The Cost of [Not] Rebelling
Why does market governance only occur when it benefits all parties involved?
Why does imposed government only follow parasitic trajectories, and can we map those trajectories as time progresses?
[Dis]Association
In the market exchange, coordination occurs if it is beneficial, and it occurs at the best possible price at the moment.
If there is a potential benefit for a group of people to coordinate their actions, then game theory can be applied. For example, Smith grows cabbages that he sells while Rosie sells squash. The two of them have the option to coordinate their actions. There is a benefit to coordination if they could sell to a larger group of people in a briefer amount of time.
Perhaps Timothy capitalizes on the potential of this coordination and tells them that he will act as a coordinator, a “farmer’s market,” where a large group of potential buyers will congregate for a short amount of time. The intention would be for exchanges to occur at greater rates, making the use of Smith and Rosie’s time more efficient.
This coordination service will have some value to Rosie and Smith. It will also have a cost that they must pay — a price requested by Timothy. If Timothy can produce these services at a price that is less than what the coordinating effort is worth to Rosie and Smith, then it will be in their interests to accept the exchange with Timothy. To associate with anyone requires some form of reciprocity. On the other hand, if the costs of the coordinator’s services is greater than its benefits (its value to Rosie and Smith), the interests of concerned parties will converge on the coordination not occurring. In the case of disassociation, so long as both parties do not attempt to impose their will on one another, even the failed business agreement relies on reciprocity. In the market exchange, coordination occurs if it is beneficial and it occurs at the best possible price at the moment.
This scenario can be modeled with game theory,1 and the same line of reasoning can even be applied to a coordinator that detains the means of coercion - an imposed government coordinator. 2 Unlike Timothy, a government coordinator can prevent disassociation in the event that his coordination costs more than it is worth; and [eventually, in equilibrium] fully monopolize the coordinating service.
Where the economic trader, Timothy, must bargain and consider the potential loss due to disassociation, the government coordinator possesses powers such that free disassociation is not possible. The fundamental difference between the two coordinators is that one earns while the other takes.
The Cost of Rebellion
The Cost of Excommunication
anyone who wishes to do business in the market where the government coordination exists will be forced to use it over all other options. Indeed, it will even be forbidden for other options to exist!…the government coordinator’s interests will inevitably conquer the economic trader’s interests, since the former uses force against the latter.
The government player need not consider the value of his service to other players as he hinders their ability to disassociate. Rather, he must consider the opt-out options that other players have. There are two levels of disassociation the government coordinator inhibits. First, once his service exists, his price in the form of taxation applies. Players must pay it upon penalty of detainment.
He will then impose additional fees, after the fact. This follows from the government official’s inability to calculate how profitable Smith and Rosie’s business is, yet he has the ability to coerce so after the fact, the government official applies additional fees to the profits that Smith and Rosie are permitted to keep. Eventually, he will make Smith and Rosie lose more of their wealth than if they had not participated at all since it is in his interests and means to do so. Thus, it will be in Rosie and Smith’s interests to disassociate from his coordination service.
Upon disassociation, Rosie and Smith will still be forced to pay taxes, but they will no longer have to pay the surcharges. This is the soft monopoly that the government official installs. Players don’t have to use it, and indeed are permitted to use market alternatives; but they must pay the initial fee of taxation or face detainment. Current examples of a “soft” monopoly is the government mail carrier USPS, or public schools.
Eventually, the government coordinator, in his interests to reap more benefits of the game, will fully monopolize his service. The very same violent monopoly that enables him to take via violence in the first place (taxation) enables him to further legally coerce other players via regulations, licensing, certifications, and other legislation. Rosie and Smith, and indeed anyone who wishes to do business in the market where the government coordination exists will be forced to use the government coordination over all other options. Indeed, it will even be forbidden for other options to exist! An example is government Housing Regulation and most tasks that local and state police departments provide. Thus, to disassociate from the full monopoly is to rebel. To disassociate at this point would be to reject the mandate to use the service.
Government coordination that has not fully monopolized has not reached equilibrium yet, as the government coordinator’s interests will inevitably conquer the economic trader’s interests, since the former uses force against the latter. After all, government programs, despite any inefficiencies or ineptness, will eventually expand. This is in stark contrast to market programs where failure results in reconfiguration or termination.
The act of foregoing government coordination (the opt-out choice) is far different than the voluntarily disassociation (the market’s opt-out choice) that defines the markets. The option of forgoing the government coordinator happens, not when the costs exceed the benefits, but instead when the costs have exceeded another thing entirely.
Taxation, surcharges, and legislative hindrances will increase until reaching the transaction costs of opting out of government rule - by violent defense, fleeing to a distant society, hiding clandestinely in the wilderness, or some other form of rebellion. That is, the costs of abandoning their lives has to be weighed against the costs of the monopoly. If an individual reasons that the taxes and surcharges and legal coercions are more costly than his valuation of the costs of leaving his life behind, then he will opt out.
When the government coordinator miscalculates and takes so much that the other players elect to opt-out of civil society altogether; then rebellion occurs. Since we are all individuals with our own subjective valuations of services, some will rebel sooner than others.
It is not in the government coordinator’s interests to voluntarily dissolve his means to coerce, and indeed, there are no known examples of such happening. Thus, the government coordinator only fears rebellion (the internal threat) or other government coordinators (the external threat).
That is, citizens within the jurisdiction of The State will rebel or an external state will war with the existing state. If war occurs, the new government coordinator will loot society until the very same equilibrium presents itself once more. This is precisely why the state’s programs are meant to placate each threat.3
The Terms of Enslavement Only Worsen
In terms of the external threat of other states, the victor’s interests are to expand it’s territory into the loser’s realm. After all, only 300 years ago, Europe was comprised of many thousand independent states or cities. The political powers of each had to compete with one another for the citizens of which they looted. As political power consolidates, the cost of opting out - of exiting the territory of one state - becomes more significant for each generation as political power consolidates into fewer, larger States with less competition between one another.
As the cost to exiting becomes higher, the equilibrium point rises. The State has an interest in looting as much as the citizens will bear before rebelling; so the more costly the act of rebelling, the worse the enslavement conditions.
The terms of enslavement become worse with each generation, as escape becomes more costly.
Read next: Know the Enemy
…albeit it, to arrive at the same conclusions but for twice the work. The theory, and mathematical modeling in economics, cannot deduce causal relationships and indeed cannot tell us more than what direct reasoning can tell us. To model a scenario, we have to set up the model by reasoning as I just did, and then reason a 2nd time (symbolically, with mathematical symbols and operators) to produce the model, so we have to reason twice to arrive at the same conclusion if we are going to use game theory.
Governance is synonymous with all social action, so it is neither villainy nor virtuous. Imposed government is what is referred to as “The State”, and it is not the natural state of man, but the power of some men over other men. It requires violence or the threat of violence, and for the remainder of the essay, I will use the term “government” to refer to imposed government.
Collectively, The State only has two fears. Internally, it fears rebellion. Externally, it fears other states. All actions of The State are to plunder subjects within its jurisdiction while (i) placating the internal threat or (ii) defending against the external threat. It is no mere coincidence that The State's beneficence programs are less competent and more wasteful than free market charity yet exist anyway - these programs are meant to placate the groups most likely to defend their masters in order to secure political power. Likewise, it is no mere coincidence that The State's chastisement programs include incessant spying and the sabotaging of other states. If a reader is not convinced of this paragraph, try finding historic examples of some imposed government (state) that was overcome by civil methods such as legislative, voting, peaceful protests, or public discourse. The imposed government is only overcome via rebellion (internally) or war (externally). Thus, these are its sole fears from which to psycho-analyze it.
Political discourse around the topic of the veteran is an example of how The State deals with both fears. When being paid in expropriated property (taxations and surcharges), the government soldier aids The State in weakening rivals (war) while simultaneously securing more resources for The State. Upon retiring from soldier to veteran, The State expropriates more property to give to the veteran in order to secure political favor internally, and thus protect itself from rebellion. When the political subject cries out to "protect veterans", what he really means (if he is not simply doing so out of ignorance) is I was enslaved once to secure the rulership of my masters. I ought to be enslaved once more to care for the needs of master's retired thugs. Thus, the soldier is an example of The State dealing with its fear of external threats, while the veteran is an example of The State dealing with its fear of internal threats.