30 June 2016

Liberty and Austrian economics in the principality of Liechtenstein

By Andreas Kohl Martínez

“We are moving in the wrong direction. An expansion of the influence of the State has no place in a globalized world. Nevertheless, nationalist and socialist concepts have survived in almost all States. We should bid farewell to nationalist and socialist ideas to the extent possible and transfer more responsibilities to the citizens. We do not need more, but rather significantly less State. We must strengthen the will to engage in private solidarity and strengthen families as the foundation of society.”

-HSH Sovereign Prince Hans-Adam II of Liechtenstein in an interview for the Jan/Feb 2007 edition of the Handelszeitung

In an era of rising superstates and increasing centralisation, or to word it otherwise; a time of intensifying conflict between the always ubiquitous nationalist and socialist agendas, it isn’t hard to lose track – or indeed, never even be aware – of the few places in this world where individual freedom trumps these aforementioned concepts.

Liechtenstein is such a place, and even though its territory covers only a roughly 60 square miles patch of mountainous land in central Europe, its radical ideas on the limits of the State apparatus are growing increasingly more apparent to the rest of the world. But how, and why, is Liechtenstein pivoting away from the trends of Statism that torment the rest of the globe to varying degrees? In order to get an answer, it is important to first get one’s head around the underlying political systems that are providing the groundwork for this principality’s rise to liberty.

Apart from neighbouring Switzerland, Liechtenstein is the only state in which direct democracy is fully developed, and at the end of the day, it would only take action from half of its 35,000 citizens to pass or abolish any law, regulation, or even constitution. There is also an element of indirect democracy through democratically elected oligarchs pertaining to political parties (as is unfortunately the core of all western democracies) which share more or less equal ruling power with the privately funded Princely House, but these latter parts of the political environment in Liechtenstein (parliament and monarchy) can be removed through an act of direct democracy; popular initiatives require 1,000 signatures (5% of the electorate) or alternatively the approval of three municipalities to effect a popular vote, if it concerns laws. If the initiative proposes to change the constitution, 1,500 signatures or alternatively the approval of four municipalities is required.

Naturally, an anarchist could claim that a monarch from a family that has reigned for centuries cannot possibly be in favour of abolishing the state. In response, I should like to note that the Princes of Liechtenstein are not paid for their duties as head of state by either the state or the taxpayer. The total cost of our monarchy, in contrast to almost all other monarchies, is covered by the Prince’s or the Princely House’s private funds.”

-HSH Sovereign Prince Hans-Adam II of Liechtenstein, The State in the Third Millennium, Introduction (Page 3)

In addition, there are 11 autonomous municipalities in Liechtenstein and each of them also have individual systems of regional direct democracy, these systems are constitutionally protected by the State of Liechtenstein and as of the constitutional reform of 2003, include the right of vote for secession (more on that later). This effectively means that  if approx. 183 of the municipality of Planken’s 366 citizens gathered tomorrow morning to vote for Planken to secede from Liechtenstein in order to join another country or even form a sovereign or anarchic entity, they’d be constitutionally guaranteed that right.

“The State should treat its citizens like an enterprise treats its customers. For this to work, the State also needs competition. We therefore support the right of self-determination at the municipal level, in order to end the monopoly of the State over its territory.”

-HSH Sovereign Prince Hans-Adam II of Liechtenstein

At first sight, none of this seems like it has a lot to do with libertarianism, after all there is a lot wrong with the possibility of a 51% attack (just ask the Bitcoin community) and there are some very accurate comparisons to be made of democracy and gang rape, but in the context of such a tight-knit community like Liechtenstein, it creates a sense of security from the expansionary nature of government; an almost private business-like relationship with the State where competition does exist to a satisfying degree, even though the ‘customers’ in this case are groups of between 366 and 5811 people (ie the population in the least and most densely populated municipalities).

But who is responsible for coming up with this state model? Is Liechtenstein a country of savants who by some kind of divine enlightenment have been able to protect their liberties while we lost more and more of our own? Hardly so, and in fact a quick look at the principality’s rich history shows an equal surge of nationalism and socialism as experienced by all other surrounding countries in the 19th and 20th centuries.

However one thing did make Liechtenstein rather unique, and that is the incredible wisdom of its monarchs arising from their ability to disinterestedly reflect on and learn from history. This is made quite clear in Prince Hans-Adam II’s book, The State in the Third Millennium (it can be ordered from Amazon – or directly from the Publisher), which is, in Hans-Adam’s own words, ‘a cookbook of political recipes, gathered over centuries by my ancestors and over decades by myself’. This book is a very interesting read for minarchists and anarcho-capitalists alike, for even if the prince rejects ‘anarchy’ as such (or at least, his understanding of it), his recognition of the state as ‘a real threat to the life and freedom of individuals’ makes him call for a surprisingly libertarian redefinition of the State.

“I would like to set out in this book the reasons why the traditional state as a monopoly enterprise not only is an inefficient enterprise with a poor price-performance ratio, but even more importantly, becomes more of a danger for humanity the longer it lasts.”

-HSH Sovereign Prince Hans-Adam II of Liechtenstein, The State in the Third Millennium, Introduction (Page 2)

I’m going to attempt to set out Hans-Adam’s vision for the State of tomorrow in a concise manner that will especially appeal to readers of Rothbard or other modern libertarians. For this, let us imagine that there is an Anarcho-Capitalist revolution in America; the IRS is shut down, so is the NSA, CIA, DEA, and any other governmental institution which bases its very existence on the use of force and violation of the NAP. All other parts of the government are now without funding, for taxes no longer exist.

The question which Hans-Adam II seems to ask us in this situation is as such: Will all of these now broke institutions disappear, or will some of them be able to survive as part of a large, private, multi-service company which adheres to a constitution that is also accepted by the company’s customers (this, in essence, is what he calls “State” throughout The State in the Third Millennium)? In other words, will the Constitution of the United States be torn apart and forgotten about or can it possibly survive as a voluntary contract? I don’t personally have an answer, but Hans-Adam’s opinion is that once we establish that States can no longer enforce their rule through coercion, this solution of voluntary governance will be preferable at first; after all, human beings are a creature of habit and we have already been exposed to more than 3 millennia of statecraft – that said, he even recognises that “For some, the steps in this book will appear too large; for others, too small. Yet perhaps in the fourth millennium, humanity may be able to ask the question: ‘Why do we need a state at all?’” .

“Let us create a country in which, to the extent possible, the individuals themselves, not the State, shall make each individual’s decisions and decide upon their needs”

-HSH Prince Alois, Hereditary Prince of Liechtenstein; August 16, 2005

But if the Prince is so keen on individual rights, why on earth are individuals in Liechtenstein not free to secede from the country, why would it take them the effort of persuading half of their municipality in order to sign out of compelled governance? Further investigation into the constitutional reform of 2003 yields some fascinating information in that regard, and it would appear that Hans-Adam II at first petitioned for the right of self-determination not just at the municipal level, but at also at the individual level, which would have allowed citizens to secede not just themselves, but also all of their private property from the country, making the whole concept of  “sovereign citizens” a legal possibility. In The State in the Third Millennium, Prince Hans-Adam II enunciates: “We in the Princely House are convinced that the Liechtenstein monarchy is a partnership between the people and the Princely House, a partnership that should be voluntary and based on mutual respect. As long as we in the Princely House are convinced that the monarchy can make a positive contribution to the country and its people, that a majority of the people desire this, and that certain conditions are fulfilled, such as the autonomy of our family as established in our house law, we shall gladly provide the head of state.”

However we must also remember that the Princely House has the power to veto any bill proposed by parliament, and that the opposite is also true. In this case, parliament threatened to veto the constitutional amendment brought forward by His Serene Highness on grounds that this new legal possibility would be abused erratically and bring chaos, and thus the proposition was cut back to secession only at the municipal level as active today. All of this is explained in further detail on pages 283-284 of Freedom and Prosperity in Liechtenstein: A Hoppean Analysis by Andrew Young from the Journal of Libertarian Studies, Vol 22, a great paper reminiscent of Hans-Hermann Hoppe’s arguments in favour of monarchy over democracy, which provides us with our first link between Liechtenstein and Austrian Economics.

The connection doesn’t stop there however, imagine my surprise when I learned that many members of the Princely House are actually involved in an Austrian Economics think-tank, the ECAEF. Such is their belief in free market economy that they have actually felt the need to personally support the cause of Austrian Economics, an otherwise unrepresented economic school amongst heads of states.

“There is inequality in all social forms, and there always will be.”

“[Forcible] Redistribution can not be the solution, [by this] the economy is weakened.”

-H.S.H. Prinz Michael Von Liechtenstein, president of the ECAEF – European Center of Austrian Economics Foundation during an interview in Jan 2013.

Prinz Michael also quoted Ludwig von Mises on this occasion, saying:

“The riches of the rich are not the causes of one’s poverty,”

The foundation is obviously completely privately funded, just as is the Princely House. Amongst other activities, the ECAEF hosts an annual conference and essay competition (This year’s topic: “Trusting Politicians with Our Money is like Leaving a Cat in Charge of a Cream Jug”). It also makes a variety of press releases, including articles that are sometimes featured in Liechtenstein newspapers and it has some ties with the European counterpart of Students for Liberty.

“Political elites and their bureaucracies have always tried to restrict civil liberties.” “After all the knowledge of the circumstances of the individual opens up possibilities for abuse and thus the ability to restrict individual freedom through more government controls. A vicious cycle, a never-ending vicious circle.”

-H.S.H. Prinz Michael Von Liechtenstein, president of the ECAEF, on the expanding Surveillance State (with allusion to the NSA and other spy agencies) for the 41st (28th of May 2014) edition of Finanz und Wirtschaft

I would invite readers of this article to make their own conclusions on Liechtenstein, its sovereign family, and whether or not it exemplifies the libertarian values which we hold so dearly, but personally I need no further convincing – I can’t count how many times I have been sent to live in Somalia ever since I adopted the label of “Anarchist”, and honestly, it doesn’t bother me too much since dispelling the “Somalia = Libertarian Anarchy” fallacy isn’t much of a challenge any more, but this argument often comes along with questioning on the existence (and inferred feasibility) of a Libertarian country. I feel like thanks to Liechtenstein, we are now able to prove that Liberty works.

This article was originally published on Liberty.me, and can be found here

Andreas Kohl Martínez was the Provincial Coordinator in the province of Toledo for the Spanish Libertarian Party, P-Lib. He is now Liberland's ambassador to Liechtenstein and works with the Foundation for the Advancement of Liberty in Spain. He also runs a Bitcoin business in Liechtenstein.