Certain memes have become popular among advocates of gold and cryptocurrencies. This is the meme of “fix money, fix the world”. This slogan is based on the idea that by switching to some commodity currencies—whether cryptocurrencies or metals—and abandoning fiat currencies, the world will be greatly improved.
Of course, in terms of its mild form, this slogan is undoubtedly correct. The state-controlled currency is immoral, dangerous and impoverished. It paved the way for the government to steal private wealth by imposing an inflation tax, thereby allowing the state to do more of what it does best: launching wars, killings, imprisoning, stealing, and making friends of the regime get rich at the expense of everyone else. . Privatizing the currency system and implementing a “separation of currency from the state” will help limit these activities.
But it is also important not to exaggerate the benefits of taking money away from the state.The temptation to push the idea of “fixing the world” to a utopian level often appears in cryptocurrency extremists and And some gold promoters.
For example, at least A bitcoin enthusiast It is believed that Bitcoin will bring “the end of the nation state.”In a particularly exaggerated paragraph Another Bitcoin initiator, We are told that cryptocurrency will basically cure all diseases from poverty to corruption to environmental destruction.
Switching to different money will somehow end theft, poverty, Even war It’s the kind of savior mindset that would allow old-school Marxists to fight for money.
Yes, we all agree that if we “improve money”, we will also “improve the world.” However, eliminating the country’s currency monopoly will not allow the states to put away their tents and slip away at night. (And, needless to say, simply changing money will not make bad food or poverty go away.)
The state existed before the state controlled the currency. They will still exist afterwards—unless there is also a profound ideological change.
Country predates legal tender
A recent article on mises.org entitled “How the government controls the currency“I explored the early history of European countries and the long process of how the country gradually controlled the currency and financial system. However, it is worth noting that we found that the state power established anything similar to a true monopoly on the currency system in the country—— Or the power to create fiat currency has grown very well.
In other words, countries predate the currency monopoly they now enjoy. In the 16th and 17th centuries-without the benefits of legal tender-the country established a large standing army for the first time. They established a mercantilist economy. Many rulers managed to form huge bureaucracies to serve the authoritarian state. The degree of centralization of the country has never been seen in Western Europe since the Romans. This is a period when the monarch and his agents have made great progress in nation-building.
However, except in very brief and limited circumstances, these states cannot “print money” and cannot enjoy the benefits of legal tender. In fact, the period of tremendous growth in this country is also a period of “parallel” and “parallel” currencies. During this period, various gold and silver coins-most of which are foreign currencies-compete within the borders of a country. . Many attempts by the regime to issue problematic, devalued currencies have failed because there are too many options. But this did not prevent Louis XIV from establishing a powerful country.
So when we ask ourselves this question, “Can the country survive without legal tender?” The answer is obviously “all experience shows yes.”
The state can still levy taxes without legal tender
The existence and health of the country does not depend on legal tender or currency inflation. To be sure, these things help a country, but they are not important to the equation. On the contrary, what is really important is to be able to take advantage of the state’s monopoly on coercive means to seize resources.
The great national historian Charles Tilly pointed out that without the ability to “extract” or “derive from its subjects the means to establish a country, wage war, and protect it,” “no country will last long.”
Of course, “extraction” is just a simple “taxation” for most modern readers. But historically, it can also mean other things. The state can obtain resources by demanding tributes as compensation for the “protection” services the state allegedly provides. This may be a payment made by the local government to the central government. The states also usually own large amounts of land and other property. This means that states can directly obtain resources through rents, leases, and expenses. The state can also grant monopoly power to nominally “private” organizations that provide tangible and intangible benefits to the state (this is a common strategy under systems such as mercantilism). None of this requires legal tender or a monopoly of currency production. All this just requires states to have the coercive power needed to collect taxes, rents, tributes, and other benefits.
Despite this, some cryptocurrency advocates still try to claim that when the financial system is decentralized through an encrypted network, the state will not be able to collect taxes. This will work if the resource does not come in the form of money other than money. but it is not the truth. Since humans are tangible animals—needing food, water, shelter, heating, etc.—the country only needs to focus on taxation and monitoring of physical goods. This will certainly shift the tax burden from the financial sector to physical assets, but it will not end the ability to collect taxes.
Conversely, if states find themselves unable to obtain a monetized economy, they will instead increase taxes on real estate, retail trade, fuel, and hard-to-move physical capital. These states can even require these payments to be made in the country’s preferred currency, thus ensuring the continued existence of state-controlled currencies, even if the currency is a less popular currency within the framework of competition. Those who refuse to comply will see their assets confiscated by guns brandished by the state.
Warmaking: the key part of the puzzle
Finally, we must remember why the country needs to extract all these resources from the beginning. One of the reasons is of course that resource extraction brings more resource extraction.Once a state has a large number of tax collectors and regulators, it is even easier to expand resource extraction more. Fortunately—from a national perspective—this requires only a small portion of total revenue.In addition, many taxpayers can count on actively obey.
A large part of this income—almost all of it in the days before the emergence of the modern welfare state—has traditionally been used for what Tilly calls the “basic minimum activities of the state.”these are
State-made: Attack and inspect competitors and challengers in the territory claimed by the country.
war: Attacking opponents outside the territory that the country has claimed to have sovereignty;
Protect: Attack and check the opponents of the ruler’s main allies, both inside and outside the country’s claimed territory.
These activities are the country’s “core capabilities”, and they also constitute—as Rothbard pointed out—the most risky activities for the country. They are high-risk because countries that fail to succeed in these activities are usually doomed countries. Therefore, even if the states are forced to reduce the welfare state, they will go all out before giving up any of these “minimum activities.”
Of course, historically, the state has been able to obtain sufficient resources in terms of resource extraction for the purpose of war and to ensure the protection of its coercive power. The monopoly on currency and legal tender was never necessary for this equation. Facts have proved that the state borrows, threatens, and propagates when necessary to launch a war-whether it is against foreigners or its own people-very cleverly.
Of course, ideologically, the origin of the state lies mainly in the ability of state agents to promise to “protect” from domestic and foreign threats. As long as the public believes that the state is necessary in this equation, the states will continue to be able to demand taxes, obedience, and “unity.” If anyone doubts the validity of such an idea, they only need to support the division of the United States into smaller parts. People may immediately hear this statement: this is never allowed to happen, because China (or some other monsters at the time) poses an excessively serious threat to the “national interests” of the United States. We are told that a “strong America” is necessary. Of course, this “strength” is funded by taxes.
The state has very strong ideological control over the public in this regard. Unless there is a major change in ideology, most people in the world may continue to count on the state to provide protection from what is considered evil. Therefore, separating the country from money will not fundamentally change the geopolitical world. This will not change the fact that many states are very popular and regarded by their subjects as important and beneficial. In addition, the ancient root causes of conflict will still exist. Racial tensions will continue. Nationalism will not disappear. Border disputes and the struggle over who “correctly” controls some strategic coastlines will not disappear.
Yes, taking control of money away from politicians and bureaucrats is obviously a good thing and should be done quickly and thoroughly. But it will not “fix the world”. This is just part of a larger puzzle.
