Nepal Has Fallen

Among Asian nations, Nepal is not high on Washington’s list of foreign policy priorities. The mountainous nation, which is consumed by the massive Himalayas, is mostly known for its Buddhism and its Gurkhas—a warrior people who still provide mercenary services for the British, Indian, and Singaporean armies. Overall, Nepal produces very little that Americans consume. Nepal is also not the home to a large American military contingent, nor is it seen as an important ally in America’s never-ending quest to be the major hegemony in West and East Asia. Nepal, to put it bluntly, is not important to American interests.

This view will almost certainly change, however. The reason for this is that a powerful Communist party, the Communist Party of Nepal (Unified Marxist-Leninist) recently acquired the levers of power in Kathmandu after a democratic election. According to all international observers, the Communists in Nepal have close connections to the Chinese Communist Party in Beijing. This all but guarantees that rustic and rural Nepal will become a Chinese satellite on the border with India, a close American ally and a long-time opponent of China owing to a border dispute that once erupted in violence.

Democracy, Civil War, and Insurgency

In order to appreciate the importance of this victory, one must understand the history of communism in Nepal. Himalayan Communists are not the typical neckbeard professors that one encounters in the West; they are experienced guerrilla fighters who waged a war against the central government for almost two decades.

The Communist Party of Nepal is led by two former prime ministers, K.P. Sharma Old and Pushpa Kamal Dahal (both of whom fought against the center-left government during the 2000s). These two men managed to unify two competing factions of the far-left party in order to sweep the country’s Parliament and Provincial Assembly. With this mandate, Nepalese Communists are expected to both follow a harder line against India and be more cooperative to Chinese business interests in the country. It is predicted that one of the first orders of business for the new government is to pass through the Chinese hydropower project that the former prime minister, Kamal Thapa, cancelled less than a month before the election.

In 1994, the government of prime minister Girija Prasad Koirala, the first democratically elected leader of Nepal and a member of the center-left Nepali Congress Party, suffered a vote of no confidence. That same year, new elections brought the Communists into power. Communist leader Man Mohan Adhikari became the prime minister and briefly led a minority government. That same government dissolved less than a year later. After that, Nepalese Communists, especially the Maoists among then, began their long insurgency.

A brief paper written by Yurendra Basnett in 2009 laid out the reasons underlying the vicious civil war that rocked Nepal between 1996 and 2006. Basnett writes that Western scholars were baffled by the far-left insurgency given that “Nepal enjoyed [an] unprecedented level of economic and political freedom” at the start of the rebellion.[1] The Maoists themselves argued that their war began because of economic inequality, rural poverty, and chronic landlessness in the country. Basnett argues that these invocations of economic disparities do not amount to much given that they have been “omnipresent” since the formation of modern Nepal.[2]

What Basnett’s critique of the Maoist movement misses is that Communist movements rarely come from times of economic disparity. Except for the rise of far-left movements during the Great Depression of the 1930s, most of the seminal Communist movements have sought to obtain power just at the time when their respective nations have achieved some form of unprecedented growth or stability. When the Bolshevik Revolution of 1917 erupted, the Russian Empire that they overthrew was far more liberal, progressive, and economically advanced than Western liberals and socialists realized. According to UNZ Review writer Anatoly Karlin, the Russian Empire of Tsar Nicholas II was even more “progressive” than such typically modernist bastions as London, Paris, and Berlin:

“Access to higher education was actually more meritocratic in the late Empire than in contemporary Germany or France by a factor of 2-3x. Women constituted about a third of Russia’s total numbers of university students, a far larger percentage than in any other European country—and Russia by 1913 had the largest number of university students in Europe (127,000 to 80,000 in Germany, around 40,000 in France and Austria each). Likewise, they constituted an absolute majority in grammar schools, many decades ahead of most of the rest of Europe. In 1915, restrictions on co-education were dropped across a range of Russian universities by decision of the Tsar and his Council of Ministers.”[3]

Tragically, this liberal attitude allowed a radical student body to fester and become many of the same Bolsheviks who oversaw the genocidal regime that would rule Russia until 1991. Such a scenario played out in China as well, for when the Chinese Communist Party began life in the aftermath of World War I, China was modernizing at a rapid pace. Thanks to World War I, which did not damage China, Chinese exports rose and the nation’s trade deficit dropped by an astounding 80 percent. While this success proved temporary, China before Mao was politically unstable but considered one of the world’s greatest jewels. Shanghai in the 1920s and 1930s was a cosmopolitan city beloved by Asians and Westerners alike.

Maoism in Nepal follows a discernible pattern—as prosperity increases or stabilizes, discontent grows as well. Like Marx, the social leech who had servants and never worried about earning a dollar, many of today’s Communists are full of the same greed that they constantly accuse capitalists of harboring deep in their benighted chests.

In Nepal, Maoist violence reached a terrifying apex in November 2001, when more than one hundred people were killed in violent confrontations between rebels and government forces. As a result, the central government declared a state of emergency. An absolute monarchy returned to power amidst the chaos. All told, almost 20,000 people were killed and another 2,000 remain missing.

From Monarchy to Democracy to Communism

A reactionary analysis would find that Nepal’s troubles began with the decline and fall of its monarchy. When this stabilizing force fell, chaos came in its wake.

Nepal was unified into a central state ruled by a hereditary monarchy in 1768. The kingdom first began to falter due to military incursions by the British East India Company, which already had a sizable foothold in India by the late 18th century. Between 1814 and 1816, Nepalese forces lost the Anglo-Nepalese War to the soldiers of the East India Company and their Indian allies. Although the Kingdom of Nepal retained its independence, one third of the country would be a protectorate of British India until Indian independence in 1947.

When King Birendra came to the throne in 1972, political parties were banned in the country. However, this did not mean that the king could rule by fiat or whim; a system of regional councils called panchayats helped to disperse and decentralize authority. Because he ruled during an age of interventionist democratic liberalism, King Birendra often told the international press that he was a democrat rather than an autocrat. Still, the king wisely told his critics that due to Nepal’s “backwardness,” mass democracy would be a recipe for disaster. The political violence that often accompanies the rise of political parties would ruin the country, the king argued.

King Birendra would rule Nepal in this way for decades. Despite the relative peace and harmony, there were pro-democratic movements designed to bring down the monarchy. In 1980, King Birendra had the leaders of the center-left Nepali Congress Party arrested in order to keep the panchayat system in place. The king then called a referendum in order to see if Nepalese citizens would prefer a non-party government or one that allowed political parties to exist. Nepalese voters favored non-party politics by a score of 55 to 45 percent.

Ten years later, the People’s Movement used strikes to disrupt the monarchical state. This movement proved harder to suppress than one political party, as it was composed of several political parties, including the Nepali Congress Party and a unified group of Communist parties called the United Left Front. In February 1990, the government began arresting the leaders of the People’s Movement and shut down most of their media organs. A series of deadly confrontations between the Nepalese state and People’s Movement protesters followed this. For example, in the city of Bhaktapur, police killed 12 protesters in late February. Out of anger and frustration, approximately two million protesters descended on the capital of Kathmandu. On April 8, King Birendra removed the ban on political parties. A few months later, in November 1990, a constitution written by the People’s Movement forced King Birendra to remove the panchayat system and to democratize the government. Marxists were soon elected to office.

Although 1990 is often seen as the year when democracy came to Nepal, the continued existence of the royal family helped to maintain fears that an absolute monarchy could return at any time. These fears gained substance thanks to Crown Prince Dipendra, the king’s eldest son and heir. Unfortunately, he proved to be a murderous psychopath. On June 1, 2001, Dipendra consumed large amounts of alcohol and hashish at a dinner on the grounds of the Narayanhity Royal Palace. After misbehaving with a guest, the King told him to leave. He returned an hour later with a Franchi SPAS-12 shotgun, an H&K MP5 submachine gun, a Colt M16A2 rifle, and a Glock 19 9mm pistol, which he used to kill nine members of the royal family: the King and Queen, his sister, his brother, the King’s brother, two of the King’s sisters, the husband of one of the King’s sisters, and the King’s cousin. Dipendra then turned a gun on himself, dying after spending three days in a coma during which he was King. While many Nepalese citizens continue to question the official story of the massacre, there is no doubt that the future of the Nepalese monarchy ended on that late spring night in 2001.

The throne passed to Gyanendra, another brother of Birendra who briefly re-established the absolute monarchy due to political violence in the country. King Gyanendra blamed Nepal’s political parties for failing to form a government after the dissolution of the parliament. After taking direct control of the state, Gyanendra dismissed three prime ministers for failing to call for new elections. Interestingly for an autocrat, King Gyanendra demanded that Nepal acquire some form of democracy or parliamentarianism in order to legitimize the state in the eyes of foreign critics. King Gyanendra’s promises of “peace and effective democracy” were undermined by the Maoist rebels who continued to carry out their bloody war against the Nepalese monarchy. Like Bavarian minister Gustav von Kahr, King Gyanendra all but admitted that a “cell of order” must exist before democracy can take hold. Personal liberty is nothing if public safety cannot be guaranteed.

By 2006, King Gyanendra announced that he would give executive authority to a new prime minister. Interim prime minister Girija Prasad Koirala took power in 2006 while Nepalese politicians argued about the role the monarchy would play in the future democracy. That April, Gyanendra reinstated the country’s parliament.

The fall of the monarchy occurred under the watchful eye of the Indian government. Along with Prime Minister Koirala, who supposedly suspected that the monarchy would always threaten democratic governance, Indian officials weakened the King’s power to the point where the royal palace became just the head of the parliament. On May 27, 2008, King Gyanendra was ordered by the parliament to vacate the royal palace within fifteen days. The ruling came as part of peace talks between the transitional democratic government and the Maoists. This is how the Nepalese monarchy fell—as an olive branch given to ultra-left radicals who despise Nepalese traditions.

Lessons

There are several lessons to be learned from these events. First, in the words of Hans-Hermann Hoppe,

“One may say innumerable things and promote almost any idea under the sun, but naturally no one is permitted to advocate ideas contrary to the very purpose of the covenant of preserving and protecting private property, such as democracy and communism. There can be no tolerance toward democrats and communists in a libertarian social order. They will have to be physically separated and expelled from society.”[4]

If democrats and communists are permitted to wield political power and advance their goals, they will eventually destroy the traditions and values that make civilization possible. It sometimes begins with something that seems innocuous—the Magna Carta in England, the Constitution in America, or the People’s Movement in Nepal—but the end is always some form of communist takeover, whether overt or covert. Monarchs (or private property owners in a libertarian society) must be willing to use the necessary amount of force to crush democratic and communist uprisings, however unpleasant the resulting bloodshed may be.

Second, it is no measure of health to kowtow to a sick global community, especially when the disease in question is such a virulent one as liberal democracy. Had King Birendra argued a passionate defense of traditional unelected governance, offered an ideological offensive against democratic thought, and called upon foreigners to respect Nepal’s sovereignty, the progress of the Maoists might have been forestalled. King Gyanendra was no better in this regard, and it cost him his crown. Unlike other countries that have had democratic experiments inflicted upon them by Western intervention, Nepal harbors no conceivable threat and has little that imperialist powers could want, so war propaganda would be more difficult to manufacture against them.

Finally, the greatest enemy is always the enemy within. A stable family, let alone governance structure for a nation, must have a means of detecting and removing threats like Dipendra. This could take many forms, from mental health evaluations to keeping inebriated people and deadly weapons away from the King.

What Lies Ahead

For India, the end of official hostilities in Nepal have been of little comfort. After all, India itself is still battling an internal Maoist insurgency that has ties to Nepal’s Communists. India’s war with Communist forces have been going on since 1967, and today, the “red corridor” of the country has claimed almost 18,000 lives. Violence is trending downwards, but there is no end in sight to the insurgency. A Communist victory in Nepal is likely to bolster the spirits of Maoists across the border in India.

For China, a pliant government in Nepal means that they move one step closer to realizing their “One Belt, One Road” dream. This plan, which has already seen China dump billions of dollars in investments in Asian and European ports, as well as investing heavily in the economies of sub-Saharan Africa, is the great issue facing the West. Contrary to starry-eyed Cathedral elites, the Chinese Communist Party is not reformed and has not embraced capitalism. Instead, the CCP is bent on pursuing a predatory economic policy that will make Asia and Africa into colonies of China’s limitless and cheap produce.

In order to achieve “One Belt, One Road,” do not be surprised if China dusts off an old gem from Communism’s history. During the 1930s, when fascism posed a grave threat to Soviet Communism, Joseph Stalin encouraged the Popular Front strategy, which saw Communist parties collaborate with liberal and socialist parties in France, Spain, the United States, and other nations. The elections of May 1936 brought the Front Populaire to power in Paris, and Leon Blum pursued a radically republican, anti-clerical, and socialistic platform thanks to support from Communist-backed labor unions. Across the Pyrenees in Spain, the Frente Popular installed the a rabidly anti-Catholic and anti-capitalist government headed by Manuel Azana. This was the last government of the Second Spanish Republic, for a right-wing coup led by the Spanish Army triggered what would become the Spanish Civil War in 1936. China, in pursuing their economic goals, may begin promoting Communist parties all across Asia. While Nepal is small potatoes in the grand scheme of things, its fall to a far-left rabble does not bode well for liberty in Asia.

References:

  1. Basset, Yurendra (2009). From Politicization of Grievances to Political Violence: An Analysis of the Maoist Movement in Nepal. Development DESTIN Studies Institute, Working Papers Series. p. 4.
  2. Ibid.
  3. Karlin, Anatoly (2017). The Russian Empire: Too Nice For Its Own Good. http://www.unz.com/akarlin/progressive-russian-empire/
  4. Hoppe, Hans-Hermann (2001). Democracy: The God That Failed. Transaction Publishers. p. 218.

The Not-So-Current Year: 2017 In Review

Though the specific demarcation of the passage from one year into another is a rather arbitrary social construct, it does provide a useful annual period for self-examination and remembrance. Now that 2017 has entered the history books, let us take a look back at a year’s worth of essays and review the not-so-current year.

We begin, of course, with last year’s article of the same kind. Some articles in this list are sequels to articles in that list. Aside from that, we may move on.

I began 2017 by addressing a recurring story throughout the 2016 election campaign; that of Russia hacking the DNC and phishing Hillary Clinton campaign chairman John Podesta’s email system. I argued that Russia would have been justified in doing not only this, but in actually altering the election to cause Donald Trump to win. I would later use this piece as an example in a guide on how to argue more sharply in order to throw opponents out of their comfort zones. The story lingered on, so I published a sequel detailing the benefits of a Trump-Russia conspiracy. The left’s activities after the election became ridiculous, so I decided to give them some free advice.

My first list of 25 statist propaganda phrases and some concise rebuttals was a major hit, so I started planning a sequel. I had no intention of taking almost two years to compile 25 more statist propaganda phrases to refute, but better late than never, I suppose.

Donald Trump became the 45th President of the United States, which of course meant that Gary Johnson did not. I explored in detail what was wrong with Johnson’s campaign that made him not only lose, but fail to earn 5 percent of the vote against two of the least popular major-party candidates ever to seek the Presidency. Once Trump was in office, the responses to his trade policies among mainstream analysts led me to explain why many of them are politically autistic.

Book reviews have long been a part of my intellectual output, but I decided to start doing more of them in late 2016. This trend continued throughout 2017, as I read and reviewed The Invention of Russia, The Age of Jihad, In Our Own Image, Come And Take It, Against Empathy, Level Up Your Life, Islamic Exceptionalism, The Science of Selling, Closing The Courthouse Door, Open To Debate, Calculating the Cosmos, The Art of Invisibility, Libertarian Reaction, and The Euro.

Antifa grew from a nuisance that rarely affected anyone other than neo-Nazis into a serious threat to anyone who is politically right of center and/or libertarian who wishes to speak in a public venue. A comprehensive strategy to defeat them was necessary, and I was happy to provide one. Kyle Chapman grew weary of Antifa’s antics and led the effort to take up arms against them, becoming known as Based Stickman. I praised him in song. After the events of February, April, and May Day, I revised the strategy.

The Walking Dead comic series and the television show based on it contain many themes which are of interest to the student of libertarian philosophy. I explored the many ways in which Negan’s group resembles a state apparatus. The first part covers the sixth season of the show, and the second part covers the first half of the seventh season. At least three more parts will come next year.

‘No Particular Order-ism’, or the belief that libertarians should take whatever reduction in the size and scope of government they can get, has become common among the more radical members of the Libertarian Party. I explained why this approach is misguided.

White nationalist and alt-right leader Richard Spencer was present in the bar of the Marriott hotel that hosted the International Students For Liberty conference. This did not go over well with Jeffrey Tucker, who loudly denounced Spencer, after which security removed everyone from the bar. I wrote about the incident and the philosophical underpinnings of it.

Sometimes, the lens of examination is best turned inward to correct one’s own missteps. Such was the case for an article I wrote in 2014 about the nature of fake libertarianism, so I published a revision.

Theories concerning the creation, acquisition, trade, inheritance, and defense of private property form much of libertarian philosophy. The role of conquest in the determination of property rights had gone largely unexplored, so I decided to remedy the situation.

Terrorism struck in London on the anniversary of the Brussels attacks. I wrote a list of observations on the event.

I argued against more amendments to the United States Constitution, namely the Second and the Eleventh.

A chemical weapon attack occurred in Syria, which led to US intervention via a cruise missile strike. I wrote a list of observations on the event.

Keynesians and others who support fiat currency and central banking frequently claim that there is not enough gold in the world to back the quantity of currency in existence, and thus returning to gold would set off a deflationary spiral while destroying several industries that depend on gold. I debunked that claim.

On the anniversary of the Oklahoma City bombing, I applied ethical theories to the event to gain a deeper perspective of what happened and the aftermath of the event.

The primary aim of politically active libertarians is to limit and reduce the size and scope of government, as well as to eliminate as much state power as possible. I made the case that in order to do this, it may be necessary to temporarily do the opposite.

On May 8, Fritz Pendleton published an article at Social Matter in which he argued that liberty is best preserved by authority rather than anarchy. He then proceeded to launch a misguided attack against libertarianism, all while misunderstanding authority, anarchy, liberty, and the nature of a libertarian social order. I rebutted Pendleton’s case on a point-by-point basis.

Fashion trends can be a useful barometer of the health of a society. I explained how the trend of clothing that is designed to mimic the appearance of wear and work for those who think themselves above the sorts of activities that would produce these effects naturally indicates that a revolution may come soon.

Memorial Day provides an opportunity to promote statist propaganda concerning the nature of service and the provision of defense. I decided to do the opposite.

The immediate danger standard says that using force against someone who is not presenting a physical threat at the exact moment that force is used constitutes aggression, and it has become far too commonly advocated in libertarian circles. I explained why it is wrong and why it has gained prevalence.

On June 14, James Hodgkinson opened fire on several Republican members of Congress and their staffers while they were practicing for the annual Congressional Baseball Game for Charity. I wrote a list of observations on the event.

The Supreme Court ruled against the stays on Trump’s travel ban, but he missed a greater opportunity by letting them decide rather than ignoring the courts. I explained how and why.

Political rhetoric has grown increasingly heated, with violence erupting as a result. I showed how democracy is the root of this problem and how abolishing democracy is the solution.

The meme of throwing one’s political rivals out of helicopters has become popular among certain right-wing and libertarian groups in recent years. Unfortunately, people from all over the political spectrum tend to misunderstand the historical context of the meme, and thus interpret it incorrectly. I wrote an overview of this context and explained why helicopter rides may not be the best option.

I welcomed Insula Qui, the first additional writer for Zeroth Position, in July. He provided two articles to keep the site going while I was preparing for, participating in, and recovering from the Corax conference in Malta. A piece describing the problems that led to the call for net neutrality and recommending against more state inteference in the Internet came first, followed by a critique of common libertarian strategies to date. Speaking of the Corax conference, a revised version of my talk may be found here, as they own the rights to the original. A topic that came up in the talk that needed further comment is that in the discussion of proper behavior beyond the basics of libertarian theory, right-libertarians in general and libertarian reactionaries in particular will use the term ‘degeneracy,’ but they do not always properly define the term. I attempted to do so.

In the August 2 episode of the Tom Woods Show, he asserted that libertarians and fascists are completely contradictory political perspectives and could never be combined, and that when one embraces fascism, one must have relinquished one’s libertarianism, as there is no other solution that would make sense. Qui countered these assertions and delved deeper into the relationship between libertarianism and fascism than I had previously, which is not as inimical as one might think.

An alt-right rally in Charlottesville, Va. on August 11-12 turned violent, with three deaths and about 20 injuries. I wrote a list of observations on the events. In response, the large technology companies of Silicon Valley, which have become increasingly hostile to right-wing and libertarian content creators over the past decade, ramped up their censorship efforts. I proposed a novel and radical plan to deal with this problem so as to avoid public utility regulation.

I welcomed Benjamin Welton, our second additional writer, in September. I had meant to write an article about using the historical concept of outlawry to deal with violent illegal aliens myself, but time constraints led me to outsource the project. He then explored several historical examples of private military defense, finding that something novel must be created in order to defeat the state and maintain a libertarian social order.

In the wake of two major hurricanes, the usual complaints about price gouging were made yet again. I explained why price gouging is actually beneficial.

Qui wrote a piece about the limits of the applicability of libertarian philosophy, explaining that humans can fall into the categories of personhood or savagery, and that it is important to deal with each accordingly.

Catalonia held a referendum to secede from Spain and become an independent nation on October 1. This was met with force, and much hostility ensued. I wrote a list of observations on the events.

Qui examined the role of the modern concept of citizenship in advancing a particularly insidious form of totalitarianism.

On October 5, the New York Times published an opinion column by Michael Shermer in which he argued that the rule of law is a bulwark against tyranny, but guns are not. I thoroughly rebutted his arguments.

Welton explored the history of judicial corporal punishment, then made a case for restoring its use as a replacement for imprisoning lesser criminals.

The debt ceiling became a political issue again. As it incites financial panic for no good reason and hides important truths from common view, I advocated for its elimination on formalist grounds.

Capitalism and consumerism are distinct phenomena, with the latter caused by high time preference, which in turn is caused by the flaws inherent in modernity. Qui explained this at length.

I welcomed Nathan Dempsey, our third additional writer, in November. He runs a project called Liberty Minecraft, and wrote an introduction to the project.

The relationship between libertarianism and racial politics has become a controversial issue in recent years. Views on the issue run the gamut from complete opposition to imperative alliance, with nearly every conceivable position between being advocated by someone noteworthy. Many libertarians either provide the wrong answer or are afraid to address the question, so I decided to address libertarianism and support for ethnic nationalism.

Black Friday is revered by most libertarians as a celebration of free-market capitalism. I updated my explanation of why this reverence is misplaced. I weighed in on holiday shopping again due to some misguided criticism of computer programs designed to scalp popular gifts. Finally, I detailed the problems with Santa Claus.

Qui offered a message of hope in dark times by demonstrating how the socialists and anti-capitalists of today are not usually as fanatical as those that the early libertarians opposed, then offered advice on how to argue against them. He quickly followed this with an explanation of his concept of autostatism, which closely echoed one of the other presentations from the Corax conference. He then dealt with traditional views on degenerate behavior, and how a compassionate, non-enabling approach is necessary.

Due to surging exchange rates, the opening of Bitcoin futures, and the likelihood of Bitcoin exchange-traded funds in the near future, there is renewed mainstream interest in Bitcoin and other cryptocurrencies. There are benefits of cryptocurrencies which will be cheered by political outsiders to the chagrin of the establishment, and I listed eight of them.

Qui finished out the year by explaining why individualism and nationalism are not as incompatible as many people believe.

All in all, it was an interesting year full of occasions to make sharp libertarian and reactionary arguments. May 2018 bring more and better. Happy New Year!

Eight Politically Incorrect Benefits of Cryptocurrency

Due to surging exchange rates in the past few months, the opening of Bitcoin futures, and the likelihood of Bitcoin exchange-traded funds in the near future, there is renewed mainstream interest in Bitcoin and other cryptocurrencies. Mainstream investors tend to be attracted to the profit potential, portfolio diversification, and technological curiosities of cryptocurrency. But there are other benefits of cryptocurrencies which may scare away the average investor. Let us consider eight activities which can be performed with or aided by Bitcoin and its alternatives that will be cheered by political outsiders to the chagrin of the establishment.

1. Tax Evasion

Charles Stross famously complained that Bitcoin

“looks like it was designed as a weapon intended to damage central banking and money issuing banks, with a Libertarian political agenda in mind—to damage states ability to collect tax and monitor their citizens’ financial transactions.”

The problem is that he views this as a negative. From a moral standpoint, taxation is armed robbery, slavery, racketeering, trespassing, communicating threats, receiving stolen money, and conspiracy to commit the aforementioned crimes. If anyone dared to challenge the state’s monopoly on tax collection, they could face any of these criminal charges. By doing business in cryptocurrencies and taking additional steps to protect one’s identity (Bitcoin is pseudonymous rather than anonymous, though other cryptocurrencies are fully anonymous), one can keep part or all of one’s income and stored wealth away from Leviathan’s watchful eye. Establishment politicians and pundits will decry tax evasion as immoral. But as Murray Rothbard writes,

“Just as no one is morally required to answer a robber truthfully when he asks if there are any valuables in one’s house, so no one can be morally required to answer truthfully similar questions asked by the State, e.g., when filling out income tax returns.”[1]

The weapon of cryptocurrency is thus more of a shield than a sword, though it may be employed in an offensive posture (see #8).

2. Agorism

One way to reduce the size and scope of the state is to starve it of funds. Agorism is a strategy introduced by Samuel Konkin for reducing and eventually eliminating state power by expanding the size and scope of gray and black markets. As more people rely on the informal economy to a greater extent, they will develop a culture of resistance against state power while depriving governments of revenue by keeping their taxable income out of official records. This will incense people who believe that the state is necessary for the provision of essential services such as military defense and legal systems, but those services could be performed by private entities if they were not forcibly stopped from doing so by state monopolies. It will also worry those who believe that governments must take care of the poor and down-trodden, but private charity is quite capable of solving the problem, especially with tax burdens removed.

3. Undermining Prohibition

From the beginning of the original Silk Road, cryptocurrency has played a role in helping people to obtain goods and services that are prohibited by state laws. Though that site was shuttered by government intervention, this had more to do with the incompetence of Ross Ulbricht than with any inherent flaw in Silk Road or Bitcoin. Since then, many other sites have been created to serve the same purpose. This is a terrifying prospect for drug warriors and gun control advocates, who believe that strict laws against the sale of such goods are necessary to keep communities safe. But the available evidence suggests that state bans only raise the prices of banned goods while increasing the violence involved in their trade. Thankfully, online black markets will continue to undermine prohibitionist policies while reducing the amount of violence involved in both law enforcement and black market disputes.

4. Circumventing Child Labor Laws

Most developed countries prohibit children under a certain age from working. Proponents of child labor legislation believe that it is necessary to protect children from exploitation and lack of education. However, in most places where child labor is still prevalent, it is better than the alternatives of lackluster schooling, child prostitution, or starvation. In more developed countries, child labor laws prevent children from earning income, learning useful trade skills, building a work ethic, and avoiding indoctrination by the state. Cryptocurrencies provide a framework to allow people to hire and pay children outside of official channels (see #2), while smart contracts on a cryptocurrency blockchain can prevent wage theft and other exploitation.

5. Circumventing Capital Controls

In many countries, there are laws that forbid carrying more than a certain amount of money or goods out of the country. Such laws are easy to enforce when currencies are centralized in a specific country, and when money and goods must take physical form, as precious metals and cash do. But cryptocurrencies are not particular to any physical location and do not require a physical form. This allows a person to trade one’s fiat currency or precious metal in one country for cryptocurrency, travel to another country, and either sell the cryptocurrency for fiat currency or precious metal in the other country or use the cryptocurrency directly. Economic protectionists may argue that this weakens the economy of the nation that experiences capital flight, but capital flight would not be occurring if the nation experiencing it had a more responsible government that was not creating adverse economic conditions.

6. Financing Disapproved Activism

Political dissidents and the causes they support are frequently rejected by the legacy financial system. Banks, credit cards, Paypal, and other money handlers have a long history of closing accounts and denying service to people and groups that oppose the current power structure with sufficient ardency and effectiveness. This occurs partly because these companies tend to be controlled by virtue-signaling members of the establishment, and partly because government regulators can make business difficult or impossible for companies that refuse to crack down on dissidents. If there were no other options, then the establishment would be able to effectively eliminate its opposition by starving them out. But ever since Wikileaks came to depend on Bitcoin donations for funding, cryptocurrencies have provided an alternative financial system that allows activists to make a living, engage in commerce, and perform their activism despite the disapproval of ruling elites.

7. Thwarting Monetary Policy

Ever since Keynesian economics became prevalent among policymakers, central bankers have sought to manipulate interest rates and the money supply to stimulate the economy. But in practice, this only distorts the economy further, encouraging those with capital to make malinvestments. True to the Austrian business cycle theory, this forms yet another economic bubble that then breaks, after which misguided commentators blame markets and call for yet more intervention. Over the long term, central banks also destroy the purchasing power of a currency, with the US dollar losing 96 percent of its value since the Federal Reserve was formed in 1913. In order to continue to function, central banks must have a critical mass of economic transactions occur in the currency that they manipulate. Should enough people make the switch away from state-backed fiat currencies, monetary policy will lose its effectiveness. Cryptocurrencies threaten this critical mass by offering an alternative to people who wish to opt out of the scam of central banking and own an asset that appreciates over time.

8. Assassination Markets

Perhaps the most controversial application for cryptocurrencies is known as a death pool or an assassination market. First theorized by Tim May and fleshed out by Jim Bell in the 1990s, assassination markets predict the date on which a particular person will die and provide payment to those who guess correctly. This incentivizes an assassin to bet on a certain date and kill the person on that date. The original proposal was made long before cryptocurrencies were invented, and thus called for the use of anonymous remailers. Cryptocurrencies render remailers obsolete, as they better serve the purpose of compensating the assassin without leaving evidence that law enforcement can use to discover the identity of the assassin and/or the crowdfunders. The goal is to increase the level of occupational hazard for being a politician or minion thereof to such an extent that the benefits of wielding state power are no longer worth the cost. The theoretical result is that if politicians, central bankers, enforcers, and other such people suddenly become frequent targets of assassination, then these occupations will cease to exist due to a lack of interest in assuming such roles. Although the establishment will only ever view such an approach as murderous, and cryptocurrency enthusiasts are deeply divided over the concept, there will almost certainly be many attempts to create assassination markets in the coming years.

References:

  1. Rothbard, Murray (1982). The Ethics of Liberty. Humanities Press. p. 183

Book Review: The Euro

The Euro is a book about the shortcomings of the eurozone currency project by American economist Joseph Stiglitz. The book makes a case against many of the policies pursued by European leaders thus far and recommends several alternatives, including further integration, a flexible euro, and the exit of one or more members. The book is divided into twelve chapters which explore different aspects of the problem and possible solutions.

A short preface details Stiglitz’s view of the economic problems of Europe as being largely attributable to the creation of a single currency zone without the creation of other institutions that are found in other such places elsewhere in the world. He compares the euro to the gold standard, repeating the flawed mainstream view that deflation is bad. His Keynesian approach to economics and thoroughly statist worldview is apparent from the beginning. That being said, Stiglitz appears to want to solve problems and correctly identifies some people and institutions as being uninterested in doing so.

The opening section begins with a chapter that expands upon the preface and outlines the rest of the book. There is little here that is not covered in greater detail later, so let us move on. In Chapter 2, Stiglitz argues that the poor results of the euro should have been expected because economic integration of this sort cannot come before political integration. Here, he contends that military might no longer shapes outcomes as it once did, but this is dubious because nothing short of a nuclear exchange that no one wants could have stopped the United States from conquering and colonizing Iraq if that had been the intention and American leadership had used its full power. So too for Russia in Ukraine and Crimea. His responses to other arguments for a single currency make more sense. He states the fallacious mainstream position on public goods, claiming without logic or evidence that it is impossible for markets to provide basic research and common utilities. This amounts to a confusion of collective action with state action. Even so, Stiglitz does recognize that localization is better than central planning from afar, though his disdain for German policies makes him inconsistent on this point. He then turns to economic integration, discussing the importance of German history with hyperinflation and its prominent role in modern Europe for understanding the European Central Bank. Next, Stiglitz writes about effect that a shared currency has on economic integration, which is mixed. Like many Keynesians, he accuses the market of failure when this is actually impossible; such events are actually failures of government, resources, or individual people. He also regards economics as scientific, even though the scientific method cannot be applied to subjects in which counterfactuals are so important but also unobservable. As usual, the word ‘neoliberal’ says more about the person using it than anything else. He concludes by arguing that there is a democratic deficit in Europe, even though he argues elsewhere in the book against incentive structures which are necessarily part of any democracy.

Europe’s lackluster economic performance since the 2008 crisis is the subject of the third chapter. Stiglitz begins by claiming that Keynesianism is a success because it has lengthened business cycles and shortened downturns, but it has also made the downturns that do occur so much worse that markets were better off before such interventionism. Much of the chapter consists of empirical data for Europe since 2007. When discussing unemployment, he seems not to recognize that unemployment benefits subsidize a negative behavior and will thus produce more of that behavior. Stiglitz relies upon the Gini coefficient when discussing inequality, which is a faulty metric because it measures pre-tax income rather than after-tax consumption. This causes it to exaggerate the amount of income inequality. His detailing of the long-term adverse effects of recession in terms of destroyed human capital is largely correct, but he again recommends interventionism that tends to worsen such problems. He also takes the position that the state should protect those at the economic bottom, though almost every economist would avoid social Darwinism on this front. Stiglitz then commits a fixed pie fallacy by arguing that trade surpluses necessarily cause trade deficits elsewhere, when the reality is quite different. He concludes by correctly noting that the counterfactuals help critics of the euro, and that there is no better explanation for many of Europe’s troubles than sharing a common currency across uncommon societies and economies.

The second section argues that the euro suffers from a flawed initial design. In Chapter 4, the requirements for a single currency region to be successful are considered. Here, Stiglitz uplifts full employment and market stability as goals while denouncing those who favor economic freedom as a “lunatic fringe.” This leads him to contemplate a false dilemma between national control of money and supranational control. He blames market fundamentalism (which he calls neoliberalism) for the crisis of 2008, despite the fact that markets were altered by central bankers in such a way as to cause the crash, which he all but says elsewhere. In explaining the differences between the United States and the eurozone, Stiglitz highlights the freer movement of Americans, the identity of Americans at the national level rather than the state level (at least in modern times), and the federal nature of monetary and fiscal stimulus. He is correct to say that there must either be “more Europe” or “less Europe,” but sides with the former. He describes the Keynesian theory of business cycles, but makes no mention of the Austrian theory. Stiglitz then repeats the tired fallacy that austerity caused the Great Depression and the current malaise, rather than central bank shenanigans and tariff policies. His blame for the gold standard is similarly misguided. He somewhat fixes an error from the previous chapter by clarifying that trade imbalances are not a problem if currency exchange rates can change to compensate for them. He straw-mans the laissez-faire position on unemployment by saying that it views unemployment due to market adjustments as good rather than as simply necessary. Stiglitz then gets a few points correct: low wages undermine worker morale and productivity, falling wages may not amount to falling prices if firms are worried about their solvency, and monetary stimulus has a breaking point at which interest rates cannot be lowered further. But he again blames the private sector for being excessive when it is only reacting to perverse incentives created by governments and central banks. There is little to fault in Stiglitz’s explanation of why currency areas are prone to crisis except for the preceding error, but it never occurs to him to simply not have such an area. The chapter ends by repeating many of the fallacious arguments from the previous chapter concerning trade surpluses and deficits.

The fifth chapter considers the economic divergence of the eurozone countries. Stiglitz argues in favor of institutional frameworks to prevent the need for bailouts, as well as funds to make depositors whole and provide bailouts. This ignores the moral hazard created by such a regime that causes bankers to take excessive risks, as well as the powerful incentives that an absence of protection would have on depositors to act responsibly and hold bankers accountable. His view of regulation is starry-eyed, missing the entire concept of regulatory capture. This is especially striking, given his focus on institutional capture in the following chapter. Stiglitz rightly complains of capitalized gains and socialized losses among bankers. In his consideration of other sources of divergence, he again fails to consider the possibility of turning over infrastructure to private development, instead proposing expansion of the European Investment Bank, which is certain to become another statist boondoggle. His view of knowledge markets is flawed in the same manner as his view of economies; it fails to account for the distortions that statism necessarily causes which lead to various types of failure. He concludes the chapter by showing how policies in the eurozone have caused greater instability, but cannot seem to avoid blaming the private sector for responding to the incentives imposed upon it.

In Chapter 6, Stiglitz examines the European Central Bank. He begins by saying that open markets and free competition can efficiently allocate resources only in the presence of adequate government regulation. This is a contradiction because an absence of government regulation defines an open market with free competition. His arguments concerning the inflation-only mandate of the ECB and the problems it causes would be much stronger if the Austrian business cycle theory were anywhere to be found in the book. His description of events in Chile under Pinochet does not agree with the long-term result of economic prosperity relative to the rest of South America and neglects how much worse conditions would have been under Salvador Allende. His claim that markets are supposed to be efficient and stable are a straw man; instability in the form of creative destruction and inefficiency by some metrics rather than others are inherent in a market economy. Stiglitz correctly writes that monetary policy is always a political question, pitting creditors against debtors for control of the central bank. But he leaves unclear how democracy is supposed to hold central bankers accountable. He also must not know any libertarians, or he would know that some people have proposed taking away spending power from governments to ensure that they do not misbehave. The chapter ends with a history of fashionable central bank policies over time and what was wrong with them from a Keynesian perspective.

The next two chapters delve into the Greek situation in particular, as Greece has suffered a more severe economic crisis than any other eurozone country. The seventh chapter explores the effect that the Troika’s policies had on countries in crisis. Stiglitz accuses some European leaders of acting in bad faith by purposefully attempting to punish governments with different political views from their own, which may be accurate. He continues his misguided attack on austerity, though it has more merit against what Europeans have actually done than against real austerity. He correctly explains the problem with primary surpluses, but then commits the broken window fallacy by embracing Keynesian multipliers. Stiglitz accurately diagnoses the problems of increasing taxes, but seeks to aid governments in collecting them rather than encourage economic freedom and stronger property rights. He describes his ideal system of property taxation in the same tone that a proud and unrepentant thief might use to boast of his crimes. Although he is correct to say that particular moves toward privatization and economic freedom may produce adverse results in particular contexts, this is a justification not for state intervention, but for undoing even more statism so as to remove the problematic context. Stiglitz notes that the hegemony of American military power has put Europe into a Pax Romana problem in which it cannot fend for itself against a real threat, but advises that this problem be worsened in the name of fiscal restraint. He compares reductions in pensions to wage theft when the two are clearly different. It is the responsibility of workers to figure out that they are being offered terms which may be impossible for the employer to meet in the future and practice caveat emptor. As for bank bailouts and debt restructuring, Stiglitz describes the situation well except for his faulty view of austerity.

Chapter 8 delves into structural reforms in Greece that made matters worse. Again, Stiglitz’s views of austerity and democracy corrupt an otherwise sound analysis of trivial and counterproductive actions taken by the Troika. He claims without proof that industrial policies are required to advance countries that are lagging behind in technological development, neglecting that markets are not doing this because they are either disallowed from doing so or are assuming that the state will do this for them. He criticizes intergenerational transmission of advantage and seeks to use the state against it, when it should be championed as both eugenic and important for maintaining a natural aristocracy. Stiglitz argues for a price on carbon emissions and claims that the private sector will not address climate change, when again the state has kept this from happening. He finishes by discussing counterfactuals, which is interesting given his empiricist thinking on economics.

The final four chapters deal with various proposals going forward. In the ninth chapter, Stiglitz offers his advice for fixing the eurozone. As before, he embraces what Henry Hazlitt called “the fetish of full employment” as the goal of his policy proposals. Much of the content of the chapter rehashes proposals from previous chapters. He seeks to create common deposit insurance and common resolution while abolishing place-based debt within the EU. This will create moral hazards and work against people who wish to escape debt slavery inflicted upon them by their ancestors. He calls for wages to be raised in countries with surpluses, which will lead to unemployment in those countries as workers whose labor is not worth higher wages are laid off. He fundamentally misunderstands precious metals, failing to understand their role as a store of value and medium of exchange, even if no longer officially used in such capacities. Stiglitz seeks to make the financial sector and other corporations serve society, but fails to recognize that the organs of a statist social order inherently and irrevocably serve themselves at the expense of the society. The shortsightedness of markets of which he complains is actually caused by the institutions that he seeks to use to solve the problem. One of the few sound recommendations made in this chapter is the creation of a super-Chapter 11 bankruptcy procedure to quickly restructure debt. He goes on to propose that EU taxes be based on citizenship, and that some of the proceeds be used for foreign aid or resettlement of migrants, further impoverishing and culturally endangering Europeans.

Chapter 10 examines the possibility of what Stiglitz calls “an amicable divorce,” in which countries exit the eurozone. He considers the example of Grexit, or Greece returning to its own currency that he calls the Greek-euro but would probably be called the drachma, as it was before the euro. He proposes that Greece create a new electronic currency to ease concerns over producing coins and banknotes, stop tax avoidance, bring everyone into the financial system, and facilitate the ability of central banks to create credit. Stiglitz fails to consider that people are likely to reject such a system in favor of cryptocurrencies, which have all of the benefits of such a system without most of the drawbacks, and that such a system could offer states tyrannical control over their citizens. His view of credit indicates magical thinking, although this is quite common in modern financial circles. He again blames the private sector for problems caused by politicians and central bankers, while ignoring peer-to-peer lending as a substitute for modern credit systems. Stiglitz describes a potential system of credit auctions which could be abused with much the same ease as the current system. He admits and supports what should be abhorrent to any decent person: that fiat currencies are ultimately given value by extortion in the form of taxation. Stiglitz correctly says that a new Greek currency would enable them to devalue it to correct trade imbalances, but his proposed system of trade tokens for the same purpose would be redundant. He equates deflation with a deficiency of aggregate demand, neglecting the possibilities of an abundance of supply or improvements in efficiency and/or quality. His description of currency change as a debt restructuring is insightful. To end the chapter, Stiglitz considers the alternative of Germany leaving the eurozone, though it is unlikely that they would give up their current position of power so willingly. This segues into the topic of the next chapter, which is a flexible euro consisting of several subdivisions.

Stiglitz uses Finland as a counterexample against those who claim that profligacy in southern Europe is to blame, rather than the structure of the eurozone. Most of his argument here is correct, except for his view of austerity. His proposal in this chapter is to have several eurozones with fluctuating exchange rates, which could be brought closer together over time as political integration occurs, eventually resulting in economic integration. The details are borrowed from the previous two chapters. Though more likely to succeed than the proposals in those chapters, it is also the least likely to be adopted. Stiglitz correctly recognizes that having a single currency area is an interference in the market in and of itself, monopolizing exchange and interest rates in the area, but cannot seem to fathom that his flexible euro proposal also does this on a smaller scale. He claims that it can be better not to simply rely on prices for the allocation of resources, but does not explain how to solve the local knowledge problem or the economic calculation problem in a superior manner. He also says that history shows free banking to be a disaster, when the truth is quite the opposite.

The final chapter sees Stiglitz review many themes from previous chapters, but he also covers topics which are barely mentioned elsewhere. He denounces anti-immigrant groups in Europe, which are only trying to resist demographic replacement by a ruling class that they did not ask to replace them. So much for the “democratic accountability” that Stiglitz extols in the same breath. He blames right-wing economic ideology for rising inequality in the United States beginning with the Reagan administration, but incomes really began to diverge ten years earlier, when Nixon ended the gold standard. Stiglitz expresses a desire to preserve the Enlightenment values of Europe, but cannot comprehend how letting in migrants with distinctly anti-Enlightenment values will jeopardize that mission. On the issue of trade policy, he understands that free trade is not always best for all parties involved, as it can destroy important societal arrangements that prevent conflict. But then Stiglitz incredulously asks how one could have expected that Europe’s leaders would create such economic dysfunction, with massive unemployment and lack of economic security. The answer is that a proper amount of cynicism would require such an expectation.

Overall, the best thing that can be said for the book is that it is not an effort made in bad faith. Stiglitz correctly identifies many of the problems with the current state of affairs in Europe and seems to want to help, but his proposed solutions are thoroughly misguided. Despite his palpable disdain for Milton Friedman and other Chicago School monetarists, he suffers from one of the worst of their faults: a desire to solve the immediate problems set before him combined with a lack of broader perspective. This leads him to propose a banking system which could be used to terrible effect against political dissidents, tax collection schemes that would indicate criminal intent in any non-statist context, and forced political integration by means of stealth and subterfuge. He also seems to believe that everything would be fine if only state power were used by the right people to implement the right policies. It never occurs to him that the power itself might be the problem. The Euro is an interesting case study in leftist economic thought, but those looking for real solutions to Europe’s economic woes should keep looking.

Rating: 2.5/5

Praise The Grinch Bots

This week, outlets across the spectrum of establishment media were outraged at so-called ‘grinch bots.’ These are automated programs that make bulk purchases online so that scalpers can resell the items at higher prices. This has caused the prices of some toys to increase several-fold. For instance, a Barbie Hello Dreamhouse retails for $299.99, but on eBay, one reseller is asking for more than $4,600. This phenomenon has caught the attention of Sen. Chuck Schumer (D-NY), who said, “Grinch bots cannot be allowed to steal Christmas, or dollars, from the wallets of New Yorkers. …Parents have a real dilemma: either they can’t get the toy because the bots have scooped them up, or they have to pay an enormous price.” In a letter to the National Retail Federation and the Retail Industry Leaders Association, he wrote, “I am calling on your associations to immediately investigate how these dishonest software programs are being used on your members’ sites and take all available steps to thwart computer systems from cheating America’s consumers.”

Schumer’s comments illustrate an economic illiteracy that is all too common among politicians and pundits. Contrary to popular belief, scalpers perform an important function in an economy. In this case, they also provide other benefits that extend beyond economics and into culture. Let us examine these phenomena in order to see why grinch bots are good.

The Economic Role of Scalpers

When a manufacturer produces an item for sale, it is impossible to calculate the market clearing price in advance. The market clearing price is exactly what it appears to be: the maximum price at which the producer can sell all of the produced items. Any price above this level will result in unsold product, while any price below this level will invite people to buy up the items and resell them, also known as scalping. Whereas overproduction is the worst inefficiency in manufacturing, a producer would prefer to err on the low side of the market clearing price. This naturally produces excess demand, which in turn leads to higher prices. Part of this effect occurs naturally in retail businesses, but scalpers act as an additional market force to accelerate the price correction up to its proper level.

Scalpers also function as risk mitigators. If a scalper buys products and fails to resell them, then the scalper loses the entire cost of the item while the manufacturer, retailer, and everyone in between are reimbursed for their expenses. If the scalper does make sales, then he makes a profit and people find the products they want. The scalper is thus strongly incentivized to connect manufacturers and distributors with customers who want their goods. Note that the scalper is behaving like a retailer, in that he buys large amounts of finite, potentially scarce products and sells them for a profit to people who want them. Yet hatred of scalpers is common, while hatred of retailers is rare.

Some people will argue that scalpers are responsible for higher prices and lower availability, but this is merely a result of arithmetic, and would happen with or without dedicated scalpers speculating on Christmas toys. Suppose, for an example similar to the case at hand, that doll houses are selling for an average of about $300, there are 10,000 doll houses for sale every day, and 15,000 people want a doll house. To avoid distributing reservations without price rationing, which would result in reservations being made available in an arbitrary and discriminatory manner, prices must rise to a level where only 10,000 people still want them. This level may be around $450 in this case. How this $150 per doll house increase is distributed is what will vary, depending on how much scalping versus internal revaluation in retail stores is occurring.

Schumer makes two more especially ignorant claims which are worthy only of a cursory rebuttal. First, he contends that scalping harms the poor. This ignores the fact that scalping is an excellent economic opportunity for the poor, as they can make large returns by engaging in scalping. Second, he says that grinch bots are engaging in acts of theft and cheating. The idea that voluntarily purchasing a product at the offered price could constitute theft and cheating is simply bizarre.

Cultural Benefits

When scalpers buy up Christmas toys and fail to resell them, there are additional benefits which extend beyond economics and into culture. There is an enormous opportunity cost involved with the holiday shopping season, as people spend money they do not have on items they do not need, then spend even more money on getting out of debt. One way of preventing this is for attempted scalpers to raise prices and thus reduce demand. This will cause people who are on the margin of shopping versus not shopping to reconsider in favor of the latter. Those who make one reconsideration are more likely to make other, related reconsiderations, so people who cease engaging in holiday consumerism may come to some deeper personal or spiritual understanding, or at least develop more concerns beyond immediate gratification. Although a few grinch bots may play a minmal role in the grand scheme, any lowering of time preference coupled with greater focus on the virtues embodied in Christmas traditions would be a cultural improvement.

Conclusion

The attacks on the grinch bots are understandable; they are an obvious target for the economically illiterate, and going after them makes excellent political hay for a senator looking to expand the state’s regulatory powers. Which of these best describes Schumer is debatable, but the above analysis clearly demonstrates that scalpers in general and these computer programs in particular should be praised rather than denounced.

The Case for Autostatism

Author’s note: The reader can find everything else I have written about the concept of autostatism here.

Introduction

Libertarians have always had ambitions that are both universalist and purist. Most libertarians are willing to admit that their vision will not be realizable in their own lifetimes and rather hope that future generations are wiser than they themselves have been. These libertarians take an approach that could only be considered rational when one takes into account the very nature of libertarianism. The search for liberty means always fighting against tremendous odds, as many people care more about increasing their personal power than about liberty. Power is a great direct gain, while liberty is a diffused social gain. This insight, combined with the logic of public choice, tells us that when people seek power, they are more likely to attain it than those who want to destroy power are to destroy it. These people seek power for themselves by being parasites on others, which is generally incompatible with achieving liberty.

The achievement of a libertarian social order requires collective motivation on a scale that is only present when the state has become so oppressive as to be intolerable. The state has adapted to this and tries very hard to avoid any loss of power by being as tolerable as possible and making its operations as covert as possible while openly integrating themselves into the lives of everyone. This helps the state remain an unambiguous sovereign and appear to be a fundamental condition of life from which it is hard to deviate psychologically and intellectually. The modern state makes itself into a leviathan not by lording over people, but rather by integrating itself into the population. This process is neither peaceful nor painless; the methods by which the state integrates itself into a society must be fundamentally based on indoctrination and coercion. But once sufficiently advanced, the state becomes a fact of life that is almost incontestable by any rational person, and support for the abolition of the state will be extremely sparse. Thus it is possible to say that up to a point, the more oppressive a state is, the more it can be expected to have popular support.

Collective Separation

The main premise from which the strategy of autostatism is derived from is that separating ourselves into multiple autonomous governments or stateless localities is a necessary precondition for abolishing the central state. In modern democracies, all sides of all conflicts are under immense pressure and are thus very hostile towards everyone with whom they are in conflict. Since all issues are to be decided by all people in a democracy, the people who have their lives questioned will be the people who resist those who challenge their ability to live their own lives as they please. Note that in a healthy social order, the challengers themselves would be the imperiled group. From this comes a desire to separate from the hostile factors that are directly antagonistic to the individual’s lifestyle and property. There is no reconciliation or common ground within the framework of democracy because democracy intentionally creates unresolvable antagonisms. The common decision-making process is irreconcilable with personal liberty. Having the masses govern the masses thus becomes a self-reinforcing structure of creeping totalitarianism.

This does not necessarily mean that the correct answer to the problems of democracy is statist fascism or monarchism, as the conflicts are still present but heavily suppressed, although a case could still be made for these kinds of states. Even though autocracy has a better incentive structure than democracy in most cases, the state is not the answer to all problems within democracy. Neither is a lack of state; when libertarians think that full rights in property will properly resolve all conflicts, they assume that all people desire to have full rights in their own property. The problem is then a conflict of whether or not there should be complete property rights or whether property rights ought to be limited for the sake of the common good. This is the question of whether property creates society or vice versa.

The answer to this fundamental conflict is the autostate. This is the practical, but largely forgotten notion of governance based on actual consent. The word “autostate” means a government by the self. It can also be explained as a state formed from autonomy. The fundamental difference between a state and an autostate is that the foundational principle of the autostate is that the system of governance ought to require the consent of everyone who is governed. If no such consent is acquired, the government must be invalid and must fall into internal conflict. The notions of tacit or implicit consent that play a prominent role in social contract theory only serve to elevate the conflict inherent in any system of compulsion and suppression.

Since an autostate has the unanimous consent of everyone governed by it, it functions as any other entity on the market. However, instead of a consumer good or a conventional service, the autostate provides governance, which is to say a legal framework and a means of enforcement. Many libertarians are caught up in a fantasy in which all governance is evil. Most people do not agree with that assessment and want to put together a semblance of a social and political order so they can realize their vision for what virtue and political organization should be.

Powerless Politics

The fundamental tenet of autostatism is that the government ought to be completely powerless and can only enact those edicts which people find to be tolerable or benevolent. If this is no longer the case, the autostate could be overthrown without any risk or violence. It is necessary to distinguish between a government and a state. A government is the manager of a land area while a state holds a monopoly of compulsion and coercion. Thus, the autostate is a government, but not a conventional state. The autostate fundamentally requires consent, and consent can be revoked when the autostate stops diligently fulfilling the duties that it has taken upon itself. The autostate can be fascist, socialist, or anarchist in nature and it does not need to have any formal structure at all. What matters is that this structure or lack thereof is first agreed upon. Many anarchists and libertarians see this as conflicting with spontaneous order, but the natural condition of society is deliberate action building upon spontaneous order. It does no good to assume that one system or another is objectively part of human existence.

Furthermore, the prevailing law system in any area is more powerful and consistent if all people within that area follow the same system. This does not mean that autostates need to be dependent on physical area, but autostates are composed of the individuals who subscribe to the legal structure of the autostate. The autostate is simply the reduction of governance to a market entity and the elimination of coercion within governance. However, the autostate can retain the political and personal values that people want to have enacted. The autostatist order can thus be acceptable to everyone who is not wholly influenced by their desire for power or domination. Autostatism can let everyone accomplish their utopian political structure unless it involves the direct subjugation of others. It allows for people to have their own ideals realized in a manner that does not impose costs on those who do not share these ideals.

In essence, autostatism calls for an abolition of competitive politics for the implementation of cooperative politics. Politics should not be a matter of majority consensus but rather the implementation of mutually agreed upon social goals. The politics right now are imposed upon an unwilling population; the politics of autostatism are collaborative and voluntaristic. This can be called either an abolition of politics or a revolution within the nature of politics. Politics should not imply coercive governance, but cooperation for the achievement of mutual goals. It may be true that these mutual goals are reprehensible to others, or that some people will not want to participate in seeking these goals, but the goals themselves are not a threat within the autostatist order because they are strictly confined within consensual relations. These consensual relations mimic governance in the traditional sense, yet they require no authority insofar as that authority is derived from force and compulsion. The autostate as a concept itself allows for a reconciliation between anarchists, libertarians, socialists, conservatives, and every other group that is able to be so intellectually honest as to admit that they are better off when they have their own ideal structures implemented.

Stateless Governance

Stateless governance may seem like an ultimate nonsensical contradiction. When there is no state, the government supposedly lacks the power to do what it needs to do. And within libertarian circles, the government is seen as an inherently coercive and violent entity. Thus, stateless governance seems impossible. But we must realize that without a state, the government is nothing other than a manager of a certain society or community. If a government is a voluntarily funded managerial entity which only ensures that the social order is kept functional, there is nothing inherently unethical about that government. A critique of the state cannot be a critique of governance, as the governance is derivative of the state only in modern society.

The distinctly libertarian view that all governance and control over an individual are inherently evil, and we should all be free and not tied to any obligation, is naive and unrealizable. Most people do not want to fully determine the path of their lives and do not want others to do so either. People have values that go beyond individual liberty and they want to exercise those values. The reality is that most people want society and themselves to be controlled, appealing to liberty as an ultimate end is only convincing when appealing to people who would inevitably become libertarians themselves if given enough time to reflect on their beliefs. We must acknowledge that government is not something that is inherently evil, but rather a tool that can be used for the accomplishment of certain goals. However, when the government is tied to a state, it will be fundamentally exploitative, as the incentive structures allow for such exploitation and cater to those who would engage in such behavior. The problem is statism and not governance.

Fourth-Wave Libertarianism

Libertarianism is currently in a serious identity crisis. To explain this, let us begin by sorting the development of libertarianism into four different periods. The first period was the classical liberal era, in which the primary conflict was between the liberals and the mercantilist-feudalist tendencies within the social order. Between the high point of the first period and the high point of the second period, there were the Anglophone anarchists. People such as Lysander Spooner and Benjamin Tucker developed a theory of natural law and individualist anarchism which would later be adopted in part by Rothbard. Although integral for the development of the third wave in libertarianism, they were not influences on the later or earlier thinkers. The second period was the most desperate period, in which Ludwig von Mises, Friedrich von Hayek, and Ayn Rand were the most active and the period in which the groundwork was laid for the modern libertarian movement. This was the active defense against communism and socialism as they were becoming the dominant forces in the world. This was followed with the wave of libertarianism that had Rothbard at the forefront. This was a drastic attack against the state itself that went beyond the anti-socialism of the previous wave. The third wave accumulated thinkers such as Hans-Hermann Hoppe and Walter Block, and reached a somber crescendo with the campaigns of Ron Paul. The neoliberal movement was also created at this time, although this movement does not follow the particular development of libertarianism and as such is excluded.

Each of these waves has a distinct attitude, and all of them shared the consistent strategy of trying to reach libertarianism by being the most reasonable and intellectual people. But this only works when libertarians are attacking something dangerous and imminent; the success was not due to rationality, but due to how threatening the opposition was. However, there is an emergent fourth wave, and although Hoppe falls solidly in the third wave of thinkers, he is either the eminent inspiration or the primary intra-movement antagonist for most of the fourth wave. These fourth-wave thinkers do not stick to political or economic issues, but rather involve social issues at the core of libertarianism and do not allow for libertarianism to be nihilistic without properly defined morality and values. The classical liberalism of the previous waves is also under scrutiny, with some calling for a more positive outlook on reactionary thought.

Since libertarians are split into the left, right, and neither camps when it comes to social and cultural values, the fourth wave is in a disorganized and dysfunctional crisis. If we wish to preserve the libertarian tradition, we need thinkers who can unite the libertarians who want to preserve the social orders that they value alongside the purist notion of liberty. Fourth-wave libertarianism must make a drastic change and must use different tactics than the last three waves. Libertarians have always been best when they face significant issues and behemoths that seem to be immortal, and there is no larger challenge today than forced integration and coercive democracy. Autostatism offers an answer to these issues that neither the status quo nor more conventionally purist libertarians can.

How To Argue Against Modern Anti-Capitalism

Socialism is dead. This can be contended and debated, but I would assert that socialism as a pure doctrine has been defeated. The original form of socialism is barely, if at all, relevant to modern politics or economics. Almost no one goes against markets, money, property, or economic liberty on principle in the 21st century. Socialist policy has thus become a matter of pragmatism and not philosophy. One may argue that any degree of statism is socialism, but socialism as it was in the 19th and 20th centuries is no longer a threat in the Western world. Almost no person wants a command economy and no one says that the price system should be completely replaced by central planning. Only the most fringe radicals say that there should be no property and that the proletariat should have free access to capital and consumer goods.

The socialism that Mises described and the socialism that the early libertarian movement viciously attacked has long since disappeared from the common political sphere. There are still radicals who are true socialists, but even most self-described socialists have adopted positions that are in opposition to state socialism and planned command economies. The usefulness of the market in deciding the allocation of goods is almost universally recognized and economics no longer has a large current of pure socialism running through it. The closest school of thought in mainstream economics to actual socialism is post-Keynesianism, which is still quasi-capitalist. Although there are still a few socialist experiments, only Cuba and North Korea manage to remain truly and properly communist. One could argue that North Korea is just as fascist as communist, and that some other small states like Laos still retain communism. But when one looks at official state ideologies and their practice, these are the two most communist states. The Western world has fully embraced economic liberalism, although liberalism now has an inherent focus on welfarism alongside economic freedom.

By using welfare, workplace democracy, or other methods that preserve the market system, the modern anti-capitalist tries to create what they call a mixed economy. This mixed economy is supposed to be a combination of socialism and capitalism, but in reality it is trying to achieve the moral goals of socialism while still retaining the benefits of a capitalist economy. Trying to create this balance between socialism and capitalism results in a system that is still fundamentally capitalist. However, this capitalist system is restricted and encumbered by various reforms and privileges granted to favored groups. Modern anti-capitalism is no longer anti-capitalist, but simply capitalism with additional fetters. The Nordic countries are the only Western countries that socialists can point to, and they have relatively laissez-faire principles outside of the welfare state. And even the Nordic welfare states were previously balanced by the relatively high trust and high quality populations. This may be related to eugenics or other factors that make these countries different. The success of these countries is certainly despite the massive social democracies that they have in place. The only arguments that are being had concern the degree to which capitalism ought to be allowed to operate before it is restricted. The conflict is really about how capitalism ought to be improved and not whether to transform the economy into a socialist one. People who continue to call themselves socialists are far removed from what socialists used to be.

Cause for Optimism

Even traditional Keynesianism is nowhere in sight; the Keynesian assumptions still underline mainstream economic theory and some Keynesians are extremely prominent, but no one outside the Cathedral really argues for Keynesianism. There are new Keynesianism and neo-Keynesianism, which distance themselves from original Keynesianism and take a slightly more market-oriented approach. Even though Keynesianism was somewhat resurrected by the economic crash, it died again soon after. The far-left and the far-right are attempting to resurrect the theory again, but thus far they have had little luck in actually doing so.

Traditional Keynesianism is no longer a dominant paradigm, but rather confined to the spheres of radical Internet politics and extremely well-connected and state-sponsored academics. This does not mean that everyone is suddenly a libertarian; far from it. However, if a time traveler were to go back to the 1950s and tell Mises and Hayek that 60 years later, labor unions would be in decline, mainstream economics would not be hostile to the market economy, planned economies would be out of fashion, the government would not be seen as a god, and that the greatest current enemy to capitalism is universal healthcare, they would be extremely relieved.

Current Threats Against Capitalism

Since there is no organized and consistent opposition to capitalism as a whole in eminent positions or the common conscience, the threats against capitalism have become those parties which aim to limit capitalism rather than those that aim to entirely smash the capitalist system. Libertarians tend to be incredibly pessimistic and assume that the success of socialist propaganda with young people is indicative of a return to the old Communist Party, but it is actually just a desire for a more prominent central regulatory system and an increase in welfarism. There is no concentrated desire to end the market system as a whole. This is because it has been demonstrated that ending capitalism ends in ruin no matter what. The establishment media may try to downplay this as much as possible, but the common person knows that any system that is anti-capitalist ends in death and starvation. The foremost threat to capitalism is not that the state will exist or that some people seriously favor syndicalism, but that the state will gain an increasing mandate to restrict capitalism to the point that we are back to full socialism without realizing it.

Defending Capitalism

Libertarians tend to spend a lot of time in intellectual circles and on the Internet, the two places in which there still are dedicated socialists. The existence of socialists on the Internet and in intellectual circles does not demonstrate that anyone actually values old-style socialism in the real world. The word ‘socialism’ is still anathema for many of the older generation. Even worse, the continuous protest against socialism only serves as to make the modern form of socialism, which consists of taxing the rich so the rest of society can receive welfare handouts, more radical and rebellious. This is not an actual threat against the capitalist system itself, but rather a threat to the free and unrestrained capitalism that libertarians favor. But libertarians are still overly focused on the 20th-century phenomena of intellectually pure socialism and Keynesianism, and thus associate the relatively market-friendly social democrats and new Keynesians with the original socialist and Keynesian platforms. Libertarians need to acknowledge that the modern opponents of capitalism do not think like their predecessors.

Since free marketeers have won the ideological debate, it is better to focus on the debate over restrictions imposed upon capitalism. One often hears that capitalism is good up to a point but needs to be restricted. Most people have their own preconceived boundaries, past which they cannot see how capitalism can work. Modern anti-capitalism will not be defeated by talking about lower tax rates or less regulation. It will also not be defeated by defending capitalism on principle. Instead, it is necessary to demonstrate how capitalism can solve problems and how the state fails to do so. Appealing to regulation or taxes will always come across as deliberately reducing the burden on those who are privileged in society and not caring about the poorest and the weakest. This feeds into the moral sentiment from which anti-capitalism arises. Libertarians must make sure that people do not automatically assume that capitalism should be subordinated to the state at the certain occasions in which they think that it does not work. Empirical demonstration will be more convincing than arguing based on principles and abstractions. It is vital to demonstrate how capitalism can solve the problems people think it creates. We should not work on what is irrelevant to average people, but rather focus on the reasons they oppose capitalism. People rightly do not want to be oppressed and exploited by their bosses, health insurance providers, or Internet service providers. This means that we need to ensure that people do not associate pure capitalism with being oppressed and exploited by those with economic pre-eminence.

Many people currently favor free healthcare, central banking, extensive welfare, workplace safety regulations, and other conveniences. The goal should not be to tell these people about how the wondrous forces of the free market will fix all their problems, but rather demonstrate how the state is not effective at providing these services and how unrestrained capitalism is theoretically capable of doing so. An appeal to the invisible hand setting a rational economic order is not poignant when these people already acknowledge that the capitalist market system is the best system for accomplishing most goals. They accept that the capitalist premises are correct but simply refuse to follow through in certain areas. People are completely aware of why capitalism benefits them, as Westerners live in overwhelmingly capitalist societies.

There are countries in which there is an increasing opposition to capitalism, but these are isolated places and do not reflect the paradigm across most of the West. It is unnecessary to prove how capitalism can function; we need to prove what capitalism can do. Modern anti-capitalism is a very weak form of anti-capitalism, clinging onto the emotional appeal that it still has and nothing more. If we are able to defeat this aspect of anti-capitalism, we will be the closest we have been to a full acceptance of capitalism since the 19th century.

Conclusion

Education is not sufficient for creating a libertarian society, but it is necessary. Libertarian language and arguments are still tailored to those who oppose capitalism on principle and not anti-capitalists who think capitalism is a mostly decent system. This is improving somewhat, but there are very few systematic works that show how capitalism can properly solve issues and how the state is not a virtuous or effective mechanism. The people who promote capitalism as a definitive solution and not an ideal are few and far between. We do not need to show how capitalism can cause a general increase in the quality of living, as this is already known. Our current ideological opponents are the people who believe in the new neo-classical synthesis, the people who ask about how libertarians think roads would work and the people who think that healthcare gets expensive in a free market. These are not people who hate capitalism and the free market; they are not dedicated socialists or Keynesians; they are people who know how capitalism increases their quality of living.

To protect capitalism, we need to focus on furthering it because restriction is the only way in which capitalism is actually threatened. Fighting socialism is not completely useless, but the purpose of doing so should be to demonstrate how the socialist dogma is wrong to those who could be swayed by socialist moralism. We also need to talk to people in person; we cannot contain our arguments to fringe radicals on the Internet. Convincing someone is almost always impossible if there is no real conversation with that person. We should make sure that the line people draw of what capitalism is capable of is the closest it can be to the full and pure form of capitalism.

The Economic Fallacies of Black Friday: 2017 Edition

Today, shoppers across America will participate in the largest shopping day of the year: Black Friday. The National Retail Federation is estimating that 164 million customers will be shopping on Black Friday weekend. For the first time, their estimate includes Cyber Monday, which had previously been treated separately. The 2016 estimates were 137.4 million between Thanksgiving and Sunday, and 122.2 million on Monday. The actual result from 2016 was 154.4 million between Thanksgiving and Sunday. A similar adjustment to the predicted value for 2017 would mean an actual number of shoppers close to 184.3 million.

The NRF estimates that total sales for the holiday season will be between $678.75 billion and $682 billion, up from $658.3 billion in 2016. This would be an annual increase of 3.6 to 4.0 percent. The estimate for 2016 was $655.8 billion, suggesting that the total sales for 2017 may be around $683 billion. This year, the NRF estimates that retailers will hire between 500,000 and 550,000 seasonal employees, compared with the actual 575,000 they hired during the 2016 holiday season versus an estimate of 640,000 to 690,000. We may therefore expect that retailers will actually hire about 453,900 seasonal employees. On the surface, this may appear to be a marvelous celebration of free market capitalism. But let us look deeper through the lenses of the broken window fallacy and the idea of malinvestment.

To view holiday shopping as a boost to the economy ignores the fact that people could either be spending that money in other ways or saving it. In other words, such an approach is an example of the broken window fallacy because it focuses only on what is seen and ignores opportunity costs. If people would save their money rather than spending it on various holiday gifts, then this money would be invested in one thing or another. As Henry Hazlitt explains in Chapter 23 of Economics in One Lesson, saving is really just another form of spending, and one that has a greater tendency to allocate resources where they are most needed.

Per capita spending is predicted to be $967.13 in 2017, up from the 2016 estimate of $935.58. The above problems get even worse if people use credit cards to spend money that they do not currently have. With a current credit card interest rate of 16.72 percent and a minimum payment of 4.0 percent, a debt of $967.13 would take 5.5 years to pay off and would cost $1,372.85. This is $405.72 wasted on interest payments that could have been kept in one’s accounts or put toward a productive purpose. Multiply this by the 184.3 million shoppers predicted earlier, and the result is that as much as $74.8 billion could be spent on interest payments.

When people purchase unwanted gifts and/or buy gifts with money they do not currently have, their choices encourage malinvestments. A malinvestment is an investment in a line of production that is mistaken in terms of the real demands of the economy, which leads to wasted capital and economic losses. The holiday shopping season contains a subset of shopping which creates systematic and widespread mistakes in investment and production. Although the effect is not as severe as what occurs during an Austrian business cycle bust and is both caused and resolved in fundamentally different ways, there is a noticeable hangover effect on the economy. A look at the average monthly returns on the Standard and Poor’s 500 shows that while the worst month for investments is September, the next three worst months for investing are February, May, and March. (April would likely be bad as well if not for income tax returns providing an artificial economic boost.) An economic downturn occurs in the historical average following the holiday season, but as this has become an expected annual occurrence, many analysts simply do not look for an explanation of these results, as they are perceived to be natural. Even so, this appears to be a small-scale business cycle that repeats annually.

With these arguments in mind, would we all be better off if we just canceled the holiday shopping season? It is an open question, but the Austrian School of economics suggests that we could have a better economy if the burst of economic activity in late November and December were spread throughout the year and people did not spend money they do not have on items they do not need.

Building Liberty in Minecraft

The defining feature of this time period is the Internet, which provides unprecedented freedom of speech and access to information. But the more things change, the more they remain the same. Millennials have suffered from the same steady march against economic freedom. We understand much about social media and relatively little about free markets. But a new generation can know about a free society right now, and this led me to build Liberty Minecraft.

Prior Developments

For the past quarter century, the Internet has generated emergent digital economies in which people exchange digital items for analog items, usually fiat currency. These economies offer pay at any rate, avoiding minimum wage laws that remove low rungs on the economic ladder. Digital economies also exist in massively multiplayer online games.

In 2007, more than one hundred thousand people were employed as gold farmers in World of Warcraft for as little as thirty cents per hour.[1] A gold farmer is a person who plays multiplayer games to earn in-game currency for the purpose of selling it for real-world currency. Earning in-game wealth takes time and effort. Because online games can be accessed all over the world, people can earn a competitive wage in relatively low-wage markets by selling in-game currency to players in high-wage markets. Gold farming uses server bandwidth in exchange for money that players wish to spend on the game, and this costs game developers. It was once typical for game developers to ban gold farmers, but in recent years they have turned toward economic freedom as a solution to rising costs due to gold farming.

Today, players of Runescape and Eve Online may exchange in-game wealth for tokens called Bonds or CCP, respectively. These tokens are purchased for cash by one player, traded in game to another player, and may be used to pay for membership services that would otherwise cost $10-$15 per month. Game developers like play-to-pay business models because they can sell membership services for a 30% premium and use their own players to regain market share from gold farmers.[2] For gamers, play-to-pay models can provide dollar-equivalent hourly wages of less than $1, but highly skilled players can earn $5 or more. One may earn a wage during the least productive periods of their daily lives, producing at least some value instead of none.

Transactions are not always small. For example, a player of Entropia Universe spent $2.5 million to purchase virtual real estate in 2012. This was done because in the game, land owners share the revenue generated by player-to-player transactions, and this revenue is directly convertible to US dollars. This speculative bet may have yielded annual returns of 27 percent.[3] By their nature, speculations infrequently generate a profit, but one develops ability by trial and error.

Digital economies make it easier to learn about economics. Many capitalist acts between consenting adults are illegal in the real world,[4] but such barriers are rare in online games. Digital exchanges execute billions of trades per month for any of a thousand virtual commodities. Players of all ages can make thousands of equity decisions in those markets without having to file capital gains taxes. People can lose a digital shirt and learn real economic lessons.

Experiencing economic freedom in games is all well and good. This may partly explain why millennials were so attracted to Ron Paul’s “End the Fed” movement. However, organizing society by libertarian principles is about more than economics. Non-aggression and private property require freedom from the state. No such freedom presently exists in the real world. The lack of such empirical examples may help one understand why those same millennials support Bernie Sanders and Donald Trump just four years later. We do not understand freedom from the state, and this has not changed. Because a libertarian society is foreign to our experience, people ask questions like “who will build the roads?” The answer is actually simple. Without a state, people who want roads and are capable of building them do so. I have seen this in action because of Minecraft.

Original Conditions in the World of Minecraft

Minecraft is a sandbox game. Play is self-organized within a block building, 3D world. Players may select one of three basic game modes. In Creative, one may access a menu with infinite resources. In Survival, one must gather and consume resources to live but will respawn if they die. Hardcore mode is like Survival, but death is final.

Minecraft worlds are large by default. From an origin, a player may travel 30,000 kilometers along any axis and may build 256 meters to the world’s zenith. This is roughly half the size of Neptune by surface area (if it were a terrestrial planet) or seven times the surface area of Earth. Each Minecraft world has three dimensions of this size and depth. Each world is generated algorithmically from an 8-byte seed, a string of numbers. There are 264 possible 8-byte strings, leading to over 18 quadrillion possible Minecraft worlds.

The Virtual State of Nature

Online, Minecraft is lawless. Before modifications of any kind, the only rules which govern player behavior are physical laws. You have exclusive control over your player character but anyone may attack and try to kill you, thereby gaining access to resources that you carry or protect. However, in such large worlds with abundant ‘natural’ resources, violent conflict is relatively rare because it is simply easier to work for what one wants.

Competition among Minecraft servers is unfettered and meritocratic. Engagement is high; Minecraft is the best-selling computer game at present. The barrier to entry is low: a Minecraft server can be created or copied in minutes, deployed online at low cost, and operated by anyone. In less than one minute, a player may select and visit any of thousands of servers. Participation is voluntary; players always have the option to leave a Minecraft server at once.

Minecraft servers have diverse rule sets. An infinite number of server configurations are possible with server plugins that modify the game. Within commercial use guidelines and technical limitations, server operators establish rules according to their preference. These rules need not and often do not conform with existing laws in the real world. These rules can be and are often enforced by computer code. In this way, all Minecraft servers are new principalities which may or may not be governed by smart contracts.

Social orders are spontaneously created within Minecraft. Players develop institutions that are optimized to solve problems. Users build means to produce, distribute, and trade valued goods, especially food and building materials. They create farms, roads and shelters, and also chests to organize and store items for later use. Players create and promote their own social norms. If a player does not fill in potholes or replant trees to replace those that they have felled, other players may try to change their behavior. This may take various forms, from warning them in the game’s chat to attacking problematic players. Those who share values and aesthetics build their own communities and exclude (sometimes by violence) others with opposing values. Spontaneous order thus develops with or without an explicit ethical framework.

In Minecraft, people experience social orders with arbitrary rules. So, what happens if one creates a Minecraft server that defines rules by libertarian ethics and Austrian economics? In my case, the result is Liberty Minecraft.

Long Experience in a New Order

Liberty Minecraft is a sandbox for freedom. The goal was to establish a practice environment where people may test ideas within a digital free society and may learn about freedom by playing it. For over nine months, this goal has been achieved. Play is ordered spontaneously within the physical laws of Survival Minecraft. In a number of other ways Liberty Minecraft is different.

Liberty Minecraft is not as large as a default Minecraft setting. As before, there are three dimensions but their size has changed. The Overworld is seven kilometers on a side; just under nineteen square miles in surface area. This is roughly the size of Manhattan.[4] The Nether, another region, is just as large. The End, a place devoid of most resources, is ten times larger.

Some resources in Liberty Minecraft are renewable, while others are not. Resources must be gathered in order to be used or exchanged. Products are either created by the players or discovered in scarce structures that are native to Minecraft worlds. Liberty Minecraft could someday run out of trees, water, or soil, among other things.

Liberty Minecraft has few rules. Only one rule constrains player behavior; resolve nonviolent disputes nonviolently. Players of Liberty Minecraft must seek nonviolent solutions to the problem of scarcity. Two other rules further specify conditions that permit a player to use my server: read and understand the rules, and do not hack the server. The fourth rule is followed by myself and by the server itself. This rule does not bind the players, but rather provides them with an option and a promise: everything you claim is yours; if someone else claimed it first, then it is not yours. Private property rights within Liberty Minecraft are enforced by smart contracts.[5]

To claim property, a player may use a claim tool on unclaimed land and must spend claim blocks to create a claim. Claim blocks cost $20 each. A player may also purchase land from an existing claim holder. In both cases, smart contracts are optional and available to execute these transactions. Smart contracts also enforce all other forms of property on the server. This applies to player characters.

One may engage in combat with others provided that each player turns on the ability to do so. In Liberty Minecraft, a player character is protected from other players by default. This protection is optional. A player may disable these protections and enter player-versus-player mode. By entering this game mode, a player consents to be attacked at will by other players. This allows for combat between two or more people to take place, but only if all parties involved agree to enter into mutual combat.

Competition within Liberty Minecraft is unfettered and meritocratic. In under one minute, anyone who owns Minecraft for PC can join the server and begin to act within a libertarian social order. Player interactions are voluntary, with complete freedoms of association and discrimination. No one is required or forbidden to provide for others.

Liberty Minecraft uses Diamonds, one of the in-game commodities, as money.[6] At present, Diamonds are used to create the best tools and armor in Minecraft. They are also scarce, durable, and fungible. Within Survival Minecraft, diamonds cannot be farmed or produced synthetically. To obtain a diamond, one must search for hidden chests in scarce structures or dig underground for diamond ore.

Minecraft players seem to have freely chosen Diamonds as the medium of exchange. Thus, I have chosen Diamonds as money. However, a Diamond is indivisible. This problem was addressed by creating a Diamond Exchange to split a Diamond into $1,000. The value of a dollar is measured to fifteen decimal places, so there is plenty of room for revaluation if money becomes too valuable to perform ordinary transactions.

Engagement is strong so far; since the official launch in March 2017, players have engaged in more than 100,000 trades using our shop system. A single trade may consist of anything from one item to more than a thousand items, all player created. More than 8,000 hours have been logged by the players at the time of this writing. Liberty Minecraft is also cash flow positive and profitable.

Some Problems with Liberty Minecraft

There are four clear problems with Liberty Minecraft. First, the money is inherently disinflationary. Land claims as private property can only be traded when players have a “claim blocks from play” value that is larger than the size of the claim being traded, which is a technical limitation. To provide a real estate market with existing smart contracts, players must somehow accumulate claim blocks from play. To achieve this, players accumulate 20 claim blocks per hour, which is an arbitrary amount. All players receive the same amount per hour of play. Claim blocks are worth $20 each, so players currently receive a universal basic income of $400 per hour of play. Universal basic income is an obviously anti-libertarian element, but it does present the opportunity to solve this problem and observe what happens when a libertarian society eliminates universal basic income.

Second, within Liberty Minecraft, power is centralized in a single, flawed operator. I, Nathan Dempsey, make mistakes and correct them. Both types of actions can cause problems. For instance, when I created the world border in The End, I incorrectly calculated the area. The End was roughly ten times larger than I intended, and if I had left it that way, our world would become far too large for me to economically perform regular backups. I recalculated and changed the world size. This changes the availability of resources that are found in The End. I will make more mistakes as time goes on. However, if any player decides that my choices are intolerable they may (with some work) use software to download the world and their property. Then, they may put their version of the world online with server software and compete with me for players. This functions somewhat like a hard fork of a cryptocurrency. Following a land dispute, a player decided that absolute property rights are intolerable and left after downloading the world, which proves both that new competitors may enter my line of production and that I cannot be an ultimate decision maker.[7][8]

Third, the conditions of the game and server make theft and assault impossible. A player might create a death trap, but these can only be made on one’s own property, on unclaimed land, or on land in which they have been granted permission by the claim owner to create such hazards. Because property claims are impossible to violate (unless I chose to or a hacker managed to alter the server status), Liberty Minecraft does not provide a model for dealing with aggressors against property rights aside from having the server owner (me) remove someone from the server.

Finally, the Terms of Commercial Use prohibit anyone from selling soft currency for hard currency. Therefore, I cannot offer the play-to-pay model described in the opening without violating the Terms of Commercial Use. The terms provide a narrow range of ways that I can provide value to players in exchange for money. This even applies to affiliate marketing (which is not permitted), such as with Amazon. The consequence is that I must innovate within these narrow terms, which creates an interesting problem but deviates from a libertarian order. And ultimately, Mojang, the company that developed Minecraft, is regulated by the state, so Liberty Minecraft still operates within a statist framework to some degree.

Conclusion

Minecraft spontaneously generates social orders. Liberty Minecraft is an effort to create such an order based upon Austrian economics with libertarian ethics. Within Liberty Minecraft, players operate in an unfettered free market and experience social freedoms that are opposed by state aggression. This experience sharpens one’s thinking about economic and social affairs. Experiencing economic freedom online without freedom from the state has led people to reject the Federal Reserve System but favor the state at large. The goal of this project is to test libertarian ideas in a simulated environment and lead people to reject the state in favor of private property rights and non-aggression, which one experiences within Liberty Minecraft. Liberty Minecraft has some important problems that may be solved in future updates, and represents nothing less than a proof-of-concept for exploring social orders in games.

References

  1. Valdes, Giancarlo. “Jagex Wages War against Gold Farming in RuneScape 3 with Bonds” VentureBeat, 25 Sept. 2013. http://venturebeat.com/2013/09/25/jagex-wages-war-against-gold-farming-in-runescape-3-with-bonds/
  2. Dutton, Fred. “Entropia Universe player spends $2.5 million on virtual real estate” Eurogamer.net, 4 Apr. 2012. http://www.eurogamer.net/articles/2012-04-04-entropia-universe-player-spends-USD2-5-million-on-virtual-real-estate
  3. Block, Walter. “Fake Economic News | Walter Block” YouTube, Mises Media, 4 Aug. 2017. www.youtube.com/watch?v=FiwhlU4d-nY
  4. Dempsey, Nathan. “How The World Works” Liberty Minecraft, 14 Oct. 2017. www.libertyminecraft.com/how-the-world-works/
  5. Dempsey, Nathan. “How Private Property Works” Liberty Minecraft, 4 June 2017. www.libertyminecraft.com/how-private-property-works
  6. Dempsey, Nathan. “How The Money Works” Liberty Minecraft, 4 June 2017. www.libertyminecraft.com/how-the-money-works/
  7. Dempsey, Nathan. “Free Market Update: Land Disputes” Liberty Minecraft, July 2017. https://www.libertyminecraft.com/free-market-update-land-disputes/
  8. Hoppe, Hans-Hermann (2001). Democracy: The God That Failed. Transaction Publishers. p. 21.

Book Review: Libertarian Reaction

Libertarian Reaction is a collection of fifteen essays by Insula Qui. The book explores various issues from a libertarian reactionary perspective. The book is divided into three sections; one focusing on reaction, one focusing on liberty, and a long final essay.

The first part begins with an essay on the limits of libertarian ethics. In Savages, Qui deals with several types of humans who cannot be properly be considered people, and must instead be dealt with as lesser beings. The point that there is a difference between colonialism (the imposition of law and morality on people who have no rational conception of it) and colonization (a parallel development of law and morality while not imposing upon others) is important and oft-overlooked. The essay finishes with a denunciation of both Islam and communism as incompatible with libertarianism if each is to be practiced rigorously. The arguments are correct but elementary, which the author has since remedied elsewhere.

In Borders And Liberty, Qui weighs in on the debate over border policy, concluding that while state immigration restrictions are not libertarian and the only justifiable borders are private property boundaries, closed borders are a lesser evil than the forced integration imposed by modern states. He recommends restoration of the right to discriminate, sponsorship of and vicarious liability for immigrants by those who wish to bring them in, and elimination of welfare programs as methods of improving the current situation. References to support the assertions regarding demographics would improve the case made here.

Prerequisites for Liberty deals with the problem of humans who are not savages as described in the first essay but are nonetheless inclined to aggressive violence. Again, references to support demographic arguments would be helpful. Qui notes several obvious but underappreciated truths here, most notably that a libertarian social order cannot exist below a certain intelligence level, as this would preclude people from understanding the necessary rules of such an order. He correctly states that some people may convert to libertarianism by seeing it in practice instead of reaching it through reason. In fact, this is by far the more likely method of conversion in the near future. The role of hedonistic practices in damaging a social order are discussed, as is the folly of accepting non-libertarians into libertarian circles simply to grow numbers.

The next essay is Voluntary Ethnic Separation, and it explains the difference between what libertarianism requires one to accept and the common caricature of all such ideas as hateful racism. Qui shows great insight in tackling common leftist arguments here. He also makes the important point that collectivism can arise as a benign heuristic to help with decisions because people lack the capacity to deal with individuals beyond a certain point. However, the same demographic claims resurface without proper support. Finally, the point that ethnostatism could be a step toward breaking up large nation-states into more local forms of governance is overlooked by most libertarians, but not Qui.

The Antistatist Case for Monarchial Government is a longer essay that Qui included despite having changed his views on the matter, as he views it as being theoretically important. He makes a distinction between government (a manager of land and provider of essential services) and state (an entity that exercises a monopoly on initiatory force) which is lost on many people. He also explains that while a libertarian society would be imperfect, a state has even worse inefficiencies. Later, Qui hints at a potential problem with wilderness areas falling victim to a tragedy of the commons, but this could easily be solved by homesteading such areas. There are two significant errors here: a lack of accounting for the arguments made by Stefan Molyneux and others in favor of private dispute resolution organizations with regard to how law courts could function without a state, and a contradiction concerning redistribution and efficiency. The final part of the essay reads much like Hans-Hermann Hoppe’s case that monarchy is superior to democracy, and is reminiscent of the real-world example of Leichtenstein.

Qui tackles an uncomfortable issue that perhaps interests too many people in libertarian circles with The Libertarian Solution to the Age of Consent. He quickly rebuts the left-libertarians who wish to let children make decisions regarding sexual conduct, describing parenting of young children as a sort of regency until the child gains the ability to use reason. But Qui errs in saying that damages done by improper parenting are no different from any other sort of crime, as one can never truly be made whole from the lifelong detriments caused by improper parenting.

Dysgenics and Market Nobility discusses the corruption of the phrase “all men are created equal” from a statement of equality before the law into a belief in human biological uniformity. In doing so, he distinguishes between the natural elite of a free society and the power elite of a statist society, which are often conflated by leftists. Qui then explains how the two tend to work together in statist societies to keep the same families at the top for centuries rather than let the rags-to-riches-to-rags cycle properly play out. The essay then turns toward dysgenics, which refers to programs that have the opposite of a eugenic effect. The roles of feminism, sexual liberation, and welfare statism are examined in this light.

The first part concludes with Civilization and Natural Law, which makes unconventional but strong arguments in favor of censoring and physically removing people on the basis of their political opinions. Qui’s case is more utilitarian and reserved than it needs to be, but he still reaches the correct result that freedom of speech is a privilege that comes with owning property, not a fundamental right. He then finds that the solution to intractable differences between people and groups is mutual discrimination and exclusion, as forced integration necessarily results in racial tensions.

The second section begins with The Freedom of Government, which revisits themes from several of the previous essays. Qui makes a powerful case that people who claim to believe in democracy but deny people the self-determination to choose their form of governance are charlatans. He also observes that a large enough number of small monarchies is effectively equivalent to a libertarian social order. The only problem with this essay is brevity, as more explanation of each point would greatly improve the presentation.

The Curse of Citizenship explores how the modern state makes its subjects into cogs of its machine through citizenship as a legal concept. Qui shows that democracy, contrary to leftist propaganda, only makes this worse by providing an otherwise absent appearance of legitimacy. He correctly recognizes the futility of localism as an ultimate strategy, as it fails to account for the supremacy of higher levels of government. But his contention that “corruption within the state is nothing other than the people who are creating the illusion themselves being aware of the illusion” is misguided; one can have this knowledge without weaponizing it into corruption, and one can be corrupt without such an awareness.

In The Role of Co-Operation in Competition, Qui refutes several myths about capitalism. First, he proves that capitalism is not as anti-social as its critics claim. Second, he corrects the misconception of competition as being necessarily aggressive in nature. Third, he explains how competition can actually be a form of cooperation, in that individuals or groups can agree to compete in order to find out which methods are superior. Qui segues into several examples of cooperation that are not strictly competitive, such as food companies co-marketing with drink companies and agreements between private road companies. To complete the argument, he examines how the contrapositive is also true; namely, that removing competition also removes an incentive to cooperate. He finishes with a brief discussion of cartels and makes the insightful observation that a labor union is not commonly recognized as a cartel, despite functioning much like one.

It is only in Reverse Claims to Property that Qui truly goes off the libertarian reservation in his thinking, though he admits at the beginning that he may be doing so. Here, he tries (and fails) to invent an inverse of property rights to resolve questions of state-occupied property and wilderness areas. Qui again neglects other libertarian theories on how to deal with pollution. This un-ownership would, as he suggests, legitimize rights violations in some cases.

In Who Watches the Watchmen, Qui explores the libertarian answer to this age-old question, namely that the watchmen (in the form of private defense agencies) all watch each other. Here he enters an off-topic though informative discussion on the impossibility of eliminating the state by democratic means. He then returns to the topic to find that re-establishment of a state is the worst case scenario in a stateless society, but all economic and military incentives work against it. That it is the worst case means that all other outcomes must be better, setting this particular objection on its ear.

National Defence Without Coercion is the last essay in the second part, and it deals with the subject at length. Qui begins by noting the common fallacy committed by statists: using a state to defend people against other states does not change the fact that people are subjugated by a state; it only changes which state is in control. He covers the basics of how a private defense agency should function, but is a bit too enamored with nationalism. His comparisons between a private defense agency and an insurance company make one wonder where such arguments were in earlier essays. The latter part includes some novel thought on how the facilities of a private defense agency might be employed in other ways during peacetime. The conclusion discusses the difference between pre-modern gentlemen’s war and modern total war, with libertarianism likely to end modern warfare and return us to the less destructive pre-modern type of warfare. This essay and the previous essay could have been combined.

The final part consists of one much longer essay titled Examining Cultural Destruction. Qui examines the causes and symptoms of cultural decay, then proposes solutions. The role of the state and central banking in reducing time preferences is explained, then Qui shows how capitalism makes this worse not by being bad in and of itself, but by amplifying whatever inputs it receives. Egalitarianism is blamed in the Rothbardian sense of a revolt against nature, as is the loss of autonomy and identity that statism causes. Symptoms of these causes are identified as the demonization of productive work, the collapse of stable interpersonal and family relationships, the loss of spiritualism and hierarchy, the ascent of shallow materialism, the prevalence of escapism, and the expansion of empiricism into inherently rational disciplines. To solve these problems, Qui recommends absolute private property rights, abolition of central banking and as much of the state as possible, and a restoration of traditional values.

The first word that comes to mind when describing the entire collection is ‘incomplete.’ Qui lacked an editor for the book, and it shows. The grammatical constructions and punctuation are frequently in need of revision, and each of the essays would benefit from a much deeper bibliography. But the thoughts expressed therein are sufficiently intriguing to merit reading despite these flaws.

Rating: 4/5