol consumption didn’t work and brought crime and civil liberties violations in its wake. . .  But if most people reject the Prohibition Amendment as an undue restriction on personal freedom, shouldn’t they reject the war on drugs as well?
It’s not just astronomically high incarceration rates that this war has produced.  Quoting Laurence Vance, he writes:
The war on drugs has destroyed financial privacy. Deposit more than $10,000 in a bank account and you are a suspected drug trafficker. ... The war on drugs has provided the rationale for militarizing local police departments. ... The war on drugs has resulted in outrageous behavior by police in their quest to arrest drug dealers. ... The war on drugs has eviscerated the Fourth Amendment’s prohibition against unreasonable searches and seizures.
The State’s monopoly of legal coercion can be invaluable for groups that want to impose their agenda on the rest of us.  As the agenda produces legislation and more bureaucracy, government expands, which is another way of saying more of our liberties disappear. 

Environmentalism, the call for tyranny

The environmentalist movement regards humans as the number one threat to the survival of the planet, and today “it holds the moral high ground.”  Nature is pure and man a blight.  The great evil is capitalism and the Industrial Revolution.  If you’re burdened with a terminally-ill disease, suggests an EarthFirst! Journal article, “Don’t go out with a whimper; go out with a bang! Undertake an eco-kamikaze mission.”  Don’t jump off a bridge — blow it up.  

Yet there’s no denying we have environmental problems.  Rockwell returns to the free market for a solution: 
The answer is to privatize and deregulate everything, from trash pickup to landfills. That way, everyone pays an appropriate part of the costs. . . .  The choice is always the same: put consumers in charge through private property and a free price system, or create a fiasco through government.
But some problems are global in scope, say the environmentalists, and only a world government can solve them.  How are we going to keep the air clean and the water potable without forcing people to radically change their behavior?

In economics, if something is not owned but used by many, it is called the “tragedy of the commons,” a term popularized by Garret Hardin.  The problem, to quote Aristotle, is “that which is common to the greatest number has the least care bestowed upon it.” 

Robert P. Murphy in his Mises Academy Energy Economics course explains the problem with an example of overfishing.  Government owns lakes and won’t allow people to fish there without rules.  And the rules are many: Boat size, net size, size of the fish that can be caught, etc.  If it took a laissez-faire approach instead, people would come in and clean out the lake with huge boats and sophisticated fishing equipment.  Government thus imposes rules to make fishing less efficient.

But if the lake were privatized, the owner would have an incentive to act economically responsible.  He would charge an appropriate price rather than cripple the efficiency of his customers.

As Rockwell tells us,
[If] people had property rights in the streams and rivers running through their land, they could prevent pollution just as they prevent trash-dumping in their front yard. And if fishermen and homeowners held property rights in the coasts and adjacent waters, they could prevent pollution and properly allocate fishing rights.
The State’s Creature 

He next turns his attention to the engine of State growth: the central bank, which in the U.S. is the Federal Reserve System.  

The literature on the Fed would fill an ocean, but it’s essential character is easy to describe: It has monopoly control of the nation’s money supply, which today consists of paper bills and digits in bank accounts.  The power to create money at will allows it to guarantee the solvency of the biggest banks and serve as the federal government’s ATM machine. 

If you remember only one thing about the Fed, allow me to suggest that you never forget it is a creature of government.   It is not a free market entity.  Parts of it are privately owned but without the State none of it would exist.  

It is said the Fed is a necessary appendage to make the free market run smoothly, without the Panics that once plagued it.  It is in fact the second-worst thing to happen to free markets, with the number one villain being the State itself.  

Panics were the market’s disincentive for the perennial banking practice of fractional reserve banking.  With fractional reserve banking the banker says to its depositors: Your money is safely in our care anytime you want it.  When enough depositors sense that this may not be true, they line up at the bank demanding their money, which the bank cannot provide.

In pre-Fed days the government would allow favored banks to turn depositors away.  One would think the bank would be charged with embezzlement, which is defined as “the fraudulent appropriation of funds or property entrusted to one’s care but actually owned by someone else.”  Not so.  English courts circumvented this problem by declaring the money deposited with the banker is really his, not the depositor’s, and American courts have done the same. See here for historical details. 

Without the State banks that practiced fractional reserve banking would be far more cautious with their depositors’ money, at the very least.

Today, the central bank is ready to print money at a moment’s notice to support irresponsible banks.  The central bank is also ready to print money to support the state’s military adventures and welfare schemes.  It’s a nice racket for those at the top of the food chain, but not for the rest of us.  

Rockwell is careful to point out the distinction between hard times created by central bank meddling and hard times that arise for other reasons, such as war or natural disasters.  The latter may not be avoidable but the former certainly are.  Drawing on Mises’s circulation credit theory, he explains how, when the central bank artificially lowers interest rates, entrepreneurs are fooled into believing long-term projects are sustainable when in fact the resources don’t exist for completing them. 
The public has not made available [through increased savings] the additional means of production necessary to make the array of long-term production projects profitable. The boom will therefore be abortive, and the bust becomes inevitable.
It was this “misdirection of resources into unsustainable projects” that led to the Crash in 1929.  This is crucial to understand, Rockwell points out, because the prevailing economic approach was (and still is) to consult various aggregate measures for the health of the economy, particularly wholesale prices.  By this measure all seemed well.  As Rothbard explains in America’s Great Depression, 
the stability of wholesale prices in the 1920s was the result of monetary inflation offset by increased productivity, which lowered costs of production and increased the supply of goods. But this “offset” was only statistical; it did not eliminate the boom–bust cycle, it only obscured it. The economists who emphasized the importance of a stable price level were thus especially deceived . . . [pp. 169-170]
Economist Irving Fisher was one of those deceived, Rockwell notes, and was completely blindsided by the Crash.  Rockwell:
In the 1920s as now, fashionable opinion could see no major crisis coming. Then as now, the public was assured that the experts at the Fed were smoothing out economic fluctuations and deserved credit for bringing about unprecedented prosperity. And then as now, when the bust came, the free market took the blame for what the Federal Reserve had caused.
He concludes:
The century of the Fed has been a century of depression, recession, inflation, financial bubbles, and unsound banking, and its legacy is the precipice on which our economy now precariously rests.
And I wish to add, the century of the Fed has been a century of war.  

What we are today

At this point Rockwell identifies the social and economic system we have today, and it isn’t one most people would find comforting: Fascism.  Nevertheless, the shoe fits.
Fascism is the system of government that cartelizes the private sector, centrally plans the economy to subsidize producers, exalts the police State as the source of order, denies fundamental rights and liberties to individuals, and makes the executive State the unlimited master of society.
Of all the cartels the federal reserve is the most powerful by far, since it has monopoly control of the money supply.  Cartels derive their power from the coercive monopoly of the State.  In his pathbreaking book, The Triumph of Conservatism: A Reinterpretation of American History, 1900-1916, Gabriel Kolko explains that cartels and regulations began with the desire of big business to protect their turf and profits from upstart competition.  Voluntary arrangements within industries weren’t working so businessmen turned to government for help.  

When bankers partnered with government to establish the Fed it wasn’t long before money itself (gold) was banished domestically (1933) then later altogether (1971).

The money we have today is a loaded deck, and the dealer is the Fed.

Rockwell cites the year 1985 as the year in which “it became more common than not for a household to have two incomes rather than one.” Women were entering the workforce to keep family incomes stable.  Why was this necessary?  Fed inflation and an outpouring of new regulations were jacking up the cost of living.  Median family incomes today are only slightly better than they were in the Nixon era.

So should we seek reforms, tweak the system here and there?  Emphatically not, says Rockwell.
The problem is more fundamental. It is the quality of the money. It is the very existence of 10,000 regulatory agencies. It is the whole assumption that you have to pay the State for the privilege to work. It is the presumption that the government must manage every aspect of the capitalist economic order. In short, it is the total State that is the problem, and the suffering and decline will continue so long as the total State exists.
Someone might reasonably claim that the Founding Fathers’ ideal of limited government is the solution, the so-called night watchman view of the State.  While this would be a vast improvement over what we have, there is no way to prevent the watchman from becoming a tyrant.  No one is watching the watchman or curbing his power.  Besides, the Founding Fathers were not strict libertarians.  American fascism got its start at the Constitutional Convention and has expanded ever since.
Well, you might say, even if the statist, fascist tradition goes very far back in American history, can’t people reverse it? Can’t we return to limited government, as the Constitution mandates?  
This solution can’t work. It suffers from a fatal flaw. The Constitution creates a government that is the judge of its own powers.
Nor will focusing on democracy limit the State.  If democracy is understood as majority rule, what safeguards will we have to protect minorities?  What safeguards exist to prevent the majority from “eating the seed corn” or from doing anything at all?

How does a stateless society work?

If we have eliminated all varieties of State rule, we are left without a state.  How then do we live without one?

Simply put, we rely on the free market for everything, though “we can’t specify in advance exactly how the free market will work.”  But we know on a fundamental level what we need.  We need rights.  We need the right to acquire and own property.  And we need to “accept a common law code that spells out these rights.”

We also have the right to self-defense.  But as most people can’t do that for themselves we need an agency that will provide it for us.  We also need some means of settling disputes.

We don’t want a monopoly securing our rights because States have not only failed to do the job, they have violated our rights at every turn.    

The anarcho-capitalist solution follows from the nature of a voluntary society: “People would purchase protection and judicial services on the market, just like other goods.”

That simple?  That simple.

Rockwell quotes Rothbard for details:
Most likely, [protection and judicial] services would be sold on an advance subscription basis, with premiums paid regularly and services to be supplied on call. . . It seems likely, also, that supplies of police and judicial service would be provided by insurance companies, because it would be to their direct advantage to reduce the amount of crime as much as possible.
Further:
The checks and balances in the stateless society consist precisely in the free market, i.e., the existence of freely competitive police and judicial agencies that could quickly be mobilized to put down any outlaw agency. . . 
Did someone mention foreign policy?  Rockwell has an answer:
There is no danger of an aggressive or imperialist foreign policy, because there is no foreign policy. Each protection agency is confined to protecting its clients. Agencies, or allied groups of agencies, would defend against an organized invasion.
Conclusion

There is much more to Lew Rockwell’s argument than I have presented here, and I encourage readers with unanswered “buts” to see what he has to say.  

Overall, Rockwell presents his case in typical Rockwellian fashion, which is concise, lively prose that pulls no punches: 
We are in the stage of late fascism. The grandeur is gone, and all we are left with is a gun pointed at our heads.
Nor does he go it alone.  He calls on experts such as Murray Rothbard, Ludwig von Mises, Hans-Herman Hoppe, Tom DiLorenzo, John Flynn, Lysander Spooner, Albert Jay Nock, Robert Higgs, Glenn Greenwald, and even opens with a quote from Thomas Paine.

Perhaps an abbreviated version of this book would be enticing to those looking for a brief introduction to a market-only society.  Though his book is not long, it does take the reader through details that an introductory work could safely omit.  

Lew Rockwell deserves high praise for a work I consider a must-read not just for libertarians, but for any person looking for answers in a world where wars and economic crises have become the norm.




    













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