Key ideas: The title of the book comes from Frederic Bastiat: “The state is the great fiction by which everyone seeks to live at the expense of everyone else.” The main issue discussed in the book is the choice between liberty and statism.
NOTES
Definition of a state
What must an agent be able to do to qualify as a state? This agent must be able to insist that all conflicts among the inhabitants of a given territory be brought to him for ultimate decision-making or be subject to his final review. In particular, this agent must be able to insist that all conflicts involving him be adjudicated by him or his agent. [...]
[T]he second defining characteristic of a state, is the agent’s power to tax: to unilaterally determine the price that justice seekers must pay for his services.
Pro-state arguments at kindergarten age
To the extent that intellectuals have deemed it necessary to argue in favor of the state at all, their most popular argument, encountered already at kindergarten age, runs like this:
Some activities of the state are pointed out: the state builds roads, kindergartens, schools; it delivers the mail and puts the policeman on the street. Imagine, there would be no state. Then we would not have these goods. Thus, the state is necessary.
Pro-state arguments at the university level
At the university level, a slightly more sophisticated version of the same argument is presented. It goes like this:
True, markets are best at providing many or even most things; but there are other goods markets cannot provide or cannot provide in sufficient quantity or quality. These other, so-called “public goods” are goods that bestow benefits onto people beyond those actually having produced or paid for them. Foremost among such goods ranks typically “education and research.”
“Education and research,” for instance, it is argued, are extremely valuable goods. They would be under-produced, however, because of “free riders,” i.e., of “cheats,” who benefit—via so-called neighborhood effects—from “education and research” without paying for it. Thus, the state is necessary to provide otherwise un-produced or under-produced (public) goods such as education and research.
Refutation of the pro-state arguments
These statist arguments can be refuted by a combination of three fundamental insights:
First, as for the kindergarten argument, it does not follow from the fact that the state provides roads and schools that only the state can provide such goods. People have little difficulty recognizing that this is a fallacy. From the fact that monkeys can ride bikes it does not follow that only monkeys can ride bikes
And second, immediately following, it must be recalled that the state is an institution that can legislate and tax; and hence, that state agents have little incentive to produce efficiently. State roads and schools will only be more costly and their quality lower.[...]
Third, as for the more sophisticated statist argument, it involves the same fallacy encountered already at the kindergarten level. For even if one were to grant the rest of the argument, it is still a fallacy to conclude from the fact that states provide public goods that only states can do so.
Brief examination of Hobbes' argument
(Notes for Leviathan - by Thomas Hobbes)
Finally, the most sophisticated argument in favor of the state must be briefly examined. From Hobbes on down this argument has been repeated endlessly.
It runs like this: In the state of nature---before the establishment of a state---permanent conflict reigns. Everyone claims a right to everything, and this will result in interminable war.
There is no way out of this predicament by means of agreements; for who would enforce these agreements? Whenever the situation appeared advantageous, one or both parties would break the agreement.
Hence, people recognize that there is but one solution to the desideratum of peace: the establishment, per agreement, of a state, i.e., a third, independent party as ultimate judge and enforcer.
Yet if this thesis is correct and agreements require an outside enforcer to make them binding, then a state-by-agreement can never come into existence.
For in order to enforce the very agreement that is to result in the formation of a state (to make this agreement binding), another outside enforcer, a prior state, would already have to exist.
And in order for this state to have come into existence, yet another still earlier state must be postulated, and so on and on, in infinite regress.
On the other hand, if we accept that states exist (and of course they do), then this very fact contradicts the Hobbesian story. The state itself has come into existence without any outside enforcer.
Presumably, at the time of the alleged agreement, no prior state existed. Moreover, once a state-by-agreement is in existence, the resulting social order still remains a self-enforcing one.
To be sure, if A and B now agree on something, their agreements are made binding by an external party.
However, the state itself is not so bound by any outside enforcer. There exists no external third party insofar as conflicts between state-agents and state-subjects are concerned; and likewise no external third party exists for conflicts between different state agents or agencies.
Insofar as agreements entered into by the state vis-à-vis its citizens or of one state agency vis-à-vis another are concerned, that is, such agreements can be only self-binding on the State.
The state is bound by nothing except its own self-accepted and enforced rules, i.e., the constraints that it imposes on itself. Vis-à-vis itself, so to speak, the state is still in a natural state of anarchy characterized by self-rule and enforcement, because there is no higher state, which could bind it.
Confront statists with the following riddle
Assume a group of people, aware of the possibility of conflicts between them. Someone then proposes, as a solution to this human problem, that he (or someone) be made the ultimate arbiter in any such case of conflict, including those conflicts in which he is involved.
Is this is a deal that you would accept? I am confident that he will be considered either a joker or mentally unstable. Yet this is precisely what all statists propose.