Front Matter

LIBERTARIAN PAPERS VOL. 1, ART. NO. 32 (2009)

GOLD, THE GOLDEN RULE, AND GOVERNMENT:CIVIL SOCIETY AND THE END OF THE STATE

D.* G.WHITE

Gold is the child of Zeus.

—Pindar, circa 500 BCE

What you do not want done to yourself, do not do to others.

—Confucius, circa 500 BCE

I heartily accept the motto, “That government is best which governs least.”…

Carried out, it finally amounts to this, which also I believe—”That government is best which governs not at all”; and when men are prepared for it, that will be the kind of government which they will have.

—Henry David Thoreau, 1849 CE

1. The Twin Pillars of Civilization

WITHOUT MONEY, there can be little in the way of economic specialization, or what is commonly known as the division of labor. And without the division of labor, there can be little in the way of civilization. In pre-agricultural hunter-gatherer society, labor is primarily limited to these two endeavors, the hunting generally done by men and the gathering by women.1 So, too, is labor limited in early agricultural society, the men generally doing the farming and women the domestic work.2 And while proto-money3 might

*D. G. White (white12349@gmail.com) is an eco-industrial entrepreneur who lives,works, and writes in the American southeast.

CITE THIS ARTICLE AS: D.G. White, “Gold, the Golden Rule, and Government: CivilSociety and the End of the State,” Libertarian Papers 1, 32 (2009). ONLINE AT: libertarianpapers.org. THIS ARTICLE IS subject toa Creative Commons Attribution 3.0 License (creativecommons.org/licenses).

1 See Wikipedia, “Hunter-gatherer / Social and economic structure” here:en.wikipedia.org/wiki/Hunter-gatherer#Social_and_economic_structure.

2 See “Early Agricultural Societies” at WebChron Glossary of Historical Terms here:www.thenagain.info/WebChron/glossary/EarlyAg.N.html.

3 See Wikipedia, “History of money / The emergence of money” here:

1

be involved, economic exchange is generally limited to barter, which requires a coincidence of wants that is far too inelastic to allow for the manifold exchange of goods and services that is the lifeblood of civil society.

Money, in other words, is essential to any society that we would call civil, prompting us to ask what, in fact, money is and how it comes to be. The answer, simply enough, is that money becomes what it is through the very same process of exchange upon which civil society depends: If one good is more marketable than another—if everyone isconfident that it will be more readily sold—then it will come intogreater demand because it will be used as a medium of exchange. It willbe the medium through which one specialist can exchange hisproduct for the goods of other specialists.

Now just as in nature there is a great variety of skills and resources,so there is a variety in the marketability of goods. Some goods aremore widely demanded than others, some are more divisible intosmaller units without loss of value, some more durable over longperiods of time, some more transportable over large distances. All ofthese advantages make for greater marketability. It is clear that inevery society, the most marketable goods will be gradually selectedas the media for exchange. As they are more and more selected asmedia, the demand for them increases because of this use, and sothey become even more marketable. The result is a reinforcingspiral: more marketability causes wider use as a medium, whichcauses more marketability, etc. Eventually one or two commoditiesare used as general media—in almost all exchanges—and these arecalled money.4

Money, then, is simply a commodity that, as an inherent store of value, is used as a conduit for exchange. And given its considerable attributes—e.g., beauty, density, indestructibility, malleability, homogeneity, divisibility, transportability—it is little wonder that, over time, gold became the commodity of choice, the preeminent medium of exchange the world over. Nor is it any wonder that with the subsequent emergence of banknotes and other money substitutes, which greatly facilitated indirect exchange and therefore the division of labor, it was gold that usually backed them up.

Gold, then, is a good that is especially good as the money upon which civil society depends—so good, in fact, that if something is said to be “as good as gold,” it is receiving what is understood to be the highest possible praise, just as that which is described as “golden”—a golden moment, for en.wikipedia.org/wiki/History_of_money#The_emergence_of_money.

4 Murray N. Rothbard, What Has Government Done to Our Money?,Praxeology Press,1963, p. 18.

example—is understood to be “of the greatest value or importance.” And thus does it come as no surprise that the ethic of reciprocity, all but unknown in this terminology, has been accepted the world over as the golden rule: The nearly universal acceptance of the golden rule and itspromulgation by persons of considerable intelligence, thoughotherwise of divergent outlooks, would seem to provide someevidence for the claim that it is a fundamental ethical truth.5

The preeminent moral precept of virtually every major religion and culture in human history, the golden rule is indeed a fundamental ethical truth that is as precious to civil society as the metal itself is deemed to be. Thus, it is not too much to say that as gold has historically been the foremost currency of commerce, the golden rule has been the foremost currency of morals, the ethic that civil society has always “banked on” in one form or another. Nor is it too much to say, then, that together, gold and the golden rule form the twin pillars of civilization—i.e., the means by which individuals have traditionally cooperated to improve their lot in life, there being no other reason for civil society to exist: The idea that anybody would have fared better under an asocial stateof mankind and is wronged by the very existence of society isabsurd. Thanks to the higher productivity of social cooperation, thehuman species has multiplied far beyond the margin of subsistence.6

Indeed it has. And if left to its own devices—i.e., if its members are allowed to interact freely and of their own accord—the human species will use its commodity money and its universal morality to continually improve its overall wellbeing.

But let us pause and ask, why freedom? What is so important about freedom,and why is it so vital to the advance of civil society?

2. The Metaphysics of Freedom

Freedom is nothing else but a chance to be better. —Albert Camus

What individuals fundamentally seek is order, by which we do not mean regimentation but harmony—i.e., “a pleasing combination of the elements in a whole,”7 wherein the whole is the wholeness of one’s life. And because such

5 Marcus G. Singer, The Encyclopedia of Philosophy, MacMillan Publishing, 1967, p. 366.

6 Ludwig von Mises, Human Action: A Treatise on Economics, Henry Regnery Company,1966 (1949), Third Revised Edition, Contemporary Books, p. 165.

7 See definition two at Answers.com here: www.answers.com/topic/harmony. 4 LIBERTARIAN PAPERS 1, 32 (2009)

order is virtually impossible to attain in isolation (even hermetic monks live in a society of shared belief, without which their mode of existence would be devoid of meaning), individuals socialize for this reason, and naturally so. For insofar as there is order in nature (and of course there is astounding order), freedom—which is inherent, for instance, in the random variation that is integral to the evolutionary process—is the cause, not the effect, of it. So too, then, is freedom in the human realm “the mother, not the daughter, of order,”8 it being but the conscious application of its counterpart in the natural realm. And thus is freedom the sine qua non of human civilization—the foundation upon which its twin pillars stand—without which the order that its individual members yearn for cannot be generally attained or continually increased.

But not just any freedom. For while freedom is indispensable to the social enterprise, complete freedom is destructive of it, resulting not in order but in chaos, as each does whatever he wants, regardless of what others may or may not want. “Anything goes,” in other words, and thus does libertinism render civil society null and void amid a literal free-for-all of untempered action.

Moreover, while we accept the determinism whereby “man is free as long as his own will is one of the steps in the causal chain,”9 we reject the determinism whereby “every event in the future is fated to happen,”10 as this too results in chaos. For if our actions are purely a matter of fate—if we have no choice in what we do—then we have no responsibility for what we do. And if we have no responsibility for what we do, then there can be no moral content in our actions. As with libertinism, then, so with fatalism, as there is no right or wrong in either case. Once again, “anything goes” for the simple reason that “everything was already going to be.” And thus does “the chance to be better” have literally no chance, there being no standard by which to gauge it. Better than what, after all? Better than bad? But there is no bad, just as there is no good.

Thus do the extremes of freedom and determinism result in meaninglessness, which is to say, in absurdity. And to avoid it, we reject both libertinism and fatalism by accepting—by embracing—the fact that while freedom is a metaphysical reality, it can have no meaning in the human realm without restraints being placed upon it, the task for society being to

8 Pierre-Joseph Proudhon; see “Remembering Proudhon” at Polycentric Order here:polycentricorder.blogspot.com/2009/01/remembering-proudhon.html.

9 See The Information Philosopher here:www.informationphilosopher.com/freedom/determinism.html.

10 See preceding footnote.

determine what the minimum restraints are, that it might maximize the opportunity for its individual members to improve their lot in life. To generate more order. To be better.

3. The Natural Law of Civil Society

The best interpreter of the law is custom. —Marcus Tullius Cicero

Individuals do not always, if ever, exercise their freedoms so as to promote the order in everyone’s lives. On the contrary, in promoting the order in their own lives, individuals tend to impinge upon the lives of at least some others, if only because, in their efforts to cooperate with one party— i.e., to exchange one or another good or service to their mutual benefit—they inadvertently compete with another party, in which case one or the other must accordingly lose. But insofar as this process of exchange promotes the division of labor, resulting in the provision of a wider variety of goods and services that in turn improves the overall quality of life, the gains far exceed the losses.11 For how else could the human species have advanced at all, much less to a stage that was inconceivable little more than a century, or even mere decades, ago? How else could it have harnessed electricity, for example—or invented the locomotive, the telegraph, the telephone, the automobile, the airplane, the computer, the cell phone, email, the Internet, etc.—if not but through this cooperative, if inevitably competitive, process?

When individuals eschew cooperation, however, and instead aggress against one another in order to improve their lot in life—i.e., when they initiate the use of force—then the social enterprise is thereby thwarted, prompting society to develop the means to minimize aggression, to adjudicate the disputes that arise as a result thereof, and to provide restitution for those aggressed against in such a way that society as a whole is preserved. Society develops a system of law, in other words, and traditionally this system has been known as customary or common law—i.e., law that is “developed

11 Yes, competition can be so intense that one business—a coffee shop, say—puts asimilar enterprise out of business. But as long as the former did not aggress against the latter—i.e., it did not lie, cheat, steal, or otherwise aggress against it—this is simply business as usual. And importantly, this includes the “creative destruction” (see Wikipedia entry here: en.wikipedia.org/wiki/Creative_destruction), whereby a new technology—say, the “horseless carriage”—is introduced, and manufacturers of the old technology are put out of business for lack of customers. As such, this too is simply business as usual, as the destruction of whole industries is more than offset by the introduction of new ones, the survival of which is dependent on how well their members (e.g., automakers) meet the demands of their customers.

through decisions of courts and similar tribunals … rather than through legislative statutes or executive action.”12 And of fundamental importance in the development of such law is that it is based on reciprocity: Reciprocities are the basic source both of the recognition of duty toobey law and of law enforcement in a customary law system. That is,individuals must “exchange” recognition of certain behavioral rulesfor their mutual benefit.13

In noting that such exchange is fundamental to both money and law, it should be no surprise, then, that

… the origin, formation, and ultimate process of all socialinstitutions … is essentially the same as the spontaneous orderAdam Smith described for markets. Markets coordinate interactions,as does customary law. Both develop as they do because the actionsthey are intended to coordinate are performed more effectivelyunder one system or process than another. The more effectiveinstitutional arrangement replaces the less effective one.14

Like customary money, in other words, customary law evolves over time, as the members of society come to agreement through a process of trial and error to determine which laws best promote their mutual wellbeing. As such, legal reciprocity is part of a seamless process of cooperative interaction that is “marketable” precisely as monetary reciprocity is. For both are products of the spontaneous order—i.e., of “the emergence of various kinds of social order from a combination of self-interested individuals”15—that naturally arises from such reciprocation. Thus is law natural to man, and thus do customary money and customary law form the core of man’s morality, as each arises through the application of the ethic of reciprocity.

As the application can vary, however, from proper to perverse—i.e., from logical restraint to pathological intervention—let us examine the implications thereof.

12 See Wikipedia entry here: en.wikipedia.org/wiki/Common_law.

13 Bruce L. Benson, The Enterprise of Law, Pacific Research Institute for Public Policy,1990, p. 12.

14 Ibid., p. 15.

15 See Wikipedia, “Spontaneous order,” here:en.wikipedia.org/wiki/Spontaneous_order.

4. Negative Rule, Positive Rule, and Positivist Rule

Law is a negative concept. —Frederic Bastiat

As an element of nature, gold is what it is, no matter what form. The same cannot be said of the golden rule, however, for no matter how natural the social process out of which it evolved, the golden rule is a human construct and therefore its existence “in one form or another” can be decidedly different from the forms of its elemental namesake.

In the first place, it is one thing to say, with Confucius, “What you do not want done to yourself, do not do to others” and quite another to say, “What you want done to yourself, do to others” (or as many of us were taught, “Do unto others as you would have them do unto you”). For although both are reciprocal, the first rule merely requires restraint, while the second requires intervention. That is, the first says that if John doesn’t want Joe to hit him, then John must refrain from hitting Joe, while the second says that if John wants Joe to feed him, then John must feed Joe.

Moreover, the inversion of the golden rule goes even further, transmuting the authority of the interventionist rule so as to say, in effect, “Do unto others what they would have you do unto them.” Now, John is not merely obligated to intervene on Joe’s behalf and Joe on John’s. Instead, John is obligated to do whatever Joe wants, and Joe is obligated to do whatever John wants, making each the servant of the other.

As religions have differed in this regard, we note, for example, that Judaism holds to the negative rule, saying, “What is hateful to you, do not to your fellow men,” adding an emphatic, “That is the entire Law; all the rest is commentary.”16 Christianity, on the other hand, adopts the positive rule, saying, “Whatever you wish that men would do to you, do so to them,”17 and (with the symbolic washing of feet, for instance) goes so far as to invert the rule into a one of mutual subservience.

Insofar as positive rule, including its inversion, is adopted on a purely voluntary basis, it is perfectly acceptable in society. When positive rule is commanded, however, then insofar as that society would be free, it is not, and therefore insofar as that society would be civil, it is not. For whenever individuals—beyond the restraints of the negative golden rule—are prevented from acting freely and of their own accord, but are instead forced

16Babylonian Talmud: Tractate Shabbath, Folio 31, online version here: www.come-and-hear.com/shabbath/shabbath_31.html17 John 13:3-14 and, in the same vein, Mathew 5:39-42.

to obey this or that positive rule, they are being required to do unto others what they might not want to do and/or be done unto as they might not want to be done.

To one degree or another, then, involuntary servitude must be the inevitable result of this form of positive rule. And as involuntary servitude is the very definition of slavery, it follows that the members of such a society are accordingly enslaved, the corruption of the positive golden rule arising from “the substitution of coercion for voluntary actions.”18 To such corruption we therefore give the name positivism, this being the already established term as it relates to the so-called severability thesis, which posits that law is not derived from morality, asserting on the contrary that “law and morality are conceptually distinct.” 19

Furthermore, we use the term positivism regardless of whether it manifests itself on a religious or a secular basis. Thus is Marxist positivism— ”From each according to his ability, to each according to his need”20—no different from the positivism of Christian theocracies of the past or Muslim theocracies of the present. And while it might be assumed that today’s presumably democratic societies are not positivistic, it will be seen upon examination that they are—and thoroughly so.

5. Money and the State

It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.

—Henry Ford

Once the domain of society—i.e., of the cooperative interaction that is its natural mode of economic organization and integration—the control of money has been usurped by the state and accordingly monopolized. Moreover, the monopolization is now a fait accompli due the state’s abandonment of gold, or any other commodity, as the monetary standard. Money has been positivized, in other words, in that it is now created not by

18 Rothbard, Man, Economy, and State, 1962, copyright 2004 by the Ludwig von MisesInstituteThe Mises, Chapter 11, “Money and Its Purchasing Power,” p. 766, online Scholar’s edition here: mises.org/rothbard/mes.asp19 See The Internet Encyclopedia of Philosophy, “Legal Positivism,” here:www.utm.edu/research/iep/l/legalpos.htm.

20 Karl Marx, Critique of the Gotha Program; see Wikipedia entry here:en.wikipedia.org/wiki/From_each_according_to_his_ability,_to_each_according_to_his_need.

“voluntary agreement between the parties immediately affected”21 but by the authoritarian degree of a third party. And it is because of this positivization that society’s money has effectively been stolen from it, toppling the first of civilization’s twin pillars.

How could this happen? How could the state get away with stealing society’s money?

“For the étatist, money is a creature of the state,”22 and surely one of the greatest tragedies of our time is that the people, in their unwitting acceptance of monetary positivism, are statists themselves, if only as pawns in a game that has been rigged utterly and completely against them. For so meager and confused is the people’s understanding of money that it is inconceivable to them that “all money has originated, and must originate, in a useful commodity chosen by the free market as a medium of exchange;”23 that the state is accordingly “powerless to create money for the economy;”24 that the first act of every sufficiently large state is “to seize an absolute monopoly of the minting business” as the “indispensable means of getting control of the coinage supply;”25 that “inflation, being a fraudulent invasion of property, could not take place on the free market;”26 that with the creation of a central bank, all banks become, by extension, “arms of the government;”27 that “[c]entralization of credit in the hands of the State, by means of a national bank with State capital and an exclusive monopoly” is not capitalism but communism;28 that by going off the gold standard and issuing only fiat money, the state is simply issuing “paper … with nothing but paper backing;”29 that the globalization of this system constitutes “the most gigantic trust [cartel] on earth;”30 that the kingpin of this cartel is the U.S. Federal Reserve System; that the Federal Reserve can “never add anything to our capital structure, or to the formation of capital, because it is organized to produce credit;”31 that a monetary system based on credit is a monetary system based on debt; and that the U.S. government, which had virtually no

21 Ibid., Benson, p. 12.

22 Ibid., Mises, p. 277

23 Ibid., p. 53.

24 Ibid., p. 19.

25 Ibid., p. 62.

26 Ibid., p. 54.

27 Ibid., p. 72.

28 Karl Marx and Friedrich Engels, The Communist Manifesto, 1848, Washington SquarePress, 1964, p. 94.

29 Eustace Mullins, Secrets of the Federal Reserve, Kasper and Horton, 1952, p. 202.

30 Congressman Charles Augustus Lindbergh, Sr., arguing against the FederalReserve Act after its passage in 1913, as quoted by Eustace Mullins in Secrets of the Federal Reserve, p. 15.

31 Ibid., p. 118.

debt prior to the creation of the Federal Reserve, is now over $11 trillion in debt.32 And this does not include nearly $100 trillion in unfunded welfare liabilities,33 the sum total of which amounts to an indebtedness of well over $300,000, and counting, for every man, woman, and child in America.

Because these debts can never be repaid and will instead be simultaneously inflated away by the Federal Reserve and defaulted on by the Treasury, the American people will pay the price through the devaluation of the government’s monopoly money on the one hand—money, let us be clear, that has already lost over 97% of its value34—and through broken government promises on the other.

Moreover, as the government’s money metastasizes, so do its laws. And were the people to understand that the state’s law is no less fraudulent than its money, they would run from legal positivism as fast as they will soon be running from monetary positivism.

6. Law and the State

The more corrupt the State, the more numerous the laws. —Cornelius Tacitus

It has been said, albeit in jest, that the five most important words in the United States Constitution are “Congress shall make no law ...”35 It is of course impossible for Congress not to make law, however, for Congress is the legislative—i.e., the lawmaking—branch of government. As obvious as this is on its face, what is not at all obvious, but nonetheless true, is that legislated law is inherently in conflict with the very reason that Congress was created: namely, to represent the people. This is because … the more numerous the people are whom one tries to“represent” through the legislative process and the more numerousthe matters in which one tries to represent them, the less the word“representation” has a meaning referable to the actual will of actual

32 See the U.S National Debt Clock here: brillig.com/debt_clock.

33 See Richard W. Fisher, “Storms on the Horizon: Remarks before theCommonwealth Club of California,” May 28, 2008, here:www.dallasfed.org/news/speeches/fisher/2008/fs080528.cfm.

34 See The Market Oracle, “Impact of US Dollar Inflation and Devaluation: Illusion,Myth, and Magic,”here: www.marketoracle.co.uk/Article3324.html.

35 The United States Constitution, Amendment 1: “Congress shall make no lawrespecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.”

people other than that of the persons named as their“representatives.”36

Since the matters to be dealt with are limitless, so is the legislation required to resolve them, which is why

… a legal system centered on legislation resembles … a centralizedeconomy in which all the relevant decisions are made by a handfulof directors, whose knowledge of the whole situation is fatallylimited and whose respect, if any, for the people’s wishes is subjectto that limitation.37

A cursory examination of the numbers, from a historical perspective, drives the point home:

The Constitution was framed for 3 million people in thirteensovereign states. When the first Congress met in 1790, there was onerepresentative for every 30,000 [people]. Since only property-holdingwhite males could vote, [this comes to] around 5,000 voting citizensper [representative]. By 1920, the U.S. population was 90 million,and Congress capped representation in the house at 435, where itremains today. Now, however [2002, when the article waspublished], there are 287 million Americans, yielding a ratio of onerepresentative for every 655,000. If we apply this ratio to 1790, therewould have been only five members in the House ofRepresentatives. Or, to put it another way, if the ratio of the framersexisted today, there would be around 9,000 members in the House.38

Clearly, the notion that any but those with what are now commonly known as “special-interests”—i.e., those with the money to pay for the requisite access—are represented in any meaningful way in the U.S. today is ludicrous.39 And insofar as special interests are at odds with those of the people as a whole—i.e., insofar as they merely reflect the fact that the state is

36 Bruno Leoni, Freedom and the Law, Liberty Press, 1961, p. 19.

37 Ibid., pp. 6 and 7.

38 Donald W. Livingston, “Dismantling Leviathan,” Harper’s magazine, May, 2002,p. 14.

39 “It must be recognized that there is a powerful constituency for ignoring theconstitutional limits on governmental powers, and there is no well-organized pressure group of any consequence in favor of it. All special-interest groups seeking a share of federal largesse work diligently, day in and day out, to urge the government to abandon or ignore constitutional limits and award them subsidies. In contrast, the general public is widely dispersed and rarely ever well organized politically. The public would benefit most from constitutional government, but costs overwhelm the effort to coalesce the masses into an effective political pressure group.” Thomas J. DiLorenzo, Lincoln Unmasked: What You’re Not Supposed to Know About Honest Abe, Three Rivers Press (Crown Publishing Group, Random House, New York), 2006, p. 72.

“the fictitious entity by which everyone seeks to live at the expense of everyone else”40—it is equally clear that what is represented is, in the end, the interests of the state itself, since it has no other means of living at all: It is unfortunately none too well understood that, just as the Statehas no money of its own, so it has no power of its own. All thepower it has is what society gives it, plus what it confiscates fromtime to time on one pretext or another; there is no other sourcefrom which State power can be drawn. Therefore, every assumptionof State power, whether by gift or seizure, leaves society with somuch less power; there is never, nor can be, any strengthening ofState power without a corresponding and roughly equivalentdepletion of social power.41

This being so, the growth of state power demonstrates beyond all doubt the trend away from representation and toward centralization. At the time of its founding, the combined civil and military employment of the U.S.’s then-federal government was perhaps 2,500 people, 42 or roughly one for every 1,600 citizens,43 while its now-central government (being federal in name only) employs some 14.6 million people,44 or approximately one for every 21 of the nation’s roughly 306 million citizens.45 Amounting to a growth rate of nearly 7,600%, it is little wonder, then, that Americans’ tax burden has grown even more. For while the average U.S. citizen paid a paltry $20 a year in federal taxes at the time of the nation’s founding, today the

40 See Frederic Bastiat online at The Library of Economics and Liberty, The State,