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[This essay was originally published in Reassessing the Presidency: The Rise of the Executive State and the Decline of Freedom, edited by John V. Denson, pp. 667–696.



In a recent survey, people of different nationalities were asked how proud they were to be American, German, French, etc., and whether or not they believed that the world would be a better place if other countries were just like their own. The countries ranking highest in terms of national pride were the United States and Austria. As interesting as it would be to consider the case of Austria, we shall concentrate here on the United States and the question of whether and to what extent the American claim can be justified.

In the following, we will identify three main sources of American national pride, the first two of which are justified sources of pride, while the third actually represents a fateful error. Finally, we will look at how this error might be repaired.

I - A Country of Pioneers

The first source of national pride is the memory of America's not-so-distant colonial past as a country of pioneers.

In fact, the English settlers coming to North America were the last example of the glorious achievements of what Adam Smith referred to as "a system of natural liberty": the ability of men to create a free and prosperous commonwealth from scratch. Contrary to the Hobbesian account of human nature — homo homini lupus est — the English settlers demonstrated not just the viability but also the vibrancy and attractiveness of a stateless, anarchocapitalist social order. They demonstrated how, in accordance with the views of John Locke, private property originated naturally through a person's original appropriation — his purposeful use and transformation — of previously unused land (wilderness). Furthermore, they demonstrated that, based on the recognition of private property, division of labor, and contractual exchange, men were capable of protecting themselves effectively against antisocial aggressors — first and foremost by means of self-defense (less crime existed then than exists now), and as society grew increasingly prosperous and complex, by means of specialization, i.e., by institutions and agencies such as property registries, notaries, lawyers, judges, courts, juries, sheriffs, mutual defense associations, and popular militias.

Moreover, the American colonists demonstrated the fundamental sociological importance of the institution of covenants: of associations of linguistically, ethnically, religiously, and culturally homogeneous settlers led by and subject to the internal jurisdiction of a popular leader-founder to ensure peaceful human cooperation and maintain law and order.

II - The American Revolution

The second source of national pride is the American Revolution.

In Europe there had been no open frontiers for centuries, and the intra-European colonization experience lay in the distant past. With the growth of the population, societies had assumed an increasingly hierarchical structure: of free men (freeholders) and servants, lords and vassals, overlords, and kings. While distinctly more stratified and aristocratic than colonial America, the so-called feudal societies of medieval Europe were also typically stateless social orders.

A state, in accordance with generally accepted terminology, is defined as a compulsory territorial monopolist of law and order (an ultimate decision maker). Feudal lords and kings did not typically fulfill the requirements of a state; they could only "tax" with the consent of the taxed, and on his own land every free man was as much a sovereign (ultimate decision maker) as the feudal king was on his.

However, in the course of many centuries, these originally stateless societies had gradually transformed into absolute — statist — monarchies. While they had initially been acknowledged voluntarily as protectors and judges, European kings had at long last succeeded in establishing themselves as hereditary heads of state. Resisted by the aristocracy but helped along by the "common people," they had become absolute monarchs with the power to tax without consent and to make ultimate decisions regarding the property of free men.

These European developments had a twofold effect on America. On the one hand, England was also ruled by an absolute king, at least until 1688, and when the English settlers arrived on the new continent, the king's rule was extended to America. Unlike the settlers' founding of private property and their private — voluntary and cooperative — production of security and administration of justice, however, the establishment of the royal colonies and administrations was not the result of original appropriation (homesteading) and contract — in fact, no English king had ever set foot on the American continent — but of usurpation (declaration) and imposition.

On the other hand, the settlers brought something else with them from Europe. There, the development from feudalism to royal absolutism had not only been resisted by the aristocracy but it was also opposed theoretically with recourse to the theory of natural rights as it originated within Scholastic philosophy. According to this doctrine, government was supposed to be contractual, and every government agent, including the king, was subject to the same universal rights and laws as everyone else. While this may have been the case in earlier times, it was certainly no longer true for modern absolute kings. Absolute kings were usurpers of human rights and thus illegitimate. Hence, insurrection was not only permitted but became a duty sanctioned by natural law.

The American colonists were familiar with the doctrine of natural rights. In fact, in light of their own personal experience with the achievements and effects of natural liberty and as religious dissenters who had left their mother country in disagreement with the king and the Church of England, they were particularly receptive to this doctrine.

Steeped in the doctrine of natural rights, encouraged by the distance of the English king, and stimulated further by the puritanical censure of royal idleness, luxury, and pomp, the American colonists rose up to free themselves of British rule.

As Thomas Jefferson wrote in the Declaration of Independence, government was instituted to protect life, property, and the pursuit of happiness. It drew its legitimacy from the consent of the governed. In contrast, the royal British government claimed that it could tax the colonists without their consent. If a government failed to do what it was designed to do, Jefferson declared, "it is the right of the people to alter or abolish it, and to institute new government, laying its foundation on such principles, and organizing its powers in such form, as to them shall seem most likely to effect their safety and happiness."

III - The American Constitution

But what was the next step once independence from Britain had been won? This question leads to the third source of national pride — the American Constitution — and the explanation as to why this Constitution, rather than being a legitimate source of pride, represents a fateful error.

Thanks to the great advances in economic and political theory since the late 1700s, in particular at the hands of Ludwig von Mises and Murray N. Rothbard, we are now able to give a precise answer to this question. According to Mises and Rothbard, once there is no longer free entry into the business of the production of protection and adjudication, the price of protection and justice will rise and their quality will fall. Rather than being a protector and judge, a compulsory monopolist will become a protection racketeer — the destroyer and invader of the people and property that he is supposed to protect, a warmonger, and an imperialist.

That in all cases, for all commodities that serve to provide for the tangible or intangible needs of the consumer, it is in the consumer's best interest that labor and trade remain free, because freedom of labor and trade have as their necessary and permanent result the maximum reduction of price. … Whence it follows: That no government should have the right to prevent another government from going into competition with it, or to require consumers of security to come exclusively to it for this commodity (p. 3).

If, on the contrary, the consumer is not free to buy security wherever he pleases, you forthwith see open up a large profession dedicated to arbitrariness and bad management. Justice becomes slow and costly, the police vexatious, individual liberty is no longer respected, the price of security is abusively inflated and inequitably apportioned, according to the power and influence of this or that class of consumers. (pp. 13-14)

Indeed, the inflated price of protection and the perversion of the ancient law by the English king, both of which had led the American colonists to revolt, were the inevitable result of compulsory monopoly. Having successfully seceded and thrown out the British occupiers, it would only have been necessary for the American colonists to let the existing homegrown institutions of self-defense and private (voluntary and cooperative) protection and adjudication by specialized agents and agencies take care of law and order.

This did not happen, however. The Americans not only did not let the inherited royal institutions of colonies and colonial governments wither away into oblivion; they reconstituted them within the old political borders in the form of independent states, each equipped with its own coercive (unilateral) taxing and legislative powers. While this would have been bad enough, the new Americans made matters worse by adopting the American Constitution and replacing a loose confederation of independent states with the central (federal) government of the United States.

This Constitution provided for the substitution of a popularly elected parliament and president for an unelected king, but it changed nothing regarding their power to tax and legislate. To the contrary, while the English king's power to tax without consent had only been assumed rather than explicitly granted and was thus in dispute the Constitution explicitly granted this very power to Congress. Furthermore, while kings — in theory, even absolute kings — had not been considered the makers but only the interpreters and executors of preexisting and immutable law, i.e., as judges rather than legislators,

there is, in the Middle Ages, no such thing as the "first application of a legal rule." Law is old; new law is a contradiction in terms; for either new law is derived explicitly or implicitly from the old, or it conflicts with the old, in which case it is not lawful. The fundamental idea remains the same; the old law is the true law, and the true law is the old law. According to medieval ideas, therefore, the enactment of new law is not possible at all; and all legislation and legal reform is conceived of as the restoration of the good old law which has been violated. (p. 151)

Similar views concerning the permanency of law and the impermissibility of legislation were still held by the 18th-century French Physiocrats such as Mercier de la Riviere, author of a book on L'Ordre Naturel and one time governor of Martinique. Called upon for advice on how to govern by the Russian Czarina Catherine the Great, de la Riviere is reported to have replied that law must be based

on one [thing] alone, Madame, the nature of things and man. … To give or make laws, Madame, is a task which God has left to no one. Ah! What is man, to think of himself capable of dictating laws to beings whom he knows not? The science of government is to study and recognize the laws which God has so evidently engraved in the very organization of man, when He gave him existence. To seek to go beyond this would be a great misfortune and a destructive undertaking. (Quoted in Murray N. Rothbard, Economic Thought Before Adam Smith: An Austrian Perspective on the History of Economic Thought [Cheltenham, U.K.: Edward Elgar, 1995], vol. 1, p. 371)

See also de Jouvenel, Sovereignty, pp. 172–73 and 189.

the Constitution explicitly vested Congress with the power of legislating, and the president and the Supreme Court with the powers of executing and interpreting such legislated law.

The much cherished modern view, according to which the adoption of "constitutional government" represents a major civilizational advance from arbitrary government to the rule of law and which attributes to the United States a prominent or even preeminent role in this historical breakthrough, then, must be considered seriously flawed. This view is not only obviously contradicted by documents such as the Magna Charta (1215) or the Golden Bull (1356) but more important, it misrepresents the nature of premodern governments. Such governments either entirely lacked the most arbitrary and tyrannical of all powers, i.e., the power to tax and legislate without consent, or even if they did possess these powers, governments were severely restricted in exercising them because such powers were widely regarded as illegitimate, i.e., as usurped rather than justly acquired. In distinct contrast, modern governments are defined by the fact that the powers to tax and legislate are recognized explicitly as legitimate; that is, all "constitutional" governments, whether in the United States or anywhere else, constitute state governments. Robert Nisbet is thus correct in noting that

a pre-modern king may have ruled at times with a degree of irresponsibility that few modern governmental officials can enjoy, but it is doubtful whether, in terms of effective powers and services, any king of even the seventeenth-century "absolute monarchies" wielded the kind of authority that now inheres in the office of many high-ranking officials in the democracies. There were then too many social barriers between the claimed power of the monarch and the effective execution of this power over individuals. The very prestige and functional importance of church, family, gild, and local community as allegiances limited the absoluteness of the State's power. (Community and Power, pp. 103–04)

In effect, what the American Constitution did was only this: Instead of a king who regarded colonial America as his private property and the colonists as his tenants, the Constitution put temporary and interchangeable caretakers in charge of the country's monopoly of justice and protection.

These caretakers did not own the country, but as long as they were in office, they could make use of it and its residents to their own and their protégés' advantage. However, as elementary economic theory predicts, this institutional setup will not eliminate the self-interest-driven tendency of a monopolist of law and order toward increased exploitation. To the contrary, it only tends to make his exploitation less calculating, more shortsighted, and wasteful. As Rothbard explained,

while a private owner, secure in his property and owning its capital value, plans the use of his resource over a long period of time, the government official must milk the property as quickly as he can, since he has no security of ownership. … [G]overnment officials own the use of resources but not their capital value (except in the case of the "private property" of a hereditary monarch). When only the current use can be owned, but not the resource itself, there will quickly ensue uneconomic exhaustion of the resources, since it will be to no one's benefit to conserve it over a period of time and to every owner's advantage to use it up as quickly as possible. … The private individual, secure in his property and in his capital resource, can take the long view, for he wants to maintain the capital value of his resource. It is the government official who must take and run, who must plunder the property while he is still in command. Murray N. Rothbard, Power and Market: Government and the Economy (Kansas City: Sheed Andrews and McMeel, 1977), pp. 188–89. See further in chapters 1–3. In light of these considerations — and in contrast to common wisdom on the matter — one reaches the same conclusion regarding the ultimate "success" of the American Revolution as H.L. Mencken, A Mencken Chrestomathy (New York: Vintage Books, 1982): Political revolutions do not often accomplish anything of genuine value; their one undoubted effect is simply to throw out one gang of thieves and put in another. … Even the American colonies gained little by their revolt in 1776. For twenty-five years after the Revolution they were in far worse condition as free states than they would have been as colonies. Their government was more expensive, more inefficient, more dishonest, and more tyrannical. It was only the gradual material progress of the country that saved them from starvation and collapse, and that material progress was due, not to the virtues of their new government, but to the lavishness of nature. Under the British hoof they would have got on as well, and probably a great deal better. (pp. 145-46)

Moreover, because the Constitution provided explicitly for "open entry" into state government — anyone could become a member of Congress, president, or a Supreme Court judge — resistance against state property invasions declined; and as the result of "open political competition" the entire character structure of society became distorted, and more and more bad characters rose to the top.

Free entry and competition is not always good. Competition in the production of goods is good, but competition in the production of bads is not. Free competition in killing, stealing, counterfeiting, or swindling, for instance, is not good; it is worse than bad. Yet this is precisely what is instituted by open political competition, i.e., democracy.

In every society, people who covet another man's property exist, but in most cases people learn not to act on this desire or even feel ashamed for entertaining it. In an anarchocapitalist society in particular, anyone acting on such a desire is considered a criminal and is suppressed by physical violence. Under monarchical rule, by contrast, only one person — the king — can act on his desire for another man's property, and it is this that makes him a potential threat. However, because only he can expropriate while everyone else is forbidden to do likewise, a king's every action will be regarded with utmost suspicion. Moreover, the selection of a king is by accident of his noble birth. His only characteristic qualification is his upbringing as a future king and preserver of the dynasty and its possessions. This does not assure that he will not be evil, of course; at the same time, however, it does not preclude that a king might actually be a harmless dilettante or even a decent person.

In distinct contrast, by freeing up entry into government, the Constitution permitted anyone to openly express his desire for other men's property; indeed, owing to the constitutional guarantee of "freedom of speech," everyone is protected in so doing. Moreover, everyone is permitted to act on this desire, provided that he gains entry into government; hence, under the Constitution, everyone becomes a potential threat.

To be sure, there are people who are unafflicted by the desire to enrich themselves at the expense of others and to lord it over them; that is, there are people who wish only to work, produce, and enjoy the fruits of their labor. However, if politics — the acquisition of goods by political means (taxation and legislation) — is permitted, even these harmless people will be profoundly affected.

In order to defend themselves against attacks on their liberty and property by those who have fewer moral scruples, even these honest, hardworking people must become "political animals" and spend more and more time and energy developing their political skills. Given that the characteristics and talents required for political success — good looks, sociability, oratorical power, charisma, etc. — are distributed unequally among men, then those with these particular characteristics and skills will have a sound advantage in the competition for scarce resources (economic success) as compared with those without them.

Worse still, given that, in every society, more "have-nots" of everything worth having exist than "haves," the politically talented who have little or no inhibition against taking property and lording it over others will have a clear advantage over those with such scruples. That is, open political competition favors aggressive, hence dangerous, rather than defensive, hence harmless, political talents and will thus lead to the cultivation and perfection of the peculiar skills of demagoguery, deception, lying, opportunism, corruption, and bribery. Therefore, entrance into and success within government will become increasingly impossible for anyone hampered by moral scruples against lying and stealing.

Unlike kings then, congressmen, presidents, and Supreme Court judges do not and cannot acquire their positions accidentally. Rather, they reach their position because of their proficiency as morally uninhibited demagogues. Moreover, even outside the orbit of government, within civil society, individuals will increasingly rise to the top of economic and financial success, not on account of their productive or entrepreneurial talents or even their superior defensive political talents, but rather because of their superior skills as unscrupulous political entrepreneurs and lobbyists. Thus, the Constitution virtually assures that exclusively dangerous men will rise to the pinnacle of government power and that moral behavior and ethical standards will tend to decline and deteriorate over all.

Moreover, the constitutionally provided "separation of powers" makes no difference in this regard. Two or even three wrongs do not make a right. To the contrary, they lead to the proliferation, accumulation, reinforcement, and aggravation of error. Legislators cannot impose their will on their hapless subjects without the cooperation of the president as the head of the executive branch of government, and the president in turn will use his position and the resources at his disposal to influence legislators and legislation. And although the Supreme Court may disagree with particular acts of Congress or the president, Supreme Court judges are nominated by the president and confirmed by the Senate and remain dependent on them for funding. As an integral part of the institution of government, they have no interest in limiting but every interest in expanding the government's, and hence their own, power.

IV - Two Hundred Years Later …

After more than two centuries of "constitutionally limited government," the results are clear and incontrovertible. At the outset of the American "experiment," the tax burden imposed on Americans was light, indeed almost negligible. Money consisted of fixed quantities of gold and silver. The definition of private property was clear and seemingly immutable, and the right to self-defense was regarded as sacrosanct. No standing army existed, and, as expressed in George Washington's Farewell Address, a firm commitment to free trade and a noninterventionist foreign policy appeared to be in place. Two hundred years later, matters have changed dramatically.

Now, year in and year out, the American government expropriates more than 40 percent of the incomes of private producers, making even the economic burden imposed on slaves and serfs seem moderate in comparison. Gold and silver have been replaced by government-manufactured paper money, and Americans are being robbed continually through money inflation. The meaning of private property, once seemingly clear and fixed, has become obscure, flexible, and fluid. In fact, every detail of private life, property, trade, and contract is regulated and re-regulated by ever-higher mountains of paper laws (legislation). With increasing legislation, ever more legal uncertainty and moral hazards have been created, and lawlessness has replaced law and order.

Last but not least, the commitment to free trade and noninterventionism has given way to a policy of protectionism, militarism, and imperialism. In fact, almost since its beginnings the US government has engaged in relentless aggressive expansionism and, starting with the Spanish-American War and continuing past World War I and World War II to the present, the United States has become entangled in hundreds of foreign conflicts and risen to the rank of the world's foremost warmonger and imperialist power. In addition, while American citizens have become increasingly more defenseless, insecure, and impoverished, and foreigners all over the globe have become ever more threatened and bullied by US military power, American presidents, members of Congress, and Supreme Court judges have become ever more arrogant, morally corrupt, and dangerous.

What can possibly be done about this state of affairs? First, the American Constitution must be recognized for what it is — an error.

As the Declaration of Independence noted, government is supposed to protect life, property, and the pursuit of happiness. Yet in granting government the power to tax and legislate without consent, the Constitution cannot possibly assure this goal but is instead the very instrument for invading and destroying the right to life, property, and liberty. It is absurd to believe that an agency that may tax without consent can be a property protector. Likewise, it is absurd to believe that an agency with legislative powers can preserve law and order. Rather, it must be recognized that the Constitution is itself unconstitutional, i.e., incompatible with the very doctrine of natural human rights that inspired the American Revolution.

Indeed, no one in his right mind would agree to a contract that allowed one's alleged protector to determine unilaterally, without one's consent, and irrevocably, without the possibility of exit, how much to charge for protection; and no one in his right mind would agree to an irrevocable contract which granted one's alleged protector the right to ultimate decision making regarding one's own person and property, i.e., of unilateral lawmaking.

Second, it is necessary to offer a positive and inspiring alternative to the present system.

While it is important that the memory of America's past as a land of pioneers and an effective anarchocapitalist system based on self-defense and popular militias be kept alive, we cannot return to the feudal past or the time of the American Revolution. Yet the situation is not hopeless. Despite the relentless growth of statism over the course of the past two centuries, economic development has continued, and our living standards have reached spectacular new heights. Under these circumstances, a completely new option has become viable: the provision of law and order by freely competing private (profit-and-loss) insurance agencies.

Even though hampered by the state, insurance agencies protect private property owners upon payment of a premium against a multitude of natural and social disasters, from floods and hurricanes to theft and fraud. Thus, it would seem that the production of security and protection is the very purpose of insurance. Moreover, people would not turn to just anyone for a service as essential as that of protection. Rather, as de Molinari noted,

Before striking a bargain with [a] producer of security … they will check if he is really strong enough to protect them … [and] whether his character is such that they will not have to worry about his instigating the very aggressions he is supposed to suppress.

In this regard insurance agencies also seem to fit the bill. They are big and in command of the resources — physical and human — necessary to accomplish the task of dealing with the dangers, actual or imagined, of the real world. Indeed, insurers operate on a national or even international scale. They own substantial property holdings dispersed over wide territories and beyond the borders of single states and thus have a manifest self-interest in effective protection. Furthermore, all insurance companies are connected through a complex network of contractual agreements on mutual assistance and arbitration as well as a system of international reinsurance agencies representing a combined economic power that dwarfs most if not all contemporary governments. They have acquired this position because of their reputation as effective, reliable, and honest businesses.

While this may suffice to establish insurance agencies as a possible alternative to the role currently performed by states as providers of law and order, a more detailed examination is needed to demonstrate the principal superiority of such an alternative to the status quo. In order to do this, it is only necessary to recognize that insurance agencies can neither tax nor legislate; that is, the relationship between the insurer and the insured is consensual. Both are free to cooperate or not to cooperate, and this fact has momentous implications. In this regard, insurance agencies are categorically different from states.

The advantages of having insurance agencies provide security and protection are as follows. First, competition among insurers for paying clients will bring about a tendency toward a continuous fall in the price of protection per insured value, thus rendering protection more affordable. In contrast, a monopolistic protector who may tax the protected will charge ever-higher prices for his services.

Second, insurers will have to indemnify their clients in the case of actual damage; hence, they must operate efficiently. Regarding social disasters — crime — in particular, this means that the insurer must be concerned above all with effective prevention, for unless he can prevent a crime, he will have to pay up. Further, if a criminal act cannot be prevented, an insurer will still want to recover the loot, apprehend the offender, and bring him to justice, because in so doing the insurer can reduce his costs and force the criminal — rather than the victim and his insurer — to pay for the damages and cost of indemnification. In distinct contrast, because compulsory monopolist states do not indemnify victims and because they can resort to taxation as a source of funding, they have little or no incentive to prevent crime or to recover loot and capture criminals. If they do manage to apprehend a criminal, they typically force the victim to pay for the criminal's incarceration, thus adding insult to injury.

Third and most important, because the relationship between insurers and their clients is voluntary, insurers must accept private property as an ultimate given and private property rights as immutable law. That is, in order to attract or retain paying clients, insurers will have to offer contracts with specified property and property damage descriptions, rules of procedure, evidence, compensation, restitution, and punishment, as well as intra- and interagency conflict resolution and arbitration procedures.

Moreover, out of the steady cooperation between different insurers in mutual interagency arbitration proceedings, a tendency toward the unification of law — of a truly universal or international law — will emerge. Everyone, by virtue of being insured, would thus become tied into a global competitive effort to minimize conflict and aggression. Every single conflict and damage claim, regardless of where and by or against whom, would fall into the jurisdiction of exactly one or more specific and enumerable insurance agencies and their contractually agreed-to arbitration procedures, thereby creating "perfect" legal certainty.

In striking contrast, as tax-funded monopoly protectors, states do not offer the consumers of protection anything even faintly resembling a service contract. Instead, they operate in a contractual void that allows them to make up and change the rules of the game as they go along. Most remarkably, whereas insurers must submit themselves to independent third-party arbitrators and arbitration proceedings in order to attract voluntary paying clients, states, insofar as they allow for arbitration at all, assign this task to another state-funded and state-dependent judge.

Further implications of this fundamental contrast between insurers as contractual versus states as noncontractual providers of security deserve special attention.

Because they are not subject to and bound by contracts, states typically outlaw the ownership of weapons by their "clients," thus increasing their own security at the expense of rendering their alleged clients defenseless. In contrast, no voluntary buyer of protection insurance would agree to a contract that required him to surrender his right to self-defense and be unarmed or otherwise defenseless. To the contrary, insurance agencies would encourage the ownership of guns and other protective devices among their clients by means of selective price cuts, because the better the private protection of their clients, the lower the insurers' protection and indemnification costs would be.

Moreover, because they operate in a contractual void and are independent of voluntary payment, states arbitrarily define and redefine what is and what is not a punishable "aggression" and what does and does not require compensation. By imposing a proportional or progressive income tax and redistributing income from the rich to the poor, for instance, states in effect define the rich as aggressors and the poor as their victims. (Otherwise, if the rich were not aggressors and the poor not their victims, how could taking something from the former and giving it to the latter be justified?) Or by passing affirmative action laws, states effectively define whites and males as aggressors and blacks and women as their victims. For insurance agencies, any such business conduct would be impossible for two fundamental reasons.

First, all insurance involves the pooling of particular risks into risk classes. It implies that to some of the insured, more will be paid out than what they paid in, and to others, less. However — and this is decisive — no one knows in advance who the "winners" and who the "losers" will be. Winners and losers — and any income redistribution among them — will be randomly distributed. Otherwise, if winners and losers could be systematically predicted, losers would not want to pool their risk with winners but only with other losers because this would lower their insurance premium.

Second, it is not possible to insure oneself against any conceivable risk. Rather, it is only possible to insure oneself against accidents, i.e., risks over whose outcome the insured has no control whatsoever and to which he contributes nothing. Thus, it is possible to insure oneself against the risk of death or fire, for instance, but it is not possible to insure oneself against the risk of committing suicide or setting one's own house on fire.

Similarly, it is impossible to insure oneself against the risk of business failure, of unemployment, of not becoming rich, of not feeling like getting up and out of bed in the morning, or of disliking one's neighbors, fellows or superiors, because in each of these cases one has either full or partial control over the event in question. That is, an individual can affect the likelihood of the risk. By their very nature, the avoidance of risks such as these falls into the realm of individual responsibility, and any agency that undertook their insurance would be slated for immediate bankruptcy.

Most significantly for the subject under discussion, the uninsurability of individual actions and sentiments (in contradistinction to accidents) implies that it is also impossible to insure oneself against the risk of damages that are the result of one's prior aggression or provocation. Rather, every insurer must restrict the actions of its clients so as to exclude all aggression and provocation on their part. That is, any insurance against social disasters such as crime must be contingent on the insured submitting themselves to specified norms of nonaggressive, civilized, conduct.

Accordingly, while states as monopolistic protectors can engage in redistributive policies benefiting one group of people at the expense of another, and while as tax-supported agencies they can even "insure" uninsurable risks and protect provocateurs and aggressors, voluntarily funded insurers would be systematically prevented from doing any such thing. Competition among insurers would preclude any form of income and wealth redistribution among various groups of insured, for a company engaging in such practices would lose clients to others refraining from them. Rather, every client would pay exclusively for his own risk, respectively that of people with the same (homogeneous) risk exposure that he faces. Nor would voluntarily funded insurers be able to "protect" any person from the consequences of his own erroneous, foolish, risky, or aggressive conduct or sentiment. Competition between insurers would instead systematically encourage individual responsibility, and any known provocateur and aggressor would be excluded as a bad insurance risk from any insurance coverage whatsoever and be rendered an economically isolated, weak, and vulnerable outcast.

Finally, with regard to foreign relations, because states can externalize the costs of their own actions onto hapless taxpayers, they are permanently prone to becoming aggressors and warmongers. Accordingly, they tend to fund and develop weapons of aggression and mass destruction. In distinct contrast, insurers will be prevented from engaging in any form of external aggression because any aggression is costly and requires higher insurance premiums, implying the loss of clients to other, nonaggressive competitors. Insurers will engage exclusively in defensive violence, and instead of acquiring weapons of aggression and mass destruction, they will tend to invest in the development of weapons of defense and of targeted retaliation.

V - Revolution by Means of Secession

Even though all of this is clear, how can we ever succeed in implementing such a fundamental constitutional reform? Insurance agencies are presently restricted by countless regulations that prevent them from doing what they could and naturally would do. How can they be freed from these regulations?

Essentially, the answer to this question is the same as that given by the American revolutionaries more than two hundred years ago: through the creation of free territories and by means of secession.

In fact, under today's democratic conditions, this answer is even truer than it was in the days of kings. For then, under monarchical conditions, the advocates of an antistatist liberal-libertarian social revolution still had an option that has since been lost. Liberal-libertarians in the old days could — and frequently did — believe in the possibility of simply converting the king to their view, thereby initiating a "revolution from the top." No mass support was necessary for this — just the insight of an enlightened prince.

However realistic this might have been then, this top-down strategy of social revolution would be impossible today. Political leaders are selected nowadays according to their demagogic talents and proven records as habitual immoralists, as has been explained above; consequently, the chance of converting them to liberal-libertarian views must be considered even lower than that of converting a king who simply inherited his position.

Moreover, the state's protection monopoly is now considered public rather than private property, and government rule is no longer tied to a particular individual but to specified functions exercised by anonymous functionaries. Hence, the one-or-few-men-conversion strategy can no longer work. It does not matter if one converts a few top government officials — the president and some leading senators or judges, for instance — because within the rules of democratic government no single individual has the power to abdicate the government's monopoly of protection. Kings had this power, but presidents do not. The president can resign from his position, of course, only to have it taken over by someone else. He cannot dissolve the governmental protection monopoly because according to the rules of democracy, "the people," not their elected representatives, are considered the "owners" of government.

Thus, rather than by means of a top-down reform, under the current conditions, one's strategy must be one of a bottom-up revolution. At first, the realization of this insight would seem to make the task of a liberal-libertarian social revolution impossible, for does this not imply that one would have to persuade a majority of the public to vote for the abolition of democracy and an end to all taxes and legislation? And is this not sheer fantasy, given that the masses are always dull and indolent, and even more so given that democracy, as explained above, promotes moral and intellectual degeneration? How in the world can anyone expect that a majority of an increasingly degenerate people accustomed to the "right" to vote should ever voluntarily renounce the opportunity of looting other people's property? Put this way, one must admit that the prospect of a social revolution must indeed be regarded as virtually nil. Rather, it is only on second thought, upon regarding secession as an integral part of any bottom-up strategy, that the task of a liberal-libertarian revolution appears less than impossible, even if it still remains a daunting one.

How does secession fit into a bottom-up strategy of social revolution? More important, how can a secessionist movement escape the Southern Confederacy's fate of being crushed by a tyrannical and dangerously armed central government?

In response to these questions, it is first necessary to remember that neither the original American Revolution nor the American Constitution was the result of the will of the majority of the population. A third of the American colonists were actually Tories, and another third were occupied with daily routines and did not care either way. No more than a third of the colonists were actually committed to and supportive of the revolution, yet they carried the day. And as far as the Constitution is concerned, the overwhelming majority of the American public was opposed to its adoption, and its ratification represented more of a coup d'état by a tiny minority than the general will. All revolutions, whether good or bad, are started by minorities; and the secessionist route toward social revolution, which necessarily involves the breaking-away of a smaller number of people from a larger one, takes explicit cognizance of this important fact.

Second, it is necessary to recognize that the ultimate power of every government — whether of kings or caretakers — rests solely on opinion and not on physical force. The agents of government are never more than a small proportion of the total population under their control. This implies that no government can possibly enforce its will upon the entire population unless it finds widespread support and voluntary cooperation within the nongovernmental public. It implies likewise that every government can be brought down by a mere change in public opinion, i.e., by the withdrawal of the public's consent and cooperation.

And while it is undeniably true that, after more than two centuries of democracy, the American public has become so degenerate, morally and intellectually, that any such withdrawal must be considered impossible on a nationwide scale, it would not seem insurmountably difficult to win a secessionist-minded majority in sufficiently small districts or regions of the country.

In fact, given an energetic minority of intellectual elites inspired by the vision of a free society in which law and order is provided by competitive insurers, and given furthermore that — certainly in the United States, which owes its very existence to a secessionist act — secession is still held to be legitimate and in accordance with the "original" democratic ideal of self-determination (rather than majority rule) by a substantial number of people, there seems to be nothing unrealistic about assuming that such secessionist majorities exist or can be created at hundreds of locations all over the country.

In fact, under the rather realistic assumption that the US central government as well as the social-democratic states of the West in general are bound for economic bankruptcy (much like the socialist people's democracies of the East collapsed economically some years ago), present tendencies toward political disintegration will likely be strengthened in the future. Accordingly, the number of potential secessionist regions will continue to rise, even beyond its current level.

Finally, the insight into the widespread and growing secessionist potential also permits an answer to the last question regarding the dangers of a central government crackdown.

While it is important in this regard that the memory of the secessionist past of the United States be kept alive, it is even more important for the success of a liberal-libertarian revolution to avoid the mistakes of the second failed attempt at secession. Fortunately, the issue of slavery, which complicated and obscured the situation in 1861, has been resolved. However, another important lesson must be learned by comparing the failed second American experiment with secession to the successful first one.

The first American secession was facilitated significantly by the fact that at the center of power in Britain, public opinion concerning the secessionists was hardly unified. In fact, many prominent British figures such as Edmund Burke and Adam Smith openly sympathized with the secessionists. Apart from purely ideological reasons, which rarely affect more than a handful of philosophical minds, this lack of a unified opposition to the American secessionists in British public opinion can be attributed to two complementary factors. On the one hand, a multitude of regional and cultural-religious affiliations as well as of personal and family ties between Britain and the American colonists existed. On the other hand, the American events were considered far from home and the potential loss of the colonies as economically insignificant.

In both regards, the situation in 1861 was distinctly different. To be sure, at the center of political power, which had shifted to the northern states by then, opposition to the secessionist Southern Confederacy was not unified, and the Confederate cause also had supporters in the North. However, fewer cultural bonds and kinship ties existed between the American North and South than had existed between Britain and the American colonists, and the secession of the Southern Confederacy involved about half the territory and a third of the entire population of the United States and thus struck Northerners as close to home and as a significant economic loss. Therefore, it was comparatively easier for the Northern power elite to mold a unified front of "progressive" Yankee culture versus a culturally backward and "reactionary" Dixieland.

In light of these considerations, then, it appears strategically advisable not to attempt again what in 1861 failed so painfully — for contiguous states or even the entire South trying to break away from the tyranny of Washington, D.C.

Rather, a modern liberal-libertarian strategy of secession should take its cues from the European Middle Ages when, from about the 12th until well into the 17th century (with the emergence of the modern central state), Europe was characterized by the existence of hundreds of free and independent cities, interspersed into a predominantly feudal social structure.

By choosing this model and striving to create an America punctuated by a large and increasing number of territorially disconnected free cities — a multitude of Hong Kongs, Singapores, Monacos, and Liechtensteins strewn out over the entire continent — two otherwise unattainable but central objectives can be accomplished. First, besides recognizing the fact that the liberal-libertarian potential is distributed highly unevenly across the country, such a strategy of piecemeal withdrawal renders secession less threatening politically, socially, and economically. Second, by pursuing this strategy simultaneously at a great number of locations all over the country, it becomes exceedingly difficult for the central state to create the unified opposition in public opinion to the secessionists that would secure the level of popular support and voluntary cooperation necessary for a successful crackdown.

If we succeed in this endeavor, if we then proceed to return all public property into appropriate private hands and adopt a new "constitution" that declares all taxation and legislation henceforth unlawful, and if we then finally allow insurance agencies to do what they are destined to do, we truly can be proud again and America will be justified in claiming to provide an example to the rest of the world.