Property and Freedom Podcast, Episode 268.

This talk is from the recently-concluded Seventeenth Annual (2023) Meeting of the Property and Freedom Society, Sept. 21-26, 2023.

Hans-Hermann Hoppe (Germany/Turkey): “On Centralization, Secession and the Problem of Self-Defense.”

Other talks to follow in due course.

PFS 2023 Youtube Playlist.

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On Centralization, Decentralization, and Self-Defense

by Hans-Hermann Hoppe

Delivered Sept. 24, 2023, Property and Freedom Society 17th Annual Meeting, Bodrum, Turkey

States, regardless of their constitution, are not economic enterprises. In contrast to the latter, states do not finance themselves by selling products and services to customers who voluntarily pay, but by compulsory levies: taxes collected through the threat and use of violence (and through the paper money they literally create out of thin air). Significantly, economists have therefore referred to governments—i.e., the holders of state power—as stationary bandits. Governments and everyone on their payroll live off the loot stolen from other people. They lead a parasitic existence at the expense of a subdued “host population.”

A number of further insights emerge from this.

Naturally, stationary bandits prefer larger loot to smaller loot. This means that states will always try to increase their tax revenue and further increase their spending by issuing more paper money. The larger the loot, the more favors they can do for themselves, their employees, and their supporters. But there are natural limits to this activity.

On the one hand, the bandits have to be careful not to burden the “hosts” whose work and performance make their parasitic existence possible so much that the latter stop working. On the other hand, they have to fear that their “hosts”—and especially the most productive among them—will migrate from their dominion (territory) and settle elsewhere.

Against this background, a number of historical tendencies and processes become understandable.

First of all: It becomes understandable why there is a tendency towards territorial expansion and political centralization: with this, states succeed in bringing more and more “hosts” under their control and making it more difficult for them to emigrate to foreign territories. This is expected to result in a larger amount of loot. And it becomes clear why the end point of this process, the establishment of a world state, while certainly desirable from the standpoint of the ruling gang, would by no means be a blessing for all of mankind, as is often claimed. Because one cannot emigrate from a world state, and hence, there exists no possibility of escaping state looting by emigration. It is therefore to be expected that with the establishment of a world state, the scope and extent of state exploitation—indicated, among other things, by the level of state income and expenditure, by monetary inflation, the number and volume of so-called public goods and persons employed in the “public service”—will continue to increase beyond any previously known level. And that is certainly not a blessing for the “host population” that has to fund this state superstructure!

Second: A central reason for the rise of the “West” to become the world’s leading economic, scientific, and cultural region becomes understandable. In contrast to China in particular, Europe was characterized by a high degree of political decentralization, with hundreds or even thousands of independent dominions from the early Middle Ages up until the recent past. Some historians have described this state of affairs as “ordered anarchy.” And it is now common among economic historians to see in this quasi-anarchic state a key reason for the so-called European miracle. Because in an environment with a large variety of independent, small-scale territories in the immediate vicinity of each other, it is comparatively easy for the subjects to vote with their feet and escape the robberies of state rulers by emigration. To avert this danger and to keep local producers in line, these rulers are under constant pressure to moderate their exploitation. And this moderation, in turn, promotes economic entrepreneurship, scientific curiosity, and cultural creativity.

Third: In combining these two insights, the grand course of modern history becomes intelligible. Territorial expansion requires war – wars between rival gangs of stationary bandits. But the conduct of war requires means (economic resources), and bandits do not produce anything. They parasitically draw on the means produced and provided by others. They can influence the overall volume of production and the size of their own loot indirectly, however, through the treatment of their “host population.” Other things being equal, the more “liberal” – the less exploitative – the ruling gang, the more productive will be the host population; and parasitically drawing on a more productive host population, then, it is internally “liberal” gangs that tend to win out in war and drive the centralization process. I have called this the paradox of imperialism: internally liberal regimes tend to conduct a more aggressive foreign policy and are the central promoters of imperialism.

This helps understand not only the rise and long-lasting economic and financial supremacy of the collective “West” over and above all of the “Rest.” It helps in particular also to understand the sequence and the progressive stages of Western imperialism. From sizable Spain and Portugal as leading imperialist powers (but broke at last ), the center of economic gravity moves to the small liberal Low Countries (Netherlands), and it is from there that the next major imperialist ventures are launched. The Low Countries are then cut to size, set back and surpassed as the leading imperial power by a liberal Britain with some world-wide Empire. Finally, after more wars, Britain’s former colony, the break-away US takes over and expands on Britain’s erstwhile role. Owing to its ultra-liberal (in comparison) internal policies, US-America grows to become the world’s greatest economic power, and sitting and drawing on such cushy economic foundation, then, the US government has risen to become the world’s foremost imperial power, with a world-wide network of military bases and of foreign vassals and a US-paper-dollar that functions as the international reserve currency (allowing the US gang to have a free lunch – to spend and consume – at foreigners’ expense).

Fourth: These imperialist ventures may initially have liberating effects: a relatively more liberal – less exploitative or more capitalist – regime may be exported to a comparatively less liberal society. However, the further the process of imperial expansion and of political centralization advances, i.e., the closer one gets to the ultimate goal of a one-world government with a global central bank issuing a single universal fiat currency, the less pressure there is on the ruling gang to continue in its former internal liberalism. Internal exploitation, taxation, inflation and regulation will increase and economic crises, stagnation or even impoverishment and decline will result.  And with the economic failure of political centralization becoming increasingly obvious/dramatic, then, the opposite tendency toward de-centralization gains in strength. The lesson of the “European Miracle” is remembered, and the vision of a radically decentralized world, brought about by means of territorial secession – the very anti-thesis to a world-state – gains in popularity. The vision of a world made up of thousands upon thousands of Liechtensteins, Swiss cantons and independent free-holds (dominiums), all linked by free trade and an international gold standard and all seeking, in competition with other places, to retain and attract productive people with favorable local conditions.

One central, regularly presented challenge to this secessionist project – the challenge I will take up in the following – is this: Secession implies that a larger territory is split into two or more smaller parts. Yet how are small and increasingly smaller units to protect and defend themselves against the imperialist desires on the part of some larger state neighbor? Are not small states run by small gangs in constant danger of being conquered and taken over by larger states and larger gangs? And isn’t the only lasting safety and security to be foun