Abolishing the state’s monopoly on the provision of services
There is certainly no need for a central government to decide who should provide various services, and possessing the power to do so is highly undesirable. In fact, although in some cases in the past only governmental bodies endowed with the coercive authority to collect taxes could provide certain services, there is no justification for holding the exclusive right to supply any particular service. It may be that the established provider of certain services is in such a superior position that it can supply them better than any potential private competitor, and thus we face a de facto monopoly; however, there is no social benefit in granting it a legal monopoly over any activity. Clearly, this means that any governmental agency authorized to use taxes to finance such services must be required to refund the taxes collected for that purpose to anyone who prefers to receive those services in some other way. This applies to all services currently in the hands of the state or for which the state seeks to legalize a monopoly of supply, with the exception of maintaining and enforcing the law (including defense against foreign enemies), which requires maintaining an armed force—that is, all governmental service activities from education to transport and communications, including the post, telegraph, telephone, and radio and television broadcasting services, all so‑called “public utilities,” the various forms of “social” insurance, and, most importantly, the issuance of money. It is certainly possible that some of these services are at present in practice supplied as monopolies in a fully efficient manner; but progress and the prevention of abuses require that others [potential competitors] have the opportunity to offer better services of this kind. As with most of the topics briefly touched upon in this concluding chapter, I cannot enter into a detailed discussion of the government’s current service activities; but with respect to some of these services, the question of whether the state should possess an exclusive right is decisive—not only from the standpoint of efficiency but also because of the vital importance this has for preserving a free society. In these cases, opposition to any exclusive governmental powers should take priority, even if such a monopoly promises higher‑quality services. For example, we may discover that a state monopoly over radio and television broadcasting could in practice threaten political freedom as much as the abolition of freedom of the press. The postal system is another example, where the state monopoly that governs it is merely the product of the government’s attempt to control private activities, and its result in most parts of the world has been the continuous deterioration of postal services ... In the course of the research for writing this book, due to the mutual interconnection of political and economic issues, I have come to the firm conviction that without depriving the state of the right to issue money, no system of a free economy can ever function satisfactorily again, and we will never be able to eliminate its most serious defects or prevent the constant growth of the state. It seemed necessary to me to examine this issue in a separate book, yet I fear that all the safeguards against encroachment and abuse of political power proposed in this book for restructuring the state will be of little help unless state control over the supply of money is simultaneously removed. Since I am convinced that it is no longer possible today to enforce strict rules that would ensure money issued by the state both responds to legitimate demands and at the same time preserves its value, it seems to me that the only way to achieve this goal is to replace current national monies with competing monies issued by private enterprises, with people being free to choose whichever money is best for their transactions.
To my mind this matter is so important that, in the constitution of a free people, this principle should be entrenched by a special clause such as: “Parliament shall enact no law that restricts anyone’s right to hold, buy, sell or lend, to contract and enforce contracts, to keep and compute their accounts, in the money of their own choice.” Although this is implicit in the fundamental principle that the state may prohibit or mandate actions only on the basis of general, abstract rules that apply equally to everyone, including the state itself, the application of this particular part of that principle is still so unfamiliar that we cannot expect courts to recognize that the state’s traditional special privilege is no longer valid; for this reason, it must be explicitly stated in the constitution.
F. A. Hayek; Law, Legislation and Liberty (Volume III)
