“Counter-Economics: Our Means” by Samuel Edward Konkin III

The following is a chapter from SEK3’s “New Libertarian Manifesto”.

Having detailed our past and statist present and glimpsed a credible view of a far better society achievable with present understanding and technology – no change in human nature needed – we come to the critical part of the manifesto: how do we get from here to there? The answer breaks into two naturally – or maybe unnaturally. Without a State, the differentiation into micro (manipulation of an individual by himself in his environment – including the market) and the macro (manipulation of collectives) would be at best an interesting statistical exercise with some small reference to marketing agencies. Even so, a person with a highly sophisticated decency may wish to understand the social consequences of his or her acts even if they harm no other.

With a State tainting every act and befouling our minds with unearned guilt, ait becomes extremely important to understand the social consequences of our acts. For example, if we fail to pay at tax and get away with it, who is hurt: us? The State? Innocents? Libertarian analysis shows us that the State is responsible for any damage to innocents it alleges the “selfish tax-evader” has incurred; and the “services” the State “provides” us are illusory. But even so, there must be more than lonely resistance cleverly concealed or “dropping out?” If a political party or revolutionary army is inappropriate and self-defeating for libertarian goals, what collective action works? The answer is agorism.

It is possible, practical, and even profitable to entrepreneur large collections of humanity from statist society to the agora. This is, in the deepest sense, true revolutionary activity and will be covered in the next chapter. But to understand this macro answer, we must first outline the micro answer. [1]

The function of the pseudo-science of Establishment economics, even more than making predictions (like the Imperial Roman augurers) for the ruling class, is to mystify and confuse the ruled class as to where their wealth is going and how it is taken. An explanation of how people keep their wealth and property from the State is then Counter-Establishment economics, or Counter- Economics [2] for short. The actual practice of human actions that evade, avoid and defy the State is counter-economic activity, but in the same sloppy way “economics” refers to both the science and what it studies, Counter- Economics will undoubtedly be used. Since this writing is Counter-Economic theory itself, what will be referred to as Counter-Economics is the practice.

Mapping and describing all or even a significantly useful part of Counter- Economics will require at least a full volume itself. [3] Just enough will be sketched here to provide understanding for the rest of the manifesto.

Going from an agorist society to a statist one should be uphill work, equivalent to a path of high negative entropy in physics. After all, once one is living in and understanding a well-run free society, why would one wish to return to systematic coercion, plunder, and anxiety? Spreading ignorance and irrationality among the knowledgeable and rational is difficult; mystifying that which is already clearly understood is nearly impossible. The agorist society should be fairly stable relative to decadence, though highly open to improvement.

Let us run backwards in time, like running a film backward, from the agorist society to the present statist society. What would we expect to see?

Pockets of statism, mostly contiguous in territory, since the State requires regional monopolies, would first appear. The remaining victims are becoming more and more aware of the wonderful free world around them and “evaporating” from these pockets. Large syndicates of market protection agencies are containing the State by defending those who have signed up for protection- insurance. Most importantly, those outside the statist pockets or sub- societies are enjoying an agorist society save for a higher cost of insurance premiums and some care as to where they travel. The agorists could co-exist with statists at this point, maintaining an isolationist “foreign policy” since the costs of invasion of statist sub-societies and liberation would be higher than immediate returns (unless the State launches an all-out last aggression), but there is no real reason to imagine the remaining victims will choose to remain oppressed when the libertarian alternative is so visible and accessible. The State’s areas are like a super-saturated solution ready to precipitate anarchy.

Run backward another step and we find the situation reversed. We find larger sectors of society under Statism and smaller ones living as agorically as possible. However, there is one visible difference: the agorists need not be territorially contiguous. They can live anywhere, though they will tend to associate with their fellow agorists not only for social reinforcement but for ease and profitability of trade. It’s always safer and more profitable to deal with more trustworthy customers and suppliers. The tendency is for greater association among more agorist individuals and for dissociation with more statist elements. (This tendency is not only theoretically strong; it already exists in embryonic practice today.) Some easily defendable territories, perhaps in space or islands in the ocean (or under the ocean) or big-city “ghettos” may be almost entirely agorist, where the State is impotent to crush them. But most agorists will live within statist-claimed areas.

There will be a spectrum of the degree of agorism in most individuals, as there is today, with a few benefiting from the State being highly statist, a few fully conscious of the agorist alternative and competent as living free to the hilt, and the rest in the middle with varying degrees of confusion.

Finally, we step back to where only a handful understand agorism, the vast majority perceiving illusory gains from the existence of the State or unable to perceive an alternative, and the statists themselves: the government apparatus and the class defined by receiving a new gain from the State’s intervention in the Market. [4]

This is a description of our present society. We are “home.”

Before we reverse course and describe the path from statism to agorism, let us look around at our present society with our newly-acquired agorist perception. Much as a traveller who returns home and sees things in a new light from what he or she has learned from foreign lands and ways of life, we may gain new insights on our present circumstances.

Besides a few enlightened New Libertarians tolerated in the more liberal statist areas on the globe (“toleration” exists to the degree of libertarian contamination of statism), we now perceive something else: large numbers of people who are acting in an agorist manner with little understanding of any theory but who are induced by material gain to evade, avoid, or defy the State. Surely they are a hopeful potential?

In the Soviet Union, a bastion of arch-statism and a nearly totally collapsed “official” economy, a giant black market provides the Russians, Armenian, Ukrainian and others with everything from food to television repair to official papers and favors from the ruling class. As the Guardian Weekly reports, Burma is almost a total black market with the government reduced to an army, police, and a few strutting politicians. In varying degrees, this is true of nearly all the Second and Third Worlds.

What of the “First” World? In the social-democrat countries, the black market is smaller because the “white market” of legally accepted market transactions is larger, but the former is still quite prominent. Italy, for example, has a “problem” of a large part of its civil services which works officially from 7 A.M. to 2 P.M. working unofficially at various jobs the rest of the day earning “black” money. The Netherlands has a large black market in housing because of the high regulation of this industry. Denmark has a tax evasion movement so large that those in it seduced to politics have formed the second largest party. And these are only the grossest examples that the press has been able or willing to cover. Currency controls are evaded rampantly; in France, for example, everyone is assumed to have a large gold stash and trips to Switzerland for more than touring and skiing are commonplace.

To really appreciate the extent of this counter=economic activity, one must view the relatively free “capitalist” economies. Let us look at the black and grey markets [5] in North America and remember this is the case of lowest activity in the world today.

According to the American Internal Revenue Service, at least twenty million people belong in the “underground economy” of tax evaders using cash to avoid detections of transactions or barter exchange. Millions keep money in gold or in foreign accounts to avoid the hidden taxation of inflation. Millions of “illegal aliens” are employed, according to the Immigration and Naturalization Service. Millions more deal or consume marijuana and other proscribed drugs, including laetrile and forbidden medical material.

And there are all the practitioners of “victimless crimes.” Besides drug use, there are prostitution, pornography, bootlegging, false identification papers, gambling, and proscribed sexual conduct between consenting adults. Regardless of “reform movements” to gain political acceptance of these acts, the populace has chosen to act now – and by so doing are creating a counter-economy.

But it doesnt stop here. Since the 55 mph speed limit enacted federally in the U.S., most Americans have become counter-economic drivers. The trucking industry has developed CB communications to evade state enforcement of regulations. For independents who can make four runs at 75 mph rather than three runs at 55 mph, counter-economic driving is a question of survival.

The ancient custom of smuggling thrives today from boatloads of marijuana and foreign appliances with high tariffs and truckloads of people from less- developed countries to the tourists stashing a little extra in their luggage and not reporting to customs agents.

Nearly everyone engages in some sort of misrepresentation or misdirection on their tax forms, off-the-books payments for services, unreported trade with relatives and illegal sexual positions with their mates.

To some extent, then, everybody is a counter-economist! And this is predictable from libertarian theory. Nearly every aspect of human action has statist legislation prohibiting, regulating or controlling it. These laws are so numerous that “Libertarian” Party which prevented any new legislation and briskly repealed ten or twenty laws a session would not have significantly repealed the State (let alone the mechanism itself!) for a millennia! [6]

Obviously, the State is unable to obtain enforcement of its edicts. Yet the State continues. And if everyone is somewhat counter-economic, why hasn’t the Counter-Economy overwhelmed the economy?

Outside of North America we can add the effect of imperialism. The Soviet Union has received support from the more developed countries in the 1930’s and large quantities of instruments of violence during World War II. Even today, “trade” heavily subsidized by non-repayable loans props up the Soviet and new Chinese regimes. This capital (or anti-capital, being destructive of value) flow, together with military aid, from both blocs maintains regimes in the rest of the globe. But that does not explain the North American case.

What exists everywhere on Earth allowing the State to continue is the sanction of the victim. [7] Every victim of statism has internalized the State to some degree. The IRS’s annual proclamation that the income tax depends on “voluntary compliance” is ironically true. Should the taxpayers completely cut off the blood supply, the vampire State would helplessly perish, its unpaid police and army deserting almost immediately, defanging the Monster. If everyone abandoned “legal tender” for gold and goods in contracts and other exchanges, it is doubtful that even taxation could sustain the modern State. [8]

This is where the State’s control of education and the information media, either directly or through ruling-class ownership, becomes crucial. In earlier days, the established priesthood served the function to sanctify the king and aristocracy, mystify the relations of oppression, and induce guilt in evaders and registers. The disestablishment of religion has put this burden on the new resisters. The disestablishment of religion has put this burden on the new intellectual class (what the Russians called the intelligentsia). Some intellectuals, holding truth as their highest value (as did earlier dissenting theologians and clerics), do work at clarifying rather than mystifying, but they are dismissed or reviled and kept away from State and foundation-controlled income. Thus is the phenomenon of dissidence and revisionism created; and thus is the attitude of anti-intellectualism generated among the populace who suspect or incompletely understand the function of the Court Intellectual.

Note well how anarchist intellectuals are attacked and repressed under every State; and those arguing for an overthrow of the present ruling class – even only to replace it with another – are suppressed. Those who propose changes which eliminate some beneficiaries of the State and add other\s are often laud ed by the benefiting elements of the Higher Circles and attacked by the potential losers.

A common characteristic of most hardened black marketeers is their guilt. They wish to “make their bundle” and return to the “straight society.” Bootleggers and hookers all long some day for re-acceptance in society – even when they form a supportive “sub-society” of outcasts. Yet there have been exceptions to this phenomenon of longing for acceptance: the religious dissenting communities of the 1700s, the political utopian communities of the 1800s, and most recently, the counter-culture of the hippies and New Left. What they had was a conviction that thir sub-society was superior to the rest of society. The fearful reaction to themselves they generated in the rest of society was the fear they were correct.

All of these examples of self-sustaining sub-societies failed for one overriding reason: ignorance of economics. No social binding, no mater how beautiful, can overcome the basic glue of society – division of labor. Thu anti-market commune defies the only enforceable law – the law of nature. The basic organizational structure of society (above the family) is not the commune (or tribe or extended tribe or State) but eh agora. No matter how many wish communism to work and devote themselves to it, it will fail. They can hold back agorism indefinitely by great effort, but when they let go, the “flow” or “Invisible Hand” or “tides of history” or “profit incentive” or “doing what comes naturally” or “spontaneity” will carry society inexorably closer to the pure agora.

Why is there such resistance to eventual happiness? Psychologists have been dealing with that since they began their embryonic science. But we can at least give two broad answers when it comes to socioeconomic questions: internalization of anti=principles (those seeming like principles but actually contrary to natural law) and the opposition of vested interests.

Now we can see clearly what is needed to create a libertarian society. One the one hand we need the education of the libertarian activists and the consciousness-raising of counter-economists to libertarian understanding and mutual supportive ness. “We are right, we are better, we are surviving in a moral, consistent way and we are building a better society – of benefit to ourselves and others,” our counter-economic “encounter groups” might affirm.

Note well that libertarian activists who are not themselves full practicing counter-economists are unlikely to be convincing. “Libertarian” political candidates undercut everything they say (of value) by what they are doing; some candidates have even held jobs in taxing bureaus and defense departments!

On the other hand, we must defend ourselves against the vested interests or at the very least lower their oppression as much as possible. If we eschew reformist activity as counter-productive, how will we achieve that?

One way is o bring more and more people into the counter-economy and lower the plunder available to the State. But evasion isn’t enough; how do we protect ourselves and even counter-attack?

Slowly but steadily we will move to the free society turning more counter- economists onto libertarianism and more libertarians onto counter-economics, finally integrating theory and practice. The counter-economy will grow and spread to the next step we saw in our trip backward, with an ever=-larger agorist sub-society embedded in the statist society. Some agorists may even condense into discernible districts and ghettos and predominate in islands or space colonies. At this point, the question of protection and defense will become important

Using our agorist model (Chapter 2), we can see how the protection industry must evolve. Firstly, why do people engage in counter-economics with no protection? the pay-off for the risk they take is greater than their expected loss. This statement is true, of course, for all economic activity, but for counter-economics it requires special emphasis:

The fundamental principle of counter-economics is to trade risk for profit. [9]

The higher the expected profit, the greater the risk taken. Note that if risk is lowered, a lot more would be attempted and accomplished – surely an indicator that a free society is wealthier than an unfree one.

Risk may be lowered by increasing care, precautions, security (locks and stashes), and by trusting fewer persons of higher trustworthiness. The last indicates a high preference for dealing with fellow agorist and a strong economic incentive binding an agorist sub-society and an incentive to recruit or support recruitment.

Counter-economic entrepreneurs have an incentive to provide better security devices, places of concealment, instructions to help evasion and screen potential customers and suppliers for other counter-economic entrepreneurs. And thus is the counter-economic protection industry born.

As it grows, it may begin insuring against “bursts,” lowering counter-economic risks further and accelerating counter-economic growth. Then it may provide lookouts and guarded areas of safekeeping with alarm systems and highly technological concealment mechanisms. Guards may be provided against real criminals (other than the State). Already many residential, business and even minority districts have private patrols, having given up on the State’s alleged protection of property.

Along the way the risk of contract-violation between counter-economic traders will be lowered by arbitration. Then the protection agencies will start providing contract enforcement between agorists, although the greatest “enforcer” in the early stages will be the State to which each can turn the other cone into. Yet that act would quickly result in one’s expulsion from the sub-society; so an internal enforcement mechanism will be valued.

In the final stages counter-economist transactions with statists will be enforceable by the protection agencies and the agorists protected against the criminality of the State. [10]

At this point we have reached the final step before the achievement of a libertarian society. Society is divided between large agorist areas inviolate and statist sectors. And we stand on the brink of Revolution.


[1] Micro and macro are terms from present Establishment economics. While Counter-Economics is part of agorism (until the State is gone), agorism includes both Counter-Economics in practice and libertarianism in theory. Since that theory includes an awareness of the consequences of large-scale Counter-Economic practice, I will use agorist in the macro sense and counter- economic in the micro sense. Since the division is inherently ambiguous, some overlap and interchangeability will occur.

[2] “Counter-Economics” was formed the same way as “counter-culture;” it does not mean anti-economic science any more than counter-culture was anti-culture.

[3] This volume, Counter-Economics (the book), has been begun and should be completed in 1981 and published in 1982 one way or the other, Market willing!

o Note to Second Edition: The Market is not yet willing, but soon…

[4] That class has been called the Ruling Class, Power Elite, or Conspiracy, depending on whether the analysis comes from a Marxist, Liberal, or Bircher background. The terms will be used inter changeably to show the commonality of the identification.

[5] While some coercive acts are often lumped into the label “black market,” such as murder and theft, the vast majority of this “organized crime” is perfectly legitimate to a libertarian, though occasionally unsavory. The Mafia, for example, is not black market but as government over some of the black market which collects protection money (taxes) from its victims and enforces its control with executions and beatings (law enforcement), and even conducts wars when its monopoly is threatened. These acts will be considered red market to differentiate them from the moral acts of the black market which will be discussed below. In short, the “black market” is anything non-violent prohibited by the State and carried on anyways.

The “grey market” is used here to mean dealing in goods and services not themselves illegal but obtained or distributed in ways legislated against by The State. Much of what is called “white-collar crime” falls under this and is smiled upon by most of society.

Where one draws the line between black and grey market depends largely on the state of consciousness of the society one is in. The red market is clearly separable. Murder is red market; defending oneself against a criminal (when the State forbids self-defense) – including a police officer – is black in New York City and grey in Orange County.

[6] Thus an “L”P would perpetuate statism. In addition, and “L”P would preserve the ill-gotten gain of the ruling class and maintain the State’s enforcement and execution.

[7] An example of how this works may be helpful. Suppose I wished to receive and sell a contraband or evade a tax or violate a regulation. Let’s say I can make $100,000 a transaction.

Using government figures on criminal apprehension, always exaggerated in the State’s favor simply because they cannot know how much we got away with, I find an apprehension rate of 20%. One may then find out the percentage of those cases that come for trial and the percentage of those that result in conviction even with a good lawyer. let’s say 25% make it to trial and 50% result in conviction. (The latter is high but we’ll throw in the legal fees involved so that even a decision involving loss of legal costs but acquittal is still a “loss.”) I therefore incur a 2.5% risk (.20 x .25 x .50 = 0.025). This is high for most real cases.

Suppose my maximum fine is $500,000 or five years in jail – or both. Excluding my counter-economic transactions (one certainly cannot count them when deciding whether or not to do them), I might make $20,000 a year so that I would lose another $100,000. It’s very hard to ascribe a value to five years of incarceration, but at least in our present society it’s not too much worse than other institutionalization (school, army, hospital) and at least the counter-economist won’t be plagued with guilt and remorse.

So I weigh 2.5% of $600,000 loss or $15,000 and five years against $100,000 gain! And I could easily insure myself for $14,000 (or less) to pay all costs and fines! In short, it works.

[8] It probably should be noted explicitly that businesses could grow quite large in the counter-economy. Whether or not “wage workers” would exist instead of “independent contractors” for all steps of production is arguable, but this author feels that the whole concept of “worker-boss” is a holdover from feudalism and not, as Marx claims, fundamental to “capitalism.” Of course, capital-statism is the opposite of what the libertarian advocates.

Furthermore, even large businesses today could go partially counter-economic, leaving a portion in the “white market” to satisfy government agents and pay some modicum of taxes and report a token number of workers. The rest of the business would (and already often does) expand off the books with independent contractors who supply, service, and distribute the finished product. Nobody, no business, no worker, and no entrepreneur need be white market.