A significant portion of the people interested in Austrian economic theory claims that the state, as such, should exist in order to preserve and defend private property. While this idea sounds good on the surface, I do not think that it has been properly developed and brought to its logical conclusion. And such a conclusion would be extremely interesting, because it would imply that the state, as we accept it today, should cease to exist.

From a philosophical standpoint, supporters of the Austrian School view private property as something which does not need permission to exist. That is, it is a basic human right and does not need to be acknowledged or allowed by an authority. And since private property needs protection, the belief is that  the state must be  given the power to serve as its guardian. At the same time, however, the state must  not be  given the right to make decisions about whom the property belongs to or how it will be used. Basically, the idea is that the institution of private property is above the state as such.  The state exists only to help us protect it and nothing more.

However, if we accept this premise, then the property owner must have the right to say to the state: “I do not want your protection. I will opt out of your services  and join another country.” And the state cannot have the right to stop this person.  If the state stops him/her, or interferes with this decision in any way, then this means that a person’s property is not personal but is co-owned by the state. Such an action would violate the principle that the state is just a guardian empowered by the owner of the property.

At this point, someone could insist that leaving a state is possible even nowadays. You need just move to another country. However, the problem is that you cannot leave with your land. You can sell it and transfer the money abroad but you are definitely not allowed to secede and join a neighboring country, or to establish your own country.

However, If we accept that the state is only the guardian of private property, then logically property owners should have the right to decide not to avail themselves of its services and secede with their own land. The land belongs to the property owner, who is the only one who can legitimately decide what to do with it. This detail alone should eliminate the existence of the state, as such.

If a “state” which recognizes property rights in their entirety  is to exist at all, it would have to issue such laws that are acceptable to the people who live in it.  Because if this is not the case,  they would opt out of its services  and in very short order this particular country would cease to exist, since it would have no land and no subjects to rule. Such a major change in the relationship between property owners and the state would render the state almost irrelevant.

Under the above circumstances, a “state” can exist in the form of a  variable-size jurisdiction at best. This means a piece of land which is governed by a common set of laws. The laws would be determined by the owners of the land, who can be one or many individuals.  There would be no problem with having laws, as long as these laws are willingly accepted by the people who live under them and in particular by the owners of the land. Every land owner would be entitled to decide what kind of laws are to be valid on his land and it would be fully consistent with the tenets of the Austrian School if a number of landowners  decide to share a common set of laws. From an economic point of view, common standards are  beneficial for everybody  . In such a way jurisdictions could be formed. However, the laws of a jurisdiction would be binding just within its borders. Anybody who disagrees with them  would be free to leave the particular jurisdiction. The size and number of  such jurisdictions would change constantly,  however. The reason is that every jurisdiction would have to create laws that are acceptable to  the people who live therein and that suit the local culture and customs.  Basically, the various jurisdictions would be in market competition with each other. The successful ones, the ones that comply best with the ideas, culture and customs of their people would prosper and grow in size and the ones that do not cater to the real needs of their people would cease to exist. There could be a jurisdiction for every individual culture, belief or lifestyle embraced by people. Therefore, these organizations would be in a state of constant flux in order to reflect societal views and preferences. They would constantly adapt to the new and changing circumstances.

This would be the actual outcome of upholding the supremacy of private property above the state. Variable-size jurisdictions would be established, with laws which are created by the market forces and which thus reflect the needs and preferences of the people living there. The state as we understand it today simply cannot exist because it encroaches on the rights of private property.

An interesting question about the suggested system of separate jurisdictions is: “Who would write the laws which govern them, and how?” This could be achieved in many different ways: democratic (the majority would vote some laws) or  non-democratic (a certain group of people who are interested and able would create the laws, or we could simply let the laws be created through trial and error). An interesting consequence would be that no particular group would be able to create and impose laws which are not acceptable to the people who live under them.  For instance, if the decision is made democratically, those who do not agree with this particular set of laws would leave the respective jurisdiction and only the people who support these laws would be subject to them. What I would like to emphasize is that it is immaterial who creates the laws or how they are created. The laws would self-adjust and coalesce into the right legislation for the particular culture or group of people. The market forces would make this possible.  The average person may not understand much about law and order but he understands very well where live runs smoothly and to his benefit.  People tend to flock to  places where the conditions are best for them. Therefore, this means that they go to places with better laws, with a better societal organization. As we very well know, the emigration/movement in search of  better economic and political conditions has always existed and will continue. That is how the market can impose laws. Jurisdictions with better laws would flourish; the rest would wither. However, this could happen only if the market is free, i.e., if the people recognize the supremacy of private property.

Another interesting aspect is that such a process of law creation does not require financing.  The people who are interested in living under certain laws would create them gratuitously. The others would have the choice to either accept them and live according to them or to just not accept them entirely and leave the jurisdiction.

When private property is sacred, one cannot be made to pay for something one does not want, and in this particular way to support a parliament, for instance. If a parliament exists, it would have to be supported only by the people who are in it and/or by their supporters. What this basically means is that we do not need taxes in order to support the creation of legislation. It would be created on its own accord and free of charge.

To summarize, if we accept the supremacy of private property and in particular that the institution of private property stays above the state as such, then it follows logically that the state as we know it today cannot exist.  At best, such a state could exist in the form of a variable-size jurisdiction which would constantly adapt to the changing societal circumstances. The laws which govern it would be created by the free market, that is, they would meet the needs and wishes of the people of the particular jurisdiction and what is more, they would be created gratuitously.