HISTORY AND THEORY OF TAX AND STATE
You have sown much, and harvested little; you
eat, but you never have enough; you drink, but you never have
your fill; you clothe yourselves, but no one is warm; and you
that earn wages earn wages to put them into a bag with holes.
Haggai 1, verse 6
"...[W]hen it is no longer worth the producers' while to produce, when they are taxed so highly to keep the politicians and their friends on the public payroll that they themselves no longer have a reasonable chance of success in any economic enterprise, then of course production grinds to a halt... When this happens, when the producers can no longer sustain on their backs the increasing load of the parasites, then the activities of the parasites must stop also, but usually not before they have brought down the entire social structure which the producers' activities have created. When the organism dies, the parasite necessarily dies too, but not until the organism has paid for the presence of the parasite with its life. It is in just this way that the major civilizations of the world have collapsed."
Professor John Hospers, 1975
The history of taxation is also the history of the rise and fall of civilization. It is the history of economic rape. From the history of taxation we can learn...
TAX IN EGYPT, ROME, AND THE MIDDLE EAST
Charles Adams wrote a superb book, Fight, Flight and Fraud: The Story of Taxation. It is a comprehensive analysis of the history of taxation in the context of the rise and fall of civilizations. Starting with Egypt, Adams says:
"The most impressive analysis of Egypt's demise came from the great Russian scholar Rostovtzeff. He believed, after a lifetime of study, that the decay in Egyptian society was the result of lawlessness in the bureaucracy, especially the tax bureau. The king could not restrain it and his orders went unheeded. Rostovtzeff felt that the continual and unabated tyranny of Egyptian tax collectors produced a nationwide decline in incentive. Egyptian workers and farmers lost their desire to work - agricultural lands fell into disuse, businessmen moved away and workers fled. Sound money disappeared as a raging inflation destroyed what capital there was. The land became filled with robbers who wrecked commerce and brought fear and despair to the populace. Boating and sailing along the Nile became as dangerous as walking at night on the back streets of New York and Detroit. In the end, thieves were no longer only in the tax bureau - they were everywhere."
Adams devotes several chapters to Roman taxation and concludes:
"The prevalence of crippling taxation prior to the fall of Rome has led many historians, in all ages, to suspect that Rome, like so many great empires, taxed itself to death. Recently, the tax theory of the Fall has become unfashionable among many scholars - perhaps because of our own tolerance for heavy taxation. No one likes to think we are writing our own obituary when we draft modern tax legislation. If our civilization is to be destroyed, we like to think it will happen Hollywood-style - a cataclysmic event like an atomic war, an ecological blunder, or some other dramatic happening. Certainly not something so simple and dull as everyday taxation."
"At first, the Muhammadans came as liberators and brought relief to the inhabitants of an over-taxed and enslaved Roman world," writes Adams, but finally:
"The Moslems had led the world right back to where it was before they had arrived on the scene. Only the names had changed. Moslem tax men ended up rivalling the worst of the Roman Empire. Perhaps this picture of Moslem tax chiefs, written centuries ago, best illustrates the end-product of their tax system: 'They were cruel rascals, inventors of a thousand injustices, arrogant and presumptuous... They were the scourges of their age, always with a causeless insult ready in their mouths. Their existence, passed exclusively in oppressing the people of their time, was a disgrace to humanity.'"
Today the IRS uses informers extensively. They receive a percentage of all taxes collected as a result of the information they provide. The IRS even conducts seminars on how to induce people to inform on one another. Contrast this to Emperor Constantine, who abolished torture, crucifixion, and tax informers. He regarded tax informing as more evil than crucifixion. In the year 313 AD he ordained:
"The greatest scourge of mankind, the detestable race of tax informers, must be stopped. We must stifle it in its first efforts and tear out the pernicious tongue of envy. Let not the judges receive... the information of the informer; let them be given up to punishment as soon as any of them appear."
This is the earliest historical record of the Exclusionary Rule, which forbids the use in court of illegally obtained information. What would Constantine have thought of our present bankers who serve as tax-informer handmaidens to the IRS?
TAX IN ENGLAND
In 1215 King John of England was compelled to sign the Magna Carta or "great charter." The Magna Carta guaranteed free trade to merchants within England. It also established the principle of "separation of powers." According to Adams:
"The king could spend but not tax. Parliament could tax but not spend. As long as the power to tax and the power to spend were separated, the rights of Englishmen would live forever, especially the right to be free from oppressive taxation. Today the principle of separation of powers means something quite different. Our current runaway taxation is the natural consequence of our abandonment of that ancient English practice. We live in a pre-Magna Carta world in which we - like the subjects of King John - can be 'pilleth with taxes and tallages unto the bare bones.'"
The first income tax was introduced in England in 1404. Very little is known about this tax, because Parliament had every written document and record about it destroyed. Obviously, a substantial number of people recognized it for the evil it was. A short poem about it did survive:
"A monstrous birth shewn to the world,
to let it know what could be done,
and concealed by historians,
and the world might not know
what may not or ought not to be done."
In 1842 Sir Robert Peel adopted a "temporary" 3 percent income tax, which was supposed "to be repealed as soon as government revenues were in balance." Peel admitted, "A certain degree of inquisitorial scrutiny is... inseparable from an income tax." William Gladstone was determined to abolish the income tax. He said, "The inquisition it entails is a most serious disadvantage, and the frauds to which it leads are an evil such as it is not possible to characterize in terms too strong." But the income tax was never repealed. And in 1911, Professor Seligman, a leading American economic scholar observed that the tax had never risen above 6 percent, and the "early complaints against the inquisitorial character of the tax have long since well-nigh completely disappeared."
During the nineteenth century the German states also introduced income tax. According to Adams:
"Unlike the British, the Prussian system summoned taxpayers before revenue authorities for examination. All taxpayers were required to declare and pay their tax. Prussian surveillance was so extensive that one German legislator declared, "The country is covered with a perfect system of espionage." But Prussian oppression was of no concern to the democratic West. Seligman dismissed the Prussian system as an aberration. Such an inquisitorial system "would be impracticable almost anywhere else... Nowhere else are the people so meek in the face of officialdom. In no other country in the world would it be possible to enforce so inquisitorial a procedure as we have learned to be customary in Prussia."
In a few short years this observation by the leading tax expert in America would be contrary to the course of development of every income tax system in the world. The very worst fears of the alarmist in the Napoleonic era would come to pass. The spirit of Britain's modest income tax would become outmoded and unworkable; while the spirit of the Prussian income tax system would soon infect every nation on earth. In short, the British invented the form of our modern income tax laws - but the Prussians gave us the muscle by which they now operate."
THE AMERICAN TAX REVOLUTION
The revolt of the Thirteen Colonies of British North America was rooted in taxation. After the war of independence there was general agreement that there should not be a national government with taxing power. In 1773 Benjamin Franklin had written an article: "Rules by which a Great Empire may be reduced to a Small One." Examples:
THE AMERICAN TAX WAR
Adams provides conclusive evidence that the American Civil War - more accurately, "the Rich Man's War and the Poor Man's Fight" - was caused by taxation. I think we should call it the "American Tax War." At the time the South paid about three-quarters of all federal taxes. The tax system shifted wealth from the South to the North. The proverbial "straw that broke the camel's back" was the Morill Tariff, passed by Congress in 1861, and signed by Abraham Lincoln. According to Adams:
"It doubled the rates of the 1857 tariff to about 47 percent of the value of the imported products. This was Lincoln's big victory. His supporters were jubilant. He had fulfilled his campaign and IOUs to the Northern industrialists. By this act he had closed the door for any reconciliation with the South. In his inaugural address he had also committed himself to collect customs in the South even if there was a secession...
Jefferson Davis, the first president of the Confederacy, justified secession in his inaugural address by making reference to the Declaration of Independence then emphasizing the import tax issue."
The North, led by Abraham Lincoln, practiced economic rape against the South. The result was a war in which more than 300,000 died. The Civil War was fought over taxes, not slavery. It was two years after the start of the war before Lincoln issued the Emancipation Proclamation. Can we surmise that by 1861 Americans had forgotten the history lessons they could have learned from 1776?
THE BIRTH OF BIG BROTHER
According to Adams:
"The year 1894 may have been civilization's most important tax year. Britain adopted new death duties with progressive rates and the United States adopted an income tax. The progressive rates in Britain soon applied to income taxation everywhere. The taxing habits of civilization would never be the same again. In the United States the income tax and the estate tax would soon revolutionize society. The connection between the real 1894 and Orwell's fictitious 1984 may turn out to be more than a transposition of numbers. If Orwell's society with its all-seeing Big Brother comes to Western Civilization, roots of that Frankensteinian monster may be traced to the tax laws of 1894."
Have you ever wondered why Big Brother uses the term "duty?" Death duties, import duty. It is your "duty" to pay your "fair share." People who don't pay their "duty" or "fair share" are "tax cheats."
Adams quotes the reaction of a former British Chancellor of the Exchequer to the 1894 income tax:
"But where are you going to find a standard of what it is right to take? ...I think the standard will vary from Parliament to Parliament and from majority to majority; and the principle of taxation will depend on the wave of public opinion, and not on the equality of taxation which has been insisted upon in our finances... I am anxious that this graduation should not become a kind of scaffolding for plunder... there is the possibility of inflicting injustice after injustice because you will have no standard to guide you - no landmarks to place along this road of taxation."
Within a year of passing the 1894 U.S. income tax, it was challenged in the Supreme Court in the case Pollock v. Farmers Loan and Trust Co. A lawyer summed up the importance of the case:
"No member of this court will live long enough to hear a case which will involve a question more important than this, the preservation of the fundamental rights of property and equality before the law, and the ability of the United States to rely upon the guarantees of the Constitution... There is protection now or never."
The 1894 income tax was a 2 percent tax on income above $4,000. Only 2% of the population had that high an income. One lawyer argued, "If the rate is 2 percent today, it could be 20 percent tomorrow." Another said, "Once you have decided that the many can tax the few, it will be impossible to take a backward step." The Supreme Court repealed that income tax as unconstitutional. Today practically all U.S. judges, in tax matters, will rule references to the Constitution inadmissible. If a defendant persists in raising Constitutional issues, the judge will find him or her guilty of contempt and impose a jail sentence!
In 1913 - the same year the Federal Reserve Act was passed - the Sixteenth Amendment was adopted. (Though some claim that it was never legally ratified.) It states:
"The Congress shall have the power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, without regard to any census or enumerations."
In To Harass Our People: The IRS and Government Abuse of Power, Congressman George Hansen asks:
"By what possible stretch of the imagination can current IRS procedures be justified under this Amendment? Does the Sixteenth Amendment repeal the First, Fourth, Fifth, Sixth, Seventh, Eighth, Ninth and Tenth Amendments? Certainly the examples in this book would indicate that the IRS seems to think so."
So 1913 gave birth to our income tax and the modern IRS. Throughout the latter half of the 19th Century, the British income tax rate remained at 3 percent. Proponents of the U.S. income tax held this up as proof that fears of runaway tax rates were unfounded. According to Charles Adams:
"...[T]he United States Constitution intended to prevent Congress from having a blanket power to tax without standards assuring fairness and preventing oppression. The current horrors in America's income tax law, which President Carter called "a disgrace to the human race," came about because Congress has no standards to follow. As a result the words of Hamilton in The Federalist have come to pass - the federal government has "trampled on the rules of justice," as he predicted."
In Restoring the American Dream Robert Ringer writes:
"When the Sixteenth Amendment to the Constitution became law in 1913, an important step was taken in laying the groundwork for the destruction of the spirit that had made America the freest, strongest and most prosperous country in history. ...[T]he powerholders of that day arbitrarily decided (as they do through all Amendments) to take away a right guaranteed by the Constitution.
The key element in the Sixteenth Amendment was that it gave government the power... to levy taxes against incomes. Just as important, it left the interpretation of the word "income" up to the courts, which meant that from that point on the rules could be changed at the discretion of the government."
In 1910 Senator Richard E. Byrd had this to say about the passage of the Sixteenth Amendment:
"It means that the state must give up a legitimate and long-established source of revenue and yield it to the Federal government. It means that the state actually invited the Federal government to invade its territory, to oust its jurisdiction and to establish Federal dominion within the innermost citadel of reserved rights of the Commonwealth. This amendment... will extend the Federal power so as to reach the citizens in the ordinary business of life. A hand from Washington will be stretched out and placed upon every man's business; the eye of a Federal inspector will be in every man's counting house.
The law will of necessity have inquisitorial features, it will provide penalties. It will create a complicated machinery. Under it businessmen will be hauled into courts distant from their homes. Heavy fines imposed by distant and unfamiliar tribunals will constantly menace the taxpayer.
An army of Federal inspectors, spies and detectives will descend upon the state. They will compel men of business to show their books and disclose the secrets of their affairs. They will dictate forms of bookkeeping. They will require statements and affidavits. On the one hand the inspector can blackmail the taxpayer and on the other, he can profit by selling his secret to his competitor.
When the Federal government gets a stranglehold on the individual businessman, state lines will exist nowhere but on the maps. Its agents will everywhere supervise the commercial life of the states..."
CAN WE CHANGE OR ABOLISH THE IRS?
According to Charles Adams (Fight, Flight and Fraud: The Story of Taxation):
"In 1974, decriminalization of tax offences was suggested by Donald Alexander, tax chief for the United States - a move which would have curtailed the operations of the "special agents" of the IRS. These "tough guys" of the revenue, who had become a kind of institutionalized J. Edgar Hoover, were not about to have their power diminished. Alexander's character was attacked and eventually a grand jury was called to look into his activities. In the end, Alexander abandoned his plan and acknowledged that about all he accomplished was the activation of his bleeding ulcer."
And according to Congressman Hansen:
"Without commenting on their guilt or innocence, responsibility or lack of same, I am here raising the question that if the subject of national concern is the abuse of the civil rights of our citizens, where is there a single indictment or prosecution of an IRS official or employee for proved violations of decent citizens?
The answer is that there have been none and there will be none. When a Commissioner of Internal Revenue can say to the House Committee on Ways and Means that "the truth is that... the only way we can keep people in line, the only way we can keep them honest... is to keep them afraid," then we know that the IRS is immune from retribution. Every prosecutor, every judge, every legislator, as well as every citizen, is subject to the same fear.
In his "House Divided" speech, Abraham Lincoln told us an eternal truth. No nation can exist half slave and half free. We have, almost inadvertently, created an agency within the government at war with our freedoms. If it is not curbed, in our view, if it is not destroyed, it will inevitably control us all."
On April 17, 1991 Patrick Buchanan's syndicated column appeared in the Blade-Citizen under the heading, "Abolish the Federal Income Tax?" He starts off with some history. Up to 1913 the federal government got its revenue from tariffs and fees. From 1789 to 1913, the U.S. developed from a small farming community into "the greatest industrial power on earth - with growth rates unequaled since."
After the passage of the Sixteenth Amendment in 1913, federal income tax was imposed. The rate was one percent for incomes over $3,000 ($4,000 for married couples). For incomes between $20,000 and $500,000 the rate went up to 6%. By 1950 the average family was taxed two percent of its income by the IRS. By 1990, however, it had gone up to 24 percent.
Buchanan suggests that the income tax be replaced by a federal retail sales tax of 16 percent. Taxes on corporations, estates, and gifts would also be abolished. The federal government would still get the same income. Advantages:
In my opinion, such a tax would still involve a huge police force; millions of people will evade it. Be that as it may, what really needs to be abolished is the taxing power, including the "currency-tax." Any monopoly power to issue currency is also a taxing power. The issue of monopoly currency transfers value from the producer to the issuer. It is a hidden tax. It manifests as price inflation - the loss of value of the currency. The IRS represents a second taxing power. Both taxing powers need to be abolished.
It is no accident that both the Federal Reserve System and the modern IRS have their origins in 1913. The same senator Nelson Aldrich who played a key role in passing the Federal Reserve Act, was also the kingpin that pushed the Sixteenth Amendment through Congress. As we saw in Chapter Three, Aldrich was the grandfather of Nelson Aldrich Rockefeller. Around the end of WW II, income tax withholding was introduced. One of the prime movers of withholding was Beardsley Ruml, Chairman of the Federal Reserve Bank of New York. Could this mean that the IRS is really the Gestapo of the Federal Reserve Bankers?
THE PRINCIPLES OF TAXATION
From the history of taxation, I believe we can deduce certain principles. In moments of wishful thinking, I imagine that somewhere, sometime some clever people will create a civilization where these principles are understood and applied:
LITURGY, ONE ALTERNATIVE TO TAXATION
We live in a world of infinite possibility, but in a culture of severe limitation. We have been brainwashed with "nothing is as certain as death and taxes." For us to imagine a world without taxes is almost like a fish trying to live other than in water. We are stuck in constricting constructions of thought like, "If we don't have taxes, we must have "X" as the only alternative; "X" is evil; therefore we must have taxes." The fact is, however, that we have an infinite number of alternatives to taxation potentially available to us. We just have never thought of them.
Nevertheless, the ancient Greeks did think of an alternative to taxation. Charles Adams, in Fight, Flight and Fraud: The Story of Taxation, describes it as "revenue sharing without bureaucracy":
"When a city needed a new public improvement or activity, such as a bridge, or perhaps a play or festival, the leading citizens were called upon to provide what was wanted. It was not a tax or confiscation of any kind. Called a liturgy, this was a voluntary contribution to the city-state. It was enforced by nothing more than tradition and strong public sentiment. Public amusements, athletic games and military equipment were purchased by rich citizens and donated to the city. A certain amount was expected of each rich citizen, but most of them gave more than was asked...
The practice of liturgies created a new sense of private property. Those who had wealth held it in a kind of voluntary trust for the city. Ownership of property involved duties more than it involved rights. This was the Greeks' brilliant alternative to government ownership and bureaucratic control which typified the oriental despotisms of that day and the governments of our day. The rationale was that property, by the natural order of things, was bestowed on those best able to acquire and manage it, but those so endowed were obligated to hold it for the community as it was needed. This system permitted the management of the excessive wealth of the private citizen for the whole community without government bureaucracy - something no other people has been able to do, either before or since the days of the ancient Greeks. Waste and inefficiency that is so inherent in bureaucratic life was replaced by private enterprise for the public good.
The private donor actually managed and directed the public improvement or activity. If a bridge was needed the wealthy citizen actually built the bridge. For his work and money the donor was honored. The city-state government had little to do except to push the project along. Under the system the public received the most from the donor's money. His management talent was free.
Today we shift a great deal of private wealth to the public sector through heavy taxation and government-managed expenditures. The costs are enormous. Worst of all is the spirit of the whole operation. The donors are neither respected nor honored for their benevolence. In fact, the taxpayer, however high the tax he pays, does not know where his money goes. He pays because the alternative is prison and he never pays more than the law demands, if that much. Paying three or four times as much tax as the law demands is unheard-of in our society. Our governments exact taxes with the arrogance of an owner, somewhat like the attitude of Louis XIV as expressed by one of his aides: "All the wealth of his subjects was his, and when he took it he took only what belonged to him." This is the attitude of the despots, which the Greeks understood so well and tried so hard to avoid through the system of liturgies.
Scholars have taken strong positions both for and against the liturgy. It cannot be questioned, however, that the liturgy was the device by which the Greeks achieved civilization without despotism. When a government takes wealth by force and claim of right, it is inclined to trample on the people's property rights and liberties. On the other hand, if private wealth is spent without social conscience on the extravagances of individuals, the less fortunate suffer and are often driven to violence and revolution. The liturgy was a solution to the dilemma of too much versus too little government intervention in the accumulation of private property. The interests of the community and the individual were reasonably balanced. The liturgy respected private property, but it also induced the wealthy to shoulder the main burden of providing for the needs of the community - and the genius of the system lay in the fact that no police power was needed to achieve those ends.
Under a liturgy system there is no place for the games of avoidance and evasion that characterize our tax systems. Loopholes, tax gimmicks and tax shelters have no place. Every citizen should shoulder his fair share of the costs of maintaining government and providing for the needs of the community. This kind of patriotism is not jingoistic; without it liturgy will not work.
The Greek practice of liturgies survived the city-states. But when the Romans demanded liturgies from their conquered cities with the muscles of the legions, this was no longer voluntary contribution. Now it was legalized robbery or, to be more sophisticated, the confiscation of private property for government use without just compensation."
THE ORIGIN AND DEVELOPMENT OF THE STATE
In Parliament of Whores, P.J. O'Rourke describes a town meeting in "Blatherboro," New Hampshire. It is a little town whose inhabitants are extraordinarily decent. The citizens are educated, sensible, and all employed. In 1989 the town spent $21,000 on public assistance. All the money was supplied by private charitable donations. But, writes O'Rourke:
"...[T]he result of the annual town meeting is always a stupid and expensive mess. Much of the stupidity is common to all government... Blatherboro has fifteen police officers - the same ratio of police to population as New York City. The annual Blatherboro police budget is $425,000. This in a town that, in 1989, had 520 crimes, of which 155 were minor incidents of teenage vandalism. The cost of police protection against the remaining 365 more or less serious malefactions was $1,164 each - more than the damage caused by any of them."
O'Rourke then describes the school system. The drop-out rate is around 36% - similar to the rates in most inner-city slums. Yet in Blatherboro they spend three times the national average per student. He describes other stupidities, like Blatherboro having to build a $6.2 million unnecessary water system in order to comply with the Safe Drinking Water Act of 1982. Failure to comply would have subjected the town to a fine of $25,000 per day.
Then came the great sewer debate. A golf-course developer had handled all the legal obstacles in order to build a golf course and a condominium complex. He had punctiliously met all the requirements of the Planning Board and other agencies - he obtained forty-seven permits from eleven different government agencies. Construction was already underway. But some of the townspeople wanted to "control growth." The last possible way to stop the development was to pass a local regulation requiring that any extension to the town's sewage system costing more than $50,000, would have to be approved by a special town meeting! O'Rourke continues:
"It was at this moment, in the middle of the Blatherboro sewer debate, that I achieved enlightenment about government... It wasn't mere disillusionment that I experienced. Government isn't a good way to solve problems; I already knew that. And I'd been to Washington and seen for myself that government is concerned mostly with self-perpetuation and is subject to fantastic ideas about its own capabilities. I understood that government is wasteful of the nation's resources, immune to common sense and subject to pressure from every half-organized bouquet of assholes. I had observed, in person, government solemnity in debate of ridiculous issues and frivolity in execution of serious duties. I was fully aware that government is distrustful and disrespectful toward average Americans while being easily gulled by Americans with money, influence, or fame. What I hadn't realized was government is morally wrong.
The whole idea of our government is this: If enough people get together and act in concert, they can take something and not pay for it. And here, in small-town New Hampshire, in this veritable world's capital of probity, we were about to commit just such a theft. If we could collect sufficient votes in favor of special town meetings about sewers, we could make a golf course and condominium complex disappear for free. We were going to use our suffrage to steal a fellow citizen's property rights. We weren't even going to take the manly risk of holding him up at gunpoint."
The first imperative of human behavior is: Survival or self-preservation. The second imperative is: Obtain the means for survival through the least effort. There are two basic ways to obtain the means for survival: Working and Stealing. Working is called the economic means. Stealing is the political means. The private sector or free market utilizes the economic means; the public sector or government, the political means. In his book The State, Franz Oppenheimer says:
"The State, completely in its genesis, essentially and almost completely during the first stages of its existence, is a social institution, forced by a victorious group of men on a defeated group, with the sole purpose of regulating the dominion of the victorious group over the vanquished, and securing itself against revolt from within and attacks from aboard. Teleologically, this dominion had no other purpose than the economic exploitation of the vanquished by the victors. No primitive state known to history originated in any other manner."
Oppenheimer was a sociologist who studied many peoples: Americans, Barbarians, Chinese, Dutch, Egyptians, Franks, Germans, Huns, Indians, Japanese, Kafirs, Lapps, Macedonians, Normans, Ostrogoths, Quakers, Romans, Saracens, Turks, Ugvarks, Vikings, Wassanai, Xhosas, Yankees, Zulus, and many others.
So Moses said to the people, "Arm some of
your number for the war, so that they may go against Midian, to
execute the Lord's vengeance on Midian. You shall send a thousand
from each of the tribes of Israel to the war." So out of
the thousands of Israel, a thousand from each tribe were conscripted,
twelve thousand armed for battle... They did battle against Midian,
as the Lord had commanded Moses, and killed every male... The
Israelites took the women of Midian and their little ones captive;
and they took all their cattle, their flocks, and all their goods
as booty. All their towns where they had settled, and all their
encampments, they burned, but they took all the spoil and all
the booty, both people and animals. Then they brought the captives
and the booty and the spoil to Moses... Moses became angry with
the officers of the army, the commanders of thousands and the
commanders of hundreds... Moses said to them, "Have you allowed
all the women to live? These women here... made the Israelites
act treacherously against the Lord... so that the plague came
among the congregation of the Lord. Now therefore, kill every
male among the little ones, and kill every woman who has known
a man by sleeping with him. But all the young girls who have not
known a man by sleeping with him, keep alive for yourselves."
Numbers 31, verses 3-18
Oppenheimer describes four stages in the development of the state. The first "comprises robbery and killing... of men, carrying away of children and women, looting of herds, and burning of dwellings."
The second stage starts when the conqueror spares his victim in order to exploit him. It is the origin of slavery. The victim, ceases to resist and becomes a slave who pays tribute to the conqueror.
The third stage comprises the "integration" of the master and slave, involving a "stream of sympathy, a sense of common service."
The fourth stage occurs when the master and the slave have been "integrated" to the point that they speak the same language, a union between the ethnic groups has developed on a defined territory.
I see three further stages. The fifth stage involves the development of a third class: the welfare-recipient. In the U.S. this stage started in the early thirties. We now have three classes: masters, slaves, and welfare-recipients.
The sixth stage occurs when the burden of the slaves in supporting the masters and the welfare recipients, becomes too onerous for the slaves to tolerate and they revolt. Hyperinflation may also occur.
The seventh stage is a hypothetical stage we may never reach. In stage seven people have abandoned the political means for the economic. They have learnt voluntary cooperation.
The important principle to realize is that:
AS LONG AS THERE ARE WILLING SLAVES (TAXPAYERS), THERE WILL BE MASTERS (THE STATE) TO TAX AND EXPLOIT THE SLAVES.This is because of the second principle of human behavior: Obtain the means for survival through the least effort.
In addition to Franz Oppenheimer, I am also indebted to George Roche for my understanding of the origin of the state. Roche is the author of a brilliant book, America by the Throat: The Stranglehold of Federal Bureaucracy. Basically he describes bureaucracy as the organization of the political means. Roche answered the question for me: What fundamental of human nature - what basic impulse - gives rise to the state, that is, organized theft? He writes:
"...[T]he impulse toward bureaucratic growth is fueled by simple human greed. For this we turn again to the insights of Albert Jay Nock in his classic 1935 essay, Our Enemy, the State. This work developed the earlier sociological research of Franz Oppenheimer, who had observed that throughout history, without exception, "Wherever opportunity offers, and man possesses the power, he prefers political to economic means for the preservation of his life." Baldly stated, men would rather steal than earn a living if they have a way to do so easily.
From Herbert Spencer and Henry George, Nock had learned "the formula that man tends always to satisfy his needs and desires with the least possible exertion."
These two basic principles of behavior come together in an almost blinding insight about the human condition. Nock recalled that it occurred at a luncheon with his friend Edward Epstean, to whom his book was dedicated. He described the incident in his autobiography:
"I do not recall what subject was under discussion at the moment; but whatever it was, it led to Mr. Epstean's shaking a forefinger at me, and saying with great emphasis, "I tell you, if self-preservation is the first law of human conduct, exploitation is the second."
The remark instantly touched off a tremendous flashlight in my mind. I saw the generalization which had been staring me in the face for years... If this formula (of Spencer and George) were sound, as unquestionably it is, then certainly exploitation would be an inescapable corollary, because the easiest way to satisfy one's needs and desires is by exploitation...
In an essay which I published some time ago (Our Enemy, the State), having occasion to refer to this formula, I gave it the name of Epstean's law... Man tends always to satisfy his needs and desires with the least possible exertion."
Armed with this insight, Nock demolished all pretense that the state could ever become a benevolent institution or serve the interests of society. The State is the organization of the political means. Its sole purpose is the economic exploitation of one class by another. The State originated historically for purposes of exploitation, and exploitative it remains; it cannot change its nature."
Let us explore the six stages in the development of the state in more detail. A long time ago there were four basic occupations: hunter-gatherers, nomadic herdsmen, peasant-farmers, and fishermen. One of these groups developed systematic plunder as a way of life. It was the herdsmen, because the easiest way for them to expand their herds was to raid other herdsmen. So they started raiding each other to steal livestock. They were mobile and had domesticated horses and camels. They inhabited mainly plains and desert areas, suitable for grazing their animals, but not fertile enough for agriculture. They developed weaponry. Next they started raiding farming communities. They raided, killed, looted, and left. They became known as "hordes." This was the first stage in the development of the state. We could regard the organization and actions of these warrior tribes as the "state in embryo." In order to succeed they had to operate like an army. Somebody had to be in charge, and the others had to follow orders. According to Oppenheimer, they "developed a science of tactical maneuvers, strict subordination, and firm discipline." Roche sees the genesis of bureaucracy in this prehistoric military organization. He writes:
"What I, as a historian, find so interesting about all this, is that bureaucracy must have antedated government by millennia... The irresistible conclusion is that the State was invented by bureaucrats, and not the other way around! All the evidence supports this conclusion...
In a system of violence and plunder, some must die for others to live... The plunder system is thus a sort of cannibalism, with part of the human race feeding off the rest. This is still so [today], but the system has been immensely refined."
After centuries of such raids, some bright warrior made the revolutionary discovery that the conquered peasant-farmer was worth more alive than dead. This is the origin of slavery, and the second stage in the development of the state. Writes Oppenheimer, "The ownership of slaves! The nomad is the inventor of slavery, and thereby has created the seedling of the State, the first economic exploitation of man by man."
The nomads added "human stock" to their livestock. Their nomad military bureaucracy was adapted to manage and control their slaves. According to Oppenheimer, what made this possible is that "the peasantry do not flee. The peasant is attached to his ground, and has been used to regular work. He remains, yields to subjection, and pays tribute to his conqueror; that is the genesis of the land states in the old world."
Now there is a common interest between the master and the slave. The master comes to depend on the slave's tribute; and the slave, on the master's protection. Eventually they come to speak the same language. Integration of culture occurs. Emotional bonds between master and slave develop. This is the third stage of the development of the state.
The fourth stage occurs when the masters define a territory in which they own all the slaves and land. According to Roche, "The nomads have abandoned their economic role as herdsmen for a new and wholly political job. They own the territory and its people." But despite its bloody origin, the state, in its early stages, becomes a civilizing factor because of the common interests between the master and the slave, and the economics of slavery. Just as the herdsmen looks after their livestock, the masters care for their slaves. According to Oppenheimer:
"The raiders burn and kill only so far as is necessary to enforce a wholesome respect, or to break an isolated resistance. But in general, principally in accordance with a developing customary right - the first germ of the development of all public law - the herdsman now appropriates only the surplus of the peasant. That is to say, he leaves the peasant his house, his gear and his provisions up to the next crop... The peasant thus obtains a semblance of right to the bare necessaries of life; so that it comes to be regarded wrong to kill an unresisting man or to strip him of everything."
Can we see this pattern in the original U.S. Constitution? Most of it deals with the powers of the government, including taxing powers; not too much about the rights of the people. There must have been tremendous opposition to the original Constitution, so the Bill of Rights was added to increase the rights of the people. In my opinion, it is the Bill of Rights, more than anything else, that made America a great civilization.
In its fifth stage of development the state becomes a "welfare state." In addition to masters and slaves, a third class arises: the welfare-recipient. The New Deal of the thirties was the flowering of stage five. There are two sub-classes of welfare-recipients: non-producers and certain state-contractors. The non-producers essentially produce nothing and live off handouts from the state. The state-contractors I refer to here are those who are overpaid for the goods or services they provide to the state. The military-industrial-complex is the prime example. Ross Perot also comes to mind. According to David Hapgood (The Screwing of the Average Man):
"Towering over such petty hustlers is the imposing figure of H. Ross Perot. Hardly anyone had heard of Perot when, in 1969, he was made a director of the Nixon Foundation... By the following year... Perot was worth around $1.5 billion, and Fortune magazine offered the observation that no American had ever made so much money in so short a time. Perot... made his fortune out of government funds for the old and the poor. He founded an electronic data processing firm which picked off Medicare and Medicaid contracts all over the country. His bid was often higher than anyone else's, but somehow he landed the contracts, and his profit rate ran as high as 41 percent. Perot was evidently hard to resist; when New York State bureaucrats chose another bidder, Perot appeared in the office of then Governor Nelson A. Rockefeller, and on the governor's orders Perot got back on the inside track. ...[T]he fortune Perot made out of public money works out to an average contribution of almost $19 from each taxpayer in the land."
During stage five, government becomes much more complex. Among other things, it needs to "administer" the non-producing welfare-recipients and the state-contractors. Bureaucracy and government spending start growing explosively. Taxes rise steeply.
The present U.S. is a perfect example of the next stage. Bureaucracy and government spending are huge and ballooning out of control. During the sixth stage of the development of the state, the state has become an almost unlimited license to steal. A morality has arisen in which people's desires have become needs, and their needs have become "rights" - which must be guaranteed by the state - like "universal health care." This morality is epitomized by a front-page headline of The Arizona Republic of July 20, 1992:
"Good health 'a human right' ...The chairman of the eighth International Conference on AIDS issued a dramatic call Sunday for a new world political movement organized around the issue of health, saying it is time to "champion the principle that health is a human right, not a privilege.""George Roche describes stage six perfectly:
"Physical fear of the conqueror turns into psychological dependence; the State is accepted as the supreme power, a god, a protector and dispenser of justice. Its agents assume the aura of a priestly class, in the vestments of authority; and its exactions become irresistible. No longer can subjects question the right of the State to take what it will, for their minds are enslaved along with their bodies. The state is god. The honest dealings of men give way to greed, and greed to glory. The masses are forced not to bake bread but to build pyramids."
Eventually the burden of the slaves in supporting the masters and the welfare recipients, becomes too onerous for the slaves to tolerate and they revolt. The growing tax rebellion in the U.S. is typical of stage six. The former Soviet Union completed stage six in 1991 when it broke apart. The stage six explosion of bureaucracy, and government spending and debt, may produce hyperinflation. Civilization may collapse.
After a revolution, people tend to return to an earlier stage of government or state, perhaps on a different territorial basis, as in the case of the former Soviet Union. The seventh stage is a hypothetical stage we may never reach. It is called , Freedom, Self-government or Free Enterprise. People have abandoned the political means for the economic. They have learned voluntary cooperation. Ancient Greece with its liturgy system probably came close to stage seven. The Declaration of Independence was an example of an advance to stage seven.
In her superb book, The Discovery of Freedom: Man's Struggle Against Authority, Rose Wilder Lane describes three attempts to achieve and maintain free societies. The first attempt started four thousand years ago when Abraham "taught his increasing family that men are free." It continued with Moses in Egypt, "Over and over he told them that they were responsible for themselves, that each one of them was free..." He gave them the Ten Commandments, which were all negatives - "Thou shalt not steal." And two thousand years ago Jesus "preached that men are free."
Lane describes the second attempt:
"About thirteen hundred years ago a self-made business man began the second attempt to establish the fact of individual freedom in practical affairs." Mohammed started teaching in Mecca that, "Each individual is self-controlling and responsible... There is no superior kind of man; men are humanly equal. The Emperor has no actual power over anyone... a priest is no holier or more powerful than any other man, either... Mohammed said that some men are prophets. The greatest, he said, are Abraham, Moses, and Christ... The knowledge that men are free swept across the known world... In eighty years the world was Moslem from the Indian Ocean to the Atlantic... Europeans called them Saracens...
They opened their schools; from Baghdad to Granada... These universities had no organization whatever. (Mohammed said that organization corrupts knowledge.) A Saracen university had no program, no curriculum, no departments, no rules, no examinations; it gave no degrees nor diplomas. It was simply an institution of learning. Not of teaching, but of learning. A man, young or old, went to a university to learn what he wanted to know, just as an American goes to a grocery to get the food he wants... The Saracens' free minds first grasped that concept: zero..."
Lane continues to describe the Saracens' monumental achievements in mathematics, astronomy, navigation, medicine, surgery, anesthesia, science, art, agriculture (contour plowing, fertilization, irrigation, and crop rotation), manufacturing, commerce, transport, free trade, and postal services. They created a civilization with these features:
"It is scientific, constantly increasing and using scientific knowledge. Its essential function is not war, but production and distribution of goods. It is tolerant of all races and creeds; it is humane. Its standard of living, including standards of cleanliness and health, is the highest in the world. Its tempo is increasingly rapid, and great speed in communication and transportation is necessary to its existence...
The Saracens evidently got along very well for nearly a thousand years with no law. They modified, in many ways, the pure anarchy of freedom. From the past, they kept tribal customs. They increased the natural authority of parents over children, and the natural influence of wise, able, successful men and women. Workers formed fraternal groups; these still exist, more than a thousand years old...
All these are methods of using [human] energy flexibly, in mutual action. They are ways of controlling combined human energies without restricting individual freedom... There must have been many methods of controlling by mutual consent, all the activities of that busy civilization spanning three continents with trade, discovering and increasing and applying scientific knowledge, creating and distributing an unprecedented wealth of goods and of knowledge, literature, art, architecture - constantly improving all living conditions.
There was no Authority. There was no state. There was no Church."
The third attempt to achieve a free society, Rose Wilder Lane describes, is the American Revolution: "What actually occurred, when men could act freely was a terrific outburst of human energy, changing all life-values, and utterly transforming the material world." An article in the June 1991 issue of The Connector describes the impact of the American Revolution:
"The Revolutionary War gave Americans something new under the sun, something that no other people throughout all of history had ever enjoyed before, with the singular exception of the ancient Israelites... Up to the American Revolution there had been only two classes of people in the world, Rulers and Slaves, Kings and Subjects, and no man or group of men had ever been able to break that mold or to change that balance of power.
That all changed with the American Revolution and for the very first time the mold was broken and the balance of power shifted. With the defeat of King George our Founding Fathers gave us a very unique Constitution which severely limited the powers of government and then added a Bill of Rights which, literally, made every man a King and free to exercise, without undue restraint, his natural talents and abilities to the fullest extent possible.
This unlimited and free exercise of personal rights and abilities resulted in what is now called the Free Enterprise system of economy. Shortly after it went into effect, a virtual explosion of prosperity followed. And this prosperity, in turn, created a new class of people on planet earth which we now know as the Middle Class. For the first time man had managed to free himself from the shackles of serving other men who had kept him in bondage for thousands of years.
This cumulative effect of exercise of personal rights and abilities, free enterprise economy, prosperity and the rise of the Middle Class produced a... New Nation... that in the span of just one generation... became the crown gem of all the nations in the world. We want to point out here so it will not go unnoticed, that there have been thousands of fierce revolutions throughout all of history but not one of those revolutions produced a nation such as ours and we must ask ourselves why? Part of the answer is that those revolutions only put new faces in the seats of power but never gave men the opportunity to freely exercise their God-given rights and abilities. The American Revolution went the extra mile by making every man a King and as long as he had respect for the rights and property of all other men within that system of law agreed upon, there were no limits to how far he could spread his wings."
In his famous essay published in 1844, The Right to Ignore the State, Herbert Spencer wrote:
"It is a mistake to assume that government must necessarily last forever. The institution marks a certain stage of civilization - is natural to a particular phase of human development. It is not essential, but incidental. As amongst the Bushmen we find a state antecedent to government, so may there be one in which it shall have become extinct... The once universal despotism was but a manifestation of the extreme necessity of restraint. Feudalism, serfdom, slavery, all tyrannical institutions, are merely the most vigorous kind of rule, springing out of, and necessary to, a bad state of man. The progress from these is in all cases the same - less government... Thus, as civilization advances, does government decay. To the bad it is essential; to the good, not. It is the check which national wickedness makes to itself, and exists only to the same degree. Its continuance is proof of still-existing barbarism."
THE GROWTH OF BUREAUCRACY
Imagine a new kind of organism. It is the uncontested owner of a large territory with a hundred million slaves. All the organism does is cause problems. However, the slaves believe that the organism has the magical powers to solve all problems. They further believe that the more they feed the organism, the more problems it will solve. The organism feels better, the fatter it gets. In fact, its happiness is geometrically proportional to the quantity it consumes. Of course, the organism has no competition in its territory and the slaves may not feed any other organism. Guess how large the organism grows - and what it might give birth to?
In America by the Throat: The Stranglehold of Federal Bureaucracy, George Roche writes:
"The U.S. Office of Education was a tiny, fact-finding body in 1939 when it was incorporated into a new, larger bureau called the Federal Security Agency. Few remember what the FSA was, but everyone is thoroughly familiar with what it became. After fourteen years, the FSA was promoted to the cabinet and changed its title to the U.S. Department of Health, Education and Welfare. It began life with a budget of about $4 billion. After another twenty-six years, its budget now approaching $200 billion a year, HEW was seen to be great with child. And like some colossal whale calving, it was delivered of a whole new Department of Education. In forty years of gestation, the tiny education bureau had grown into a cabinet department with 152 offices of its own and a budget of $12 billion. Its compound growth rate for the period must have outstripped a Ponzi game...
Bureaus... do not operate in the world of doing things with concrete purpose and clear goals. Their only purpose is to be what the reigning politicians say they should be, and move as far as they can up toward the fat end of the public trough."
Roche goes on to describe the reasons for bureaucratic growth:
"...State agencies can consume faster than we can produce. Never in sixty centuries of State history can I find a single exception to this... [I]n the State system, bureaucracy multiplies geometrically while the resources needed to support it, from the productive economy, grow only arithmetically. Political action creates an ever-increasing demand for bureaucratic intervention, which causes damage faster than society can repair it. Never knowing when to stop, the bureaucratic power continues to expand its interventions until society itself collapses."
THE MOST BASIC ARGUMENT AGAINST GOVERNMENT
The following two sentences refute all the "government-is-necessary-to-do-X" arguments: Government consists of people. When anyone says "government is necessary to do 'X' (whatever)," they are really saying "people are necessary to do 'X' (whatever)." Likewise, when anyone says "only government can do 'X'," they are really saying "only people can do 'X'."
I strongly recommend reading the article: Is "Government" A Solution To Anything? - which explains the above in detail, along with related arguments and issues. The remainder of this chapter continues on from that article, to address some additional issues...
BUT WHAT ABOUT NATIONAL DEFENSE, POLICE, COURTS, AND PRISONS?
In our present world of violent limitation we are very restricted in the range of solutions we are stuck with. In a free market an infinite number of potential solutions become available. We would be free to experiment with a wide variety of solutions. There would be competition between solutions. People who operate in the economic mode tend to solve problems.
David Friedman, son of Nobel economics laureate Milton Friedman, has written a superb book, The Machinery of Freedom: Guide to a Radical Capitalism, which includes a chapter, "National Defense: The Hard Problem." There are basically two classes of functions the people called "government" perform - those we can eliminate today, and those we can eliminate tomorrow. National defense is in the latter class. David Friedman provides several suggestions for how national defense might be handled in a free society.
The following possibility is based on a suggestion from my friend Neil Steyskal: Often, when people think about national defense, they think in terms of defending against an invading army or against nuclear attack. Imagine that instead we think in terms of "defending against" the top political and military chiefs of any nation with a threatening military force. The theme of such a defense system is, "Anything military you do that threatens our security may result in personal destruction and/or death of your top banking, political, and military chiefs, their families, and their homes." The defense system is totally aimed at the banking, political, and military bosses. I'm sure someone with military, technological, and intelligence savvy could figure out how such a defense system could be set up for less than one percent of the current U.S. military budget. Of course, in a world of governments such a defense system is unthinkable - the first people to get killed would be the organizers of war.
Let me repeat the fundamental expounded in the article: Is "Government" A Solution To Anything?: "government" is people; what they do is being done by people; these people don't have magical powers; other people can also do what "government" people do. Once you grasp this fundamental, you can open your mind to an unlimited range of possibilities. We already have private police in the form of security companies, because government police protection is insufficient. Common law courts developed without the "help" of government. And people don't have to call themselves "government" in order to build and operate prisons.
Assemble yourselves and come together, draw near,
you survivors of the nations! They have no knowledge - those who
carry about their wooden idols, and keep on praying to a god that
Isaiah 45, verse 20
Robert Axelrod, Professor of Political Science and Public Policy at the University of Michigan, has written a groundbreaking book, The Evolution of Cooperation. On the dust cover is written:
"This path-breaking and provocative work provides a bold answer to one of the oldest and most important questions human beings face: How can cooperation emerge among self-seeking individuals when there is no central authority to police their actions? It is a question that has troubled philosophers and statesmen for hundreds of years; its importance has never been greater than in today's world of nuclear weapons."
SPONTANEOUS LAW AND ORDER
Common law is an example of a legal system, including courts, that developed spontaneously. In Law, Legislation and Liberty, Nobel laureate Friedrich A. Hayek makes the distinction between "cosmos" and "taxis." Cosmos is a spontaneous order like language. Nobody sat down and designed English; it developed spontaneously over the centuries. A language can be regarded as an example of Cosmos. A crystal is another.
A skyscraper is a designed order or taxis. So are an automobile, a football team, and the U.S. Constitution. These are all orders designed by humans. For certain purposes we need designed orders; for others, spontaneous. Government is an attempt to impose a designed order through violence.
A society can be an example of cosmos. Common sense customs develop spontaneously - as did common law. A clever observer notices that certain behaviors work and others don't. So he formulates "Ten Commandments," which say, "don't do this and don't do that, because it doesn't work." Nobody needs to design a punishment system, because "nature automatically punishes" transgressors in the form of poor or negative results.
In Government Anarchy and the POGONOGO Alternative, Theodore Becker, professor of political science at the University of Hawaii, wrote:
"What anarchists admire is the antithesis of "government of law and not of men." They seek self-rule of men without externally imposed law and its cumbersome equipment of promulgation and execution. They entertain different assumptions about the political nature of man, whether in the state of nature or in the state of Vermont. They believe that if men were left alone to make up their own rules as they went along, according to their own ideas of what's right, society would be better off.
I was particularly intrigued by a comment of an American chief of police after his experience as an observer at the Woodstock Rock Festival in the summer of 1969. Chief Joseph Kimble, who has since been banished from the Beverley Hills Police Department, was astonished that over four hundred thousand young people could overpopulate a small area under terribly adverse weather and space conditions and get along so well, producing negligible violence and minor friction.
At Woodstock nearly half a million persons managed to simulate an urban slum, yet perform all animal functions happily - despite the near-absence of visible police power. As a matter of fact, the uniform of the token police force there was a red blazer, with no badge of authority except the Woodstock symbol: a dove and a guitar. Kimble emerged with some fresh ideas on the possibility that multitudes of people could police themselves with little structure akin to that we call police departments.
Was the Woodstock Nation a group of people living in anarchy [without having a ruler]? Yes. It was a gathering of people in large numbers who were determined to act in concert without regard to stone tablets, yellowed parchments, or rigid rulebooks."