LOTTIERI, Carlo. European Unification as the New Frontier to Collectivism

8/10/2019 LOTTIERI, Carlo. European Unification as the New Frontier to Collectivism

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European Unification as the New Frontier

of Collectivist Redistribution

The case for Competitive Federalism and a Free-market Economy

Carlo Lottieri, University of Siena ([email protected])

Frankfurt, Bremen, Hamburg, Luebeck are large and brilliant, and their impact onthe prosperity of Germany is incalculable. Yet, would they remain what they are if they wereto lose their independence and be incorporated? (Johann Wolfgang von Goethe, Maximenund Reflexionen, 1828).

From the extent of our country, its diversified interests, different pursuits, anddifferent habits, it is too obvious for argument that a single consolidated Government would

be wholly inadequate to watch over and protect its interests; and every friend of our freeinstitutions should be always prepared to maintain unimpaired and in full vigor the rights andsovereignty of the States and to confine the action of the General Government strictly to the

sphere of its appropriate duties (Andrew Jackson,A Political Testament, 1837).One essential of a free government is that it rests wholly on voluntary support. And

one certain proof that a government is not free, is that it coerces more or less persons tosupport it, against their will (Lysander Spooner,No Treason No. II, 1867).

One of the most important contemporary debates is the one on the Europeanunification and the project to create a centralized State: with a single currency, ademocratic parliament and a monopolistic government. In this context, the currentfailure of the EMU is used as a good argument in favor of an even more accelerated

path toward the transfer of powers from the old Nation-States to Brussels and

Strasbourg. According to many economists and political scientists, the badperformance of the European single currency is the consequence of a lack ofinstitutional unity. Hoping for a reversal in the declining power of western socialistideals they want more and more political centralization and economic planning.

These discussions are plagued by four main superstitions, and in the first partof my lecture I will try to show how irrational it is the idea of unifying this continent.

Europeans seem to have accepted the idea of a European democracy withoutanalyzing its implications. Not only do they underestimate traditional andextraordinary differences among European societies, but they also ignore the benefitsof competition between institutions and they are totally unaware of the distributive

consequences of a large, massive democracy.

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In the second part of my analysis I will try to point out the advantages of a truefederal alternative, based on local autonomies and communities by consent.2

1 For a strong critique of democracy from a libertarian point of view, see: H.-H. Hoppe,Down with Democracy, Enterprise and Education, summer 1995 (reprinted in Rothbard-Rockwell Report, February 1996).2 This expression is a free borrowing from the Rothbardian idea of nations by consent(see: M. N. Rothbard, Nations by Consent: Decomposing the Nation-State, The Journal ofLibertarian Studies, vol.11, n.1, fall 1994).


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Federalism, correctly understood, is firmly in the tradition of classical liberalism andlibertarianism. In the logic of radical and authentic federalism, political communitiesare federations of individuals and these institutions develop new voluntaryrelationships establishing federations of federations. Thus, I think that the term andconcept of a federal State is a sort of paradox, or a contradiction in terms, because a

state always suggests the notion of a chain of command, incompatible withfederalism. In fact, federalism is a set of voluntary relations working whithincommunities as well as among individuals.

American history offers us a tragic example of it. In fact, a political theoristsuch as John C. Calhoun considered the Union as a federation (namely a freecompact), and for this reason he defended the southern point of view; but PresidentLincoln and all the other heirs of the Hamiltonian tradition were persuaded that theUnited States was a single State: aperpetualand unified democracy. We can considerthe bloody struggle opposing northerners and southerners from 1861 to 1865 as themost dramatic consequence of the absurd effort to link the conflicting notions of

State and federation.3

Europeans have an opportunity to make good use of the American experience.In other words, we must avoid the consequences of a vague definition of the federalcompact. Our task is to build federal institutions and, for this reason, we mustreorganize our Nation-States and coordinate a strong resistance against this risingcentralism.

In order to pursue this objective, we must elaborate a new vision of Europe:based on property rights and institutional competition, individual liberty and free-market. This is our past and this can be (while the age that saw the triumph of themodern State and totalitarian ideologies seems to be fading away) our future.

1. Four superstitions entertained by the dreamers of acentralized superstate

1.1 Superstition n.1. Individual liberty and juridical polycentrism cause

tensions and ultimately wars.

During last centuries, European countries have been engaged in many wars.Imperialism and statist ideologies have been the chief causes of the conflicts.

3 For an interesting analysis of the peculiarity of the Jeffersonian tradition, with reference tothe differences between European and American idea of sovereignty, see: L. M. Bassani,Jefferson, Calhoun, and States Rights: The Uneasy Europeanization of AmericanPolitics,Telos, n.114, winter 1999.


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1.2 Superstition n. 2. The market is a reality requiring the State: it is the resultof the juridical order created by the State.

It is quite evident that one does not have to share libertarian ethical principlesin order to accept that we can have a juridical order also in absence of a common

policy. Roman Law,Lex Mercatoriaand Common Law are some important examplesof rules emerging in a social, rather than in a State oriented order. For centuries andin many different contexts, people lived together in well-defined juridical systems.

As Bruno Leoni pointed out in Freedom and the Law, the Romans acceptedand applied a concept of certainty of the law that could be described as meaning thatthe law was never to be subjected to sudden and unpredictable changes. Moreover,the law was never to be submitted, as a rule, to the arbitrary will or to the arbitrary

power of any legislative assembly or of any person, including senators or prominentmagistrates of the state.5We must understand that the State is not the protector of our rights and

liberties, but rather their worst enemy. Its existence is a continuous aggression to ourliberty, property and autonomy. Accordingly, in western societies free-marketrelations dont exist because of the State, but in spite of it.

Classical liberals and libertarians are aware that the roots of our history offreedom are in the Middle Ages and in its institutional pluralism. As BoudewijnBouckaert wrote, polycentric extended orders, such as Medieval Peace of God(1100-1500), do not conform with the Hobbesian intuition about power and order.

() The Medieval order was an order without a sovereign power in the modernsense of the word, i.e. a central power disposing of a monopoly of a coercive powerenabling it to rule a whole nation and to act as a conflict-solver of the last resort. 6And Leonard Liggio remarks that after 1000 A.D., while bounds by the chains of thePeace and Truce of God from looting the people, the uncountable manors and

baronies meant uncounted competing jurisdictions in close proximity. () Thispolycentric system created a check on politicians; the artisan or merchant could movedown the road to another jurisdiction if taxes or regulation were imposed7.

5B. Leoni,Freedom and the Law, New York, Van Nostrand, 1961, pp.84-85.6 We can find the same observations in Robert Nisbet: medieval society, from the point ofview of formal authority, was one of the most loosely organized societies in history. Despitethe occasional pretensions of centralizing popes, emperors, and kings, the authority thatstretched theoretically from each of them was constantly hampered by the existence ofjealously guarded liberties of town, gild, monastery, and village (R. Nisbet, The Quest forCommunity, San Francisco, Institute for Contemporary Studies, 1990 [1953] p.99).7 L. Liggio, The Medieval Law Merchant: Economic Growth challenged by the PublicChoice State, Journal des conomistes et des tudes Humaines, vol.9, n.1, March 1999,p.65.


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As defenders of this libertarian European heritage, we must rediscover thisrational way to solve our conflicts and to arrange our quarrels without resorting to theState, that is, organized violence that most of our fellow citizens consider legitimate.

1.3 Superstition n. 3. The existence of a European identity calls for theconstruction of a single State in Europe.

I dont deny that we are Europeans, that there might be such a thing as aEuropean identity. There are different ways to be European and there are importantdifferences among our societies, but it is enough to meet Asians or Africans (the caseof America, of course, is totally different) to understand that Europeans have a lot ofthings in common. This fact, however, doesnt imply the construction of a singleEuropean State.

On the contrary, one of the most important elements of this European identityis history. And history has not always been the Nation-States dominion. In fact,pluralism has been the key of our historical success, and such pluralism was theabsence (at the end of Middle Ages) of a powerful center of political decisions. Wehad Church, Empire, a number of Kings and Princes, a multitude of feudalrelationships and in some regions independent Cities, but we never had a smallgroup of rulers able to organize economic life and civil society. As Jean Baechlernoticed in his important study about the origins of capitalism and about the role ofmedieval anarchy in this extraordinary history8, the dark centuries have undeniablydiffused a spiritual order, but also a deep disorder in politics and the economy9. This

manageable chaos was the explanation of our success.The will to unify Europe shows a misunderstanding of what the Europeanidentity is all about and a subversion of our deepest heritage.

1.4 Superstition n.4.In a unified Europe we will have more harmony and wewill be able to support the development of poor societies (Eastern Europe, forinstance).

This idea of forced solidarity is not compatible with libertarian principlesand with the notion that people must be respected in their dignity and liberty. The

public redistribution of resources implies a strong centralized power capable tocontrol the society.

8 Baechler wrote that the expansion of capitalism has its origins and its rationale in thepolitical anarchy of medieval times (J. Baechler, Les origines du capitalisme, Paris, Puf,1971, p.126).9J. Baechler,Les origines du capitalisme, p.111.


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Not only: recent Italian experience teaches that coercive solidarity createshostility where there was harmony and respect. In my country, for centuries the Northand the South had pretty good relations; traditional political divisions didnt hindercultural and economic exchanges, and we never had experiences of intolerance.Current social and cultural tensions between Northern and Southern Italy are the

result of a unified policy, consequence of the birth of the Italian Kingdom (1861). Atthe end of the 19th century, protectionist governments aided industries (of the North)and damaged agricultural Southern exports. The situation changed in 20 th century,when the creation of an important welfare State was the cause of massiveredistribution from the rich North to the poor South. In addition, the various Italian

peoples were forced to live together and to follow the same rules.The first consequence of these political decisions is that now, in Italy we have

a considerable and widespread hatred between Northern and Southern regions. Andin fact, if free market has a tendency to bring together people, coercive politics tendto divide.

Not only that, the Italian experience of a political unification shows also thatstatist solidarity has not been a tocsin for poor economies. In the last fifty years,Northern firms and families have paid a lot of money to finance programs for theSouth. But if we are witnessing some encouraging evolutions they come only fromlocal and spontaneous initiatives.

Welfare programs redistributed the money to big firms and the mafia,multiplied public employees, strengthened trade-union organizations, and reducedincentives for work. Particularly Eastern Europeans must keep this Italian lesson inmind, because they have to refuse a model of development based on politicalinvestments and bureaucratic regulation.

2. What can we do? Four ideas for the future

2.1. Refusing European unification, defending free trade and globalization

We must oppose the project of European unification, because the creation of

this cartel of monopolist rulers would reduce institutional competition and individualfreedom. In a large and unified country the welfare State will find no hurdles andredistributive policies will become the rule. Every government expenditure will affecta large number of people, but the single individual usually pays only a fraction andthus he prefers not to bother with organized a resistance. The consequence is thesatisfaction of many lobbies and the increase of taxation.

Some economists believe that European unification brings about the abolitionof all internal barriers to free trade, but this idea is not entirely true, and a lot ofexperience invariably point to the same direction. A directive adopted in 1973, for


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instance, allowed the United Kingdom, Ireland and Denmark to make chocolatecontaining up to 5% of vegetable fats but not to sell it as chocolate in other MemberStates. As a result Italian, Belgian and French governments obtained to prohibitchocolate imports from other Member States; and through health and safetyregulation we have similar directives against Spanish strawberries, French camembert

and so on10

.In addition, political leaders of a unified Europe might try to build aprotectionist Europe, an unassailable fortress against Asian and Americancompetitors. To pursue this kind of policy would be impossible in a small nation(incapable of self-sufficiency), but a large area such as Europe can help to foster theillusion that protectionism will help the economy, defend wages and bring about full-employment.

As Hans Hoppe emphasizes, a country the size of US, for instance, mightattain comparatively high standards of living even if it renounced all foreign trade,

provided it possessed an unrestricted internal capital and consumer goods market.

On the contrary, in the small jurisdictions this error is less frequent, because thesmaller the country, the greater the pressure to opt for free trade rather thanprotectionism.11 Swiss Cantons, San Marino, Liechtenstein, Andorra or Monaconever dreamed to obtain advantages by refusing international trade and free-market.These small political communities the true and only heirs of the great Europeanspirit are interested in the diffusion of libertarian and free market principles, theywant to export and to buy all the goods they dont want (or cant) produce. In fact,these small political entities are in the best position to teach a very important lesson:the international division of labor is a useful opportunity for individuals, families,companies and communities.

For this reason, it is urgent to reject the political project of a unified Europeand to adopt an alternative model (more flexible, based on pacts and contracts).If Europe exists (and I agree that a European identity is in our history and in

our present), it can exploit the opportunity of economic integration (globalization)and free movement of information. In the international circulation of money, goodsand ideas, we dont see a planner: order emerges spontaneously as a result ofvoluntary cooperation.

In a free society it can be easy to satisfy our need to rediscover commonhistorical heritage and to develop institutional and economic links. In a Europe basedon property rights, the wall still dividing West and East could quickly disappear, and,free from the rigid constructivism of Schrder or Jospin, we could organize new andtruly federal relationships.

10 F. Aftalion, Regulatory Competition, Extraterritorial Powers and Harmonization: TheCase of the European Union, Journal des conomistes et des tudes Humaines, vol. IX,n.1, March 1999, pp.98-99.11 See: H.-H. Hoppe, Small is Beautiful and Efficient: The Case for Secession, Telos,n.107, Spring 1996, p.100.


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2.2 Free European relationships in a polycentric world

For centuries, in the structure of Nation-State the idea of sovereigntyguaranteed that the King and, then, the Parliament were able to control society. But

this hierarchical construction was also the premise to an anarchical internationalorder. The Kantian idea of a world federation, the distant progenitor of contemporaryEuropean unification, must be explained as the logical consequence of aninternational regime based on sovereign entities.

The paradox of the Nation-State is in its promise of law and order only withinits borders: internal hierarchy and external autonomy (the so-called internationalanarchy). But if modern political culture preferred hierarchy to anarchy (and itadopted the Hobbesian framework), the result was that our international (dis)orderhad to be modified. If the State had the task to avoid violence inside the borders, Kantimagined a parallel solution to the problem of law and order in the international

arena. In other words, the pursuit of peace and harmony among different peoplescould happen only through a higher (both ethically and geographically) politicalcenter able to reduce conflicts to a minimum.

The Kantian dream of eternal peace is the politically correct version of theprojects of Napoleon and Hitler, the political leaders more seriously engaged in theconstruction of a European State. Present-day prophets of a united world share withthese statesmen a strong preference for a society directed, more or less violently, by asmall political elite. Furthermore, they have in common the same distrust abouthuman liberty.

One must also understand that European unification is only a step towards a

global unification; and we must realize that the determination to abolish politicalpolycentrism is the most important threat to freedom. Europes finest hour wascharacterized by a system of hundreds of semiautonomous entities with an open andfree market12.

At the same time, opposing European unification means to reject the neo-protectionism of the media heroes: the Seattle people. For this reason we mustdefend European traditional values: openness, competitiveness, respect of fellow menand of their rights, localism and free spontaneous commonality. But we must also behonest and acknowledge the fact that many important European values migrated to

North America, in the ships carrying European colons and religious dissenters to theAtlantic coast. Our hope is that these traditional values have not left the continent forgood.

12 German history, in this sense, is very interesting. Before the Napoleonic wars, Germanyconsisted of hundreds of independent political units: there were important regional Statessuch as Prussia or Bavaria, but also a multitude of free cities, knightly manors and othersmall territorial entities. Besides any other consideration, in that institutional context the riseof a Hitler was a logical impossibility.


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2.3 Federal Europe, free communities and the right of secession

Against the pseudo-federalism of Maastricht, classical liberals and libertarians

must speak up on behalf of the true federal tradition. In the West we have a lot ofhistorical experiences: Jewish tribes, Greek poleis, ancient German communities,Italian and Flemish medieval Communes, Hanseatic League, Dutch UnitedProvinces, Swiss Confederation and the early republic in Jeffersonian America. Wealso have classical liberal and libertarian thinkers who paid attention to this topic:from Althusius to Jefferson, from Calhoun to Lord Acton, from Spooner to Nock.

Furthermore, there is a small group of social theorists working on a correctvision of federal theory. In this sense, for instance, the ideas of Bruno Frey can beuseful to show a possible evolution towards a society more and more free andcompetitive. The project of FOCJ (functional, overlapping and competitive

jurisdictions) and the idea of a solid utilization of the right of secession (with thepurpose to create nations by consent and a true market for institutions, whereindividuals can shop for the best political arrangements) are the prerequisites forconstructing federal relationships among individuals and groups.13

But afederal Europe is exactly the opposite of a unified Europe. When Iemphasize the need to develop negotiated connections among small politicalcommunities, I want to stress the difference between the existing Europe and thisvoluntary political order favored by European libertarians. As Roland Vaubel wrote,in a true federal institution each member state would have the explicit right to leavethe union at any time, if a simple majority of its population voted in favor of

secession.

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The possibility for any community to dissolve the federal compact (theright of exit) is the only condition that can force the central power to respect therights of the members of federation (states, regions, cities, individuals).

In this sense, we must also defend the idea that federalism can be a strategy toimagine and achieve political relationships without State (or beyond and after theState). In fact, federal pacts imply mutual agreements and horizontal contracts.Federalism is the theory of political pacts and it demands a new elaboration of thenotion of political community. In a true federal society, the right to abandon the unionmust be preserved and this is the most important guarantee that the federal authoritywill respect different realities.

If European politicians and bureaucrats are in fact impatient to destroy ourright to abandon the secular Paradise they are planning for us, the reason is that theywant to be free to make it as close to Hell as possible. The Euro nightmare under

13 B. S. Frey R. Eichenberger, Competition Among Jurisdictions. The idea of FOCJ, inL. Gerken (ed.), Competition Among Institutions, London, Macmillan, 1995.14 R. Vaubel, The political economy of centralization and the European Community,Journal des conomistes et des tudes Humaines, vol.3, n.1, March 1992, p.41.


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construction will be a land with an Italian bureaucracy, a French regulation, aScandinavian taxation, German trade unions, and no right to opt out.

2.4 Solidarity: free or compulsory?

Against socialist solidarity (in nationalist or internationalist version), classicalliberals and libertarians must protect the dignity of human beings and their right tonot become objects of political and coercive decisions.

We have to defend our experience of true solidarity: in families, associations,churches and so on. We must understand that State charity is a pretext of politicalrulers eager to increase their power at the expense of the peoples. Furthermore, wemust explain that the political machine operates a redistribution that never helps the

poor. In general, redistribution is for the benefit of the strongest lobbies and it helps

the rich, intelligent and sophisticated citizen. In brief the people who know how thesystem really works.Even in this case, a comparison between Europe and America can be useful. In

the United States there is a net of mutual aid private associations because thegovernment is less invasive and property rights are more protected. Our ability toattain a sense of community and true solidarity rests directly on our freedom.

Against the new socialism of Philippe van Parijs (who proposes that everyone and Californian surfers too should be paid a universal basic income, though at asubsistence level)15 and against Habermas idea of universal democratic integration16,it is important that we preserve the individuals right to reject political obligation.

Honest men dont respect unjust laws.But in the next millennium only a radical change in our vision of society mightbring about a rebirth of European liberties. As tienne de la Botie pointed out in hismasterpiece17, the power of political elite can be explained only by the fact that

people accept to obey the laws (he called it the mystery of civil obedience).Consequently when we will cease to obey, unjust power will disappear and we willhave the opportunity to build a more civilized way to live together.

During the modern age, Europeans have considered as natural the existence ofa two-class order, with the rulers and the subjects. Only a small group of libertarianthinkers expressed their dissatisfaction for this situation and engaged a culturalcampaign about the liberation of the new slaves of monarchical and democraticregimes. But present unqualified acceptance of despotism is also the consequence ofa lack of ethical responsibility. This European crisis, generated by the widespreadacceptance of aggression and the refusal to resort to self-defense, has moral origins.

15 Ph. Van Parijs, Why Surfers Should be Fed: The Liberal Case for an Unconditional BasicIncome,Philosophy and Public Affairs, vol. 20, issue 2, Spring 1991.16 See J. Habermas, The Inclusion of the Other. Studies in Political Theory, Cambridge, MitPress, 1998 (1996).17. de la Botie,Discours de la servitude volontaire, Puf, Paris, 1983 (1546-48).


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Therefore, a complete change in the way we connect with other people impliesa rediscovery of human dignity and a more vivid sense of responsibility toward ourfellow men and ourselves. If Europeans will be more charitable and generous, theclaims of public authorities to justify their role as social benefactors will appear toeverybody as a tragic farce. And the Emperor, even the European one, will have no

clothes.

Documents

LOTTIERI, Carlo. European Unification as the New Frontier to Collectivism