Free Societies could Appear in the Near Future

I am going to define a free society as a place where all activity is carried on by competing individuals or associations of individuals.

I am going to define a free society as a place where all activity is carried on by competing individuals or associations of individuals.  They trade their output freely with producers of other valued outputs.  That applies to security, court judgement and judgement enforcement services.  I will however stretch this definition to include societies where those three services are provided by a monopolistic entity – a ‘state’ - which nevertheless acts in a competitive market for providing such services.  I will explain anon.

First let me say what I am not expecting.  I am not expecting a widespread conversion to Austro-libertarian ethics followed by a revolution aimed at eliminating the state.  There still aren’t enough of us libertarians and there may never be.  (Actually, Marx did propose exactly such a revolution and look how many hundreds of millions of lives were trashed as the revolutionaries decided to stick at the dictatorship phase.)  Revolutions represent attempts to seize the machinery of the state, not dismantle it.  Statists are the power grabbers.  We libertarians don’t want coercive power over anybody.  It is part of our charm.

Secondly, may I point out what a mess Democratic Socialism is in?  We have had years of declining living standards in the West masked by fake statistics.  Governing globalist elites are not in a good place. Governments have taken on unfunded liabilities of tens of trillions of dollars. They are squeezing shrinking productive sectors for resources.  But still they cannot raise enough to pay off their supporters. They are borrowing to fund an expensive mix of social engineering and surveillance, aggressive militarism, exploitative crony corporate regulation and demoralising welfarism.  All of which we don’t need.

Public contempt and loathing for politicians and failing state institutions is growing.  The corona-virus saga is a big mess.  But much worse is the world slump which began last year and is going to take most people wholly unawares.  Only Austrian School economists with their non-Keynesian explanation of the business cycle have been expecting it.  Forthcoming events which are pretty much baked in the cake include general bank failure and nationalisation, slumping tax revenues, massive default on government bonds, broken pension promises, failed states and hyper-inflations.  Within a few years much of the remaining shine on the notion of government will be gone for most people in the West.

Yes, big states will try to adopt the China model of authoritarian social surveillance totalitarianism and state/crony capitalist interventionist economies.  Indeed, the current corona-virus fake-pandemic is being used as an opportunity by power grabbers everywhere to head in this direction.  But in such states dissent and economic decay will just continue to flourish until eventual collapse occurs.  Big governments and globalist edifices such as the EU, the UN, NATO, BIS, IMF and World Bank and (above all) the US deep state are just too top heavy and expensive to feed. 

Only free societies will be able to achieve first world prosperity now that business is so mobile.  The way to freedom is via ever more decentralisation.  The globalist authoritarians know this.  They push desperately to create still more unwieldy structures of world governance.  All they do is waste our time and increase the scale of the eventual train wreck.

They know that a world of more, smaller jurisdictions would be their nemesis.  These would be under intense pressure to downscale to compete for custom.  They will need to encourage productive citizens and avoid encouraging unproductive ones.  They will not be able to engage in trade protectionism for the same reason Hong Kong could not retaliate against Britain’s barriers to its textiles.  It was too small for access to its own market to matter.  Nor do small jurisdictions need the costs of maintaining separate currencies and banking systems.  Any that used them, as they are used now, to steal from their inhabitants would be shunned.    

Libertarianism is ultimately secession at the lowest level, ideally that of the individual.  There is a trend towards more jurisdictions.  There are far more jurisdictions worldwide than there were in 1914, even counting the EU as one jurisdiction, for the moment.  Three of the most successful small jurisdictions, Singapore, Hong Kong and Dubai, are fragments of just one 1914 state, the British Empire.

The UK itself is leaving the EU, probably to break up further.  Dissent from the EU project is growing everywhere.  The United States comprises very different states, some of which are ignoring federal edicts on illegal drugs or immigration.  When many US state and city governments go bust, how interested in bailing them out will other cities or states be, or indeed in propping up Uncle Sam himself?  Any big diverse state with regions of differing prosperity such as India, the USA, China, Brazil, Mexico or the EU could break-up, as the USSR did when it collapsed thirty years ago.  Sudden unexpected decentralisation via secession could be commonplace over the next few decades.

As secession proceeds, at some critical number of jurisdictions, possibly in the high hundreds, or possibly many fewer, competitive pressures will overcome discredited democratic socialist institutions. The obvious route to decentralisation is secession from larger units.  Trying to help a place secede from a larger unit is one of the few real justifications for libertarian involvement in conventional politics.

Another route to liberty may be the establishment of autonomous free cities by failing states themselves.  Effectively this would be a partial, managed secession. Proximity to ‘tax havens’ makes neighbouring places more prosperous. So failing states will be keen to get a little prosperity and revenue out of currently unrewarding regions.  There are already many, smallish, specialised economic zones with particular corporate and tariff taxation or trade arrangements around the world.  Competition for international business is intense if covert.  The next stage could be creating free cities.  They could be seen as Super Economic Zones made worthwhile for the productive individual. 

Free cities would be jurisdictions created by agreement with agencies, companies or wealthy individuals with their own laws, or at least – in some fields of law - independent courts.  They would offer conditional citizenship in an autonomous low tax and regulation economy.  Perhaps there might be no direct taxes and banking secrecy, or maybe just an annual membership fee like a golf club. Different higher and lower cost offers would be tried as in any decentralised economy.  But for the city operator and the sponsoring state the ideal city government might want to do as little as possible to keep costs down and profits up.  (A useful source for this idea is Titus Gebel’s ‘Free Private Cities, Making Government Compete for You’).

Now then, you might say, it’s not going our way at the moment.  Free cities have not happened, although some are mooted.  Nor have recently seceded states all become havens of freedom.  Why is here an increasing tangle of globalist regulation and tax surveillance? Why did most nations sign up to ill conceived WHO protocols which have closed down the world by mistake?  How have the big states, ultimately the United States as the would-be global hegemon, been able to make other countries snitch on each other’s productive citizens. Even Switzerland has been bullied into abandoning banking secrecy, after centuries of protecting citizens of neighbouring countries from state predation and currency destruction.

I agree this is discouraging.  The political dynamic of Democratic Socialist regimes is still operating. It prioritises subsidising state employees, welfare dependents, bankers and corporate cronies at the expense of productive people’s prosperity.  On the democracy side, Parliament’s obstruction of Brexit showed how little establishments believe they are democratically accountable. Not to worry however, Democratic Socialist states have become unaffordable and will be bankrupt soon.  What cannot survive must end. They will default on their impossible promises to shield voters from any and all risk, cradle to grave. 

In particular the United States Government will default on well over $20 trillion of debt.  It will probably do it by printing the dollar into worthlessness, taking most other western government currencies, and the governments in question, down with it.  That means good bye to social security/state pensions and private pensions.  The US Federal Government is proposing a deficit nearly as large as its revenues. The Federal Reserve has created trillions of dollars out of thin air in the last months. An endgame is approaching.

It will also be good-bye to the American global hegemony, and to Britain’s embarrassing sidekick role in it. The United States has been trashing its industrial base for years by borrowing (currently) $1 trillion a year from overseas manufacturing exporters, in particular China.  It has spent it on an expensive, relentlessly destructive deep state imperial system.  In contrast Russia’s trim defence budget is less than a tenth of America’s. That suggests that hardly any of US spending is actually needed to defend North America.

In a few years’ time therefore, with bankruptcy and break-up in the EU and a bust Uncle Sam, the game may be up and new competitive forces set in motion.  Switzerland or others may reintroduce bank secrecy, which is actually just proper confidentiality.  Hundreds of American bases will be just derelict eyesores.  Maybe Guantanamo Bay could re-open as a free city.  I’d go.

In the heartlands of the big old western Democratic Socialist regimes the weight of the failing state machines will continue for as long as possible to grind down production and hope.  Eventually people will vote with their feet or secede. They may discover that with a little courage they can ignore discredited, useless regimes.