Guest Post: Why Expansionist Central States Inevitably Implode

Tuesday, January 15, 2013
By Paul Martin

by Charles Hugh-Smith

The S-Curve usefully charts the gradual development, explosive rise and eventual stagnation and collapse of complex systems. Remarkably, natural phenomena such as the spread of bacteriological diseases and financial dynamics both follow S-Curves. The S-Curve also helps us understand why the Expansionist Central State is doomed to inevitable implosion/collapse. The key dynamic in State spending is this: the allocation of public capital is intrinsically a political process, not a market or communal process. We are at the inflection point indicated on the chart below where the lines cross, just before the crisis: tax revenues are lagging spending in an enormous structural deficit. Tweaking tax policy or raising the debt ceiling will not change any of these dynamics. The Expansionist State is on the path to implosion (insolvency) and collapse, i.e. a political crisis. If we understand the core dynamics of the Expansionist Central State – the political allocation of scarce national income to favored constituencies and cartels – we understand why this process is inevitable.

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