In 10 days the British will decide whether their country will continue to belong to the European Union or leave the community of nations.
If it turns out to be an exit, it would be a watershed moment for the Continent.
Then the anti-E.U. and secessionist elements in other countries would also be given a boost. The pet project of the political elite, the expansion of the European Union into a centralized European government, would be stopped, and the vision of a United States of Europe would have failed.
That’s why politicians from Brussels, Berlin and Paris are attempting to turn public opinion against the so-called “Brexit.” The politicians are insinuating the end of political integration would also mark the end of prosperity and peace in Europe.
History shows that Europe’s wealth and prosperity isn’t founded on political simplicity but rather on the decentralized variety.
But that, of course, is nonsense. History shows that Europe’s wealth and prosperity isn’t founded on political simplicity but rather on the decentralized variety.
After the fall of the Roman Empire, a colorful kaleidoscope of principalities, kingdoms, independent cities and provinces emerged in Medieval Europe. The polycentric structure ignited an intensive competition among the regions from which both the citizens and the business class profited.
Princes and kings were compelled to treat their productive subjects well, otherwise they would leave their country. The political competition placed narrow limits on taxation and the whims of governments, said Australian economist and historian Eric Jones in his 1981 book, “The European Miracle.”
David Landes, the Harvard University professor of economics and history, saw the competition of the minor states to be the decisive source for an “unprecedented vitality” of business activity. It wasn’t without reason that capitalism blossomed at the beginning of the modern age in decentralized city states in northern Italy and in the secessionist Netherlands.
Given this historical background, attempts to do everything possible to keep the countries under the E.U. umbrella is a dubious endeavor.
Normally, peaceful exits and secessions should be possible. That has many advantages. The smaller a nation is, the less the distance between government and citizen. That increases the pressure by society on the politicians to take the wishes of the citizens seriously.
A Continent of autonomous states would offer the people a wide variety of social models. The small states have a small expanse of territory, making it easier for the citizens to vote with their feet. That forces the governments to roll back taxes and governmental infringements of ownership, which strengthens factors promoting growth.
The governments would also work together in a Europe organized in small states. And yet it wouldn’t be the political harmonization that takes center stage in this, but rather the market-based competition would be the coordinating mechanism. In this way, the governments learn from other countries and cultures.
Competition as a “discovery procedure” (see the works of economist Friedrich Hayek) replaces the bureaucratic forging of consensus. The politicians would no longer be able to shift the blame for undesirable developments to a central authority like the European Union but rather have to take responsibility themselves for the consequences of their decisions. This reinforces the principle of liability, the lifeblood of a free and just society.
Small territories are not self-sufficient, however, they are dependent on the division of work and free trade with their neighbors. For this reason, a Europe of small states would not fall victim to protectionism. There is also no threat of a currency chaos, since the market economy’s search for a common currency would lead the people to gold or silver or crypto-currencies backed by precious metals.
A world of small states is not a horror scenario but instead would promote prosperity.
The article first appeared in the business weekly, WirtschaftsWoche. To contact the author: firstname.lastname@example.org