The United States: A Hayekian Solution

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What do you do with a state — a highly centralized and militarized state — that has unconstrained hegemonic ambitions and is a proven threat to its citizens and other nations around the world? This is a question that has vexed liberally minded thinkers for centuries. In particular, much to the sadness of any real American, it is a question that many people at home and around the world are asking about the United States, especially since the election revealed explosive political divisions inside the country.

After all, the US has aspired to be the sole superpower, the arbiter of who does and does not have weapons and under what conditions. Its militaristic campaigns are not abating but spreading, and under pretenses that range from thin to false. We live in a country where slightly-less-than-half is bitterly opposed to the slightly-more-than-half who currently control the levers of power and are determined to use them in ways that are designed to teach the minority and the rest of the world a thing or two about American power.

No short-term solution seems possible but at some point in the future, something will have to be done to restrain the problem. The goal should not be so much punitive as preventative. What to do? Let’s turn to history. An analogous situation confronted the world after the end of the Second World War, in an issue that came to be called the German Problem. The problem was how to deal with a nation that had, in its history, contributed so brilliantly to science, art, literature, and world prosperity, but which was burdened by a very troubled political history that had made it a threat to peace.

The problem stemmed from a conviction that it was not the particular regime as such, or even the individuals who were running the show, but that the structure of the German state attracted dangerous individuals. The existence of a highly centralized and heavily militarized government, lording over a country of people who see themselves as somehow set apart and superior to other peoples in the world, is itself an occasion of sin.

Now, in some people’s view at the time, the proper path was nothing short of destruction. The Morgenthau Plan of 1944 envisioned a country utterly crushed and ruined, under the continuing military dictatorship of the Allied powers with a controlled economy, a taxing authority dedicated to looting the country and smashing all institutions, and universal forced labor. We might imagine that this is a rough approximation of what some extremist Islamic elements might dream would happen to the US. It is a ghastly idea, obviously incompatible with human rights.

The liberals of the time, however, had a different idea. F.A. Hayek dealt very deftly and humanely with the subject in an introduction to a 1946 book entitled The German Question, by Wilhelm Ropke (the author himself had his book banned by the Nazis and found refuge in Geneva, along with Ludwig von Mises). In Hayek’s view, it was best to find a solution that would lead to the safety of the German people and the safety of the world, and one compatible with human rights and the good of all nations.

His plan was return Germany to her true self before the centralization and aggrandizement of the state that began with Otto von Bismarck and saw its fulfillment in the rise of Hitler. He sought to reclaim the proper heritage of Germany as “a decentralised and truly federal structure” along the lines of what existed from the middle ages through the middle of the 19th century. He sought to restore the Germany before the second German Reich as a way to prevent a fourth from emerging.

Hayek had in mind a system not of force or poverty, but one compatible with the classical liberal spirit: people in their own historic community governing themselves. Let Hayek speak:

Decentralisation need neither mean a Germany partitioned by the victors, which in the course of time would almost certainly produce a new wave of virulent nationalism, nor a Germany condemned to lasting poverty; it would, on the contrary, make it easier to give the Germans a chance to regain economic standards which in a centrally-organised Germany would appear as a threat to her neighbours. Instead of building up a central German administration, the Allies should tell the Germans…their only but certain path to independence is through developing representative governments in the individual German states, which will be freed from Allied control as they succeed in establishing stable democratic institutions. This process would have to be gradual, with the Allies retaining in the end no more control over the individual state than corresponds to the minimum powers of a federal government.

And yet it is not enough to merely restore these historic institutions:

To be successful such a policy would need to be supplemented by the enforcement of complete free trade, external and internal, for all these German states. This not only would be necessary to prevent those deleterious economic effects which the opponents of decentralisation fear, but it would also constitute the most effective economic control, which would make it impossible for Germany to become again dangerous without preventing her from regaining prosperity. Under free trade Germany could never achieve that degree of industrial and agricultural self-sufficiency on which her economic war-potential rested; she would be driven to a high degree of specialization in the fields where she could make the greatest contribution to the prosperity of the world, and at the same time become dependent for her own prosperity on the continued exchange with other countries. There would, in fact, be hardly any other economic controls required, while this one essential control is also the only kind of control which could not be secretly evaded.

Try to appreciate the genius of this insight. Then and today, it is generally assumed that prosperity goes together with centralization and consolidated government. Hayek was arguing that, despite appearances, the opposite is more likely true. Many entities trading with each other create a kind of peaceful dependency so that autarky is no longer possible. Each region would depend on the other for its well-being and yet no central state would gain power to dominate others. Also, there would be no political pressure for protectionism or attempted national self-sufficiency — this was a main demand of Hitler — because such a thing would be obviously unviable.

Hayek saw that trade plus decentralized government was the best system for Germans and for the world. Such a plan was the best means to promote German prosperity and human rights in a way that was compatible with peace. Of course his plan fell on deaf ears. This was a generation of planners who, despite their professed anti-Hitler policies, had great affection for the idea of large states and planned economies. The notion of turning Germany into a model and ideal of the old liberal system was just not something that they were willing to consider. Instead, Germany was put through yet another rough peace, partitioned, half put under totalitarian tyranny and the other half made into a centralized welfare state albeit with enough economic liberty to produce a “Germany miracle.” It took another 40 years before some of these bad choices righted themselves.

As for the US today, we see very similar pressures toward militarism, protectionism, and a kind of national belligerence that regards all nations of the world as naturally destined to live under the civilian administrators of the master people. Americans are burying their heads in the sand on this point, but the rest of the world is mighty alarmed, especially after a presidential election that has netted bombs on Fallujah and a proposal to put an advocate of torture as head of the US Justice Department.

We need a Hayekian solution to the US. We need small states trading with each other. How many? It really doesn’t matter so long as one is not overly large geographically or in terms of population. It could be 10 states or 100. At some point, the number of political units created would have to be left to the people themselves, to be decided by local plebiscite. After all, at that point, all political alliances between units would have to be voluntary and clearly dissolvable.

Moving the US from a unitary state to a region of a large number of small and independent states would permit prosperity to continue developing without fueling the expansion of an imperial central state. This would eliminate the temptation toward any kind of national self-sufficiency and remove nationalism from being a motive of public policy. It is a solution that is compatible with US history; in purely political terms, we arguably had such a system before 1860, before our own Bismarck embarked on the great experiment of consolidation and central planning.

This solution is particularly compelling in light of the deep political divide in the US. A system that has a bitter and resentful 51% ruling over a bitter and resentful 49% is one that risks blowing up in ways we cannot entirely predict. The idea of breaking up the United States might sound radical, but it is, in fact, an entirely reasonable proposal that would be best for Americans and best for the world. It is a solution that is compatible with the oldest American values, which are about freedom, not imposition, division, and war.

Llewellyn H. Rockwell, Jr. [send him mail] is president of the Ludwig von Mises Institute in Auburn, Alabama, editor of, and author of Speaking of Liberty.

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