“If one merchant or one group was as good as another in gathering information and guessing about supply and demand, the one able to operate with lower costs would gain larger profits. A very substantial part of costs was what had to be paid for protection and for insurance against losses that might be inflicted by violence-using enterprises if their exactions were not paid. Some trading enterprises secured more protection than others, or equally good protection at less cost, and this difference in their costs enabled them to make extra profits which I call protection rents.”
~ The Economic Consequences of Organised Violence (on the ancient origins of government and its monopoly on force in exchange for some peace of mind and civilisation)
“Consider the definition of a racketeer as someone who creates a threat and then charges for its reduction. Governments’ provision of protection, by this standard, often qualifies as racketeering.”
~ Charles Tilly
The social contract is essentially a trade : Governments provide protection (of the physical and fiscal sort) and citizens, in exchange give up some freedoms (permitting the government a monopoly on force and enforcement) and some funds (taxes).
It’s all too easy to see how that works – and breaks down.
It’s a fine balance and it’s a balance that’s tilting away from the citizen towards the state:
Increasingly, citizens are being asked to give up more freedoms (and more funds) for rapidly diminishing marginal returns in the form of real security improvements. Despite growing government monetary and fiscal policy interventions (and their reciprocal costs in terms of taxes, inflation and social and commercial restrictions) inequality is rising, living standards are stagnating, and personal and social safety is under threat. What are we getting for our pound of flesh? – Another pound of flesh…
As it turns out: Money can buy force. Force can take money.
A monopoly on money can be expropriated by a monopoly on force.
It’s not quite the deal we thought we were signing up for, is it?