The Global Currency Plot

The State in and of itself is the most moral whole, the realization of freedom; and it is the absolute purpose of reason that freedom be real.
– GEORG WILHELM FRIEDRICH HEGEL

It is probably no exaggeration to say that most people regard the state (as we know it today) as indispensable: “Without it, nothing would work,” it is often said. “Without the state, there would be neither law nor order; civilized coexistence would be impossible; all hell would be let loose.” But careful reflection shows that this assessment cannot be correct. In order to understand this, one must first clarify what the state actually is.

The state is—in order to use a positive definition (i.e., an explanatory definition)—the territorial coercive monopolist with ultimate decision-making power. It is the entity which judges all conflicts or has the last word—that is, decides all conflicts that occur between its subordinates and also all conflicts that occur between its subordinates and itself. Every kindergarten child will immediately understand that no one would voluntarily give their consent to such a state. The question that arises here is: How can the state (as it has just been defined) have arisen?

It is logical that the state did not come into being on a voluntary basis. Among the living there will be no one who can truthfully claim that he was asked whether he wanted to be subjected to the state and who also agreed to it. Even the reference to the fact that the state came into existence by way of a social contract is not convincing. There is no such contract that you or I have ever signed. And anyone who then replies that the social contract which establishes the state is only a metaphor to symbolize the contractual concession, does not have a convincing argument either: he is merely trying (by coercion) to turn a yes into a no.

From the point of view of the logic of action, the state—if it is a territorial compulsory monopolist to which the individual is subjected for better or worse—is contradictory and thus literally wrong.39 It de facto degrades the individual to a slave, and this is incompatible with the logic of human action—because property, self-ownership, is an indispensable category of human action. One cannot even argue without contradiction that the state is legitimate when people voluntarily submit to it. For then people are no longer owners of themselves and of the goods that they have acquired in a non-aggressive way.40

Of course, no one in his right mind would voluntarily and once and for all cede control over the welfare or suffering of himself and his property to the coercive monopolist which is the state, to a monopolist of all final decisions in his field, who has the power to unilaterally determine the extent and price of justice and security. Such a contract—if it existed—would simply be immoral. We cannot help but recognize that the existence of the today’s state is the result of violence, conquest, oppression, and plunder. In this light Franz Oppenheimer (1864–1943)41 writes:

The State, completely in its genesis, essentially and almost completely during the first stages of its existence, is a social institution, forced by a victorious group of men onto a defeated group, with the sole purpose of regulating the dominion of the victorious group over the vanquished, and securing itself against revolt from within and attacks from abroad. Teleologically, this dominion had no other purpose than the economic exploitation of the vanquished by the victors.42

It is often said that we need the state in order to protect property, and that without the state there would be no property at all. Is this argument convincing? The answer is no. Property must already have existed before the state—whose essence is the invasion of property—came into play. Property must have preceded the formation of the state. The state could only come into being after people had already created property. Obviously, you don’t need the state to create property.

But can the aggression of the state against property perhaps be justified with the notion that without the state peaceful coexistence in the community would be impossible? This is a bee that Thomas Hobbes (1588–1679) put into his readers’ bonnets when he wrote Homo homini lupus est (“Man is a wolf to man”).43 Let us suppose that Hobbes was right: A and B, in order to live peacefully together, needed a state S. Without S, A and B would live in anarchy; they would perish in conflict and struggle. They therefore have to ask for protection and security from S and from no other, and S alone determines what he charges them for it. In other words, A and B are subjected to S. The inalienable right of A and B to self-ownership is thus revoked.

But who now controls S, behind which people like A and B must necessarily hide? There is no reason why people who exercise the power of S should behave differently toward A and B than A and B behave toward each other. The logical conclusion would therefore be to control state S through a higher authority, state S*. And S* would again have to be controlled by S**—and so on and so forth. Thought through consistently to the end, a world state would have to be established, to which all (A and B as well as S, S*, S**, and so on) are subjected. But who would control the world state? It is easy to see that this train of thought does not provide a convincing solution. The world state would also not be compatible with the a priori of property: like any nation-state, a world state could only emerge from aggression, from violence against the property of the individual.

We have realized that the state is an apparatus of violence. The question that now arises is: How does such a state obtain its power? It is well known that a state can only survive as long as the subjects or governed—as a rule, they form the majority—do not rebel against the state or the rulers—as a rule, this is a small minority. The state can prevent such resistance in two ways. First, the state can force its existence by using naked force. After all, it has a monopoly on the use of force. However, this kind of power retention rests on clay feet and is also expensive. In addition, the state or its representatives must fear that they will be deposed by even more ruthless ones.

Second, it is far more effective for the state to form a voluntary following. This, in turn, can be achieved in three ways.

(1) The state dominates the educational system and spreads its self-glorifying ideology. To this end the state cooperates with intellectuals (teachers, professors, writers, actors, musicians, and artists), whom it pays and protects and ensures that they occupy public opinion in favor of the state. This obviously works very well: nowadays most people believe that the state is indispensable—and that reduces resistance against it.

(2) In principle, the state offers everyone the prospect (whether they have graduated school and college or not, whether they have rendered outstanding services to their fellow human beings or not) of being elected and thus coming to power if the individual so desires. This also makes the state an acceptable and supportive institution from the point of view of many—and also weakens the resistance against it.

(3) The state blatantly corrupts people. It proverbially buys the support of the electorate by promising them privileges and incomes that they would not be able to obtain through their own work. The state therefore acts according to the principle of divide et impera: divide and rule.

Many people quickly recognize the state as an appropriate means to achieve their personal goals: all that is needed are ruling parties that are empowered to implement and enforce what is desired.44 This means that sooner or later everything and everyone will be politicized: state influence is spreading to all areas of society and life—education, work, health, pensions, the environment, food, transport, security, legislative, judicial, money, and credit—and the state is becoming the dominant player everywhere.

The French economist and thinker Claude-Frédéric Bastiat (1801–1850) finds clear words to this effect:

The state is the great fictitious entity by which everyone seeks to live at the expense of everyone else. For, today as in the past, each of us, more or less, would like to profit from the labor of others. One does not dare to proclaim this feeling publicly, one conceals it from oneself, and then what does one do? One imagines an intermediary; one addresses the state, and each class proceeds in turn to say to it: “You, who can take fairly and honorably, take from the public and share with us.” Alas! The state is only too ready to follow such diabolical advice; for it is composed of cabinet ministers, of bureaucrats, of men, in short, who, like all men, carry in their hearts the desire, and always enthusiastically seize the opportunity, to see their wealth and influence grow. The state understands, then, very quickly the use it can make of the role the public entrusts to it. It will be the arbiter, the master, of all destinies. It will take a great deal; hence, a great deal will remain for itself. It will multiply the number of its agents; it will enlarge the scope of its prerogatives; it will end by acquiring over-whelming proportions.45

Bastiat’s reference to the fact that the state cannot be limited deserves special attention. Indeed, anyone who hopes that the expansion of the state can be effectively contained by constitutional rules is hoping in vain. The state also monopolizes legislation and jurisprudence. Thus, it makes itself the judge of all conflicts, including those that it itself has started. It is obvious that under these conditions, case law is in favor of the state (especially in questions of existential importance to it). After all, the courts are staffed and paid by the state. The judiciary may emancipate itself from the influence of the ruling party which currently has power and authority, but not from the state itself.

We cannot help but reach this conclusion: the creation and continued existence of the state are not based on voluntarism, but on violence and coercion. Of course, there are states that abuse their (coercive) monopoly more than others; from this point of view, we could speak of “bad” and “less bad” states. But they all constitute a violation of property rights. States are, as Hoppe puts it, expropriating property protectors and law-breaking law-keepers—and thereby release decivilizing forces. The modern democratic state especially is continuing to expand. Attempts to tame and enclose it prove to be an illusion. Even a minimal state becomes a maximal state sooner or later.46 This logical insight has a counterpart in reality.

Wherever you look: in recent decades, states have become increasingly powerful, and they have spared no area of economic and social life. Above all, states claim the monopoly of money production. The reason for this is that once the state has gained sovereignty over money, the path is clear for the greatest possible expansion of power: the state can then literally buy everything and everyone. It is therefore no coincidence that states now have a monopoly on money all over the world. Chapter 8 examines the steps by which they have gradually gained control over money, sometimes through intricate paths.

• 39A well-known definition of logical contradiction can be found in George Orwell’s dystopian novel 1984 (1949; Planet eBook, n.d.) in the form of doublethink (p. 197, italics in the original): “His mind slid away into the labyrinthine world of doublethink. To know and not to know, to be conscious of complete truthfulness while telling carefully constructed lies, to hold simultaneously two opinions which canceled out, knowing them to be contradictory and believing in both of them, to use logic against logic” (p. 198).
• 40As long as the individual voluntarily submits to the state, as long as he thinks and does what the state wants him to do, there seems to be no problem. But the problem becomes obvious if he does not want that, but something else. then the ugly face of the state appears, then the state forces him to obey. A taxation example: There are many people who say that they like to pay taxes, that they do not regard taxes as robbery because taxes are used for the benefit of society. But this doesn’t justify their statement convincingly. The proof is in taking the liberty of denying the state taxes—and the reaction of the state will show the nature of taxes: violent expropriation, possibly associated with imprisonment or worse.
• 41 Franz Oppenheimer was the doctoral supervisor of Ludwig Erhard (1897–1977), who admired him greatly.
• 42Franz Oppenheimer, The State: Its History and Development Viewed Sociologically, trans. John Gitterman (New York: B. W. Huebsch, 1922), p. 15.
• 43Hobbes’s view has never been uncontroversial. While he sees the original urge of human action in the “egoistic” desire for self-preservation, Richard Cumberland (1631–1718), Samuel Pufendorf (1632–1694), and John Locke (1632–1704), for example, place it in “sociability.”
• 44It is precisely small and well-organized interest groups that influence state legislation and regulation effectively in their favor, as Mancur Olson (1932–98) explains in The Logic of Collective Action: Public Goods and the Theory of Groups (Cambridge, MA: Harvard University Press, 1965).
• 45Claude-Frédéric Bastiat, Selected Essays on Political Economy, trans. Seymour Cain and ed. George B. de Huszar (Irvington-on-Hudson, NY: Foundation for Economic Education, 1995), p. 144.
• 46According to Hans-Hermann Hoppe, Democracy: The God That Failed: The Economics and Politics of Monarchy, Democracy, and Natural Order (New Brunswick, NJ: Transaction Publishers, 2006), p. 229.