Where is Austro Libertarian?

Political Theory

Governance as a Role vs. the State as an Entity

CJay Engel
October 23, 2019
There is a difference between the role of "governments" and the entity of the "state" which so often quickly monopolizes the governance function.
Political Theory

Governance as a Role vs. the State as an Entity


CJay Engel

October 23, 2019

There is a difference between the role of "governments" and the entity of the "state" which so often quickly monopolizes the governance function.

The Problem

The necessity of an institution which enforces legal property boundaries and punishes criminals that act outside of the parameters of the civil order stems primarily from two facts: First, it stems from the fact that an individual man does not live on this earth alone.  If a man occupied the earth without any other human beings, there would be no possibility of conflict with other humans, and thus, no need for "law and order."  Second, it stems from the fact that the nature of the physical world includes a certain degree of scarcity such that there exists an ever present possibility of the desires of two or more people being mutually exclusive.  That is to say, conflicts occur when one or more persons want to do with a certain scarce resource that which contradicts what the other person wants to do with that very resource.  Two examples will suffice:

1: A man owns a diamond and wants to keep that diamond on display in a case in his house. And at the same time, another man wants that diamond to sell for a great sum of cash to go purchase a boat. There is only one diamond, and mutually exclusive desires for its use. Who gets to decide what will happen to it? If the second man wants the diamond, should he be allowed to walk into the first man's house and help himself to the diamond? Why or why not? If not, what should we think of the second man if he does this anyway?

2: A man has worked hard to grow up a field of sunflowers, some of which he will use for selling sunflower seeds, others he will sell to buyers who want them for decoration.  A second wants to arrive at a certain destination which is on the other side of the sunflower field from where he currently lives.  The straightest distance between his house and his destination is through the field. The first man and the second man disagree on whether the second man should be able to drive his car straight through the field. Who gets to decide which of the two men gets his way?

Such is the nature of the mutually exclusive nature of our world of scarcity.

The Solution

The present essay will not expand at length on the foundations of the solution.  But in short, the solution that this essay assumes is the private property solution.  That is to say, the decision maker in the above two scenarios is the one who owns the property whose use is in dispute.  Under a private property order, the property owner has the legal authority to put his goods to use at any time and in any manner except those manners which contradict the authority held by another individual over his own property.  This includes the fact that the property owner has the right to decide who uses his property and the limits and restrictions on that use.

The libertarian understanding of property takes this idea to its logical conclusion.

This is the basic understanding of the private property order: the property owner is the ultimate decision maker regarding the use of his property.  And any person whose actions contradict the decision of the property owner has committed a crime.  From murder to theft to battery to counterfeit to breach of contract, criminals become criminals for all sorts of reasons. And it is all grounded in their refusal to accept the stipulations of the private property order.

The Second Problem

The above is all well and good. There is a means by which to recognize how to avoid conflict in every real situation: those who own the property get to decide its use, those who act contrarily to that are criminals. But then it must also be observed, as Hoppe points out, that conflict still does exist and we need a means to enforce the rule stated above:

As important as this insight is— that the institution of private property, ultimately grounded in acts of original appropriation, is without alternative given the desideratum of conflict avoidance (peace)— it is not sufficient to establish social order. For even if everyone knows how conflict can be avoided, it is still possible that people simply do not want to avoid conflict, because they expect to benefit from it at the expense of others. 
In fact, as long as mankind is what it is, there will always exist murderers, robbers, thieves, thugs and con artists, i.e., people not acting in accordance with the above-mentioned rules. Hence, every social order, if it is to be successfully maintained, requires institutions and mechanisms designed to keep such rule breakers in check. How to accomplish this task, and by whom?

Hoppe's final question above represents the second problem of the civil order.  And the answer seems obvious to most people: the state accomplishes this task! Hoppe writes:

The standard reply to this question is to say that this task , i.e., the enforcement of law and order, is the first and primary duty— indeed, the raison d’être—of the state. In particular, this is the answer also given by classical liberals such as my own intellectual master, Ludwig von Mises. Whether or not this answer is correct depends on how “state” is defined.

What is the State?

But what Hoppe desires to point out, indeed the whole reason for the present essay, is that this is a fundamental mistake that doesn't take into consideration the distinction between the State, properly defined, and the role of punisher of the criminal.  In other words, the thesis here is that there is a better way to think of the State than as synonymous with the role of civil governance.  Of course, we ought to agree that some institution or mechanism is needed to keep the rule breakers in check, for otherwise the criminal has no incentive to halt his crime and civilization cannot carry on.

Hoppe identifies the mistake of considering the State as synonymous with any other criminal punisher, and thus as necessary for the development of society, as the fatal flaw of the Classical Liberal School.  This mistake is so widespread, in fact, that the brilliant Austrian economist Ludwig von Mises, Classical Liberalism's most ardent defender, has stated:

With human nature as it is, the state is a necessary and indispensable institution. The state is, if properly administered, the foundation of society, of human cooperation and civilization. It is the most beneficial and most useful instrument in the endeavors of man to promote human happiness and welfare. But it is a tool and a means only, not the ultimate goal. It is not God. It is simply compulsion and coercion; it is the police power.

Hoppe's thesis, and the one being presented in this essay, is that this makes a fundamental blunder of assuming that the role currently provided by the State must by necessity be fulfilled by the State.  The problem will become more apparent as we first define the State, and then move on to analyze the role of civil governance.

The role of civil order (assuming the goal of a private property order) enforcer is to act coercively in upholding justice in response to a crime.  As Murray Rothbard has stated

"For it should never be forgotten that a libertarian society does not mean the total absence of coercion but only the absence of coercion against noncriminals. Those who invade the rights of others by violence deserve their proper check and punishment by the force of law."

The State is certainly an institution which is built on and survives by coercive activity.  There are two fundamental aspects of the State which distinguishes it from all other legally upright institutions. First, the State has the self-declared authority to tax its citizens, to take from the wealth of those citizens without their prior consent or agreement.  Second, the State has the self-declared authority to outlaw any potential competitors who want to enter the property order enforcement role. It declares that it alone has the right to provide such services and that any competing institution within the State's declared jurisdiction will be driven, by aggression, out of business.  Thus, the state, in the words of Hoppe, "is the ultimate arbiter in every case of conflict, including those involving itself. It allows no appeal above and beyond itself." These two aspects of the State make it distinct from all other legal institutions.

Moreover, as Martin van Creveld points out in his monumental work on the history and development of the State, the State is not simply to be defined as the means of public order enforcement, but must also be recognized as a corporation, an organization that has a life of its own that exists independent of whomever happens to be in control at any given time.  This makes the modern State especially distinct from the "governments" that have existed since the age of the Greek city-states, to various African mini-kingdoms, and to the feudal order of medieval Europe.  The State is a corporation that has its own set of interests and incentives distinct from those disseminated throughout the society and expressed by way of the market system.  The State is an agency that desires income (via taxation), control over various industries (most notably money and security), and seeks the elimination of its competitors, whether foreign or domestic. The difference between the State and the market, then, lies in the means that it uses to reach its ends.

The State as Solution to the Second Problem

By way of reminder, in seeking a solution to the second problem above, we are seeking a mechanism that will fill the role of criminal punisher, of justice provision, of coercive defender of the private property order.  The problems with the State fulfilling this role can be categorized in two distinct ways: ethics and economics.

Ethically, we have in the State, as defined above, a contradiction in terms.  For if the State is the means by which private property is supposed to be ultimately defended, and yet the State declares, independent of the will of the property owner, what the property owner must pay him or be recipient of violent expropriation, then the private property itself, rather than being defended, is threatened.  As Hoppe notes: "However, a tax-funded life-and-property protection agency is a contradiction in terms: an expropriating property protector."

Moreover, if the State claims unto itself the right to act as the sole provider of its services and actively seeks the elimination of any competitors, then in driving other competitors out of business, here too it contradicts its very intended role.  Any State that allows its citizens to choose another criminal punishment corporation if they desire, that is, any State that does not consider itself as the sole provider of its "services," cannot last as a State any longer than the citizens allow it. And thus, being essentially a voluntary organization, it loses its status as a State; for States are force, not cooperation.  Therefore, a State must, to retain its label, actively seek the eradication of all jurisdictional competitors; and in doing so, it contradicts its role of defender of private property.  For it must violate the private property of its competitor in order to eliminate it.

Economically, all the incentives that the State possesses work against the long-term tendency toward justice, honesty, and stability.  The State, having a monopoly on its services and also having the authority to tax at whatever rate it desires, does not have incentive to "do a good job," eliminate crime, or budget itself wisely.  To do a good job is to eliminate demand for its services, to eliminate crime is to provide itself with a ceiling on its potential request for more power and revenue.  The State also then has incentive to

cause and provoke conflict in order to settle it to [its] own advantage.  That is, if one can only appeal to the state for justice, justice will be perverted in the favor of the state, constitutions and courts notwithstanding.
These constitutions and courts are state constitutions and courts, and whatever limitations on state action they may set or find are invariably determined by agents of the very same institution under consideration. Predictably, the definition of property and protection will be continually altered and the range of jurisdiction expanded to the state’s advantage. The idea of some “given” eternal and immutable law that must be discovered will disappear and be replaced by the idea of law as legislation—as arbitrary, state-made law.

These economic problems are profoundly compounded as the State becomes more "democratic."  This is one aspect of Hoppe's tremendously provoking treatise against Democracy.  Whereas the traditional storyline is that as the Western world became more democratic, it became more free, Hoppe's version is precisely the opposite. Because of the nature of the State, Hoppe teaches, the democratic state actually makes things worse than the inherently minimal states (while still problematic) under the control of kings.  Whereas kings have an economic incentive to take care of their kingdoms and keep them stable so that they might be passed along from generation to generation, democratic leaders have no ownership interests in their "kingdoms," but rather, since they are only "renting" the seat of power, they must get all the use out of the maximum amount of taxes as possible before they are forced to relinquish control.

Moreover, whereas kings vary in their ability to rule, democracies produce a certain class of men and women that become accomplished professionals in the role of "statecraft."  They are power-seeking individuals who become very good at doing very bad, have incentive to lie and deceive in order to get what they want, and "win" by immoral promise-making to the politically well connected and socially favored.  This all has the effect of massively speeding up the decivilization of the society, as Hoppe explains:

Predictably, then, under democratic conditions the tendency of every monopoly of ultimate decision-making to increase the price of justice and to lower its quality and substitute injustice for justice and is not diminished but aggravated. As hereditary monopolist, a king or prince regards the territory and people under his jurisdiction as his personal property and engages in the monopolistic exploitation of his “property.”
Under democracy, monopoly and monopolistic exploitation do not disappear . Rather, what happens with democracy is this: instead of a prince and a nobility who regard the country as their private property, a temporary and interchangeable caretaker is put in monopolistic charge of the country. The caretaker does not own the country, but as long as he is in office he is permitted to use it to his and his protégés’ advantage. He owns its current use—usufruct—but not its capital stock. This does not eliminate exploitation. To the contrary, it makes exploitation less calculating and carried out with little or no regard to the capital stock. Exploitation becomes shortsighted and capital consumption will be systematically promoted.

Hoppe continues with the social and economic problem the public nature of the State:

However, functional privileges and privileged functions exist. Public officials, as long as they act in an official capacity, are governed and protected by public law and occupy thereby a privileged position vis-à-vis persons acting under the mere authority of private law.
In particular, public officials are permitted to finance or subsidize their own activities through taxes. That is, they do not, as every private-law subject must, earn their income through the production and subsequent sale of goods and services to voluntarily buying or not-buying consumers. Rather, as public officials, they are permitted to engage in, and live off, what in private dealings between private-law subjects is considered “theft” and “stolen loot .” Thus, privilege and legal discrimination— and the distinction between rulers and subjects— will not disappear under democracy. To the contrary. Rather than being restricted to princes and nobles, under democracy, privileges will be available to all: everyone can engage in theft and live off stolen loot if only he becomes a public official.
Predictably, then, under democratic conditions the tendency of every monopoly of ultimate decision-making to increase the price of justice and to lower its quality and substitute injustice for justice and is not diminished but aggravated.

The State then, not having ethics and economics on its side, is entirely incapable of fulfilling the role of justice provider.  Instead, the State tends to pursue injustice, it tends to grant to itself a variety of immunities and exemptions, and it tends to pervert justice for its own benefit and toward the accumulation of its own power.  Constitutions, while perhaps helpful in slowing this trend, nonetheless will inevitably be ignored and dismissed as "archaic" and "inapplicable" in a variety of certain situations. We must reject the State as solution to the second problem, on the basis of ethics and economics.

The Solution: Private Law Society Enforced by Free Market Judges

In the place of the State, we advocate a private-law society, which is distinguished from the public and socialized nature of the democratic state.  The democratic state, the state which is allegedly owned by "the people," yet is managed by Professionals, is incapable of maintaining social order in the long run.  Hoppe writes:

If the state, and especially the democratic state, is demonstrably incapable of creating and maintaining social order; if, instead of helping avoid conflict, the state is the source of permanent conflict; and if, rather than assuring legal security and predictability , the state itself continuously generates insecurity and unpredictability through its legislation and replaces constant law with “flexible” and arbitrary whim, then inescapably the question as to the correct—obviously, non-statist— solution to the problem of social order arises.

The private-law society is one in which all individuals are bound by the same law and there is none who is legally allowed to exempt himself. There is no "public property," and every owner of property is the ultimate decision maker over the use and restrictions of his property.  There are no public officials who can for "the public interest," expropriate wealth from the property owner, restrict by force the entrepreneurial activity of the owner in the form of regulations, or create tax-funded bureaucracies, for whatever purpose he has in mind.  No one is allowed to acquire property except by way of original appropriation or voluntary trade; neither is anyone allowed to "prohibit anyone else from using his property in order to enter any line of production he wishes and compete against whomever he pleases." (Hoppe).

Now then, under this model, how will the second problem above be addressed?  Firstly, we must distinguish between two types of services that are, in our current world, blurred together by the establishment of the State: protection and punishment.  Protection entails the actual and active defense of property and the keeping of criminals away from their criminal goals. In short, protection services are an outsourcing of the "man with a rifle on his porch."  Given the market's tendency to promote the utilization of the division of labor, protection services are to be handled by specialists, by firms, who provide their services for a fee, like any other business.  As are all businesses, as profoundly distinct from the State, these firms will charge a market price for their services, and be bound to their clients by way of contracts, which specify the precise services that will be provided. Any breach of contract, contrary to the modern state, can be cause for a lawsuit in court that is not inherently predisposed to the side of the "law enforcement."

The second role is the punisher of criminals.  Those who have actually been suspected of criminal activity, have been tried, found guilty, and must receive what is due to them. This is the role of the justice-provider, or Judges.  These are the decision makers who have the authority to determine a criminal sentence, or at least moderate the process. Judges do not have the authority to create law (legislation) as the modern State legislators do. Rather, their speciality is in gathering and interpreting the facts of the case in question. Where there is conflict, the Judge must hear both sides, consider all the evidence, and issue his opinion. Where a man is found guilty by the process, which will no doubt include juries as a check and balance against the judge, that man is sentenced according to the stipulations of the judicial system in which he was tried.

In the old, pre-monarchical Europe, the assumption was that a man’s property was rightfully his –and no other could claim it. But in the general course of things, there would arise the inevitable conflict over a given stretch of land or piece of property and the demand was formed for conflict-resolution and judges.  Who was to decide whether the present controller of the property or the individual disputing the controller’s ownership had the rightful claim?  Notice here, that the judges needed were not to “write law,” that is, they were not needed as legislatures and the creators of artificial law, but rather were “fact-finders” who heard the case and made decisions.  The idea of law-creation via a publicly controlled legislative body is a modern one, and it is a stain on civilization.  The demanded arbitrators were called upon to apply the generally accepted idea of property ownership and its deducible conclusions.

In any case, the demand for arbitration was not satisfied by just any third party.  Like any industry, those who were specialists in the field were given the most attention.  As Hoppe states in another presentation, “Obviously, people will not just turn to anyone, because most people do not have the intellectual ability or the character necessary to make for a quality judge…. In order to settle their conflicts and to have the settlements lastingly recognized and respected by others, they will turn to what I call natural authorities or to members of the natural aristocracy.”  Those in society who had the intellectual capability of making difficult judgements, who were honest and fair, who were considered to make agreeable decisions, they became the recognized judges.  And soon, this natural aristocracy were referred to as “nobles” in society, and then “kings.”  But notice that these kings were not kings in the same tyrannical sense as the European monarchies which soon arose when the kings began to tax the people and demand that no other judges could exist within the kings’ jurisdiction.  They were “free-market” kings, rooted in the social and civil lives of the people.  They were kings without a State.

It was only later that the kings began to monopolize their kingdoms and tax the people and became owners of “States.”

These non-state kings are to be thought of as Civil Judges in the purist sense of the word. They are judges who have not been given the tool of the state by which to rule; they are judges who do not have a legal environment that benefits their lust for power and their tendency to seek greater income by immoral means.


Civil Judges rightly acts coercively in upholding justice in response to a crime; and the State wrongly acts coercively to systematically contradict justice and act criminally.  When Augustine observed that, “Justice being taken away, then, what are kingdoms but great robberies? For what are robberies themselves, but little kingdoms,” he was contributing to the logical necessity of dividing between coercive bodies which pursue justice and coercive bodies which are inherently at odds with justice.  For how can two bodies which act in opposite ways both be considered substantially the same?

About the author

C.Jay Engel is the founder and publisher of Bastion Magazine. He has written for Mises.org, LRC, David Stockman, and related. He owns several consulting business, actively works on the magazine, and lives in Northern CA.

from the editor's blog