"An unlimited power to tax involves, necessarily, a power to destroy; because there is a limit beyond which no institution and no property can bear taxation." ~ John Marshall
The Politicalization of Society
There appears to be a common tendency to confuse the concepts of power and freedom as well as disregard the differences between the economic and political means. These tendencies brought together result in the general acceptance of politics as morally defensible. When greed and envy are used to justify initiating the use of force, politics then becomes perceived as the arbiter of justice. The use of an immoral end (greed/envy) to validate the use of an immoral means (force) will lead to the breakdown of the morals in a society. The state thus imposes immorality on society in a process of politicalization that undermines the economic order.
Freedom is the concept that humans are free to choose what they wish to do in life and free to choose what action is required in order to accomplish that goal. Power is the concept that humans have the power to envision a desirable goal and the power to act upon that vision. How that power is used is determined by individual choices. People make personal choices by perceiving what they can and can't do based on reconciling their power with their freedom in a moral framework. If a general agreement can be reached in a society about what actions are reasonable and just, a standard of conduct is created in that society and a civilization is realized. The action one resolves to take in order to improve one's conditions can be judged as moral or immoral. An action that restricts the freedoms of others is considered immoral by most civilized standards. Since the use of force restricts the freedoms of others, it is therefore immoral.
The economic means is the voluntary exchange of labor (property) in mutually beneficial transactions. The political means is the forced taking of someone's labor to give to someone else. Economic and political means both create power and both limit freedom. The clear difference between means is a moral one involving the use of force. Economic power is not based on the use of force and does not inherently restrict the freedoms of others. Political power is based on the use of force and does inherently restrict the freedom of others. The fact that political power is fueled by economic power does not taint all economic power, only those individuals who chose to use their economic power to provide fuel for political machines.
People who provide superior products and services for terms that others find agreeable will accumulate more economic power than those who provide inferior products, services and/or disagreeable terms. An outcome of mutually beneficial exchanges is to establish a standard of conduct that leads to more mutually beneficial exchanges. A society is created out of the expansion of the number of relationships involved in these exchanges. These dealings establish a standard of peaceful conduct that grows to include more peaceful people who wish to cooperate in that economic system. A standard of peaceful conduct is required if a system of voluntary exchanges is to remain viable. People will work hard and save if they know that their property will be respected. Where property is not respected, hard work and savings will be avoided.
In a free society some persons with lower time preferences will put aside some of the fruits of their labor (savings or capital) while other persons with higher time preferences will spend everything on immediate satisfaction. As the overall amount of capital increases due to some persons (or even one person) having the foresight to save for the future, the complexity of the division of labor will increase proportionately. This results in improving living conditions for all, but leads to disproportionate amounts of economic power among individuals. If all members of the society had the same propensity to save and the same aptitudes, then economic power would be more evenly distributed. This, however, is not possible because people are not widgets off an assembly line. Trying to create these conditions by force is not only impossible, but also counter-productive.
People are free to choose what actions to take and what principles to live by, but that does not mean that they have the power to act as they wish or make up principles as they go. For instance, natural laws restrict our actions. One may wish to jump over a mountain, but human capabilities preclude this choice. This does not mean that one is not free to jump over the mountain, just that one does not have the power to do so. Power is thus limited by natural laws, but freedom is not. To say that people who do not have the power to act contrary to natural laws are not free is just plain silly. People must take observable data about the natural world and convert this information into viable goals based on an understanding of natural human capabilities. This is where the reasoning ability and moral stature of humans becomes an important factor in how we organize social interaction.
What is just or fair must be based on ideals that can be upheld as honorable by the standards of conduct, but human capabilities must be considered as well. A standard that requires an equal distribution of savings and abilities may be considered ideal, but it is not workable (even when force is applied to try and make it work). A standard that makes a person and their personal property sacrosanct is both honorable and workable. The basic ideal that even children seem to be able to work out at an early age is: I will agree to leave you and your stuff (property) alone if you agree to leave me and my stuff alone. This principle is proven to lead to a system of peaceful exchanges. Taking someone else's stuff can not be construed as fair or honorable no matter how much they may have relative to what you have. This is where politics comes into the matter as a means of justifying immoral actions with immoral desires.
To illustrate, say one person with somewhat superior natural intellect, desire and/or skills compared to others in a valley, many of whom have given up even trying to get over the mountain, conceives of and builds a balloon that will carry people over the mountain. This individual sacrifices time, energy and savings in the present to act upon this idea for the sake of potential future returns. A number of others even scorn this person for being foolish and wasteful for taking these risks, while they act upon their own immediate goals and desires. Yet the entrepreneur perseveres until successful. Of course, now that a way over the mountain has been demonstrated, others wish to make the trip for business or pleasure. The successful entrepreneur has created a way to fulfill a need of many and now seeks to profit from his/her labor and capital invested as well as for the risks taken. This person has acquired economic power in the form of control over a very scarce good (or service) that others desire.
If the group interaction is organized around the economic means respecting the Non-Aggression Principle, others will offer to exchange the fruits of their labor for a ride in the personal property of the successful entrepreneur. If group interaction is organized around the political means respecting the principle of "might makes right," then the control of property is decided by the elite decision makers who rule based on "The Will of God" or "The Will of the People" or some such mystical justification. In a mixed system, entrepreneurs retain a façade of property rights while the political elite fix the price as well as how business may be conducted. The mixed system also provides incentives for the entrepreneur to negotiate a settlement for these controls that include restricting future competition. This negotiation between the old established political elite and the new entrepreneurial elite to preserve the elite economic status of both is common in history and ongoing today.
In a free society, the entrepreneur will be subject to competition from others who may make another balloon, invent another type of flying machine or dig a tunnel through the mountain. To maintain his/her business (property), the entrepreneur will need to innovate and improve the product, service and/or terms to retain market share and continue to generate profits. A greedy entrepreneur would alternatively use political means (like a state) by offering rewards to political thugs who would enforce restrictions on competitors to retain market share and generate profits. This latter method results in resources being allocated to expanding the political machine and away from innovation and improvement of the product. These restrictions may help a few to profit for a while at the expense of the many, but the immoral principle this system is based on will lead to a breakdown in the economic system because the original peaceful code of conduct is no longer respected.
Another possibility would be for a large group of consumers to create a mob (like a state), elect a leader and storm the property of the entrepreneur forcing him/her to give everybody a ride in exchange for allowing the leader to charge what he thinks is "fair" to everybody in the form of taxes, whether the service is used or not. This is also an example of the state as institutional chaos leading to the destruction of property and undermining any incentives to maintain and improve it. There is also an incentive for the leader to sell out the mob to the entrepreneur, and they end up right back where they started, but poorer overall.
Today we live in a society where corporate elite battle mob leaders in the forum of politics. Both groups have abandoned the original code of conduct that created the society we inherited, at least what's left of it, anyway. More and more individual actions and decisions are considered by more and more people to be political in nature, not economic. The use of force to resolve conflict (foreign and domestic) is becoming accepted by an increasing number of individuals in our society. This is the politicalization of society.
The motivation for people who wield large amounts of economic power to use political power to increase that economic power is greed. The motivation for people who wield little or no economic power to use political power to gain economic power at the expense of others is envy. Greed and envy are two sides of the same political coin. To continue flipping this coin in the voting booth will lead to the further deterioration of our moral code of conduct and undermine our economic system.
Once the use of force is initiated, order has already broken down. The use force is thus self-defeating for even nobler goals than greed and envy. This is why the state at its core is immoral, and those who use politics to get what they want are immoral people. The politicalization of a society provides a breeding ground for immoral people to thrive. Thus political systems corrupt economic systems. It is not economic systems that corrupt political systems.
Politics, whether used in favor of the few or the many, is immoral. In order to build a viable, peaceful society, we need to adhere to the simple Non-Aggression Principle. This means respecting not just the persons but the property of others. That is, again, if you leave me and my stuff alone, then I will leave you and your stuff alone. If you want to then, maybe, we can agree to trade some of mine for some of yours. If not, then that's OK too. People who choose to work hard and save should not have to fear those who choose not to no matter how rich or poor they are. These are principles that we can live by, peaceably. In the long run, the right thing to do also turns out to be the best thing to do.