The very existence of power that is forceful and “mandatory” for everyone leads to the emergence of corruption. Regardless of what anyone says, all governments in the world are corrupt; it is simply that not all are ready to admit it and call this phenomenon by its true name, often hiding behind a term such as “lobbying.” And this is not surprising—if a certain public body possesses the “legal” right to a monopoly on establishing and controlling orders in society, including through the use of force, then various interest groups will always turn to it in an attempt to achieve their goals at the expense of infringing upon the rights and freedoms of other interest groups. This is inevitable even in the most liberal democracies, for in them as well, nothing prevents a particular interest group from inducing a sufficient number of officials to adopt a decision necessary for them.
As long as coercive power-based governments exist, corruption and the infringement of the interests of some people in favor of the interests of others are unavoidable. Only in a free market can different interests stably coexist parallel to one another, for it is sufficient that each interest has at least a minimal group of “consumers.” Politics, however, can at any moment issue a law according to which all alternatives to a certain single interest will be discriminated against or even completely liquidated within a specific territory. And such a law will be backed by the threat of violence in the event of non-compliance.
Among the authoritarian right, there is a widespread belief that capitalism and the market can exist and function only through strict state control. They believe that this is the only way to ensure the protection of property rights, the honesty and security of agreements, and to correct certain alleged deficiencies of the free market. Naturally, alongside this, they deny that such state intervention in market processes is an act of violence. In their view, this intervention is precisely what protects everyone from violence. But is this actually the case?
1) State intervention harms market processes
From economic theory, we know that by intervening, the state disrupts market equilibrium. The most obvious example of measures leading to such a process is the establishment of minimum and maximum prices. The first measure leads entrepreneurs to believe that the production of a certain good is more profitable than it actually is. As a result, an overproduction of this good occurs, and the entrepreneurs themselves, unable to sell it, only go bankrupt. The second measure, conversely, leads to a shortage of the good, as it becomes unprofitable to produce and sell, and the fact that the cost is lower than the market price leads to those first in line for the product buying up the entire available assortment immediately, leaving nothing for those who find themselves at the end of the line.
Usually, proponents of state control say that these measures are necessary to support entrepreneurs and to guarantee that all people are provided with a certain benefit, and that the listed problems are solved by additional measures (subsidizing entrepreneurs and controlling the redistribution of benefits among people). But, of course, these measures require additional bureaucratic expenses, which negate the alleged benefits obtained from introducing these regulations.
The state also takes a portion of the population’s funds through taxation, and thereby partially deprives people of the ability to invest their funds in the types of production in which they are genuinely interested. Furthermore, through its regulations, the state makes it difficult for businesses to enter certain economic spheres, which also distorts market equilibrium and complicates people’s access to certain types of benefits.
Let us also not forget that in some spheres, the state declares itself to be an indisputable monopolist. Unable to compare the results of its activities with possible alternatives, and unconditionally receiving profit in the form of tax funds regardless of the quality of these results, the state monopoly is an inefficient producer, which harms the well-being of citizens.
Finally, the state corrupts the private sector. Under conditions of a free market, companies have only one option to continue functioning and increasing their wealth—providing people with benefits of the highest quality and at the lowest prices. Otherwise, people will simply leave for competitors. The state, however, gives some entrepreneurs an alternative option—corruption. An entrepreneur bribes officials (or promotes their relatives, friends, and acquaintances into the state apparatus) and gains legal grounds to restrict competitors from conducting a certain activity. At the very least, he can avoid the application of state regulations to himself and achieve the active imposition of these regulations on everyone else. At most, he can lobby for a law that makes him the only legal producer in a specific economic sphere.
Through its regulations and monopolistic coercive control, the state severely harms economic processes, distorts market equilibrium, and reduces the well-being of people. Capitalism, as a type of economic system in which legal equality as well as the principle of freedom of activity and agreement must be observed, is absolutely incompatible with the actions undertaken by any governments.
2) The state does not protect property rights and does not ensure the security of transactions
An important point in the program of etatists is that the state is necessary for the protection of property rights and guaranteeing the security of transactions, without which capitalism and the market cannot function at all. Minarchists—proponents of a minimal state that should engage only in this—place particular emphasis on this.
Yes, I agree that property rights and the security of transactions are necessary for the functioning of the economic system as a whole. However, the state cannot provide them in any way.
Let us remember that the state is a monopolistic and indisputable instrument of power. Being in specific hands at a specific moment, it serves only the interests of its owners. And nothing can stop them from abusing their authority and violating the norms they themselves have prescribed. Of course, it can be said that this is solved by the democratization of politics, or by creating a system in which only intelligent and kind rulers come to power. But in reality, neither will work. Ensuring the first, even in its absolute (that is, in the form of direct democracy), only means the observance of the interests of the majority to the detriment of the interests of the minority. Ensuring the second completely collapses against the phenomenon of corruption and the potential incompetence of the agents and agencies engaged in searching for and bringing to power supposedly pure and innocent angel-rulers.
Even in the case where the government is more or less reasonable, it still, unlike market and competing agents, has no incentives to act in the most efficient way. It only needs to act as efficiently as the population’s indignation does not exceed a certain critical level, above which the actions of security forces become either ineffective or cause the government significant reputational damage, thereby stimulating the rest of the population and the global community in general to also express indignation.
As Mikhail Svetov always correctly notes, the state is the One Ring of power. And regardless of whose hands this ring is in, one should not expect it to work for the good.
The observance of property rights and the security of transactions can be ensured only by the Balance of Violence Potential and Reputational Institutions. The first concept states that monopolistic power should not exist at all, and that different subjects and groups of subjects should possess approximately equal capabilities to inflict unacceptable damage on one another. In such conditions, cooperation will be far more profitable than coercion. The second concept asserts that reputational institutions and services can be used as tools for guaranteeing the security of transactions. Furthermore, they provide ostracism as an effective and powerful tool for punishing those who were not honest in their intentions.
You can read more about the concept of the Balance of Violence Potential here. You can learn how Reputational Institutions function, why Reputational Services are useful, and what ostracism is here.
3) State intervention is always violence
What do you call a subject (a person or an organization) who unilaterally imposes certain conditions on me, forces me to give them a part of my funds, and threatens to take away even more of my funds or forcibly lock me behind bars in case of non-compliance with the conditions imposed by them? Obviously, this is a rapist and an aggressor, and the actions they carry out are violence and aggression. And the institutionalization of these phenomena in no way changes their essence.
Even in the case where the state exists exclusively to protect its citizens from violence, it still first commits an act of aggression toward them, because it establishes itself as their protector regardless of the desire and choice of the people. In fact, this is common gangster protection (“kryshevanie”). If someone breaks into my house, points a gun at me, and says, “give me this much money, and I will protect you, otherwise you will be punished yourself,” then that too would be an obvious act of aggression.
A rapist and aggressor cannot be your protector, because to provide this protection, they must first apply aggression to you. Based on this, the state, politicians, bureaucrats, and all those who clearly support state activities are rapists and aggressors, because their activities assume that people must be attacked first, covering themselves with stories allegedly about how if we don’t attack you, someone else will. Naturally, the attitude toward the listed subjects should be appropriate.
We can draw the following conclusions: the state hinders the functioning of the economy and market processes, it is unable to ensure the protection of property rights and the security of transactions, and it is merely a rapist who has imposed their will on you through methods of aggression. And after all this, how can one even support the idea of state control and intervention? No sane person will do so, and whoever does—they themselves admit that they lack the slightest competence in matters of economics, public management, and in general are an open rapist and maniac!
