I will begin my note about the state with a paradoxical statement — no state exists. No one in the world has ever dealt with the state. We use this word every day and imagine the state as an almost physically existing entity. But the state is nothing more than an abstraction, convenient for analytical and propaganda purposes. In real life, always and everywhere, without exception, there exists only the interaction of people among themselves. However, such interaction is never absolutely “clean.” People communicate with each other not “from scratch,” but based on behavioral patterns — traditions, morals, culture, habits, experience, etc. — that is, the knowledge accumulated in society and which it constantly produces. The “state” is nothing more than a set of such behavioral patterns; these patterns tell us how to behave in certain situations when some people encounter (or, on the contrary, want to avoid encountering) other people called “officials.”
From this statement, two conclusions can be drawn that are important for our topic. The first — contrary to the common stereotype, officials do not exist separately from the state. There is no such thing as a “good” state and “bad” officials within it; the state always and everywhere is nothing more than these specific officials and your behavioral patterns that tell you how to behave with them. The second conclusion is that if the state is merely a group of people and patterns associated with their activity, then the answer to the question of why the “state” behaves this way and not otherwise lies in the behavioral characteristics of these people.
The main characteristic of officials is that they hold a monopoly on violence. That is, these people can order other people how to behave and punish them if they don’t like something. An important consequence of this “right” is that officials “legally” regularly seize part of your income (taxes).
The behavioral characteristics of officials are clearly visible if we compare them with the behavior of entrepreneurs. Why are we talking about entrepreneurs? The thing is that the state explains its existence by the fact that it provides services. Entrepreneurs do the same. Here, entrepreneurship should be considered as broadly as possible — any social activist is, in this sense, an entrepreneur.
Let us consider the case of an ideal state that exists exclusively on taxpayers’ money, without resorting to inflation and loans, in which officials do only what they were told to do, and in which there is no corruption. The voters in this state are also ideal; they are able to read, understand, and adequately evaluate election programs, and politicians always do what they promise.
| Activity | Entrepreneurs | Officials |
|---|---|---|
| Goal | Improving position (earning profit) | Improving position (earning profit) |
| Who coordinates goals and means | Profits and losses | Voters vote only for goals. Means, as a rule, are arbitrarily chosen in subsequent activities. |
| When does activity begin | When people voluntarily give up some goods in favor of goods produced by the entrepreneur. | Not based on voluntary choice, but on the opinion of some people (experts, ideologues, theorists) about how other people should behave so that some state occurs that these experts currently consider “good.” |
| When does activity cease | People no longer buy the goods created by the entrepreneur; they prefer other goods. | At will |
| Who corrects errors | Other entrepreneurs | At will |
| Who pays for errors | The entrepreneur, partially — the consumer | The taxpayer |
| How does income arise | Satisfying the needs of other people | Reporting related to arbitrary criteria |
| How does profit arise | As a result of finding mismatches in society (high profit indicates the presence of mismatch and is a signal for other entrepreneurs to apply effort) | By seizing areas of activity from entrepreneurs, or inventing new state functions. |
| Where do resources for activity come from | Purchased from other entrepreneurs | Appropriated under threat of punishment (taxes) |
Let us note several more points related to accountability and information production. First, accountability does not work as a management tool in the state. The reward and punishment of an official is connected with his execution of instructions and good reporting, not with satisfying the real needs of people. Worse still, even this work is evaluated arbitrarily. Hence the well-known Soviet saying about “rewarding the uninvolved and punishing the innocent.” It is true for any state.
Second, it is believed that “people shift responsibility onto the state,” if, for example, they rely on state police or medicine. This is bad, but it is doubly bad, since in reality no “shifting” occurs at all. It is simply impossible to “shift responsibility,” since this assumes complete identity between the guardian and his client. Where does the responsibility go in this case? Correct — it simply does not exist, which means that management in this case also cannot be effective.
Third, any complex activity is a sequence of steps. In the market, each step is provided by its own group of entrepreneurs, who are accountable by income for the optimality of their activity. In order to be able to produce, say, a computer, millions of other entrepreneurs must work in several thousand industries, passing, in Mises’s words, a daily plebiscite among consumers of their products.
The state replaces this activity with instructions. All intermediate steps are produced by people acting on the principle of “so as not to get into trouble”; their activity is evaluated not by consumers but by bosses, that is, evaluated arbitrarily. For the end result, people who hold elective positions bear some responsibility, but they are a minority. The overwhelming majority of the state consists of appointed officials who consider the result exclusively from the point of view of reporting.
Fourth, something new on the market appears as a result of using the opportunities that were created by the previous activity of its participants. Entrepreneurship consists in searching for and recognizing these opportunities, which, in turn, creates new opportunities and so on. That is, the market cannot “invent a computer.” A computer can “be invented” as a result of the activity of many people in the market, as an opportunity recognized by one of the entrepreneurs (Steve Jobs, Bill Gates). The government ignores this process. It believes that it is enough to proclaim “good” goals and order people to act to achieve them. However, no government has the power to cancel this process. Therefore, the government can be effective only if it gets into everyone’s head and has all the information available to each individual and its only correct interpretation. But this is not enough either. The government must also have the information that has not yet been created and is currently in the process of creation. Simply put, the government can be useful only if it is in the future and governs us, the unfortunate, from there.
Now it is possible to draw some conclusions. The state will always produce “dementia,” that is, absurd, from the point of view of common sense, decisions, since its activity exists only for the sake of itself, is evaluated by itself, and has a constant free source of resources. The very feeling of absurdity arises precisely from the fact that in the real world resources are paid for, and the success of activity is evaluated by people who consume the goods you create.
The state will always seek to do two interrelated things — to maximally expand its powers and to limit our freedom. Generally speaking, our very existence is a source of problems and poor reporting for an official. The ideal of the state is a barracks.
Since the state is behavioral patterns, it can be said that “developed countries” so far differ from us precisely in the ideas of people about what is allowed and what is not allowed to do to other people who call themselves the state. Accordingly, in these societies, states so far have a smaller scope of powers. Hence the futility of all sorts of “reforms,” especially those based on the idea of “doing it like they do.” The only solution available to our society to the problem of “state dementia” is the elimination of its source.