Conditions for Prosperity


Richard Kieninger


Criminals, terrorists and warlords are well aware of the coercive power of violence. Law abiding citizens often donít understand that laws are merely wishes on a piece of paper unless there is sufficient power to enforce them. Violence can only be bettered by superior force, not by good intentions. What is yours by man-≠made rights and justice is yours only as long as you or some one else can protect it for you. There are no property rights in Nature.


The chief deterrent to predatory violence is the threat of even greater force. To achieve peace, a society must find ways to muster enough force to curtail the incentives to use violence to take whatever one wants from whomever has it. To police predation effectively, some group must exclusively control the physical means to overpower anyone. Superior weapons are the primary tools that determine the

civilian police or any army to employ superior violence for the protection of a populace. If criminals become armed with the superior weapons, they soon become the government; and you would have to apply to them for loans or for permission to park your car. This has to a great extent happened in Columbia where the drug cartel has more firepower than the government. In some urban neighborhoods of the U.S.A., the police have lost control and dare not even enter.


Democracy and equality are primitive, matriarchal realities. They were not ideas thought up by the ancient Greeks. The Greeks merely codified such concepts in their laws. Hunting-gathering societies are made up of individuals who are equally armed with primitive hunting weapons and so have equal power. That was also the case among the Greek hoplitesóthe soldiers who were independent land owners who could afford to buy their own weapons, which were very expensive. Because he was heavily armed, and because defense of the nation depended upon close cooperation with his equals, he could not be ignored. Greek notions of liberty and a democratic vote were not extended to everybody. Women, slaves and the poor had no voice in politics. Power was held only by the men who had the military means to enforce their claim to it. They all stood in defense of fair property rights since that was the source of their individual political and military strength. Even in the U.S.A., liberty depends on the citizens having modern arms in their homes. The stability of democratic systems has always rested on an underlying military equality of the citizen electorate.


In most of the worldís history, only a king or warlord had soldiers and weapons. Everyone else was a serf or slave owned by the man who controlled the army. As agriculture became established around the world, people left the nomadic way of life and grew grain in plots of land that took much effort to prepare for crops. People settled permanently in one place; and since it took half a year of hard work to sow, cultivate and harvest their crop, they wanted to protect the fruits of their labor from those who preferred to steal food rather than work for it. The stores of grain were always a temptation to pillageónot only by locals but also by outside raiders. The solution to their problem was either to mount a cooperative defense among all the local farmers when there was a raid or else to feed and equip a permanent armed force that guaranteed fullótime protection.


The latter option proved more effective, but it usually didnít take long f or the leader of the armed force to realize that the army could rule the unarmed farmers and that he could levy taxes and obtain personal privileges for himself and became king. In a generation or two this became so institutionalized that the king owned everything and everybody. This eventually became the case in almost the whole world.


The temptation was always there for a warlord to use his army to expand the territory he ruled by making war on weaker neighbors and smaller armies, for it was self-evident that more serfs meant more riches to support a larger, more powerful army. Thus empires in the Middle East and Far East and then Europe came about. A side benefit of this trend was that the larger the empire, the more secure the public safety. The resources for large public works, like irrigation in Mesopotamia and Egypt benefited the farmer, and cities became feasible. But there was no freedom for anyone and no democratic or republican forms of government. The ruler could do anything he wanted with anyone, and he usually did.


These empires could last for centuries, but innovations of superior weaponry in the hands of other kings could bring empires down. If an empire fell apart simply because of internal corruption and dissention, a number of smaller sovereign govern≠ments would follow. But then trade would suffer because the confusion of many different rules and imposts in crossing many borders makes a snarl of everything. The more and smaller the units that exercise sovereign power, the greater the number of transactions that will be hung up, stifling economic growth.


Historically, the breakdown of a large political entity has led to criminal violence and economic decline in its smaller successors. Generally speaking, the larger the scale over which order can be exercised, the more conducive it is to progress. This is not to say that small systems canít outperform large ones, but they need to have safe avenues for outside trade in order to obtain internally-unavailable raw materials and to have markets for their products to earn the money to buy those raw materials.


Prosperity can occur only where the negative effects of violence can be minimized. An important element in the growth of prosperity in Western Civilization since the 15th Century was the evolution of institutions that reduced the risks of trade: among which are a legal system designed to give predictable rather than arbitrary decisions, bills of exchange which facilitate the transfer of money and credit for commercial transactions, an insurance market, and the change to governmental revenue systems from discretionary expropriation to systematic taxation. These institutions all depend upon internal and international legal and court systems to enforce them and also upon the threat of force of arms or embargo against a nation that doesnít keep its traders in line. The principal reason poor countries are poor is because they lack a crucial element required for economic developmentóa stable government that reliably provides law and order, impartially protects private property, and enforces contracts. But this is not to say that the poor countries donít have laws to accomplish these thingsóitís that they canít or donít enforce them.


Another major factor in a nationís prosperity is partly cultural and partly economic. A people who have come to eschew violence makes them more fit for commerce, and the long success of commerce tends to reinforce this taboo on violence. When a personís life is secure by having sufficient wealth to provide all his needs, he is prone to protect the system that provides it. The more stable a society, the greater will be its store of liquid monetary assets relative to its tangible assets. These money assets can be in the form of cash, stocks, bonds and other investments. Confidence in the safety of funds when invested outside the owners s hands depends upon long-standing stability and the reliability of the courts enforcing contracts so one can be reasonably assured that money entrusted to others will be repaid. The richest countries are those that have the highest percentage of liquid monetary assets.


A sound constitution has great economic value. A constitution will be honored in broad measure as long as the rules continue to pay off for those who have the power to change them. Economic decline is destabilizing because then the incentive to abide by the rules of society falls as well. Although physical force is the ultimate determinant of the rules by which a society operates, the goodwill and strength of ethics of its citizens will do more to preserve economic and political stability than armed force. A man will invest his money in his personal future only if he judges that the future will be essentially the same as or better than sound monetary conditions in the present. If he perceives that stability is on a long-range decline, he will spend now and not invest, or he will try to emigrate to a place that is more secure.


For security, we rely on sound money, a just and effective legal system dedica≠ted to upholding a good constitution, a strong police force, and a moral citizenry. If any of these is missing, history has proven there can be no real or lasting prosperity.