What is 'Economic Secession'

Economic secession is a social phenomenon that occurs when currency, goods or services are exchanged outside of a traditional economic system. Such economic secession might entail removing a person or group of people from the use of fiat currency, for instance, with them instead relying on bartering or other commodity-based transactions, such as gold or durable goods.

BREAKING DOWN 'Economic Secession'

Proponents of economic secession advance it as one way of helping reduce government influence on various economic factors and decisions, since it doesn't depend on government-sanctioned legal tender and is not subject to taxation.

Economic secession is a decision made by individuals or localities to remove themselves from a country's general economic network – thus reducing the power of the government over their lives, since it is no longer able to use its monetary policy to influence behavior.

Given these characteristics, economic secession is considered a form of Libertarianism, or even anarchism. Simple tax avoidance or resistance is one example of and rationale for economic secession.

But there are many other instances: agrarian societies that exist on bartering goods and services, anarcho-capitalism, complementary currency, various examples of local exchange trading systems, bitcoin and other types of digital or alternative currencies, etc.

Promise and Skepticism of Economic Secession

Wendell Berry, the writer, environmental activist and cultural critic, is thought to be one of the first to have coined the term economic secession, putting forth his vision in an essay tiled "Conservation and Local Economy."

In a recent 2017 interview, Berry pointed to the Amish as exemplary of his idea of what the term means:

"Certain Amish communities have economies reasonably local in orientation, starting with the economies of households and neighborhoods," said Berry. "The Amish are the only Christians that I know about who actually practise the radical neighborliness of the Gospels. Their extensive use of horses for fieldwork and transportation limits their lives and livelihoods to a neighbourly scale and keeps their work largely dependent on local energy, from sunlight and homegrown forages and grains. The Amish are the true geniuses of technology, insofar as they, almost alone, are able to refuse it when the use of it would be destructive to their community."

In another essay, however, written in 2003 for the Mises Institute, two socioeconomic theorists offered their opinions on why "Economic Secession Won't Succeed."

"Some freedom-minded people pin their hope for liberty on withdrawing from an unfree world," wrote Gene Callahan and Paul Birch. "In times of crisis, such as wars and recessions, this idea gains popularity. We might refer to this notion as "economic secession," borrowing the name from John Kennedy's article of the same title. Despairing of advancing the cause of liberty in society at large, they hope to be able to secure their own liberty anyway."

To describe the limitations for economic secession's ability to effect governmental change, they offered the following example: "What would happen if the man in the street were able to hide a larger fraction of his personal wealth or income? Would the government shrug its collective shoulders and reduce its spending? Hardly. It would merely assume that each taxpayer is hiding a similar fraction of his income and increase all tax assessments accordingly. This would penalize honesty, and in fostering anger against the tax evaders would in all likelihood encourage the introduction of ever more draconian and authoritarian laws. And the tax revenues would keep flowing just the same."

RELATED TERMS
  1. Economic Growth Rate

    An economic growth rate is a measure of economic development, ...
  2. Economic Conditions

    Economic conditions are the state of the economy in a country ...
  3. Fiscal Localism

    Fiscal localism is an idea that involves a focus on local and ...
  4. Economics

    Economics is a branch of social science focused on the production, ...
  5. Berry Ratio

    The Berry ratio measures a company's gross profit to operating ...
  6. Applied Economics

    Applied economics refers to the use of economy-framed theories, ...
Related Articles
  1. Small Business

    Money Tips From The Amish

    The Amish are frugal and savvy in business. Here's how you can improve your personal finances by doing what the Amish do.
  2. Trading

    The Euro Post-Brexit Is Looking Resilient: Here’s Why

    The euro's stability is remarkable given the fundamental uncertainties in Europe.
  3. Trading

    Dollarization Explained

    Find out how fledgling economies can find some stability in their currency and attract foreign investment.
  4. Taxes

    The Tax Implications Of Bartering

    Here are some tax consequences for bartering that you need to know, as well as how to report them.
  5. Insights

    What is Fiscal Policy?

    Fiscal Policy how governments adjust taxes and spending to moderate the economy. Fiscal Policy is the sister strategy to monetary policy, through which a central bank influences a nation's money ...
  6. Insights

    How Currency Works

    Currency offers key advantages over economies based on direct trade, including a broader market for sellers' goods and services and transport ease.
  7. Investing

    The difference between finance and economics

    Learn the differences between these closely related disciplines and how they inform and influence each other.
  8. Financial Advisor

    Why Positive Economic Data Pushes the Market Down

    Unemployment comes in higher than analysts’ expectations, and the market rallies 1% instead of dropping. GDP growth exceeds expectations slightly, and markets drop. Why could this be happening?
  9. Trading

    3 Factors That Drive the U.S. dollar

    We look at three important factors that affect U.S. dollar value, and how to determine when it's the right time to buy currency.
RELATED FAQS
  1. What impact does economics have on government policy?

    Learn about the impact of economic conditions on government policy and understand how governments engineer economic conditions ... Read Answer >>
  2. What is the difference between barter and currency systems?

    Learn the difference between barter and currency systems in the trade of goods and services, and why currency is preferred ... Read Answer >>
  3. What are some of the limitations and drawbacks of economics as a field?

    Find out why the field of economics is full of controversy. Policy decisions, political campaigns and personal finances are ... Read Answer >>
  4. What are some examples of barter transactions?

    Learn how bartering involves the provision of goods or services in exchange for other goods or services, and review different ... Read Answer >>
  5. How and where is revenue recognized from barter transactions?

    The IRS has ruled that companies and individuals must include the fair market value of all received goods and services exchanged ... Read Answer >>
  6. Is the United States a Market Economy or a Mixed Economy?

    The United States is a mixed economy, combining elements of a true free market economy with governmental, economic controls. Read Answer >>
Trading Center