“States are maintained in accordance with the same principles that called them into being. The primitive state is the creation of warlike robbery; and only by warlike robbery can it be preserved.” ²³

There is no doubt that the State is contributing to cooperation between people if we are considering coercion to be an intrinsic part of the term “cooperation”. Whether such cooperation is good or bad, beneficial or not, just or unjust is another story, but it has nothing to do with how and why the State emerges. 

There is a little difference between right of primary occupation of particular private property or of particular economic resource and between right of primary occupation of the State. Just like land in primitive societies or more recently in American colonies was often appropriated according to a principle of primary occupation, arising States have normally been appropriated by strongest and most fitted individuals who came to be the kings. Later, both land and state property became to be subject to inheritance, exchange and frequently even to forcible expropriations. Just like originally private property possessions were an outcome of primary or even forcible occupation, in the very same way a balance of power in society or inside political (rather indeed military) hierarchy has determined original State proprietors. Besides, as we shall see, it is still determining the real proprietors of State or “public” property.

“The right of occupation, or of the first occupant, is that which results from the actual, physical, real possession of a thing. I occupy a piece of land; the presumption is, that I am the proprietor, until the contrary is proved. We know that originally such a right cannot be legitimate unless it is reciprocal; the jurists say as much.” ²⁴

The same is absolutely accurate in relation to State property, especially to State property under any form of dictatorship. Principle of reciprocity in application to the State property implies an exchange of recognition of power and property between king and other most influential and fitted individuals in society. Economic or lawful legitimacy of property might be a matter of inheritance or of economic activity, but its social legitimacy is merely an expression of the balance of power in society and of mutual recognition of rights obtained in the process of social counteraction.

Embryonic State entity exists right from that moment when men begin to fulfill some kind of productive or exchange activity. Even more than that - no productive activity can be realized without, at least, some kind of State alike institution. In society of self-interest oriented human beings, realization of property rights including maintenance of property regime and income distribution is impossible without some kind of regulatory for those interests entity based on power and coercion at the societal level. The very same self-interest orientation of human nature is simultaneously generating an intention to benefit from privileges of this regulatory power. Cooperation between private individuals imposed by the State is certainly having place, but it is primarily compulsory and coercive cooperation of authoritarian character. Nobody is agreeing upon this regulatory entity, nobody being asked – it is simply being imposed by the strongest and the most fitted individuals in society. According to their private interests per se, those people never care about any regulation; they only care about property expropriations and property redistributions. For these “regulatory” activities society is paying to the State or rather the State is appropriating (expropriating) certain amount of money in the form of taxes and other payments, which make state revenues and which are allowing the State to acquire goods and services. State being such an irreplaceable and may be even unavoidable part of universal economic and social activity can be considered as a production factor since under the definition of production factor we usually understand economic resources, without which any productive activity is impossible.

The other thing, which is attracting our attention, when we are thinking about the State, is its exclusive essence or its replacement impossibility. The State is unique by itself, according to its definition and to its nature. We cannot have another State in the same place and at the same time. And if some phenomenon is so remarkably unique and exclusive, it must have all immanent characteristics and inbuilt potential of monopoly. Since the State is an important production factor to one degree or another implicated in economic activity, it must have all consequential effects upon economy and society. Those effects must be the production factor monopoly’s effects associated with exclusive social and property rights. On the other hand, since the State is a unique supplier of particular product, which is usually called “public” services, it must have all economic and social characteristics of structural monopoly. However, the most important, most influential and most determinative type of monopoly associated with the State is represented by an exclusive utilization of the mechanisms of power and coercion. Similar to any other monopoly, State enjoys price influence situation, marking a price of its services and being a pure price maker. Besides taxation and other forms of price influence situation, sometimes the State is also able to increase its property by borrowing (usually with somewhat uncertain obligation to repay neither in the short-term nor in the long-term) when it needs to cover additional expenses, problems and sometimes even mistakes of the government. Being price maker and enjoying price influence opportunities, the State is creating property rights imperfections evaluating single-handedly and socially (based on power and coercion) its own value and its own economic contribution. Exclusive rights connected with the State are signaling that they must be predominantly utilized by particular social group, access of other people and social groups to State property being either limited or denied.

The entire so-called communist, socialist and interventionist theories are critically mistaken in one fundamental assumption relating to an overall system of property relations associated with the State. Every logical inconsistency, every inexplicability, methodological difficulties and permanent failure in adequate apprehension of reality are finally coming from this wrong assumption. They all suppose that State property (or as it is sometimes called “public property”) belongs to the entire population or even equally to every member of particular society. This is essentially and fundamentally wrong. In the best case, State property belongs to all members of society legally or formally. And even that is not always the case - neither on historical time scale nor even within modern geopolitical scale. Such assumption is originally unsustainable because it is not differentiating between the legal basis of society shaped by people with their biased and partial interests and the real statement of things expressed in objective and uncontrollable by people system of social and property relations. It is considering modern system of law as absolute, autonomous and as establishing or, at least, completely reflecting underlying system of property relations. However, law is doing nothing more than merely describing and putting on paper an achieved at certain point in time balance of power in society or an existing level of social counteraction. While it is exactly the system of property relations what is shaping an entire legal foundation of society. If laws are not adequately reflecting particular system of property relations they simply doomed on failure and disregard as multiple examples of modern underdeveloped countries and even more multiple examples from past history of modern economically developed nations teach us. On the other hand, if property relations comprise certain imperfections or certain exclusive rights, no legal system will ever improve or eradicate those imperfections. Law can only replicate on paper existing system of social and property relations together with all its imperfections – nothing more nothing less.

Hardly there are any real economic differences between public and private (including partnership and incorporated) property. There is only juridical or legal difference between them, but if we are considering social and economic processes of long duration and moreover if we are considering social evolution, this kind of difference is of no use for us whatsoever. Vice a versa legal difference being imposed by social infrastructure is shadowing the real true essence of property relations as well as the very fact that legislative system is completely dependent upon the system of property relations. There is only one type of property, which is always associated with concrete tangible proprietors or beneficiaries. Because of that it is called “private property”. Though, much more justified is to call it simply “property”. Understandings of private, partnership, corporate and state property are rather convenient for statistical purposes and probably also for certain types of macroeconomic analysis as long as they do not intervene with our comprehension of societal processes. However, if we are talking about societal phenomena, property relations and moreover about social evolution we have to realize that for every property at the end of the day there are always real personified and named proprietors who are benefiting from it the most and, first of all, benefiting materially - in terms of income. Partnership or incorporated property for the sake of business efficiency and according to legal definitions may come as integrated and unified, however, for any property there are always concrete and personified proprietors with a strictly determined share of every person or of every economic agent in any particular property. We can always differentiate that Mr. A is having a share of 75% in a partnership while Mr. B is having the rest 25%. Very similar situation is with the state property except that the share of real proprietors in property possessions and primarily in income distribution is always hidden and is almost unidentifiable. Normally it is rather difficult to recognize real mechanisms of income appropriation, distribution and redistribution inside the State monopoly. They are rather hidden and because of that the very nature of the State seems rather obscure, while in reality it is exceptionally simple.

Furthermore, if we look at the state property from the point of property relations we can see that there is no any particular difference between public property and property rights on that shop around the corner. The State just like any shop is the conventional commercial enterprise with a single purpose to extract money from the people for its real informal proprietors whoever they are (who they really are we will learn in the next chapter). Even worse, on the contrary to other commercial enterprises the State is getting any money only by force relying on the mechanisms of power and coercion. State property similar to any other property is having its real informal proprietors – people who control it the most and who are able to utilize associated with the State benefits (first of all material benefits) to their utmost personal advantage. Because of State’s monopolistic nature, real State proprietors at the same time are acquiring exclusive social (based on power and coercion) property rights. State, from the point of view of property relations, is the same economic agent as any other company, corporation, partnership or private enterprise with its concrete tangible proprietors and the same social monopoly as any other of a kind with its own egocentric and non-socialized interests. Moreover, that on the contrary to any other social monopoly, the State so far cannot be subject to social property rights dispersion and therefore under current social circumstances will be indefinitely non-socialized. If State property belongs to particular individuals and not to all members of society on equal basis, then all State actions and all State resources will primarily benefit those particular individuals with their corporate and non-socialized interests while only afterwards, if at all, other members of society.   

Just like any type of social monopoly is generating exclusive property claims towards any particular economic property, in the very same way the State monopoly is producing exclusive property claims upon state property. Who are real informal proprietors of the State property and who is having exclusive property rights upon the State monopoly is determined in the same way as any property rights associated with social monopolization. Just like non-socialized human interests are generating exclusive property rights, they are equally creating exclusive property claims upon the State. It is the same question of power and coercive appropriation.

“That which belongs to each is not that which each may possess, but that which each has a right to possess.” ²⁵

Since public property does not belong to all people or to all members of society on equal basis the State does not represent any kind of impartial and unbiased arbiter - neither for property relations nor for the social ones. Vice a versa it is an enormously co-interested player in any social and property game with its own exclusive and non-socialized interests. Therefore it cannot be a judge in questions of fairness or justice as well as it cannot identify and eliminate societal injustice and, first of all, economic injustice connected with unfair income distribution in society. The very existence of the State as of production factor monopoly is immediately creating economic and afterwards also social injustice. Because of that any societal system, which is relying upon the State cannot provide an absolute solution to the injustice problems. State property just like originally any property normally belongs to the strongest or to the most powerful individuals in any particular society.

State property similar to any other monopolized property to one degree or another can serve societal interests on more or less efficient scale (though always on less efficient scale than non-monopolized property). At the same time, State monopoly similarly to any monopoly of the social nature is always oriented against particular individuals, first of all, in terms of appropriation of the monopolistic income. Formal rights upon the State property may be dispersed among a large number of “stakeholders”, who individually never obtain any property rights upon state monopoly and upon state revenues. Real informal property claims upon the State monopoly and first of all upon exclusive patterns of income distribution associated with the State represent much more focused phenomenon, which always rests with the most fitted and powerful individuals. Main problem with the State is that in order to get any financial resources it has to expropriate them from people applying mechanisms of power and coercion. As a consequence we are always trapped by its single solution to all our problems - escalation of property redistributions from us to itself and to the people who really control State monopoly, whoever they are. There is simply no other way no matter what noble objectives the ruling social groups and people in power are planning to achieve. While the non-socialized interests based on exclusive property rights associated with the State are never noble and never even fair.

“In coercing them to realize the general will or to give effect to collective choice, the state is competing with its subjects for the use of the scarce resource that is the liberty and property of each” ²⁶

There is one particular social consequence of the State being both production factor monopoly and final instance of power and coercion, which basically is immanent to any kind of social monopoly. Social monopolies throughout the entire history of mankind are having a very strong tendency to cooperate with each other, uniting their forces and power in order to enhance their potential for survival as well as in order to elevate their social and economic strength. Cooperating monopolies are helping each other to cover up, to hide and to preserve monopolistic social and property relations as well as are significantly enriching their opportunities to fool, to trick and to coerce people. The State being an ultimate source of power and coercion traditionally represents an essential tool for maintenance and support of particular production factor monopolies, which cannot eternally subsist under a natural order of things because of their inefficiency and injustice. They all need some instrument of power in order to survive and in order to oppress any opposition to their exclusive privileges and first of all to their exclusive and non-socialized revenues. Such an instrument is there for them all the time – a power of State, which being merely another type of social monopoly is always afraid of loosing privileges and benefits generated as a result of its monopolistic nature and therefore normally is ready to cooperate with any other social monopoly. In addition to state coercion, to social infrastructure and to ideology, the power of any social monopoly is also supported by additional exclusive income coming from its monopolistic privileges. To oppose or to fight with such kind of power sometimes can be dangerous for the State as well as for the government. It is much more profitable to cooperate with this power unless the State is constrained by other interests or unless it feels itself to be strong enough in order to dictate its will to all people including to other monopolistic proprietors. To make things better for every member of a particular monopolistic social group, they need some kind of common social agreement for exploitation of their monopolistic privileges. State is a very handy and suitable institution in order to provide such services. Both State and proprietors of other social monopolies are benefiting from each other. All these factors taken together lead to a reality where the State together with its direct nature of production factor monopoly represents also a key instrument for coercive maintenance of other social monopolies. Consequential outcomes of such unification of interests normally are authoritarian and arbitrary governance, lack of democracy, totalitarian political regimes such as monarchies, dictatorships, empires, etc. and private property claims upon the State property. On the other hand, even democracy, relatively eliminating governmental monopoly, cannot do anything about the State monopoly. Although the State sometimes is equalized with the government, for societal analysis and from the point of view of property rights imperfections these two definitions are absolutely different. Major difference stands in the fact that under democracy the government is only a part (normally elected part) of top-level State bureaucracy, other parts being representatives and judicial institutions. The State is always a property and always a social monopoly, while the government is neither anybody’s property nor necessarily a monopoly. The State is embracing an underlying it property, while the government is only managing the property of the State for a particular reward and therefore represents a singular part of the social group, which interests are associated with the State monopoly.  

As we have seen, production factor monopolies generally and the State in particular vary according to their social and economic strength. Under communism the State is realizing itself as social monopoly to the paramount degree and is establishing an overall domination in society of the state bureaucracy as of associated with the State social group with a very limited co-optation or access to monopolistic property of the State on behalf of the other people. Monopoly of the State is very strong since nobody except for the top-level state bureaucracy or sometimes indeed except for only one person – a communist party leader - has an access to power and to management of the entire State and state revenues. Therefore nobody else is having economic and social property claims upon the State monopoly – property rights are extraordinarily concentrated. Communism is a pure case of the State monopoly. Under other types of social formations and first of all under dictatorships, power of the State bureaucracy may be limited by power of other monopolistic groups. For example, in 18th century in France the State bureaucracy became quite strong and dominant in society and yet its power was limited to certain extent by the power of land aristocracy as of social group associated with feudalism and with a production factor monopoly on land. On the other hand, a deteriorating power of land aristocracy during the period of feudalism dissolution can be explained by a social dispersion of exclusive property rights of this social group upon the land monopoly. At this point in time, power of land aristocracy portrays a diminishing strength of the land monopoly and growing association with the land property of other social groups such as financial magnates, state bureaucracy, bourgeoisie and farmers. Similar kind of property and power dispersion process, we are witnessing when State governance system is changing from dictatorship to democracy. Evolution of State from feudalism to capitalism incorporates an inbuilt transition from dictatorship of a king and land aristocracy to democracy with wider property claims upon the State on behalf of various parts of population. Initially wealthy bourgeoisie, financiers, oligarchs, middle classes and at the end hopefully every particular individual suppose to be associated with property claims towards the State, though this is a rather idealistic picture. Evolution of governance system from dictatorship to democracy through conventional property rights dispersion suppose to provide for more and more individuals and social groups property rights upon the State as well as formal social or political opportunities to determine a value of the State services as well as some kind of price influence situation towards the State property. This is how things are generally understood today in connection with the value of whatever State is doing in this world. However, since the State is a social monopoly, its price or price of the State services is based solely on its monopolistic nature. Particular individuals or people generally cannot establish economic value of the State simply because there are no any price voting rights and possibilities whatsoever. Price, which can be determined in relation to the State services, is a social (based on mechanisms of power and coercion) price of particular monopolized property. And whoever is establishing monopolistic price of particular monopolized property is also appropriating attached to this property monopolistic income. Only people acquiring monopolistic property claims or exclusive rights upon the State property can establish a price of overall State services. Their possibilities to determine the State value correspond to monopolistic nature of State, while their interests are associated with the maximum possible price for State services, which allows to maximize an amount of appropriated monopolistic income.

Established through political voting or through other mechanisms of social influence, price of State services or otherwise a level of taxation is not an economic value of the State as of production factor, but rather is its social value, which is determined by social and political processes based on power and coercion. Main problem with social processes is that they are having their winners and their losers. Social and political processes, on the contrary to economic ones, are never a win-win kind of game simply because they do not create any value. Within any social or political process we have to take away resources from certain people in order to give them to certain other people. Social processes are simply never impartial and objective, because of the subjectivity of human interests, unequal distribution of power in society and also because of the persuasive ideological mechanisms of social infrastructure, which main raison d'être is to justify redistribution of resources from one social group to another. Very important and very costly element, which people have to buy under the social price formation, is ideology. Ideology always serves certain monopolistic interests and does not cost anything under the free market price formation. Core objective of any ideology is to persuade people to pay an exclusive price for certain exclusive rights. Ideology is vitally important tool for preservation of social monopoly and is complementing in this task the mechanisms of power and coercion, especially in modern economically developed society where wide-scale utilization of the latter might be problematic.

State historically represents the highest in terms of social and economic domination as well as in terms of association with power and coercion form of property rights imperfections. Power, coercion and domination in combination with monopolistic income are those essential returns to which self-interest oriented human nature is always perceptibly or imperceptibly directed. The very state’s existence is rooted in self-interest oriented human nature. As long as exist sociality, anything social in society or more precisely social means to make a living based on power and coercion, the State will always be with us. On account of all that, anarchist claims of State cancellation, whatever attractive they might be, are not really feasible under the self-interest oriented human nature. It might be possible to rebuild social structure, exchange one type of governance system with another or one ruling social group with the other. It is also quite possible to destroy previous type of the State and even previous type of socio-economic formation together with associated property relations, as was the case of October revolution in Russia in 1917. Even to destroy nation, country or civilization is very practicable as comprehensive historical experience is teaching us. But it is very difficult at our present stage of social and economic development to get rid of the State. Not even violations of property rights are the main threat under anarchism, but rather self-interest oriented socially strong individuals who will always find their way through to power and social domination. Social evolution, economic efficiency, economic and social justice are not directly connected with any particular production factor or with one particular social group. It does not matter whether it is working class (Marxism), entrepreneurs and capital proprietors (classical and liberal tradition) or the State (Keynesian and Marxist traditions). Social evolution is based on permanent interaction between social groups and production factors as well as on continuous counteraction of any property rights imperfections, including primarily of those coming from the State.

The State, similar to any other monopoly, is not doing anything practical without strong social pressure. State just like any other monopoly is accomplishing any tasks or anything for that matter only under a constant pressure and counteraction on behalf of the people. It took humanity several thousands of years of constant battles and confrontation with the State and with the other social monopolies in order to achieve a present day system of social and property relations. If this counteraction will decline or even end, our “welfare State” will easily transform into “welfare monster” with a lot of State and a very limited welfare. In twentieth century we have witnessed an astonishing number of such transformations including communism, nazism, different types of dictatorships and persistent human rights violations. Besides, it is not the State what is counteracting other social monopolies - those are the people who are doing that. The State, ceteris paribus, simply does not care. Sometimes counteracting other monopolies it is establishing its own social hegemony or increasing its own social strength. Sometimes, vice a versa, it is cooperating with other monopolies in order to promote its own power. Sometimes the State bureaucracy might even loose a State control to more influential social groups. However, the State is never doing anything, what is not in its direct material interests or rather what is not in direct material interests of its real informal proprietors without pressure and counteraction on behalf of the people. The same is relevant for any structural monopoly. Under different social pressures the structural monopoly can serve customers more or less satisfactory, but just like the State it does not care too much about them economically or naturally since they do not have any product or property alternatives – they simply do not have any social property rights related to its monopolistic nature.

Additionally to ideology, exclusive income and to mechanisms of power and coercion the State monopoly is having other two very strong allies. First one is patriotism, which represents a non-economic or ideological factor of moral nature. The problem with patriotism is that normally it is heavily utilized by the State and by associated with the State social groups in their non-socialized interests either in order to persuade people to pay monopolistic prices for overall State services or in order to obtain some financially inexpensive support often at the cost of human lives. Patriotism is not particularly consistent logically simply because by and large people have no any financial obligations to foreign countries and therefore foreign countries are materially irrelevant to them, while their home or residence State have no any other means to appropriate any financial resources except to coercively confiscate them from its own people. Based on this powerful material foundation are arising all kinds of social, ethical, cultural and other immaterial factors related to individual disaccord with particular society or with particular social infrastructure. Major impasse stands in that a person is not just giving up a part of his income for procurement of “public goods”, but that his income is being forcibly expropriated based on mechanisms of power and coercion and on exclusive property rights of the State monopoly and is utilized in its non-socialized material interests or rather in non-socialized material interests of State’s real informal proprietors. Second social ally of the State monopoly is income redistribution or people’s innate desire and sometimes necessity to benefit on account of the other people. The problem with income redistribution is that no matter what noble purposes it might serve, it is based on coercive expropriation of people’s property – an act extraordinary similar in its nature to an act of robbery. But even worse is that any income redistribution is escalating a level of coercion in society, State monopoly (first of all, financially in terms of State revenues and ideologically) and an amount of exclusive income appropriated by State’s real proprietors. These two allies are very persistent and powerful in terms of State monopoly’s support. They tend to make people to forget about social counteraction with the non-socialized State interests.

Nature of the State is based absolutely and exclusively upon the conceptions of property and property rights imperfections. As a matter of fact, we have separated this part of the book from the first one mostly owing to differences in a common understanding of the phenomena of State and of property rather than due to any legitimate logical assumptions. Such separation is a bit artificial also because in the second part we are examining the very same property rights and property relations and relying upon the very same approaches and conceptions of property as in the first part. More than that, second part would hardly make any sense without reading of the first part. State is a unique social phenomenon, first of all, because any property rights imperfections in society can emerge only with its direct (State as a production factor monopoly) or indirect (support of other social monopolies) participation. It is a single and final instance, which supports and maintains property rights imperfections. If it would not be for the State an emergence and preservation of social monopolies would simply never happen. The State is also a single substance, which owing to associated mechanisms of power and coercion is introducing a phenomenon of sociality into almost any purely economic process. Sociality, no matter whether it is good or bad, whether it is right or wrong, whether it is necessary or not, means only power, coercion and forcible persuasion, otherwise there is nothing social in any economic process and nothing social in society; the only thing left without sociality is economy. The more barbarian or uncivilized is society or humanity generally, the more sociality it embraces, whereas the more economically and socially developed it is becoming the less of anything social it contains or the less it is based on mechanisms of power and coercion. At the same time, the less it relies on mechanisms of power and coercion and the less of social monopolization it incorporates – the more socialized it is. While power and coercion is exactly what the State is all about. Rephrasing words of Marx and Engels²⁷ – history of all previous societies and civilizations is the history of people’s struggle with the State as with a final source of power, coercion, injustice, corruption, inefficiency, oppression and forcible persuasion.

²³ Franz Oppenheimer. The State

²⁴ Proudhon. What Is Property? An Inquiry Into The Principle Of Right And Of Government

²⁵ Proudhon. What Is Property? An Inquiry Into The Principle Of Right And Of Government

²⁶ Anthony de Jasay. The State

²⁷ “The history of all hitherto existing society is the history of class struggles”. Karl Marx and Frederick Engels. Manifesto of the Communist Party