New Libertarian Manifesto 37
III. COUNTER-ECONOMICS:
OUR MEANS
Having detailed our past and statist present
and glimpsed a credible view of a far better
society achievable with present understanding
and technology—no change in human nature
needed—we come to the critical part of the
manifesto: how do we get from here to there?
The answer breaks naturally—or maybe un-
naturally—into two parts. Without a State, a
differentiation into micro (manipulation of an
individual by himself and his environment—
including the market) and the macro (manipu-
lation of collectives) would be at best an
interesting statistical exercise with some small
reference to marketing agencies. Even so, a
person with a highly sophisticated decency may
wish to understand the social consequences of
his or her acts even if they harm no other.
With a State tainting every act and be-
fouling our minds with unearned guilt, it be-
comes extremely important to understand the
social consequences of our acts. For example,
if we fail to pay at tax and get away with it,
who is hurt? Us? The State? Innocents? Liber-
tarian analysis shows us that the State is re-
sponsible for any damage to innocents it al-
leges that the “selfish tax-evader” has incurred;
and the “services” the State “provides” us are
illusory. But even so, must there not be more
38 Samuel Edward Konkin III
than lonely resistance cleverly concealed or
“dropping out”? If a political party or revolu-
tionary army is inappropriate and self-defeat-
ing for libertarian goals, what sort of collec-
tive action works?
The answer is agorism.
It is possible, practical, and even profitable
to entrepreneur large collections of humanity
away from statist society to the agora. This is,
in the deepest sense, true revolutionary activ-
ity and will be covered in the next chapter. To
understand this macro answer, however, we
must first outline the micro answer.24
The function of the pseudo-science of Estab-
lishment economics, even more than making
predictions for the ruling class (as did the Impe-
rial Roman augurs), is to mystify and confuse
the ruled class as to where their wealth is going
and how it is taken. An explanation of how people
can keep their wealth and property safe from the
State, then, is Counter-Establishment econom-
ics, or Counter-Economics25 for short. The actual
practice of human actions that evade, avoid, and
_____________________________________________
24 Micro and macro are terms from present Estab-
lishment economics. While Counter-Economics is part
of agorism (until the State is gone), agorism includes
both Counter-Economics in practice and libertarianism
in theory. Since that theory includes an awareness of
the consequences of large-scale Counter-Economic prac-
tice, I will use agorist in this macro sense and counter-
economic in the micro sense. Since the division is in-
herently ambiguous, some overlap and interchange-
ability will occur.
25 The term “Counter-Economics” was formed the
same way as the term “counter-culture”; it does not
mean anti-economic science any more than counter-cul-
ture meant anti-culture.
New Libertarian Manifesto 39
defy the State is counter-economic activity, but—
in the same sloppy way that “economics” refers
both to the science and what it studies—
“counter-economics” will undoubtedly be used.
Since this writing is Counter-Economic theory
itself, what will be referred to as Counter-Eco-
nomics is the practice.
Mapping and describing all or even a sig-
nificantly useful part of Counter-Economics
will require at least a full volume itself.26 Just
enough will be sketched here to provide un-
derstanding for the rest of the manifesto.
Going from an agorist society to a statist one
should be uphill work, equivalent to a path of
high negative entropy in physics. After all, once
one is living in and understanding a well-run
free society, why would one wish to return to
systematic coercion, plunder, and anxiety?
Spreading ignorance and irrationality among
the knowledgeable and rational is difficult;
mystifying that which is already clearly un-
derstood is nearly impossible. The agorist so-
ciety should be fairly stable relative to deca-
dence, though highly open to improvement.
Let us run backward in time, like running
a film in reverse, from the agorist society to
the present statist society. What would we ex-
pect to see?
Pockets of statism—mostly contiguous in
territory, since the State requires regional
_____________________________________________
26 This volume, Counter-Economics (the book), is in
process and will soon be completed, Market willing!
Note to Fourth Edition: SEK3 died before com-
pleting his magnum opus, but KoPubCo is in the pro-
cess of preparing what exists of his manuscript for pub-
lication in the near future.
40 Samuel Edward Konkin III
monopolies—would first appear. The re-
maining victims are becoming more and more
aware of the wonderful free world around them
and “evaporating” from these pockets. Large
syndicates of market protection agencies are
containing the State by defending those who
have signed up for protection-insurance. Most
importantly, those outside the statist pockets or
sub-societies are enjoying an agorist society
save for a higher cost of insurance premiums
and some care as to where they travel. The
agorists could coexist with statists at this point,
maintaining an isolationist “foreign policy”
since the costs of invasion and liberation of
statist sub-societies would be higher than im-
mediate returns (unless the State launches an
all-out last aggression). There is, however, no
real reason to imagine the remaining vic-
tims will choose to remain oppressed when the
libertarian alternative is so visible and accessi-
ble. The State’s areas are like a supersaturated
solution ready to precipitate anarchy.
Run backward another step and we find the
situation reversed. We find larger sectors of
society under Statism and smaller ones living
as agorically as possible. However, there is one
visible difference: the agorists need not be ter-
ritorially contiguous. They can live anywhere,
though they will tend to associate with their
fellow agorists not only for social reinforcement
but for ease and profitability of trade. It’s al-
ways safer and more profitable to deal with
more trustworthy customers and suppliers.
The tendency is for greater association among
more agorist individuals and for dissociation
with more statist elements. (This tendency is
New Libertarian Manifesto 41
not only theoretically strong; it already exists
in embryonic practice today.) Some easily de-
fendable territories, perhaps in space or islands
in the ocean (or under the ocean) or big-city
“ghettos” may be almost entirely agorist,
where the State is impotent to crush them.
Most agorists, though, will live within statist-
claimed areas.
There will be a spectrum of the degree of
agorism in most individuals, as there is today,
with a few benefiting from the State being
highly statist, a few fully conscious of the
agorist alternative and competent as living free
to the hilt, and the rest in the middle with vary-
ing degrees of confusion.
Finally, we step back to where there exist
only a handful who understand agorism, the
vast majority perceiving illusory gains from the
existence of the State or unable to perceive an
alternative, and the statists themselves: the
government apparatus and the class defined
by receiving a net gain from the State’s inter-
vention in the Market.27
This is a description of our present society.
We are “home.”
Before we reverse course and describe the
path from statism to agorism, let us look
around at our present society with our newly
acquired agorist perception. Much as a trav-
eler who returns home and sees things in a
new light from what he or she has learned from
_____________________________________________
27 That class has been called the Ruling Class, Power
Elite, or Conspiracy, depending on whether the analy-
sis comes from a Marxist, Liberal, or Bircher back-
ground. The terms will be used interchangeably to show
the commonality of the identification.
42 Samuel Edward Konkin III
foreign lands and ways of life, we may gain
new insights on our present circumstances.
Besides a few enlightened New Libertarians
tolerated in the more liberal statist areas of
the globe (“toleration” exists to the degree of
libertarian contamination of statism), we now
perceive something else: large numbers of
people who are acting in an agorist manner
with little understanding of any theory but who
are induced by material gain to evade,
or defy the State. Surely they have potential?
In the Soviet Union, a bastion of arch-stat-
ism and a nearly totally collapsed “official”
economy, a giant black market provides the
Russians, Armenian, Ukrainian and others
with everything from food to television repair
to official papers and favors from the ruling
class. As the Manchester Guardian Weekly re-
ports, Burma is almost a total black market
with the government reduced to an army, po-
lice, and a few strutting politicians. In vary-
ing degrees, this is true of nearly all the Sec-
ond and Third Worlds.
What of the “First” World? In the social-
democrat countries, the black market is smaller
because the “white market” of legally accepted
market transactions is larger, but the former
is still quite prominent. Italy, for example, has
a “problem” of a large part of its civil service
(which works officially from 7 a.m. to 2 p.m.)
working unofficially at various jobs the rest of
the day to earn “black” money. The Nether-
lands has a large black market in housing be-
cause of the high regulation of this industry.
Denmark has a tax evasion movement so large
that those in it seduced to politics have formed
New Libertarian Manifesto 43
the second largest party. And these are only
the grossest examples that the press has been
able or willing to cover. Currency controls are
evaded rampantly; in France, for example,
everyone is assumed to have a large gold stash
and trips to Switzerland for more than tour-
ing and skiing are commonplace.
To appreciate fully the extent of this
counter-economic activity, one must view the
relatively free “capitalist” economies. Let us
look at the black and grey markets28 in North
America and remember that this is the case of
lowest activity in the world today.
_____________________________________________
28 While some coercive acts, such as murder and theft,
are often lumped into the label “black market,” the
majority of this “organized crime” is perfectly legitimate
to a libertarian, though occasionally unsavory. The
Mafia, for example, is not black market but a govern-
ment over some of the black market that collects pro-
tection money (taxes) from its victims and enforces its
control with executions and beatings (law enforcement),
and even conducts wars when its monopoly is threat-
ened. These acts will be considered red market to dif-
ferentiate them from the moral acts of the black mar-
ket, which will be discussed below. In short, the “black
market” is anything nonviolent that is prohibited by
the State and carried on anyway.
The “grey market” is used here to mean dealing in
goods and services not themselves illegal but obtained
or distributed in ways legislated against by the State.
Much of what is called “white-collar crime” falls under
this heading and is smiled upon by most of society.
Where one draws the line between black and grey
market depends largely on the state of consciousness of
the society in which one lives. The red market is clearly
separable: murder is red market. When the State for-
bids self-defense, defending oneself against a criminal—
including a police officer—is black in New York City
and grey in Orange County, California.
[44] According to the American Internal Revenue Service, at least twenty million people belong in the “underground economy” of tax evaders using cash or barter exchange to avoid detections of transactions. Millions keep money in gold or in foreign accounts to avoid the hidden taxation of inflation. Millions of “illegal aliens” are employed, according to the Immigration and Naturalization Service. Millions more deal or consume marijuana, cocaine, and other proscribed drugs, including laetrile, tryptophan, anti-AIDS drugs, and other forbidden medical material.
And there are all the practitioners of “victimless crimes.” Besides drug use, there is prostitution, pornography, bootlegging, false identification papers, gambling, and proscribed sexual conduct between consenting adults. Regardless of “reform movements” to gain political acceptance of these acts, the populace has chosen to act now—and by so doing are creating a counter-economy.
It doesn’t stop here, though. Since the 55 mph speed limit was enacted federally in the U.S., most Americans have become counter-economic drivers. The trucking industry has developed CB communications to evade State enforcement of regulations. For independents who can make four runs at 75 mph rather than three runs at 55 mph, counter-economic driving is a question of survival.
The ancient custom of smuggling thrives today, from boatloads of marijuana and foreign appliances with high tariffs and truckloads of people from less-developed countries, to the tourists stashing a little extra in their luggage and not reporting it to customs agents.
[45] Nearly everyone engages in some sort of misrepresentation or misdirection on their tax forms, off-the-books payments for services, unreported trade with relatives, and illegal sexual positions with their mates.
To some extent, then, everybody is a counter-economist! And this is predictable from libertarian theory. Nearly every aspect of human action has statist legislation prohibiting, regulating, or controlling it. These laws are so numerous that a “Libertarian” Party that prevented any new legislation and briskly repealed ten or twenty laws a session would not have significantly repealed the State (let alone the mechanism itself!) for millennia!29
Obviously, the State is unable to obtain enforcement of its edicts. Yet the State continues. And if everyone is somewhat counter-economic, why hasn’t the Counter-Economy overwhelmed the economy?
Outside of North America we can add the effect of imperialism. The Soviet Union has received support from the more-developed countries in the 1930s and large quantities of instruments of violence during World War II. Even today, “trade”—heavily subsidized by non-repayable loans—props up the Soviet and new Chinese regimes. This capital (or anti-capital, being destructive of value) from both blocs, along with military aid, maintains regimes over the rest of the globe. But that does not explain the North American case.
[46] What exists everywhere on Earth that allows the State to continue is the sanction of the victim.30 Every victim of statism has internalized the State to some degree. The IRS’s annual proclamation that the income tax depends on “voluntary compliance” is ironically true. Should the taxpayer completely cut off the blood supply, the vampire State would helplessly perish, its unpaid police and army deserting almost immediately, defanging the Monster. If everyone abandoned “legal tender” for gold and goods in contracts and other exchanges, it is doubtful that even taxation could sustain the modern State.31
This is where the State’s control of education and the information media, either directly or through ruling-class ownership, becomes crucial. [47] In earlier days, the established priesthood served the function to sanctify the king and the aristocracy, to mystify the relations of oppression, and to induce guilt in evaders and resisters. The disestablishment of religion has put this burden on the new intellectual class (what the Russians called the intelligentsia). Some intellectuals, holding truth as their highest value (as did earlier dissenting theologians and clerics), do work at clarifying rather than mystifying, but they are dismissed or reviled and kept away from State and foundation-controlled income. Thus is the phenomenon of dissidence and revisionism created; and thus is the attitude of anti-intellectualism generated among the populace, who suspect or incompletely understand the function of the Court Intellectual.
[48] Note well how anarchist intellectuals are attacked and repressed under every State; and those arguing for an overthrow of the present ruling class—even if only to replace it with another—are suppressed. Those who propose changes that eliminate some beneficiaries of the State and add others are often lauded by the benefiting elements of the Higher Circles and attacked by the potential losers.
A common characteristic of most hardened black marketeers is their guilt. They wish to “make their bundle” and return to the “straight society.” Bootleggers and hookers all long someday for reacceptance in society—even when they form a supportive “subsociety” of outcasts. Yet there have been exceptions to this phenomenon of longing for acceptance: the religious dissenting communities of the 1700s, the political utopian communities of the 1800s, and most recently the counter-culture of the hippies and the New Left. What they had was a conviction that their subsociety was superior to the rest of society. The fearful reaction they generated in the rest of society was the fear that they were correct.
All of these examples of self-sustaining subsocieties failed for one overriding reason: ignorance of economics. No social binding, no matter how beautiful, can overcome the basic glue of society—the division of labor. The anti-market commune defies the only enforceable law—the law of nature. The basic organizational structure of society (above the family) is not the commune (or tribe or extended tribe or State) but the agora. No matter how many wish communism to work and devote themselves to [49] it, it will fail. They can hold back agorism indefinitely by great effort, but when they let go, the “flow” or “Invisible Hand” or “tides of history” or “profit incentive” or “doing what comes naturally” or “spontaneity” will carry society inexorably closer to the pure agora.
Why is there such resistance to eventual happiness? Psychologists have been dealing with that since they began their embryonic science. We can at least give two broad answers when it comes to socioeconomic questions: internalization of anti-principles (those that seem to be principles but are actually contrary to natural law) and the opposition of vested interests.
Now we can see clearly what is needed to create a libertarian society. On the one hand we need the education of the libertarian activists and the consciousness-raising of counter-economists to libertarian understanding and mutual supportiveness. “We are right, we are better, we are surviving in a moral, consistent way, and we are building a better society—of benefit to ourselves and others,” our counter-economic “encounter groups” might affirm.
Note well that libertarian activists who are not themselves full practicing counter-economists are unlikely to be convincing. “Libertarian” political candidates undercut everything they say (of value) by what they are doing; some candidates have even held jobs in tax bureaus and defense departments!
On the other hand, we must defend ourselves against the vested interests or at the very least lower their oppression as much as possible. If we eschew reformist activity as [50] counter-productive, how will we achieve that result?
One way is to bring more and more people into the counter-economy and lower the plunder available to the State. But evasion isn’t enough; how do we protect ourselves and even counterattack?
Slowly but steadily we will move to the free society, turning more counter-economists on to libertarianism and more libertarians on to counter-economics, finally integrating theory and practice. The counter-economy will grow and spread to the next step we saw in our trip backward, with an ever-larger agorist subsociety imbedded in the statist society. Some agorists may even condense into discernible districts and ghettos and predominate on islands or in space colonies. At this point, the question of protection and defense will become important.
Using our agorist model (Chapter II), we see how the protection industry must evolve. Firstly, why do people engage in counter-economics with no protection? The payoff for the risk they take is greater than their expected loss. This statement is true, of course, for all economic activity, but for counter-economics it requires special emphasis:
The fundamental principle of counter-economics is to trade risk for profit.32
[51] The higher the expected profit, the greater the risk taken. Note that if risk is lowered, a lot more would be attempted and accomplished—surely an indicator that a free society is wealthier than an unfree one.
Risk may be lowered by increasing care, taking precautions, tightening security (locks, stashes safe houses), and by trusting fewer persons of higher trustworthiness. The last indicates a high preference for dealing with fellow agorist and a strong economic incentive that binds an agorist subsociety and privides an incentive to recruit or support recruitment into that subsociety.
[52] Counter-economic entrepreneurs have an incentive to provide better security devices, places of concealment, instructions to aid evasion and to screen potential customers and suppliers for other counter-economic entrepreneurs. And thus is the counter-economic protection industry born.
As it grows, it may begin insuring against “bursts,” lowering counter-economic risks further and accelerating counter-economic growth. Then it may provide lookouts and guarded areas of safekeeping with alarm systems and high-tech concealment mechanisms. Guards may be provided against real criminals (other than the State). Already many residential, business, and even minority districts employ private patrols, having given up on the State’s alleged protection of property.
Along the way, the risk of contract-violation between counter-economic traders will be lowered by arbitration. Then the protection agencies will start providing contract enforcement between agorists, although the greatest “enforcer” in the early stages will be the State to which each one can betray the other. Yet that act would quickly result in one’s expulsion from the subsociety; so an internal enforcement mechanism will be valued.
In the final stages, counter-economist transactions with statists will be enforceable by the protection agencies and the agorists thus protected against the criminality of the State.33
[53] At this point we have reached the final step before the achievement of a libertarian society. Society is divided between large, inviolate agorist areas and rapidly-shrinking statist sectors.
We stand on the brink of Revolution.
29 Thus a “Libertarian” Party would perpetuate statism. In addition, a “Libertarian” Party would preserve the ill-gotten gain of the ruling class and maintain the State’s mechanism of enforcement and execution.
30 Thank you, Ayn Rand, for that phrase.
31 Although this topic is extensively covered in libertarian literature, many are still unaware of the true nature and mechanism of inflation.
Very briefly, a general price rise is only the consequence of inflation, which is the increase of the money supply. Much more damaging is its redistribution of wealth and its side-effects that dislocate the economy. The State “creates” money, which is distributed to the first line of beneficiaries—big bankers, to pay off its warfare/welfare contractors—and to the civil service, the second line of beneficiaries. As they bid up prices with this unbacked purchasing power, everyone else finds him- or herself unable to buy as much.
The unanticipated rise in price (anticipated inflation is discounted by the market) signals entrepreneurs to invest in capital goods for increased demand. As consumption is cut back because of a lowering of general purchasing power, those entrepreneurs find that they have over-invested and must sell at a loss, lay off employees, and liquidate capital—a depression results. The State is often induced by the clamor of unemployed workers and near-bankrupt capitalists to increase the currency supply again to “stimulate” the economy; that is, to create another illusory boom.
Unfortunately, this new injection of inflation must be anticipated to work; hence, an even larger inflation must ensue. The cycle, if it continues, would lead to runaway inflation (Germany, 1923, is a classic example) and collapse of the currency (“Crack-Up Boom” is Mises’s descriptive phrase).
Allegedly free-market economists urge the State to “take the bitter pill” of depression (like an addict going “cold turkey” lest he overdose) to work out the effects of the money injection and cure the system. As can be seen, this is profoundly conservative in maintaining statism.
A far better solution would be for people to abandon State fiat money in favor of uninflatable media of exchange such as gold, silver, commodities, or harder foreign currencies in order to hasten the collapse.
32 An example of how this works may be helpful. Suppose I wished to receive and sell a contraband or evade a tax or violate a regulation. Let’s say I can make $100,000 a transaction.
Using government figures on criminal apprehension—always exaggerated in the State’s favor simply because they cannot know how much the counter-economy gets away with—I find an apprehension rate of 20%. One may then find out the percentage of those cases that come to trial and the percentage of those that result in a conviction even with a good lawyer. Let’s say 25% make it to trial and 50% result in conviction. (The latter is high but we’ll throw in the legal fees involved so that even a decision involving loss of legal costs but acquittal is still a “loss.”) I therefore incur a 2.5% risk (.20 x .25 x .50 = 0.025). This is high for most real cases.
Suppose my maximum fine is $500,000 or five years in jail—or both. Excluding my counter-economic transactions (one certainly cannot count them when deciding whether or not to do them), I might make $20,000 a year so that I would lose another $100,000 while imprisoned. It’s very hard to assign a value to five years of incarceration, but at least in our present society it’s not too much worse than other institutionalization (school, army, hospital) and at least the counter-economist won’t be plagued with guilt and remorse.
So I weigh 2.5% of $600,000 ($15,000) loss and five years against $100,000 gain! And I could easily insure myself for $15,000 (or less) to pay all costs and fines! In short, it works.
33 It probably should be noted explicitly that businesses could grow quite large in the counter-economy. Whether or not “wage workers” would exist instead of “independent contractors” for all steps of production is arguable, but this author feels that the whole concept of “worker/boss” is a holdover from feudalism and not, as Marx claims, fundamental to “capitalism.” Of course, capital-statism is the opposite of what the libertarian advocates.
Furthermore, even large businesses today could go partially counter-economic, leaving a portion in the “white market” to satisfy government agents and pay some modicum of taxes and report a token number of workers. The rest of the business would (and already often does) expand off the books with independent contractors who supply, service, and distribute the finished product. Nobody, no business, no worker, and no entrepreneur need be white market.