Liberty Beginner

Legal Plunder

When law becomes a tool for taking away property instead of protecting it, it is called legal plunder.

· 6min

Legal Plunder refers to a phenomenon where law deviates from its original purpose — protecting individuals’ life, liberty, and property — and instead becomes a tool for taking property from one citizen and giving it to another.

This concept was systematically developed by French economist and political philosopher Frédéric Bastiat in his 1850 work “The Law” (La Loi). This short book, now over 170 years old, remains one of the clearest introductions to libertarian thought today.

Bastiat’s Argument

The True Purpose of Law

Bastiat clearly defines the legitimate purpose of law.

Every individual is born with rights to life, liberty, and property. These three rights precede law. Law did not “grant” these rights. The role of law is to protect these already-existing rights.

In Bastiat’s terms: law is the collective organization of self-defense. Individuals possess a natural right to defend their own life, liberty, and property, and they gather together to create law and government in order to exercise this right effectively.

Therefore, law can only do what individuals justly can do. If it is wrong for an individual to take his neighbor’s property, law cannot take one citizen’s property and give it to another.

When Law Becomes an Instrument of Plunder

Yet in reality, law frequently performs the opposite role. Instead of protecting property, law becomes a means of taking from one group and giving to another. Bastiat named this “legal plunder.”

“When plunder is committed by an individual, it is called crime. When it is committed by law, it is called legality. But the essence is the same.”

Legal plunder is more dangerous than ordinary crime because victims cannot appeal to law. In ordinary crime, law protects the victim. But when plunder is committed by law itself, the victim has nowhere to turn. The very institution that should prevent plunder is perpetrating it.

Bastiat presents a simple test for identifying legal plunder:

“Look and see whether law is taking from one citizen what it could not justly take from him. Look and see whether law is permitting one citizen to do what it could not justly permit him to do.”

If either condition applies, it is legal plunder. Let us apply this test.

Subsidies and Protective Tariffs

The government grants subsidies to a particular industry. Where does this money come from? From the taxpayer’s pocket. A certain industry lacks competitiveness on its own and is destined to be eliminated by market forces, yet through the force of law, taxpayer money is taken and invested in that industry.

Protective tariffs work the same way. Tariffs, under the pretense of protecting domestic producers, force consumers to pay higher prices. Taking consumer money by force of law and giving it to producers — by Bastiat’s definition, this is legal plunder.

Progressive Taxation

Consider the progressive structure of income tax. Higher earners are taxed at higher rates, and the proceeds are used to benefit others. Taking one citizen’s property and giving it to another — this fits Bastiat’s test.

The claim that this serves a “good purpose” does not change the nature of legal plunder. Bastiat asks: “Does plunder cease to be plunder because its purpose is noble?”

Inflation did not exist in Bastiat’s time, but in the modern era, inflation is the greatest legal plunder.

When central banks issue currency, existing money holders lose purchasing power. This is an act of taking part of a citizen’s property — without his consent, without his awareness — from him. As explained in the Cantillon Effect, this plunder transfers wealth from late receivers (ordinary citizens) to early receivers (government, financial institutions).

Inflation is the perfect form of legal plunder. No voting, no legislation required. Invisible, so almost no resistance. Yet its effects are harsher than any tax.

Bastiat’s Three Scenarios

Bastiat says society has three choices regarding legal plunder:

1. The Few Plunder the Many (Oligarchy)

A small privileged class uses law to transfer the property of the many to themselves. Historically, monarchy and aristocracy exemplify this.

2. Everyone Plunders Everyone (Universal Plunder)

Every group uses law to take property from other groups. Farmers demand subsidies, businesses demand tariffs, workers demand minimum wage laws, retirees demand pensions, students demand loan forgiveness. Everyone competes through law to take from others. Bastiat diagnosed this as the condition of modern democracy.

In this scenario, politics ceases to be “the pursuit of the common good” and becomes “the struggle for legal plunder”. Elections become a process of deciding “who will take whose property.”

3. No One Plunders Anyone (Freedom)

Law is used solely to protect life, liberty, and property, and no citizen’s property is transferred to another. Bastiat argues this alone is law’s legitimate state.

Bastiat explains why legal plunder, once started, necessarily expands.

When Group A succeeds through law in taking Group B’s property, Group C asks: “Why can’t we do the same?” Unable to logically refute them, Group C makes its own demands. Then Groups D, E, and F follow. Eventually, all reach a state of “universal plunder” where everyone tries to take from everyone. Government becomes a vast redistribution institution, and politics becomes warfare between interest groups each demanding “more for us, less for them.”

Bitcoin: Property Beyond Law

If legal plunder works through law, the solution is property outside law’s jurisdiction.

Bitcoin makes this possible:

  • Seizure Resistance: As long as you remember your private key, no law can physically take your bitcoin
  • Inflation Immunity: As sound money, bitcoin is free from the invisible plunder of currency creation
  • Jurisdictional Neutrality: Bitcoin exists outside any state’s legal jurisdiction, allowing escape from that state’s legal plunder

Bastiat believed political struggle was citizens’ only recourse when law became an instrument of plunder. Now, 170 years later, Bitcoin offers a new choice: holding property in a form that cannot be plundered.

This is not “breaking” law. It is storing property in territory where law’s reach cannot technically extend. According to the non-aggression principle, how you store your property is entirely your decision, provided you harm no one else.

Bastiat’s Contemporary Significance

The reason Bastiat’s “The Law” is still read 170 years later is because the pattern of legal plunder he described has expanded rather than diminished in the modern era.

In Bastiat’s time, subsidies and tariffs were the primary forms of legal plunder. In modern times, we have added central bank currency creation, quantitative easing, zero interest rates, bailouts, and corporate subsidies. The scale is beyond what Bastiat could have imagined.

Bastiat’s question remains valid: Is law protecting property or taking it? Answering this question honestly is the first step toward recognizing legal plunder.

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