Guide to the Phenomenon of State

(Manifesto of the State's Nature)

On the nature of property

Introduction into the nature of State property

Real State proprietors

State as conventional commercial enterprise

The State and communism

Why democracy is just not enough

Capitalism against democracy

Legal corruption

Socialist ideas

Income redistribution and social idealism

Few words on the nature of taxation

Our Society and Social Robbery

The State

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On the nature of property

Property is a far too profound and fundamental social concept and whatever people generally understand under the definition of property is a rather superficial part of this enormously important and all-explaining phenomenon. Generally everything in our economic life and in our social world (with very rare exceptions) is the property just like everything in the known to us Universe is matter and energy. Even the feelings, emotions and sentiments are our property, which nobody can trespass without our permission

In order to understand the phenomenon of property in all its complexity, first of all, we need to realize that originally and essentially the property is having its roots neither in law nor in economic activity. Property is not determined by economic factors simply because not all property acquisitions are being generated within the economic activity. At least two other major types of property acquisitions besides economic acquisitions can be identified – acquisitions based on power and coercion and “rights of primary occupation”. Economic activity thus is merely one among several methods of property appropriation. Instead, it is a single method of property multiplication or of property generation and in this sense it cannot be overestimated.

Definition of property cannot originate in law, first of all, because property in its nature is absolutely informal and universal category. When somebody finds a dollar on the street, law is not relevant here in order to explain motives and nature of appropriation. When a military leader of early Franks is subjugating other tribes’ lands – the law is irrelevant here for determination and understanding of proprietor. When October revolution in Russia in 1917 is expropriating all the capital in the country – law is irrelevant here and describes nothing of how and why such expropriation is possible. When a person is becoming to be a property of another person (slave or serf) there is similarly no place for law there. When Spanish colonists are exploring and appropriating lands in newly discovered America – there is no law involved. When a couple of early American industrialists are joining in cartel seeking monopolistic prices for oil – law is absolutely irrelevant in order to describe their ability to receive monopolistic income based on monopolistic prices. And finally law is absolutely irrelevant for identification of the real State proprietors at any time and under any circumstances, but particularly under dictatorship. If somebody imagines that the state property belonged to the people in Stalin’s Russia or in Nazi Germany for example, he probably urgently needs to free himself from brainwashing and stereotypes.

Secondly, property emerges much earlier than any laws. Evolutionary laws are appearing much later, when property rights are by and large recognized and property relations are established and whenever central regulatory power (embryonic State entity) is strong enough in order to enforce those property rights and property relations.

Thirdly, extremely often in human history the lawful property is not entirely safe with its proprietor and can be easily expropriated or confiscated. Exactly because law is merely reflecting the existing property relations at certain point fixed in time, it does not guarantee yet that a person will be able to keep his property at another point in time, say tomorrow. There are at least four possibilities how a person can loose (in full or in part) his property guaranteed to him by law - first, as a result of legal, half-legal or even illegal actions of particular powerful individuals (for example mafia, medieval land barons, particular high-level state bureaucrats) via simple extortion of one’s property; second, as a result of changes in domestic legislation (as a result of nationalization or of the tax raise, for example); third, as a result of external forcible expropriation (in the aftermath of war for ex.); and fourth, as a result of domestic forcible expropriation (as a result of social revolution or of civil war, for ex.). All these possibilities are originating in the mechanisms of power and coercion - even peaceful changes in law can be put into practice only relying upon the instruments of coercion (upon the power of state coercion), otherwise nobody will give up his property voluntarily.

Thus, law, is merely a superficial put on paper or written expression of property relations - expression correlated with economic or conventional property rights. As a result of our educational prejudices and societal propaganda in the modern world, too much attention is being drawn to the superiority of law. Law is definitely important and even essential in day-to-day life, but law is absolutely irrelevant for explaining the nature and reasons of any social phenomenon, just like law is irrelevant for understanding of any economic phenomena or for economics as a science generally. Law is never a reason – it is always a consequence. It does not determine any social phenomenon or any social relations – it is merely marking on paper a current state of affairs in a particular society. Law does not create anything – it merely more or less adequately reflects things and first of all it reflects the balance of power in society.

If law and economy do not determine property and property relations – then what does? Or where the definition of property comes from? It comes from power. Power is a single determinant factor of any property rights and of any property relations. Power is property and property is power as we shall see. First of all directly. Second of all, because power, being based upon the mechanisms of coercion, can appropriate or expropriate property. Power is a foundation of the historical or social definition of property because of the three fundamental reasons.

First, power is allowing to appropriate, expropriate or to confiscate property outside of any economic activity as a result of wars, revolutions, dictatorships, private property rights violations (of crimes or sometimes even of in-law violations), of social property rights violations (forcible expropriations based on the societal mechanisms of coercion), etc.

Second, power is allowing exercising continuously exclusive (monopolistic) property rights based on the mechanisms of coercion within particular economic activity. This is a much more delicate and at the same time much more important and much more comprehensive manifestation of power. Forcible expropriations and redistributions of property not underlined by any economic activity represent a rather primitive and rough type of societal relations and though being enormously persistent throughout human history – they are not often encountered in the modern days. Forcible expropriation of property is also a short-term or even one single time opportunity. Socially strong or powerful individuals quite soon start to recognize that they need much longer-term manifestations of their power in order to obtain and to maintain the material benefits and social privileges. Single existing way of doing that is exclusive property rights or social monopolies based on power and coercion including such monopolies as for example slavery, feudalism and communism.

Third, power is allowing to keep (to own) the property. This is a very important manifestation of power – quite forgotten by the people today - especially by the people in economically developed countries. We often imagine that our property is somehow automatically guaranteed to us by some supernatural half-mythical, half-legendary force called "law". We already saw that it is not so. Only particular civilized balance of power within the modern economically developed society is allowing us to more or less securely own our property. And even that is a myth because coercive expropriations of our property are growing every year thanks to a nice phenomenon of taxation. We have simply traded obnoxious social conflicts with uncertain possibility of potential social revolts for permanently growing pay offs in order to keep less fitted and less capable individuals fed and away from atrocious behavior or speaking otherwise we have exchanged occasional short-term threats of social conflicts, occasional minor violent property redistributions and unclear perspective of social revolutions for uncontrollable and permanently growing income redistribution threatening with a definite collapse of our society in the future if those tendencies are not reversed. Apart from all that, if we think about modern underdeveloped societies or even about the modern economically developed countries in historical retrospective, we can observe that state extortions of property are often accompanied by the threats of private extortions on behalf of powerful private individuals, primarily of high-level state officials.

Coming from the origin of property, of property appropriations, from economic, legal and power foundations of property rights as well as from the definition and nature of property, we can identify two fundamental types of property rights - economic or conventional property rights and social property rights based on power and coercion. Economic property rights are the non-exclusive rights under which neither property possessions, nor appropriated income are relying on the instruments of coercion. Economic property rights represent the property rights in their common understanding - what people usually understand under the phenomenon and definition of “property”. Both economic property rights and their proprietors normally are explicitly and exhaustively defined by law.

On the contrary to economic rights, social property rights represent the exclusive rights when both property possession and income appropriation are based upon the instruments of coercion. Exclusive property rights of slave-owners upon slaves, of feudal barons upon land, of communist party leaders upon the state are the concrete examples of social property rights. Social property rights presuppose that certain rights are beyond the reach of other people (other than their current proprietors) within the normal exchange transactions, that certain production resources are switched off from the free production factors’ flows and that a single way for their appropriation is power or social counteraction. Social property rights are purely informal rights and are rarely (almost never) fully reflected in law or within the other parts of social infrastructure. Vice versa, law and social infrastructure are always trying to hide these rights in order to disallow any rational apprehension of social realities and thus to diminish social counteraction against these rights. Therefore, law can only identify economic proprietors of particular property. In order to establish social proprietors of the property rights based on power and coercion, we have to investigate how exactly mechanisms of coercion are generating exclusivity of particular property rights and who is appropriating exclusive income connected with this particular property. Probably such approach not always presumes the straightforward clear-cut answers, but there is simply no other way to determine thoroughly concealed by social infrastructure proprietors of exclusive property rights and beneficiaries of exclusive incomes.

Introduction into the nature of State Property

Several observations seems relevant to propose on the nature of State property first of all because the nature of State property is single-handedly determining the nature of State. But also because the nature of State property is rather important for identification of the real State proprietors and because a matter under consideration is not that straightforward within the variety of ideas dominating the modern conception of property.

General definition of property is a far more complicated concept than the one we used to in economics. Rights, which we understand under the pure definition of property, in human society are always limited and restricted by the mechanisms of power and coercion at societal level or by the existing societal balance of power. One needs power in order to initially obtain the right of property (“right of primary occupation”) and one needs power in order to retain the property. Only thanks to a particular unique balance of power in the modern economically developed countries we are able to obtain, to use and to keep any property rights and property possessions. In vast majority of historical societies and in quite a few modern ones property rights are very far from being guaranteed by societal structures even if they are guaranteed by law.

Essentially property is not a legal category. Property is partly an economic category, since usually one has to create or to purchase it in order to possess. But mostly it is a social category because one needs power in order to keep, to hold or alternatively to expropriate property. Law is merely superficially conveying the people's ability to hold and to alienate property based on the existing balance of power in society. But it is exactly the balance of power in any particular society what creates, maintains and changes property rights and property relations. Property as a concept and any property possession is completely dependent upon the mechanisms of power and coercion. We cannot fully explain property, property rights and property relations relying either upon legal basis of society or upon economic theory, terms and definitions. For that, first of all we have to employ social, sociological or political theory.

If everything in the society would be based only upon economy, a pure definition of property will prevail and will be enough for understanding of any societal phenomenon. Since besides the economy, unfortunately and predominantly, we are having in our society such an unpleasant thing as mechanisms of power and coercion, the pure understanding of property is not enough in order to explain anything in society. Any private proprietor is able to utilize his property rights only up to a level allowed by the existing societal balance of power. For example, in our days any company or any private enterprise is having significantly less rights and a way more restrictions in carrying out of its daily commercial activity than it used to have for example in 19th century. This may be good or may be bad, but what is the most certain in this case is that private property rights are being restricted to one extent or another. The mechanisms of power and coercion additionally to conventional microeconomic property rights are allowing to acquire and to possess certain exclusive rights generated at the macroeconomic, at the macro-social or simply at the societal level. For example, exclusive property rights upon the slaves’ labor in ancient Rome, which were based entirely on the mechanisms of power and coercion and which by no means can be explained employing merely an economic theory.

Overall in economics we are quite happy with property definitions given by law. Not so in social science concerned with the mechanisms of power and coercion. Law just like any other element of social infrastructure is not determining anything in society – it is merely marking down on paper current social and property realities in a particular society or is marking down on paper the societal balance of power. In social sciences we cannot be satisfied with any declarations made by social infrastructure (by law, by ideology, by media, by the government, etc.) because of two fundamental considerations. First of all, the social infrastructure is very far from being something neutral, objective and impartial. Its basic function is to preserve, no matter what, an existing social order and existing property relations whatever inefficient and unfair they might be. Second and much more important is that social infrastructure is not a determinative part of any societal processes in any imaginable way, but vice versa it absolutely depends upon the system of social and property relations or what is basically the same - absolutely depends on the existing in society mechanisms of power and coercion. Therefore only within the mechanisms of power and coercion we must look for the societal, political or sociological definition of property. Economic or rather legal definition of property does not embrace and fails to explain the following fundamental issues related to property rights and property relations:

1.      Exclusive property rights based upon the mechanisms of power and coercion (social monopolies). Economic definition of property even fails to identify such rights

2.    Real proprietors of the property, which is being based upon the mechanisms of power and coercion, often identifying false or superficial symbolic proprietors

3.      A system of property management and control under the exclusive property rights.

4.      Mechanisms of income appropriation by the real proprietors of exclusive property rights

5.      Social formations or societal constructions, power mechanisms, the nature of property relations and social domination under such systems of exclusive property rights as slavery, feudalism, communism and modern socialism of economically developed nations

6.    Forcible property expropriations, revolutions, wars, nationalizations and any social revolts against existing property rights and property regimes

7.      Historical evolution of property rights and property relations

8.     Quantitative characteristics of property rights (for ex. to what extent the private proprietor really owns the company, which pays 60% of its revenues in various taxes and is fully dependent upon the various State regulations of the economy)

9.      The nature of social institutions in any society

10.  But above all - the nature of State

Sociological or social definition of property relates to social opportunities (based on power and coercion) to own any type of property by any particular proprietor. Moreover such definition is applicable to exclusive property rights, which are based solely on power and coercion. Even more than that, since power is a rather quantitative phenomenon, such definition of property also introduces the quantitative characteristics of property - not just who owns this or that type of property, but also to what extent somebody owns particular type of property or who controls particular type of property more and who controls it less. Amount of restrictions imposed at the societal level upon the property rights can be and in fact often is extraordinarily large including under the ancient slavery, in medieval societies as well as in the modern world dominated by socialist ideas. In order to adequately describe societal processes and any social phenomenon we must always take into account triple characteristics of property – economic, social and property rights in their evolution.

A general understanding of monopoly in modern economic and social science is equally superficial and inadequate. We are basically familiar only with the economic monopoly, which is of no interest and of no use for us in social sciences. Economic monopoly is relatively simple, comprehensively explored by economics and mostly useless for understanding of the societal processes and of the society generally. In social science we are first of all concerned with the social monopolies – monopolies based on the mechanisms of power and coercion. Power and coercion are finally what society is all about. Without power and coercion – everything is pure economy and that is an outcome we should all wish for. If people think that society is not merely about power and coercion, it only means that in this particular society predominantly governs economy and very little social (based on mechanisms of power and coercion) has left in it. Normally, however, such impression is a naive misapprehension of reality, which normally can emerge exclusively within the extremely affluent modern societies. Without power and coercion social sciences except economics are overall irrelevant. They simply have nothing to study because at the end of the day social sciences are only about mechanisms of power and coercion and about applications of these mechanisms – nothing more, nothing less. If they do not study mechanisms of power and coercion, they are being transformed in pure ideology. At the same time we must make it crystal clear that power is not yet the final essence of human social interest or is not yet an absolute human objective per se, even though some people prefer power to everything else. Normally the ultimate value of power and coercion, their ultimate meaning as well as the ultimate value of any exclusive rights stands in the associated with any exclusive rights opportunities to appropriate an exclusive income - non-market-driven income, above and beyond the market income or the income not determined by all people, but exclusively or socially determined by certain exclusive people relying on the mechanisms of power and coercion. Normally people are being motivated by the ideas of the “exclusive rights” and of the “exclusive incomes” as long as they pursue their interests (self-interest). Exclusive rights are allowing the materialization of those interests in the most complete way, to the highest degree of comfort and in the longer time span. Power and coercion are finding their fundamental manifestation in economics through the particular exclusive rights for those people and social groups, which are able to control and to utilize mechanisms of power and coercion to their utmost personal advantage and first of all in order to appropriate an exclusive income.

The nature of the State and the nature of the State property are very much based on the idea that State is a monopolistic economic and social agent/institution with exclusive social and property rights on particular territory. State is the social monopoly because on a particular territory State is the single source of power and coercion (at least if we think about the modern economically developed countries). State is the monopoly because on any particular territory there is no any alternative entity, which is providing regulatory services’ for the entire economy. State is also a very specific type of monopoly. First of all it is a structural monopoly. There is nothing of a kind on a particular market of the State services including income redistribution services in any society. But this is merely a part of its story and hardly yet the most important part. Much more sophisticated and influential part of the entire nature of the State and of the State monopoly is the fact that State represents a production factor monopoly. State is the production factor because any economic or any production activity so far is impossible without some kind of regulatory entity at the macroeconomic or societal level. And since under the definition of production factor normally we understand exactly the economic resources essentially important and even indispensable for an overall process of production or of the value/wealth creation we can probably without much of a controversy refer to this category the State as well. Just like any production activity is impossible without capital, labor and land, which we normally understand under the basic definition of a production factor or of a fundamental group of economic resources, in the very same way any production activity is impossible without State.

Exclusive property rights associated with the State, first of all, imply that whoever is the real true State proprietor - he/she/they are receiving from the State property an exclusive, monopolistic, based upon coercion, not freely determined by the people, beyond and above the market, non-socialized and mostly unearned income.


Real State proprietors

Inquiry into who owns or at least who controls State property is a rather complicated task significantly hindered by clouds of fog surrounding it. State property, on the other hand, is so unique and outstanding that it would probably be a mistake to unconditionally apply to it any common criteria. Proprietorship of any monopoly based on power and coercion, including proprietorship of the State, on the contrary to economic proprietorship is never explicit and yet has to be uncovered through examination of the system of control over the mechanisms of power and coercion. Under the definition of property or of the property possession in common understanding we basically understand three inherent characteristics:

1.      Right (or rather a social opportunity or informal right – not necessarily a legal or formal right) to manage and to control property to one’s own personal advantage,

2.      Right (informal right) to alienate property or simply right to sell and exchange property and to appropriate proceeds of such selling, and

3.      Right (informal right) to appropriate some important income from utilization of particular property

In our investigation of the nature of State proprietorship rather than asking ourselves a question - why State property does not belong to the people (or at least why it does not belong to all people on equal basis) - we must ask ourselves what actually makes us to believe that State property does belong to the people. It is fairly evident to assume that under no circumstances people are the true real proprietors of the state or of the “public” property especially if we abstract for a second from a cliché we all are grown up with and especially if we think about the dictatorship, which comprises more than 99% of historical statehood taken both in time and in space. Any argumentation provided in this sense will probably seem somewhat extravagant and irrelevant. To explain why state property does not belong to the people is about the same type of endeavor as trying to persuade people that our planet is not flat-shaped. Those are not reason and rational arguments what keep us believing in an opposite statement of things, but merely an irrational ideological appeal based on ancient tradition. However, since there is still some misunderstanding of this matter - here are several logical observations.

1. First of all the category “people” means and explains almost nothing in social sciences unlike in cheap political propaganda. People are even hardly a sociological group – it is rather merely an unorganized vague and flowing numbers of separate private individuals, scarcely united by anything at all apart from another mythical concept of “society”. Particular individuals are separated from each other, first of all, by a lack of any common (common for all people – for each and every single individual) economic and property interests – we all are having different and quite often, unfortunately,  mutually exclusive interests.

2. Probably one of the main reasons why we suppose that there is such thing as “public” property, which belongs to people or to all people, is a declaration of such statement of things by law or by national constitutions (although even in these documents such fact is not always entirely explicit) as well as by the entire social infrastructure. However, law is never determining either property relations or societal structure and is merely marking down on paper societal realities/relations formed under the existing in society balance of power. For the sake of political economy or sociology we cannot be limited by legislative declarations as well as by any proclamations of the other elements of social infrastructure – in social sciences we must not trust them generally as all of them are normally ideological fundamentals. Law just like any other part of social infrastructure normally is presenting things in a way, which is convenient for individuals and social groups in power and serves their personal financial interests.

3. People or rather social security and welfare beneficiaries (which form the only part of the “people” and so far not yet the biggest part) actually are not earning any income through the State (such income is not even being taxed normally) – their income is redistributed to them i.e. is being coercively taken away from other people and transferred to the concrete beneficiaries whatever justification of such an act is. Unearned income more than anything else testifies that this is not the income of proprietor. Proprietor always has to earn his income at least somehow even if he is having exceptionally exclusive or monopolistic property rights and is benefiting from monopolistic income – otherwise we face a pure case of robbery, which politically is very difficult to sell and which people do not tolerate long enough.

4. If we would abstract for a moment from reality and imagine that the state property does belong to all people, then everybody suppose to make a living, partially or entirely, from this property. While even in our days of unleashed comprehensive socialism not yet everybody is receiving whatever income from the State. More like vice a versa - so far majority of people are receiving negative income from the State, i.e. subsidizing the state paying taxes. If people do not receive income from their property (which in fact does generate income and revenues), if some of them receive income from the State while the others do not, if some of them receive big while the others merely crumbs, if majority is paying while minority is receiving what kind of proprietors are they?

5. Except for the election of the government, people rarely, if at all, have any influence upon the decision-making related to administration of the state property and of the state revenues. Overall people have no much interest in such an administration mainly because so far they receive their major income from other sources or outside of the state property. It is almost the same as with small corporate shareholders or those who invested in mutual funds. People do not care about management and control. It is not why they have invested – they invest only for the sake of income and not in order to manage anything. People directly (especially if they are receiving their major income from sources outside of the State) are having almost no any participation in management of the state property and almost no interest in such management. If people have little possibility and little interest in management of the state property (the latter fact is also exhibiting a general disbelieve in declarations that state property belongs to the people) and if in their majority they receive a negative income from the State (although the State is getting the permanently growing revenues from taxation and other sources) what kind of proprietors are they?

It is equally hardly credible that people are the true real proprietors of the state property and that the state property does not belong to anybody (it is not a characteristic of property - not to belong to anybody) then the main question is who would be the real state proprietors – people who control the state to their utmost personal advantage? Actually the main obstacle for proper understanding of who are the real proprietors of the State is our faithful and relentless belief in the nature of “public” property and in hypothesis declined above. Once we are skeptical about the fact that the state property is people’s property – very few reasonable doubts remain about the nature of the state property and about who controls it. However, since there is some misunderstanding on that matter either - here are several rational observations.

1. First of all, we must clearly differentiate between the private property rights upon the State under dictatorship when a dictator does not have any limits for his control over the state property (as well as over the mechanisms of coercion) and between the property claims upon the State as a production factor monopoly under democracy without any private property rights upon the state property on behalf of particular beneficiaries. State property rights under democracy are merely more dispersed than under dictatorship, just like property rights in corporation are more dispersed than in the private company.

2. Management of the State property. Strategic and operational management of the state property is a fundamental and explicit task of the top-level state bureaucracy including top level politicians. If it is not – what else is State bureaucracy good for and what it is all about?

3. Alienation and appropriation of the state property. One particular limitation related to the state property creates a certain misunderstanding – impossibility to sell the property on behalf of particular public officials and to appropriate direct gains from that, which is based upon the fact that any separately taken public official is not yet a proprietor of any part or of any portion of the state property. At the same time, even though we have historical examples of various restrictions on that account the right to alienate property is normally being integrated in our understanding of the property rights. Particular corporate shareholder (as a proprietor) taken separately has no any rights to sell corporate property either (unless he holds a majority of votes). It is a joint prerogative of all proprietors. While people’s representatives or the top-level State bureaucracy can sell State property in the very same way including pursuing various personal advantages – i.e. appropriate different material, tangible as well as intangible personal benefits from this act of selling. Sometimes it takes only two persons - a head of government and a minister responsible for particular domain; sometimes only one person – the minister. The other thing is that particular bureaucrat is unable to sell and even does not have his particular “share” of the State property. However, all production factor monopoly, not just the State, because of their scale rarely belong to one person (whoever he is – it is very difficult for him to fool and to coerce an entire society long enough) and are being controlled by particular people united in a social group. While top-level state bureaucracy taken as a group, comfortably small as it is, is able and always does alienate or acquire any state property with a significant guidance of its own interests and first of all of the possibilities to appropriate in different ways the main proceeds (including political ones) from such actions. This is very close to a story of a medieval landlord under feudalism, who is probably able to sell his land (though extremely unlikely because of a variety of social and economic constraints) but who even selling the land does not alienate his exclusive rights and privileges as a member of a particular social group of land aristocracy. Even selling his land, he still remains to be a part of this social group with its particular privileges (transferable in direct financial gains such as for example attractive and not too troublesome position with king’s administration or in military service, etc.) owing to his social status and to his noble descent.

4. Income appropriation. Income and associated benefits of the top-level state bureaucracy unlike the income from the State of welfare and social protection beneficiaries (which is big as a total but quite insignificant taken separately per person) are rather impressive. Besides socially (relying on mechanisms of coercion) allocated personal income we can also observe socially allocated indirect financial and non-financial benefits as well as resources appropriated under carrying out of the different State functions – luxurious office related benefits such as transportation (cars, traveling, etc. related to particular positions), office premises, dining and wining, social events; employment possibilities for friends and relatives; opportunities for promotion of affiliated organizations and political parties; political, social and economic influence including contracting influence and bargaining power; after-the-office benefits; personal affirmation, pride, self-esteem etc.; information transferable in financial gains for example on stock market and so on, and on, and on. Besides, income of the top state bureaucracy is rather permanent and permanently growing. Not only this income is permanent for bureaucracy as a whole but in fact it is equally permanent for every single top-level public official. Even if somebody is loosing his current position, he is usually getting another one either inside or outside of the State owing to his previous position unless he does something terrible.

5. Allocating/distributing State revenues. State bureaucracy is not only determining the incomes connected with the state property of the rest of society, but with a much higher degree of autonomy or with an insignificant influence on behalf of any other people and social groups top-level state bureaucracies are establishing their own incomes and evaluating their own economic and social contribution. State revenues and level of taxation are almost in exclusive prerogative of the top-level state bureaucracy. They only have to make sure that their greediness is not crossing the line of tolerance and social illusions. And even that is not so important as long as they can provide voters with a permanent or even growing stream of redistributed resources and benefits

6. Marking price of the state services. Price of the State or level of taxation, although experiences an influence on behalf of a large variety of special interests, is permanently growing and whatever the motivation and reasons for such growth are, it certainly is in favor of the state bureaucracy. State bureaucracy is always pushing the level of taxation up, skillfully utilizing to its utmost personal advantages the entire welfare ideology.

7. Paying the costs. For the state bureaucracy paying costs or the state expenditures is not only a burden, which is directly deducting financial resources from the state revenues and therefore is diminishing a profit or a share left for the distribution among top-level public officials. State expenditures, which quite often are exceeding state revenues, actually make an enormous part of the state influence and of the state domination in society and therefore equally of the influence and domination in society of the state bureaucracy. State expenditures are under almost exclusive control of the state bureaucracy and serve considerably to its direct and indirect advantages.

8. Managing mechanisms of power and coercion. Exclusive rights upon the application of coercion in society are an indivisible and inseparable prerogative of the top level state bureaucracy. People cannot apply coercion against themselves – somebody else has to apply it for them. Those who apply coercion and those against whom it is applied normally are absolutely different groups of people.

9. State bureaucracy as a social group. State bureaucracy is a very organized group with a straightforward logic of unification and hierarchy, while all other individuals and social groups, which pretend to have any claims upon the state property, normally are just the sets of certain numbers, hardly united at all.

It is natural that claims towards the state property just like any other property rights are having their limitations. However, first of all, property claims of the top-level state bureaucracy upon the State are absolutely exceeding property claims of any other individuals and social groups. And secondly neither throughout human history nor in our age of unleashed uncontrollable socialism, the economic rights of any particular proprietor do correspond to a pure definition of property. Property rights are always limited and restricted by the mechanisms of power and coercion at the societal level or by the societal balance of power.

State as Conventional Commercial Enterprise

Is the State merely a conventional commercial enterprise or is it something more than that? Actually rather than asking ourselves why the State is a regular commercial enterprise driven by purely private commercial interests, we better explain if we can - why it is not a conventional commercial enterprise. What makes people think that the State is not a conventional commercial enterprise, but something more than that? From the purely sociological or political economy point of view, everything in society including any social association or any non-profit organization directly or indirectly are pursuing an objective of getting or earning financial resources whatever noble goals those resources might serve further on. And this seems to be quite normal. Therefore, all organizations and social institutions by and large are fulfilling at least certain prerogatives of the commercial enterprises with an objective to sell something to the customers (even if is some “big ideas” or some tremendous charity and if those customers are not direct beneficiaries but funds’ contributors) and then also to distribute in a useful for organizational objectives way the proceeds or the resources obtained (even if those resources are being distributed for the work remuneration and for other organizational needs). But is there a big difference between how people appropriate those proceeds – as capital gains, as dividends, as profits or as salaries? From the point of view of law, taxation or general accounting – certainly, but from the point of view of political economy, sociology and property relations there is no any difference whatsoever. Vice a versa attempts to hide private interests and promote public character of undertakings must raise quite a number of suspicions first of all since all social undertakings normally tend to influence the mechanisms of power and coercions even if not all of them succeed in acquiring such an influence.

Here are few considerations on what makes the State to be in line with any conventional commercial enterprise:

1.      State just like any other commercial enterprise is having its proprietors (people who control it to their utmost personal advantages) with their distinctive economic and financial interests

2.      State just like any commercial enterprise is selling its goods and services

3.      State just like any commercial enterprise is receiving revenues - mostly in the form of taxes, paying costs associated with the provision of the state services and with ideological propaganda making people to buy those services, as well as receiving the profit, which later is distributed as various types of payments and benefits to its real proprietors.

4.      As any commodity or rather as any production factor the State is having a price for its services – predominantly expressed in the form of a level of taxation

At the same time two factors seem to separate the State from other regular commercial enterprises:

1.      State is the monopoly with exclusive social and property rights on particular territory and with the affiliated possibilities to gain exclusive (non-market) revenues based on coercion

2.      State is an ultimate source of power and coercion in society particularly in the modern world.

It is safe to say that from one side State is a conventional commercial enterprise while from the other side it is a social agent or social institution based on coercion. Generally speaking, social agent/institution is an organization, which revenues, profits or income are based on the mechanisms of power and coercion. Otherwise there is nothing social in any organization - only its economic nature – and that is an outcome, which we must strive to achieve for any institution. We can equally say that the social agent is a commercial enterprise with exclusive rights, privileges and revenues based on the mechanisms of power and coercion.

Because of their reliance on mechanisms of power and coercion, the nature of social agents is always covered by a shadow of misapprehension and fallacy. Important part of the overall activity of social agents is a concealment of their non-socialized nature based on the immanent to them exclusive social and property rights. Furthermore, their real proprietors (people benefiting from their activity the most in terms of income) are rather vague and obscure, which statement of things is allowing to hide underlying them private interests and to market public character of organization. However, not only the nature of their real proprietors is socially disguised, but almost every single aspect of their activity (nature of customers or contributors, nature of revenues, nature of price formation for their services, nature of property relations) is concealed as much as possible. Under these circumstances it is absolutely normal that the very essence of the State (which is one of the most ancient and “experienced” social agents) is rather far from being explicit and for its uncovering needs some serious exercise and, first of all, requires a thorough denunciation of certain ungrounded emotional appeals and non-sustainable widespread social axioms.

Social agent is a very important intermediary definition in our envy to discover the nature of State - very important primarily because the definition of social agent is completely embedded in the definition of State. At the same time understanding of the social agent is a fundamental part of the definition of social monopoly (monopoly based on mechanisms of power and coercion). Not any organization or institution is yet a social agent or social monopoly; some of them being incorporated purely in commercial purposes continuously maintain such capacity and their straight character of conventional commercial enterprise. Though, normally, majority of them, together with purely commercial activity equally pursue various social objectives or objectives achievable only through at least a certain reliance on the mechanisms of power and coercion. However, not even all organizations with such objectives are yet transforming into social agents. Some of them simply fail to get any exclusive benefits based on those mechanisms of coercion either because of their inability or because of the objective unyielding circumstances. Only those organizations and institutions, which are carrying out their grand objectives getting social revenues and social benefits (including tax advantages acquired owing to their status), which in one way or another are succeeding in being associated with the mechanisms of power and coercion, can be called the social agents. Table below exhibits several comparative characteristics of the economic and social agents.



Economic agent (conventional commercial enterprise)

Social agent (social monopoly)


Basic definition

Organization or institution, which revenues are not being connected with exclusive social and property rights based on the mechanisms of power and coercion and are coming from purely economic activity

Organization or institution, which revenues are based on certain exclusive rights and privileges generated through their direct or indirect affiliation with the mechanisms of power and coercion


Examples of organizations

Conventional commercial enterprises (companies with limited liability, partnerships, corporations, associations, institutions and non-profit organizations) without any exclusive rights

Social monopolies (private companies, non-profit organizations and special interest groups) with exclusive rights and privileges based on the mechanisms of power and coercion including unions, associations and the State

Economic characteristics

Key revenues

Proceeds from sale of goods and services

Contributions plus different material and immaterial benefits and “favors” on behalf of the mechanisms of power and coercion (mostly on behalf of the State)

Costs to proprietor

Labor, land, input resources

Everything what relates to the provision of services including ideologies, advocacy, promotion and fund raising


Everything left after deducting costs from revenues

Incomes and other benefits of the top management

Form of income distribution

Dividends and capital gains

Salaries and other benefits

Price formation

Economic - interaction of supply and demand

Social (based upon involvement of the mechanisms of power and coercion), either exclusively or when it complements the economic or market  formation of price

Social characteristics

Key customers

Buyers of goods and services

Plus to the other funds contributors, the State normally becomes one of their important contributors – in terms of exclusive benefits based on power and coercion

Real proprietors


Top management

Legal identification of real proprietors

Explicitly identified in the law

Concealed or not explicitly identified by law

Exclusive rights based on power and coercion



Exclusive (non-market) revenues based on exclusive rights




One simple illustration. Suppose we register ourselves a non-governmental organization with an objective to prevent certain ecological disasters. A rather important and noble mission. The organization proceeds in its work employing available resources, competing with other organizations in the field on equal basis. Above all competing with the alternative points of view and alternative organizations, which suggest that those ecological disasters are rather unlikely while the views on which our organization is based are incorrect or incomplete. Thus far everything is fine and the market, if one wishes a pure commercial competition between the organizations and the points of view is prevailing. All organizations and viewpoints are being socialized and none of them is having any exclusive rights. People who consider the suggested ecological disasters to be imminent contribute to our organization, while those who consider that they are not are contributing to organizations with alternative views. More than that, those with the opinions close to the mission of our organization do have a choice to which among the organizations advocating similar to ours viewpoints to contribute. Nobody is having monopoly either on the concept or organizational one. So far everything seems to be fine. However, let us suppose that the State (politicians and top-level state bureaucracy) for some reason are starting to favor our organization’s point of view. More than that they are starting to provide State grants to organizations, which are having only the points of view similar to those of our organization. While providing no grants at all for organizations advocating alternative viewpoints. Here are emerging non-socialized exclusive rights and privileges for our organization. Our organization is starting to get the exclusive revenues based on the mechanism of power and coercions - redistributed taxpayers money. More than that, our organization is getting also the money of the taxpayers who are favoring an alternative opposite points of view to ours on ecological disasters. The further the more, the State is starting to teach our doctrine as exclusive or almost exclusive in schools and universities, which puts our organization in even more advantageous position comparatively with the organizations promoting opposite points of views. Then they start to use certain important state resources in media promotion of our particular point of view. With the time passing by our organization’s revenues are increasing significantly due to this propaganda – both in the component of the state grants and in the component of the private and corporate contributions. At the same time, the organizations with the alternative points of view are having harder and harder times in collecting any contributions since people are being taught that it is exactly our concept and doctrine related to the ecological disasters is the only one right and correct. With the time is emerging an idea to gather all the organizations united by our view of ecological disasters in the one structure or under the one network with the monopoly on scientific, social and policy views in this particular field. They will nicely explain us that in this way it would be easier and more efficient to channel the state grants to this field, to unite the advocacy efforts, to communicate and to promote, to reach out to the media resources, etc., etc., etc.  Exclusive rights then emerge not only in relation to the one partial point of view, but also in relation to the organizational structure dealing with or advocating such point of view. Probably this sounds rather familiar and with few exaggerations only if at all 


Neither one social group, social institution or social association is superior to another. Their single objective is to acquire and to maintain exclusive rights based on the mechanisms of power and coercion, otherwise there is nothing social about any organization. Taken separately all social agents are futile and unendurable while their single value stands in that they fight and obliterate each other thus diminishing chances for emergence of strong and authoritarian exclusive social rights.


If the State seems to have both natures (one of the conventional commercial enterprise and the other one of the social agent) why we are implying that it is hardly anything more than a regular commercial enterprise? The reason is really simple and straightforward - two characteristics above, which we have attributed to the State as a social agent (both being a monopoly and being based upon the power & coercion), under dictatorship and under democracy serve one single commercial objective – to extract from the people as much financial resources as it is only possible for the internal consumption of the real state proprietors (top-level state bureaucracy). Unfortunately, State is not merely a conventional commercial enterprise - it is also a social agent or rather a social monopoly based on exclusive rights, power & coercion and on appropriation of exclusive income. We can equally say that fundamentally the State is somewhat inferior to the conventional commercial enterprise because as its inherent part it embraces exclusive social and property rights, while its revenues, income and property are based on the mechanisms of power and coercion. Thus under its very definition it is a non-socialized social institution utilizing to its advantages the mechanisms of power and coercion. To what extent it is a non-socialized institution, in each particular society is being determined by the power of social counteraction to the State on behalf of the people

The State and Communism

Misunderstanding of the fundamental nature of communism and of the communist societies by the general public and by the western social science is often being acknowledged both by a significant number of immigrants from former communist countries and by the experts in the field from those countries who after collapse of communism continue to work in their home countries. On the other hand, the understanding of communism by social science and moreover so by common people in economically developed countries does not seem like has improved significantly. After the collapse of communism or after a break-up of the Soviet Union, the subject for a while has lost its interest, originality and practicality. We may ask what is the point to waste time and to argue about something, what has already gone. Three factors at least are in disaccord with such a perspective.


1. Hardly we can have a sustainable transition of many countries from totalitarian societies to more civilized forms of ruling unless we perfectly understand the nature of communism. For economics and sociology of the countries in transition we must have at least some understanding of where we are departing from and where we want to be, otherwise we are in a serious risk of returning back to the point of departure


2. Nature of the State under the communism is having multiple straightforward implications and influence upon to the nature of the problems faced today by the newly emerged (after communism) societies and by the international development industry


3. The nature of State in modern economically developed countries is absolutely the same as it is under any other social formation including as it is under the communism even though its power and manifestations are different. If we do not understand what we have had under communism most probably we do not understand in what kind of society we are living today and what we can expect in future. Communism generally is a perfect showcase and an ideal experimental laboratory for investigation of the phenomenon of State in all its complexity.


Nature of communism is extremely simple, much simpler than the nature of capitalism or than the nature of socialism of modern economically developed nations. It used to be and turns out that it still is significantly disguised by the communist ideology and social infrastructure including in economically developed countries in order to conceal its unimaginable inefficiency and terrifying injustice. In our understanding of communism we are basically limited by two fundamental delusions:

1.      First we tend to imagine that the communism is lacking full-scale market relations or full-fledged market laws in operation.

2.      econd one we tend to imagine that communism is lacking the private property


These two fundamental delusions are first of all contradictory to the very fact that the market (or natural economic laws) and the property are universal categories and therefore always exist even in the “state of nature” and in primitive societies. If there is no property or no market (economic) laws it can only mean that there is no society. The other matter is that it can easily happen that there are no explicit property rights related either to “private” property or to “public” or “collective” property. Such statement of things, for example, is characteristic both for primitive societies and for the communism as well. Generally speaking how explicit are the property rights is a rather quantitative phenomenon. There are a lot of examples of rather inexplicit property rights throughout the entire human history (for example real property rights upon the State property are always hidden and inexplicit). On the other hand, it can also happen that the market laws are operating in the conditions of limited exchange transactions. This is far from being only a characteristic situation of the primitive societies or only of communism – enough to mention feudalism during its emergence and affirmation, early ancient societies, Russia before Peter the Great, etc.  In all these cases and in many others exchanges/trade/markets are significantly limited or even suppressed, but this is very far from meaning that market laws or markets are non-operational or non-existent. It simply means that any exclusive rights based on power and coercion (social monopolies) always do limit the number and intensity of exchange transactions.


Under the communism we are dealing with absolutely the same genuine market laws as under any other social formation and not a one bit less perfectly functioning market laws (since they are objective – they are perfect) than they do under the “wild” capitalism. Everything has to be seen from a different perspective. Under communism there is only one single commercial enterprise in the entire economy – the State, which is getting its revenues selling goods and services (including ideology); paying its costs in terms of salaries to employees (i.e. to basically all people), social services, comprehensive ideology apparatus, police and security expenses; and receiving its profits distributed as financial and non-financial benefits of the top-level State bureaucracy, which are essentially controlled by only one person – communist party leader or dictator. We have only one monopolist who sells almost all goods and services on the national market – the State, and a lot of non-monopolistic buyers. State being a single monopolistic seller of all the goods and services in society can dictate any price. Being absolutely uncontrolled coercive monopoly it can withdraw any taxes and coerce anybody on almost any scale. This scale is only limited by people’s opposition to the political regime. However, even if people do oppose the political regime, they are still stuck with a huge State monopoly at every step they make – on consumer market, on job market, on law and order services market, on media market, on the market of ideologies, etc. State can sell very cheap particular socially important goods (in order to create certain social illusions), withdraw little taxes, but then take everything back through a complex combination of low salaries and expensive goods (for example such goods as the cars in former Soviet Union, which were extremely expensive on the scale of the other commodities). Laws of demand and supply have functioned under the communism absolutely. We deal with an extraordinary social monopolization of the market, economy and society which generates shortages of supply, low quality goods and services as well as the underground economy. Communist state, in fact, did not care much about all that. It was not afraid of social revolts as a result of shortages, initially because of its strong ideological position and later because there were no any serious threats of large-scale famine and hunger, for example during Brezhnev’s times. Owing to extensive coercive forces and to strong ideological domination of the State, shortages were not a serious threat in any event. To a certain extent thanks to shortages, State had the possibility to recruit its supporters from outside of the top-level state bureaucracy – for example people who were involved in black market operations or in other illegal commercial activities.


It is not a function of economic laws or of the market generally to equilibrate supply and demand. Law of supply and demand is rather about an interaction of supply and demand depending on prices. They are also about the simple facts that under the free market economy, supply and demand are in price related equilibrium. Otherwise, the further we are from the free market – the larger is disequilibria. And disequilibria imply a very broad meaning – not just a short-term deviation from equality of supply and demand. And not just an economic meaning – we must also look into societal (based on mechanisms of power and coercion) implications of disequilibria. Artificial short-term would be “equilibrium” maintained with a significant waste of economic resources we are having today in economically developed countries heavily dependent upon the State is another example of the same statement of things. Disequilibria embraces low quality public services, huge governmental spending for largely inefficient and wasteful programs including in order to assure non-sustainable short-term equilibrium, unemployment, sometimes high inflation and overproduction, lower quality private services (because of important dependence of goods and services’ providers upon the governmental regulations). All that we are having these days under the comprehensive socialism of the modern economically developed countries. Finally an extreme end of this row would be the shortages which have existed under communism. Under the modern socialism of economically developed nations, communist shortages are simply exchanged for gigantic inefficient governmental spending and regulation, which are almost as wasteful and inefficient as shortages under the communism.


Under the communism always do exist the very same private property as under any other social formation including capitalism. The difference is that under communism there is only one commercial enterprise or only one economic agent in society and therefore only one productive property – the State property. State property under the communism is in absolute private possession of the communist party leader – the entire State literally is his private property. This should not produce any serious controversy because if we take three fundamental characteristics of property – right to manage and to control property to one’s own personal advantage, right to alienate property and to appropriate the proceeds and right to appropriate some important income from utilization of particular property – and apply them to the communist realities we can see that Stalin, for example, was able to do with the State property and with the entire State revenues (absolutely uncontrollably) much more than that and much more than any modern days private proprietor can do with his private property. Whoever only does not control the private proprietor today – taxes, labor security, health security, social security, neighborhoods, communities, different non-profits and associations, governmental regulation, etc., etc., etc.  – none of those were there for Stalin. While, his predecessor Lenin confirming a total applicability of property alienation criteria to the State property gave up huge Soviet territories under the Brest Peace Treaty to the Kaiser Germany or really sold them in exchange for staying in power and for appropriation of the benefits associated with this power. A slightly different case in Soviet history is exhibiting the later Brezhnev’s period – when other members of Soviet “politburo” usurped pieces of his influence and of his power including owing to his health condition, while the State property became to be rather a group or a partnership property of four-five people.


Everything under communism is as simple as that – it is the simplest social construction exactly because it contains only one commercial enterprise or only one economic agent, only one social agent and only one giant piece of commercial private property. Here also comes our modern problem with the State both in the developing and in economically developed countries. In modern economically developed countries, State is still the largest commercial enterprise even if it is not already a single commercial enterprise in the economy as under the communism. It is still a monopolistic commercial enterprise – a social monopoly (single source of power and coercion and single regulatory agency on a particular territory or in particular country). It is not in the interests of the State real proprietors to create any strong competitors – vice a versa other things equal, in direct interests of the top-level State bureaucracy is to scale down any competitor predominantly through an application of the mechanisms of power and coercion (otherwise purely economically the State is always an uncompetitive bankrupt). And why do the State and its proprietors want to do that? State is eager to suppress independent goods and services providers (and not on one by one basis, but rather them taken all together) not only and not so much because of the competition on particular markets, but because of the competition on one extraordinary and kind of intangible market. The State sells big – it does not sell just usual goods and services. First of all it sells itself or the entire State ideology. Being economically always uncompetitive, naturally the State cannot sell an idea of its efficiency. Instead in order to justify its impotence, incapacity and inability it has to demonstrate to the people that it is having certain inherent social, ideological, national, cultural or moral value. It does not care so much about profits from particular commercial undertakings or from particular services, programs and projects as it does care about an overall profitability and revenue generation by the entire State machine - profitability based exclusively on power and coercion. Fundamentally, at the end of the day it does not sell electricity, heat, education, law and order, etc. – first of all it sells an idea of public services. While more public services simply mean more State revenues and therefore more income for the top-level State bureaucracy. Efficient private proprietors are discrediting State’s functional integrity, its general level of competency and for some people even its societal value. However, State cannot destroy the private economic agents completely as we will all starve in that case, but it can strive to increasingly “regulate” or rather to increasingly deteriorate business in order to demonstrate its constant decline and based on such decline (which is a direct consequence of the state wrongdoings), it can argue for ever more state regulation of the seemingly “business” or “economic” problems 

Why Democracy is just not enough

Today more or less prevails a general understanding that democracy solves all social or societal problems and represents a single precondition for overall societal justice. Conflict of interests between the State and the people under dictatorship hardly produces any serious controversy. Under dictatorship all the State property (including mechanisms of power and coercion) in real terms literally belong to only one person – the dictator or in the best case to a narrow group of his associates, whose major goal is to extract from the people as much money as possible for their own personal consumption. Taking this into account, under dictatorship – what is good for the people is bad for the State and vice a versa – is valid for about one hundred percent.


Our question is whether democracy does change anything in this statement of things, and if it does – whether it eliminates completely the oppositeness of interests between the State and the people? To answer these questions, first of all, we need to understand in what way democracy is different from dictatorship and what do they have in common (if anything). First of all, let us consider what democracy is changing in societal realities comparatively to any form of dictatorship. Democracy does provide us with the elections of the government by the people to a degree limited by people’s ability to assure or rather to rip off from the State what is normally called the “real democratic elections” – with free access to media, with relatively equal financial possibilities, without votes’ accounting manipulations, etc. All these in the very best case are applicable to a couple of dozens of nations in the modern world. On the other hand, rather than with electoral process we are much more interested here in what democracy changes in the entire State machine or in the relations between the State and the people taking into account that government is merely a part of the State – quite important part, but just a part. Can people really influence the State as a social institution in any possible way even under the most perfect democracy? Particularly since the State is a social monopoly based on power and coercion with its rather distinctive private interests. For the time being people are so happy with the elections of the government, which represents major not to say "single" difference between the two governance systems, that they are hardly motivated to inquire whether there are any common characteristics between dictatorship and democracy. Table below is suggesting few general guidelines for a comparative analysis of the two systems of governance.





Elections of Government



Degree of public opinion influence upon the State decision-making process


Moderate. State has to be careful in order not to overrun a limit of people’s patience with the coercion monopoly. If State does not overrun it - the State is safe, if it does – social upheavals or social unrest might bring non-desirable consequences for the State


Higher than under dictatorship since at least people are able to express their opinions freely. However, the State merely has to make sure that it buys people adequately and properly with social welfare, social protection and social guarantees. If this is intact, nothing threatens the State. Strong State supporter in this sense is a natural yearly GDP growth. With the growth in place, the State may even increase social and welfare measures from time to time.

People’s participation in political process

Social upheavals and unrest

Plus to upheavals and unrest (or strikes and demonstrations in the modern language) people are also able to have the voting and elections and a possibility to elect the government, but not the State and not the top-level State bureaucracy or the elite.  Government, top-level State bureaucracy or representatives usually consist from a rather narrow circle of members of a limited political clan represented by superior positions in political parties - mostly only in the two alternating each other parties, without any other alternatives. And even if there is a some kind of parody on alternative, the recipes are very limited. Normally it is only a question of more social security against less freedom and vice a versa. State and societal system are staying the same. While people are inclined all the time to select less freedom and more social security, which choice is leading slowly but persistently to the first system of governance  – to dictatorship.

Governing groups

Dictator or state aristocracy (narrow part of the top-level state bureaucracy) sometimes together with the other powerful social groups

Influential representatives and top-level state bureaucracy

People’s participation in the management of State property

Zero. All State revenues, entire State property and all mechanisms of coercion are uncontrollably managed by the dictator, whoever he is

Very limited if any. Except for election of the governance people rarely if at all have any influence upon the decision-making related to the State property management. More than that - normally people are having rather limited interest in such management being busy managing their own property and their own affairs. Any interests people might have in the State property are normally being reduced to the income redistribution and social security.

People’s participation in income redistribution and income appropriation through the State

Zero. All revenues received by the State are distributed under the one hundred percent control of the dictator.


Major people’s interest in the State is reduced to income redistribution in social and welfare purposes. There are also certain special group interests in income redistribution for particular business promotion and protection purposes


Real proprietors of the State property

Dictator or state aristocracy (narrow part of the top-level state bureaucracy). Unlimited private property rights of dictator up to a general possibility to alienate State property and even State territories and to appropriate the proceeds.


Representatives and top-level State bureaucracy (including legislative and judiciary branches, which are the intrinsic elements of the entire State machine and therefore also of the State bureaucracy and first of all in terms of their material interests coming from their principal source of income)


Let us also exhibit a rough cost-benefit analysis of the State under dictatorship and under democracy.





State Revenues

Mainly taxes, but role of non-tax revenues is much higher than under democracy

Main beneficiaries – the State, sometimes also certain social groups in power (slave owners under slavery, landlords under feudalism, etc.)

Taxes and charges for particular State services

Main beneficiaries – the State


Coercive enforcement of dictatorship (army, police, security forces etc.), comprehensive propaganda (moralistic and psychological, logic and image-type), limited welfare

Main beneficiaries – mainly forces of coercion and persuasion, other people to a rather limited degree (scarce social benefits)

Comprehensive social benefits, other types of income redistribution, propaganda  



Main beneficiaries – people as social protection and welfare beneficiaries represent the main cost for the State. To certain degree also benefit from the State costs particular special interests groups and lobbying organizations as well as associated with them interests


Everything left after the costs – State income and State property, which in real terms belong (and distributed) either to dictator or in the best case to a narrow group of his associates











Main beneficiaries – dictator, sometimes together with a negligible number of associates

Financial and non-financial benefits of the top-level State bureaucracy (salaries and other monetary bonuses related to the performance of State functions; office related benefits such as traveling and transportation, office premises, dining and wining, social events; employment opportunities for friends and relatives; opportunities for promotion of affiliated political parties and organizations; political, social and economic influence including contracting influence and bargaining power; after-the-office benefits; personal affirmation, pride, self-esteem etc.; information transferable in financial benefits and so on and on)

Main beneficiaries – top-level State bureaucracy and representatives


Now let us formulate why we are having those outcomes in the tables above, why precisely democracy is not enough for a complete realization of societal justice and what exactly is not allowing a one hundred percent correspondence between interests of the State and those of the people even under the most perfect democracy.


First of all, very few people at any point in time are associating their vital or primary material (financial) interests with the management of state property or with the State generally. So far a significant portion of people’s income is coming from sources outside of the State. Under these circumstances people simply care much less about politics and management of the State affairs. Moreover that the State is nothing else but merely another type of entrepreneurial activity and from the point of view of top-level State bureaucracy the State is merely a conventional commercial enterprise serving to extract money from the people for its own personal consumption. As far as the State is providing people or rather is allowing them to provide themselves with a certain living minimum (up to an understanding of such minimum in a particular society) people do not care much about the state. Other things equal, people whose primary financial interests are not connected with the social benefits and welfare payments are rather inclined not to share (or to share as little as possible) their incomes with the State and not to supply the State with any kind of property and income than to participate in any management of the State property. They are rather managing their own property in such a way that it would not be appropriated by the State. In these circumstances people might be willing to interfere in State management or to protest against the State as such and against the governance system as a whole only if something is noticeably exceptionally wrong in which case quite often it is too late to protest. It is never too late to protest against low salaries in education, but it might be easily too late to protest against escalating State domination in society. At certain point in time, when people wake up, it might turn out to be irreversible.


Second. Top level State bureaucracy managing mechanisms of power and coercion and being socially the strongest social group or one of the most active and intelligent groups in society (one have to be smart enough in order to get into significantly closed power circles) will not that easily allow people to participate in the State property management and, first of all, in appropriation of the exclusive income from the State. From the point of view of the top-level State bureaucracy the way to go is to throw people a bone of social welfare benefits and to appropriate colossal state proceeds (revenues, income, etc.) in one small happy family.


Third. Somebody might complain that together with the rising social welfare and social security more and more people are increasingly relying on social benefits and social guarantees and therefore are more and more interested in State revenues, if not in the State property management. That is mostly correct. This is precisely how under democracy the social inclination to the living on redistributed income in the long run are leading people to a dictatorship – the way exploited by Robespierre, Lenin, Hitler and the way earlier contributed to the destruction of ancient Rome, Soviet Union and of many many other societies. Not only the interests of the people and those of the State are quite distanced, but also the interests of different people towards the State property are different. Some people are eager to acquire as much benefits from State as possible, while the others hate to share any of their earnings with the State. Those two categories are having hard times to find a mutual satisfaction – in the best case they are getting just a short-term equilibrium. Such statement of things is far from being a good contributor to the people’s counteraction to the power of State. Rather, vice a versa, it divides people and helps the State to trick, to enchain them and to extort their money. It would be much better if people did not have any interest in the State property, than if they have it all and are lead by this interest to a permanent escalation of the State domination in society.


Democracy is having two fundamental advantages comparatively with any form of dictatorship. First of all, democracy is allowing a higher degree of realization of personal freedom. But it is only personal freedom what has all the intrinsic value, while democracy per se is just a tool. Democracy is nothing if it does not lead to a personal freedom. Vice a versa the higher level of personal freedom is a single cause, which is justifying a notable inefficiency and injustice of democracy based on the immanent to democracy extraordinary levels of coercive income redistribution. Second, democracy usually is more efficient than dictatorship as a governance system. But as a governance system it is certainly not a "rule of the people, by the people and for the people". Much rather it is a rule of the top-level State bureaucracy by the top-level State bureaucracy and for the top-level State bureaucracy.


At the same time democracy is having one exceptionally important inbuilt immanent problem - unlimited or rather permanently escalating income redistribution based on the “one man – one vote” idea and on the corresponding opportunity for a majority to benefit on account of the minority. Income redistribution, nature of the state proprietorship and the difference of people's interests towards the State are the three main causes why democracy is not enough for elimination of all the imperfections within the system of social and property relations or for elimination of exclusive property rights based on the mechanisms of power and coercion. Without economic, social and political benchmarking even the most perfect democracy can, and throughout the entire human history quite often did, degenerate in a dictatorship. Coercive monopoly on particular territory or on particular area of residence even under the most perfect democracy cannot eliminate a societal injustice as well as imperfections within the societal system based on the exclusive social and property rights. While the State and people associated with the State will always have a possibility to appropriate incomes, which economic value cannot be estimated in an open market competition or, what is the same, which economic value is being based exclusively on power and coercion and cannot be estimated at all.


At the end of the day we are bound to ask - is there anything at all that can eliminate any type of societal injustice and any imperfections within the societal system or they are really immanent to any human society? For now, based on our current societal knowledge, we can only say that there is a single functional condition for a substantial diminishing of the imperfections within the societal structure – an open competition between States and societal systems – competition, which have already destroyed once the most inefficient and the most unjust societal system ever – communism. There are, however, at least two fundamental problems, which are limiting applicability and influence of this condition.


1. The condition is working with a significant time lag, even though together with economic development and social evolution this time lag is constantly diminishing. Existence of the time lag is explained by the presence in any society of the artificial barriers for free production factors’ flows. Back in history when countries and nations were quite closed for outsiders and for an outside world, democracies being quite fragile social constructions (fragile mainly due to the inherent income redistributions oriented towards a significant state domination in society) quite often were leading to the dictatorships. With opening borders and globalization, social benchmarking and production factors’ flows today are in the permanent evolution and in our days it is rather difficult, though probably not entirely impossible, to establish a dictatorship in one separately taken economically developed country.


2. Imperfect benchmarking, which takes its origin in a simple fact that particular individuals in any society do not care directly about the macroeconomic efficiency. What they care about are their interests or their own microeconomic efficiency. People might compare, benchmark and follow not only positive for macroeconomic efficiency and societal justice developments, but negative ones though better corresponding to their own personal interests as well. There are no societal mechanisms or no social guarantees, whatsoever, that the most efficient and the fairest societal policy will be chosen. Moreover, that under the universal suffrage it is virtually impossible to follow any other policies except for the socialist ones.


Deep down inside, however, there is a single fundamental obstacle for a complete realization of the societal justice. It stands in the fact that at our present level of societal knowledge it seems to be practically impossible to eliminate the State or governance monopoly on particular territory. At most we can weaken or suppress it. However, no matter how hard we try (while lately we are not trying at all), the State remains to be a social monopoly based on mechanisms of power and coercion, remains to possess exclusive social and property rights, remains to be a pure price maker (establishing a level of taxation or what is the same - a price of the State services), as any social monopoly remains to be unjust and inefficient and because of all that to one degree or another remains to be a non-socialized institution.

Capitalism against democracy

Throughout the entire history of mankind there are a lot of studies on capitalism, socialism and democracy taking separately as well as on comparative characteristics of the two or of the three of them. Well, “enough is enough”, of course. Yet reading the books on modern history one might unintentionally be haunted by a thought that capitalism (or a free market society) and democracy (particularly representative democracy) seem to be antipodes. What this treachery idea is based upon? Are there any logical or rational foundations for such an extravagant thought besides some superficial impression? Let us start with the three of them.


First, traditional capitalism as a free market society throughout all its history (18th -19th centuries) is associated either with some form of dictatorship (empire, monarchy, aristocracy, etc) or with one or another type of the voting rights’ system based on property census (census or limited suffrage). And only when universal suffrage comes along capitalism starts to transform into socialism – not as ideology or philosophy, but as practically existing societal construction - with all the attributes of the latter such as elevated income redistribution and extensive taxation, state domination in society, state regulation of economy, market limitations, social parasitism, etc.


Second, much more important - democracy in its nature is based on the enormous expropriations of property (through the phenomenon of taxation) and on the various limitations of property rights (under the state regulation and interventions into economy). Such nature is rather straightforward because under the "one man - one vote" arithmetically (by simple vote counting) the poorer majority is always getting a redistribution of money of the richer minority in its favor continuously raising a level of the progressive taxation.


Third, escalation of the State domination in economy and society under the representative democracy based in its turn on accelerating income redistribution through the State is downgrading and suppressing not only all the free market principles corresponding to our understanding of the traditional capitalism, but is downgrading and suppressing continuously the personal freedom as well.


Before going any further with analysis would be good to provide straightforward definitions and to clearly differentiate between capitalism and socialism including what concerns their time frame. Table below suggests a brief analysis.





Property rights


Permanently interfered and violated by the State

Private property

Foundation of society and predominant

Subject to rigorous State control

State regulations and state interventions in economy

Very limited

Corner stone of the economic reality



Suppressed by State regulation, “public” procurement, mechanisms of coercion and artificial “incentives” (including lobbying)

Income distribution


Significantly limited by triple - income redistribution, state regulation and artificial “incentives”

State expenditures and taxation

Rather limited


Social security



Income redistribution

Rather limited


Underlining type of governance system

Either dictatorship (monarchy or empire) or property census democracy (constitutional monarchy or republic)

Representative democracy based on the universal equal suffrage

Time period

Second half of 17th century till the beginning of the 20th century

1933 till today


Free market society (free from any social monopolies based on power and coercion)

Exclusive rights of the top-level State bureaucracy (representatives) on the entire state property including on the mechanisms of power and coercion


Time division between capitalism and the emergence of socialism manifested by the growth of State expenditures is commonly attributed to the 1930th in the aftermath of the Great Depression theoretically or ideologically underlined by Mr. Keynes. Two remarks, however, have to be made on that 


1.  There are several studies (based, of course, on factual data) that booming State expenditures have started much earlier than that - yet in 1920th, before the Great Depression (particularly interesting is the work of Randall J. Holcombe - The Growth of the Federal Government in 1920’s). Table below somewhat exhibits this idea presenting an expansion of the Federal government expenditures in the United States. Even from this simple table we can see that Federal government outlays in 1925 have increased more than four-fold comparatively to 1916, while in 1936 comparatively to 1931 only 2.3 times. What does this say from our perspective? 1920th are precisely the years when universal suffrage started to work at its full capacity and not only in the United States, but the entire world as well. Coincidence? Hardly…


Selected years

Federal government outlays (in millions of dollars)

Federal government outlays (in percent of GDP)

Growth in % to the previous period in the table (not accounting for USD depreciation)


1090 (avg. per year - 18)

No data



15453 (avg. per year - 309)

No data




No data




No data



1 954

No data



12 677

No data



18 493

No data



2 924

No data

310 (to 1916)


3 577




8 228




6 840




9 468




13 653




35 137




92 712




29 764




42 562




92 191




195 649




590 941




1 253 165



Source: The U.S. Government Printing Office


2.  What started in 1920th and in 1930th was a clear-cut boom of the State expenditures. A moderate growth of the State expenditures and some elements of the socialism in economy (universal public education, embryonic social security, unions, rudiments of progressive taxation, etc.) we can observe in many countries yet in the late 19th century.


Table below demonstrates how different types of suffrage franchise were represented and disenfranchised in different countries under traditional capitalism (18th-19th centuries). Very interesting analysis both of the voting franchise and of the growth in size of the government as well as of the correlation between the two is proposed in the work of Toke S. Aidt and Peter S. Jensen - Tax Structure, Size of Government, and the Extension of the Voting Franchise in Western Europe, 1860-1938.



Universal suffrage starting from 1893 (weakened by a plural vote for electors fulfilling certain conditions of income, age and education)


Widening of suffrage in 1882 (the requirement to pay 20 lire in direct taxes per annum and abolished altogether for those with two years' schooling)


Suffrage was restricted, and it was tied to property provisions until 1907. The emperor was authorized to govern without parliament in the event that the assembly should prove unable to work.

New Zealand

1879 - Property requirement abolished.

1893 - Women given equal voting rights with men.


Representation of the People Act 1884 - amended the Reform Act of 1867 so that it would apply equally to the countryside; 40% of males were still disenfranchised, whilst women could not vote.

Property restrictions for voting were lifted for men only in 1918


In the United States, suffrage is determined by states, not federally. There is no national "right to vote". Suffrage franchise for white male started to disintegrate after the civil war.

U.S. Constitution has been changed five times to disallow states from limiting suffrage, thereby expanding it, for example:

15th Amendment (1870): no law may restrict any race from voting

19th Amendment (1920): no law may restrict any sex from voting

24th Amendment (1964): neither Congress nor the states may condition the right to vote in federal elections on payment of a poll tax or other type of tax


17th century – 1918 Kingdom of Prussia and German empire

Following the unification of Germany, Bismarck introduced universal male suffrage for elections to the Imperial Parliament (called the Reichstag) from 1871


1799-1815 empire of Napoleon Bonnapart

1815 – 1830 return of monarchy (Louis XVIII, Charles X)

1830-1848 constitutional monarchy of Louis-Philippe with suffrage census

1852 – 1870 Louis-Napoléon Bonaparte (short second republic with universal suffrage for men and second empire)

After 1870 – IIIrd republic gradual introduction of universal suffrage


In 1887 the Netherlands' constitution was amended and the right to vote was made dependent on education and property. The franchise was expanded, to 29% of the adult men.

Universal suffrage was introduced after the World war I (1918)


Universal and equal suffrage from 1907

Source: Wikipedia, Encyclopedia Britannica


Another table illustrates where we are with our socialism closer to these days or where we have ended up after the introduction of universal suffrage in terms of state expenditures, state revenues and particularly in terms of their share in GDP.



GDP (in billions USD on an exchange rate basis)

Consolidated state revenues (in billions USD on an exchange rate basis)

Consolidated state expenditures (in billions USD on an exchange rate basis)

Share of State Revenues in GDP

Share of State Expenditures in GDP

Public debt in % from GDP
























































































































Source: CIA Fact book, 2006


Based on the tables above and on our previous analysis we can reasonably draw few conclusions


1.   During the period of traditional capitalism (from 17th century till the end of 19th or beginning of 20th century) as of the free market society with limited State intervention in economy and society, all modern economically developed countries were either dictatorships (empires or monarchies) or republics and constitutional monarchies with limited suffrage. Suffrage franchise was limited either by property census, by sex or by race or by a combination of the three. Here we are interested exclusively in the property census


2.   Universal suffrage started to gain universal grounds at the beginning of twentieth century (though in some countries a bit earlier). This is exactly the period of the unprecedented escalation of taxation, of income redistributions, of State and governmental expenditures and of the State interventions in economy and society – i.e. of all what we understand under a pure definition of socialism.


3.   At the initial introductory stage (end of 19th century – beginning of 20th) socialism was advancing at a moderate pace because the suffrage was becoming universal rather gradually while taxation and state expenditures were rising gradually as well (though quite impressively comparatively with their rather negligible level before). At the second stage (starting from 1920th) when universal suffrage was firmly established and started to bring its “results” – socialism is accelerating and acquires substantial comprehensiveness.


4.   Universal suffrage introducing the phenomenon of socialism in our society is simultaneously destroying capitalism and finally leads to its dissolution as of the free market economy exchanging competition for hideous state regulation and state interventions, domination of private property for gigantic and constantly multiplying state property, free distribution of income and resources for colossal income redistribution through the state, limited state for unprecedented taxation and enormous State domination in economy and society, natural property rights for their violation and permanent interference on behalf of the State, free people for dependent on the state benefits and guarantees collective beings shivering from every single life-time inconvenience, freedom for deplorable parody on “people-driven” or “public” political decision making


5.   Capitalism started to disintegrate together with the complete introduction of the universal suffrage and vanished completely by 1960th. Today capitalism does not exist anywhere in the world and certainly not in any economically developed country


6.   Social formation we are living in today is the socialism. Using Marxist understanding and phraseology, under our socialism the “working class” has finally succeeded, it has won the power battle as much as it ever was able to. And contrary to all absurd Marxists conclusions bound to establish a totalitarian dictatorship of the top-level State bureaucracy called “communism” and against all property censuses or voting limitations designed to support a political power of bourgeoisie or of the people of property. The only winner, whose gains from socialism supercede those of the “working class” (if anybody considers the working class to be a real winner) is the state bureaucracy and particularly the top-level state bureaucracy. Total real benefits of the top-level state bureaucracy today are not only higher than those of the modern small and medium-size “bourgeoisie”, but sometimes are even higher than the incomes of the large “bourgeoisie” whatever that is. While the state revenues in economically developed countries today are higher than the overall revenues of the entire national “bourgeoisie” taken together.


7.   Socialism and democracy are indivisible. It is only democracy with universal and equal suffrage what brings socialism. Democracy might be better than any form of dictatorship. However, owing to the universal and equal suffrage it inherently embraces permanently escalating redistribution of property, which represents both a complete absurdity and a foundation of socialism and is only possible thanks to the rising power of the mechanisms of coercion in our society.


If socialism and property (income) redistributions in 19th century were at least understandable if not justifiable taking into account an extreme poverty, hunger and devastating living conditions of the certain groups of population, today with our national wealth as well as with historically immense minimal salaries, nothing can either justify or even make to understand income and property redistributions and particularly their irreversible and permanently accelerating dynamics.


Legal Corruption


Understanding of corruption in the modern world is overall inadequate. Corruption is implicitly understood as an illegal act of utilization of one’s own position in one’s own interests or to one’s own personal advantages. This is corruption, all right. However, such illegal or out-of-law corruption is only a part of the phenomenon of corruption and not yet the most important and the most determinative part. The very essence of corruption lies much deeper than that.


General phenomenon of corruption is, first of all, connected with corruption in the system of social and property relations. Corruption of the system of societal relations is always in-law or legal corruption and implies unjust and inefficient, but absolutely legal system of income distribution in society. This phenomenon might become clearer if we abstract from the modern economically developed society and turn to a history of mankind or to the modern developing nations. Hardly arguable would be that the system of income distribution in Ancient Rome between slaves and slave-owners was unjust and inefficient yet it was perfectly legal. Later such shocking types of income distribution have disappeared, however a large variety of less severe and likewise perfectly legal kinds have emerged.


Profound nature of corruption is rather simple - it stands in appropriation of exclusive or monopolistic income based on the mechanisms of power and coercion and embraces both lawful or legal and illegal corruption. In the modern world as well as in any historical retrospective a final source of power and coercion is the State and therefore any corruption is first of all associated with the State. On the other hand, State is the last significant social monopoly or monopoly based on the mechanisms on power and coercion left in the modern economically developed countries. Any other social monopolies cannot emerge today apart from relying on the power of State and therefore owing to State’s direct or indirect participation. State being a production factor monopoly is having an exclusive right to determine its own value or its own economic contribution establishing a level of taxation for its citizens and residents. State also possesses an exclusive prerogative to establish a price of services (including all associated benefits) of the top-level state bureaucracy. Generally speaking, from the point of view of top-level state bureaucracy the only value of State stands in social (based on power and coercion) opportunities for appropriation of exclusive income, which level is not determined either by the market or by the people. Otherwise power has no any meaning and business or self-employment would probably be more profitable occupations.


An overall level of corruption in society is not determined by any illegal actions; it is fundamentally a pure legal phenomenon, which means that the more income and revenues based on mechanisms of power and coercion exist in society – the more corrupted it is. Under the modern days realities of abundant societal domination of the State monopoly, the social corruption is rather straightforward – the larger State budget (in relation to GDP) or the more State revenues based on coercion we encounter the more corrupted is this particular society.


Although, separate cases of illegal corruption are not entirely connected with the corruption in system of social relations, illegal corruption as a social phenomenon or taken as a whole is significantly determined by the level of legal or in-law corruption in society. Where a level of in-law corruption is low, illegal corruption normally is also insignificant and vice a versa.


Let us consider a very simple illustration of the in-law corruption in modern economically developed society - State agency for the regulation of agricultural market. Activity of such agency is inefficient because its general idea is to help farmers and either to subsidize agricultural production or to keep agricultural prices above the market equilibrium employing certain kinds of regulatory measures including those related to diminishing the supply of agricultural products. What it means from the point of view of macroeconomic efficiency – scarce resources are squandered in the field where they do not produce the most efficient economic results or do not produce any result at all. On the other hand, this practice is also generating an equal degree of societal injustice, because higher prices or subsidies in agriculture means that people have to pay more of their hard-earned money for the regulated activities. Speaking otherwise, people in other sectors of economy have to work harder or more for the same amount of money as people in agriculture. On top of that, people also have to pay taxes in order to finance these regulatory measures or subsidies. Tax proceeds are partly going to the agency’s employees, which actions under such circumstances neither produce economic efficiency nor can be socially justified. Probably people in that agency, especially technical experts and middle management, are skilled professionals and hard-workers. But this does not change a bit an essence of their actions – their activity is overall inefficient. While we can be always sure that the top management of this agency will do everything possible in order not only to maintain agency’s status, but also in order to expand agency's responsibilities and to increase its budget simultaneously escalating a level of in-law corruption in society.


Any legal activity, which is producing economic inefficiency and injustice in income distribution and which is based on the mechanisms of power and coercion represents the in-law corruption or corruption within the system of social and property relations.


Socialist Ideas


Socialist ideas, no matter how idealistic and attractive they might sound, are incorporating a serious threat to economic efficiency and societal justice stimulating and accelerating forcible (based on mechanisms of power and coercion) property and income redistribution. Generally speaking, any income redistribution must generate at least certain degree of skepticism primarily because it is based on coercive expropriation of property. Excessive income redistribution associated with representative democracy and accelerating under an influence of socialist ideas is detrimental both in the short and in the long-term and not so much economically but to a significantly larger extent it is detrimental socially.


Economically socialist ideas are leading to a lower competitiveness and lower efficiency. Such outcome is natural because competition does not care about political or social justifications underlying redistribution, the only thing it cares - is efficiency. In reality all socialist ideas are having only pseudo-justification brought mainly by a weakness of human nature, which is rather eager to rely upon assured support and social guarantees generated on account of the other people. In fact there is no such thing as social justification of inefficiency. What is inefficient is never fair and vice a versa what is unfair is always inefficient. At the end of the day people always have to pay for any kind of inefficiency, while normally only a very small powerful and socially strong minority is lucratively benefiting from economic inefficiency.


Social harm of socialist ideas is much more profound, a way more severe as well as significantly more dangerous. At least three fundamental dimensions of the social harm of socialist ideas can be identified:


1. Socialist ideas are producing one or another degree of social parasitism – envy and addiction to living on coercively extorted unearned income and benefits combined with mounting income redistribution through the State and with intensifying inefficiency of enormous public sector significantly influencing the inefficiency of private sector, which is starting to serve the State and particular bureaucrats rather than the market and the people


2. Socialist conceptions idealizing social realities are leading to an escalation of social mendacity and social hypocrisy in society. Inconsistent idealistic social views produce a massive misunderstanding of societal realities in economically developed countries, which is rapidly embracing the entire world. Misunderstanding of societal realities is quite dangerous phenomenon constantly preparing grounds for social cataclysms, which we have witnessed for numerous amount of times in the history of mankind. Although misunderstanding of social realities is not a single and may not even be the main reason of social cataclysms, it is significantly diminishing people's capacities to fight fundamental societal deficiencies leaving us helpless in front of the forthcoming social catastrophes.


3. Socialist ideas pumping State with enormous financial resources (first of all within the income redistribution process) are leading to a growing political, economic and social domination of the State and of the mechanisms of coercion in society and to a permanently consolidating subordination of private individuals to the State. While subordination of people to the State is finally what dictatorship is all about.


Economic inefficiency and social deficiency of the socialist ideas are destructive not only for economically developed countries dominated by socialist ideologies. Economic inefficiency accompanied by social consequences of the socialist experiments is even more harmful for developing countries, which are far behind economically developed countries in terms of economic and social progress. Elevating general level of inefficiency in developing societies socialist conceptions are deepening this gap from one side, while moving these countries closer and closer to totalitarian dictatorships from the other side further escalating there State domination, which is enormous in these countries even without socialist recipes imposed and imported under an influence of economically developed nations.


Entire theoretical absurdity and practical inconsistency of socialist ideas is based upon the three fundamental delusions persistent in modern world:

1.      Severe misapprehension of the nature of State as of the social institution

2.      Misconception of the nature of representative democracy

3.      Over-idealization of the nature of society (whatever “society” is)


Not only socialist and liberal tradition, but sometimes even conservative social philosophy are dominated by a vision of the State as of some kind of social and economic arbiter, as of an institution which task is to create and to maintain an adequate social and property regime, as of a guardian of “public” interest and as of a general manager of “public property”. Misapprehension of the State’s nature coming from such views is equally based on misconception of the nature of state property and of the property as such for that matter. Generally speaking the very idea of “public property” may have some legislative designation as well as some ideological bend, but from the point of view of sociology or of political economy – there is no such thing as “public property”. Every property belongs to somebody in the very distinctive terms – otherwise it is not a property as an air or a planet of Mars. What belongs to everybody does not belong to anybody. Every property is having its real private proprietors or real private beneficiaries. That goes for any corporate or associated property as well as for the State. Only those people who are able to manage associated or state property up to their utmost personal advantage and who are able to appropriate from that kind of property some important income can be called its proprietors. In this sense the state property never belongs to the people. Under dictatorship it belongs to a dictator (or to a small number of his associates) and is transforming into his private property. Democracy from the point of view of property relations represents a rip off from the property rights of dictator in favor of the top-level state bureaucracy (including representatives), and certainly not a rip off from the property rights of dictator in favor of the people. Not to mention that in science there is no such thing as “people”, there are only separate private individuals with their private contradictory to one another and often mutually exclusive interests. “People”, whoever they are, have no any claims or rights upon the state property, in the best case only somewhat indirect influence upon the state expenditures. They are merely getting a certain part of the state revenues (social security, social protection, etc.) in order to generate and to maintain certain social illusions and in order for the top-level state bureaucracy to appropriate the rest of the state revenues in one small happy family.


Real true nature of the state property is entirely downgrading postulates mentioned above. First of all, under no circumstances the State supports and maintains any property regime. Major goal of the State or major goal of the state’s real proprietors, both under dictatorship and under democracy, is to obtain through the State as much property, income and revenues as it is only possible. Speaking otherwise, the main objective of the State what concerns property regime is to get a hold of as much property and of as much income for internal consumption of the top-level state bureaucracy as it is only possible. Under democracy methods are merely becoming more civilized, proprietors a bit more dispersed, while underlying determinants of the process remains to be the same. Instead of rough and tough property expropriations, a predominant role is being played by unleashed and scarcely controllable phenomenon of taxation. Preservation of any property regime by the State under these circumstances is a rational absurdity. A single property regime, which the State is eager to promote and to maintain, is the communism with unlimited state property and uncontrollable income appropriation by the top-level state bureaucracy. Only counteraction on behalf of the people is not allowing the State to get such property regime. In order to be social, economic or property arbiter one must be impartial, unbiased and personally disinterested in outcome. Neither of which comes with the story of the State, which is an enormously co-interested player in any property game. Much worse than that - State is a purely monopolistic social and economic agent with exclusive social and property rights on particular territory (as a final or rather a single source of power and coercion) and therefore to one degree or another is always a non-socialized institution.


Democracy being the strongest advocate and at the same time one the strongest initiators of the socialist ideas simultaneously is enormously abused by them. Socialism tends to pump into the State immense financial resources shifting societal balance of power towards progressively increasing state domination in society, final logical end of which is dictatorship or even communism. Democracy is far from being sufficient for a complete realization of societal justice. Overall democracy is not as important as personal freedom; it is merely a tool for more adequate realization of personal freedom. Since the state property never belongs to people, democracy would hardly ever allow people to manage the state property (and first of all to control the mechanisms of power and coercion) under any circumstances. But much more important is that the nature of personal freedom is not democracy either. The nature of personal freedom is property – the property on our lives, on our aspirations, sentiments, on our abilities and capacities as well as on production factors. When there is no preservation and multiplication of property (including first of all of such fundamental property as human life) – there is no any freedom. Democracy, though is better than dictatorship and being overall superior to dictatorship in terms of the societal justice, still represents a certain denominator for property, efficiency and finally for societal justice as well. And why democracy creates these imperfections within the societal system? For a simple reason that under the universal suffrage or under the “one man – one vote” – poorer (not just “poor”, but poor and middle-income) people being every time in the majority are always voting for and getting a redistribution of income of the “richer” people in their favor and there is no end to this, except for an absurd logical end – the communism. In blind belief that the state property is a public one, they expect to get proceeds of such redistribution. However, a lion share of all taxes we pay is divided among the top-level state bureaucracy, top level representatives and strong special interests groups in a complex variety of ways. However, the income redistribution does create certain illusions – illusions, which are supporting and promoting a permanently growing level of taxation; illusions, which are strongly supported and extensively promoted by their major beneficiaries – the State and the top-level state bureaucracy.


Role of society in the promotion of socialist values is a bit more complicated issue. Overall society or social infrastructure from the point of view of property relations is there to upkeep and maintain the existing social order or of the current system of social and property relations. Nothing bad is here yet. Social orders or social constructions, however, are quite imperfect; it is hard to imagine any perfect societal order in the history of mankind. Therefore, society or social infrastructure maintains and preserves something imperfect. Still this is not too bad. Much depends on “preserves” from what – from something better or from something worse. If we imagine a course of social evolution as a permanently improving and advancing society – not only economically, but also what concerns property relations and societal systems – then we must admit that society or the social infrastructure might be on the way of social and economic progress by preserving existing social order. Of course, sometimes there is also a regress in the social evolution as well, as would be communism, national-socialism or any kind of dictatorship for that matter. What is the most certain, however, is that every single society or every single social infrastructure together with all its elements (law, culture, education, moral values, etc.), just like the State, is not something neutral or impartial. It is having its own very distinctive character and rather distinctive interests being paid and paid big, first of all, by the State, in order, for no matter what, to preserve the existing social and property relations (including once upon a time - slavery, feudalism and communism for example). Sometimes society or social infrastructure does not look that bad, but it always does care very little if at all about any private interests except about those interest for which promotion it is being paid. After all, society is merely a social (based on power and coercion) marketplace where people sell their non-socialized or exclusive interests (socialized interests people sell at the economic marketplace) and where only the strongest succeed in such “selling”. Those who benefit the most from communism as well as from the modern socialism of economically developed nations are not the most vulnerable groups of population, but vice a versa - the most fitted and the socially strongest individuals and social groups, which easily learn how to abuse any types of income redistribution.


All people are born and moreover should remain free, independent and dignified and not herd-bound animal-like creatures, which are afraid of every single lifetime inconvenience, as socialist and communist ideologies are eager to represent us. Human individuality and a power of human intelligence - is a foundation for that.


The very essence of the socialist ideas is largely questionable since they actually forward and advance an act, which if not thoroughly justified (and it is hardly ever justified at all) is significantly similar to an act of robbery – there is a very thin difference between theft and income redistribution. Overall income or property redistribution never goes just like that - never remains unpunished. Just like robbery or theft are being punished by the man-made laws, the very same way advanced income redistribution is always being punished by the natural societal laws, which are bound to prevent any kind of societal inefficiency including through eradication of the inefficient and wasteful societies.


Income redistribution and social idealism


There are two fundamental societal deficiencies within the modern economically developed society. They are rooted not just in economic realities and unfortunately not just in social life but are beginning to be immanent and dominating features of human nature. Those are – social parasitism or addiction to the extreme levels of income redistribution and social idealism or idealistic (false) apprehension of society and social realities. These two states of spirit are influencing or much rather are generating major economic and social problems of the modern society. Among them first of all are the loss of democracy and personal freedom; consolidation in society of the mechanisms of coercion; over-bureaucratization; state domination in society; economic and social dependence of businesses and private individuals upon the State; permanently accelerating inefficiency of an enormous public sector, which is significantly influencing inefficiency of the private one; over-regulation and often absurd laws and regulations; inadequate and lent economic development; persistent loss of economic and social competition, etc.


Social parasitism is a phenomenon, which is more and more consuming modern society. Once it has already destroyed communism and now is threatening to the modern socialist countries.


Today, the manifestations of social parasitism are rather comprehensive and also rather alarming for every impartial observer. Social parasitism in its simplicity is very far from being merely a redistribution of income in favor of the vulnerable parts of population. Besides rather exaggerated, mostly unjustifiable and cumbersome “social protection”, social parasitism equally embraces a huge redistribution of income in favor of the top level state bureaucracy, income redistribution for business support and business promotion, employment related redistribution of income (including welfare, unemployment benefits, minimal salaries, redundancy payments, etc.) and even international redistribution of income to foreign countries through intermediary of international aid. Usually people are associating social parasitism with massive social benefits (pensions, education, social security, health care, unemployment benefits, etc.) dominating modern economically developed society. However, rising social payments and economic problems of the State in serving them represent only a tip of the iceberg, which is creating certain economic inconveniencies on the background of much harsher social problems such as:


1. Growing corporate and business dependence upon the State regulation, upon “public” procurement and upon particular public officials. Instead of serving the market and the people, business is increasingly serving particular politicians and state bureaucrats as well as the entire state machine. Extraordinary income redistribution through the State is critically enforcing interests connected with the state expenditures and simultaneously stimulates a permanently rising inefficiency of the State, of the public and private sectors.


2. Financial, moral and ideological dependence of academics, media and other public opinion makers upon the state funding, state subsidies and state regulations is critically limiting a freedom of expression. People are becoming progressively dependent upon the State - universities, academics and non-governmental organizations being tied up by State grants, funds, subsidies and procurement of expertise, corporations - by the State orders and bureaucratic regulations, media by imposed upon society idealistic departed from any realities views, which are restraining both adequate apprehensions of reality and rational public opinion, etc. Freedom of expression is very much undermined by the elevated state domination in society (including by financial domination), while under the overall limitation of freedom it is only a matter of time for the visible limitations of democracy to come. So far economically developed countries are closer to democracy in general understanding than to the dictatorship, but first of all there is no any unambiguous qualitative difference between the two social systems – the difference is rather quantitative in terms of how much of the state control over people, property and society we’ve got from one side and the State got from the other. On the other hand, the authoritarian vector in modern socialist society is sufficiently persistent and is furthermore promoted by co-interested (first of all, financially co-interested) political elites and by the massive income redistribution through the State.


3. Immense over-regulation of economy is leading to a constant loss of economic freedom. While economic freedom is one hundred percent correlated with the personal freedom; moreover it is only the economic freedom what generates political freedom and absolutely nothing else. No economic freedom - no personal freedom; less economic freedom - less personal freedom.


4. Socialist ideas dominating modern society serve as an important tool for preservation and acceleration of the coercive income redistribution and of the immanent to it inefficiency. They also serve as a fundamental promoter for misunderstanding of social realities or for social idealism consequentially further enforcing both social parasitism and social mendacity in our society.


5. All these developments are totally in favor of the State and of the top-level state bureaucracy, which under different slogans, banners and other ideological fetishes are promoting their own egocentric and non-socialized financial interests. These interests shifting a balance of power in society in favor of the top level state bureaucracy are leading to an accelerating personal dependence upon the State, to the deterioration of personal freedom and to cosmetic democracy. Further evolution of this tendency is threatening with an authoritarian regime or worth than that - with violent social counteraction.


Even though certain income redistribution is probably unavoidable, the problem stands in the fact that unfortunately there is no end to this process. Socialist democracy based on the universal suffrage is not only escalating income redistribution, but what is far more deficient for any societal construction – it is also escalating and accelerating the involvement in society of the mechanisms of power and coercion. In the short, medium and long-term perspective under the representative democracy there are no any comprehensive social instruments capable to limit income redistribution supported by the two fundamental social pressures. First one stands in that the poorer people (not just “poor”) being always in a majority, are eager to take away infinitely something from the richer ones. And second one stands in that the interests of the State and of the top-level state bureaucracy are always backing up the higher state expenditures and therefore more income redistribution as well. Single tool, we are having today in order to fight social parasitism is the competition between the states and societal systems, which is depriving inefficient states and social constructions from the very right on existence. Unfortunately, as we have seen already, this tool is very far from being perfect. On the other hand, with the emergence of various supra-national state entities, it might be further damaged by the emerging possibilities to cover up the state inefficiency by the colossal commercial and negotiation power of these inefficient states on the international arena.


Social parasitism persistent in the modern economically developed countries is harmful not only for them, but is even more destructive for the developing societies. Underdeveloped countries are doomed to orient on the very same socialist values and, first of all, on the very same socialist democracy of economically developed countries. These values are only further accelerating the already extraordinary state domination in the developing societies and are critically limiting these countries’ development capacities destroying them in the short, medium and long-term perspective.


Social parasitism is very difficult to reverse under any circumstances, never ever has it been reversed in the previous history of mankind.


There are three fundamental reasons for that:

1.      Poorer people are always eager to vote in a way, which allows them to get something from the richer ones and there is no end to this process under the representative democracy especially when people are getting taste for it covered by pervert social justification

2.      People and moreover people in power (top-level state bureaucracy) are never giving up voluntarily without a fight once acquired benefits and positions. Such fight is becoming tougher and tougher with every penny added to income redistribution through the State. To fight benefits and privileges of the state bureaucracy is also problematic because people in power are the “socially strongest” individuals (one has to be strong enough in order to get into significantly closed power circles) from whom it is very difficult to usurp any piece of their power and any part of their income.

3.      Unsustainable social idealism dominating modern economically developed countries based on excessive income redistribution produces a lot of impediments for thorough apprehension of the societal and political realities and makes people think that somebody else except for the socially strong individuals is lucratively benefiting from the monstrosity of income redistributions.


Social idealism represents yet another quite fascinating, sufficiently attractive and enormously dangerous social phenomenon. Besides misapprehension of social realities, social idealism also implies attributing a decisive role in societal processes to certain elements of social infrastructure such as moral values, law, public opinion etc. Such an approach can be very appealing to different people and social groups. People, especially in economically developed countries, love to advance their attractive and mild homemade moral environment on economics, politics and society. From one side, it seems nice to them to build or to reshuffle various social phenomena as well as social processes according to the principles of general morality. From the other side, there is a significant danger in doing that. We can never be sure that our moral principles are "good" in reality. What seems nice and appropriate thing today might look rather repulsive tomorrow. For example, slavery was once a common part of the ancient Roman society almost never questioned, but rather vice a versa always favored by Roman morality. Yet today we would probably be very much offended if somebody will stand up in the favor of slavery. Not even saying that different people and social groups are having rather different, often contradictory to each other, while sometimes even opposite and mutually exclusive moral principles and values.  The problem with society is not only that nothing is determined by the idealistic moral perceptions, but vice a versa all those moral perceptions are based exclusively upon the rough and tough materialistic assumptions. Making very complicated things easier - the richer is society the more just and more moral it is. Poor societies are generally unjust and immoral – not because they are poor, but because most of the time they are having or used to have pervert social or societal systems based on excessive power of the mechanisms of coercion and because of those systems they are poor.


Another part of social infrastructure, which often seems as would be determinative of social or societal realities, is the law. There is no denial of the importance of law, first of all, because denunciation or violation of legal system might bring along even more repugnant social construction not even speaking about violence and wars. However, overall, law just like any other part of social infrastructure is always covering up exclusive rights of particular individuals and, first of all, their exclusive based on the mechanisms of power and coercion income appropriation opportunities. This was the case in ancient Rome when law protected slave-owners against slaves, it was the case in medieval society when law protected barons and land aristocracy against peasantry and other working population, it was the case under communism when law protected exclusive property rights of the top State dictators upon the entire state property and upon people’s lives, it was the case in nazi Germany when law protected we all know what, and it is still the case in our modern society when the law is covering up and protecting state domination and massive income redistributions, expropriations and appropriations by the State and top-level state bureaucracy. Law is merely a tool for the preservation of a particular type of societal system, while societal systems are always imperfect just as any laws or legal systems. Law always reflects and protects injustice and inefficiency of a current societal system. It does not create any social construction or any global rules for that matter - it is merely marking down on paper a balance of power existing in society whatever intolerable or unfair that balance might be. If law does not reflect a balance of power or if it is not based on property relations, it is becoming non-operational right away. Those who have studied developing societies are probably familiar with a quite common phenomenon when almost perfect laws in their wording are not working simply because they do not reflect the balance of power in that particular society.


Principal foundation of social idealism is, of course, high material standards of living or a wealth of the modern economically developed countries. Besides that, social idealism is having two important artificial causes. First one is connected with a simple fact that people always fancy to see their society as more idealistic, more attractive, more human and friendlier. However, any society is good and becoming better with the time not because people are becoming better, but only because society is becoming wealthier, while people are becoming richer. Only because people and society are becoming wealthier, people are becoming "better" and society is becoming fairer. If one day all our financial foundation will disappear owing to some natural or social cataclysm, all the present day morality will disappear right away as it happened quite recently in the former Soviet Union. Second artificial cause for social idealism is coming from the people who are benefiting from this idealism - mainly from the top-level State bureaucracy, which is very much profiting from the affiliated with social idealism additional financial resources or from the transferred taxpayers’ money for idealistic and normally futile social programs. Such programs overall represent not only economic waste but also the waste in terms of general morality since with this money invested in productive business activities, in employment, society would become richer and therefore also more just and fairer.


Both phenomena explained here are extremely dangerous taken separately and much more than twice as dangerous taken together. Taken together social parasitism and social idealism are making people to fight for the wrong social principles. People’s energy and good intentions are not merely being wasted but in fact they generate the obstacles and barriers on the way of economic development and social evolution such as state domination, over-regulation, income redistribution, etc. All those represent a significant regress and degradation of the economic and social relations. Unfortunately even much worse than that - social parasitism and social idealism are not only constantly and progressively undermining personal freedom, but are also discrediting democracy and pushing for the authoritarian ruling and totalitarian dictatorship.


Social parasitism as well as wrong apprehension of social realities can be neither justified nor tolerated.



Few words on the nature of taxation


People are getting so used to taxes, that questions on the nature and fairness of taxation as such or of the phenomenon of taxation overall arise quite rare. At most people are arguing about a level of taxation or about a nature of the recently introduced taxes. Arguing about taxation generally does not seem to do any good since as far as we have no any viable alternative to the State, we have to support it somehow, even though it may not be a very efficient or not even a very socialized social institution, but rather a single source of power and coercion in the modern world and a monopolistic agent with exclusive social and property rights.


Overall any taxation must produce at least several straightforward reservations what concerns its volume, fairness and even legitimacy such as

1.      What from the point of view of societal and economic justice and even from the point of view of general morality is allowing to expropriate people's income (or what is the same - people's property) and to redistribute it to the other people? Where is a justification for that? Such an action seems to be very close to an act of robbery and in its nature merely represents a primitive forcible expropriation. Law is a very poor argument here. Mainly because law does not explain and does not introduce anything in society - it is merely marking down on paper existing in society social realities or an existing balance of power. Much more interesting is what societal realities and which social processes are allowing unpunishable expropriation of people's income and of people's property.

2.      Why do we tend to redistribute financial resources from the most efficient private proprietors to the least efficient, based exclusively on coercion, always non-socialized and the single gigantic monopoly in the modern world – to the State?

3.      Where is the end to this process if at all? How to stop such redistribution as almost every year governments and States invent and impose a handful of new taxes, fees, payments and fines as well as raise the already existing ones while people are always voting for all that?

4.      How is it possible to make people absolutely resilient to their own interests and to "robotize" them to such a degree that they would be glad to give up parts of their income? How people being completely sane are eager to vote against their own interests? There are must be much more profound and concealed interests involved, which are playing here a major role.


In order to bring at least some clarity to an issue of why do we have taxation and why do we have it permanently growing, we must understand what interests or vice a versa what types of a misapprehension of private interests are allowing and stimulating taxation in modern society. Overall four basic types of such interests driving up the phenomenon of taxation can be identified.


1. Major promoter and major beneficiary of income redistribution in modern society is the top-level state bureaucracy. Basically a single interest of top-level state bureaucracy in the State is the existing opportunities to appropriate an extra-natural (non-market) income connected with the state monopoly. Otherwise, business or entrepreneurial activity would probably be more profitable for them. Nature of the income of top-level state bureaucracy is rather simple - if we take all tax collections as state revenues and deduct all the state expenditures associated with income redistribution and with the provision of the state or “public” services - leftovers, which might be considered as the state profit or the state income, are appropriated by the top-level state bureaucracy in a large variety of ways. Those ways in fact are rather complicated and deserve a special separate analysis, however, for a simple demonstration we will name first of all salaries and monetary bonuses related to performance of various State functions; office related benefits such as luxurious transportation (cars, traveling, etc.), office premises, dining and wining, social events; employment opportunities for friends and relatives; opportunities for promotion of affiliated organizations and political parties; political, social and economic influence including contracting influence and bargaining power; after-the-office benefits and possibilities; information transferable in financial gains, for example on stock exchange; and so on and on. Big idea, however, just like with any other corporation stands in the fact that in order to get more profits one must generate more revenues and in case of the State it is only possible through an additional taxation. The nature of business of the top-level state bureaucracy stands in the justification of current and additional state spending as well as in the justification of affiliated to these expenditures current and additional state functions, tasks and programs


2. Poor and middle-income people are always eager to get or to redistribute any additional income from the more affluent or from rich people. And since those who consider themselves to be "poor" or "poorer" (or simply poor and middle-income people) and who envy to enlarge their income are always in majority - it is very difficult or much rather it is quite impossible to counteract such interests under the "one man - one vote" electoral system.


3. Owing to a substantial rise in the standards of living in modern world as well as to a substantial rise in associated with such standards level of comfort from one side as well as owing to a widespread of the socialist policies and ideas dominating modern economically developed countries from the other, human nature is becoming weaker, softer, more gentle and more eager to rely on various types of assured social support and social guarantees further pushing and pulling taxation, socialism and state domination in society.


4. Unsustainable idealism of the "middle classes", which are humbly subordinating themselves and the entire society to coercively imposed generosity, generating in this way a line of societal deficiencies rather negative not only for themselves, but also for society as a whole. If somebody wants to help other people - it is much more preferably to do so on one’s own within the market environment through a large variety of charities and without the coercive and forcible involvement in this process of the other people against their will as well as without general application of the instruments of coercion for the purpose of generosity. Otherwise what kind of generosity is that?


Taxation is not an isolated social phenomenon - it is actually inseparable from a much more profound and influential social phenomenon - the State. What determines the entire nature of taxation is that taxation represents a major, if not a single, source of the state revenues in modern society. Taxation is not very pleasant in itself, but its main deficiency stands in the associated generation of certain negative and even disastrous societal consequences, every one of which worth a special separate consideration. Additional problem with taxation stands not only in that it stimulates all those negative consequences, but also that all those consequences in their turn are further on promoting an even higher taxation. We are actually trapped by an endless circle of negative cause-and-effect relationships such as

1.      Coercive or forcible expropriation of income and property, which is the most uncivilized angle of taxation.

2.      State domination in society - when more taxes means more State, more state interference  and more of the state dictate in society up to a dangerous point on the edge of democracy and dictatorship

3.      Social parasitism or living on unearned income on account of the forcible expropriation of income and property.

4.      Social idealism or inadequate and false apprehension of social realities, which is based upon a variety of societal factors, high taxation being among the most important ones

5.      Exchange of the efficient private investments for the wasteful state consumption

6.      Tax discrimination coming from progressive taxation, when those who work harder and more - also pay heavily, while those who work less or do not work at all are vice a versa receiving the money from the State.


Another interesting subject for inquiry, analysis and investigation represent the taxation systems or the mode in which taxes are collected in modern world and in historical retrospective as well as the potential prospective systems of tax collection. Any taxation system we have just like almost anything in society is not a matter of reason and rational. Any taxation system is rather a matter of the balance of power existing in particular society. So far the dominating worldwide ever growing progressive taxation accompanied by a huge variety of indirect taxes, state charges, penalties and fees is almost the least efficient and the most damaging for property and societal relations amongst everything we can imagine it can only mean one thing - for the time being people are heavily loosing a power battle to the State. At least five taxation systems in order of their preference in terms of societal justice and economic efficiency can be proposed for investigation

1.      Modern progressive taxation accompanied by a large variety of the indirect taxes, charges, penalties and fees - the most inefficient, unfair and discriminative system threatening with unlimited and uncontrollable escalation of income expropriations as well as of the state domination in society up to a dangerous point on the edge between dictatorship and democracy.

2.      Flat rate income tax - fixed non-progressive percentage levied from every person regardless of the level of income and preferably without any tax exemptions. For example fixed 10% personal income tax rate withheld from every single person regardless of an individual income. Richer people are paying more than poorer (because their income is higher), but not progressively more.

3.      Flat rate related to the indirect taxation without collection of the income taxes. Better than previous options because of a restrained discrimination in taxation, but mainly because of a limited coercion applied for tax collection purposes under the indirect taxation. Richer people are still paying more (because they are buying more) than poorer.

4.      Lump-sum taxation - a fixed amount of money paid by everybody expressed in absolute figures rather than in a percentage level and levied from every person in society regardless of the level of income. For example – one hundred dollars from every single individual. This is quite a way to stop the social parasitism, which is one of the main factors promoting permanently rising levels of taxation and permanently mounting state domination in society. Lump-sum taxation is completely undermining the reasons for poorer parts of population to vote for higher taxation and vice a versa is significantly turning them against any taxation at all. Rich and poor people are paying equally. Tax equality prevails and there is no any tax discrimination. After all people are using public services predominantly on equal basis and it is not clear at all why some people have to pay more for the same services while other people have to pay less

5.      Voluntary contributions or charity donations to the State without any coercive taxation and similar to the mode of financing of non-governmental or non-profit organizations. State has to engage in a free-market competition with non-profit organizations for scarce financial resources. Extraordinary way for elimination of the State coercion and therefore also a huge step towards complete annihilation of the state monopoly.


Such a noble task as searching for alternatives to the taxation per se and to the State in its current form generally is very far from being on agenda of the social science and moreover so of the social practice. One of the main reasons for that would probably be a general disbelief in existence of any alternatives enforced and imposed by the State and ideology. However, a demand for alternative options might be escalating enormously already in the nearest future because in many instances we are now on the edge of how much of the State we can take. At least the following guidelines might be proposed for further research and investigation on how to erase the State or at least the state monopoly from our lives.


1. Essential limitation of the state functions, state expenditures and state budgets. Ideal target for the state expenditures for the time being might be established at around 10% of GDP. Even this moderate initial target is quite distanced from the current societal realities when in the vast majority of economically developed countries this indicator is being around 50% and sometimes even more.


2. Potentially total elimination of the state financing based on direct taxation, which is heavily relying on abusive state controls and on more state interference and coercion.


3. Employing private sector operators and business service providers to perform specific state or governmental tasks and competencies as well as the overall state management functions aiming at diminishing the number and restraining “public” services as such


4. Investigation of the ways to further enhance the competition between States and societal systems all over the world aiming at undermining of the state monopoly on particular territory. To reinstate that global competition is the second important after the social counteraction tool, which is diminishing an otherwise drastic influence of the State under democracy upon our society 


5. Comprehensive inquiry into further development of regional and local autonomy or even of a wide-scale federalization of the national States where conditions allow. Particularly worthwhile is the examination of a general transfer of taxes as well as of the majority of state functions (including income redistribution) primarily to regional administrations aiming at acceleration of the interstate and interregional competition between regulatory institutions and simultaneously at the dissolution of the state monopoly.


6. Terms limitations for absolutely all positions within the top-level state bureaucracy and of the representatives as well as the terms limitations for every single individual to be employed as a top-level public official in legislature, government and judiciary similarly to the two terms limit for the presidency.


7. Introduction of the other State’s ruling on particular territory in order to exchange national governance with more efficient one of the other State (of course based on the referendum or on the strict constitutional procedure). This dimension might be particularly worthwhile in the case of developing countries in order to make the State to emigrate, not the people and capital.


8. Analysis and reassessment of a social value of property census bearing in mind that management of the state property is almost the only thing what State is all about. Even power and coercion are merely the tools for management of the state property and state revenues. All other visions of the nature of state are mainly brought in by the unsustainable emotional appeal and by the associated with the State non-socialized social ideologies. Only a lack of the exclusive property rights based on power and coercion as well as a profound respect for property rights, which is impossible under the representative democracy with its enormous income redistribution, can bring along a complete realization of the personal freedom and of the societal justice. The State is just another conventional commercial enterprise, which from the point of view of political economy, serves (as any other enterprise) in order to sell something and to get money from the customers (people in this case) and to distribute money to its real proprietors (top level state bureaucracy) after all expenses are paid. If this is so - why not to let the main customers to determine how many services do they want to buy or whether they want to buy them at all and how much they are willing to pay for those. This is about a single recipe in order to diminish extraordinary and inefficient state expenditures bearing in mind that the State is also a monopolistic commercial enterprise based on power and coercion. Probably property census in our modern realities is not entirely relevant and for reflections and deliberations should be exchanged for the income census democracy since it is mainly the income what is being expropriated by the State. More income, more taxes paid, bigger contribution to the state enterprise - more votes on the price of the State services and on the management of the state property; less income, less taxes paid, smaller contribution to the state budget - less votes. Only in this way the state property will start to acquire at least a somewhat “public” character and will cease to be private machinery for the extortions in favor of the top-level state bureaucracy when people are unable to control either state property or income redistribution through the State. Certainly the nature, the threats and potential negative influences (if any) and the social value (if at all) of the income census democracy yet have to be examined in a much more detailed way. Particularly worth consideration how income census might shift a balance of power in society and whether it is not a threat to the personal freedom or rather whether it is not a bigger threat for personal freedom than the permanently accelerating state domination in society under the representative democracy.


Taxation systems here identified as well as the general guidelines for eradication of the state monopoly proposed herewith are rather basic and in no way pretend to be exclusive, comprehensive, while sometimes even very realistic for the time being. To reiterate, however, once again that it should be, there are and always will be ways to manage our societal affairs with as little state involvement as it is only possible and one day may be even entirely without the State in its current form and understanding. Their investigation is quite a long-term and labor-intensive process, which, nevertheless, will pay back enormously because the taxes being collected by the modern States are already on the edge of political and social tolerance, while the inefficiency, corruption, economic waste, injustice and a risk of comprehensive social cataclysms caused by our tax collections are beyond any comprehension.


Our Society and Social Robbery

Under a simple “robbery” we normally understand forcible expropriation of people’s belongings based on application of some kind of force or strength. Under the “social robbery” we can only mean forcible expropriation of people’s property (income) based on application of the social mechanisms of power and coercion.

Existing throughout the entire human history in a variety of forms, social robbery gains sufficiently solid grounds under the modern representative democracy combined with the modern socialism of economically developed nations. Of course, there are different rational ways to explain and to justify a perseverance of social expropriations both in our modern society and in any historical retrospective. However, the problem with society is that the reason never being a driving force of societal processes based on power and coercion and underlined by material interests of self-interest oriented human beings in the best case can serve as a more or less influential ideological tool. It is hardly a lucrative exercise to strive for a reason in society trying to introduce particular social norms and to implement particular social ideals since society is not about logic and reason, but only about interests, power and coercion. Society is merely a social marketplace where people endeavor to promote their interests relying on the mechanisms of power and coercion. Their socialized interests, people are promoting at the economic marketplace. Essential foundation of the social interests in any historical retrospective or what social interests are all about is the reallocation of resources from certain people or from certain groups of people to certain other people or to certain other groups of people – reallocation based on social expropriations. There is no any other meaning of the word “social” just as there is nothing else about any state policy. No matter how ardently we support any policy, we cannot implement it without certain financial resources and we will always prefer if somebody else will be paying for it. On the other hand, we will support any inefficient and even dubious policy, which is providing us personally with the additional financial resources. This is rather straightforward since average self-interest oriented human being much more prefers his own welfare to any “public” interest whatever that is.

Social robbery is only possible through the last instance of power and coercion – the State. State is having sufficiently pragmatic, private and rather simple interests in any social expropriations and reallocation of resources - interests, which social infrastructure is always trying to hide with an utmost vigor. Real true proprietors of any State – dictators (under dictatorship) and top-level State bureaucracy including representatives (under democracy) – do not have any other ways of earning a living except to expropriate money from the people. They just cannot live without our money - it is the only way how they can exist and the only way how they can brainwash us. They are desperately in need to undertake and to consolidate brainwashing and propaganda; otherwise sane people will hardly ever contemplate giving up some serious resources to devastatingly inefficient social institutions. It is rather hard, exhausting and not too profitable to earn the money at the economic marketplace; much easier is to expropriate them - that is what top level State bureaucracy is built upon starting from the ancient civilizations and up until today.

After all, the State is a conventional commercial enterprise, which single source of revenue is coercion, with its real tangible proprietors (top-level State bureaucracy and representatives), whose single objective is to extract as much money from the people for their own personal consumption as it is only possible under the circumstances.

Nature of the State confiscations is very simple. Money is being expropriated from the people through coercive taxation and is redistributed to representatives and top-level State bureaucracy in a large variety of ways. Equally clear and simple is the nature of social expropriations associated with the representative democracy. “One man – one vote” means nothing else as reallocation of wealth from the richer minority to poorer majority – a clear-cut recipe for the socialist and communist organization of society – “expropriate and redistribute”. Poorer (not just “poor”) people, being all the time in a majority, naturally are always inclined to vote for the socialist policies of income redistribution in their favor. In modern world, such policies are often coming also from the conservative parties seeking not just a cheap popularity, but their own survival by appealing to the majority rather than to a small minority. In the long run there is no end or not even one single social or political limitation for all that. Moreover, that social robbery is always supported by a thorough brainwashing of the people – brainwashing leading to a devastating social idealism, which is both stimulating property confiscations and simultaneously reducing people’s abilities for social counteraction to such confiscations. In the short run there are generally two factors, which are opposing while sometimes are even slowing down a growth of the state expenditures or escalation of social expropriations in our society:


1.  First one is a purely internal or domestic factor – reason and indignation against all-embracing corruption, inefficiency and absurdity of social realities. Reason produces a social counteraction to the State. However, this factor is being weakened by a fundamental solid opposition - majority of people are actually co-interested in higher income expropriations from the richer people and in income redistributions in their favor – co-interested with the strongest type of human interest – the material one. Unfortunately, people are easily selling the reason for adequate social justification.


2.  Second factor is an external or global one – competition including economic competition between the States and societal systems. This factor probably is a somewhat stronger than the first one. Still it is too fragile in order to interfere with the general trend underlined by the interests of majority in income redistributions and by the interests of powerful State bureaucracies in higher State revenues. Besides, a fundamental impediment for external factor is that today socialist values, extraordinary State revenues and enormous income redistributions are dominating all economically developed countries and there are no any alternatives left in those countries around the globe.  On the other hand, social and economic competition with the developing countries is rather weak, because their economic and political power (one needs political power badly in the modern world built on coercive socialist ideas) as well as internationalization of the vast majority of the developing economies is not yet significant. Not to mention, that socialist values are equally penetrating and embracing developing countries under a strong pressure of economically developed nations. Emerging and consolidating economies of the new “economic dragons” together with a progressing economic prosperity and under a pressure of representative democracy are normally elevating State revenues and income redistribution up to the levels rather close to those of economically developed countries. Even less of global competition is being left thanks to an emergence of the colossal supra-state entities, which are introducing even more coercion globally as well as further advancing international lobbying are leaving less and less space for the free markets and for the free economy.

May be it wouldn't be anything wrong with social welfare, with social protection, with income redistribution as well as with all those noble intentions attached to them by common people if not for the three inherent fundamental deficiencies of this entire process.

1.  Social welfare, on the contrary to economic one, is built on the mechanisms of power and coercion as well as on forcible expropriation of other people's property - expropriation very close in its nature to a conventional robbery. 

2.  Since society is not about reason and rational, but about interests and power, there are always non-socialized interests around, which do everything possible in order to profit from any good intentions and to extort as much money from the people for their own personal consumption as it is only possible. Much worse is if those interests and those people are controlling the mechanisms of power and coercion. They will vigorously endeavor to convince us that not only such extortions are legitimate, noble, just and absolutely necessary, but also that an opposite way of seeing things is selfish, dishonorable, extravagant and immoral.

3.  Since there are no any limits for human wants and desires and since wants of majority under the representative democracy are sooner or later materializing through a political voting - there are no any political and societal limits whatsoever for a permanent growth of income redistribution.


Nature of the social expropriations associated with representative democracy is also rather straightforward. Money are being expropriated from the people through coercive taxation and redistributed to other people with a systemic inefficiency and economic waste (coming from implication in this process of the most inefficient social and economic agent ever - the State); with an ideological brainwashing of the entire population (otherwise it is rather difficult to expropriate money from the sane people); with an accelerating social parasitism, corruption, social mendacity and State domination in society and with the associated redistribution of a significant part of this money to the State bureaucracy. 


The most interesting part starts, however, when the two types of social expropriations, associated with the State and with representative democracy, are being combined. Even though in reality of course they are always combined under the representative democracy. Here comes a real supremacy of irrationality. All people are being expropriated in favor of the top level State bureaucracy (the nature of State), but on top of that more or less affluent people are being expropriated both in favor of the State bureaucracy and in favor of poorer people (the nature of representative democracy). Unfortunately, these two types of social robbery form the nature of our modern society. Because of the comprehensive social robbery, our society embraces more and more of mendacity, hypocrisy, corruption and social parasitism – or what is basically the same embraces more and more of socialism. 


It is rather difficult to hide social robbery under any circumstances. Normally social expropriations are affiliated with the comprehensive and very expensive cover up mechanisms, which are simultaneously producing social mendacity and hypocrisy in society. And the larger are social expropriations – the higher is the domination of mendacity and hypocrisy until one day nothing else except mendacity is being left. If people can tolerate social expropriations for fairly long time - natural societal laws hardly tolerate them at all. They are never buying pervert social justifications invented in non-socialized interests based on power and coercion and are destroying societies built on social robbery.


Corruption is a synonym of the State. Illegal corruption being quite an insignificant part of the general phenomenon of corruption represents only a tip of an iceberg. Iceberg itself is being formed from the perfectly legal, but unjust and inefficient social and property relations. A vivid example of such kind of relations is slavery in ancient Rome, which was perfectly legal those days, though unjust and inefficient. Unfair and inefficient property relations are not so easy to maintain and normally they are rather obvious and straightforward. Unfortunately, there are also two important ways to prolong their existence. First one is power and coercion, which are associated with the State in the last instance. Second is ideological brainwashing of the people, which is always accompanied by the domination of mendacity and hypocrisy in society.


Parasitism is a synonym of the representative democracy. Obviously a real legal opportunity to benefit on account of the other people supported by an adequate social justification sounds very attractive. It is much easier to redistribute money than to earn them. Today it is considered almost as a social obligation or as a political correctness to vote for more income redistribution. Social parasitism and social robbery come hand in hand together not merely as a single act or a deed, but even in their philosophical nature. Both of them are being fundamentally supported and extensively promoted by the top-level State bureaucracy, by our politicians. These two phenomena are allowing them to extort much more money from the people for their own personal consumption, for the departmental budgets and expenses, for more and more comprehensive competencies, tasks, programs and responsibilities. Unfortunately, unrestrained social expropriations, unless reversed (which is most unlikely), will unavoidably end with a total social degradation and economic collapse of our society just like they recently ended in the former communist countries.


Socialism is the name and the nature of modern society. Socialism is both a theoretical and a practical absurdity. Not merely because all socialist answers to any social problems are reduced to the primitive "expropriate and redistribute", not merely because socialism is built exclusively on coercion and therefore is absolutely unjust and inefficient social construction, not even because socialism is being associated with the word "incapacity" in all the senses and in application to all its promoters (and first of all to the top-level state bureaucracy and representatives), but fundamentally because of the straightforward division line, which is separating forcible robbery from any decent type of occupation.

Society based on coercive extortion of money and on social parasitism is having a rather imaginary and illusory apprehension of social realities. Simply put people are rather living in dreams and in fairy tales than in the real world just like they did in the former Soviet Union. Everything seems nice and romantic until one day it starts to fall apart. Coercive confiscation of resources no matter how resourcefully it is being disguised, in reality remains to be only coercive expropriation, while social parasitism no matter how coherently it is justified remains to be only an uninspiring coercive living on account of the other people.

People back in Soviet Union were also considering their country and their society as the most democratic, fairest and socially harmonized based on total equality. All of which turned out to be merely one big bubble of lie sold by the State and state ideologists to the people and blown away in no time together with the underlying it social order, nation, country and patriotism. To note that back then in Soviet Union ideologically were dominating the very same kind of values we treasure today – equality, multiculturalism, social cohesion, climate and environment, resilience, gender equality, democracy, peace, stability, prosperity, employment, etc. – may be they were merely called slightly different. They all were reduced to an ideological illusion after a while being abused by the State and by the elites in the very same way they are being abused and reduced our days in our socialist societies.

Inadequate nature of the modern economically developed society is having quite a negative influence upon the developing countries, stimulating and disseminating social robbery all over the world. State dictate in underdeveloped societies is enormous even without the interference of the economically developed ones – a lot of these countries only recently got rid of the communist and other authoritarian regimes. And what can economically develop countries propose to them under all the development policies – only the return to totalitarian dictatorship if not to communism - through political and financial support of the repulsive political regimes, through consolidation of the State, through encouragement of income redistributions, through social idealism – all that these countries barely started to loose and now they are doomed to take them back. 

Unfortunately, today economically developed countries do not know anything else and cannot teach anything else except the socialism, social parasitism and the state domination in society based on the state coercion



The State


Today it is considered offensive to say in literature or in public something unpleasant about the State as such or about the governance system of representative democracy as a whole. Has the State become that good? Or has it rather succeeded in its propaganda? Real true nature of the State has not changed at all and is not better now than it was in 3000 BC, in 14th century or in 1930-1945 in Germany and Russia. In our days the State may be suppressed to a certain point in manifestations of its power and coercive capacities. In 19th century it was seriously loosing a power battle to the people, but our days it is back and is armed with unimaginable ever before state revenues. From the point of view of social and property relations or from the point of view of political economy, the State represents merely another economic agent with its own egocentric interests – interests based on power, coercion and exclusive rights. State is a conventional commercial enterprise designed to expropriate money from the people and to divide them among the top-level state bureaucracy after all the expenditures are paid. In Marxian phraseology, the State is a political mean for economic exploitation of the entire population by the top-level state bureaucracy. Under no circumstances the State is designed to regulate property relations or to maintain an adequate property regime. It is a dream, a fantasy or a fairy tale that the State by itself, by its nature, by associated social and property relations may serve as an economic or social arbiter. Only if the State is annihilated, diminished, despised and conquered by the people only then it is more or less starting to perform certain externally and artificially imposed functions to one or another degree of efficiency. Otherwise, the State is always eager to expropriate and to neglect any kind of property. Only people's counteraction to the State is not allowing it to destroy and to expropriate anything and everything in society. State as a final expression of power and coercion is not bound to create any rules or any laws except for a complete totalitarian dictatorship or the communism. Rules and laws is an artificial or external function to the real true State's nature – function imposed by the people.


Modern society, whether we want it or not, is moving yet slowly and gradually but permanently and persistently towards a general sociality logical or absurd end of which is the communism, although it does not mean that at the end of the way we are definitely doomed to reach it once again. State is very much pushing people and modern society in that direction, because governments and state bureaucracies always envy bigger state budgets, more state competencies and more State overall. Communism is a logical end of this process since “total State” is exactly what communism is all about, while “more State” is what socialism is all about. So far quite a rapid boost of personal incomes and a permanently growing level of comfort available to a particular modern human being, especially in economically developed countries, are concealing the entire societal inefficiency and injustice. If evolutionary or willingly humanity is more and more turning towards the different models of socialism and if counteraction to that seems to be diminishing, then we must have at least some impartial understanding of the main economic agent of today and may be of a single economic proprietor of tomorrow – the State. Today we are persuaded to believe that there are some spheres of activity which are better done through "public" control because of their “natural” character and “economies of scale”, tomorrow we will be persuaded to believe that all the other types of activities are better done by the State. We must understand what State actually can and is doing and what interests are underlying its each and every action.


Rephrasing Oliver Cromwell’s “England is not a king and king is not an England” and Murray Rothbard’s “we are not the government; the government is not us" – the State is not the people and people are not the State. It is not even the rephrasing but rather a generalization of the very same ideas. It does not matter what kind of State we have in mind - democracy, dictatorship, communist or otherwise. Interests of the State and, first of all, material interests in income appropriation of the associated with the State social groups are not the interests of the people. Vice a versa those interests always had, always are and always will be counteracting each other. Only a permanent confrontation with the State, which took humanity more than ten thousand years, has procreated the modern system of power and property, which sometimes seems so perfect. If this confrontation will diminish (what is happening now) while economic and social power of the State will still be growing (what is also happening now) - the outcomes are terribly predictable.


Modern society, both in economically developed and in underdeveloped countries, is getting more and more corrupted by the State. We are not interested here in the well-known illegal or out-of-law corruption, which is merely a consequence of the legal one. We mean perfectly in-law corruption or corruption within the system of social and property relations brought up by the existence of exclusive social and property rights – perfectly legal but unfair and inefficient. Law being merely another element of social infrastructure is only marking down on paper a balance of power achieved at certain point in time within an overall process of social counteraction. But, under no circumstances, the law is ever establishing the property relations or the property regimes. Perhaps the in-law corruption is better than revolutions, civil wars, class battles and other types of violent social counteraction. But State revenues do not come from nowhere and created by them “social’ seduction, which is “un-socializing” people and social groups yet needs to be explored. While the line between how much inefficiency and corruption society can take and how much it cannot is rather invisible and easily crossable at the point of no return without any explicative and warning signs and clarifications under way. May be the social welfare and social protection are generating a feeling of the social security and by doing that it is allowing people to apply their talents in more productive and efficient way. But the enormous social (based on power and coercion) benefits and massive income redistribution are making a lot of people socially, economically and politically dependent upon the state. What is even worse - the representative democracy and associated with it elevated levels of income redistribution is permanently expanding an implication in society of the mechanisms of power and coercion. May be humanity is becoming wealthier and more democratic with every year and a little bit of inefficient and unfair income redistribution together with inappropriate income appropriation cannot damage our society too much. But how much is that "little bit" and where is the limit when it is still "a little bit" before it is transforming into "a lot". The same way of judgment probably is applicable to the ancient Rome. It also saw itself as established forever. However, first it lost its democracy and then vanished due to the inefficient property relations, in-law and out-of-law corruption. Soviet Union was also not the poorest country in the world. The same goes for France in 1789 and England in 1641 – even economic prosperity is not yet a full-fledged guarantee for the survival of any society or of any civilization. We can only hope that our modern system of social and property relations, which so far exists for a much shorter period of time than the Roman one did, will not get that bad.


Subjectivism or partiality in our apprehension of society is basically having two foundations. First one is purely and literally innocent. Some people would love to see our society and mankind looking good, non-materialistic and unselfish. They are lying not to other people, but to themselves. However, we should not lie to ourselves, it is even worse than lying to the others. If somebody is lying only to the other people, sooner or later these people will understand that one is lying, but it is much more difficult to discover a lie if lying to the others at the same time we are lying to ourselves. Like they say “the road to hell is paved with good intentions”. Another motivation is coming from co-interested in certain social, political and economic outcomes social groups. This motivation is completely selfish, egocentric, non-socialized and is primarily based upon the interests in appropriation of the exclusive income. Since this motivation is based on pure mendacity, it is being easier to uncover. To deal with the first motivation is much more difficult. May be idealistic apprehension of society, state and social evolution taught in schools, colleges and universities is assuring younger generations’ confidence in people, society and future as well as socializing their behavior later on. But only an apprehension of reality, which comes from oneself, can be called "idealism", when a misapprehension of reality is being taught by the others it is called "social mendacity". Social mendacity and social idealism are concealing the societal problems, which might require some urgent solutions, and are threatening with a comprehensive societal blow if such solutions are postponed. This had happened for so many times in human history, most recent example being the Soviet Union. People in economically developed countries must learn rather comprehensively what happened with the Soviet Union. With our socialism we may be only one step away from that kind of society.


General Theory of the State and Social Evolution



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