Chapter I. The laws of action.
Chapter II. The laws of interaction.
1. Judicial monopoly
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 exploited and milked 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. It is not only the numbers but also that among them some might have higher resistance to exploitation. Robinson cannot rely on simple lies and brute force anymore. He must convince most of the new arrivals to give up their right to agree upon an arbitrator in conflicts. Robinson must convince them to accept him as a the ultimate/monopoly judge in all disputes, i.e. a judicial monopoly where Robinson can nominate judges and revise their judgments as the supreme judge.
In other words, Robinson must convince 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 lie that Fire God himself made him the king of the island. In awe of his fire weapons and with the acceptance of the idea of a state many of the arrivals accept Robinson as their monopoly judge. The state is born.
The definition of a State assumed here is rather uncontroversial: A State is an agency which possesses the exclusive monopoly of ultimate decision-making and conflict arbitration within a given territory. In particular, a State can insist that all conflicts involving itself be adjudicated by itself or its agents. Implied in the power to exclude all others from acting as ultimate judge, as the second defining element of a State, is its power to tax: to unilaterally determine the price justice seekers must pay to the State for its services as the monopolistic provider of law and order.
Certainly, based on this definition it is easy to understand why there might be a desire to establish a State. It is not, as we are told in kindergarten, in order to attain the “common good” or because there would be no order without a State, but for a reason far more selfish and base. For he who is a monopolist of final arbitration within a given territory can make and create laws in his own favor rather than recognize and apply existing law; and he who can legislate can also tax and thus enrich himself at the expense of others. …
Assume a group of people, aware of the possibility of conflicts between them. Someone then proposes, as a solution to this human problem, that he (or someone) be made the ultimate arbiter in any such case of conflict, including those conflicts in which he is involved. Is this is a deal that you would accept? I am confident that he will be considered either a joker or mentally unstable. Yet this is precisely what all statists propose. (Hans-Hermann Hoppe. The Great Fiction. pp. 104, 8.)
2. Ruling elite
In a propertarian free market a single private businessman can function alone by serving consumers. If he is a good entrepreneur he is good at guessing what people want and knows how to satisfy them. For an aggressor things are different. It is difficult to attack people alone because the victims usually resist and try to stop the aggression. This is why lonely aggressors have to be good political entrepreneurs. They usually prefer to make hit-and-run attacks in disguise or just steal in the dead of the night. In this way they can have a long aggressive career. However, the state cannot be created in secret. It must be done openly and thus the aggressor faces serious resistance.
Soon Robinson realizes that lying and the threat of aggression is not enough. He cannot cow many people for long even with his weapons. Neither will his lies help him for long once people realize the full implications of a state. Friday and others would point out that by accepting a judicial monopoly people would essentially become slaves of the state and its leader Robinson. Friday would explain the absurdity of judicial monopoly by pointing out that as the leader of the state Robinson would in effect also judge the cases brought against himself.
During his slavery Friday had learned the essence of politics and now he would warn all others that politics is the antidote to economic activity and life itself by parasitically restricting the economic activity of appropriation, production and contracting. People understand this almost instinctually and therefore it is extremely difficult to make people accept exploitation except through obfuscation and aggression. The state was not only born out of aggression but it is aggression. Friday would warn the arrivals that the cruel and greedy Robinson and his allies would never voluntarily give up their power but rather increase it.
Robinson realizes that he cannot run the state alone. He must create a political firm with many employees. Just like a business firm also political firm can increase its income by recruiting and organizing employees. But who to recruit and how to organize them? Robinson realizes that in order to subjugate the people he needs a small army of soldiers and officers. He also realizes that the officers must be recruited from the natural elite.
In each human group there is always a voluntary hierarchy and on the top are the most respected individuals. In natural order the members of the natural elite lead by example and are rewarded with economic and social benefits. For example, a member of the natural elite can function as an educator, arbitrator, leading businessman and a military leader. However, the competition between the members of natural elite for leadership positions can turn into conflicts where lies, fraud and violence are used. It is these renegades who Robinson must recruit to his side in order to create an efficient ruling elite.
After allying with these renegades Robinson creates a hierarchical mini-army and gives them weapons. To ensure their loyalty he promises them loot. Together Robinson and his new allies crush all who defy the state. Friday must flee for his life and go into hiding. Now there is a ruling elite composed of Robinson and his most trusted allies. In effect Robinson has created a militarist state with himself as the military dictator or more precisely, the leader of a political firm.
Thus a ruling elite requires two things: Defectors from the natural elite who have a relatively strong desire to become aggressors and victims who have relatively low resistance to aggression and exploitation. Only with bad genes and bad culture is a ruling elite possible.
3. State territory
Robinson has now created a ruling elite and subjugated the people. However, not all aggressive members of the natural elite have joined forces with Robinson state. This is because in practice the quantity of the loot is fixed. There is only so much to rob. The renegade members of the natural elite know their value and demand significant part of the loot. The more allies Robinson takes from the natural elite the less power and loot there is left from himself. Political firm faces scarcity and coordination problems just like a business firm. Both have find an optimal number of employees and especially leading employees. However, this problem is greater for a political firm because the leading employees might try to aggressively take over the political firm or even destroy it by turning against aggression itself. Therefore Robinson is reluctant to ally with many renegades of the natural elite especially since he realizes how power hungry they are. This easily leads to the situation that some of the renegades feel left out and try to also create a state of their own.
Therefore it is not surprising that some members of the natural elite in the northern mountainous part of the island have also proclaimed themselves as the leaders of the island state. Now there are two political firms, i.e. states competing with each other in exploiting people. Competition between business firms is plus sum since they try to increase wealth but competition between political firms is zero-sum since it involves robbing wealth. Since the quantity of the loot is relatively fixed there is always a fundamental conflict of interest between different aggressors. There can be only one judicial monopoly in a given territory because otherwise competition in exploitation would lead to a tragedy of commons and thus to over-exploitation.
The competition between aggressors is eliminative. However, war between aggressors is dangerous and both sides are hesitant to start an all-out war. Therefore it is often in the interest of the aggressors to divide the land by creating territorial judicial monopolies, i.e. states which have no overlapping jurisdictions. Robinson agrees to draw borders with the mountain state. Now both states can in peace exploit their own subjects.
The number of states is dependent on both geographic barriers and the level of economic development. In primitive economies it is difficult to control large areas of land and thus the development of the states starts from multitude of states each competing with each other for power. This external competition is the biggest threat to the state because other states have the motive and the resources to attack and conquer the state. If one of the states is much weaker then it probably will conquered unless it is a buffer state between two more powerful states. There always exists a cold war between the states. It is therefore imperative to continually gather military intelligence and occasionally test the power of the other state. This is why there are often border skirmishes between different states. Robinson fears the raids from the mountain state but he also realizes that he does not have enough resources to control the mountainous parts of the island. So he creates border fences and has to accept the other state for now.
Since there is always a threat of invasion it is imperative to have a navy and army that will protect the borders of the state. Naturally at the same time Robinson has to socialize many lands including the border area, coast, rivers and some roads and castles. Only then can the physical integrity of the state be guaranteed. There can be no absolute property rights because that would create free landowners who could create free societies where people could resist the state. Thus the state itself always requires that at least part of the land will be directly socialized and all remaining land is only provisionally private. Statism is socialism.
4. Class justice
The political firm can live forever just like a business firm. Both have an organization and income source that sustains the firm. However, the business firm will have to stop operations and disband if it cannot serve the consumers. Political firm does not have to serve because it can just keep on robbing the consumers and live parasitically. However, the leaders of the political firm are usually smart enough to be political entrepreneurs. They soon realize that it is important not to kill the goose that lays the golden eggs. In fact, it is even better if the goose grows in size so that it can lay even bigger golden eggs. It is this desire to increase exploitation income that makes the political firm to limit short-term exploitation in order to increase long-term exploitation.
Now more secure in its military rule the Robinson state starts to maximize its income by controlling and exploiting the ruled in a more organized fashion. No more can the state soldiers pillage, kill, steal and rape those who oppose the state. The state creates its own courts where state judges will decide over conflicts not only with the state but also between the subjects themselves. If there are already private courts with private arbitrators they will be subordinated to the public courts. The state sheriffs and police will enforce the decisions of the courts. The state becomes more separate from the ruling elite and its leader. Even if he dies the state will continue to function and serve the ruling elite which chooses someone else to lead the state.
By organizing state courts the state creates the illusion of justice but it still does not change the fact that state law, i.e. public law surpasses the private law created by private arbitration. The public judges and police will have immunity even when they allow aggressions. The agents of the state are now legally superior to the subjects. The enforcers of the state became a ruling class that is protected by class justice. In practice the subjects of the state become slaves under the jurisdiction of the state. This fact is not changed by the excuse that the state is supposedly just upholding “law and order”. The state might not always use its power to the full extent but it still has the power of life and death over its subjects. The core machinery of the state is now complete.
Praxeologically there are three ways a state can exploit its subjects. Autistic, binary and triangular. Autistic exploitation takes place when the subject’s control over his own body is restricted. For example, he can be conscripted and killed in a war. Binary exploitation takes place when the state steals from its subjects with taxation. Triangular exploitation takes place when the state regulates interaction by giving privileges to certain individuals and groups by either forcing or forbidding voluntary interaction. For example, the state grants monopoly and cartel privileges to its favorite allies and supporters.
… restricts the subject’s use of his property when exchange is not involved. This may be called an autistic intervention, for any specific command directly involves only the subject himself. Secondly, the intervener may enforce a coerced exchange between the individual subject and himself, or a coerced “gift” to himself from the subject. Thirdly, the invader may either compel or prohibit an exchange between a pair of subjects. The former may be called a binary intervention, since a hegemonic relation is established between two people (the intervener and the subject); the latter may be called a triangular intervention, since a hegemonic relation is created between the invader and a pair of exchangers or would-be exchangers.
The market, complex though it may be, consists of a series of exchanges between pairs of individuals. However extensive the interventions, then, they may be resolved into unit impacts on either individual subjects or pairs of individual subjects. All these types of intervention, of course, are subdivisions of the hegemonic relation—the relation of command and obedience—as contrasted with the contractual relation of voluntary mutual benefit. (Murray Rothbard. Power and Market. p. 12-13)
Political entrepreneurs soon realize that there is more resistance to autistic intervention than to binary and especially to triangular intervention. They also realize that binary and triangular intervention brings more profits. This is why there is a gradual move from slavery to taxation and cartels.
It would quite easy for Robinson to start increasing his monopoly arbitration fees, i.e. taxation. He would 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 internal and external protection of citizens is expensive. Now there would be no upper limit to taxation because Robinson could always claim that upholding justice and security has become more expensive.
Taxation income allows the state to expand its state machinery. The army, courts, police and administration is expanded and the enforcers of the state will be offered ever higher wages. Periodically auctioning monopoly and cartel privileges would also increase exploitation profits and gain the support of the cartellistic Big Business. Society is divided into layers of rulers and ruled. In the top are the tax-eaters and in the bottom tax-payers.
The necessary result, then, of the unequal fiscal action of the government is to divide the community into two great classes: one consisting of those who, in reality, pay the taxes and, of course, bear exclusively the burden of supporting the government; and the other, of those who are the recipients of their proceeds through disbursements, and who are, in fact, supported by the government; or, in fewer words, to divide it into tax-payers and tax-consumers.
But the effect of this is to place them in antagonistic relations in reference to the fiscal action of the government—and the entire course of policy therewith connected. For the greater the taxes and disbursements, the greater the gain of the one and the loss of the other, and vice versa. . . . The effect, then, of every increase is to enrich and strengthen the one, and impoverish and weaken the other. (John C. Calhoun, Disquisition on Government, pp. 16–18.)
In the free market there are many business firms which all compete in serving the consumers. The consumers are on the top and the business firms are in the bottom trying to satisfy the consumers. Whenever a firm fails in this its income is decreased and it has to start pay less to its employees who soon move to other business firms. Eventually the inefficient firms are dissolved and replaced by other more efficient firms. This creates an inverted pyramid where the masses of consumers are on the top and much fewer business firms are at the bottom.
In the political market the situation is the reverse. There are a few statist pyramids where the ruling elite is on top and below are its soldiers, judges, clergy, Big Business and other important supporters. Together they create the ruling class. Below them are the great number of ruled. The power pyramid of the state stays the same even when the king turns into a president, aristocrats into bankers and clergy into Big Media. The individual exploiters change but the exploitation machinery, i.e. state always stays as long as there is a monopoly of arbitration. The history of all hitherto existing society is the history of class struggle.
5. Class consciousness
The ruling class is united in exploitation. This creates a class consciousness. The exploiters see themselves as superior beings who have the right to rule and manipulate the society. The rulers see themselves as masters who have to keep the people subjugated. The subjects become ants who really have no human worth. The ruling elite develops a master ethics that destroys their belief in just universe. They become militarists who believe that might is right.
Faced with aggression an individual is not only scared of his health and life but feels horror at the injustice of aggression. He cannot understand why an another individual would violate the universal rule of reason and justice. He feels alienated from orderly just universe. Depending on his psychological structure the victim either freezes in horror or starts to defend himself.
Alienation is further increased with statist aggression and class justice because it has larger social acceptance. It is not anymore an individual aggressor but a large group of aggressors out to enslave you. This undermines even more the victims belief in natural order and humanity. It makes him doubt reason and rationalism thereby undermining his sense of orientation and self-worth.
The victim starts to believe that universe is an evil place where only might is right. Consequently he starts to steel himself not only against continuous statist aggressions but also in order to start aggressing himself whenever there is a chance to get away from it. This kills his humanity and gradually turns him into a hyena-like person.
It is in the nature of hyenas to band together. The exploited want to oppose their exploitation. Other things being equal, increase in exploitation increases resistance and tends to create a class consciousness. Depending on the biological and cultural qualities of the ruled there starts to develop a passive or active class consciousness. This can lead to rebellions where alienated subjects can create very violent rebellions. This is very dangerous to the ruling class because the ruled are the great majority who could easily crush the state and its elite. This fact was lucidly noted already in 1577 by Etienne de la Boetie in his Discourse on Voluntary Servitude (Discours de la Servitude Volontaire):
Shall we call subjection to such a leader cowardice? … If a hundred, if a thousand endure the caprice of a single man, should we not rather say that they lack not the courage but the desire to rise against him, and that such an attitude indicates indifference rather than cowardice? When not a hundred, not a thousand men, but a hundred provinces, a thousand cities, a million men, refuse to assail a single man from whom the kindest treatment received is the infliction of serfdom and slavery, what shall we call that? Is it cowardice? …
When a thousand, a million men, a thousand cities, fail to protect themselves against the domination of one man, this cannot be called cowardly, for cowardice does not sink to such a depth. . . . What monstrous vice, then, is this which does not even deserve to be called cowardice, a vice for which no term can be found vile enough . . . ?11 …
Resolve to serve no more, and you are at once freed. I do not ask that you place hands upon the tyrant to topple him over, but simply that you support him no longer; then you will behold him, like a great Colossus whose pedestal has been pulled away, fall of his own weight and break in pieces.16
6. False consciousness
Since the ruling class wants to maximize its income the state functions like a firm but in reverse. A propertarian firm operates on the market and can only gain income by selling products and services. State is an interventionist firm that does not have to give anything but can just exploit the people. It is in the interest of the state firm to make exploitation ever more pervasive and institutionalized. However, exploitation is always risky because of the possibility of passive or active resistance. Thus there is the need for political entrepreneurship where exploitation is increased in ways that create as little opposition as possible. In this way the exploitation profits can be maximized.
As a leader of the territorial state it would be imperative for Robinson to totally demonize Friday and all those who would refuse to accept a monopoly judge. To this end Robinson would try to ally himself with intellectual, religious, economic and social leaders. He would need them to legitimize the state. Soon the existence of the state would become official dogma preached by the intellectuals, churches, schools and the media.
Especially the support of the churches would be important because they could make opposition to the state a sin. The church would teach the people that the state and its first servant and prophet, Robinson is supported by the almighty God himself. If some priests resisted and accused Robinson of blasphemy then he could create his own church and label the priests schismatics and heretics. By controlling propaganda through churches, schools and media 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.
Since some of the new arrivals would still actively or passively oppose Robinson’s rule he would have to offer an additional justification of his rule. Robinson would develop a liberal excuse by explaining 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 he is that judge because he is a God fearing man who arbitrates fairly. Robinson promises to be like a father to his people. Depending on the genetics and culture at least part of the subjects will believe these arguments or at least become confused enough to decrease their opposition.
It would also be important to get as many intellectual on his side as possible. Therefore he would also try to influence science and especially political science. There are two theories of the origin of the state: Exogenous and endogenous. Exogenous theory sees the development of the state as based on a violent conquest or civil war that results in the violent subjection of one group by another group. The endogenous theory of the state sees the development of the state as based on economic inequalities which help the rich to start ruling over the poor. It is therefore important for Robinson to support the endogenous theory of the state. He could claim that state is inevitable outcome of inequality. And since inequality in strength, psychology and intelligence is a fact of life it follows that a state will always emerge. The only thing we can do is to find good leaders such as Robinson and his allies to rule over others.
With the support of both the church and scientists Robinson can now start to change the language. State is actually contractual and state agents are actually civil servants. Aggression is called public law, jurisdiction slavery is called citizenship, robbery is called taxation and privilege is called regulation. At the same time exploitation is made more predictable. This also decreases the opposition because now the citizens do not have to live in fear of sudden unpredictable aggressions. With the change in the language brainwashing becomes even more easier. However, the political entrepreneurs realize that propaganda and brainwashing is not enough when it clearly conflicts with reality. For example, it is not very convincing to try to excuse robbery by calling it a just income transfer. In addition to the stick and lies it is necessary to use carrots.
It is important to start changing the class consciousness with diveda et impera policies. Part of the opposition is neutralized with bribes, i.e. bread and circuses. However, this usually is not enough for the most intelligent opponents such as high IQ universities, professionals and journalists. They must be bribed with public employment and cartel privileges such as licensing and degree quotas which substantially raise their salaries also in the private sector.
Political entrepreneurs in the ruling class also gradually realize the benefits of monopolies and cartels especially in the field of money. First the state obtains a monopoly of minting which then makes it easy to create fiat labels and debase the money. With the help of Gresham’s law the debased state currency takes over and the people are stuck with currency that is periodically debased further. However, this creates opposition in bankers and businessman. Therefore it is important to bribe the bankers by allowing them to practice fraudulent fractional reserve banking even if it destabilizes the economy by creating the business cycle. The alliance with the highly intelligent and rich bankers secures the power of the ruling elite. Soon the bankers essentially become part of the ruling elite.
Propaganda, bribes, privileges and especially democratization breaks most of the opposition to the state and starts brainwashing subjects into a false consciousness. This is done with a stick and carrot -method. First the ruler claims that resistance is both futile and sinful. This usually breaks the will of the people. Then the rulers claim that the people actually benefit from the protection and care provided by the state. This is why the rulers also give the people bread and circuses.
But offering free subsidies requires raising direct taxes which is always unpopular especially in the middle class. Soon the state realizes that it is better to offer many monopoly and cartel privileges to the businessmen who can then pay even more taxes and give bigger loans to the state. 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 prices, taxes and regulations would hit them visibly. 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. If this excuse would not convince the middle class then 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 become grateful to the Robinson state for their own expropriation.
Propaganda, bribes and privileges usually are not enough to break to opposition of the middle class because they suffer most from exploitation as net tax-payers. Therefore it is imperative to decrease their opposition by giving them an illusion of power through democratization. At the same time the most intelligent of them has now a possibility to gain subsidies and privileges through the political process. This breaks the opposition of the most intelligent subjects of the state.
The basic norm of the state is power. That is, seen from the side of its origin: violence transformed into might. Violence is one of the most powerful forces shaping society, but is not itself a form of social interaction. It must become law in the positive sense of this term, that is, sociologically speaking, it must permit the development of a system of “subjective reciprocity,” and this is only possible through a system of self-imposed restrictions on the use of violence and the assumption of certain obligations in exchange for its arrogated rights; in this way violence is turned into might, and a relationship of domination emerges which is accepted not only by the rulers, but under not too severely oppressive circumstances by their subjects as well, as expressing a “just reciprocity.” (Franz Oppenheimer. System der Soziologie. Vol. II. pp. 322–234)
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 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?
Now most of the exploited see their own exploitation as normal and are even grateful for it. They develop state fetisism where they start to see the state as a benefactor and even a God. The feeling of alienation changes into belief in interventionism and statism. It transforms the subjects psychologically so that they become schizophrenic. On the one hand they are lambs who accept state rule but on the other hand they are still hyenas who try to attack others through the state. The individual becomes an obedient slave to the state. He may still understand that he is being exploited but now he sees the state as his ally and other state subjects as the exploiters. The most intelligent subjects realize that this creates an inexorable conflict but instead of demanding a return to propertarianism they see communism and a stronger state as the only solution. False consciousness is now complete and the greatest threat to the state is removed.
As an exploitative firm, the state must at all times be interested in a low degree of class consciousness among the ruled. The redistribution of property and income—a policy of divide et impera—is the state’s means with which it can create divisiveness among the public and destroy the formation of a unifying class consciousness of the exploited.
Furthermore, the redistribution of state power itself through democratizing the state constitution and opening up every ruling position to everyone and granting everyone the right to participate in the determination of state personnel and policy is a means for reducing the resistance against exploitation as such.
Second, the state is indeed, as Marxists see it, the great center of ideological propaganda and mystification: Exploitation is really freedom; taxes are really voluntary contributions; noncontractual relations are really “conceptually” contractual ones; no one is ruled by anyone but we all rule ourselves; without the state neither law nor security would exist; and the poor would perish, etc. All of this is part of the ideological superstructure designed to legitimize an underlying basis of economic exploitation. (Hans-Hermann Hoppe. Great Fiction. p. 131)
7. Aristocratic anarchy decentralizes
The resistance of the people has now been largely crushed with false consciousness. Robinson’s political entrepreurship has managed to create a highly profitable political firm, a stable state. However, Robinson does not only face resistance from the ruled and the other states but also from his allies, the ruling class. Robinson’s top officers have a mind of their own and want to become even more powerful. Many even dream of becoming military dictators themselves. Robinson’s military council might be powerful enough to take power and even kill Robinson.
In order to stay military dictator Robinson has now to apply the three diveda et impera policies that he used against the people also to his military council: First, create loyalty and false consciousness in his officers with propaganda. Explain that the fate of the nation is in their hands. Only with the leadership of Robinson will there be law and order. Second, bribe them by offering money, land and monopoly privileges. In primitive economy especially land will satisfy the officers and make them grateful to Robinson. Third, play the officers against each other by gradually democratizating the council. Recruit new talent who owe everything to Robinson and are thus more loyal than many old officers.
Despite diveda impera policies Robinson realizes that at some point his subordinates will probably become disloyal. The military officers are simply too powerful to be cowed and manipulated for long. They tend to turn into local warlords who want to become ever more independent. Warlords soon demand that their sons can inherit their land and position. To maintain his power Robinson agrees and the warlords become hereditary aristocratic landowners while at the same time Robinson himself becomes the king. Depending on the power of the aristocrats Robinson would become either an elective or hereditary king.
Now with their own lands the aristocrats repeat the diveda et impera policy in their own lands. In this way they can increase exploitation by maximizing taxes and regulations. After the resistance of the people has been dealt with the next problem is external exploitative competition. First, the aristocrat must maintain his power against other aristocrats who would like to invade his land. This leads to low level border wars and constant bickering between aristocrats which is alleviated with class consciousness and matrimonial alliances. Second, the aristocrats must deal with the king himself. They realize that it might be useful to ally with the people against the king. The aristocrats already have a sort of mini-state so why not become autonomous or even independent? The subjects of the aristocrats would also be happy not to pay extra taxes to a far-away state. The aristocrats and the people would be even more happy if they did not have to take part in Robinson’s statist wars. With the help of their subjects the aristocrats become more independent and start paying less taxes to Robinson.
When the aristocrats become more independent they start to economically compete against each other. The most intelligent aristocrats would try to make their domain prosperous by decreasing exploitation and encouraging barter. Soon aristocratic landlords would start to compete over workers and capital. 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. Money economy would develop and economic growth would greatly increase.
The liberty-minded aristocrats would become ever more powerful and they would gradually be able to stop paying taxes to Robinson. Soon Robinson would have to manage with the income from his own lands. Robinson is now becoming a mere landowner who can only appeal to the loyalty of his vassals. In practice Robinson would become a voluntarist king who would only function as a voluntarily chosen arbitrator in interpersonal conflicts and military leader in defensive wars.
A few liberty minded aristocrats supported by Friday would start spreading the message of freedom to the people. Why should the state meddle in local matters at all? Why not have a voluntarist harmonious society of 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 state and demanding local independence. It is they who tried to break the aggressor cartel and kill the state.
From the perspective of liberty aristocrats are the worst and best. In the beginning they are worst since they submit the local population with military might. Aristocracy is the original statist sin that was born out of the war council 0f the conquistadors or the winners of the civil war. However, in a primitive barter economy the king needs the loyalty of his military officers and vassals but they inevitable tend to become more independent. This is also why aristocracy is the best political organization because it is in the long-term interest of aristocrats to turn into non-aggressive land-owners. It is in their nature to oppose the subjugating central power by appealing to property rights and privatize exploitation. It is the aristocrats who developed the ideology of liberty.
It is virtually inevitable that in a primitive economy the aggression cartel breaks down into independent ministates. It is also inevitable that these ministates start to economically compete with each other and thus create economic growth and a money economy. There is an inevitable tendency toward privatization of exploitation just like when Robinson agreed to sell Friday his freedom. Liberty is natural and thus there is always a tendency toward liberty.
8. Monarchist serfdom centralizes
If there is a natural tendency toward liberty why then does the state exist. Because of greed and envy. Just like Robinson’s greed and envy made him exploit Friday so too the less efficient aristocrats do not sit idly by while some of their neighbors become ever more richer. They especially resent that their most productive workers move to the lands of the more liberty-minded aristocrats. The less competent aristocrats join with the king to stop economic competition. This is now easier since the evolved money economy makes it easier for the king to maintain a bigger army. Together with the economically inefficient aristocrats Robinson ties the people to land and thus to aristocratic landowners. People would not anymore be allowed to vote with their feet and flee economic exploitation. The king would function as a monopoly enforcer in return for an increase in power and especially taxes. He would also enforce outright slavery and further increase his power by auctioning slave trading and tax farming monopolies.
Robinson becomes a hereditary monarch who upholds aristocratic serfdom and a cartel economy. With his bigger army he can also expand his state and even create an empire. However, Robinson is not all-powerful. On the contrary, the aristocrats still rule the land. Even in a money economy it is very difficult for the monarch to become powerful enough to concentrate all power into his own hands. He still needs to create loyality of his vassals with false consciousness. If Robinson becomes too despotic then the aristocrats will unite and overthrow him. In serfdom aristocrats are still the real rulers. This is also why they are tax-exempt and have a monopoly to the highest state offices.
Cartel theory predicts that the more efficient cartel members will try to maximize cartel/exploitation income by breaking the rules. This creates a tendency for the cartel to break down. However, the less efficient cartel members have an incentive to uphold the cartel rules by further centralizing power. This creates an opposite tendency for the cartel to become more monopolistic. It depends on the level of aggressive demand and resistive supply which tendency will win out.
Cartel theory is just an instance of exploitation negotiation. It is exactly the same process which took place when Robinson exploited Friday. Exploitation negotiations always proceed cyclically so that each unit increase in aggressive demand is faced with resistant supply. The exact same thing happens when group of exploiters negotiate with each other to divide the loot and exploitation territory. Each exploiter wants to maximize his exploitation income at the expense of other exploiters. Each exploiter is afraid that the other exploiter becomes so powerful that they will take over his exploitation territory. Thus there is a tendency to cheat and skirt the rules of the group. The cheated ones respond just like they would respond to any aggression by trying to limit supply. However, this time it is done by trying to tighten the rules and centralizing their enforcement.
Serfdom is It was inevitable that the less efficient landowners would ally with the king and try to create serfdom. However, it was not inevitable that they succeed. That depends on the level of false consciousness and material conditions such as geographic barriers. And even if the king manages to create serfdom it is very difficult to uphold because in the long run it is impossible to completely restrict the movement of people.
9. Propertarian towns decentralize
Despite serfdom gradually the most productive people will still vote with their feet. The relatively more liberty-minded aristocrats gradually become richer and more powerful and thus are able to more and skirt the regulations. They might also pay the king to lower the regulations or look at the other way. The aristocrats would also try to become more independent by building ever more and bigger castles. Soon some aristocrats would create relatively free economic zones on their land and so fairs and trading towns would develop. Monopoly economy inevitably breaks down in the face of increasing economic competition.
This competition between landowners is automatic and will tend to again break-up the state and lead to ever increasing freedom. It is again turning aristocrats into a propertarian natural elite with a noblesse oblige. After all, internal competition always threatens to end the aggressor cartel. Freedom is always trying to break out. This is why aristocratic landowners always give birth to economic freedom and thus to towns and international markets.
At some point the towns become so rich that they can even pay their aristocratic overlords to grant them independence with the status of a free city. Now liberty is breaking out with great force since the competition between landowners is further intensified with the competition between towns. An international economy develops and humanity is about the break from the Malthusian trap. Monarchy is now again loosing its power. It is not only the more efficient aristocrats that have become more powerful with the development of the money economy but especially the towns. Robinson is again becoming a voluntarist monarch.
Robinson the king faces not only the resistance from the people, the aristocracy and the towns but there is also political and economic competition from other states. Previously they did not present a big economic threat because it was difficult to travel and make war over long distances. However, economic progress has made it easier to build better roads and ships. Travel has become more safe and cheaper. With the development of the money economy it is also now easier for people to move to the town or another state. Even bigger threat is that the businessmen and especially their capital might emigrate.
Robinson has to offer more and more subsidies and cartel privileges to various interest groups to keep them happy. Robinson would also occasionally have to go to war against other states. However, that further increases taxation and regulation. More and more productive people vote with their feet 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 capital flees to enemy states making them even more powerful. Third, 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. Friday might even invade with the support of a foreign army.
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 starts the race to freedom with the neighboring 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 acute and concentrated. Free competition would wreck havoc to all those who are dependent on business monopolies and 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.
10. Imperialist absolutism centralizes
Robinson is in a tight spot. He is bleeding capital to other states while facing a rebellion both from the people and from the ruling class. But Robinson has a solution. He makes an alliance with the higher middle class by expanding the parliament with a second lower chamber. The higher chamber includes aristocrats and the clergy while the lower chamber includes the merchants and the leading peasants. This opens the door for legislation. Previously the state could only influence the law in individual cases but now the state starts to make laws with legislation. Robinson could now legitimately start making laws instead of just arbitrating and punishing.
In effect, Robinson opens the doors of the ruling class to the richest and most intelligent of the middle class. Robinson especially allies with the big merchants and big merchants in the towns. He simply offers to limit economic competition in return for taxes and loans. Soon the deal would also include tariffs and other restrictions on trade. Robinson and Big Business would create a cartel economy. This is essentially a return to serfdom but on a higher economic level.
This alliance with merchants also 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. He gradually becomes an absolutist monarch who now largely controls all the land with his ability to legislate cartels. The competition between towns is now eliminated so that they cannot create their own ministates and threaten Robinson’s power.
Now the state would use all “problems” and “crisis” as justification for legislation. This would make the state grow fastest during economic depression and other real, imaginary or manufactured emergencies and crises such as wars, drug wars, war against terrorism, environmental and virus crises, etc. because it acquires extraordinary emergency powers. After the worst emergency only part of the emergency powers or the machinery to enforce them is given up. In other words, the state contracts but hardly ever to the same level as before the crises. This is called the Ratchet effect. Thus emergencies tend to help the state to grow into an ever bigger state.
Absolutism does not automatically solve the problem of foreign competition. Other kings also make an alliance with the middle class and become more powerful militarily. Competition between states only increases. Robinson has only one alternative. 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 there is 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 even more 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 must loan even more money from the bankers. Then when he has problems repaying they propose him a plan. 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 competition with a political monopoly but there is still some 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 more and more 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 personified. All people who approach him must crawl on the floor. Criticizing Robinson is blasphemy punishable by death.
Internal and external competition has now been reduced but not totally eradicated. 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.
11. Interregnum decentralizes
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 external and internal political competition Robinson has no other choice but to increase taxes and regulations. This increases the 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, debts 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. Especially the debasement of the currency further accelerates the destruction of the economy. Robinson would have to either let the empire to disintegrate or institute price controls. However, the price controls totally destroy the economy and soon the economy of his empire descends into a subsistence level. It is more and more difficult to pay the army and the empire disintegrates 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 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.
12. Monetary imperialism centralizes
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. Since Robinson is now a experienced political entrepreneur he now understands the Paradox of imperialism the task is much easier.
Victory or defeat in interstate warfare depend on many factors, of course, but other things such as population size being the same, in the long run the decisive factor is the relative amount of economic resources at a state’s disposal. In taxing and regulating, states do not contribute to the creation of economic wealth. Instead, they parasitically draw on existing wealth.
However, state governments can influence the amount of existing wealth negatively. Other things being equal, the lower the tax and regulation burden imposed on the domestic economy, the larger the population will tend to grow and the larger the amount of domestically produced wealth on which the state can draw in its conflicts with neighboring competitors. That is, states which tax and regulate their economies comparatively little — liberal states — tend to defeat and expand their territories or their range of hegemonic control at the expense of less-liberal ones. (Hans-Hermann Hoppe. The Paradox of Imperialism.)
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 colonies all over the world.
With his finances in fairly good order Robinson will launch the second part of his master plan. Together with his aristocratic supporters and an international consortium of bankers he draws an ingenious plan for a money machine, i.e. fractional reserve banking. Together they create a central bank led bank cartel which creates new money out of nothing 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.
However, the money machine requires the cooperation of the leaders of both aristocracy, businessmen and intellectuals. Together with the bankers Robinson makes sure that the universities and the media never attack the money machine. Now his money machine safe Robinson can increase democratization and create a constitutional monarchy. This gains Robinson much support but does not really limit his power because he still has his money machine.
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. However, even with his new empire Robinson still faces external competition because the other empires also have created their own money machines. They too try to force other countries to adopt the imperial currency.
In the first step a dominant state (a state, that is, which could crush another militarily and is perceived as capable of doing so, in particular by the dominated government) will use its superior power to enforce a policy of internationally coordinated inflation. Its own central bank sets the pace in the counterfeiting process, and the central banks of dominated states are ordered to inflate along with the dominating state. In practical terms, the dominating state’s paper currency is imposed as a reserve currency on foreign central banks, and they are pressured to use it as a basis for their own inflationary actions. …
The government itself will be satisfied with this solution. For once its own currency is employed as a reserve currency by foreign banks on which they then pyramid their various national paper monies, then it becomes possible for it to engage in an almost costless expropriation of foreign property owners and income producers without having to fear contractive consequences. …
And the general public in the dominated territories, which through arrangement is subject to a double layer of exploitation of foreign states’ elites on top of a national state and elite, is again largely unaware of all this and fails to identify it as one important cause of its own prolonged economic dependency and relative stagnation vis-à-vis the dominant nation. (Hans-Hermann Hoppe. The Great Fiction. pp. 107-108.)
Soon the world is divided only by a few huge empires that exploit their colonies and allies with monetary imperialism. Each empire realizes that if they loose economic competition then their currency could collapse and create a deep economic depression. It is therefore imperative to eliminate currency competition. The world is divided into military and currency blocks and world war is just a matter of time.
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 they can maintain the 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 power cartels have a tendency to break-up from 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 and together with the bankers create a world currency backed up by a global police state. Robinson supports a puppet president but holds all the power. Finally he is the ruler of mankind.
Monetary imperialism can be upheld only by eliminating economic competition. No other country can be allowed to be much more economically successful than the imperial state or its reserve currency and banking system might collapse. This is why the empire state creates economic and political unification (USA, EU) and an hegemonic order (U$Srael) that will create a world currency and a central bank controlled by ruling elite banking dynasties.
All this has taken place during the last few decades. The petrodollar system did save American imperialism in the 70s and 80s but the strong economies of Europe and Asia threatened it. Especially the German Mark was a threat since the dollar was loosing its value compared to the German Mark. Thus the European Union and the euro currency was created to eliminate this threat. Now it was easy to inflate the dollar and euro in tandem.
There is an inexorable drive toward ever bigger hegemonies and ultimately world state. However, more and more interest groups will try to enter into the ruling elite. At some point the world hegemony becomes a democratic world state unless it breaks down before that.
And even if a dominated central bank willingly inflates along with the dominating central bank, other factors (such as a lower level of taxation and regulation, for instance) can still make its currency appreciate against that of the dominant state. …
Thus, in order to assure its dominant position and maximize exploitatively appropriated income, in a second step a dominant state will invariably try to institute an international—and ultimately universal—currency monopolistically controlled and issued either directly by its own central bank or indirectly by an international or world bank dominated by its central bank. …
A new currency with a new name must be created and defined in terms of existing national monies in order not to arouse nationalistic or anti-imperialist sentiments. This new currency must only be somewhat overvalued against the various national monies (which in turn are defined in terms of the new currency) in order to drive all national monies out of circulation (in accordance with Gresham’s law). …
And with a world money and world bank in place, and controlled by the dominant state’s central bank, a decisive step is taken toward reaching its ultimate goal of establishing itself as a full-scale world government, with world-wide control not only over counterfeiting, but also over taxation and legal regulation. (Hans-Hermann Hoppe. The Great Fiction. pp. 110-111.)
13. Secessionism decentralizes
Once the monetary imperialism has reached global rule it has no more competitors. This will increase inflation, taxation, regulations, censorship and other interventionism. The economy will slow down and at the same time business cycle boom-bust will become global. The next depression will be global and completely destroy trust in the government that has already been falling a long time because of alternative media.
False consciousness will be destroyed. This creates a secessionist wave that will break up the monetary imperialism and usher in a global wave of nationalism and decentralism. Depending on the class consciousness of the people the result will be strong militarist states warring with each other and the repeat of the military cycle or peaceful decentralist process that kills the state and creates world peace and prosperity.
The ruling elite is never stable. There is always competition not only from new entrants but also between the members of the ruling elite. However, unlike market competition which tends to decentralize and stabilize the society political competition tends to centralize and destabilize society. This creates an unstable political cycle. Cartel theory explains how political competition creates a political cycle from the rule of the few (oligarchy) to rule of the one (tyranny) to rule of the many (mobocracy) until society disintegrates and reverts to one of the earlier stages. This process is illustrated in the classical theory of anacyclosis where aristocracy turns into monarchy which then turns to democracy that destroys the social order and the cycle starts again.
The classical theory could not explain the process fully because it lacked understanding of the laws of economics and politics. Only by applying these laws it is easy to see how the process unfolds. The first step in the process is the creation of the state by the ruling elite. At this stage the war council usually divides the land among the council members. This creates a landed aristocracy which starts to protect its property rights to land. In the long run this private landownership protects freedom because it allows people to vote with their feet by moving into lands with better landowners. However, those less successful landowners who loose people to more successful landowners usually try to stop the emigration of people with force. They try to institute serfdom with the help of a king. Gradually the cartel of inefficient landowners becomes a cartel of parasitical aristocrats who together with the king convene in a council and decree various laws protecting serfdom. At the same time the king also gains more power over the aristocrats by gradually becoming the ultimate monopoly judge in disputes between the aristocrats. Gradually kings become more powerful and monarchy becomes hereditary.
Aristocratic aggression cartel of serfdom is usually unstable because the more successful aristocrats want to break the cartel. They even encourage the development of towns on their lands. Now even more people want to flee the less successful aristocrats to the towns. The king allies himself with the towns and creates a higher chamber for the aristocrats and a lower chamber of parliament for various representatives of clergy, merchants and eventually even commoners. At the same time he organizes with them various monopolies and cartels which guarantee the king income while at the same time protects the merchants from economic competition. The increase in income makes the king not only more independent of the aristocracy but also more powerful militarily. The support of the merchants and people makes the king an absolutist monarch who now can start military imperialism. However, this leads to over-taxation and over-regulation which at some point breaks down the economy and the empire.
The interregnum gives rise to a decentralized political order and a developed banking economy. This then changes the nature of statist exploitation from slavery and militarism to monetary imperialism. At the same time the parliament will try to increase its power by extending the vote. Gradually the suffrage is extended so that more and more people and interest groups are represented in the parliament. Soon parliament becomes so powerful that a democracy is declared. This makes the government very short-sighted. Democratic governments can usually stay in power only few years so they are in a hurry to grant various subsidies and cartel privileges for their supporters. Even if these politicians understand that the privileges for special interest groups are not good for the nation as a whole they do not care. They have to reward their own supporters because their competitors would do the same. A politician who thinks only about the interests of the nation is soon an ex-politician. It is steal as much as you can or be pushed to the side. Taxes, debt and regulations raise until the people suffer under neo-serfdom and finally the whole society descends into economic depression and civil war.
The political doctrine of anacyclosis (or anakyklosis from Greek: ἀνακύκλωσις) is a cyclical theory of political evolution. The theory of anacyclosis is based upon the Greek typology of constitutional forms of rule by the one, the few, and the many. Anacyclosis states that three basic forms of “benign” government (monarchy, aristocracy, and democracy) are inherently weak and unstable, tending to degenerate rapidly into the three basic forms of “malignant” government (tyranny, oligarchy, and ochlocracy).
According to the doctrine, “benign” governments have the interests of all at heart, whereas “malignant” governments have the interests of a select few at heart. However, all six are considered unworkable because the first three rapidly transform into the latter three due to political corruption.
The idea of anacyclosis influenced theorists of republicanism. Some of them, including Aristotle, Cicero, Machiavelli, Vico and Kant suggested that mixed government might help to stabilize republics and prevent permanent anacyclosis. (Wikipedia)
The ancients realized that there was something profoundly wrong with the politics but they could not find a cure because they believed in the stat. They believed in a state where life was politics and most of the work was done by slaves. Only with the development of stoicism and Christianity was it possible to develop a detailed theory of liberty and the parasitic state.
Militarist to Corpocratic dynasties
Anacyclosis describes the political cycle. However, it is a parasitical cycle that feeds off the linear development of the economy. When the state was born out of civil or territorial war the ruling elite was composed mostly of military officers and economy was a primitive barter economy. The land was divided between the militarist elite which gradually turned into landowning aristocratic dynasties. The competition between landowners encouraged the development of the money economy which made it easier for the king to collect taxes and grant cartel privileges. Just like barter economy allows aristocratic parasitism so money economy allows monarchist parasitism. With the development of the banking economy the situation changes by giving much power to bankers and business leaders. At first the monarch periodically taxes and confiscates money from the banks but gradually bankers propose an alliance with the state if it helps to develop fraudulent fractional reserve banking.
The fraud starts when the state gives money substitutes (usually paper tickets to gold) the support of legal tender laws. At the same time banks are allowed to practice fractional reserve banking provided they buy state bonds. In this way the banks can issue more tickets to gold (and silver) money than they have in their vaults. In other words, the banks create money out of nothing and use part of the profits to buy state bonds thereby also enriching the state. Gradually people get used to paper money and it is relatively easy to suspend specie payments and create a paper currency. Now both the banks and the state have their money machine.
The money machine enables bankers to gradually cartellize the economy and take over Big Business. Economic power concentrates into fewer and fewer hands until only the state and a few globalist mega-corporations control the economy. This process is speeded by the fact that the fractional reserve banking automatically leads to the intensification of inflation and the boom-bust business cycle that creates periodic economic depressions. Economy becomes ever more unstable. However, with the help of their money machine the bankers and their business allies can always better whether depressions. Each depression makes the corpocracy more powerful.
The state alliance with the bankers and Big Business is mutually beneficial. However, the state would benefit more if it just eliminated fractional reserve banking. Then only the state could create money out of nothing. Many politicians realize this and start to lobby for 100% reserves. Now the bankers fear that the state might completely take over the banking system. This is why they start to manipulate not only the media and economics profession but also infiltrate the ruling elite. This is relatively easy since bankers are on average much more intelligent and long-sighted than politicians. Gradually the bankers manage to join the ruling elite and even control it. The members of the ruling elite naturally want to pass their membership to their children. This also includes bankers and thus ruling banking dynasties develop. The composition of the ruling elite has changed from militarists into politicians and finally into bankers. Barter economy was ruled by militarists, money economy by politicians while the banking economy is ruled by the bankers.
14. Two political cycles
Just like economic competition so too political competition has inevitable consequences. However, these are the opposite. Economic competition leads to cooperation and higher production while political competition leads to exploitation and lower production. Economic competition leads first to barter networks, then money economy and finally to banking economy. Economic networks are not directly dependent on geographical boundaries but extend gradually from the local level to national and finally to international and global level. These networks support the development of any voluntary groups but in practice families, tribes, nations, racial and language communities can develop confederacies that create a common defense and culture.
Political networks are parasitic and thus develop in tandem with economic networks by trying to limit them. Unlike economic networks political networks are based on the might of the territorial state. Thus historically the political parasitism develops in four steps: Local, national, international and global. First the less efficient aristocratic landowners try to stop economic competition with serfdom and then with absolutism. Next the absolutist monarch tries to limit international competition with military imperialism and finally with a continental and then world state. However, imperialism destroys the money economy and the empire breaks before world rule. This leads to secessionism and intense competition between ministates that lead to the development of modern banking economy.
The libertarian order could now kill the state but in practice the bankers come to the rescue and ally themselves with the state. Now the state does not have to use brute military imperialism to rob the people because it can parasitically draw wealth from the people with fractional reserve banking. Again there are four steps: Local competition between banks is limited with suspension of specie payments, intra-national competition is limited with a central bank, international with a monetary imperialism and global competition with a world bank.
The first political cycle takes place in a barter-money economy and evolves into military imperialism. The second cycle takes place in a banking economy and evolves into monetary imperialism. The first tries to stop people from voting with their feet and the second from voting with the choice of currency. It is these two parasitic cycles that direct history by trying to limit economic competition with regulations. However, since competition can never be totally eradicated the regulations must be made monopolistic also geographically by expanding the territory of the state. This is the same process that already started when Robinson tried to regulate Friday and had to stop his escape not only by controlling the whole island but also by shackling Friday. The shackles have only been turned into a global police state.