Free speech June 29, 2020




From Robinson Crusoe to The World State



The Austrian school of economics is based on praxeology which starts from the axiom of action and its categories. These serve as the praxeological foundations of epistemology and all social sciences. However, in practice the Austrian school has largely limited its investigations only to economics. This even though one of its most famous exponents, Ludwig von Mises, emphasised that praxeology is the foundation of all social sciences and economics is only one of its subbranches. Mises made this clear when he gave a lauding review of Murray Rothbard’s Man, Economy and the State: A Treaties on Economic Principles.


an epochal contribution to the general science of human action, praxeology, and its practically most important and up-to-now best elaborated part, economics.


Mises himself did not try to study political science in a systematic fashion. Fortunately, one of his students, Murray Rothbard, did present a praxeological analysis of politics in his book Power and Market: Government and the Economy. However, Rothbard’s analysis moved only on a very general level when he divided interventions into three categories: autistic (slavery), binary (taxation) and triangular (regulations).



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It was Rothbard’s student Hans-Hermann Hoppe who in his book The Economics and Ethics of Private Property went into details by showing how the laws of political science sort of mirror the laws of economic science. Hoppe has been a trail-blazer, trying to expand praxeological analysis into areas that have previously been reserved for other sciences such as sociology.



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Mises, Rothbard and Hoppe showed the way to a praxeological analysis of politics. However, hardly anyone has followed in their path. No one seems to have tried to present a step by step praxeological theory of the state. The closest attempt comes from Dan Sanchez who presented a theory of the cycle of the state in his article Sisyphus Shrugged: The Cycle of the State.


Link to the article


In his article Sanchez even presented a diagram of the big picture.




This article summarizes the points of Mises, Rothbard, Hoppe and Sanchez by presenting a deductive overview of the praxeological foundations of political science. From these foundations the cycle of the state is then deduced step by step. At the same time, it becomes clear how much of economic, sociological and historical analysis is actually based on political science. It also helps to clear some of the terminological confusion regarding the sciences of economics and politics.


Methodological individualism 
The Austrian school always starts its investigations into social science by applying methodological individualism. So too with political science. States or other metaphorical entities do not act. Only individuals act. States and political processes must be studied by investigating the actions and interactions of individuals affecting state policies. This requires not only praxeology but also some empirical observations that proceed in practical steps.


Robinson Crusoe economics

To clarify the differences between economics and politics it is necessary to start from the beginning. Thus, the first step is to look at a single individual confronted with physical world, i.e. nature. This can be studied with Robinson Crusoe economics that introduces empirical facts into the chain of praxeological deduction from action axiom. Empirical observations tell us that there is diversity in nature and people. It also tells us that leisure is a consumer good. Rothbard called these empirical facts subsidiary postulates.

Robinson’s each action has a physical component. If his goal is to stay alive then he must homestead land and other scarce resources with his labour. These he can then transform with his knowledge and work by producing consumer and producer goods he needs to stay alive. All these actions can be studied with economic science by applying the categories and especially the laws of action such as the law of value maximization, the law of marginal utility and the law or returns. All this is explained in detail in the beginning of Rothbard’s book Man, Economy and State. A Treatise on Economic Principles.



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Interaction constrained by conflict over resources
The next step is to study interaction. This is done by introducing Friday. In the beginning interaction between Robinson and Friday makes the problem of scarcity even worse. Robinson cannot wholly control his body and the resources of the island if Friday also wants to decide over their use. Immediately a possible conflict over the use of scarce resources presents itself. In The Ethics of Liberty Rothbard explains that there are only three logical ways to solve the conflict:

1. Common ownership. (Communism/socialism)
2. Private property. (Propertarianism/libertarianism)
3. Slavery. (Interventionism/Fascism)



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[ADD: Before Friday there was Miss Thursday who was a Communist.]


Communist common ownership rule is illusory
Robinson and Friday can agree to adopt the property rules of communism. They can agree that their bodies and the whole island are the common property of both of them. However, soon Robinson and Friday would notice that in practice communism is just wishful thinking. Conflicts over scarce resources are not avoided by hoping that conflicts will not arise or that agreement to them will always be found. On the contrary. Scarcity is the ultimate problem of society and conflict over physical resources are not only possible but practically inevitable as long as there is interaction between people with different tastes, values and opinions.

Communism tries to solve the problem of scarcity either by changing the laws of nature or the nature of people. The first solution is clearly a pipe dream and thus never made explicit except perhaps as the utopian final stage of communism. The second solution led to the famous attempt to create a new egalitarian Soviet or postmodern man. Since this failed too Communists have turned to a less satisfactory but relatively more realistic way to decrease conflicts: Radically decrease the number of people on the planet so that there would be enough free fruits of land for all.

Red communism became green communism. However, this still does not change the fact that as long as people interact with each other property rules over land, bodies, food, water, clothes, shelter and other physical resources are necessary. Even if Robinson and Friday are the only people on the island they can still easily face conflicts if they interact. In practice communism must thus evolve either into propertarianism or interventionism.


Propertarian private property rule is practical
If Robinson and Friday realize the futility of communism they can adopt propertarian rules. Robinson and Friday now see themselves as independent individuals who have the exclusive right to control and thus own their own body and scarce resources they have homesteaded, produced or contractually obtained. Only interaction that respects the physical integrity of their respective property is allowed. Propertarianism thus sees interaction in terms of control over scarce physical resources. It is now easy to see who owns what. Society is not only based but also defined in terms of private property.

In a private property society each individual is a kind of castle owner who lives in his castle (body) and from there either homesteads, produces or contractually obtains physical resources such as land and food. All rights are therefore private property rights. Robinson and Friday can only lord over their own body and homesteaded, bought, rented, inherited or otherwise gifted land. Each individual is a body-castle owner with his own propertarian “land-country” and other physical possessions. All interaction is between these propertarian spheres or “countries”. All social interaction is voluntary and therefore peaceful. Society is purely propertarian and all interaction is contractual.


Propertarianism is natural
Propertarianism respects natural order in the sense that it tries to peacefully solve the ultimate problem of life, scarcity. Private property rights are necessary since there is no other peaceful way to solve conflicts over scarce resources. Each individual naturally wants to have property rights to his own body. It is only natural that he owns his own body and nobody else. Furthermore, it is natural that he can use his body to homestead unused land and other physical resources. Thereby he does not violate anybody else’s body or other physical resources. If he did not have the right to his homesteaded and produced resources then who would? To ask the question is to answer it. Private property rights are natural and logical. They make peaceful interaction possible in the first place. Even children and primitives seem to understand the homestead principle and consider it natural.

Propertarian rules allow only Pareto superior moves. In other words they allow two types of actions: They allow actions that do not physically hurt the property of others (homesteading, producing, consuming). They also allow interactions where both expect to benefit by entering into a mutually agreed upon contract concerning transfers of property titles (contracting). Propertarian society is peaceful since all interaction is ex ante mutually beneficial without hurting anyone physically.


Propertarianism is axiomatic

Rothbard was philosophically an Aristotelian and therefore emphasized that this natural and almost self-evident nature of propertarianism makes it ethical. His student Hans-Hermann Hoppe agrees but is more of a Kantian and therefore developed argumentation ethics that emphasizes the logically self-evident and axiomatic nature of propertarianism.

On Praxeology and the Praxeological Foundation of Epistemology (Part II of Economic Science and the Austrian Method) Hoppe points out that only propertarian rules can be justified since argumentation itself presupposes independent individuals and the homestead principle, or more specificially the first user-rule of appropriation. By trying to deny the first user-rule of appropriation one would enter into a performative contradiction and so in practice admit not only one’s own ownership of at least parts of one’s own body but also the fact that argumentation presupposes intersubjectively ascertainable norms and other independent individuals with property rights based on appropriation, production and contracting. Propertarianism is axiomatic and thus self-evident for every rational being. No wonder even children and primitives understand it almost instinctually.



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Basic preconditions of propertarianism
Under propertarian rules Robinson and Friday can interact in a purely voluntary manner without having to use any violence. Peace reigns. Moreover, they can both greatly benefit from peace and mutually beneficial exchanges. However, they have to have enough intelligence and knowledge to fully understand this. Furthermore, the benefits of peaceful relations are often long-term only. There is also the possibility to benefit short-term by successfully stealing and robbing. This becomes an appealing possibility especially if either Robinson or Friday is lazy and short-sighted with a very high time preference.

Conflict becomes even more appealing if people are very greedy and jealous while at the same time not committed to ethical and moral ideas about right and wrong. Thus, a propertarian society requires from its members also a minimum level of intelligence, education, self-discipline, ethics and morality. This is why animals, young children and primitives cannot create propertarian societies. And neither can people with a socialist culture of jealousy and aggression.


Contractual interaction
According to propertarian rules if Robinson has homesteaded the whole island then he has the right to refuse Friday entry. However, if the island is not wholly homesteaded then Robinson has to allow Friday access to the non-homesteaded parts of the island and let him homestead his own home there.

Robinson and Friday can also choose to contractually interact with each other. Only gifts (unilateral contract) and mutual exchanges (bilateral contract) can take place. Gifts occur if Robinson gives some water and bananas to a thirsty and hungry Friday. Gift takes also place when Robinson invites Friday to visit his home. However, this unilateral contract, i.e. a gift is made on the precondition that during the visit Friday behaves in certain manner that Robinson deems appropriate. Even gifts have an economic aspect and can be studied with economics just like any other voluntary interaction.


If Robinson and Friday get along they can start mutual exchanges. For example, Robinson can offer bananas in exchange for Friday’s oranges or work in repairing Robinson’s house. This mutually agreed upon exchange is called barter. It can be studied by extending economic analysis one step further into catallactics that studies the formation of exchange ratios. These are determined by the law of supply and demand.

Barter allows the development of division of labor. Both Robinson and Friday can specialize in what they are best at and both benefit from increased production. The Ricardian law of association shows that even if Robinson is better in everything than Friday both still benefit because Robinson can more easily concentrate on where his relative skills are the best. Barter makes peace profitable for both Robinson and Friday.



Money economy
Even if Robinson and Friday continue interacting in a peaceful manner barter is still limited by the necessity of the double coincidence of wants. Only with the introduction of more people into the island will it be possible to develop a universally accepted medium of exchange, i.e. money. This removes the problem of the double coincidence of wants and further develops division of labor. It also creates money prices that makes possible monetary calculation and a price system that automatically coordinates production through an invisible hand better than any human or committee ever could. This in turn makes it possible to create large firms that pool savings, invest in producer goods and specialize in mass producing commodities for the market.

The pooling of savings is made even easier by savings and credit banks that become the coordinating nerve centers of the economy. In What Has Government Done to Our Money Murray Rothbard showed step by step how the use of a common medium of exchange (money) and banking creates a highly complex and efficient market economy. In a few generations living standards can rise to great heights. All this can be studied with economic science and especially monetary theory that studies not only prices but also capital formation, money and banking.

In the propertarian free market all exchanges are voluntary and therefore the consumer is the master. Since everybody is at the same time a producer-supplier and demander-consumer there is no conflict nor a master-slave relationship. Everybody serves and is being served. Free competition allows the investors and producers to compete in offering their products to the consumer who can freely choose from the offered alternatives. Production and investment rises all around which at some point creates exponential economic growth.

The rise and fall of producers is determined by how well they serve the consumer. However, the competition is not even here aggressive since producers who loose in the competition can lower their prices, cash out and start producing something else. They too benefit from the general lowering of prices and rising living standards. They may temporarily loose as producers but they always win as consumers.


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Natural elite
Propertarian rules are natural and thus intuitive. It would be very difficult for Robinson to convince Friday to become his slave or otherwise surrender his property rights when most of the island is still in virgin state ready to be homesteaded. Situation changes when a society becomes larger. First, there is less prime land to be homesteaded. Second, the great strength of a market economy – its price signals that create a kind of invisible hand that coordinates production and consumption – is also its greatest weakness. When the link between work, saving, production and consumption becomes ever longer and abstract it is easier to convince people that violating private property rights would be beneficial.

Natural order is not automatic. A propertarian society requires individuals and institutions that actively support and uphold it. Luckily a propertarian society creates intelligent people who have the capability to understand abstract basic ideas such as rationalism, propertarianism, free market and the natural order. However, they must band together and become a natural elite. First they must educate people in rationalist philosophy, ethics and economics. Second, they must create schools, medias and other institutions that spread and upheld a rationalist culture. Third, a large majority must understand and at least passively accept rationalist ideas and propertarian institutions. Any social order will break down if a large majority actively opposes it. Fourth, the natural elite must set an example and serve as respected arbitrators and leaders of communities, academy and industry. Only by keeping in check anti-rationalist ideas and groups can a large propertarian society be upheld and the development of both communism and interventionism stopped.


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Interventionism/Fascism is studied by political science
If the natural elite fails in its task, then society easily descends into interventionism/Fascism. Unlike propertarianism it allows a specific later comer to take away from others their homesteaded, produced or contracted property. The physical integrity of property is not fully protected anymore. Thus, interventionism is based on involuntary interaction between property owners. It takes or threatens to take property from a legitimate property owner either directly by transfer or indirectly by otherwise limiting victim’s legitimate right to control his property. Thus, interventionism is parasitic. It is a Pareto-inferior system because social welfare is demonstrably decreased. It also cannot be argumentatively justified because argumentation itself presupposes the first user-rule of appropriation, i.e. the homestead principle.

Voluntary and involuntary interaction are sort of mirror images. Economic science studies the former while political science studies the latter. When studying involuntary interaction, it is crucial to emphasize that it is also action and thus constrained by the categories and laws of praxeology. However, the study of involuntary action differs from the study of voluntary action in important respects.

First, the difference between voluntary and involuntary interaction means that economic science studies peaceful and political science aggressive interaction. Aggression is defined in physical terms as threatened or actualized action that limits the legitimate property owner’s control over the physical integrity of his property. (Body is also the property of the individual.) Aggression always involves a physical conflict between property owners. Emotional conflicts do not need to involve aggression.

Second, there could have been no involuntary action when Robinson lived alone on his island. There is no such thing as Robinson Crusoe politics. Unlike economics, politics requires interaction. Pure formal action politics does not exist but only interaction politics. The most basic level of political science is Robinson Crusoe and Friday politics. Thus, economics is a branch of praxeology that studies either solitary action or voluntary interaction while political science is a branch of praxeology that studies involuntary interaction.


The law of aggressive demand and resistive supply
The next step in the analysis of politics is to apply the law of supply and the law of demand to expropriation. However, there are important practical differences in the way economic and political science apply these laws. After all, economically it does not make sense to say that there is a mutual supply and demand at work in expropriation. The aggressor clearly has demand for some definite piece of property but the victim does not want to supply it. The aggressor, in turn, does not want to supply any or at least sufficient property to his victim who in turn clearly does not have any demand for his own exploitation. Otherwise there would be a peaceful exchange and not expropriation.

Despite this obvious difference between economics and politics they are both based on the praxeological law of marginal utility. It is therefore possible to praxeologically study the behavior of both the aggressor and the victim. The laws of supply and demand still operate.

The victim is affected by the law of supply but in a different manner than in economics. In economic interaction commodities are exchanged either directly (barter) or indirectly through a medium of exchange (money). Ceteris paribus the more of a commodity (oranges) Friday supplies the more of a different commodity (bananas) he wants in exchange. This is because utility is ordinal. Friday’s utility of each additional supplied orange increases while his utility of each additional received banana decreases. The same is true of Robinson in reverse. Both participants in the exchange are supplying one commodity while demanding another commodity. Both have a double role. Both Robinson and Friday are at the same time buyers/demanders and sellers/suppliers.


The law of resistive supply

In political interaction there are no double roles. Both are not voluntarily willing to supply and demand commodities. (Oranges for bananas and bananas for oranges.) The demander is the aggressor and the supplier is the victim who is being expropriated and thus his supply is forced. However, the victim is still under the law of supply. Ceteris paribus the more units of a commodity (oranges) he is forced to supply the greater the lost utility for each additional expropriated unit (orange) and thus the more potential resistance there will be by Friday.

However, Friday must also consider the costs of resisting expropriation. Robinson might beat him up or even torture him unless Friday submits to being robbed of his oranges. Friday’s submits only when the expected costs of resistance are greater than the combined utility of the oranges and his freedom. Friday takes his freedom also into account not only because he hates being a victim deprived of his rights even temporarily but also because he has to calculate the risk of continued expropriation. Friday might not put his health and life in line for a few oranges. However, he might do just that if he suspects that his submission would just encourage Robinson to continue expropriations. If Friday would just submit to all of Robinson’s demands he would essentially become his slave.


The law of aggressive demand

Robinson the aggressor is affected by the law of demand. In economic interaction the demander is a buyer who is ready to exchange his commodity for the commodity of the supplier. Ceteris paribus the more units of a commodity (oranges) Robinson demands the less utility he receives from each additional unit and is ready to exchange less for them. The same law of demand is also true when the demander is an aggressor. The more units of a commodity (oranges) Robinson expropriates the less utility he receives from each additional unit.

Robinson must also consider his costs of expropriating Friday. Robinson might have to build a trap to extort Friday to give up his oranges. Building the trap might take so much time that he has to consume two bananas. Robinson also has to calculate the risk of resistance. Friday might be able to hurt or even stop Robinson’s attack with violent self-defence. Robinson might not put his health and life in line to get a few oranges. However, he might take the risk if he suspects that Robinson will submit easily and eventually even turn into his slave.

In economics there are limits to demand since in exchange the demander must also be the supplier of either another commodity (barter) or money. In politics the situation is very different. The demander does not have to supply anything or at least sufficiently to his victim. (Otherwise there would be an peaceful exchange.) Therefore, even if the utility from continued expropriation decreases there is still almost an unlimited demand for expropriation. Ceteris paribus, the aggressor will always try to maximize his income by expropriating as much as he can get away with.

In a country of absolute pacifists a few aggressors could arrive and take advantage of the situation. Since the aggressors would face very little costs and risks they could take by force as much as they want. Soon the pacifists would in effect become slaves or stop being pacifists. Thus, in politics the supply is the crucial factor. It is only the resistance of the victim that in practice limits aggression and expropriation.


Expropriation ratio

Unlike in exchange relation in expropriation the costs and risks of the demander and supplier are very much interconnected. They can both radically increase each others costs and risks. Ceteris paribus, the demander-aggressor gains less and less utility from ever more expropriated units of a commodity while the supplier-victim loses more and more. Thus the aggressor is benefiting less and less from the expropriation while the victim could be resisting more and more and thus generating higher costs for the aggressor. However, if resistance does not generate too much costs for the aggressor he might just increase his aggression further. This could raise the expected costs of resistance for the victim higher than the value of the expropriated property. In that case the victim could submit to expropriation. However, if the victim instead decides to resist even harder then this could make the costs of the aggression greater than the expected income for the aggressor. In that case the aggressor could rather stop the attempted expropriation and just write off his loss.

In practice during aggression the aggressor and the victim raise the stakes in turn. Both try to evaluate their own limit and guess how far the other one is willing to go. This is similar to a price negotiation in an exchange. How far one is willing to go is determined by subjective valuations. Furthermore, both in exchange and expropriation the law of demand and the law of supply operate. In barter there is a double coincidence of wants or rather double supply and demand which determines the exchange ratio of the commodities. For example, one banana for one orange. In expropriation there is instead aggressive demand and resistive supply which determine the expropriation ratio.

In addition to threats of aggression and resistance the expropriation negotiations often also involve additional offers. For example, the aggressor might be willing to offer something to make the victim accept the expropriation more easily. For example, instead of demanding 10 oranges for nothing he might offer to extort only 9 oranges for one banana.

Even if the demander-aggressor is not offering anything in return he still does incur costs when he forces the victim to supply. Robinson used to trade one banana for one orange but now his cost could be two bananas plus one banana to expropriate Friday’s 9 oranges. Despite these costs the expropriation ratio for Robinson is clearly higher than the exchange ratio while for Friday it has not only radically decreased but he has been beaten and lives in terror of the next attack and expropriation.


Negative invisible hand

In money economy mutual supply and demand create exchange ratios that are expressed in money prices which then give incentives to coordinate individual plans and thus coordinate production as if assisted by an invisible hand. Exchanges create a virtuous cycle of cooperation. In exploitation aggressive supply and resistive demand create expropriation ratios which cannot be expressed in money prices. However, the market value of the loot/loss can be evaluated in prices. The victim can thus quite accurately estimate his losses. The expropriation ratios and the value of the loot also create incentives but instead of a virtuous cycle of cooperation they lead to a cycle of regulation and escape attempts where the victim again and again tries to evade autistic, binary and triangular exploitation. When others learn of this exploitation they too decrease their cooperation with the aggressor who is deemed to be too dangerous and thus cooperation too risky.

In political interaction invisible hand still works but in a negative way by decreasing trade, investments and production all around. Furthermore, exploitative regulations often turn the negative hand to cause unseen consequences which then tend to further increase regulation. Thus exploitation tends to increase not only because of the unlimited nature of aggressive demand but also because of coordination problems. It is very difficult for Robinson to regulate Friday’s life and work since he can always try to skirt the regulations and prepare for a rebellion or escape from the island. If Friday is rebellious then Robinson must continually increase regulations until Friday literally lives and works in shackles like a mindless animal.

The same cycle of aggression and escape attempts


Theory of war
Aggression always violates property rights but in practice it proceeds in several stages. It always starts with either an open attack like a robbery or a hidden attack like stealing. When the victim notices the attack he can either surrender immediately or start a war where he passively or actively opposes the attack. The war ends when the aggressor stops his attack or when the victim is defeated through flight, death or submission.

Submission is indicated by a declaration of surrender or an equivalent symbolic action such as by rising one’s hand in the air during robbery or by ceasing to resist during rape. Submission then initiates a transfer phase where the control of victim’s property is transferred to the aggressor either temporarily like in rape or permanently like in robbery. The transfer phase is parasitic in nature and is called exploitation.

The war part of Robinson and Friday politics is something that is quite familiar to all Austrians: the economics of war. However, from the Austrian perspective the term is doubly confusing. It down plays not only the categorical difference between voluntary and involuntary interaction but also the difference in the application of praxeological categories and laws. Praxeology must be used but only with a twist that applies the categories and especially the law of supply and the law of demand into an exploitative interaction.

In studying aggression the economics of war – or rather the political science of war – starts by applying first the basic categories of praxeology. Robinson will start by weighing the anticipated costs and benefits of expropriation. In this evaluation he takes into consideration his own time preference and anticipated risks. For example, one of the anticipated risks involves resistance from Friday who might use violence against Robinson. If Robinson believes the risk worth taking he then proceeds to make a war plan and follows it unless his mind or the situation changes in a relevant way. All this can be studied with praxeology and Robinson Crusoe economics plus a few empirical subsidiary postulates from biology (the intelligence and physical strength of Robinson and Friday) and the history of ideas (the ideas and values of Robinson and Friday).


Read online Imperialism and the Logic of War Making



Theory of slavery
The exploitative transfer of victim’s property rights can be either one-time aggression like robbery and rape or open-ended continuing exploitative interaction that creates a hegemonic relationship between a slave master and his slave. The slave master considers his victim just as much of his property as he would consider an animal, say a sheep. The fact that the slave master might largely leave his slave in peace does not change the fact he possesses the ultimate decision-making power in conflicts and can at any moment increase his exploitation of the victim. Sheep are not free even if the owner hardly ever dominates them. For example, the fact that Robinson leaves Friday largely in peace does not make him any less a slave if Robinson has in effect reserved himself the power to rape, tax or otherwise exploit Friday anytime he pleases. Robinson has created a slave state where he is the monopoly judge who decides what is right and wrong. Friday is the king of his slave kingdom and Friday his exploited slave subject.

However, the Robinson kingdom is not stable. We have seen how the level of exploitation is dependent on the power of resistance which in turn is effected both by intensity of the aggression and by victims love of his freedom. Suppose Friday is very submissive and has in effect become Robinson’s slave. However, Friday still has his free will and might well change his mind. Robinson always faces the risk of resistance which could turn into a violent rebellion. What if Friday would some night sneak into Robinson’s hut and kill him while he is sleeping? Therefore, Robinson has the incentive to try to decrease potential resistance by creating an elaborate excuse for continued exploitation. In other words Robinson uses propaganda to create a cultural hegemony which then installs a false consciousness in Friday. Robinson might take advantage of his higher intelligence and education by using various religious, utilitarian or other arguments to make Friday even more submissive. For example, Robinson could claim that his rule is both inevitable and justified because the fire god is on his side and manifests whenever Robinson uses his fire weapons. If Friday has even bad rebellious thoughts the Fire God might strike at Friday from the sky or He might even burn the whole island to the ground.

Assuming that Robinson is not a dedicated sadist then it is in his interest to exploit in such a manner that enhances Friday’s productive activities. It would be in Robinson’s interest to allow Friday to possess his own personal belongings and limit exploitation in such manner that Friday can be “milked for all his worth”. For example, it is not in the interest of Robinson that Friday would get sick or die from exhaustion. Instead it is in the interest of Robinson to limit his exploitation by only taxing the productive efforts of Friday. Furthermore, it would also be in the interest of Robinson to offer Friday his freedom for a price. In this way Friday might save and work more and Robinson might maximize his exploitation profits. For this reason, private slavery tends to disappear in the long run.

The hegemonic part of Robinson Crusoe and Friday politics is something that is quite familiar to all Austrians: the economics of slavery. It studies the second phase of involuntary interaction. The politics of war studies the first phase by analyzing the attack, the nature of self-defence and the transfer of property rights. The politics of slavery studies the potential second phase by analyzing how a successful attacker continues to exploit the victim through a hegemonic relationship. If Robinson is not a sadist then there is sort of “happy ending” when Friday buys his freedom from Robinson.

It depends on Robinson’s aggressiveness and Friday’s submissiveness whether Robinson will soon again try to enslave Friday. For example, Robinson could claim that the fire god demands that as his prophet Robinson must live in greater luxury. Robinson has no other choice but to enslave Robinson once again. But after 10 years of service Friday can again buy his freedom.




Aggression theory of the origin of the state
We have now seen how political interaction starts with an aggressive attack and can then continue into war, expropriation and finally into slavery if there is more aggressive demand than resistive supply. With his intelligence, strength, weapons and cunning excuses the aggressive Robinson milks the submissive Friday for all his worth. Exactly the same process of aggression and exploitation can take place if more people arrive at the island. In fact, aggression becomes even more likely since among men there are always those who are very lazy, greedy and envious and thus willing to commit aggression.  More victims means also more loot. On the other hand, more people also means that their subjugation becomes more difficult. Robinson cannot rely on brute force and simple lies anymore. In order to maintain his position as the head of a slave state he must convince most of the new arrivals to give up their right to self-defense and their right to agree upon an arbitrator in conflicts. Robinson must convince them to accept him as a the ultimate/monopoly judge in disputes, i.e. a judicial monopoly where Robinson can nominate judges and revise their judgments.

In other words, Robinson must convince all or at least most of the arrivals to accept a state. This is made easier if the new arrivals already accept the idea of a state. For example, they could have fled from another island where they had grown up in slavery under a cruel dictator. Upon their arrival Robinson could intimidate the new arrivals with his fire weapons and explain that the mighty fire god made him the king of this island.

However, Robinson probably realizes that he cannot cow the arrivals for long. This is why Robinson also engages in coalition building. He encourages division among the new arrivals by agreeing to support some against the others. He could create a caste society. Diveda et impera. For example, Robinson might suggest to the arrivals that all the women should become slaves of the men. He could also promise the men that he would be a just king for them. All those rebelling against Robinson would be either executed with magical fire weapons or turned into slaves. In this way Robinson could again become a monopoly judge and thus the head of the state. In practice all arrivals would become Robinson’s slaves but some would be exploited less (men) than others (women).

Since some of the new arrivals would still actively or passively oppose Robinson’s rule he would have to offer an additional liberal justification of his rule. Robinson would explain to the arrivals that the state is an absolute necessity to stop people from attacking each other during conflicts. All people must do to maintain peace and prosperity is to accept an ultimate arbitrator, i.e. a monopoly judge. Robinson would explain that they are lucky that Robinson is that judge because he arbitrates fairly and with minimal fees. To the rich and powerful arrivals Robinson could further emphasize efficient protection of property rights plus a chance for profitable trade with Robinson himself. To the poor and weak he promises cheap protection against assaults and robberies plus possible employment in Robinson’s farm. All the citizens of the state would be justly and equally treated by Robinson and a great prosperity and peace would ensue.

In this way Robinson might be able to bamboozle most of the people to accept him as the monopoly judge and thus the king of the state. In effect, the people would have given up their right to self-defense and the right to choose an arbitrator. They would now be called citizens, but they would still be slaves though relatively well treated slaves of a king.

The militarist and liberal justification for a state are the exogenous and endogenous theories of the origin of the state. Exogenous theory sees the development of the state as based on a violent conquest and subjection of one group by another group.  The endogenous theory sees the state as growing from within out of economic inequalities which gradually monopolize arbitration. From the perspective of political science both require violence and fraud. State is a judicial monopoly that can only be the result of a conflict. This is why in practice it would be impossible for Robinson to bamboozle the new arrivals to accept him as a monopoly judge for long. Once the arrivals realize the full implications of a judicial monopoly some of them will resist.

Resistance is made even more certain by Friday who would secretly point out to the new arrivals that by accepting Robinson as the monopoly judge they would essentially become his slaves. Friday would explain the absurdity of judicial monopoly by pointing out that Robinson would in effect also judge the cases brought against Robinson himself. Friday would warn the arrivals that the cruel and greedy Robinson would never voluntarily give up his power but rather increase it. Since Friday had now learned in practice the essence of politics he would also point out that politics is the antidote to economic activity and life itself by parasitically restricting the economic activity of appropriation, production and contracting.

Economics studies productive activities while politics studies parasitic activities. Rothbard notes that this crucial difference between economic and political interaction was brilliantly emphasized by Franz Oppenheimer in his book The State. Since the state is defined as an institution with judicial monopoly all states are aggressive and must be studied with political science.



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Cycle of rulers

In a propertarian economy there are no cycles. Economy coordinates itself automatically. If there are investments then the economy grows. Sometimes there might be unsuccessful investments or natural catastrophes that create localized depressions but these do not occur regularly. There is no tendency toward crisis and economic disintegration. In politics the situation is different. There an cyclical development takes place automatically. This takes place in five steps:

The creation of a judicial monopoly is the first phase of the cycle. But maintaining power in the hands of one man such as a warlord is difficult. This is why in the early stages of the state there is a tendency towards aristocracy. The king must share his power. The creation of the political cartel is the second phase of the cycle. But with a cartel there is always the problem of external and internal competition. This is why cartels have a strong tendency to break up. First there is always the resistance of the exploited people who want to rebel and bring down the whole political cartel and eliminate the aggressors. Second, there is the competition inside the cartel between aggressors who are secretly planning to defraud or eliminate each other to increase their exploitation profits. Some of the aggressors are even willing to decrease exploitation in order to gain the support of the people against other aggressors. This either breaks the cartel or new more extensive regulations are created to save the cartel. This competition creates the third phase of the cycle where various regulations are enforced in order to limit competition between members of the cartel. However, it is impossible to stop the competition because gradually some aristocrats will become more richer than others. The competition is slowed down but it will gradually create free economic zones, i.e. towns. This creates an opportunity for the cartel enforcer, the king who can now ally himself with merchants and gradually turn the cartel into a monopoly. This fifth phase is absolutist monarchy. However, the power of the king is now limited not only by the threat of rebellion but also by all other political groups. Soon these demand the extension of suffrage until there is full representative democracy. Since it leads to rob-or-be-robbed mentality and incentive structure it will disintegrate the society either to some earlier stage or liberty.

These six phases create the cycle of rulers which is kept in operation by the competition between the exploiters. This cycle makes it also possible for the people to play the exploitators against each other and thus better resist exploitation. The cycle stops when people are free or when there is a global monopoly power.

The cycle explains the evolution of monarchy to aristocracy to serfdom and finally to absolutist monarchy and democracy that eventually leads to globalist police state. The aristocrats become parlamentary politicians, serfdom becomes federalism and absolutism becomes globalism.


From monarchy to aristocracy

The first phase of the cycle starts for Robinson when realizes that the arrivals to the island cannot be frightened and bamboozled for long he starts to create a militaristic state. He proposes to the ten strongest arrivals that they become the officers of his army and divides all the extra land between them. The officers have to organize local militias and help Robinson to crush rebellions. In effect Robinson creates a militarist state with himself as the military dictator. If the military officers stay loyal or can be played against each other then Robinson has a total judicial monopoly and therefore total power.

The second phase of the cycle starts when Robinson realizes that his subordinates are becoming disloyal. Usually this happens when there are problems such as a famine, a war is lost or the king dies and his son succeeds him. Then officers of the army tend to turn into local warlords who want to become ever more independent. Warlords soon demand that their sons can inherit the land and position. To maintain his power Robinson agrees and the warlords have become hereditary aristocratic landowners. This is why the judicial system and the state itself can easily develop from an aggression monopoly to a cartel of aggressors.

Gradually the aristocrats would try to increase their power at the expense of Robinson. They would realize that they already have a sort of mini-state so why not become more independent? The subjects of the aristocrats would also be happy not to pay taxes to a far-away king. The people would be even more happy if they did not have to take part in Robinson’s wars. With the help of the people the aristocrats could easily become more independent and obtain tax-freedom for themselves. The income of Robinson would decrease and he would have to manage with the income from his own lands.

A few liberty minded aristocrats supported by Friday would even start spreading the message of freedom to the people. Why should the king meddle in local matters? Why not have a harmonious society of aristocratic land owners and free workers? In effect some aristocrats would want propertarianism especially since they would be in a prime position to benefit from it as the biggest land-owners. It is these aristocrats who created the culture of freedom by opposing the kings and demanding local autonomy and propertarianism. It is they who tried to break the power cartel and end the statism cycle.



The third phase of the cycle starts when the aristocrats start competing against each other. Some would try to conquer the lands of other aristocrats. Some would try to achieve that with matrimonial alliances. Others would try to make their domain prosperous by starting to compete for workers and capital with other landlords. This would start a race to freedom. People vote with their feet when they move to the domains of the relatively more liberty-minded aristocrats.

The less competent aristocrats would not watch while their most productive workers would vote with their feet and join the more liberty-minded aristocrats. The less competent aristocrats would ask help from the king to stop this internal cartel competition. This could be done by tying the people to land and thus to landowners. The king would function as a cartel enforcer in return for an increase in taxes. This third phase of the statism cycle is called serfdom.


Absolutist monarchy

Even if Robinson might be able to create serfdom it would be impossible to completely restrict the movement of people. Gradually the most productive people would still vote with their feet. The relatively more liberty-minded aristocrats would gradually become richer and more powerful and thus able to more and more ignore or skirt the regulations. They might also pay the king to lower the regulations. Soon some aristocrats would create relatively free economic zones on their land and so fairs and trading towns would develop.

This competition between landowners is automatic and will tend to break-up the state and lead to ever increasing freedom. It not only breaks the cartel of aggressors but gradually turns the aggressors into a propertarian natural elite with a noblesse oblige. Competition threatens to end the cartel. Freedom is again about to break out.

Aristocratic landowners gave birth to economic freedom, monetary economy and the creation of towns and international markets. However, at some point these towns became so rich that they wanted to become independent from their aristocratic overlords. This gave a huge opportunity for Robinson who can now help the towns in return for military support and loans. The businessmen would soon offer Robinson a further deal: Help to destroy the competing towns in return for even more money. Soon the deal would also include tariffs and other restrictions on trade.

The alliance with the towns guarantees that Robinson has enough money to buy mercenaries who are loyal to him alone. This greatly decreases Robinson’s dependence on the aristocracy and their local troops. Robinson is becoming an absolutist monarch. Now he can force the aristocrats to institute serfdom again and maintain the power cartel. However, Robinson has a better idea. He wants to become an absolutist monarch.


Creating false consciousness

With the help of the towns Robinson can try to monopolize the flow of information. It would be imperative for Robinson to totally demonize those people who would refuse to accept him as a monopoly judge and a king. To this end Robinson would try to ally himself with intellectual, religious and social leaders and promise them income in exchange for legitimizing the state and Robinson’s rule.

The liberal excuse for a judicial monopoly, i.e. the state would become official dogma preached by the intellectuals, churches, schools and the media. With his military might Robinson would try to make sure that especially the churches would teach the people that the rule of the king is supported by God himself. If the pope or priest resisted then Robinson could create his own church and label the pope a heretic. By controlling propaganda Robinson could easily brainwash people into a false consciousness. The few die-hard opponents of judicial monopoly led by Friday would be labelled conspiracy theorists who support Satan and terrorism.



After Robinson had gradually managed to secure his monopoly of arbitration with public support he could start increasing his arbitration fees, i.e. taxation. He could explain that the justice system is expensive and everybody would have to pay a small yearly fee to maintain and improve it. In this way he could create a tax office and a bureaucratic machinery to collect taxes. Then he could gradually increase these taxes by explaining that efficient arbitration also requires efficient protection of the state and its citizens. The provision of both internal and external protection of citizens should be left to him. Robinson would now be in charge of both a regular police force and a standing army. Now the threat from the aristocrats would be much more limited though Robinson would still not dare to tax them.



Robinson is now so powerful that he can expand his power from criminal to civil law by starting to limit competition from business arbitrators. Robinson could do this by helping some merchants to cartellize production. Robinson declares that he alone can efficiently enforce contracts and punish contract breakers. In this way he will gradually expand his power to the civil law. This development of legislation would be greatly accelerated if Robinson would also propose to the people a constitution. He could explain that people need protection from the state and especially from its inherently expansionary bureaucracy. However, in practice the constitution would limit Robinson’s power where it would be difficult to use it anyway. At the same time, it would legitimize his power of legislation. Robinson could now legitimately start making laws instead of just arbitrating and punishing.


The Great Statist Fiction

Raising direct taxes is always unpopular. With the power of legislation Robinson can now offer many monopoly and cartel privileges to the businessmen who can then pay even more taxes and give bigger loans to Robinson. Consumer prices would rise but Robinson could then tax the businesses a bit more and give subsidies to the poor. Most of the poor would probably not even understand that they would in effect only receive part of the money back that was robbed from them through cartel prices. In this way Robinson would gain the support of both the big businessmen and the lower classes.

But what about the middle classes? Increasing taxes and regulations would hit them most. However, opposition to cartels could be decreased by claiming that dog-eat-dog free economic competition must be regulated with cartels for the benefit of all. Opposition to taxes could be further decreased in two ways: First, give the middle classes tax deductions and loopholes. Second, create an illusion by taking money from person’s one pocket and then give most of the money back to his another pocket in both cash and free services. Naturally the state and Robinson himself would take a cut. If churches, schools and the mass media would glorify these “free” subsidies and government services many people might be so confused by the complex tax system that they would be grateful to the Robinson state for their own expropriation. And even if some individuals would realize that they are loosing more money to the state than receiving in subsidies they would usually also then be clever enough to rectify the situation by utilizing regulations and demanding subsidies. Everybody would try get more from the state than they are giving to it.  This creates an illusion of the state as the great benefactor as Frederic Bastiat noted a long time ago:


Government is the great fiction through which everybody endeavors to live at the expense of everybody else.


In addition to economic “protection” Robinson could also offer psychological “protection”. For example, the state could protect citizens from various forms of “discrimination” and “hate speech”. This would greatly increase Robinson’s power since both can protection be defined in an open-ended manner. People seldom get everything they want from voluntary interactions so they can easily feel discriminated both economically and socially. Soon people would turn to the state not only in economic activities but also in all social activities. There would soon be no limit to the power of the Robinson state. People would genuinely accept the state as absolutely necessary. How else could dangerous competition and pervasive discrimination be stopped?

During this lengthy step-by-step process Robinson’s state has achieved not only monopoly of arbitration but also taxation and legislation. Robinson is now an absolute monarch. The basic structure of his police state does not differ from the earlier slave state. Both have a ruling elite that manipulates the people to accept their own expropriation and enslavement. The cycle is complete. Robinson is again an absolutist ruler with total monopoly on arbitration.



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Robinson has managed to destroy internal competition emanating from the aristocracy and the people but there is still external competition from other states. Previously they did not present a big threat because it was difficult to sail between the islands. However, economic progress has made it easier to build bigger and better ships and travel between the islands. Furthermore, creating a false consciousness for Robinson’s subjects is not enough because people do not live by air alone. Robinson has to offer money and cartel privileges to various interest groups. Robinson would also occasionally have to go to war against other states. However, that further increases taxation and regulation. This makes many people vote with their feet (or rather with boats) and move to other states nearby. This creates a huge threat to Robinson. First, he starts loosing taxpayers and especially productive businesses and investments. Second, the opposition led by Friday can easily gain bases of operations from where it can criticize Robinson’s rule and even prepare for a rebellion and invade together with a foreign army.

During the first cycle the competitition between the aristocrats was dangerous for the cartel because it was relatively easy for people to vote with their feet by moving to the neighboring domains. Now voting with feet is more difficult because the other states are relatively far and have different cultures and languages. However, now that the Robinson state has a monetary economy and a capital market, the biggest threat is that the businessmen and especially their capital might emigrate.

In order to save his rule Robinson has no other choice but to decrease taxation, cartellization, censorship and other interventionist measures to the level of the neighboring states. This weakens Robinson’s rule because it makes it more difficult to go to war or buy support from special interest groups. It also easily starts the race to freedom with the neighboring island states because they all try to lure tax payers with tax breaks, business friendly economic zones and relatively free speech.

Decreasing interventions and increasing liberty would benefit practically everybody in the long run. Even the state could benefit because lower taxes and regulations could increase production so much that in absolute terms the state revenue could actually increase. However, the benefits of liberalization are not only long-term but also diffused while the costs are concentrated. Free competition would wreck havoc to all those who are dependent on business cartels. Special interest groups would become furious and try to topple Robinson. They would join with the opposition led by Friday whose hatred of Robinson would now be supported by big money. Soon Robinson could face a violent rebellion. He has to buy more support by extending suffrage. More and more people can now try to get cartels and subsidies through the parliament. Since it is the most intelligent special interest groups who are best at this they benefit the most and their opposition to the king decreases.



But democratization does not solve the problem of foreign competition. However, there is a solution: Band together into a cartel of states and create an Economic Union. Remove tariffs within the union and agree to taxation and regulation floors which will be gradually increased. In this way the states do not have to be afraid that their subjects and businessmen vote with their feet. Instead they can together increase taxes, regulations and censorship so that soon they will again rule a police state. This is like returning to serfdom but in a more smarter indirect way.

An economic cartel is very useful for the states but now they again have to face the fact that all cartels have a tendency to break-up from internal and external competition. First, it is in the interest of each state to cheat, i.e. raise taxes and regulations slower than the others. This can also be done by not enforcing certain regulations and giving other secret advantages to corporations. Second, there is outside competition from those states that do not belong to the Economic Union. The more the union increases interventionism the more people and capital escape to the states outside the union.

Also the most productive states of the Economic Union start thinking that they might be better off outside the union. First there is an attempt to stop secession but soon some state manages to secede. This makes the economic union even weaker and there is talk of ending the union altogether.

Internal competition and secessions can be eliminated by turning the economic union into a political union and external competition can be eliminated by expanding the union. However, neither the rulers inside or outside the economic union are likely to give up their political independence. When the economic union is about to break up Robinson decides to act first. He presents a political domino theory. He explains that domestic terrorists led by Friday are in cahoots with foreign enemies. There must be pre-emptive strikes against foreign enemies who are plotting to attack the Robinson state. Soon Robinson plays the states in the economic union against each other and gradually invades them all with his powerful military. The cartel of states is now turned into a military empire led by his Imperial Highness Robinson The Great.

Now that competition from the closest neighboring states has been eliminated Robinson can relatively safely increase taxes, regulations and censorship. At the same time he starts a cult of Robinson where he is revered as a God. All must submit their property and lives to the Robinson God. Naturally Robinson promises the people that he will protect them from the exploitation of businessmen and bureaucrats. Robinson also offers the people free bread and circuses. During famines and economic depressions Robinson pins the blame on some minister and executes him publicly. In this way Robinson can make the majority of the population accept his rule.

The problem is that the expenses of the empire are enormous. Everybody and especially powerful special interest groups want money and favors from Robinson but he is reluctant to increase taxation too much because that could turn the masses against him. At first Robinson starts loaning money from the bankers. Then when he has problems repaying they propose him a plan. First, sell monopolies, cartels and tax farming to the highest bidder. Businessmen would be happy to pay since imperial might would guarantee their profits. Second, start minting money and make it legal tender in all the empire. Then gradually debase the coinage. When people start complaining then explain that only the state can manage money and alleviate its shortage. In this way Robinson could easily pay interest on his debts and loan even more.

Robinson solved the problem of a economic and political cartel with a political monopoly but there is still internal and external competition.  Internal competition consists now of provinces and their aristocratic rulers. They still have a desire for independence. Keeping them in submission requires a huge military and therefore increase in taxes, monopolies, cartels and money debasement. This means that gradually the far-away provinces will have ever greater incentive to rebel and secede.

The rulers of the provinces could easily gain the support of the people for a rebellion and then recreate their own state where the taxes and regulations would be a bit lower than in the Robinson empire. Robinson cannot accept this because it would again start the race for relative freedom and eventually many provinces might secede. So Robinson must tighten his police state which further alienates the people and especially the provinces.  Aggressive demand must be increased to keep up with the increasingly resistant supply. This is why empires turn more and more into warfare-police states.

Another source of internal competition comes from the imperial court where many dream of assassinating Robinson and gaining power. Some of them would even promise de facto independence for a few provinces if they would help to topple Robinson. The only thing Robinson could do to maintain his power is to announce that he is a God. Criticizing him is blasphemy punishable by death. All people who approach him must crawl on the floor.

Soon there will also be external competition because while Robinson’s empire gobbles neighboring states one by one at some point there comes a state which is allied with an another empire. This leads to a face-off where the empires draw their borders or spheres of influence. However, even if this foreign empire first wants peace it will present a great problem for Robinson. Now again his subjects and especially businessmen can vote with their feet. Also Friday will come out of hiding and create a safe base for the opposition in the foreign empire.


Break-up of the empire creates an economic miracle

At some point Friday manages to manipulate the foreign empire to attack Robinson empire. At the same time a few provinces start a rebellion to support the attack. Robinson manages to stop the attack and the rebellions but with great cost. Facing both internal and external threats Robinson has no other choice but to increase taxes and regulations. This starts a ratchet effect. Every time there is war, rebellion or economic depression Robinson must either increase taxes or take out more loans and debase his currency even more. After the crisis is over taxes, bebts and regulations can be decreased but they will stay higher than they were before the crisis. After this process has been repeated a few times the economy goes into a deep depression. The debasement of the currency would further accelerate the destruction of the economy. Robinson would have to either let the empire to disintegrate or institute price controls. However, the price controls would totally destroy the economy and soon his empire would disintegrate even more.

At some point Robinson would realize that he is fighting a loosing battle. He would gather as much money as possible to his original island and let the empire disintegrate in a relatively orderly manner. In this way he at least could still be a king of his original island.

The international political structure is now highly decentralized and there are now many states competing for trade. Even the states themselves are relatively decentralized and so aristocratic landowners and towns can compete for investments and businessmen. The race to relative freedom is now so strong that it creates a relatively free international market that starts an economic miracle. First time in the history of the world per capita investments start to increase exponentially. Finally it is possible to escape from the Malthusian trap.


Money machine stops the race to freedom

By now Robinson has figured out the cycle of the state. Since states need to eliminate competition there is first an economic union and then an empire. However, the elimination of economic competition damages the economy and increases rebellions which in the end disintegrate the empire. Then the cycle of state will start again.

Robinson is now only a king but he got taste of the ultimate power. He decides that this time he will beat the cycle of state by becoming emperor of the whole world. Since Robinson now understands the Paradox of imperialism the task is much easier. Those states which are relatively freest have the the strongest economy and thus the military and navy to invade other states and steal their resources and taxpayers. Robinson will now make his island a free port with relatively small taxes. Soon it becomes a center of international trade and business is booming. This time Robinson will not use his tax revenues to build a standing army but instead a great navy. This will further improve trade by eliminating piracy and creating trading stations all over the world.

With his finances in fairly good order Robinson will launch the second part of his master plan. He brings together his aristocratic supporters and an international consortium of bankers and with them draws an ingenious plan for a money machine, i.e. fractional reserve banking. Together they create central bank led bank cartel which creates new money in a hidden manner. The new money dilutes the purchasing power of all the people. In effect it is a hidden tax. Naturally the profits are shared among the owners of the central bank. Even more importantly it props up state credit and so Robinson can get more and bigger loans which are also a hidden tax.

In this way Robinson can easily exploit the whole population. However, there is a catch. Creating money out of nothing makes the whole banking system not only like a house of cards but also creates a boom-bust business cycle. If you create too much money then the whole house of cards can collapse. The trick is to keep the economy relatively free and healthy while parasitically drawing from it only what it can take. For Robinson this is easy because he learned the art of milking the victim while enslaving Robinson long time ago.

With the support of the money machine and its owners Robinson can now better finance his wars. However, he expands his empire only step by step because he understands not only the dangers of imperial overreach but also that in the long run he will always have the advantage with his better credit rating. In this way Robinson can create the biggest empire the world has even seen.


Currency competition restarts the race to freedom

Even with his new empire Robinson still faces both internal and external competition. …….

The money machine requires the cooperation of the leaders of both aristocracy and businessmen. Therefore Robinson must share power with them through a constitutional monarchy. Together with the bankers Robinson makes sure that the media never attacks the money machine. In order to maintain the support of the people Robinson gradually extends the franchise. …………

Explain U$Srael ……….


World currency stops the race to freedom




The error cycle

Voluntary exchange creates a virtuous cycle and expropriation creates an exploitation cycle. With the law of aggressive demand and resistive supply it is now easier to study these cycles. First, these cycles can intersect. The exploitation cycle tries to parasitically draw income from the virtuous cycle only if aggressive demand is relatively high compared to resistive supply. We saw this when Robinson turned Friday into his slave. Robinson probably benefited from this exploitation more than he would have benefited from free exchange. Robinson could even claim that slavery made Friday work more than he would have worked otherwise. The economy was not badly damaged and freedom even returned right after Friday had bought his freedom back. Also the culture might have improved once Friday realized the value of freedom and that Robinson is just a liar and an exploiter. Now Friday would be determined to defend his freedom.

With the emergence of new arrivals and a larger society the situation became very different. Now the judicial monopoly started a process where it was easy to brainwash people into a false consciousness where exploitation was good and free market evil. This created a society where most of the people either cheered or were passive every time when the state made an violent intervention to the free market. This intervention was partially the result of envy but also an intellectual error of interventionism. This error created an error cycle where again and again there was an attempt to “correct” the free market with further interventions such as price controls but which then led to unseen consequences which led to another attempts to intervention. Normally these increasing attempts would soon have destroyed the whole economy but almost each time the situation was saved not only by people and businessmen finding ways around regulations and other exploitation but also by the victims threatening to vote with their feet. But the error cycle continues because the belief in interventionism makes the state to attempt to try other interventions ad infinitum. At the same time the error cycle grows the state through the ratchet effect.

The error cycle creates various subcycles. First, the belief in the state itself creates a cycle of rulers where the members of the ruling elite compete with each other. Second, the competition between states creates a cycle of the state where those states with the smallest ratchet effect become hegemonic.


Politics of aristocracy, monarchy and democracy
There are many alternative ways to organise the decision-making process of the state. On the one hand there can be a different number of ultimate decision makers from one (absolute monarchy) to all (unlimited democracy). On the other hand, the power of these ultimate decision makers can be either permanent (hereditary monarchy) or periodic (indirect democracy).

The study of monarchism and democracy has been commonplace among political scientists. However, only a few have interpreted the state as an inherently aggressive organisation and even fewer have studied the effect of economic and social capital on political processes. It was Hans-Hermann Hoppe who inspired by Erik von Kuehnelt-Leddihn developed the economics of monarchy. (Perhaps praxeologically more descriptive term would be political science of monarchy.)

Hoppe has a positive view of aristocracy if it is based on private land ownership. Aristocratic landowners could create private covenants with tenants and thus create a propertarian society. Unfortunately, aristocrats have often instead tried to monopolize arbitration and cartellize production. This made it easy for monarchs to gain the support of people against the aristocrats and monopolize arbitration into their own hands.

Hoppe pointed out that in a hereditary monarchy the king owns the state apparatus and therefore tries to maximize both his present income and the capital value of the state apparatus. In effect, monarchist statism is based on private slavery. However, this also means that there still does exists a tendency towards civilisation and freedom just like when Friday was the private slave of Robinson. Unfortunately, this tendency is not strong enough since understandably people are easily confused. The people want to extend their political rights. They want to replace monarchy not with private arbitration and propertarianism but with unlimited democracy. This is a tragic mistake. Nobody owns the state apparatus and therefore there is no incentive to maintain its capital value. Democratic statism is based on public slavery. It creates an inexorable tendency towards decivilisation and an Orwellian-Huxleyan police-warfare state.

In Hoppe’s analysis the natural state of man is propertarianism but low intelligence and/or high time preference makes it descend into ever more interventionist statism through aristocracy, monarchy and finally into unlimited democracy that will destroy civilisation. Only secessionism and Swiss-style decentralisation can save civilisation.


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Political history
The exact definition of political science has not only been blurred by its close connection with praxeology and economics but also with history and sociology. From the praxeological perspective history studies what people’s goals, means and their relationships were in the past. Sociology studies what they are now or will be in the future if certain assumptions hold. In short, they try to scientifically answer the questions what has happened in the past (history) and what is happening or will happen under certain conditions (sociology). To scientifically answer these questions, history and sociology must gather and utilize all the relevant natural and social sciences, including especially political science.

Since the history of human race is largely the history of interventionism, history is mostly based on political history. However, political history and political science are two different fields of study. Political history is a subbranch of history. It utilizes political science to interpret political ideas and interactions in the same way economic history utilizes economic science. However, political science is totally independent of political history in the same way as economic science is independent of economic history. Both political and economic science could be studied even if there never had been any actual interaction. Unlike economic and political history, economic and political science are axiomatic and deductive offshoots of praxelogy.


Political science is based on praxeological categories and laws of action in the same way as economic science. However, economics studies both solitary action and voluntary interaction whereas politics studies only involuntary interaction. Political action always involves threatened or actual property violation, i.e. aggression. Whereas economic science is based on peaceful propertarianism and Robinson Crusoe economics, political science is based on aggressive interventionism and Robinson and Friday politics.

The law of marginal utility makes it possible to study the process of aggression in detail. Ceteris paribus the more victim is exploited the more he will resist. Ceteris paribus the more resistance there is the less aggression there will be. The law of supply and demand works also in politics but in a different manner. The law of supply and demand should in political science be called the law of aggression (“demand”) and resistance (“supply”).

Aggression starts with an attack, evolves into war and ends either in a repeal of the attack or expropriation of the victim. If exploitation becomes permanent the victim becomes a slave. People can also be first duped and then coerced into slavery by monopolizing arbitration with then creates the institution of the state. All these forms of aggression can be studied with the politics of war, slavery and statism. Unless there is a natural elite that defends propertarianism, market economy will descend into ever greater statism through aristocracy, monarchy and unlimited democracy that will destroy society unless secessionism and propertarianism breaks up the ever-bigger welfare-warfare police states.

Liberty is a positive-sum system while statism is a negative-sum system. When there is freedom there is no statism. When statism is increasing then freedom is decreasing and vice versa. When Friday arrived on the island there was freedom but then Robinson attacked and made Friday his slave. This political aggression monopoly started the first phase of statism cycle called private slavery but ended when Friday bought his freedom and started to defend himself. The statism cycle started to rise again when Robinson enslaved Friday and the new arrivals with his military state. This second phase of the statism cycle is called the militarist phase. However, during this phase Robinson needed allies and created a cartel of aggressors which contained its own seeds of destruction because the aggressors started to turn against each other. This started the race to freedom when people voted with their feet and moved to the domains of the relatively more liberty-minded aggressors. There were many attempts to stop or hinder the race to freedom: serfdom, the Great Fiction, economic union, imperialism and the world state.

History is a battle between liberty and political cartel until finally we have a world state which would make the escape as impossible as it was from the Robinson island. Only in the beginning and in the end can there be absolute aggression monopoly. The history between is merely the history of the rise and fall of political cartels.

Political science plays a key mediating role in interdisciplinary studies of society. Whereas praxeology forms the foundation of political science it in turn serves as the foundation for much of history and sociology. Political science is a very useful science in understanding society as a whole. However, this is only so because aggression and its institutionalisation i.e. states have always been widely accepted. Without such acceptance political science would not hold such a dominating position in social sciences.

In a free society political science would only help in understanding erratic criminal behavior. Perhaps sometime in the future political science will be as relevant to scientific understanding of society as the study of criminology is today. However, this is possible only if the idea of propertarianism becomes widespread.

But if propertarianism is natural and based on common sense why then throughout history its rivals, communism and interventionism have had more appeal for the people? The answer is simple: propertarian society requires high time-preference, intelligence and self-discipline. Qualities that are easily eroded by age-old sins of  laziness, stupidity, greed and jealousy.

A pure propertarian society can come to being only if people have enough intellectual capacity and a good character. In the end it is all about biology and ideas. They are the two fundamental aspects of all cultures.

It is biology that provides the intellectual framework inside of which culture ultimately decides the fate of societies. And it is ultimately ideas that in the long run decide the direction of the culture.




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