The concept of centralization is generally seen as a consequence of certain political decisions or as the cause of certain societal structures. But centralization and its opposite—decentralization—can also be interpreted as opposing historical processes that should be taken into account in the long struggle for liberty.

Forces of Centralization

Centralization is a historical process that is “centripetal” in nature; it is the totality of forces in society that move economic wealth and political power towards one or a few centers. This process should be thought of, not only in the geographical, but also organizational sense. Indeed, as means of communication improve, centralization may even conceivably be mainly institutional.

There is a natural tendency for human society to centralize. People are more efficient and more protected in large communities, rather than spread out as isolated individuals or small groups. The obvious interests in sharing information and trading goods give a natural incentive for people to gather on the proverbial “marketplace.” Groups of people allow the division of labor that is fundamental for social and economic development. These incentives in turn drive the improvement of communications and the harmonization of standards and laws. As Ludwig von Mises wrote in Nation, State and Economy (1919):

The necessity of trade is pressing for unity. It will no longer do to permit the fragmentation in law, in monetary systems, in communications and transportation, and in many other fields, to continue. In all these fields the times require unification, even beyond national boundaries. …

Forces of Decentralization

Running counter to centralization is the historical process of decentralization. This process is “centrifugal” in nature; it tends to disperse economic wealth and political power outwards from one or a few centers. The centralizing and decentralizing forces coexist with different intensity at different times, tugging on society in opposite directions, waxing and waning as conditions change.

Decentralization is driven by the reality that society benefits greatly from individual independent decision-making. As Mises wrote in Human Action (1949); “the ‘anarchic’ state of production results in supplying people better than the orders of a centralized omnipotent government.” The point of Mises—and Hayek after him—was that the availability of decentralized and unhampered price-setting on the market are crucial since they are signals that communicate information to buyers and sellers. This is what Mises called the “democracy of the market.” …

In the last decades, the world has been going through a period of political centralization with the hailed “unipolar moment” and the destructive ideology of political globalization. The Western financial and political elite has quite successfully managed to impose its global plans through its control of the international banking system and supranational institutions. Centralization in the West is now pushing societies into decline as state interventionism, top-down decision-making and suffocating taxation show no sign of abating despite clear signs of popular opposition. The increased resistance to the centralization zeal from the West upon the rest of the world also partly explains the current conflictual international situation.

However, it is important to see that the outcomes of the opposition between the forces of centralization and decentralization are not inevitable or preordained; they can be influenced, exacerbated, or attenuated by ideas and actions. This is why Mises often insisted on the impact of ideas on the direction of society and stressed the importance of getting involved “into the great historical struggle, the decisive battle into which our epoch has plunged us.” It is thus as important as ever to spread and explain the ideas of economic and political freedom, in order to decisively tilt society towards decentralization and freedom.