Progress pill
The seizure of money by the State

The economic consequences of organized violence

History of Coinage

The economic consequences of organized violence

  • Organized violence and the evolution of the state
  • Medieval balance
  • The Merchant Renaissance
  • The industrial era
  • The microprocessor revolution
  • The collapse of the Westphalian model

Organized violence and the evolution of the state

Historian Frederic C. Lane proposes a revolutionary thesis: the anatomy of the state throughout history is shaped by the technologies used to project violence. Starting from the Weberian principle that the state holds a monopoly on legitimate violence, Lane observes that this monopoly—paradoxically more efficient than competition in this field—evolves according to the relationship between the cost of attack and the cost of defense.
This analysis, taken up by the authors of "The Sovereign Individual" (1997), explains the historical mutations in political organization: from the medieval feudal system to the city-states of the Renaissance, then to the industrial nation-states and finally to the modern welfare states. Each transition corresponds to a major technological breakthrough in the exercise of violence, occurring approximately every 400-500 years.

Medieval balance

In the Middle Ages, the agrarian economy was over 90% dominant. The peasant, literally rooted to his land, could not flee from the lord and his knights. Military technology—hand-forged armor, years of sword training—was extremely expensive. This asymmetry massively favored attack over defense.
The immobile agricultural producer became the captive of the local monopolist of violence. His capacity for tax extraction reached new heights—although, paradoxically, medieval taxes remain modest compared to the 78% of compulsory levies in modern times. The lord could tax at will, because the peasant could neither resist nor leave.

The Merchant Renaissance

The emergence of Hanseatic trade in the North and Mediterranean trade in the South transformed the situation. Merchants, the main creators of added value, possessed mobile capital—their ships. They needed only light maritime militias, as the seas were difficult to police. Above all, they could easily migrate to a neighboring port if taxation became excessive.
This mobility created tax competition between city-states. Venice, Genoa and Bruges had to offer the most liberal framework possible: reliable contracts, quality currency, insurance, minimal taxation. Princes had to seduce rather than coerce. The symmetry reverses: defense (through flight) becomes easier than attack.

The industrial era

The Industrial Revolution brought with it a configuration similar to feudalism. Factories, railroads and assembly lines represent massive, immobile investments. Henry Ford was unable to relocate his plants in the face of taxation. Workers, concentrated in industrial cities, unionized to negotiate collectively rather than migrate individually.
The "welfare state" emerged: industrial planning (Japan, Korea), military protection of infrastructures, minimum social benefits for the workforce. The Second World War illustrated this vulnerability: bombing enemy factories became the dominant strategy. The concentration of physical capital enabled massive tax extraction to finance the welfare state.

The microprocessor revolution

Three technological innovations are now disrupting these long-standing balances. The microprocessor is revolutionizing warfare, enabling an operator in Nevada to pilot a drone in Afghanistan with surgical precision. The Gulf War (1991) demonstrated this breakthrough: the world's fourth-largest army (Iraq's) was defeated in 45 days, with fewer than 200 deaths on the coalition side. Technological superiority rendered frontal attack obsolete.
The Internet and asymmetric cryptography are revolutionizing value creation. A developer can work from anywhere with a MacBook and Starlink, exporting their production instantly and free of charge. Digital nomads escape geographical constraints, compelling states to compete for them in a way not seen since the Renaissance.
Bitcoin represents the culmination of this logic: a currency freed from the state, protected by an inviolable cryptographic shield. Wealth becomes defensible against any physical force. The individual regains the ability to defend against state monopoly.

The collapse of the Westphalian model

Western welfare states, designed for the industrial age, are becoming obsolete. Value creators—developers, artists, financiers—are migrating to Singapore, Dubai or El Salvador, preferring fewer public services in exchange for minimal taxation. Modern giants like Apple and Tether need neither offices nor physical infrastructure.
This brain drain creates a spiral: fewer net contributors, degraded public services, increased taxation on those who stay, and accelerated departures. States must radically downsize or face bankruptcy. Fragmentation into small, competitive jurisdictions—a new model of digital city-states—seems inevitable.
History teaches us that these transitions take generations. But Bitcoin's separation of money and state could accelerate the process. Individuals now vote with their feet and their cryptographic wallets, redrawing the map of global power along lines we are only beginning to perceive.