After a few
years of studying Austrian economics, one question continues to
puzzle us: why would anyone who understands free markets still believe
the state is necessary? Free markets require that each person be
secure in his person and property, a condition that can never be
attained under a state.
It is often
argued that a constitution is the appropriate means for restraining
will be familiar with arguments that the federal state became unconstitutional
with the New Deal, or in 1913, or during the Civil War, or perhaps
the Louisiana Purchase or the War of 1812.
constitution does not in any way restrain the state. Empirical evidence,
including American and Soviet history, shows this clearly. Logically,
if a constitution exists to limit state power, this means it aims
to limit the power of those officials, bureaucrats and others within
the state. Therefore, it is in the self-interest of everyone in
the state to simply ignore constitutional limits in order to enhance
their own power.
The state is
always operated by individual human beings with their own private
self-interests to consider. Any constitution is, as President
George W. Bush said, "Just a [blasphemous expletive] piece
of paper" with no power at all to enforce the rules written
into it, as Bush himself worked so hard to prove.
If the constitution
does not restrain the state, perhaps the people restrain it through
voting. However, there is little evidence of this. To sell themselves
to voters, politicians promise benefits to voters during the election
campaign. They must then make a show of trying to provide these
benefits using the state, thereby enhancing the spending and activity
of the state.
The only way
voting could begin to restrain the state would be if a majority
of voters were dedicated to liberty above any other political issue.
Even then, the politician need only give lip service to liberty
at election time. Once in office, he will do as he chooses. Even
if a vigilant libertarian populace then votes him out at the next
election, he will have had time to do a little looting while he
wielded state powers, perhaps enough to secure a comfortable retirement.
Those who believe
the state should be nothing but a "night watchman" will
have nothing to do while in power, and so have little reason to
seek power in the first place, unless it is an attempt to shrink
the state. If they do seek and gain office, they will be tempted
by a host of potential bribes to wield their power on behalf of
special interests, usually in ways that involve increased state
spending and power. They must be principled enough to resist this.
voting is only a check on the growth of the state if 1) a majority
of voters care more about liberty than any other issue, and 2) a
majority of elected politicians are also dedicated to liberty, and
are morally strong enough to resist the many rewards available if
they will simply abuse their power.
Even if attained,
such a system would still not be a reliable protector of liberty.
It depends on an “ever-vigilant-ever-libertarian” majority of voters.
A simple shift in majority opinion would allow the state to grow
again. Popular sentiment helped Andrew Jackson abolish the Bank
of the United States, but the central bank later returned as the
Federal Reserve. Since there are always many people who desire to
use power for their own benefit, they would constantly push to change
public opinion about the proper role of government, to influence
politicians, and to promote politicians that will serve their interests.
and elected government have both failed to keep states within the
modest bounds of protecting life and property. If there is a state
anywhere in the world that limits itself solely to these functions,
we would be surprised to learn of it.
has written about how monarchical government was actually much more
limited than democratic government. The king saw the country as
the private property of himself and his descendants, and often thought
in terms of generational dynasties. It was not in his interest to
squander all of his country's resources, since he would be passing
them on to his heirs. The democratic politician, on the other hand,
can dispose of the nation's resources immediately but cannot pass
his control of them to his grandchildren. This encourages tremendous
waste and profligate spending by the elected politician, whose time
in power is limited.
does not protect liberty. The king and nobility have special legal
privileges, including taxation and the use of force, simply because
they were born into the "right" families. We can hardly
fault our ancestors for fighting bloody revolutions to abolish this
not, democracies and republics do not, constitutions do not. By
definition, military dictatorship does not protect liberty. Neither
do fascism, socialism or communism, obviously, in which the state
owns or controls all property. (If the reader needs an argument
against these, we recommend the “Search” button at mises.org.)
A state claims
a monopoly on the use of force in its territory. Who, then, can
protect the other people in that territory against state aggression?
No one, to the extent the state has successfully imposed its “rule
of law.” The state, heavily armed and ruling defenseless people,
is perpetually tempted to use aggression to enforce its will, rather
than limit itself to merely responding to offenses against individuals
A state uses
this monopoly to finance itself through coercive taxation. As long
as people are forced to fund the state, the state is free to do
anything it chooses. Taxpayers cannot stop funding the state if
they object to its actions, as they would with a private business,
charity, or other voluntary organization. Once the state has established
its power to tax, it can continue increasing taxes. The only check
on its actions is the population's desire and ability to resist,
but again, no one is permitted to defend himself or anyone else
against state aggression. Even violent revolution always leads to
another, often more tyrannical, state.
The only system
that seems possibly capable of securing every individual's person
and property is one in which every individual is free to choose
among competing providers of protection, in a free market. The competing
providers must not be territorial monopolists, but must be at peace
with the fact that there are other security providers in the area.
They must be willing to settle disputes between their customers
in a peaceful manner.
is already found in the private security market, where many companies
operate in the same territorial area but do not get into violent
conflicts with each other. They are hired only for defensive purposes,
to protect person and property. They are the true "night watchman,"
a term that itself seems to imply a private security guard rather
than a state law enforcer.
can choose among providers, the providers have every incentive to
provide better protection at a lower cost, to beat the competition.
They have no incentive to carry out aggressive actions that will
raise their costs, damage their reputation among customers and potential
customers, and get them into dangerous and expensive conflict with
other security agencies. In the event of a rogue, aggressive firm,
the other, peaceful security firms would have every incentive to
protect their clients and even share costs by banding together against
with security offered by multiple private firms, would provide the
incentives to keep the peace (lower cost, higher profits) and the
checks and balances necessary to restrict the power of any one firm
(consumers can choose to withdraw funding and seek protection from
other firms; firms can fight back against aggressors).
presence of numerous private security companies in today's market,
we observe no tendency for these companies to get into any sort
of conflict with each other, violent or otherwise. Each company
wants to appear efficient and professional to attract customers.
They do not tend towards becoming roving bands of thugs in the streets.
We also observe
no tendency toward territorial monopoly in the private security
industry. A single customer, such as a large office building, may
have multiple security suppliers: one to provide security officers,
another to install and maintain video surveillance, a third to install
and maintain a keycard access system, a fourth to monitor burglar
alarms, etc. These different, specialized firms must collaborate
in the service of their common client. Different companies within
the office building might have their own, additional security providers,
who would at times interact with building security. While states
compete violently with other states for territory, private security
firms compete peacefully for customers. They may even operate on
the same physical territory.
A society built
on a free market in protection could last indefinitely, invulnerable
to the problems that eventually destroy all states. There would
be no apparatus of aggression to build empires (doomed to overextend
and collapse, and potentially bring foreign retaliation), enforce
arbitrary laws and regulations (hampering the market, inhibiting
innovation, reducing living standards, attacking civil liberties),
or cause the boom-and-bust business cycle through its central bank
and legal tender monopolies.
might still wish to wield power, but there would be no coercive
institutions for such people to manipulate, no politicians to bribe,
no legislative authority. Nor could anyone push the costs of their
actions onto others through taxation. Law would be established through
an ongoing process of security contracts and private arbitration,
all of it centered on protecting customers and their property against
A free market
in security is the only way to arrive at a situation where person
and property are protected, without the ever-present threat of the
state itself becoming aggressive against people or property. (This
is usually not a threat, but an ongoing condition.) The freedom
to defend one's person and property against aggression, and by extension
to choose one's own protectors to assist with that defense, is the
one and only condition that can bring about an enduring free society.