 | Among books written systematically and engagingly, with an immense depth of notes and research to accompany them, few of our time can rank alongside Hans-Hermann Hoppe’s Democracy: The God that Failed. Hoppe, a professor of economics at the University of Nevada and senior fellow with the Ludwig von Mises institute, is an anarcho-capitalist of generally Rothbardian economic and political leanings. While the logic of certain of his positions may be questionable, some of the core theses of his book: the undesirability of majority rule, the natural proximity of conservatism and libertarianism, and the pervasive moral decay bred by modern social democracy, are invaluable to friends of liberty of all stripes. Hoppe eloquently dispels the deadly commonplace fallacy that liberty and democracy are mutually reinforcing, and demonstrates why, in fact, even the abuses of a monarchical tyranny pale in comparison to the modern welfare state, which exists because of, not despite the institution of majority rule.
Hoppe’s essential approach is axiomatic-deductive, much at odds with the currently fashionable empirical-positivist credos of perpetual uncertainty and underdetermination. Just as there exist axioms of metafysics, from which all filosofical principles inexorably follow, so there exist axioms of praxeology, the science of human action, which render fundamental economic principles and relationships universal and all-applicable, rather than mere fenomena of particular eras and paradigms. Hoppe begins the book by illustrating some of these (self-evident) axioms of praxeology and focusing on an idea closely related to them, that of time-preference. He demonstrates how the development of a low time-preference (long-term economic orientation) is essential to the progress of civilization and the activities that ultimately conserve labor and develop more efficient means of production, i.e. saving and investing, deferring immediate gratification and delaying the use of one’s present resources. Hoppe points out the correlation between wealth and long-term prudence, restraint, and moral fortitude, and that between poverty, hedonism, short-sightedness, and lack of systematic devotion to a productive endeavor. He then proceeds to claim that certain political conditions (laissez-faire capitalism) better favor a low time-preference and a long-term orientation, while others (monarchy, and, to a greater degree, democracy) favor a high time-preference and a short-term orientation.
The hallmark of all centralized governments up to our time has been the employment of territorial monopoly power to coercively tax the population and redistribute wealth within it. This, argues Hoppe, fosters short-termism within individuals. Expecting their income to be diminished compared to an environment lacking government intervention, or awaiting imminent expropriation, individuals will have a greater stimulus to spend more of their wealth faster, rather than defer consumption through prudent investments. Different government forms breed this reversal to different degrees. A monarchy is akin to a privately owned coercive government, in which the king engages in moderate exploitation of his subjects. However, because the government is the king’s property, it is in his interest to maintain his estate’s value by not expropriating too much of the capital which is used as the basis for future private economic development. Hoppe appeals to history in order to demonstrate that this was in fact the case: during no monarchical era did government’s share of any country’s national product exceed 5-8%.
In a democracy, however, there is no permanent government property owner. Rather, government is headed by temporary caretakers elected by the majority. These, according to Hoppe, have no compelling interest to magnify the value of the government’s revenue in the long term at the expense of short-term tax hikes and regulatory increases, since they will not personally benefit from it. Rather, they have the benefit of present consumption of public funds, but not their future consumption. Thus, a short-term orientation is fostered within such democratically-elected officials, which explains vast historical spending increases throughout the democratized Western world, along with ballooning public debt burdens. In most Western nations, government amounts to not 5, but 50 percent of the national product. This government spending, on regulations, welfare schemes, and interventions against private property, greatly reinforces short-termism within the populace. While, in a monarchy, the king’s parasitism was insufficient to reverse the rate of economic growth, and could only marginally slow it, in a democracy, the far more intense parasitism of elected officials has been reversing living standards and the general state of the culture for the past hundred years. Though democracy does not eliminate the distinction between the privileges of government and the yoke it imposes upon the citizenry, it does, however, by the principle of “free entry” into public office, create the illusion within the citizenry that the latter is somehow in control of government affairs. (Hoppe argues to great lengths to demonstrate that the “representation” that each individual receives in a democracy is a sheer perversion of the original concept of representation.) With an increasingly more hedonistic, degenerate, and economically short-sighted masses to rule over, the democratic caretakers of government can perpetrate their ideological fraud with far greater ease.
Hoppe’s coverage of the democratic fraud is masterful, systematic, and engaging. Some of his conceived alternatives to the democratic model are, too, addressed with the skills of a formidable presenter and argumentator, though, in my judgment, they are fundamentally flawed. Hoppe is a libertarian of the Murray Rothbard camp, and thus rejects any form of government, no matter how limited. He advocates a system of private-property anarchy with insurance companies providing protection services to voluntarily paying clients. Insurance companies, according to Hoppe, would possess the capital, motivation, and rationality to systematically determine the actual market value of protection for various individuals in various locales, as opposed to the monopolistic government, whose costs are inherently arbitrary due to the lack of a free market to determine prices for the commodity of protection. Hoppe presents a lengthy economic case for his alternative, but in it he does not touch on a crucial question: By what standard are insurance companies to determine punishment for offenders and the nature of crime per se? What is to happen if different insurance companies disagree with respect to this, or if the perceived offender recognizes the jurisdiction of no insurance company? Moreover, though most businesses are honest and productive, some are led by inept and incompetent administrations. What if an insurance company were to default on its contractual promise to protect a customer? What recourse would a single customer have against a vast multinational corporation that commits fraud? (Any such just recourse would inevitably require some means of the customer’s compensation.) Addressing this issue in full is beyond the scope of this review, and is the province of a separate treatise, but it is clear even from the above deliberations that Hoppe’s case for anarchy is far from impregnable.
To Hoppe’s credit, however, he skillfully reveals who the true allies of liberty are in the quest to undermine the Leviathan state. True conservatives, according to Hoppe, are advocates of a “natural order” based on private property, cultural and moral standards, the institution of family, and the idea of natural aristocracy, a group of men who, due to their immense productivity, prudence, and private virtue, are voluntarily recognized as the cultural and intellectual leaders of their communities, and guardians of the ancient and immutable Natural Law. The true conservatives (not to be confused with Buchananite social democrats in disguise, or religious fundamentalist socialists) uphold institutions which have served as bastions against the State for centuries, and whose existence statists of all stripes systematically seek to undermine. Such conservatives are the natural allies of libertarians, whose ultimate purpose is to limit the power of the state and institute the immutable status of private property and a purely capitalist economy. Indeed, once the libertarians triumf in their endeavor, it will be the conservative values that take root in the re-civilizing world. Those self-proclaimed “libertarians” who would wish to combine anti-statist sentiments with moral degeneracy, promiscuity, “alternative lifestyles,” abortionism, short-sighted gratification, and negligence toward their spouses, families, and associates, are in fact products of the democracy-bred high time-preference, the “live for today” mindset so vocally espoused by the screeching demagogues of the 1960s New Left. In fact, the left-libertarians would be the first ones displaced and consigned to the fringes of society in an entirely laissez-faire order, characterized by free association, individual discrimination, and a lack of the forced integration undertaken by modern states. They would not be persecuted for their personal choices, but they would be ostracized from the voluntary company of more prudent and productive individuals, whose long-sightedness and future-orientation would be encouraged by the free economic system. Hoppe is confident that, if men were to gain unrestricted liberty, the hedonist lifestyle would prove uncompetitive and eventually wither away. Indeed, history once again supports his thesis. Prior to the post-World War I era of mass democratization, the Western world was characterized by successive eras of extreme social conservatism, high culture, and improvement of human living standards, from the Renaissance, to the Baroque Era, to the Enlightenment and the Victorian Age. Though not perfectly free, man, during those ages, was left sufficiently free to lower his time-preference and thus became increasingly more prudent, cultured, and civilized. This trend was only reversed by the implementation of mass democracy of the Wilsonian model in Europe and the United States.
I do not advocate the entirety of Hoppe’s case as true, but his book certainly has much to teach Objectivists, conservatives, and libertarians of all denominations. This opus is likely to set the terms of intellectual debate in the years to come, and is recommended to anyone who seriously pursues the study of politics, economics, and filosofy.
From The Rational Argumentator—August 12, 2004
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Democracy: The God that Failed by Hans-Hermann Hoppe
