The first global slaughter, which from 1914 to 1918 did away with a large portion of the urban and rural proletariat, was waged in the name of freedom, democracy and civilization. For the past five years, the so called "war on terror" with its special operations and targeted assassinations have been pursued in the name of these same values.
Yet the resemblance stops there: at the level of appearances. The value of civilization is no longer so obvious that it can be brought to the natives as a package. Freedom is no longer a name scrawled on walls, for today it is always followed, as if by its shadow, with the word "security." And it is well known that democracy can be dissolves in pure and simple "emergency" edicts -- for example, the official restitution of torture in the US, or in France's Perben II law.
In a single century, freedom, democracy and civilization have reverted to the state of hypotheses. The leaders' work from now on consists of shaping the material and moral as well as symbolic and social conditions in which these hypotheses can be more or less validated, in configuring spaces in which they can seem to function. All means to these ends are acceptable, even the least democratic, the least civilized, the most repressive. It was a century in which democracy regularly presided over the birth of fascist regimes, civilization consistently rhymed -- to the tune of Wagner or Iron Maiden -- with extermination, and in which, one day in 1929, freedom showed its two faces: a banker throwing himself from a window and a family of workers dying of hunger.
Since then -- let's say, 1945 -- it's taken from granted that manipulating the masses, secret service operations, the restriction of public libraries, and the complete sovereignty of a wide array of police forces were appropriate ways to ensure democracy, freedom and civilization. At the final stage of this evolution, we see the first socialist mayor of Paris putting the finishing touches on urban pacification with a new police protocol for a poor neighborhood, announced with the following carefully chosen words: "We're building a civilized space here." There's nothing more to say; everything has to be destroyed.
The Invisible Committee, The Coming Insurrection, p. 85-86 cf. The Triple Revolution Memorandum
In the 1980 presidential elections, candidate Ronald Reagan took a hard line on defense. In stern and urgent tones, he lashed out at the Soviet menace, calling for a vastly expanded military buildup. His opponent sought to use this stance to characterize Reagan as a warmonger, even a mad bomber. It was on of the weak spots in Reagan's public image.
At a certain point in the campaign, Reagan's handling of foreign and defense policy shifted noticeably. His tone became more reasoned and calm; the word peace began to appear more prominently in his speeches; references to "war" and the "arms race" faded. A new phrase emerged to cover his position on armaments, something bland and noncommital, but seemingly prudent: "a margin of safety."
What caused this change of tone and rhetoric? It was done in response to a key campaign advisor, Richard Wirthlin. The advice might have been based, as such advice usually has been, on pure political instinct, which may or may not have been persuasive with the candidate and his many other counselors. Politicians always work at the center of rumors, guesswork, hunches, tested savvy, gut feelings. But in this case, Wirthlin's advice was based on something else: numbers, lots of numbers. It arose from a barrage of public opinion polling all across the nation. Wirthlin commanded statistics. They gave his advice the appearance of something more than guesswork. It looked like science.
In the late 1960s, Wirthlin, a former economist at Brigham Young University in Utah, opened a market research firm in southern California called Decision Making Information. Like many such firms which measure consumer tastes, DMI easily moved into political polling, where Wirthlin was first hired on by Ronald Reagan to guide his gubernatorial campaign in California in 1970. DMI provided the usual services: voter surveys, sampling, simulations.
John Kennedy was the first national candidate to make important use of polling. That was in 1960; his hired pollster was Louis Harris, who then became an independent expert. By the late 1970s, every serious candidate for office in the United States who could afford the price was following Kennedy's lead; expensive polling along with lots of media exposure had become the prevailing campaign style. But by then, top figures in the business, like Wirthlin, had gone on to new heights of push-button statistical precision.
DMI had developed important connections. Its clients included government agencies like Heath and Human Services, the Department of Labor, the Office of Education. In turn, the firm was tapped into nearly forty federal data banks that make their information publicly available. Wirthlin, with the aid of a large staff -- as many as 300 -- was able to mobilize this wealth of data through an intricate computer method called PINS, Political Information Service. He had put together the most ambitious electronic sampling and simulating service ever developed, a new standard for the profession. His telephone surveys -- which included automated, tape recorded polls -- were larger, more intense, more constant. He developed "tracking" techniques that involved nightly phone interviews with between 500 and 1000 randomly selected voters towards the end of the campaign.
Wirthlin's carefully prepared interviews and computer programs, which divided into 108 demographic categories, could nearly single out any item on the candidate's platform or person image -- "The nice guy factor," "the meanness factor," -- and rapidly assess the "trend line" fluctuations in specific voter groups, providing overnight reactions to a speech, debate, press conference or even an offhand remark. The same refined and prompt polling could be done to assess the progress of the opposition, and the campaign could be adjusted as the numbers dictated: more of this, less of that, push harder here, smile more, keep your left side to the camera.
The pollsters are available to anyone who can afford them, they have been used by groups of every political persuasion. But they obviously bias elections in favor of those who can spend the most on the best services.
After all, their marketing techniques do succeed in selling a lot of worthless merchandise the public never knew it wanted. More to the point: there exists a pollster, Richard Wirthlin, who succeeded in making Ronald Reagan president. Any technique that can make a winner out of such unlikely material is bound to look impressive to the rest of the field.
-Theodore Roszak, The Cult of Information p. 188-190.
Lenin, if we judge him from his major writings, was a confirmed high modernist. The broad lines of his thought were quite consistent; whether he was writing about revolution, industrial planning, agricultural organization, or administration, he focused on a unitary scientific answer that was known to a trained intelligentsia and that ought to be followed. The Lenin of practice was, of course, something else again. His capacity for sensing the popular mood in fashioning Bolshevik propaganda, for beating a tactical retreat when it seemed prudent, and for striking boldly to seize the advantage was more relevant than his high modernism to his success as a revolutionary. It is Lenin as a high modernist, however, with whom we are primarily concerned.
The major text for the elaboration of Lenin's high-modernist views of revolution is What Is To Be Done? High modernism was integral to the central purpose of Lenin's argument: to convince the Russian left that only a small, selected, centralized, professional cadre of revolutionaries could bring about a revolution in Russia. Written in 1903, well before the "dress rehearsal" revolution of 1905, this view was never entirely abandoned, even under totally different circumstances in 1917 between the February overthrow of czar and the Bolshevik seizure of power in October, when he wrote State and Revolution.
Certain metaphors suffuse Lenin's analysis of the link between the vanguard party and the workers in What Is To Be Done? They set the tone of the work and limit what can be said within its confines. These metaphors center on the classroom and the barracks. The party and its local agitators and propagandists function as schoolteachers capable of raising merely economic complaints to the level of revolutionary political demands, or they function as officers in a revolutionary army who deploy their troops to best advantage.
In their role as teachers, the vanguard party and its newspaper develop a pedagogical style that is decidedly authoritarian. The party analyzes the many and varied popular grievances and, at the right time, "dictates a positive programme of action" that will contribute to a "universal political struggle." In fact, Lenin complained, the party's activists have been woefully inadequate. It is not enough to call the movement a "vanguard," he insisted. "We must act in such a way that all other units of the army shall see us, and be obliged to admit that we are the vanguard." The goal of the vanguard party is to train willing but "backward" proletarians in revolutionary politics so that they will be inducted into an army that will "collect and utilize every grain of even rudimentary protest," thereby creating a disciplined revolutionary army.
Thus the vanguard party not only is essential to the tactical cohesion of the masses but also must literally do their thinking for them. The party functions as an executive elite whose grasp of history and dialectical materialism allows it to devise the correct "war aims" of the class struggle. Its authority is based on its scientific intelligence. Lenin quotes the "profoundly true and important utterances by Karl Kautsky," who said that the proletariat cannot aspire to "modern socialist consciousness" on its own because it lacks the "profound scientific knowledge" required to do so: "The vehicles of science are not the proletariat, but the bourgeois intelligentsia."
James C. Scott, Seeing Like a State p. 147-150
Neither Dulles brother particularly welcomed Hitler, whose mildewed origins quickly affected even the best-aired drawing room. Soon after Hitler's ascension to the chancellorship Allen alluded to a "sinister impression" around Berlin. By 1934 Hitler's boycott of Jews was clearly underway, while "alien"-looking citizens were banged around routinely in public forums. Valued clients of ancient standing such as the Warburgs of Hamburg were unnerved, and murmured in their palaces of pervasive Gestapo listening devices.
Once Nazism took hold, both brothers grew cautious about speaking for the record. Hitler's medicine was virulent at times -- undoubtedly repulsive towards Jews of importance -- but what would it take to purge the abuses of Versailles? Allen subsequently grew fond of casting himself in the liberal's role at the celebrated partners' meeting at Sullivan and Cromwell late in the summer of 1935. Two of the senior partners were of Jewish descent, and several of the younger people were incensed that the firm still maintained formal offices in Berlin. Group negotiations were bruited about, while Foster protested with uncharacteristic vehemence that the loss of even reduced business from Germany might endanger the cash flow. Blue-ribbon customers like Remington, Standard Oil, and General Motors wanted German representation. The meeting got raucous, and Allen allegedly threw in with the insurgents, and once the vote went one-sidedly in favor of closing down Berlin, Foster was said to have stalked off in open tears.
Like many of Allen's anecdotes, this tale is pointed up by what it omits. One mammoth client Allen himself lured into the shop, Du Pont, was badgering him badly about the Nazi tyranny. Another partner who ostensibly sat in on the controversial meeting maintains that once the vote was tallied Foster "fully acquiesced." Allen later went so far as to deplore the U.S. arms embargo against the Spanish Republic "while its antagonists were kept supplied by certain European governments." On the other hand, he refused to name these Fascist governments publicly. Meanwhile, according to his obituary in The New York Times, Allen had been working on both the Farben and the Vereinigte Stahlwerke accounts.
The brothers would remain available to clients of every conviction, anywhere in Central Europe. According to his business records, Foster visited Germany every year until the war broke out. It told a great deal that Allen had no apparent compunctions not only about signing on as a director of the New York branch of J. Henry Schroder, but subsequently assuming the much increased workload -- and banking the augmented salary -- which went with the post of Schroder's General Counsel. The influential Schroder investment banking houses in New York and London remained affiliated, through blood and commercial ties, with descendants of "die Gebruder Schroeder." They included, emphatically, Baron Kurt von Schroeder, Heinrich Himmler's special angel.
Another of Allen's regulars, the Schroder Rockefeller investment banking combination, effected a bridging role. Partners in this 1936 hybrid were Avery Rockefeller (John D's nephew, a 42 percent participant) and the cousins Bruno (founder of the London branch) and Kurt von Schroeder (47 percent combined). Both Dulleses cleared out legal objections. Disclaimers appeared each time the liberal press sighted in, and spokesmen repeatedly emphasized that the New York Schroder branches functioned independently of the London house, let alone the Gebruder Schroeder in Hamburg or J.H. Stein in Cologne. It remained a fact that the dominating shareholder in both J. Henry Schroder offices continued to be the majestic Baron Bruno in London, on whom his first cousin Kurt still depended, periodically, to underwrite flagging Rhineland suppliers.
With Hitler progressing steadily, Bruno and the Baroness were actively proselytizing among the English ruling classes to broaden understanding for the new Germany. They inroducted Joachim von Ribbentrop to society when he became Hitler's ambassador to Britain.
As General Counsel of the Manhattan Schroder's, it behooved Allan to examine Baron Bruno's resplendent orchid collection at his estate near Cliveden, to attend the Baron's lament of the inequities perpetrated against "my poor country." Schroeder's recriminations seemed reasoned enough compared to with the feverent anti-Bolshevism of other Dulles contacts like Sir Henry Deterding of Royal Dutch Shell, now vociferously worshipping Hitler.
... Like FDR, Allen had an unnerving way of taking on the political complexion of the last forceful person he'd had a drink with. When his ex-colleague Hugh Wilson served briefly as ambassador to Germany and observed that while one may "deplore the brutality" of the maneuvering which produced the Anschluss, one "must admire the efficiency," Allen hadn't appeared perturbed. Even Foster was stunned for a moment by Hitler's invasion of Czechoslovakia, but Allen passed it off, in that paralyzingly blase manner he favored when everybody else was raving, by observing that "Hitler's batting average in taking over states is a good one."
- Burton Hersh, The Old Boys p. 72-75
The B. R. Fox Company was located in a duplex apartment on Connecticut Avenue in downtown Washington, DC. While B. R. Fox was supposedly the only tenant, the apartment in fact served a number of purposes and housed an assortment of intriguing characters. For one thing, it was used by Lou Conein as a safe-house for the vanguard of the DEA's Special Operations Group (DEA-SOG). That group numbered a baker's dozen of handpicked Latino CIA officers transferred at "Black Luigi's" behest to the DEA. Appointed to the DEA post by Nixon, Conein's task was to establish an international intelligence network capable of destroying the narcotics traffic.
Accomplishing this would be no easy matter. The DEA suffered from internal corruption, and its best agents were consistently outmaneuvered by Oriental, French and Cuban smugglers trained in techniques by their own countries and the CIA. Lacking sophistication in spookery, the DEA compiled a stunning record of failures and desperately required the expertise available in Langley. The CIA, however, was reluctant to participate in any serious effort to destroy the heroin trade, regarding its own mission as more important. Moreover, many of those involved in the trade as financiers and couriers were themselves valuable CIA agents.
Conein resolved the dilemma of DEA impotence and CIA recalcitrance by having the Dirty Dozen transferred from one agency to the other. His orders were to create a clandestine service within the DEA, and each of the dozen agents would be regarded as a future DEA "chief of station" in a foreign country. There they'd establish their own apparats, run agents, and carry out a de facto guerrilla war on dope, all of it masterminded by Lou Conein. And, because he distrusted the DEA itself, Conein chose to isolate his proteges from other agents in DEA headquarters. He did this by having them rendezvous in the La Salle apartment building leased to B. R. Fox -- but paid for, in large part, by the DEA.
Besides harboring the Fox Company and the Dirty Dozen, the apartment was also headquarters for Security Consultants International ("SECOIN"). Conceived by Mitchell WerBell (already the proprietor of the Central Investigative Agency), SECOIN was run by John Muldoon, who viewed Washington's huge embassy population as a likely clientele for debugging services. Finally, the LaSalle Building duplex served as a kind of crash pad for freelance spooks.
"It was bizarre," Eliot Spindel says. "Muldoon would show up every day with a stack of cards about three inches high. He'd sit down at his desk and, one by one, make phone calls to the numbers printed on the cards. He'd do that until noon or so, then go out with Conein for lunch, drink beer for a couple hours, and come back to make more phone calls till five o'clock...that's all he ever did. It was unnerving! I still don't know what it was all about. But the place really jumped when WerBell came through on one of his missions. It was like a visit from the general, you know?"
It must have been. At the time, WerBell was simultaneously wired into deals involving the "liberation" of Abaco, the establishment of a submachine gun factory in Costa Rica, the sale of his arsenal to Robert Vesco, and a variety of more routine transactions, described earlier. He was, in addition, under pressure from the CIA to leave the country, and according to Eliot Spindel, he was preparing to establish an offshore version of the B. R. Fox Company on Abaco. It's entirely possible that CIA pressure and the off-shore plan were related. Since the 1969 Omnibus Crime Bill, manufacturers of clandestine weapons and surveillance devices have shifted their bases to locations in the Caribbean, establishing factories and shops in mini-nations that have neither the motives nor the funds needed to regulate their export. According to WerBell, the CIA and DEA wanted him in an offshore position so that he could make and sell clandestine weapons in near-absolute secrecy.
- Jim Hougan, Spooks p. 138
Half a century ago H. G. Wells observed, correctly enough, that mankind faced a race between education and catastrophe. But what he failed to recognize was that something like catastrophe has become the condition for an effective education. This might seem like a dismal and hopeless conclusion, were it not for the fact that the power system, through its own overwhelming achievements, has proved expert in creating breakdowns and catastrophes.
Admittedly the partial disasters of war, though no longer locally limited, had through the ages grown too familiar to bring about a sufficient reaction. During the last decade, fortunately, there has been a sudden, quite unpredictable awakening to prospects of a total catastrophe. The unrestricted increase of the population, the over-exploitation of the megatechnical inventions, the inordinate wastages of compulsory consumption, and the consequent deterioration of the environment through wholesale pollution, poisoning, bulldozing, to say nothing of the more irremediable waste-products of atomic energy, have at last begun to create the reaction needed to overcome them.
This awakening has become planet-wide. The experiences of congestion, environmental degradation, and human demoralization now fall within the compass of everyone's daily life. Even in the open country, small communities are now forced to take political action against canny enterprisers seeking to dump wastes from distant cities in rural areas that already have difficulty enough in coping with their own rubbish and sewage. The extent of the approaching catastrophe, its visible nearness, and its dire inevitability unless countermeasures are rapidly taken, have done far more than the vivid prospects of sudden nuclear extinction to bring on a sufficient psychological response. In this respect, the swifter the degradation, the more likely effective measures against it will be sought.
- Lewis Mumford, The Pentagon of Power p. 411
How is it that when we try to do good we can often end up creating greater evil? The Declaration of the Rights of Man in 1789 ended in the Reign of Terror and the rise of the dictatorship of Napoleon. The temporary dictatorship of the proletariat in Russia ended up in the permanent dictatorship of the ex-proletariat in the new bourgeoisie of the Communist Party. America fought a revolutionary war against the British Empire, and then became an empire fighting to suppress a guerrilla war of national liberation in Vietnam. But these enantiodromias are not restricted to contradictory world of revolution and politics, for the Green Revolution started out as a project to feed the masses in starving India, and then ended up as the Americanization of Indian agriculture in which the rich got richer and the poor got poorer through the introduction of the petrochemicals, fertilizers, tractors, and large land holding of the modern agro-industry. The industrialization of the planet and the global distribution of medical services have increased the population so that more people are suffering than ever before. This year four hundred million people are dying of starvation.
Liberals speak of progress, especially of progress in terms of "modernization," but hunters and gatherers have more leisure time than we have and no way of institutionalizing conflict in warfare. Every step toward progress, whether it is the agricultural revolution of 9000 BC, the urban revolution of 3500 BC, or the industrial revolution of 1770, has carried with it an equal and opposite horror. As Homer recognized long ago, your unique excellence is also your tragic flaw; your greatness hobbles you. We have tried to do good in modernizing the planet through industrialization, but the internal contradictions of industrial society are beginning to become painfully visible; now some ecologists are predicting that the population of the earth with drop a hundred fold in the next ten to twenty years. If this is the case, then the entire Industrial Revolution and the whole philosophy of progress which went along with it will culminate, either through famine, ecological catastrophe, and economic disaster, or through thermonuclear war, in the greatest cataclysm in the history of the human species. When this happens, it will not be because people were consciously trying to do evil; in many cases, the leaders were trying to do good.
If evil can grow out of efforts to do good, it also seems to be the case that good can grow out of our efforts to do evil. The Roman military engineers built the roads that the Christian missionaries traveled to convert an empire. The British executed by firing squad the Irish rebels of 1916, and thus helped to free Ireland. The Nazis executed six million, and thus helped to bring the nation of Israel into existence. But much of this seems unconscious, for those who do evil certainly do not plan on having good result from it; and those who think they are working for progress do not wish to create the apocalypse. The inventor of the aerosol spray can did not wish to destroy the ozone layer of the planet, but whether it is dynamite, atomic energy, psychosurgery, or genetic engineering, it does seem to be the case that our very unconsciousness of these enantiodromias increases the likelihood of evil emerging from our acts. It is no longer safe to assume that good intentions are enough. One can wreak havoc with benevolence; therefore we have to stop and call into question the ideas of progress and philanthropy upon which modern liberalism is based.
A new race of liberals is arising to seek "The Creation of Just World Order," but if we remain as unconscious in this second global wave of liberalism as we were in the first wave which came at the end of the Second World War, then we are likely to create untold horror on a planetary scale. IF the Green Revolution can increase starvation, if antibiotics can be described as a threat to the evolutionary viability of the human species, if the entire edifice of modernization can be seen to be a curse, then how can we assume that those who write proposals for a "Systems Approach to World Order" know what they are doing? If a thing as tiny as an aerosol spray can generate intense scientific debate about the future of life on this planet, then what of a grand scheme of a handful of academics creating an entire world order?
We are like flies crawling across the cieling of the Sistine Chapel; we cannot see what angels and gods lie underneath the threshold of our perceptions. We do not live in reality; we live in our paradigms, our habituated perceptions, our illusions; the illusions we share through culture we call reality, but the true historical reality of our condition is invisible to us. How can you fix up history if you cannot see it? What if history cannot be fixed from inside history? What if the attempt to fix human history is an effort to seek out the dark with a searchlight?
- William Irwin Thompson, Evil and World Order p. 79-81
Until recently, the ability of the state to impose its schemes on society was limited by the state's modest ambitions and its limited capacity. Although Utopian aspirations to a finely tuned social control can be traced back to Enlightenment thought and to monastic and military practices, the eighteenth-century European state was still largely a machine for extraction. It is true that state officials, particularly under absolutism, had mapped much more of their kingdoms populations, land tenures, production and trade than their predecessors had and that they had become increasingly efficient in pumping revenue, grain, and conscripts from the countryside. But the was more than a little irony in their claim to absolute rule.
They lacked the consistent coercive power, the fine-grained administrative grid, or the detailed knowledge that would have permitted them to undertake more intrusive experiments in social engineering. To give their growing ambitions full rein, they required a far greater hubris, a state machinery that was equal to the task, and a society they could master By the mid-nineteenth century in the West and by the early twentieth century elsewhere, these conditions were being met.
I believe that many of the most tragic episodes of state development in the late nineteenth and early twentieth centuries originate in a particularly pernicious combination of three elements. The first is the aspiration to the administrative ordering of nature and society, an aspiration that we have already seen in scientific forestry, but one raised to a far more comprehensive and ambitious level. "High Modernism" seems an appropriate term for this aspiration.
As a faith, it was shared across a large spectrum of political ideologies. Its main carriers and exponents were the avant-garde among engineers, planners, technocrats, high-level administrators, architects, scientists and visionaries. If one were to imagine a pantheon or Hall of Fame of high-modernist figures, it would almost certainly include such names as Henri Comte de Saint-Simon, Le Corbusier, Walther Rathenau, Robert McNamara, Robert Moses, Jean Monnet, the Shah of Iran, David Lilienthal, Vladimir Lenin, Leon Trotsky and Julius Nyerere. They envisioned a sweeping, rational engineering of all aspects of social life in order to improve the human condition.
As a conviction, high modernism was not the exclusive property of any political tendency; it had both right- and left-wing variants, as we shall see. The second element is the unrestrained use of the power of the modern state as an instrument for achieving those designs. The third element is a weakened or prostrate civil society that lacks the capacity to resist these plans. The ideology of high modernism provides, as it were, the desire; the modern state provides the means of acting on that desire; and the incapacitated civil society provides the leveled terrain on which to build dystopias.
...but here it is important to note that many of the great state-sponsored calamities of the twentieth century have been the work of rulers with grandiose and utopian plans for their society. One can identify a high modernist utopianism of the right, of which Nazism is surely the diagnostic example. The massive social engineering under Aparteid in South Africa, the modernization plans of the Shah of Iran, villagization in Vietnam, the huge late-colonial development schemes (for example, the Gezira scheme in the Sudan) could be considered under this rubric. And yet there is no denying that much of this massive, state-enforced social engineering of the twentieth century has been the work of progressive, often revolutionary elites. Why?
The answer, I believe, lies in the fact that it is typically progressives who come to power with a comprehensive critique of existing society and a popular mandate (at least initially) to transform it. These progressives have wanted to use that power to bring about enormous changes in people's habits, work, living patterns, moral conduct and worldview. They have deployed what Havel has called "the armory of holistic social engineering." Utopian aspirations per se are not dangerous. Where the utopian vision goes wrong is when it is held by ruling elites with no commitment to democracy or civil rights and who are therefore likely to use unbridled state power for its achievement. Where it goes brutally wrong is when the society subjected to such experiments lacks the capacity to mount a determined resistance.
- James C. Scott, Seeing Like a State p. 88-89.
Michael Oliver, a displaced Lithuanian with an accent and right-wing ideology to match, was a Nevada resident with a dream -- and the money to make it come true. What Oliver wanted was nothing less than his own country, a land governed according to libertarian principles. Money would be minted privately and backed by gold, with a contract government performing only the most minimal services (eg counter-subversion and janitorial tasks). There would be no taxes, the schools would be private, and the State would be subject to dismissal any time that its client-citizens wished. Oliver had tried it before, and failed.
In 1972, Oliver had formed the Ocean Life Research Foundation with the intention of building a new country. The site of choice was the Minerva Reef, a barely submerged coral rock on the South Fiji Ridge. Two hundred and sixty miles east of Tonga, the reef was an unclaimed boil in the path of the baleen whales' annual migration. Sharks surrounded it, and flying fish flung themselves across its length and breadth. Located in the navel of the Earth's most tremulous seismic belt, the reef was a serrated crust that might disappear at any moment. In the making for millennia, its only significance was as a menace to navigation: a decade earlier, sixteen Tongan fishermen had floundered on its rocks and remained there, knee-deep in ocean waters, for a hundred days, awaiting rescue.
To Oliver and a consortium of wealthy libertarians the reef was a thing of beauty, the future "Republic of Minerva." Using the foundation as their conduit, the group poured hundreds of thousands of dollars into an effort to create a four-hundred acre island on the reef's highest points. While doing so, they sent a written declaration to the world's governments, declaring sovereignty for their oceanic landfill. Immediately, Tonga's 325-pound patriarch, King Taufa'ahau, leaped into action. Promising unconditional amnesty to the inmates of Tonga's jail, Taufa'ahau ordered his Polynesian miscreants to invade the new domain, evict the libertarians, and plant the flag of Tonga in the coral.
Oliver was embittered by the loss, but there was nothing he could do about it. The the Republic of Minerva had been a country without land was an obstacle he'd been prepared to overcome. But a nation without an army, confronted by scores of flag-waving Tongan felons armed with spears, stood no chance. Accordingly, the consortium abandoned the motherland, returning to an enforced exile in Orange County, California.
- Jim Hougan, Spooks p. 96-97.
Contrary to popular wisdom, operating in the underground is hardly cost-free. Extralegal businesses are taxed by the lack of good property law and continually having to hide their operations from the authorities. Because they are not incorporated, extralegal entrepreneurs cannot lure investors by selling shares; they cannot secure low-interest formal credit because they do not even have legal addresses. They cannot reduce risks by declaring limited liability or obtaining insurance coverage. The only "insurance" available to them is that provided by their neighbors and the protection that local bullies or mafias are willing to sell to them.
Moreover, because extralegal entrepreneurs live in constant fear of government detection and extortion from corrupt officials, they are forced to split and compartmentalize their production facilities between many locations, thereby rarely achieving important economies of scale. In Peru, 15 percent of gross income from manufacturing in the extralegal sector is paid out in bribes, ranging from "free samples" and special "gifts" of merchandise to outright cash.
--Hernando de Soto, The Mystery of Capital