DemocracyThe God That Failed (8 page)

Owing to these restrictions regarding entrance into government and the exclusive status of the individual ruler and his family (as king and nobles), private-government ownership (monarchism) stimulates the development of a clear "class consciousness" on the part of the governed public and promotes opposition and resistance to any expansion of the government's power to tax. A clear-cut distinction between the few rulers and the many ruled exists, and there is little or no risk or chance of a person's moving from one class to the other. Confronted with an almost insurmountable barrier to "upward" mobility, solidarity among the ruled—their mutual identification as actual or potential victims of government violations of property rights—is strengthened, and the ruling class's risk of losing its legitimacy as a result of increased taxation is accordingly heightened.
²²

²²
Bertrand de Jouvenel writes: "A man of our time cannot conceive the lack of real power which characterized the medieval king, from which it naturally followed that in order to secure the execution of a decision he needed to involve other leaders whose say-so reinforced his own." Bertrand de Jouvenel, "On the Evolution of Forms of Government" in idem,
The
Nature
of
Politics,
p. 113. Elsewhere, de Jouvenel noted:

In fact, the class consciousness among the ruled exerts a moderating effect not only on the government's internal policies, but also on its conduct of external affairs. Every government must be expected to pursue an expansionist foreign policy. The larger the territory and the greater the population over which a monopoly of confiscation extends, the better off those in charge of this monopoly will be. Because only one monopoly of expropriation can exist in any given territory, this expansionary tendency must be expected to go hand in hand with a tendency toward centralization (with ultimately only one, worldwide government remaining). Moreover, because centralization implies reduced opportunities for interterritorial migration—of voting with one's feet against one's government and in favor of another—the process of intergovernmental competition, of expansive elimination, should be expected to generate simultaneous tendencies toward increasingly higher rates of government expropriation and taxation.
²³

The king could not exact contributions, he could only solicit "subsidies." It was stressed that his loyal subjects granted him help of their free will, and they often seized this occasion to stipulate conditions. For instance, they granted subsidies to John the Good (of France), subject to the condition that he should henceforth refrain from minting money which was defective in weight. In order to replenish his Treasury, the king might go on a begging tour from town to town, expounding his requirements and obtaining local grants, as was done on the eve of the Hundred Years' War; or he might assemble from all parts of the country those whose financial support he craved. It is a serious mistake to confuse such an assembly with a modern sitting of parliament, though the latter phenomenon has arisen from the former. The Parliament is sovereign and may exact contributions. The older assemblies should rather be thought of as a gathering of modern company directors agreeing to turn over to the Exchequer a part of their profits, with some trade union leaders present agreeing to part with some of their unions' dues for public purposes. Each group was called on for a grant, and each was thus well placed to make conditions. A modern parliament could not be treated like that, but would impose its will by majority vote.
(Sovereignty,
pp. 178-79)

See also Douglass C. North and Robert P. Thomas,
The
Rise
of
the
Western
World:
A
New
Economic
History
(Cambridge: Cambridge University Press, 1973), p. 96.

²³
On political decentralization—"political anarchy"—as a constraint on government power and a fundamental reason for the evolution of markets and capitalism, as well as on the tendency toward political centralization—expansive elimination—and the accompanying tendency toward an increase in governments' taxing and regulatory powers see Jean Baechler,
The
Origins
of
Capitalism
(New York: St. Martin's Press, 1976), esp. chap. 7; Hoppe,
The
Economics
and
Ethics
of
Private
Property,
esp. chaps. 3 and 4; idem, "Migrazione, centralismo e secessione nell'Europa contemporanea,"
Biblioteca
delta
liberta
118 (1992); idem, "Nationalism and Secession,"

However, a privately-owned government significantly affects the form and pace of this process. Owing to its exclusive character and the correspondingly developed class consciousness of the ruled, government attempts at territorial expansion tend to be viewed by the public as the ruler's private business, to be financed and carried out with his own personal funds. The added territory is the king's, and so he, not the public, should pay for it. Consequently, of the two possible methods of enlarging his realm, war and military conquest or contractual acquisition, a private ruler tends to prefer the latter. It must not be assumed that he is opposed to war, for he may well employ military means if presented with an opportunity. But war typically requires extraordinary resources, and since higher taxes and/or increased conscription to fund a war perceived by the public as somebody else's will encounter immediate popular resistance and thus pose a threat to the government's internal legitimacy, a personal ruler will have to bear all or most of the costs of a military venture himself. Accordingly, he will generally prefer the second, peaceful option as the less costly one. Instead of through conquest, he will want to advance his expansionist desires through land purchases or, even less costly and still better, through a policy of intermarriage between members of different ruling families. For a monarchical ruler, then, foreign policy is in large measure family and marriage policy, and territorial expansion typically proceeds via the contractual conjunction of originally independent kingdoms.
²⁴

Chronicles
(November 1993); also Nathan Rosenberg and Luther E. Birdzell,
How
the
West
Grew
Rich
(New York: Basic Books, 1986).

²⁴
As a prominent example of this type of foreign policy, the case of the Habsburgs of Austria may be cited, whose conduct has been characterized by the motto
"bella
geruntalii;
tujelix
Austria,
nubes."
Maximilian I (1493-1519)

married the heiress of the dukes of Burgundy, who, over the past century, had acquired a number of provinces in the western extremities of the [Holy Roman] Empire—the Netherlands and the Free County of Burgundy, which bordered upon France. Maximilian by this marriage had a son Philip, whom he married to Joanna, heiress to Ferdinand and Isabella of Spain. Philip and Joanna produced a son Charles. Charles combined the inheritances of his four grandparents: Austria from Maximilian, the Netherlands and Free County from Mary of Burgundy, Castile and Spanish America from Isabella, Aragon and its Mediterranean and Italian possessions from Ferdinand. In addition, in 1519, he was elected Holy Roman Emperor and so became the symbolic head of all Germany. (Robert R. Palmer and Joel Colton,
A
History
of
the
Modern
World
[New York: Alfred Knopf, 1992], p. 74)

On the limited and moderate character of monarchical wars see the discussion on democratic warfare below.

In contrast to the internal and external moderation of a monarchy, a democratic (publicly owned) government implies increased excess, and the transition from a world of kings to one of democratically-elected presidents must be expected to lead to a systematic increase in the intensity and extension of government power and a significantly strengthened tendency toward decivilization.

A democratic ruler can use the government apparatus to his personal advantage, but he does not own it. He cannot sell government resources and privately pocket the receipts from such sales, nor can he pass government possessions on to his personal heir. He owns the
cur
rent
use
of government resources, but not their capital value. In distinct contrast to a king, a president will want to maximize not total government wealth (capital values and current income) but current income (regardless and at the expense of capital values). Indeed, even if he wished to act differently, he
could
not,
for as public property, government resources are unsaleable, and without market prices economic calculation is
impossible.
Accordingly, it must be regarded as unavoidable that public-government ownership results in continual capital consumption. Instead of maintaining or even enhancing the value of the government estate, as a king would do, a president (the government's temporary caretaker or trustee) will use up as much of the government resources as quickly as possible, for what he does not consume
now,
he may
never
be able to consume. In particular, a president (as distinct from a king) has no interest in not ruining his country. For why would he
not
want to increase his confiscations if the advantage of a policy of moderation—the resulting higher capital value of the government estate—cannot be reaped privately, while the advantage of the opposite policy of higher taxes—a higher current income—
can
be so reaped? For a president, unlike for a king, moderation offers only disadvantages.
²⁵

²⁵
On the nature of public ownership and its inherent irrationality see also Rothbard,
Power
and
Market,
pp. 172-84; Hoppe,
A
Theory
of
Socialism
and
Capitalism,
chap. 9.

The fundamental difference between private ownership of government (and low time preference) and public ownership of government (and high time preference) may be further illustrated by considering the institution of slavery, and contrasting the case of private slave ownership, as it existed for instance in antebellum America, with that of public slave ownership, as it existed for instance in the former Soviet Union and its Eastern European empire.

Just as privately owned slaves were threatened with punishment if they tried to escape, in all of the former Soviet empire emigration was outlawed and punished as a criminal offense, if necessary, by shooting those who tried to run away. Moreover,
anti-loafing laws existed everywhere, and governments could assign any task and all rewards and punishments to any citizen. Hence the classification of the Soviet system as slavery. Unlike a private slave owner, however, Eastern-European slave owners—from Lenin to Gorbachev—could not sell or rent their subjects in a labor market and privately appropriate the receipts from the sale or rental of their "human capital." Hence the system'sclassification as public (or socialist) slavery.

Moreover, with public instead of private government ownership the second reason for moderation is also gone: the clear and developed class-consciousness of the ruled. There can never be more than one supreme ruler, whether king or president. Yet while entrance into the position of king and a promotion to the rank of nobility is systematically restricted under a monarchy, in a publicly owned government, anyone, in theory, can become a member of the ruling class—or even president. The distinction between the rulers and the ruled is blurred, and the class-consciousness of the ruled becomes fuzzy. The illusion even arises that such a distinction no longer exists: that with a democratic government no one is ruled by anyone but everyone instead rules himself. Indeed, it is largely due to this illusion that the transition from monarchy to democracy could be interpreted as progress and, hence, as deserving public support. Accordingly, public resistance against government
power is systematically weakened. While expropriation and taxation before may have appeared clearly oppressive and evil to the public, they seem much less so, mankind being what it is, once anyone may freely enter the ranks of those who are at the receiving end.

Without markets for slaves and slave labor, matters are worse, not better, for the slave, for without prices for slaves and their labor, a slave owner can no longer rationally allocate his "human capital." He cannot determine the scarcity value of his various, heterogeneous pieces of human capital, and he can neither determine the opportunity-cost of using this capital in any given employment, nor compare it to the corresponding revenue. Accordingly, permanent misallocation, waste, and "consumption" of human capital results.

The empirical evidence indicates as much. While it occasionally happened that a private slave owner killed his slave, which is the ultimate "consumption" of human capital, socialist slavery in Eastern Europe resulted in the murder of millions of civilians. Under private slave ownership the health and life expectancy of slaves generally increased. In the Soviet Empire healthcare standards steadily deteriorated and life expectancies actually declined in recent decades. The level of practical training and education of private slaves generally rose. That of socialist slaves fell. The rate of reproduction among privately-owned slaves was positive. Among the slave populations of Eastern Europe it was generally negative. The rates of suicide, self-incapacitation, family breakups, promiscuity, "illegitimate" births, birth defects, venereal disease, abortion, alcoholism, and dull or brutish behavior among private slaves were high. But all such rates of "human capital consumption" were higher still for the socialist slaves of the former Soviet Empire. Similarly, while morally senseless and violent behavior among privately owned slaves occurred after their emancipation, the brutalization of social life in the aftermath of the abolition of socialist slavery has been far worse, revealing an even greater degree of moral degeneration. See also Hans-Hermann Hoppe's "Note on Socialism and Slavery" in
Chronicles
(August 1993): 6.