Why States Are Not Just Big Companies

The Fatal Conflation and the Economic Inevitability of State Collapse

The False Equivalence

A common claim is that states are simply large companies that "got away with it" - that the difference between Amazon's terms of service and taxation is merely one of degree, not kind. The argument follows that if the US government collapsed, Amazon (or some large corporation) would simply become the new state, because the biggest company inevitably morphs into a territorial monopoly on violence.

This conflates voluntary exchange with systemic coercion, and treats state formation as an inevitable economic outcome rather than what it actually is: a parasitic abandonment of economic law.

How States Actually Form: Conquest, Not Contract

The social contract theory of state formation is a fairy tale. Franz Oppenheimer demolished this myth in The State, defining it as:

"a social institution, forced by a victorious group of men on a defeated group, with the sole purpose of regulating the dominion of the victorious group over the vanquished, and securing itself against revolt from within and attacks from abroad."

States don't emerge from successful companies that gradually accumulate power. They emerge from conquest. Oppenheimer identified two fundamentally opposed means of acquiring wealth:

  1. Economic means - peaceful, voluntary exchange
  2. Political means - coercion and appropriation of others' labor

The state is the organization of the political means. It's not an evolution of economic activity - it's the opposite of it.

As the classic paradigm shows: a conquering tribe realizes it's more profitable to let the conquered live and produce, extracting a steady annual tribute, than to simply loot and murder. The state is organized parasitism, not scaled-up commerce.

The Critical Distinction: Voluntary vs. Coercive

When Amazon writes shady clauses into contracts, they pay a price. Customers leave, competitors emerge, reputation suffers. Amazon operates within market discipline - the voluntary exchange of property titles where both parties can say no.

The state operates by force. You cannot opt out of taxation. You cannot choose a competitor. There is no feedback mechanism of profit and loss. This isn't a minor distinction - it's the entire ballgame.

A company that "becomes the state" hasn't simply grown larger. It has fundamentally transformed its operation from economic means to political means. It has abandoned what made it wealthy and turned itself into a parasite.

Why This Matters: The Economic Calculation Problem

Here's where the "Amazon becomes the state" scenario completely falls apart. Operating by political means subjects the organization to the Economic Calculation Problem.

Without market prices formed by voluntary exchange, rational economic calculation becomes impossible. Central Planning cannot know what people actually value, what resources are scarce, or what production methods are efficient. The state cannot distinguish between more or less valuable uses of resources.

Mises proved this in 1920, and the Soviet Union provided the empirical confirmation in 1991. The USSR only lasted as long as it did because it could parasitically rely on world market prices to guide its planning. As Mises noted:

"The Soviet Republics existed within a world which formed money prices for all means of production. The rulers based their calculations on these prices. Without the help of these prices their actions would be aimless and planless."

When it collapsed, it wasn't because they ran out of resources or military might. It collapsed because economic calculation became impossible, leading to catastrophic misallocation of resources.

The Survivorship Bias Fallacy

Claiming states are inevitable because "they always win" is textbook survivorship bias. You're looking at the present moment and assuming it's permanent.

Consider:

The pattern is clear: states come and go. Different forms emerge and collapse. There is no inevitable permanent form because they all suffer from the same fundamental problem - the ECP.

The Temporary Runway: Why the US Seems Untouchable

The US government appears to have an unlimited runway. $37 trillion in debt, endless money printing, military bases everywhere, yet it continues. Why?

Two reasons:

  1. World reserve currency status - The dollar is held by productive people worldwide, so money printing dilutes purchasing power across a massive base. Small countries collapse faster because their currency debasement hits a smaller productive population harder.

  2. Humanity's efficiency gains - Technological progress and productivity improvements extend the state's ability to extract resources without immediate collapse.

But this is a runway extension, not flight. Compare:

Pre-Income Tax Era (1900-1913)

Post-1971 Fiat Era

The divergence is stark. The pre-income tax boom was built on sound money and minimal state extraction. The post-1971 era is a slow-motion collapse masked by productivity gains the state didn't create.

The Military Failure Signal

Even with all that extracted wealth, the ECP manifests visibly in military operations:

The Taliban and Vietcong, operating with a fraction of US resources, prevailed. Why? Because military success requires rational resource allocation, supply chain management, and real-time feedback - all things impossible under central planning and political allocation.

The state can bomb, but it cannot calculate.

Why Amazon Won't Become the State (Even If It Tries)

Let's say Amazon decides to become a territorial monopolist. What happens?

  1. They must foot their own bills - No money printing, no global reserve currency. Every coercive act is a real cost.

  2. They abandon profit signals - Political allocation replaces market feedback. They can no longer rationally calculate which investments make sense.

  3. They become subject to the ECP - Without voluntary exchange forming real prices, Amazon's famous logistics optimization becomes impossible. Their efficiency evaporates.

  4. They lose their competitive edge - Every efficiency gain they achieved in markets disappears when they operate by force.

Compare two scenarios:

Amazon as a company: Expands into housing, groceries, healthcare, logistics, cloud services - all disciplined by profit/loss, customer choice, and competition. Wealth creation through voluntary exchange.

Amazon as a state: Forces people to use its services, taxes to fund operations, no customer exit, no profit signals. Wealth destruction through coercion.

The latter isn't "more successful Amazon." It's Amazon turning itself into a calculationally blind parasite that will inevitably collapse.

The Minority Ruling Through Propaganda

Rothbard identified the core weakness in Anatomy of the State:

"The State must have the support of the majority of its subjects... This support need not be active enthusiasm; it may well be passive resignation as if to an inevitable law of nature."

States are always a minority ruling over the majority. They cannot maintain control through force alone - they need ideology. As Rothbard explained:

"Promoting this ideology among the people is the vital social task of the 'intellectuals'... The State is willing to offer the intellectuals a secure and permanent berth... and thus a secure income and the panoply of prestige."

This is why the "states always win" narrative is self-fulfilling propaganda. The greatest danger to the state isn't armed rebellion - it's independent intellectual criticism that breaks the ideological spell.

The Inevitability of Collapse

States don't collapse because people suddenly become moral. They collapse because economic reality reasserts itself.

The Soviet Union didn't fall because Russians read Mises. It fell because the ECP made continuation impossible. Food shortages, technological stagnation, economic paralysis - these are calculation failures, not moral failings.

The US dollar will eventually collapse. Not because of moral awakening, but because you cannot indefinitely extract purchasing power from the world while producing decreasing value. The $37 trillion debt isn't a number on a screen - it represents real resources misallocated by political rather than economic means.

China's "communism with trade" is still subject to the ECP for everything the state controls. Their internal capital allocation is calculationally blind. They can appear successful by parasitizing world market prices, but they cannot escape the fundamental problem.

Bitcoin: Undermining the Foundation

Bitcoin changes the game by removing a critical state tool: control of money.

States survive by:

  1. Printing money to extract purchasing power
  2. Controlling banking to monitor and confiscate
  3. Inflating away debt
  4. Being too big/important to resist

Bitcoin undermines all of these:

The reserve currency privilege that extends the US's runway? Bitcoin erodes it. Every person who holds value in Bitcoin rather than dollars reduces the base across which dollar printing dilutes.

The Struggle for Liberty Is Not Futile

The blackpill view - that companies inevitably become states and states are permanent - ignores history and economic law.

Yes, it may be "in human nature" for some to seek power through coercion. But it's also in human nature to resist, to seek freedom, to prefer voluntary exchange. More importantly, economic reality doesn't care about human nature.

As Rothbard noted:

"History is a contest between creative productivity, peaceful exchange and cooperation versus coercive dictation and predation."

This contest never ends, but neither is it futile. Consider what's been achieved:

Liberty is not a one-time achievement. It's an ongoing struggle. But crucially, it's a struggle where economic law is on the side of freedom. The state operates against economic reality, which means every state is running down a clock.

The Culture That Enables States

States don't just emerge from conquest. They're enabled by the culture that accepts them. This is where intellectual work matters.

When people believe:

...they're accepting the ideological framework that enables minority rule.

But culture changes. In the 1830s, mainstream Northern opinion shifted from gradual emancipation to immediate abolition. As one witness described: "we went to bed one night old-fashioned, conservative, Compromise Union Whigs and waked up stark mad Abolitionists."

The belief that states are inevitable, that Amazon would simply become the next state, that might makes right - these are culturally contingent beliefs, not economic laws. They can and do change.

Conclusion: States Fail Because Economics Is Real

The company/state conflation fails because it ignores the fundamental distinction between economic and political means. It treats as equivalent:

A company that becomes a state hasn't evolved - it has self-destructed. It has traded the economic means for the political means, and in doing so, subjected itself to the Economic Calculation Problem.

Will states continue to exist? Probably, for a time. Will the US dollar collapse? Almost certainly - it's a matter of when, not if. Will some try to create new states? Undoubtedly.

But none of this makes states economically rational or inevitable. They are parasites operating against economic reality. They can extend their runway by extracting more, by controlling money, by propaganda - but they cannot escape the fundamental impossibility of rational calculation without market prices.

The struggle for liberty isn't futile blackpill resignation to "might makes right." It's recognizing that economic law is on the side of freedom, and every state is slowly but inevitably failing to compute reality.

As Rothbard concluded:

"The greatest danger to the State is independent intellectual criticism."

So here's your intellectual criticism: States are not inevitable evolutions of successful companies. They are economically irrational parasites that will always eventually collapse, because you cannot outsmart the calculation problem. The runway can be long, but it always ends.

And when this state collapses - whether through currency crisis, debt implosion, or some other manifestation of calculation failure - what emerges next isn't determined by "the biggest company becomes the state." It's determined by which ideas people accept: the economic means or the political means, voluntary exchange or coercion, freedom or slavery.

The fight isn't futile. The fight is economics itself.