Praxeology, of course, does not pronounce either "largeness" or "smallness" to be ethically desirable. On the other hand, we shall find later that firms that exceed the optimum size determined by the free market, such as the large conglomerates encouraged by the VAT, tend to operate less efficiently. Although some vertical integration might prove economical even in a free market, past a certain point the consolidation of the stages of production hampers economic calculation by impeding market information flow—a topic that will be elaborated in Section 5.

It is impossible to review here every possible or proposed variation on the theme of taxes. In general, however, taxation tends to isolate individuals and firms from one another by negating the principal advantages of association. For example, imagine that an island government imposes a sales tax upon Crusoe's and Friday's exchanges of berries and bamboo sticks (pp. 4.5:22-7). Clearly, even a relatively small tax could easily eliminate the advantage of such trade for one party or the other or both, so that the two men would return to a state of individual economic autarky, each providing only for his own personal needs. Taxes tend to dissolve the bonds of association, creating a "do-it-yourself" society where individuals no longer devote their efforts to their most productive areas. In fact, taxes ultimately promote the erosion of "society" itself, in the most positive sense of the word.