(Download a PDF version of The Mystery of Capital)

De Soto makes a valiant effort to get to what I call Civilization Engineering.  His portrayal of capital and money and property are very confused but in spite of this handicap he comes to basically the correct conclusion:  what the world needs and especially the third world and communist countries is protection of property on all levels.  He does not quite get to this level of abstraction that Galambos achieved but he is definitely headed in the right direction.  He is correct in identifying that the West’s success is largely due to extending the protection of property rights to all citizens and not just the privileged few.  He correctly characterizes the condition of most people in the world as living in a condition of legal apartheid.  He also claims that the success of the privileged few in the third world is due to their access to the protection of property lacking for the masses.  I believe this is a half-truth at best.  What he misses is that the privileged few are enjoying a coercive monopoly imposed by the state.  The state is not protecting property as much as protecting special interest.  He recognizes that there are entrenched elite not willing to change for the sake of the disenfranchised but I do not think he sees how deeply the parasitic game goes.  It is just the same old coercion game.  In the eighteenth century in France it was called the ancien regime.  The parasitic class in France was finally removed by the Terror.

He claims that the growth in the cities is just so large and fast that institutions cannot keep up.  That’s like saying the auto industry cannot keep up with demand over a thirty- or forty-year span.  Nonsense.  The reason institutions are not keeping up is because they are not there to serve the masses.  They are there to protect the parasites.  One need only look at the dismal record of foreign aid.  Billions of dollars extracted from hard working Americans have been handed over to the leaders (read parasites) of third world countries and never seem to reach the masses they are intended for.  Our parasites giving away our money are just as unmotivated at doing something constructive as their parasites are.   His thesis is further off the mark when he assumes the first world countries are doing well. He misses the fact that in the West, while we are allowed to create property, we are not allowed to keep it.  Our property is being taxed away, mortgaged and dissipated faster that we are able to create it. We too are being eaten from within.

His insight that the third world is presently undergoing its industrial revolution that much of the West went through 200 or so years ago is very instructive.  He uses the American experience in the arena of land rights as the example for the third- and communist- worlds today.  It puts a whole bunch of things into perspective and gave me a whole new perspective on the American Westward Expansion.  The American State and Federal governments both lagged far behind the realities of what the pioneers and settlers needed legally to stage an orderly and efficient settlement of the West.  Out of shear necessity they created their own extra-legal title system “on the fly.”  I attribute this to the lack of understanding on the part of our “leaders”— then and now— of what Spencer Heath and Spencer MacCallum call proprietary community.  In my terminology we lacked any competent game makers.  It’s the West’s biggest blind spot.  He correctly spots the fact that people are just as entrepreneurial in the third world as in the developed nations— I think they are even more so since they create in such a backward economy— and could explode their economy into the 21^st century if given the chance.  They do not need handouts, advanced technology, environmentally friendly technology, a retreading of their cultural ways or a new religion.  They need a legal/political/societal system that is built on the sovereignty of the individual.  In short they need Civilization Engineering.

The statistics he and his crew have collected about what’s going on in so many of these underdeveloped nations are truly staggering.  They estimate that 80% of humanity is living in an extra-legal status— legal apartheid— meaning outside the protection of their property by any formal institutional agency.  It is thus easy to understand why so many in the third world are attracted to any ideology such as Christianity or Communism that claims to be able to help them attain some material and spiritual dignity in their lives.   It makes me think that true Civilization Engineering may take root first in those third world places. Overall, the case presented by de Soto confirms unequivocally Galambos’ claim that the material success of the United States is attributable to “a temporary and partial protection of some forms of property.”

Highly recommended reading for those who want to see the possibilities worldwide and to sharpen their Civilization Engineering skills at home.  I suggest it be read cover to cover at least twice, the point of view is that fresh to first world minds.

(Download a PDF version of The Market For Liberty)

I discovered this book in 1994 well after much of my own system and thinking had been developed.  I am doubtless better off for having not been influenced by it.  It is a laboriously argued attempt to get to Freedom as I have defined it, but fails in the end to Bound the necessary elements of the system.  It also starts with the traditional Natural Law argument of Rights, or Natural Rights, which I reject since it is always presented in the form of an entitlement from Nature as opposed to something that has to be brought into existence by human effort. Had I read it before 1976— the year of my epiphany— my development might have gone the wrong way, as I believe that of many libertarians and other lovers of freedom has.  Note the praise heaped on the work by Karl Hess and Douglas Casey.  Casey correctly notes that the Tannehills never call their system anarchy— they call theirs laissez faire and they correctly attack the Worst Idea in History which is the institutionalization of coercion— but many who followed in their footsteps did call this viewpoint anarchy and have hampered the drive to Freedom immeasurably.  This hideous nomenclature is a public-relations/marketing donnybrook.

I maintain that the following things must be correct and in proper juxtaposition in order to build a stable, durable civilization: Freedom and Justice properly understood—i.e. derived from the postulates of Intentional Science; the institutions of Community, Government, Money and Clearinghouse.  Like everyone else, the Tannehills are woefully unconscious on the subject of Community, failing to recognize its dynamics and its necessary restrictions and how those restrictions set the stage for the thing we all dread the most: institutionalized coercion.  Until someone demonstrates how a Community can function with restrictions and without coercion, the world is not going to believe it is possible.  The idea of Coercion as a necessary element is just too ancient and entrenched to be removed by words.  The Tannehills’ narrative surrounds all the necessary elements but in the end fails to Bound the system into an integrated whole.  Using their model one cannot build a Community that really works and hence no demonstration for the world to emulate.

After their mishandling of the concept of Community, their second biggest failure is the treatment of the Administration of Physical Force— which I call Government when done on a voluntary, subscriptive, fee-for-service basis.  After many laborious and nuanced chapters discussing issues which are appropriate to what I call policing or refereeing the Community— although they do not seem to be aware of this, arguing instead for the defense of “rights”— they are logically driven to confront the fact that physical force is an element of the set— as the mathematicians say— and must be dealt with.  Since physical force is here to stay, the question becomes how to erect a mechanism that can administer a physical counterforce against Coercion and not have it come back and destroy you.  This is precisely the issue the Founding Fathers wrestled with and failed to solve.  The Tannehills even bring in the mechanism of insurance as the answer but then basically shortchange it by deploying it only in its traditional form that Gordon Smith came to call negative insurance.  Negative insurance is the only kind of insurance the world has seen to date and is the mechanism which reimburses the insured party for its losses.  The Tannehills then laboriously step through all the dynamics of how that mechanism plays out in the marketplace.  Having negative insurance does nothing to reduce the risk of incidence of the loss.  Smith’s brilliant solution to the problem of Government was to use the insurance mechanism— all those who wish to participate pay in and are protected, but only a few have a claim— to erect a counterforce so awesome that no wannabe criminal would dare chance doing the crime in the first place.  Having such a policy on oneself would measurably reduce the risk of the loss— the would-be act of coercion— and is thus positive insurance. This is a new form of coverage that greatly diminishes or even prevents the loss in the first place.  This is positive insurance.  The Tannehills are light years from this concept and history will show it to be the linchpin of a stable, durable civilization.

The Tannehills’ argument/system collapses on pages 78 and 79.  They posit that is it morally correct for one to use physical force in the act of self-defense.  They further posit that it is still morally correct for one to hire an agent to act on one’s behalf in the case of self-defense— so far so good.  Then they posit that to subscribe to this ‘voluntary’ government service one has to renounce use of physical force on his own initiative, except in emergencies, and must let the government defend him and act as final arbiter in any disputes he might have.  “Such a ‘voluntary’ government, acting as nothing more than an agent of individual self-defense, may sound good on the surface but on examination proves to be unworkable because government, even the most limited government, is a coercive monopoly.” And then several paragraphs later: “The man who ‘hires’ a government to be his agent of self-defense will, by this very act of entering into a relationship with this coercive monopoly, make himself defenseless against his ‘defender.’ A ‘voluntary government, acting as an agent of self-defense,’ is a contradictory and meaningless concept.”  The Tannehills seem to short-circuit on the word government and always equate it with coercive mechanisms even after giving the OK to the act of voluntarily hiring someone to do your fighting for you.  The errors here are many but the biggest is to assume that anything that is called government is coercive to its customers and must of its nature have a monopoly in a given geographical area, which they also assume for some unstated reason.  This is completely wrong.  It is the exact same trap that Ayn Rand fell into.  For instance, the institution of marriage is a Community in the sense I have defined it.  A couple can hire any Government they want to enforce the terms of that marriage contact.  In any given geographical area, there could be scores of companies (governments) competing for the business of protecting that marriage contract.  In no way does geography have anything to do with it.

Examples of arenas such as marriage that call for a Government (game-keeper) are numerous, but the granddaddy of them all is the geographical Community.  The prevailing idea is that if one moves into a given Community, one has surrendered one’s sovereignty on all aspects of one’s life.  Presently our sad civilization is operating on the premise that all citizens are wards of the State and everyone’s life needs to be micromanaged by the State or Federal legislature.  There is no mechanism in place to back off the political state from its relentless intrusions and parasitism.  This is our biggest problem and dwarfs all other threats to our existence such as muggers, rapists and conmen.  The Tannehills are completely oblivious to this and they never even address this problem let alone solve it.  They can’t solve it since they never get to the Glue of civilization.

The book is a waste of your time and is included here only since it has a following which I hope to persuade to come over to the correct viewpoint— Civilization Engineering.

Community is the surrender of some part of your options but should not be the surrender of your Sovereignty. Do it carefully.  Don’t wait, call for backup (Government voluntarily subscribed to.)