The Right to Self-Determination: Why Smaller, Freer Units Create Peace, Liberty, and Prosperity

Insights and case studies from Chapter 1 of The State in the Third Millennium (Hans-Adam II)

Introduction
Self-determination is more than a political slogan, it is a design principle for free and peaceful societies. In Chapter 1, Hans-Adam II traces how personal encounters from Algeria to the Basque Country to Switzerland’s Jura shaped his conviction that local self-determination and decentralization are not threats but solutions for multiethnic states, federalism, and modern prosperity.

“Democracy appeared to be the only credible alternative to ‘the grace of God.’ However… there was no complete agreement about which model of democracy was the best.”
Hans-Adam II, Chapter 1
 
1) Personal Formation: From Student to State Thinker
As a high-school student in the 1950s, Hans-Adam II was struck by the inconsistency that self-determination seemed to apply to 20,000 Liechtensteiners but not to millions in Algeria. Years later, during a 1966 internship in the Basque Country, he asked the same question exposing the double standard of political practice.

“If the right to self-determination applied to the small number of Liechtensteiners, it should also apply to the Basques.”
Within his family, closely connected to the Habsburgs, history and global politics were debated rigorously. Consensus emerged that religious legitimation of monarchy had run its course, ideological justifications (nationalism or socialism) led to dead ends, and democracy remained the best option if designed properly.

 
2) Decolonization and Disillusion: Why Many New States Failed
The wave of decolonization brought hope but in many cases, political and economic failure followed, regardless of whether the model was British, French, or American. The rare successes (e.g., Singapore, South Korea) proved the rule and confounded establishment predictions.

Core message: Neither size, natural resources, nor a nominal constitution determine success. What matters are institutions, decentralization, market openness, and local legitimacy.

 
3) Multiethnic States: Lessons from Habsburg, Switzerland, Yugoslavia, and the USSR
Habsburg
The empire fractured under nationalism. The missed remedy? Radical decentralization and robust local democracy, modeled on Switzerland.

“With the example of the Swiss on our doorstep, robust democracy at the local level and political decentralization were the obvious solutions.”
Switzerland (Jura Question)
The Jura conflict French-speaking Catholics vs. German-speaking Protestants—escalated, but was resolved democratically: referenda, boundary adjustments, local self-determination. A best-practice case.

Yugoslavia
A counterexample: insisting on inviolable borders, rejecting decentralization resulting in civil war and ethnic cleansing. Hans-Adam II argues a roadmap centered on local self-determination could have averted the catastrophe.

Soviet Union
He advocated (ex ante) radical reforms: market economy, sharply reduced central competencies, local self-administration, rapid integration into the world economy. Gorbachev’s achievement, as he notes, was a largely peaceful dissolution preventing a potential nuclear calamity.

 
4) Québec and Canada: Thinking Self-Determination Without Splitting Societies
In Québec, nearly half favored independence while English-speaking and Indigenous minorities preferred to stay within Canada. One discussed approach: local self-determination along the St. Lawrence corridor where most French-speakers live, rather than a sweeping secession. Subsequent concessions de-escalated the conflict.

Lesson: Use fine-grained tools, not a sledgehammer: draw boundaries around real communities and uphold subsidiarity.

 
5) Small Beats Big (Economically): The Liechtenstein Argument
Contrary to “the bigger the better,” Liechtenstein’s growth after WWII shows:

Industry, not stamps, tourism, or only finance, powered the upswing.
Open markets, low taxation, and minimal bureaucracy pushed firms toward global competitiveness instead of protected home markets.
Small states cannot indulge in the illusion of a large internal market they learn earlier to compete worldwide.
“The prevailing belief in ‘the bigger, the better’ was fundamentally false.”
Economic point: As transport and trade costs dropped, the scale advantages of large states eroded. Flexibility, innovation, and openness outcompete sheer size.

 
6) Self-Determination as a Peace Order also in International Law
In the early 1990s, Hans-Adam II launched the Liechtenstein Institute on Self-Determination at Princeton and helped draft a UN convention proposing local self-determination channeling centrifugal forces into legal paths rather than violent ruptures.

“The right to self-determination is firmly established in the UN Charter… [but] never precisely defined.”
Realism: Many states fear disintegration. Yet clear rules for local self-determination can prevent conflict rather than fuel it.

 
7) Practicing What You Preach: Democratic Legitimacy at Home
Criticism of Liechtenstein’s monarchy was taken seriously. The response: strengthen democratic legitimacy and embed local self-determination in Liechtenstein’s own constitution (the broader reform of 2003 is covered later in the book). Credibility abroad starts with consistency at home.

“It is not the size of the state… but whether the state serves the people or not.”
 
8) The Vision: Many Small, Free Polities Instead of Fragile Leviathans
He does not call for destroying large states; he calls for decentralizing them down to the municipal level. The result would be many small political units where people can live freely and prosperously.

“We should therefore devote our efforts to the creation of numerous small principalities… where people can live in happiness and freedom.”
 
Key Takeaways (Policy, Economy, Society)
Subsidiarity first: Push competencies downward. Democracy scales better downward than upward.
Borders as tools, not dogma: Draw lines around lived communities to defuse conflict.
Markets over walls: Openness and global competitiveness beat protectionism.
Diversity is capital: Multiethnic mixes enrich culture and trade if local rights are secured.
Form ≠ function: The only test is service to the people; whether monarchy or democracy is secondary to outcomes.
 
Why It Matters Now
Geopolitics: Multiethnic tensions, center-periphery divides, and separatist pressures need regulated outlets not binary “all-or-nothing” breaks.
Economics: In a networked, digital, Bitcoin-capable world, scale advantages fade; agility wins.
Society: Self-determination builds trust people accept decisions made close to where they live.
 
Conclusion
Chapter 1 is a rigorous invitation to re-think self-determination: concrete, local, and peace-making not romantic, but practical. It urges us to design political architecture at a human scale and create prosperity from the bottom up.

“In principle it is all the same… whether [the state] is a monarchy, oligarchy or democracy, but rather whether the state serves the people or not.”
 
Source Note
All quotations and substantive references are from Hans-Adam II of Liechtenstein, The State in the Third Millennium, Chapter 1: “The right to self-determination—a personal conviction.”

Résumé  

In the first chapter of The State in the Third Millennium, Prince Hans-Adam II explains how his belief in self-determination grew from personal experience and history. He saw that small nations like Liechtenstein enjoyed a right that millions elsewhere were denied, and he began to question why.

Through examples from Europe and beyond, he argues that large, centralized states fail, while peace and prosperity arise when people govern themselves locally. Economically, he shows that small states can thrive through openness and innovation, not size.

His conclusion is simple: the value of any state is measured only by whether it serves its people. Real freedom, democracy, and stability come from decentralization and consent, not from power or territory.