Lecture at Liberi Comuni d’Italia


(English translation of the lecture which took place at Liberi Comuni d’Italia – Siena, Italy, 4.5.2014)


Decadence manifests itself in an extremely real, concrete, tangible way: an entrepreneur committing suicide, a company closing down, a person losing a job, a family not managing to make ends meet, an olive grove being abandoned to itself. Therefore, it is instinctive and even reassuring to try to counter decadence in an equally real, concrete, action-oriented manner while, at the same time, avoiding and even making fun of philosophical chatter. However, even though the decadence we are seeing manifests itself in a very real and concrete way, its ultimate cause is purely philosophical: it consists of the abstract idea of law which, in the Italian case, has been imposed by the Constitution.

Fiscal harassment by the Italian state (lower case intentional) and its agencies is possible because there is a “law” which allows it, but what made that “law” possible? Taxation levels which are simply insane; privacy violations which would make Orwell’s Big Brother pale with shame; Italian public television; legal tenders; the Central Bank’s printing of fiat money; fractional reserve banking; the progressive prohibition of cash payments; public financing of political parties, of newspapers, of theatre, of cinema, …; the public school system; paralyzing bureaucracy; the City of Rome’s edict which prohibits a wine bar to pour wine in glasses for its clients; and infinite other forms of state interventionism in the economy and in our lives are possible because there are “laws” which allow them, but what allows these “laws”?

Even the extremely few economists worthy of this name who can coherently and clearly see the direct cause of decadence in political, economic and, in particular monetary interventionism, almost never ask themselves what made its continuous growth possible.

It was made possible by a philosophical idea of law: legal positivism (i.e. positive -or fiat- “law”). This idea of “law” is at the heart of the Italian republic as it was at the heart of the Fascist regime. On the basis of this idea, the “law” is a bureaucratically correct, particular measure decided by the legally appointed authority. Whether the decision of this authority expresses the will of a dictator or that of a representative majority is utterly irrelevant to the extent the philosophical idea of “law” is concerned.

The problem with fiat “law” is that it makes political power (whoever holds it) unlimited or, which is the same, limited in an arbitrary way (e.g. by the will of a qualified majority). An unlimited political power necessarily tends to expand and, with it, so does the state’s interventionism. In the long run, trying to contain the state’s interventionism and its continuous growth, and therefore decadence, within the philosophical idea of “law” which necessarily produces them (for example by simply reducing the level of taxation or the number of regulations), it is thus devoid of any logical sense or chance of success. Those who declare that they want to defend the free market and create the conditions for sustainable growth within the philosophical idea of “law” which destroys them, damage liberty and economic growth even more than those who attack them directly.

What is truly surprising is not that public debt continues to rise despite continuously rising tax rates and tax oppression, extraordinarily and artificially low interest rates and ever growing inflation (which, by incessantly reducing the purchasing power of money, has the effect of impoverishing the vast majority of individuals and redistributing resources from creditors to debtors, and therefore to the biggest debtor of all: the state). What is truly surprising is that many people are surprised by this phenomenon. This happens because they have not understood its ultimate cause: the abstract idea of “law” which makes the state’s interventionism possible and therefore necessarily ever increasing in the long run.

In order to successfully counter interventionism and its continuous expansion, and therefore in order to go back to sustainable growth, prosperity, civilization and liberty, it is necessary for the state not to do but to undo; it is necessary to put the state not in the condition to do better but in that of not being able to do. In other words, it is necessary to understand that the state is the illness, not the cure, and therefore it is necessary to close it in a cage: to limit its power in a coherent and non-arbitrary way. And in order to do this it is necessary to invert the philosophical idea of law. That is, to replace the “law” intended as an instrument of arbitrary political power (fiat “law”) with the Law intended as a coherent and non-arbitrary limit to political power. This is the Law intended as principle or simply the Law (here I will refer to it simply by using the term “Law” for this was the original meaning of this word).

The Law is a general and negative rule of individual conduct which has to apply to all in the same way. It is negative in the sense that it prescribes what a person cannot do, not what it can do. In this sense, sovereignty of the Law (which is the opposite of sovereignty of the parliament) coincides with liberty. This is the condition of man in which the coercion of some by others is as little as possible and is limited to the defence of the Law and by the Law.

“Fiat” law is made (i.e. decided) by authority, such as, for example, the Italian sovereign parliament or Hitler; but who makes the Law? No one. And I mean no one. In fact, being a principle, the Law, just like language, is the result of a spontaneous process of cultural selection of successful uses and conventions. In other words, it is a spontaneous order: the result of human action but not of human design. Therefore it is not arbitrary, in the same way as the rules of a language. While in a totalitarian state, the role of the legislator is to make fiat “law”, in a free society the role of the legislator is to discover, preserve and defend the Law, which exists independently from him and from his will, and which cannot be made more than a language can.

In a collectivist and therefore totalitarian state such as the Italian one, those who control it have the power to establish what the “good” is and, through fiat “law”, to force everyone to concur somehow with its realization. On the other hand, in a free society, the only role of the state (assuming that there is one) is that of defending general and negative rules of individual conduct which are valid for all in the same way (the Law). As long as they act within the limit of these non-arbitrary Laws, in a free society, everyone can pursue what they subjectively and arbitrarily consider to be the “good”, without being subject to any interference by the community, to any “common good” or “general interest” or “interest of the country”.

The sovereignty of the Law, that is the free society, is not necessarily one in which there are no particular measures (which necessarily have to be decided: let us think of the financing of a tribunal for example), but one in which these measures are limited to the defence of the Law and by the Law. In a free society, the power to decide these particular measures (political power) is separate from and subject to the legislative power (i.e. the power to discover, preserve and defend the Law). However, in today’s totalitarian democracies these two powers are confused one with the other and combined. In Hayek’s words,

«What happened with the apparent victory of the democratic ideal was that the power of laying down laws and the governmental power of issuing directions were placed into the hands of the same assemblies. The effect of this was necessarily that the supreme governmental authority became free to give itself currently whatever laws helped it best to achieve the particular purposes of the moment. But it necessarily meant the end of the principle of government under the law. […] placing both powers into the hands of the same assembly (or assemblies) meant in effect return to unlimited government».

Now, to discover, preserve and defend the Law is not always easy. Where the law is fiat “law” the only ability which is required of a legislator is to push a button. However, where the law is the Law, the task of the legislator is extremely difficult. Sometimes, for example where there are principles in competition with each other (principles, not interests), it can even be impossible. When the law is the Law, and not its opposite, the job of the legislator requires extraordinary skills and preparation that are far superior to those the person speaking to you could ever dream of having. However, this job is made easier by the fact that, contrary to fiat “law”, the Law necessarily has to be equal for all. Of course, not in the sense that “equality before the law” has in the Italian constitution (art. 3), but in the sense that legal inequality is always illegitimate. (Legal inequality consists in treating in the same way those who belong or have been grouped in the same category but in treating differently those who belong or have been grouped in a different category, as occurs with racial “laws” or progressive taxation “laws”, for example). If a rule forbids an action in some particular cases but not in others, then there is a problem. For example, if a rule forbids counterfeiting in some particular cases but another rule allows it in others, then there is something out of joint.

Where the law is the Law, either counterfeiting is in general a legitimate action or the rule which allows it in particular cases is illegitimate (and it is not difficult to understand which is the right answer). On the other hand, where the law is fiat “law” there is no need for coherence. The question «on the basis of which principle?» is not contemplated. Equality before the Law becomes legal inequality. The difficulty of discovering the Law and coherently defending it is simply removed by removing the Law. Where legal positivism is in force, a rule can easily forbid an action in some particular cases but not in others without this being a problem: what matters is not coherence but the arbitrary will of those who control the state.

The typical example, among the infinite that could be given, is the printing of fiat money: the euro for example, or, even worse, the lira. In fact, in principle, there is no difference between the action of a jeweller who replaces some pearls on a necklace with fakes, thereby diminishing the value of the necklace through fraudulent means, and the action of a central bank which, by printing fiat money, diminishes the purchasing power of the 50 euros that I have in my pocket and that the state forces me to use for my shopping. Both actions are a form of counterfeiting. Everyone takes for granted that counterfeiting is illegitimate. However, only a few notice that the central bank legally and systematically commits the crime of counterfeiting. Only a few are aware of the fact that the printing of money is a form of additional taxation, one which differs from the others in the fact that those who impose it do not have to bear the political cost of doing it. Only very few are aware of the fact that the so-called “crisis”, which is only the prelude of the coming economic collapse, is the result of central banks’ printing of fiat money and, more in general, of the distortions of the productive structure which have been induced by manipulating money and credit and by interventionism. Only a few are aware of the fact that it is the privilege of printing of fiat money having legal tender, and therefore the counterfeiting of money, which has made wars (including World Wars) possible: in Europe the gold standard was abandoned in 1914 in order to finance a war which, otherwise, would have required such an exorbitant level of explicit taxation that, at that time, no one would have accepted it and the states would have had to renounce the call to war.

Why? Why do so many people condemn counterfeiting when it is performed by the jeweller but they do not even notice it, nor they are scandalized by it, when it is performed by the central banks, even though in the latter case the damage is infinitely superior and in fact catastrophic? Why?

One would be tempted to answer that this happens because most people are not familiar with economics; that is, with the Austrian School of economics. Hayek claimed that socialists would not be socialists if they were familiar with economic science; Ford claimed that if people knew how the monetary and banking systems work a revolution would immediately break out. Even though this is generally true, I don’t think that this is the main reason. Economics is a complex science and it would be foolish to expect that all citizens had the time and the inclination necessary to study it (though it would be reasonable to expect that at least professors of economics have studied it, which hardly ever happens). In addition, if everyone studied economics there would be widespread knowledge of it but there would be no economy. The reason why most people condemn counterfeiting when it is performed by a jeweller but they don’t condemn it and in fact they don’t even notice it and they even demand more of it when it is performed by the central bank (even though in this latter case the damage produced is infinitely larger), is that they don’t know what the Law is. Contrarily to economics, the Law (the principle) does not need to be studied, but only to be felt inside oneself, whether one respects it or not. The Law intended as principle carries within itself economic science, that is economically sustainable behaviour.

We don’t know what the Law is because from the very start of our school years, (in public schools, of course, or schools which are in anyway subject to public programming) we have been indoctrinated not to feel it inside ourselves. We have been indoctrinated to look at the legality of a measure (i.e. at the fact that this respects fiat “law”, that is the arbitrary command of authority) and not to look at its legitimacy: we have been indoctrinated not to ask ourselves «on the basis of which principle?». Paradoxically enough, and often without knowing it, the worst enemies of freedom are decent people who, believing they are defending the law, are in fact defending the arbitrary commands which the authority called “laws.” They do this so that the latter can enjoy the same respect of the Law but they are actually the expression of that unlimited political power that the Law has grown to limit. By changing the meaning of one word, the totalitarian state takes possession of people’s decency and uses it against them to attain arbitrary ends established by those who control it. Quite simply, it deceives them. When a sufficiently high number of people will start asking themselves «on the basis of which principle?», liberty, prosperity, its sustainable growth and diffusion will be back to stay. There is no need to know why the printing of fiat money and, in a different way, any other form of state interventionism, results in de-civilization and poverty, especially for those who are already in the weakest financial position. In order to avoid these, it is enough to demand that the state avoids counterfeiting; and in order to do this it is necessary to forget what one has learned (starting from the first years of school), to look inside oneself, to feel the Law (understanding the opposition between it and fiat “law”) and to demand, especially from the state, a behaviour that is coherent with it.

Today, in the Italian political arena, the Law, and therefore liberty, is defended by no one. There is not even one single political party that does not side against the Law and against liberty, that is with the Constitution, its legal positivism and its collectivism. The results of this can be observed. After “Forza Evasori”, a libertarian political party founded by Leonardo Facco which the state prevented from competing, Liberi Comuni d’Italia is the first Italian political organization which has the courage to challenge openly, on its own, the root of the problem: the philosophical idea of the law and all that derives from it. Liberi Comuni d’Italia challenges legal positivism in an institutionally coherent way, that is, by proposing: 1) a separation of political power from legislative power; 2) the subjection of the first to the second; 3) an extremely decentralized institutional structure, which is a necessary condition to respect the fundamental principle of auto-determination (the same principle which makes it illegitimate for anyone to decide how someone else should spend his own money, for example). As of now, assuming that Liberi Comuni d’Italia is allowed to compete, those searching for coherence in the idea of liberty will have the opportunity to act politically in its defence.

As I told Rivo Cortonesi, who honoured me by asking my advice, beyond strategic considerations, the Code of Liberi Comuni d’Italia needs further work in order to overcome some contradictions. However, the structure is there and has solid foundations. Above all, there is a total openness to continuous improvement. The Code of Liberi Comuni d’Italia is to the Italian Constitution as the heliocentric system is to the geocentric system: in fact, in the Code of the Liberi Comuni d’Italia it is not the “law” which orbits around authority but, on the contrary, it is authority which orbits around the Law. That is, the “law” does not derive from authority but on the contrary, authority derives from the Law, «not -as Hayek says- in the sense that the law appoints authority, but in the sense that authority commands obedience because (and so long as) it enforces a law presumed to exist independently of it».

It is not a political revolution. As we saw with the transition from Fascism to republican Italy, when political revolutions keep the totalitarian idea of “law” intact, they allow for a change of tyranny but not for its elimination. It is a revolution of thought, which is a preliminary and necessary step for a peaceful political revolution towards liberty. In particular, it is a revolution of the reference system, just as the Copernican Revolution was. And in the words of Arthur Koestler, «The revolutions of thought which shape the basic outlook of an age are not disseminated through text-books – they spread like epidemics, through contamination by invisible agents and innocent germ-carriers, by the most varied form of contact, or simply by breathing the common air». These words were written when there was no Internet.

If we look at the success that libertarianism is having in the United States, especially among the new generation, thanks to the tenacity of intellectuals like Ron Paul, Lew Rockwell and the judge Andrew Napolitano (just to name a few); if we look at the courage of heroes like Edward Snowden and Chelsea Manning; and also if we look at Bitcoin and at other digital currencies based on a system of distributed certification of transactions and property, then we understand that, at least on the other side of the Atlantic, the contagion of liberty has (re)started. I don’t know if we will be able to see it but I’m convinced that freedom will win, even on this peninsula, or at least in some of its parts. Not in the sense that one day there will be the perfectly free society, but in the sense that one day the direction will be inverted and the progress will be not towards serfdom but towards liberty and thus towards the sovereignty of the Law intended as principle. One day we’ll start learning the art of liberty instead of unlearning it and, after a period of crisis which will be necessary to get rid of the malinvestments induced by state interventionism, that will be the day in which we’ll start growing again, vigorously but sustainably.

However, even if there was no hope that the direction could be inverted (and I don’t believe that this is the case), this wouldn’t imply that fighting for liberty would be wasted time. To stand coherently by liberty is good for the soul: it allows for self-esteem, for the capability of looking at oneself in the mirror with clear eyes and for the integrity of one’s own honour. These remain intact among all difficulties of life and are the source, if not of joy, of serenity and of equilibrium.


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