Free State-Market Comptetion

Economics Political Theory
1

Earlier i asked a question about what could be the possible way to abolish central bank based system and fractional reseve banking and got a link to a literature, “Denationalisation of Money”, written by Hayek. He wrote about the usability of allowing private banks to issue their own bank notes. That can be a possible work around to fix the issue arisen out of central bank based system. But this led me think into a different matter.

If “State” is defined as social apparatus of compulsion and coercion and as we see that State depends on tax collected from the people for whose protection the State is formed, then State is not very different from an Enterprise. State provides services to the people, helps to maintain the society. But like any Enterptise, State is made of real people, who are themselves driven by their own self-interests and that can drive them and the State into a deceptive and tyrannic mode of operation. In case of oppressive State, sporadic protests start growing up, which may lead to a civil war or , if State is wise enough, major reform of the existing State. But i think we can analyse this situation in the light of free market competion too.

In this market the States ,or in more generalised term Government Houses, are the producer of consumer good/service, named governance. People of certain geographical area generally get served by a single Government House or the State, specailly when everything is going in the right way. But when the State gets corrupted, people’s needs do not get satisfied, the demand for good governance gets utterly unserved by scarcity of such service by the exisitng State. Entrepreneurs, a miraculauos creation who exists in every society, will soon detect the difference of the supply and demand and cirtically examine the secondary goods, the rebellious persons, and use them to build alternative Governemnt Houses. So, there will spring out more than one Governemnt Houses. Now each Governemnt House’s ultimate aim is to govern or provide governance to the people. If people believe in single State system, a coup of the exisiting State by a new Governemnt House may work if the new State is able to serve the demanded governace. If the people do not have such preference for single State, then there may exist multiple Governemnt Houses or States within former single State’s territory. Now, it may happen that people start to prefer one State over other or the new States may make a cartel and again a single State system may arise. Or it may happen that new States remain within the old single State system and outsiders will say that the older State is now partitioned into several smaller ones.

The Entreprenurs of the State service changes faces over time and place. There has been chief, king, emperor, parliamentarian in entreprenural role to provide this essential service to the people.

The only difference of the free State market competion from that of other markets is that the former involves the fundamental societal activities of people, hence it may involve lot of blood shed and physcial confrontation. Only if this were a bloodless competiton, being rebelious would not be considered injurious to health.

2

The only difference between a “state” and any other supplier of a product or service is simply that the state has a monopoly on the use of the threat of violence and of violence itself. So it can do two things that other actors in a free economy can not do: 1. Force people to fund it. The state can demand money from people who do not wish to provide it. And 2. Force people to use its products and services, and/or the products and services from vendors it approves. As a supplier of say education, I can not just start my own school up any place I wish. I must compete with the public school system for students and I do not have access to the public school funding sources. Then to make matters worse, I am forced to pay for the public school system despite that I intend to complete with it directly. The same is true for other services: dispute resolution, law enforcement, parks and recreation, management of waterways, waste disposal, water and sewer services, etc.

3

The problem is, how do you measure discontent? How do you measure the populace’s satisfaction with public goods and services? I have to pay for a congested road whether I use it/am satisfied with it or not. For certain crimes, I have to submit myself to government courts.

We need a guide to measure the efficacy of any enterprise, a way to determine profit and loss. It’s certainly true that the state can suffer losses (rebellion, regime change, etc.), but these signals are nowhere near as accurate or sensitive as what a market firm relies on. A rebellion takes a lot of effort, and so would only come about with severe dissatisfaction. If there were a thousand nations, and the costs of relocating to a more agreeable governing provider are low, you would have a better idea as to how well a certain state is pleasing its citizens. But it’s still far from the information available to a private firm that can subtract monetary losses from monetary revenue.

4

Sujoy,

Listen to this:

http://mises.org/media/2105

5

There are less reasonable resources at my disposal to argue against the idea of liberty. Liberty is inevitable outcome of honest exploration of the knowledge by human. But at the same time, i think, a social apparatus is required to run a society with maximum profit on the part of its members. Moreover, since every human being is different, every society or collection of humans has different self-interest. Difference can lead to confrontation, compulsion and coercion. But if freedom to choose a certain kind of good/service/idea does not involve physical damage to other person, then denying that freedom by the State is a tyranny and against essence of human beings.

I think, existence without State government would be desirable by any self-confident truth-searching human being, but it is hard to imagine how much this abolition would actually work in real world. May be it will be very slow process of mass awakening which will reach that stage through free state-market competion.