DemocracyThe God That Failed (26 page)

Specifically, the smaller the country, the greater will be the pressure to opt for free trade rather than protectionism. All government interference with foreign trade forcibly limits the range of mutually beneficial interterritorial exchanges and thus leads to relative impoverishment, at home as well as abroad.
¹⁷
But the smaller a territory and its internal markets, the more dramatic this effect will be. A country the size of the U.S., for instance, might attain comparatively high standards of living even if it renounced all foreign trade, provided it possessed an unrestricted internal capital and consumer goods market. In contrast, if predominantly Serbian cities or counties seceded from surrounding Croatia, and if they pursued the same protectionism, this would likely spell disaster. Consider a single household as the conceivably smallest secessionist unit. By engaging in unrestricted free trade, even the smallest territory can be fully integrated into the world market and partake of every advantage of the division of labor, and its owners may become the wealthiest people on earth. The existence of a single wealthy individual
anywhere is living proof of this. On the other hand, if the same household owners decided to forego all interterritorial trade, abject poverty or death would result. Accordingly, the smaller a territory and its internal markets, the more likely it is that it will opt for free trade.

¹⁶
An excellent example of the reform pressure caused by emigration is provided by the case of former East Germany. Having fallen under the control of the Soviet Union and turned socialist in the wake of World War II, East Germany suffered from its very inception from a massive outflow of people leaving for the more liberal and hence prosperous interventionist (social-democratic) West Germany. By the early 1960s, the number of emigrants had swollen to about 1,000 per day. In reaction, on August 13,1961, the East German government felt compelled to erect a border system, with walls, barbed wire, electrified fences, mine fields, automatic shooting devices, and watchtowers almost nine-hundred miles long, for the sole purpose of preventing East Germans from running away from socialism. From 1961 until the spring of 1989 the problem could thus be contained. However, when allied socialist Hungary then began to relax its border controls
vis-a-vis
Austria, persuaded, as it now turns out, by members of the Paneuropean Union led by Otto von Habsburg, the wave of East German emigration immediately resumed. In fact, within just a few days the number of East Germans escaping to the West via Hungary rose to more than 2,000 per day. It was these events, above all else, that led first to the overthrow of the Honecker regime in East Germany, then, on the forever memorable November 9, 1989, to the dismantling of the Berlin Wall, and finally, in the following year, to the reunification of Germany. See on this Hans-Hermann Hoppe, "De-Socialization in a United Germany,"
Review
of
Austrian
Economics
5,
no. 2 (1991).

¹⁷
See on this Mises,
Liberalism,
pp. 130ff.; Rothbard,
Power
and
Market,
pp. 47ff.; idem,
The
Dangerous
Nonsense
of
Protectionism
(Auburn, Ala.: Ludwig von Mises Institute, 1988).

Moreover, secession also promotes
monetary
integration. The process of centralization has also resulted in monetary disintegration: the destruction of the former international commodity (gold) money standard and its replacement with a dollar-dominated system of freely fluctuating government paper monies, i.e., a global, U.S.-led government counterfeiting cartel. However, a system of freely fluctuating paper currencies—the Friedmanite-monetarist ideal—is strictly speaking no monetary system at all.
¹⁸
It is a system of partial
barter
—dysfunctional of the very purpose of money of facilitating rather than complicating exchange. This becomes obvious once it is recognized that from the point of view of economic theory, there is no special significance attached to the way national borders are drawn. Yet if one then imagines a proliferation of ever smaller national territories, ultimately to the point where each household forms its own country, Friedman's proposal is revealed for what it is—an outright absurdity. For if every household were to issue its own paper currency, the world would be right back at barter. No one would accept anyone else's paper, economic calculation would be impossible, and trade would come to a virtual standstill.
¹⁹
It is only due
to centuries of political centralization and the fact that only a relatively small number of countries and national currencies remain, and hence that the disintegrative consequences and calculational difficulties are far less severe, that this could have been overlooked. From this theoretical insight it follows that secession, provided it proceeds far enough, will actually promote monetary integration. In a world of hundreds of thousands of independent political units, each country would have to abandon the current fiat money system which has been responsible for the greatest worldwide inflation in all of human history and once again adopt an international commodity money system such as the gold standard.

¹⁸
See also Murray N. Rothbard,
The
Case
for
a
WO
Percent
Gold
Dollar
(Auburn, Ala.: Ludwig von Mises Institute, 1991); idem, "Gold vs. Fluctuating Fiat Exchange Rates," in idem,
The
Logic
of
Action
One
(Cheltenham, U.K.: Edward Elgar, 1997); idem,
The
Case
Against
the
Fed
(Auburn, Ala.: Ludwig von Mises Institute, 1995); Hans-Hermann Hoppe, "How is Fiat Money Possible?— or, The Devolution of Money and Credit,"
Review
of
Austrian
Economics
7, no.2 (1994).

¹⁹
See on this in particular Rothbard,
The
Case
for
a
100
Percent
Gold
Dollar.
"One problem," explains Rothbard,

that every monetary statist and nationalist has failed to face is the geographical boundary of each money. If there should be national fluctuating fiat money, what should be the boundaries of the "nation"? Surely political frontiers have little or no economic meaning.. . . Logically, the ultimate in freely fluctuating fiat moneys is a different money issued by each and every individual.... I think it would be instructive if some economist devoted himself to an intensive analysis of what such a world would look like. I think it safe to say that the world would be back to an enormously complex and chaotic form of barter For there would no longer be any sort of monetary medium for exchanges. Each separate exchange would require a different "money." In fact, since money
means
a general medium of exchanges, it is doubtful if the very concept of
money
would any longer apply.... In short, fluctuating fiat moneys are disintegrative of the very function of money itself They contradict the essence of the monetary function, (pp. 55-61)

Secessionism, and the growth of separatist and regionalist movements throughout the world represent not an anachronism, but potentially the most progressive historical forces, especially in light of the fact that with the fall of the Soviet Union we have moved closer than ever to the establishment of a "new world order." Secession increases ethnic, linguistic, religious, and cultural diversity, while centuries of centralization have stamped out hundreds of distinct cultures.
²⁰
Secession will end the forced integration brought about by centralization, and rather than stimulating social strife and cultural leveling, it will promote the peaceful, cooperative competition of different, territorially separate cultures. In particular, it eliminates the immigration problem increasingly plaguing the countries of Western Europe as well as the U.S. Presently, whenever the central government permits immigration, it allows foreigners to proceed—literally on government-owned roads—to any of its residents' doorsteps, regardless of whether or not these residents desire such proximity to foreigners. Thus, to a large extent "free immigration" is forced integration. Secession solves this problem by letting smaller territories each have their own admission standards and determine
independently with whom they will associate on their own territory and with whom they prefer to cooperate from a distance.
²¹

Hence, Rothbard concludes:

The more general the money, the greater the scope for division of labor and for the interregional exchange of goods and services that stem from the market economy A monetary medium is therefore critical to the free market, and the wider the use of this money, the more extensive the market and the better it can function. In short, true freedom of trade does require an international commodity money . . . gold and silver. Any breakup of such an international medium by statist fiat paper inevitably cripples and disintegrates the free market, and robs the world of the fruits of that market, (pp. 58-61)

²⁰
See on this theme also Adolf Gasser,
Gemeindefreiheit
als
Rettung
Europas
(Basel: Verlag Biicherfreunde, 1943).

Lastly, secession promotes economic integration and development. The process of centralization has resulted in the formation of an international, U.S.-dominated government cartel of managed migration, trade, and fiat money, ever more invasive and burdensome governments, globalized welfare-warfare statism and economic stagnation or even declining standards of living. Secession, if it is extensive enough, could change all this. The world would consist of tens of thousands of distinct countries, regions and cantons, and of hundreds of thousands of independent free cities such as the present-day "oddities" of Monaco, Andorra, San Marino, Liechtenstein, Hong Kong, and Singapore. Greatly increased opportunities for economically motivated migration would result, and the world would be one of small liberal governments economically integrated through free trade and an international commodity money such as gold. It would be a world of unheard of prosperity, economic growth, and cultural advancement.
²²

²¹
See on this also Murray N. Rothbard, "Nations by Consent: Decomposing the Nation State"; Peter Brimelow,
Alien
Nation
(New York: Random House, 1995);
Im
migration
and
the
American
Identity,
Thomas Fleming, ed. (Rockford, Ill.: Rockford Institute, 1995); also chaps. 7,9, and lObelow.

²²
With respect to the cultural advancement which can be expected from this development, it is appropriate to conclude with some pertinent observations by the greatest German writer and poet, Johann Wolfgang von Goethe (1749-1832). On October 23,1828, when Germany was still splintered into thirty-nine independent states, Goethe explained in a conversation with Johann Peter Eckermann
(Gesprdche
mil
Goethe
in
den
letzten
Jahren
seines
Lebens)
on the desirability of German political unity, that

I do not fear that Germany will not be united;... she is united, because the German Taler and Groschen have the same value throughout the entire Empire, and because my suitcase can pass through all thirty-six states without being opened. . . . Germany is united in the areas of weights and measures, trade and migration, and a hundred similar things. . . . One is mistaken, however, if one thinks that Germany's unity should be expressed in the form of one large capital city, and that this great city might benefit the masses in the same way that it might benefit the development of a few outstanding individuals A thoughtful Frenchman, I believe Daupin, has drawn up a map regarding the state of culture in France, indicating the higher or lower level of enlightenment of its various "Departments by lighter or darker colors. There we find, especially in the southern provinces, far away from the capital, some "Departments painted entirely in black, indicating a complete cultural darkness. Would this be the case if the beautiful France had
ten
centers, instead of just
one,
from which light and life radiated? ... What makes Germany great is her admirable popular culture,
which has penetrated all parts of the Empire evenly. And is it not the many different princely residences from whence this culture springs and which are its bearers and curators? Just assume that for centuries only the two capitals of Vienna and Berlin had existed in Germany, or even only a single one. Then, I am wondering, what would have happened to the German culture and the widespread prosperity that goes hand in hand with culture. . . . Germany has twenty universities strewn out across the entire Empire, more than one hundred public libraries, and a similar number of art collections and natural museums; for every prince wanted to attract such beauty and good. Gymnasia, and technical and industrial schools exist in abundance; indeed, there is hardly a German village without its own school. How is it in
this regard in France! .. . Furthermore, look at the number of German theaters, which exceeds seventy.... The appreciation of music and song and their performance is nowhere as prevalent as in Germany,... Then think about cities such as Dresden, Munich, Stuttgart, Kassel, Braunschweig, Hannover, and similar ones; think about the energy that these cities represent; think about about the effects they have on neighboring provinces, and ask yourself, if all of this would exist, if such cities had not been the residences of princes for a long time. . . . Frankfurt, Bremen, Hamburg, Liibeck are large and brilliant, and their impact on the prosperity of Germany is incalculable. Yet, would they remain what they are if they were to lose their independence and be incorporated as provincial cities into one great German Empire? I have reason to doubt this.