by
Eric Englund

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“The truth
is that the State is a conspiracy designed not only to exploit,
but above all to corrupt its citizens.” – Leo Tolstoy

“None are
more hopelessly enslaved than those who falsely believe they are
free.” – Johann Wolfgang von Goethe

In 1912, Ludwig
von Mises’s masterwork The
Theory of Money and Credit was published; and to this day,
this book is underappreciated. How can this be? After all, in this
book, Mises unveiled his regression theorem demonstrating commodity
money, such as gold, can have its purchasing power traced back in
time to the point where gold was not a medium of exchange. Mises,
accordingly, eliminated the conundrum in which the marginal-utility
explanation of money demand would merely be a case of circular reasoning;
money emerged out of barter and his logic is irrefutable. Mises
also laid the foundation for the Austrian theory of the trade cycle,
which correctly deduces that economic boom-bust cycles are caused
by inflationary bank-credit expansion as enabled by central banks
and their governments. While writing The Theory of Money and
Credit, Mises was pondering the issue of economic calculation
in a socialist state. Per
Murray Rothbard,

Mises writes
that he was led to consider the socialist calculation problem
by his work on The Theory of Money and Credit. Here Mises
realized for the first time with keen clarity that the money economy
does not and cannot calculate or measure values directly: that
it only calculates with money prices, the resultants of such individual
valuations. Hence, Mises realized that only a market with money
prices based on the evaluations and exchanges of private owners
can rationally allocate resources, since there is no way by which
a government could calculate values directly. Hence, for Mises
his article and book on socialism was part and parcel of the development
of his expanded integration of micro and macro, of direct monetary
exchange, that he had begun but not completed in The Theory
of Money and Credit.[1]

Without private
ownership in the means of production, economic calculation is impossible.
Per Joseph T. Salerno, “a single human mind … would be utterly
incapable of determining the optimal pattern of resource allocation
or even if a particular plan were ludicrously and destructively
uneconomic.”[2]
To be sure, the collapse of the USSR demonstrated the harmful, resource-misallocating,
and uneconomic nature of the socialist state.

Ludwig von
Mises, indisputably, was correct about the inherent irrationality
of the socialist state. Because Mises, however, grudgingly believed
in the necessity of the state, he did not extend his critique to
the irrational essence of the state itself – after all, he
believed that government was necessary for providing national defense,
courts, prisons, and police protection/security.[3]
He did not see free-market solutions emerging in lieu of these state-provided
services.

Given the nature
of all states, is it not true that government entities are incapable
of rationally allocating resources? In a socialist state, an economy
cannot emerge due to the impossibility of economic calculation under
collective ownership of the means of production, as prices for production
goods cannot materialize. Owing to the character of all states,
however, it is impossible for bureaucratic operatives to rationally
allocate resources, which is due to the impossibility of applying
a profit-and-loss test to the operations of the state. Such impossibility
arises as a state’s revenues are based not on voluntary market exchanges
but are based on coercion mostly via taxation. In a world of scarcity,
it stands to reason that entities which misallocate resources and
destroy capital are fundamentally irrational and undesirable. Any
entity that comes into existence based on coercion and theft and
then is incapable of rationally allocating resources under its control
is criminal in nature and harmful to mankind. This entity is the
state.

The State
Is Anticapital

Capital is
wealth, in whatever form, and is used or is capable of being used
to produce additional wealth. Farmland, seeds, tools, buildings,
and draft animals are examples of capital that predate the emergence
of the state. Just as there was a day when gold emerged as money,
there was a day where the state was born. It is axiomatic, however,
that capital existed prior to the emergence of the state. As Linda
and Morris Tannehill wrote,

Wealth does
not exist in nature but must be created. The only means of creating
wealth is value-production and free exchange – the manufacture
and trade of some desired good or service. One may obtain wealth
directly, by productive work, or one may obtain it indirectly,
by looting it from a producer, but the wealth must be created
by production in the first place in order to exist at all.[4]

For man to
satisfy his needs and desires, there are the economic means and
the political means.[5]
Correspondingly, the “state is an organization of the political
means. No state, therefore, can come into being until the economic
means has created a definite number of objects for satisfaction
of needs, which objects may be taken away or appropriated by warlike
robbery.”[6] The
state, consequently, was born on coercion, expropriation, theft,
and violence.

The most aggressive
expropriator of wealth is the socialist state. Under socialism,
the state takes ownership of all means of production, including
land. Prior to the emergence of the socialist state, for example
in the USSR, much of the means of production and land were privately
owned. On the formation of the USSR, all means of production and
land were collectivized and, therefore, brought under control of
the Soviet Union’s central planners. A more accurate way to describe
this collectivization process is to call it for what it is: state-sponsored
coercion and theft on the grandest scale known to mankind.

After 74 years
of existence, the Soviet Union collapsed, thereby exposing socialism’s
devastation to its people, resources, and capital. “As the Soviet
Union came to an end, the public had been reduced to a collective
of hunter gatherers, barely existing at a subsistence level.”[7]
The total state, as exemplified by the Soviet Union, led to the
total impoverishment of its people – not to mention that it
murdered approximately 20 million of its own citizens.[8]

Although states
openly steal property, there are varying degrees of “respect” states
concede with regard to private-property ownership. People in the
United States, for instance, feel relatively secure in their ownership
of private property. It is, nonetheless, a grey area as to who owns
land and houses in the United States. For if someone fails to pay
property taxes, then the taxing authority can legally confiscate
the house or tract of land. Moreover, the 16th Amendment to the
US Constitution allows for direct taxation – and, therefore,
Uncle Sam has claimed prior ownership to the fruits of everyone’s
labor in the United States. Money is property, just as much as real
estate is, and both are subject to confiscation in the United States.

The More Power
a State Has, the More Its Criminal Nature Is Exposed

The very existence
of the state puts humanity on a slippery slope toward state servitude,
grinding poverty, and premature death:

Just as “the
power to tax involves the power to destroy,” the sanctioning of
state authority to regulate even one percent of our conduct is
to admit its authority as to the rest.[9]

Ludwig and
Margit von Mises escaped the clutches of the epitome of totalitarianism:
Nazi Germany. It is widely known how murderous this totalitarian
state was. During Ludwig von Mises’s lifetime, the extent of the
Communist bloc’s criminality and destructiveness was not known.
When The
Black Book of Communism: Crimes, Terror, Repression was
published in 1999, the evil and criminal nature of the total state,
as laid bare by Communism, was exposed for the whole world to see.

There is an
erroneous mindset that Nazism represents the extreme right of the
political spectrum while Communism represents the extreme left.
This is a mistake, as private-property ownership and liberty are
demolished under the totalitarian state, regardless of its label.
In other words, totalitarianism is totalitarianism. The authors
of The Black Book of Communism drew this exact conclusion:

One thing
is certain: Crimes against humanity are the product of an ideology
that reduces people not to a universal but to a particular condition,
be it biological, racial, or sociohistorical. By means of propaganda,
the Communists succeeded in making people believe that their conduct
had universal implications, relevant to humanity as a whole. Critics
have often tried to make a distinction between Nazism and Communism
by arguing that the Nazi project had a particular aim, which was
nationalist and racist in the extreme, whereas Lenin’s project
was universal. This is entirely wrong. In both theory and practice,
Lenin and his successors excluded from humanity all capitalists,
the bourgeoisie, counterrevolutionaries, and others, turning them
into absolute enemies in their sociological and political discourse.
Kautsky noted as early as 1918 that these terms were entirely
elastic, allowing those in power to exclude from humanity whenever
they so wished. These were the terms that led directly to crimes
against humanity.[10]

Under the total
state, there is no private property including ownership of one’s
own body. Those exercising power under a totalitarian regime see
nothing wrong with killing people for the sake of the state. It
is no wonder that Communist regimes killed nearly 100 million people
during the 20th century.[11]

The 20th century,
overall, was a bloody one. Dr. R.J. Rummel has coined the term democide,
which means “the murder of any person or people by a government,
including genocide, politicide, and mass murder.”[12]
These deaths do not count combat deaths attributed to war. In the
20th century, according to Dr. Rummel, democide accounted for 262
million deaths.[13]

As states gain
power and liberty recedes, the evil, criminal, and murderous nature
of the state becomes self-evident.

All States
Subsist on Coercion and Theft and Are Uneconomic

There is an
assertion that a social contract exists in which individuals tacitly
consent to give up some of their freedoms in exchange for the benefits
of a political order and security as provided by the state. In reality,
who consents to being murdered by a state in the name of political
order? Who consents to being taxed? Whether an individual is more
likely to be murdered by a state or is merely taxed and bossed around
by a state has everything to do with where someone is born and has
nothing to do with consenting to the dictates of the state.

Taxes are not
voluntary contributions made to the state. Figuratively speaking,
taxes are collected at gunpoint and failure to pay may land one
in prison or worse. Per Lysander Spooner,

If the government
can take a man’s money without his consent, there is no limit
to the additional tyranny it may practise upon him; for, with
his money, it can hire soldiers to stand over him, keep him in
subjection, plunder him at discretion, and kill him if he resists.[14]

What Spooner
described is the unvarnished reality that the state represents the
negation of liberty. For if an individual does not fully own the
fruit of his labor (i.e., money income), then he lives in a condition
of tax slavery.

Taxation also
depresses production. It is a natural response to prevent a thief
from stealing one’s belongings. Yet if the thief is the state, mankind
has the inclination to keep as much as possible away from the government
and the economic impact is deleterious. On this matter, let’s turn
to Frank Chodorov:

Taxes of
all kinds discourage production. Man works to satisfy his desires,
not to support the state. When the results of his labor are taken
from him, whether by brigands or organized society, his inclination
is to limit his production to the amount he can keep and enjoy.[15]

Chodorov further
comments,

While we
are on the subject of discouragement of production by taxation,
we should not overlook the greater weight of indirect taxes, even
though it is not so obvious. The production level of a nation
is determined by the purchasing power of its citizens, and to
the extent that this power is sapped by levies, to that extent
is the production level lowered. It is a silly sophism, and thoroughly
indecent, to maintain that what the state collects it spends,
and that therefore there is no lowering of total purchasing power.
Thieves also spend their loot, with much more abandon than the
rightful owners would have spent it, and on the basis of spending
one could make out a case for the social value of thievery. It
is production, not spending, that begets production. It is only
by the feeding of marketable contributions into the general fund
of wealth that the wheels of industry are speeded up. Contrariwise,
every deduction from this general fund of wealth slows down industry,
and every levy on savings discourages the accumulation of capital.
Why work when there is nothing to it? Why go into business to
support politicians?[16]

A private company’s
revenues are derived from spontaneously emergent, market-based demand
(in other words “organic” demand), whereas a state’s revenues arise
from theft. States are anticapital, irrational, and uneconomic in
and of themselves.

If there is
any contract that must be broken, it is the alleged social contract
between individuals and the state. Living standards would rise,
due to increased capital accumulation and savings, which in turn
would result in more goods and services being brought to the market.

Economic Calculation

What is economic
calculation and why is it important? In Human
Action, Ludwig von Mises succinctly answers these questions:

The task
which acting man wants to achieve by economic calculation is to
establish the outcome of acting by contrasting input and output.
Economic calculation is either an estimate of the expected outcome
of future action or the establishment of the outcome of past action.
But the latter does not serve merely historical and didactic aims.
Its practical meaning is to show how much one is free to consume
without impairing the future capacity to produce. It is with regard
to this problem that the fundamental notions of economic calculation
– capital and income, profit and loss, spending and saving,
cost and yield – are developed. The practical employment
of these notions and of all notions derived from them is inseparably
linked with the operation of a market in which goods and services
of all orders are exchanged against a universally used medium
of exchange, viz., money. They would be merely academic, without
any relevance for acting within a world with a different structure
of action.[17]

In a territory
where the institutions of private property and sound money are honored,
all goods and services can be coherently exchanged on the free market.
Under these conditions, money prices emerge for both consumer goods
and producer goods. Prices for producer goods are a derivative of
the prices of consumer goods, with the prices of producer goods
emerging through price imputation.[18]

With private
ownership in the means of production, an economy can flourish. Entrepreneurs
can make rational business decisions and subject such decisions
to the profit-and-loss test:

Monetary
calculation is the guiding star of action under the social system
of division of labor. It is the compass of the man embarking upon
production. He calculates in order to distinguish the remunerative
lines of production from the unprofitable ones, those of which
the sovereign consumers are likely to approve from those which
they are likely to disapprove. Every single step of entrepreneurial
activities is subject to scrutiny by monetary calculation. The
premeditation of planned action becomes commercial precalculation
of expected costs and expected proceeds. The retrospective establishment
of the outcome of past action becomes accounting of profit and
loss.[19]

A tool businessmen
use to determine the success or failure of past actions is a financial
statement, which includes a balance sheet and an income statement.
It is important to understand that all entries in the balance sheet
and income statement are expressed in terms of money. A businessman
can directly correlate whether his company’s capital base (i.e.,
the company’s net worth as reflected in the balance sheet) is expanding
or contracting depending on if the company turned a profit or made
a loss. Such monetary calculation assists a businessman in deciding
to maintain or change a business plan based on satisfying the ever-sovereign
consumer.

In business,
a private company can gauge the demand for its products through
its sales volume. Using generally accepted accounting principles
(GAAP), sales are recorded as the very top entry of an income statement
(also known as a profit-and-loss statement) using the term “revenues.”
Revenues are generated through the voluntary exchanges of money,
from customers, in return for the products sold to customers. A
company will know quickly if there is a demand for its product –
for if sales do not materialize or are significantly below expectations,
then the company’s revenues will reflect this lack of customer demand.
A revenue shortfall, in turn, most likely will reveal a company
with an unprofitable business model in which revenues fall short
of covering production and overhead costs. Hence, the income statement
will reveal a net loss. The company’s capital base will shrink as
a result of this loss.

A GAAP income
statement, for a private company, would look like the following:

• Revenues
• Cost of
  Revenues Earned
• Gross Profit
• General
  and Administrative Expenses
• Net Income
  from Operations
• Other Income
  (Expenses)
• Net Income
  (Loss)
• Retained
  Earnings, Beginning of Year
• Retained
  Earnings, End of Year

If the company
turns a net income, its retained earnings will increase, thus resulting
in an increase of the company’s capital base. If the company turns
a net loss, then retained earnings will shrink and this results
in the diminution of its capital base. This is the elegance of economic
calculation.

The State
Cannot Calculate

All states
are extramarket constructs and are always and everywhere incapable
of economic calculation. Without the profit-and-loss test, with
private property being a prerequisite, socialism does not allow
an economy to emerge. Socialism is, therefore, irrational. If a
state allows private-property ownership within its territory, and
a free-market economy emerges, it does not follow that such a state
is rational. For such a state is incapable of rationally allocating
resources under its command, as public entities do not have the
ability to measure their performance through the profit-and-loss
test. Public entities, ultimately, depend on coercion and theft
to fund themselves and their programs. Hence, the mindset of bureaucrats
is political and not economic in character.

In a world
of scarcity, rational resource allocation is critical to supporting
human life. For those of a political mindset, should we expect rationality
and logic with respect to matters of economics?

Rational
conduct would be divorced from the very ground which is its proper
domain. Would there, in fact, be any such thing as rational conduct
at all, or, indeed, such a thing as rationality and logic in thought
itself? Historically, human rationality is a development of economic
life. Could it then obtain when divorced therefrom?[20]

In states where
private property is allowed, there exists a false perception that
state bureaucrats can rationally allocate resources. This is an
illusion foisted on a gullible public. If a public entity runs a
surplus, it is hailed as being operated responsibly. If the public
entity runs a deficit, it is seen as a problem that must be rectified
by the bureaucrats in charge.

Public-sector
accounting does measure revenues and expenses. There is, however,
no profit-and-loss test precisely because a state or public entity
is not a market-based phenomenon. Public-sector accounting, accordingly,
is purely self-referential in that state operatives desire to know
if enough money is being skimmed from its subjects in order to remain
viable. Public-sector accounting also provides an air of respectability
in that public entities want to promote the illusion of accountability
to the populace. The objectives of public-sector accounting are
conveyed as follows:

Traditional
objectives:

• To provide
  a financial summary
• To enable
  detailed comparisons of spending to be made with the budget
• To allow
  the identification of spending to ensure it complies with the
  law and other legal authorities
• To provide
  the basis for the next budget

Modern objectives:

• To inform
  the stakeholders about the financial situation of the government
• To provide
  possible investors with information about creditworthiness
• To aid
  management decision making
• To identify
  assets and liabilities
• To facilitate
  democratic transparency[21]

Note such terms
and concepts as compliance with the law, budgeting, stakeholders,
creditworthiness, and democratic transparency; throw in the term
“sustainability” and public-relations perfection will have been
achieved.

Services most
often associated with the public sector are police protection, security,
legal system, roads, national defense, and money production. Of
course, there are numerous welfare programs such as Social Security
and Medicare – but these are not services in that they are
pure transfers of wealth.

To reiterate,
because a state’s revenues are generated through coercion, via taxation,
there is no way of gauging any organic demand for the services the
state provides to its populace. Without a legitimate gauge for measuring
the demand for a state’s services, as there is no connection between
demand and revenues (such as there is in private enterprise), a
state has absolutely no means of calculating if it is rationally
allocating resources.

It also follows
that because state services cannot be tested against the metrics
of organic demand, then it is impossible for state bureaucrats to
know if they are meeting the most urgent needs of the populace;
it is impossible for taxes to act as a substitute for market-generated
revenues. Only market-based revenues serve to provide the signals
of how much and what type of services are actually demanded by people.

In the United
States, for example, there has materialized a web of public entities
– municipal, state, and national – that has parasitically
fastened to a market society – siphoning resources away from
where countless individuals would have otherwise directed their
own money and resources. How many smart bombs, drones, fighter jets,
military bases, policemen, judges, social workers, CIA spies, and
IRS agents are demanded by John Q. Public? Whether or not a public
entity runs a surplus or a deficit does not answer this question.
Because a state is not a market-based phenomenon, although it still
may be able to gauge its expenses using prices that have emerged
on the free market, it can never gauge the demand for its services
as a state’s top-line income is derived from theft and not from
free-market demand. This lattice work of public entities, therefore,
serves to misallocate resources on an enormous scale.

State-Controlled
Money versus the Free Market

Per Ludwig
von Mises’s regression theorem,

money, in
any society, can only become established by a market process emerging
from barter. Money cannot be established by a social contract,
by government imposition, or by artificial schemes proposed by
economists. Money can only emerge, “organically” so
to speak, out of the market.[22]

Contra to what
public officials and statists assert, there is no economic law prohibiting
the private production of money,[23]
let alone security services,[24]
defense,[25]
justice,[26]
and roads.[27]
Yet governments, being the criminal enterprises that they are, have
succeeded in supplanting market-based money (gold and silver) with
fiat money.

With the emergence
of the state came the multicentury process of governments gaining
control over monetary systems. Such usurpations typically began
with the state seizing absolute control of the minting business
– with the state naming the monetary unit to separate it from
the underlying weight of the coin (which opens the door for coinage
debasement). The next step was for states to enact legal-tender
laws dictating what money could be. As money substitutes were brought
into widespread use, in recent centuries, governments gave banks
the privilege of suspending payment in specie. All of this set the
table to bring central banking into the picture, whereby governments
grant central banks a monopoly on the note of issue.[28]

Directly due
to the effects of central banking, stock-market bubbles arose in
the United States in the 1920s, the 1980s, and the late 1990s /early
2000s. Each bubble was fueled by the Federal Reserve’s easy-money
policies and led directly to the Great Depression,[29]
the record stock-market crash of 1987, and the crash of the NASDAQ/dot-com
bubble, which imploded over the period of 2000–2001.[30]
The Austrian theory of the trade cycle provides the only explanation
for these booms and busts. As Roger Garrison explains,

The Austrian
theory of the business cycle emerges straightforwardly from a
simple comparison of savings-induced growth, which is sustainable,
with a credit-induced boom, which is not. An increase in saving
by individuals and a credit expansion orchestrated by the central
bank set into motion market processes whose initial allocational
effects on the economy’s capital structure are similar. But the
ultimate consequences of the two processes stand in stark contrast:
Saving gets us genuine growth; credit expansion gets us boom and
bust.[31]

Famously, after
the attacks of 9/11, Federal Reserve Chairman Alan Greenspan reduced
the federal-funds rate (which stood at 6.5 percent in November of
2000) to 1 percent in July of 2003. The federal-funds rate remained
at 1 percent until June of 2004.[32]
Such artificially low interest rates stimulated a housing bubble
as enabled by the government-sponsored enterprises of Fannie Mae
and Freddie Mac.

Frank Shostak
eloquently describes how loose monetary policy was the proximate
cause of America’s housing bubble:

We can define
a bubble as activities that spring up on the back of loose monetary
policy of the central bank. In other words, in the absence of
monetary pumping these activities would not emerge. Since bubble
activities are not self-funded, their emergence must come at the
expense of various self-funded or productive activities. This
means that less real funding is left for productive activities,
which in turn undermines those activities. In short, monetary
pumping gives rise to the misallocation of resources, which as
a rule manifests itself through a relative increase in non-productive
activities against productive activities.[33]

Accordingly,
the mass delusion that a long-term consumer durable, such as a house,
will increase in price, year after year, directly emanated from
the Federal Reserve’s monetary pumping. The bubble-headed assumption
that housing prices would never decline demonstrates that easy money
certainly led to a massive clustering of error, culminating in a
terrible bust in the housing market.

By September
of 2008, the Federal Reserve’s easy-money policy came home to roost
when major American financial institutions recognized that their
balance sheets were in tatters. Reckless lending for home mortgages
led to widespread mortgage-loan defaults. Because Wall Street had
turned into a mortgage-debt securitization machine and American
financial institutions’ balance sheets were stuffed full of such
mortgage-backed securities – whose prices dropped precipitously,
due to the aforementioned loan defaults – money-center banks
and powerhouse Wall Street firms were brought to their knees.

On October
14, 2008, “the U.S. government announced a series of initiatives
to strengthen market stability, improve the strength of financial
institutions, and enhance market liquidity.”[34]
The cornerstone initiative was the “Troubled Asset Relief Program
(TARP), in which the secretary of the Treasury would expend as much
as $700 billion in two installments to purchase rotten paper, such
as mortgage-backed derivatives, from banks and other financial institutions.”[35]

Wall Street
titans such as Citigroup, Goldman Sachs, and JPMorgan Chase initially
felt the pain of the 2008 economic collapse. However, because such
financial institutions were deemed “too big to fail,” Secretary
of the Treasury Hank Paulson saw to it that these insolvent behemoths
were bailed out at the expense of Main Street. Robert Murphy concludes,

The TARP
was crooked from the very start, using taxpayer funds to bail
out some of the world’s richest people from their own foolish
investments. The claims that it made taxpayers money are unfounded.
Even worse, TARP taught investment bankers an important lesson:
During a boom, make as much money as you can, no matter how short-term
the profits will be. When the bubble pops, the Treasury and Fed
will be there with a taxpayer-funded pillow.[36]

When government
controls money, through a central bank, combined with the power
to tax, the criminal activities undertaken by the state can be nothing
short of audacious and supremely damaging.

Under a free
market, where gold and silver coins are privately minted and used
as money, such state-induced boom-bust cycles, as exemplified by
America’s housing bubble, could not emerge. Conversely, when the
criminal enterprise, known as the state, controls the production
of money, history illustrates how economically destructive the state
can be.

Conclusion

As a state
grows, the free market becomes hampered and recedes. Because all
states are incapable of rationally allocating resources under their
command, it logically follows that the total state must snuff out
an economy altogether. When Economic
Calculation in the Socialist Commonwealth was published,
Mises’s “seminal journal article in 1920 on the impossibility of
economic calculation under socialism was the most important critique
ever leveled at socialism.”[37]
Fundamental to this critique was the absolute necessity of private
ownership in the means of production.

Ludwig von
Mises, therefore, was a fierce defender of private-property ownership.
For without private property, an economy cannot emerge:

It is an
illusion to imagine that in a socialist state calculation in
natura can take place of monetary calculation. Calculation
in natura, in an economy without exchange, can embrace
consumption goods only; it completely fails when it comes to dealing
with goods of a higher order. And as soon as one gives up the
conception of a freely established monetary price for goods of
a higher order, rational production becomes completely impossible.
Every step that takes us away from private ownership of the means
of production and from the use of money also takes us away from
rational economics.[38]
(Emphasis in the original)

Mises did not,
however, view socialism as systematized robbery.[39]
Had he been aware of the Soviet Union’s brutal treatment of kulaks
during its collectivization process, it is possible he would have
changed his mind. Per The Black Book of Communism,

Recent research
in the newly accessible archives has confirmed that the forced
collectivization of the countryside was in effect a war declared
by the Soviet state on a nation of smallholders. More than 2 million
peasants were deported (1.8 million in 1930–31 alone), 6
million died of hunger, and hundreds of thousands died as a direct
result of deportation.[40]

Such shocking
information may have jarred Mises into grasping that all states,
by definition, exist based on systematized robbery and violence.
In turn, any entity whose very existence depends on systematized
theft and coercion inherently must misallocate resources and destroy
capital. In a world of scarcity, such an institution must be deemed
antihuman and irrational. Socialism, accordingly, isn’t the problem;
the state itself is.

Mises, to be
sure, had serious misgivings about the state:

Private property
creates for the individual a sphere in which he is free of the
state. It sets limits to the operation of the authoritarian will.
It allows other forces to arise side by side with and in opposition
to political power. It thus becomes the basis of all those activities
that are free from violent interference on the part of the state.
It is the soil in which the seeds of freedom are nurtured and
in the autonomy of the individual and ultimately all intellectual
and material progress are rooted.[41]

Inherent to
private property is the right to self-ownership, “a right held by
everyone by virtue of being a human being.”[42]
Every person, in other words, has a property right in his own body.
By extending Mises’s view of private property to each person’s body,
the sphere in which mankind would maximize freedom along with intellectual
and material progress would be where no state exists at all.

Notes

[1]
Rothbard (1998), pp. 37–38.

[2]
For an excellent analysis of Economic Calculation in the Socialist
Commonwealth, read Joseph T. Salerno’s postscript titled “Why
a Socialist Economy is ‘Impossible.'” Mises (1990), pp. 51–71.

[3]
Mises (1983), p. 27.

[4]
Tannehill (1993), p. 113.

[5]
Oppenheimer (1999), pp. 24–25.

[6]
Ibid p. 27.

[7]
Maltsev (1993), p. 25.

[8]
Courtois, et al. (1999), p. 4.

[9]
Shaffer (2009), p. 282.

[10]
Courtois, et al. (1999), pp. 752–753.

[11]
Ibid p. 4.

[12]
Wikipedia Rudolph Rummel.

[13]
Ibid.

[14]
Spooner (1852), Appendix.

[15]
Chodorov (2007a), p. 225.

[16]
Chodorov (2007a), pp. 225–226.

[17]
Mises (1998), pp. 211–212.

[18]
See Dan Mahoney On Austrian Value Theory and Economic Calculation.

[19]
Mises (1998), p. 230.

[20]
Mises (1990), p. 21.

[21]
See Noel Hepworth: Chartered Institute of Public Finance and Accountancy,
University of Malta, February 2003

[22]
Rothbard (1988), p. 19.

[23]
See Jorg Guido Hulsmann’s The Ethics of Money Production
“Monetary Reform” pp. 240–242.

[24]
See Linda and Morris Tannehill’s The Market for Liberty
Chapter 8 “Protection of Life and Property.”

[25]
See Hans-Hermann Hoppe’s Chapter 10 “Government and the Private
Production of Defense” in The Myth of National Defense: Essays
on the Theory and History of Security Production.

[26]
See Michael van Notten’s The Law of the Somalis Chapters
3, 4, and 5.

[27]
See Walter Block’s chapter “Road Socialism” in The Privatization
of Roads and Highways edited by Walter Block.

[28]
Rothbard (1990), pp. 57–69.

[29]
See Murray Rothbard’s America’s Great Depression.

[30]
See Mark Thornton’s The Economics of Housing Bubbles p.
21.

[31]
Garrison (1996), p. 112.

[32]
See Mark Thornton’s The Economics of Housing Bubbles p.
15.

[33]
Shostak (2003), p. 1.

[34]
See Board of Governors of the Federal Reserve System Troubled
Asset Relief Program (TARP) Information.

[35]
Higgs (2008), p. 1.

[36]
Murphy (2010), p. 7.

[37]
Rothbard (1988), p. 25.

[38]
Mises (1990), pp. 19–20.

[39]
Hulsmann (2007), p. 445.

[40]
Courtois, et al. (1999), p. 146.

[41]
Mises (1985), pp. 67–68.

[42]
Rothbard (2006), p. 35.

September
7, 2012

Eric
Englund [send him mail], who
has an MBA from Boise State University, lives in the state of Oregon.
He is the publisher of The
Hyperinflation Survival Guide by Dr. Gerald Swanson. He is
also a member of The National Society, Sons of the American Revolution.
You are invited to visit his website.

Copyright
© 2012 by the Ludwig von Mises Institute.
Permission to reprint in whole or in part is hereby granted, provided
full credit is given.

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