Anarcho-Capitalism and Radical Decentralization

Those who wish to portray Ludwig von Mises as the “moderate” one, compared to the more radical Murray Rothbard, will often point out that Mises was no “anarchist.”

This assertion, however, runs into trouble when we consider Mises’s comments in Liberalism on the topic of radical decentralization:

The right of self-determination in regard to the question of membership in a state thus means: whenever the inhabitants of a particular territory, whether it be a single village, a whole district, or a series of adjacent districts, make it known, by a freely conducted plebiscite, that they no longer wish to remain united to the state to which they belong at the time, but wish either to form an independent state or to attach themselves to some other state, their wishes are to be respected and complied with. This is the only feasible and effective way of preventing revolutions and civil and international wars.

To call this right of self-determination the “right of self-determination of nations” is to misunderstand it. It is not the right of self-determination of a delimited national unit, but the right of the inhabitants of every territory to decide on the state to which they wish to belong…

However, the right of self-determination of which we speak is not the right of self-determination of nations, but rather the right of self-determination of the inhabitants of every territory large enough to form an independent administrative unit. If it were in any way possible to grant this right of self-determination to every individual person, it would have to be done. This is impracticable only because of compelling technical considerations, which make it necessary that a region be governed as a single administrative unit and that the right of self-determination be restricted to the will of the majority of the inhabitants of areas large enough to count as territorial units in the administration of the country.

“But, wait” the anti-anarchists will say. “Mises says it’s impractical for every person to have total self-determination.

To this observation, the answer can only be “so what?” In the selection above, Mises clearly states that he agrees with the theoretical case for secession down the individual level. He merely states that there are certain practical considerations that make its application in the real world unlikely.

And who could disagree with him? Of course there are practical limitations on the ability of each and every person to be a — to use Mises’s term — “national unit” unto himself. Indeed, it’s hard to imagine that most human beings would even want to be stand-alone national units. It’s far more likely that even laissez-faire minded persons — provided practical options for exit always remain an option — would seek the convenience of life within a city, association, confederation, or league managed by some group of elected or appointed persons. These organizations would be charged with keeping the peace and promoting commerce by maintaining reliable and predictable laws governing the use and protection of private property.

Moreover, its difficult to see how Murray Rothbard would have disagreed with this assessment. After all, any student of history and human nature, which Rothbard indeed was, recognizes that people have always grouped themselves together for social reasons and to take advantage of economies of scale in defense and economic production.

The question for anarchists has always been not whether or not individual human beings can exist as nations unto themselves, but whether it is possible to create a society in which a person would have numerous practical options from which to freely choose. That is, can we create a situation in which persons choose their political regimes in a truly voluntary way?

We Need More States

For this reason, the practical answer to any current lack of choice (i.e., lack of “self-determination”) lies not in the immediate abolition of all states (as no one has ever convincingly described how this might be done) but in the breaking down of existing states into smaller and smaller states.

This can be done in a de jure fashion, such as through formal secession movements, or it might be done through de facto secession through nullification and insistence on localized autonomy.

What Mises describes above refers to formal votes and declarations of independence, but the same effects, in practice, can be obtained through the methods of local nullification and separation as suggested by Hans-Hermann Hoppe here. And, of course, de facto secession, for practical reasons may often be preferable.

The claim is often made by some doctrinaire and impractical anarchists that secession is a bad thing because it “creates a new state.” This is a rather simplistic view, however, given the realities of geography on planet earth. Unless one is forming a new state completely in international waters or in Antarctica or outer space, the creation of any new state will have to come at the expense of some existing state. Thus, the creation of a new state, in say, Sardinia, would come at the expense of the existing state known as “Italy.” Deprived by secession of tax revenues and the military advantages of territory, the state that loses territory would be necessarily weakened.

In addition to weakening states, the advantage from the perspective of the individual, then, is that he or she now has two states to choose from where only one existed before. The individual now has more options from which to choose a place to live that best suits his or her personal lifestyle, ideology, religion, ethnic group, and more.

With each additional successful act of secession, the choices from which each person has to choose grow larger and larger:

Note that in this case, when the number of states is one, a person has no other choices at all. The number of actual choices equals zero, since a monopoly exists. That is, a single global state is the most powerful state possible and a fully-formed state in the strictest sense. It has a complete and total monopoly of force over its population, since its citizens cannot escape the state even if they emigrate. There is nowhere that they can emigrate to.

On the other hand, a world composed of hundreds, thousands, or even tens of thousands of states (or regimes of varying types) would offer many, many choices to residents who might wish to change their living situation.

Moreover, the smaller states become, the more practical relocation options become. This is due to the fact that proximity and distance does matter, and a state that can only be escaped by emigrating 1,000 miles is considerably different from a state than can be escaped by emigrating 50 miles.

The realities of time and distance and travel mean that emigration to distant locales will limit one’s ability to share time and resources with family, friends, and loved ones left behind. Emigration to a location within a half-day’s drive requires far fewer lifestyle changes.

This is part of the reason that states prefer to be larger than smaller. Large states can make emigration impractical for people who wish to stay close to friends and family.

Similarly, if emigration requires adaptation into a radically different culture and language, this will further limit the practicality of emigration for those who are not fluently multilingual. Thus, states have benefited considerably from the fact that many states enjoy monopolies (which they reinforce) on linguistic areas. For example, if one only speaks only Swedish, one has a big incentive to stay in Sweden, and if one only speaks Greek, one is pretty much stuck in Greece. Even in the case of English, which is seen as being spoken internationally, it’s significant that 80 percent of native English speakers live under a single state — the United States. The implications of this for potential emigrants are evident.

Many of these limitations to human choice can be reduced and overcome by even limited success in breaking down state monopolies in cultural and linguistic areas.

For example, if the United States were broken into two pieces at the Mississippi River, this would immediately provide an additional choice to potential American emigrants seeking to live under a separate regime. And, it would allow them to move to a new political jurisdiction where the language and culture are extremely similar. Naturally, these choices would multiply the more the US were broken down into smaller pieces.

(As it is presently, continued residency in the United States can hardly be offered as proof of one “voluntarily” choosing to live under the American regime. Given the size and scope of the US, the real personal cost of emigration is incredibly high.)

The same can be said of breaking other countries into smaller pieces as well. If Mexico, for instance, were broken down into “North Mexico” and “South Mexico,” Mexicans would have two choices of regimes under which to live without leaving the part of the world that could be designated, culturally speaking, as “Mexico.”

Ralph Raico expands on the role and importance of culturally similar but politically diverse areas here.

Therefore, if we imagine a world described by Mises, in which self-determination is marked by a dynamic and locally-based system of choice and secession among political regimes, we gain what is fundamentally a system marked more by choice than by monopoly — unlike the current system of large states.

Choices Are Limited, Even in a Stateless World

Now, some anarchists may object even to this by claiming that one must be provided with an unlimited number of societies and governments to choose from. But if one were provided with unlimited choice in governments to live under, it would be the first time in the history of the world that anyone attained the possibility of unlimited choice in anything.

In the real world, choices are always limited, whether by physical realities, time, or by the willingness of others to voluntarily do business. One does not have the ability to choose a “perfect” hamburger restaurant at exactly the price point one desires, even in a totally free market. Although entrepreneurs have provided an immense variety of hamburgers to choose from, one can only pick from the available choices. “Unlimited freedom” (in the sense of being able to do whatever one wants wherever one wants) can not exist.

The same is true in choosing among political regimes under which to live. Even if one had the ability to create one’s own personal state, one would still be limited by the realities of scarcity. The issues inherent in such an autarkic endeavor, including problems of economies of scale, the division of labor, and the issue of enforcing contracts, are the reason that most people would simply elect to embrace membership in some type of state or civil government, preferably after considering a number of possible options.

(See here for more on the difference between a “state” and a civil government.)

It is indeed true in any realistic scenario that certain types of regimes would remain unavailable, or at least unavailable at a price desirable to most of the population. But this would be true even in a totally unhampered market for regimes. This is true for the same reason that by the mid-1980s it was nearly impossible to rent a movie on Betamax at the local video store. Resources tend to flow toward products and services that enjoy the most widespread demand. This is not a market failure, but simply entrepreneurs attempting to make the most of scarce resources.

So, just as Mises suggested, there will always be some practical limitations to attaining the so-called model of “perfect” anarchy. But, in a situation such as Mises’s scenario — in which the option of exit always exists — the stakes involved in joining any particular political grouping would be much lower. In a voluntary situation such as this, taxes become “fees” since payment is effectively voluntary. And they are voluntary even in cases where a person cannot find a jurisdiction that aligns with his desires perfectly. When a consumer chooses a product or service that most closely aligns with his desires, we still consider the purchase voluntary, even if he could not find a product that perfectly reflected his imagined ideal.

The Problem of Defense

Anyone familiar with the work of Mises knows that he was not naive about foreign policy. Mises also understood that — contrary to the often-repeated claim that centralized and “strong” states are the most powerful in terms of diplomacy — the most liberal and decentralized states often commanded the most economic power, and thus the most political power in the international sphere. This in itself is a reason to liberalize and decentralize regimes in pursuit of more effective self-defense.

As an illustration of the nuance of Mises’s views on this matter, we find that built into Mises’s view of self-determination and secession is his recognition that some of these secessionist and independent regions may wish to, as Mises put it, “attach themselves to some other state.”

Why would a state want to attach itself to another state? Well, advantages can come with membership in existing and powerful political associations. There are advantages in terms of military defense and also in terms of trade if trade is facilitated by means of customs unions or other guarantees of free trade within states.

The United States as originally envisioned — as a customs union and a confederation for military defense — was created for this purpose, with a specific eye toward attracting new territories for voluntary membership. Indeed, prior to the 1860s, the US was a very weak state in which political and military power was heavily decentralized down to its member jurisdictions.

It is likely that Mises was aware of this example as well as the fact that Europe itself contained several historical examples of membership-based regimes that existed to provide services of defense and legal administration.

Membership-Based “States”

The most notable example of this is the Hanseatic league — a trade federation of sorts — which international-relations scholar Hendrik Spruyt describes as “an interesting case because it suggests an alternative logic of organization to that of the sovereign state.” As a membership-based organization, the League “could raise an army, decree laws, engage in social regulation, and collect revenue.”

Unlike a state, however, the League — composed of commercial and urban centers across northern Europe — could not compel membership (although it could expel members), nor did it have a capital city or a direct relationship with the taxpayers of the member jurisdictions. Member cities and towns, each of which had one vote, met on occasion to vote on policies and goals for the League.

As described by Spruyt, cities and towns would pursue membership in the League to take advantages of the League’s services in providing defense from foreign states and from pirates. Membership also allowed easier trade with other League members and with cities outside the League that the league’s agents had opened to trade through diplomatic means.

In short, the League offered the services of a state without exercising a monopoly over the internal governance of member jurisdictions. Those issues that did not warrant league-wide involvement were addressed at the regional or purely local level.

Obviously, in a scenario like this, there are real advantages to membership since the cost of dealing with meddling foreign states and pirates and can be rather high. Cities that had greater need of these services were more active members, while more marginally attached cities were less involved. The complexity, fluidity, and voluntary nature of membership in the league emphasizes its ability to allow localized self-determination while nevertheless providing the benefits of defense and facilitation of trade.

Although it was not the only organization of its kind, the Hanseatic league was among the most influential and successful. Like other city-leagues, Spuyt notes, the league had no “clear hierarchical authority and formal territorial borders.”

Additionally, the League was often successful militarily, and in this regard was able to compete with the more traditional monopolistic states that surrounded it. It survived from the 13th century to the 17th century, outlasting many competing regimes.

Nor was the Henseatic League alone in this type of political regime. Spruyt continues:

the “burghers formed these leagues with the explicit purpose of defending towns against the encroachment by the nobility. Militarily they promised each other mutual aid against the common enemy… they assessed troop contingents which each town had to provide…Juridically, the leagues defended the towns’ rights of self-governance…There were a considerable number of such leagues.

The Swabian-Rhenisch League proved in 1385 that such leagues could muster considerable military might. The league consisted of about 89 towns and could field an army of 10,000.”

The city-leagues did not invent the concept of mutual defense, of course. The idea is as old as politics, although with the triumph of pro-state ideologies by the turn of the 19th century, these voluntary mutual-defense non-states such as the city-leagues disappeared. Nevertheless, the concept of mutual defense, as employed by the city-leagues, persists to this day, precisely because it works.

The Defining Characteristic of Anarchism and Radical Decentralization is Choice

Even in a world where one could choose freely among providers of legal and defense services (i.e., a marketplace for civil government) there would not be an unlimited number of choices. What makes markets preferable to states, however, is that they are voluntary, dynamic, flexible, and constantly seeking to provide desirable services in exchange for the freely-given cooperation from the consumers.

This sort of voluntary society can be facilitated and expanded through the use of free association and secession as envisioned by Mises, or through the type of local nullification and civil disobedience as envisioned by Hoppe. In either case, conflict resolution shifts away from state coercion and toward negotiation, compromise, arbitration, and consensus. While even these methods can still result in violence when they fail, they are preferable to the state model of governance in which coercive violence is assumed, legitimized, and frequently used.

Those regimes that offer more freedom, more respect for private property, and more self-determination, will also be those that are most economically successful. But fundamentally, the power of states can only ultimately be controlled by human beings adopting ideologies that question the prerogatives and legitimacy of monopolistic states. In the absence of these ideologies, no organizational structure, no document, and no historical event can by itself create the conditions necessary for the successful exercise of self-determination.

Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.

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