The State: Its History and Development Viewed Sociologically

Of this still under-appreciated classic, Murray Rothbard writes:

“The great German sociologist Franz Oppenheimer (1864-1943), who wrote this magnificent little book called The State, put the case brilliantly.”

In essence, he said, there are only two ways for men to acquire wealth. The first method is by producing a good or a service and voluntarily exchanging that good for the product of somebody else. This is the method of exchange, the method of the free market; it’s creative and expands production; it is not a zero-sum game because production expands and both parties to the exchange benefit. Oppenheimer called this method the “economic means” for the acquisition of wealth.

The second method is seizing another person’s property without his consent, i.e., by robbery, exploitation, looting. When you seize someone’s prop­erty without his consent, then you are benefiting at his expense, at the expense of the producer; here is truly a zero-sum “game”–not much of a “game,” by the way, from the point of view of the victim. Instead of expanding production, this method of robbery clearly hobbles and restricts production. So in addition to being immoral while peaceful exchange is moral, the method of robbery hobbles production because it is parasitic upon the effort of the producers.

With brilliant astuteness, Oppenheimer called this method of obtaining wealth “the political means.” And then he went on to define the state, or government, as “the organization of the political means,” i.e., the regularization, legiti­mation, and permanent establishment of the political means for the acquisition of wealth.

In other words, the state is organized theft, organized robbery, organized exploitation. And this essential nature of the state is high­lighted by the fact that the state ever rests upon the crucial instrument of taxation.

“This defense of private property is essentially also Rothbard’s. In spite of his formal allegiance to the natural rights tradition Rothbard, in what I consider his most crucial argument in defense of a private property ethic, not only chooses essentially the same starting point - argumentation - but also gives a justification by means of a priori reasoning almost identical to the one just developed. To prove the point I can do no better than simply quote:

"Now, any person participating in any sort of discussion, including one on values, is, by virtue of so participating, alive and affirming life. For if he were really opposed to life he would have no business continuing to be alive. Hence, the supposed opponent of life is really affirming it in the very process of discussion, and hence the preservation and furtherance of one’s life takes on the stature of an incontestable axiom.”
— Hoppe, EEPP, p. 321-22, quoting Rothbard, TEOL, p. 32.

“…If, then, the natural inequality of ability and of interest among men must make elites inevitable, the only sensible course is to abandon the chimera of equality and accept the universal necessity of leaders and followers. The task of the libertarian, the person dedicated to the idea of the free society, is not to inveigh against elites which, like the need for freedom, flow directly from the nature of man. The goal of the libertarian is rather to establish a free society, a society in which each man is free to find his best level. In such a free society, everyone will be “equal” only in liberty, while diverse and unequal in all other respects. In this society the elites, like everyone else, will be free to rise to their best level.

In Jeffersonian terminology, we will discover “natural aristocracies” who will rise to prominence and leadership in every field. The point is to allow the rise of these natural aristocracies, but not the rule of “artificial aristocracies” — those who rule by means of coercion. The artificial aristocrats, the coercive oligarchs, are the men who rise to power by invading the liberties of their fellow men, by denying them their freedom. On the contrary, the natural aristocrats live in freedom and harmony with their fellows, and rise by exercising their individuality and their highest abilities in the service of their fellows, either in an organization or by producing efficiently for the consumers. In fact, the coercive oligarchs invariably rise to power by suppressing the natural elites, along with other men; the two kinds of leadership are antithetical.

Let us take a hypothetical example of a possible case of such conflict between different kinds of elites. A large group of people voluntarily engage in professional football, selling their services to an eager consuming public. Quickly rising to the top is a natural elite of the best — the most able and dedicated — football players, coaches, and organizers of the game. Here we have an example of the rise of a natural elite in a free society. Then, the power elite in control of the government decides in its wisdom that all professional athletics, and especially football, are evil. The government then decrees that pro football is outlawed and orders everyone to take part instead in a local eurythmics club as a mass-participatory substitute. Here the rulers of the government are clearly a coercive oligarchy, an “artificial elite,” using force to repress a voluntary or natural elite (as well as the rest of the population).

The libertarian view of freedom, government, individuality, envy, and coercive versus natural elites has never been put more concisely or with greater verve than by H.L. Mencken:

All government, in its essence, is a conspiracy against the superior man: its one permanent object is to oppress him and cripple him. If it be aristocratic in organization, then it seeks to protect the man who is superior only in law against the man who is superior in fact; if it be democratic, then it seeks to protect the man who is inferior in every way against both. One of its primary functions is to regiment men by force, to make them as much alike as possible and as dependent upon one another as possible, to search out and combat originality among men. All it can see in an original idea is potential change, and hence an invasion of its prerogatives. The most dangerous man to any government is the man who is able to think things out for himself, without regard to the prevailing superstitions and taboos.51

     — Murray Rothbard, Freedom, Inequality, Primitivism, & the Division of Labor

IP has broken TEOL at the LvMI. It’s a crime against humanity that it does not have a free full PDF, nor a proper HTML version for each chapter.

Introduction by Hans-Hermann Hoppe (p. xi)
Preface (p. xlvii)

PART I: INTRODUCTION: NATURAL LAW
1.Natural Law and Reason  (p. 3)
2.Natural Law as “Science”  (p. 9)
3.Natural Law versus Positive Law  (p. 17)
4.Natural Law and Natural Rights  (p. 21)
5.The Task of Political Philosophy  (p. 25)

PART II: A THEORY OF  LIBERTY  
6.A Crusoe Social Philosophy (p. 29)
7.Interpersonal Relations: Voluntary Exchange (p. 35)
8.Interpersonal Relations: Ownership and Aggression (p. 45)
9.Property and Criminality (p. 51)
10.The Problem of Land Theft (p. 63)
11.Land Monopoly, Past and Present (p. 69)
12.Self-Defense (p. 77)
13.Punishment and Proportionality (p. 85)
14.Children and Rights (p. 97)
15.“Human Rights” As Property Rights (p. 113)
16.Knowledge, True and False (p. 121)
17.Bribery (p. 129)
18.The Boycott (p. 131)
19.Property Rights and the Theory of Contracts (p. 133)
20.Lifeboat Situations (p. 149)
21.The “Rights” of Animals (p. 155)

PART III: THE STATE VERSUS  LIBERTY
22.The Nature of the State (p. 161)
23.The Inner Contradictions of the State (p. 175)
24.The Moral Status of Relations to the State (p. 183)
25.On Relations Between States (p. 189)

PART IV: MODERN ALTERNATIVE THEORIES OF LIBERTY
26.Utilitarian Free-Market Economics (p. 201)
    A. Introduction: Utilitarian Social Philosophy (p. 201)
    B. The Unanimity and Compensation Principles (p. 203)
    C. Ludwig von and “Value-Free” Laissez (p. 206)
27.Isaiah Berlin on Negative Freedom (p. 215)
28.F.A. Hayek and The Concept of Coercion (p. 219)
29.Robert Nozick and the Immaculate Conception of the State (p. 231)

PART V: TOWARD A THEORY OF STRATEGY FOR  LIBERTY
30.Toward a Theory of Strategy for Liberty (p. 257)

Bibliography (p. 275)
Index (p. 295)

“On the other hand, it does not follow from this analysis that if an extant money were to lose its direct uses, it could no longer be used as money. Thus, if gold, after being established as money, were suddenly to lose its value in ornaments or industrial uses, it would not necessarily lose its character as a money. Once a medium of exchange has been established as a money, money prices continue to be set. If on day X gold loses its direct uses, there will still be previously existing money prices that had been established on day X – 1, and these prices form the basis for the marginal utility of gold on day X. Similarly, the money prices thereby determined on day X form the basis for the marginal utility of money on day X + 1. From X on, gold could be demanded for its exchange value alone, and not at all for its direct use. Therefore, while it is absolutely necessary that a money originate as a commodity with direct uses, it is not absolutely necessary that the direct uses continue after the money has been established.”

          — Murray Rothbard, MES, p. 275 

“The truth is inherently practical, and in recognizing an idea as true (or false), a scholar cannot but want it to be implemented (or eradicated) immediately. For this reason, in addition to pursuing his scholarly ambitions, Menger served as personal tutor to the Austrian Crown Prince Rudolf, and as an appointed life-member of the Austrian House of Lords (Herrenhaus). 

Similarly, Böhm-Bawerk served three times as Austrian minister of finance, and was a lifetime member of the Herrenhaus. Likewise, Mises was the nationally prominent chief economist of the Vienna Chamber of Commerce and advisor to many prominent figures during Austria’s first Republic, and later, in the U.S., he served as advisor to the National Association of Manufacturers and numerous other organizations. 

Only Mises went even further. Just as he was the first economic system-builder, so was he the first to give the Austrian activism systematic expression by associating Austrian economics with radical-liberal-libertarian-political reform (as laid out in his Liberalism of 1927). Only Rothbard, who likewise served in many advisory functions and as founder and academic director of several educational organizations, accomplished something comparable." 

          — Hoppe, MNR: Economics Science, and Liberty

“…Champions of the government’s coinage monopoly have claimed that money is different from all other commodities, because “Gresham’s Law” proves that “bad money drives out good” from circulation. Hence, the free market cannot be trusted to serve the public in supplying good money.

But this formulation rests on a misinterpretation of Gresham’s famous law. The law really says that:

money overvalued artificially by government will drive out of circulation artificially undervalued money.

Suppose, for example, there are one-ounce gold coins in circulation. After a few years of wear and tear, let us say that some coins weigh only .9 ounces. Obviously, on the free market, the worn coins would circulate at only 90 percent of the value of the full-bodied coins, and the nominal face value of the former would have to be repudiated.2  If anything, it will be the “bad” coins that will be driven from the market.

But suppose the government decrees that everyone must treat the worn coins as equal to new, fresh coins, and must accept them equally in payment of debts. What has the government really done? It has imposed price control by coercion on the “exchange rate” between the two types of coin. By insisting on the par ratio when the worn coins should exchange at 10 percent discount, it artificially overvalues the worn coins and undervalues new coins. Consequently, everyone will circulate the worn coins, and hoard or export the new. “Bad money drives out good money,” then, not on the free market, but as the direct result of governmental intervention in the market…”

          — Murray Rothbard, What Has Government Done to Our Money?

“…The standard argument against private coinage is that the minting business operates by a mysterious law of its own—Gresham’s Law—where “bad money drives out good,” in contrast to other areas of competition, where the good product drives out the bad.15But Mises has brilliantly shown that this formulation of Gresham’s Law is a misinterpretation, and that the Law is a subdivision of the usual effects of price control by government: in this case, the government’s artificial fixing of an exchange rate between two or more moneys creates a shortage of the artificially under-valued money and a surplus of the over-valued money. Gresham’s Law is therefore a law of government intervention rather than one of the free market.16

          — Murray Rothbard, The Case for a 100% Gold Dollar

…Thus, the libertarian must never, for the sake of alleged expediency, deny or conceal his ultimate objective of complete liberty; and he must never aggress against others in the search for a world of nonaggression. For example, the Bolsheviks, before the revolution, financed themselves partially by armed robbery in the name of “expropriating” capitalists; clearly, any use of aggression against private property in order to finance the libertarian movement, in addition to being immoral by libertarian principles, would cut against those principles themselves and their ultimate attainment.

At this point, any radical movement for social change, including the libertarian movement, has to face an important, realistic problem: in the real world, the goal — for the libertarian, the disappearance of the state and its aggressive coercion — unfortunately cannot be achieved overnight. Since that is the case, what should be the position of the libertarian toward “transition demands”; i.e., toward demands that would move toward liberty without yet reaching the ultimate goal? Wouldn’t such demands undercut the ultimate goal of total liberty itself?

In our view, the proper solution to this problem is a “centrist” or “movement-building” solution: namely, that it is legitimate and proper to advocate transition demands as way stations along the road to victory, provided that the ultimate goal of victory is always kept in mind and held aloft. In this way, the ultimate goal is clear and not lost sight of, and the pressure is kept on so that transitional or partial victories will feed on themselves rather than appease or weaken the ultimate drive of the movement.

Thus, suppose that the libertarian movement adopts, as a transitional demand, an across-the-board 50 percent cut in taxation. This must be done in such a way as not to imply that a 51 percent cut would somehow be immoral or improper. In that way, the 50 percent cut would simply be an initial demand rather than an ultimate goal in itself, which would only undercut the libertarian goal of total abolition of taxation.

Similarly, if libertarians should ever call for reducing or abolishing taxes in some particular area, that call must never be accompanied by advocating the increase of taxation in some other area. Thus, we might well conclude that the most tyrannical and destructive tax in the modern world is the income tax, and therefore that first priority should be given to abolishing that form of tax. But the call for drastic reduction or abolition of the income tax must never be coupled with advocating a higher tax in some other area (e.g., a sales tax), for that indeed would be employing a means contradictory to the ultimate goal of tax abolition. Libertarians must, in short, hack away at the state wherever and whenever they can, rolling back or eliminating state activity in whatever area possible…

          — Murray Rothbard, What Libertarians Can Learn From the Abolitionists