Hans-Hermann Hoppe

The Private Production of Defense

Edwin van de Haar Current Events , , , , , , ,

Lucas’ post reminded me of a piece that I wrote for his website ThinkIR, in 2013. Most of it I re-used in my book Degrees of Freedom (2015). Of course it is also a piece on its own, that readers of NoL may find of interest. Thanks Lucas!

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It is fun to think about the almost unthinkable. Therefore this contribution is about the idea that no state is needed to provide military security against foreign attack. In modern times the idea goes back to at least the French-Belgian economist Gustave de Molinari and his 1849 pamphlet The Production of Security. The most prominent current defender of this idea is the German economist Hans-Herman Hoppe, a leading anarcho-capitalist thinker, in his essay The Private Production of Defense (also see The Myth of National Defense, which was edited by Hoppe).

Hoppe rightly notices (p.1) that the legitimacy of the modern state is strongly related to the belief in collective security. Following Rothbard in The Ethics of Liberty, he argues that states will always expand, due to the governmental monopoly to tax its inhabitants. This also applies to governments that only have the limited task of protection against aggression and administrating and justice. The only proper solution is therefore to abolish the state altogether, in order to ensure true liberty and individual justice. Consequently, this also means that the provision of security needs to be privatized, as Hoppe does not expect the world to turn into a peaceful utopia (pp. 1- 5).

So how would this work? Basically, to regard the production of security as an insurance, where the expenditures for defense are to be paid by premiums paid by individuals (pp.5-8). The insured people can choose from competing insurance firms, just like in other parts of the insurance market. This is not as improbable at it may seem at first sight. Importantly, insurance companies are already used to deal with risk and other real world dangers. There are already many private security companies in existence, also at the battlefield. The cost of defense in relation to other parts of the insurance market appears large, but do not discount the idea beforehand. For example: Dutch defense expenditure in 2013 is around 7 billion Euro, less than 1% of GDP, while annual turnover of the two largest insurers is around 20 billion. Of course Hoppe would point out that the 7 billion in current defense expenditures needs to be returned to the taxpayers, hence widening the premium base. Presumably, this would work the same in other countries with smaller economies and/or smaller financial sectors (but see the remarks below).

A world without states, but with private security insurance is less war prone, Hoppe argues (p.11-12). Insurers will have an interest in keeping costs down, and will therefore only make unprovoked attacks insurable. People who provoke, or have known to provoke violence in the past, will be excluded from the insurance. After a while, the number of uninsured people will be small. They will face big defense insurance companies if they violate somebody’s property, making this unlikely to happen often, in contrast to interstate war. Yet in my view here Hoppe relies too much on his stated view on human nature: man as rational animal.

A related main defect of the essay is its focus on the role of insurers and their (economic) incentives. This is fine, but the argument quickly loses any of the convincing power it has when Hoppe turns to an analysis of international war. Or more precise, a violent conflict between a free territory, defended by one or more insurance companies, and a state, financed by compulsory taxation. He simply asserts (p. 14) that the state would be in a disadvantage because it is less efficient and that its leaders would lose their legitimacy, because they necessarily fail to convince the population of the justification of an attack on the inherently peaceful free territory.

Yet if an attack would still happen, Hoppe continues, the state-led army of specialists would not only face the defense force of the insurance company (or several insurers and re-insurers cooperating), but also an armed population (p.15). Without much analysis he simply asserts the companies will always be more efficient and also capable to counter all attacks by any state, perform counter-operations in the state territory and be able to kill its leaders, while making sure to minimize any collateral damage. All because they have to justify their insurance fees.

That is as far as Hoppe goes in his argument. He offers no further analysis or other scenario’s, no additional arguments, does not provide any international political analysis, none whatsoever. Only the fact that the insurance companies are private suffices for Hoppe as they must be more efficient and thus able to overcome all possible attack. That is too simplistic, as just three examples illuminate.

Hoppe overlooks some important geopolitical aspects. Take size of territory and population for instance. How likely is it really that a small free territory, say the size of Luxembourg, or The Netherlands for that matter, would be able to raise enough insurance premiums to enable a good defense structure to counter attacks by much larger states? There is a difference between collecting enough money to match current defense expenditures and ensuring defense against all possible attacks, especially given the anarcho-capitalist dislike of international alliances such as NATO.

Apparently Hoppe thinks all necessary technology is either invented by the research and development people of the insurance company, or freely available at the market. This is improbable as far as the state-side of the argument concerns, given today’s relative secrecy in military procurement. Also, the cooperation between insurance companies may fail in this respect. If one company has a superior weapon system, it will be a ground for competition with the other insurer(s). The superiority of one company may quickly make it a monopolist. It may become a threat to its insured, just like states may be threats to their taxpayers. Once the armed forces of the private insurer are in full operation it only takes a powerful CEO with his or her own agenda to turn things sour. Just the fact of private financing does not make much difference.

Also, does economic efficiency always trump state inefficiency? The history of warfare is full of examples where the supposedly superior army loses unexpectedly. So if the state deals a decisive blow it effectively robs the remains of the insurance company, and it’s successors, of its premium paying clients.

To conclude, for liberty loving people the prospect of stateless private security may be tantalizing. However, the quality of the argument as presented by Hoppe thus far is poor and unconvincing. His theoretical arguments largely stem from economics and overlook other relevant facts and arguments, including those from IR. Hoppe’s private production of defense remains a fairy tale.

Links:
Molinari:
http://mises.org/document/2716/The-Production-of-Security

Hoppe:
http://mises.org/document/1221/The-Private-Production-of-Defense

http://mises.org/document/1092/Myth-of-National-Defense-The-Essays-on-the-Theory-and-History-of-Security-Production

Rothbard:
http://mises.org/document/1179/The-Ethics-of-Liberty

A Short Note on Fraudulent Banking

Joakim Book Economics, History, Liberty , , ,

In my piece over at American Institute for Economic Research the other week, I discussed the phenomenon of selling property that one does not (yet) own. I mentioned a left-wing and a right-wing version, but focused my efforts mostly on the right-wing “Fractional-Reserve-Banking-is-Fraud” idea.

My main point was to, by analogy, point to other fiduciary relationship – specifically insurance and airline overbooking – that fulfil the same criteria of double-ownership that is so crucial for the right-wing view. Insofar as this analogy holds, rejecting fractional reserve banking as fraudulent and illegal requires one to similarly reject insurance policies and airlines’ practice of overbooking. Regardless of where one comes down on the legal relationship between a depositor and a bank, I thought the theme interesting to explore.

Unknown to me, in one of Hoppe-Hülsmann-Block’s (HHB) early articles they devoted about two pages to addressing my main points. To HHB, there’s a “fundamental distinction” between property and property titles that render these and other analogies “mistaken”: future vs present goods. Money titles such as fractionally issued bank notes are designated present goods whereas insurance policies, parking permits or flight tickets are considered future goods. Money is the “present good par excellence“ to use Rothbard’s words.

HHB claims that one can legally oversell future goods, but when overselling present goods, one is committing fraud. A narrow distinction, admittedly, and we’ll see that it doesn’t fare so well. Discussing the example of airline overbooking, this distinction does momentarily save HHB from condemning airlines; yes, the airline is selling a flight at a future date, which seems meaningfully different from the instantly-available present goods bank notes ought to be. But the thing about the future is that it inevitably and predictably becomes the present. Once that future arrives, HHB explicitly admits that having more passengers at the gate than they have seats on the plane does amount to fraud. Strangely, however, HHB exonerate airlines since they are “prepared to pay every excess ticket holder off”.

Oh, and fractional reserve banks aren’t?

At this point their already weak defense falls apart. Every instance of historical bank runs include management, shareholders and governments doing precisely that: slowing down the run by paying employees, friends or relatives to deposit funds; acquiring new funding (either debt or equity) to pay off skittish depositors who want their present goods right away; or my own personal favorite, as a good student of Scottish financial history: the Option Clause!

HHB say that airlines are not committing fraud since once at the gate – on the verge of having their oversold future goods transform into present goods – they stand ready to

“repurchase [the passenger’s] ticket at a price (by exchange of another good) that the holder considers more valuable than his present airline seat.”(HHB 1998: 47)

Let’s see what the financially innovative Scots did. Their notes were subject to a legal clause, allowing management to ‘mark’ particular notes when offered up for redemption. That meant deferring the redemption claim for six months, effectively transforming the present good (the money title) into a future good (money title in six months), at the maximum legal rate of interest of 5%. That sounds like a good “the holder considers more valuable”, especially considering that these notes were effortlessly accepted in trade – i.e., the holder could instantly turn around and buy things with this note, its value gradually appreciating as the six-month date arrived.  In practice, this deterrent was only used infrequently, and then almost exclusively against English currency speculators.

Indeed, extrapolating this point, as I do in a forthcoming piece on maturity-mismatch (and have flaunted in Austrian conferences), illustrate how little practical and economic difference there would be between the opposing and deeply-entrenched Fractional-Reserve-Banking camps.

Regardless, it seems the airline-insurance-parking permit analogy still stands.

Underrated & overrated libertarian thinkers

Edwin van de Haar Current Events , , , , , , , , ,

Here is my take on Tyler Cowen’s views on libertarian thinkers who are either overrated or underrated in shaping the libertarian tradition. Please be aware that I think libertarianism and classical liberalism are two different strands of liberal thought, as argued in more detail in an earlier post here at NOL and in my latest book. Please also note that my judgement will be particularly informed by their views on international relations.

Overrated:

  1. Hans-Hermann Hoppe – completely esoteric ideas about international relations, especially his erroneous and ill-thought idea about private defence through private insurance companies.
  2. Deepak Lal – no complaints about his general work, but his praise for empires was deeply disturbing, even though he meant well. Liberalism and globalization do not need empires, no matter how civilized – in the Oakeshottian meaning – they are meant to be.
  3. Ron Paul – I admire Ron Paul in many ways, but his ideas for ‘a foreign Policy of freedom’ are not much better than Hoppe’s. ‘peace, commerce, and honest friendship’: nice Jeffersonian goals, bad underlying analysis, not least about human nature.

Underrated:

  1. Friedrich Hayek – a far more sophisticated thinker on international relations than he is ever given credit for.
  2. Adam Smith – nowadays erroneously equated with ‘trade leads to peace’ fairly tales. Yet any reader of the complete two volumes of the Wealth of Nations recognizes that the book is also a lot about war and foreign policy, as are his Lectures on Jurisprudence and even a bit in The Theory of Moral Sentiments. Together these make for a full and sophisticated position on international affairs.
  3. David Hume – basically the same as Smith.
  4. Robert Jackson – ok, I am taking liberties here. I do not think Jackson would consider himself a classical liberal or libertarian. But his writings on international relations are important and often have a classical liberal leaning, especially The Global Covenant.

A short note on monarchical nostalgia

Brandon Christensen Culture, Politics , , , , ,

Kingship organizes everything around a high centre. Its legitimacy derives from divinity, not from populations, who, after all, are subjects, not citizens. In the modern conception, state sovereignty is fully, flatly, and evenly operative over each square centimetre of a legally demarcated territory. But in the older imagining, where states were defined by centres, borders were porous and indistinct, and sovereignties faded imperceptibly into one another. Hence, paradoxically enough, the ease with which pre-modern empires and kingdoms were able to sustain their rule over immensely heterogeneous, and often even contiguous, populations for long periods of time. (19)

This passage, from Benedict Anderson’s much-cited book on nationalism (Imagined Communities), does a good job of summarizing what the world looked like politically prior to the Industrial Revolution. It does a less good job of summarizing what monarchy is, politically (see this or this), but does do a great job of explaining why monarchies were able to exert governance over populations that were linguistically, religiously, and ethnically diverse.

What is less clear in this passage is its explanation for why paleolibertarians are so enamored with monarchy and why some non-paleo libertarians often write nostalgically about imperial pasts. Even though this is not clear in the passage (I doubt Anderson had intra-libertarian squabbles in mind when he wrote Imagined Communities), it is a great way to explore why libertarians have nostalgia for monarchy and empire.

Let’s start from the top, though. Libertarians don’t like nation-states because of nationalism, because of borders with taxes and restrictions on movement of goods and people, and because of the power that governments can exert over well-defined spaces of territory. So, instead of delving into the intricacies of why nation-states are around, some libertarians reach back to an older age, where “borders were porous and indistinct,” state sovereignty was not the end game of geopolitics, and governments had ways other than nationalist propaganda to bring diverse populations to heel. So on the surface, nationalism was non-existent, borders were open, and diverse groups of people lived together in relative harmony under one roof. What libertarian wouldn’t like that? Fred Foldvary’s post on restoring the Ottoman Empire is a good example of this kind of historical naivety. (Barry and Jacques have both written good rebuttals to this kind of wishful thinking.)

Historical naivety is one thing, but the arguments of so-called “anarcho-monarchists” are quite another. Arguing that monarchy is anarchy because monarchs don’t reign over a nation-state (instead they rule over the private property of the crown) is disingenuous at best, and nefarious at worst. Royal property and private property are two different things (“L’etat c’est moi“). This argument leads directly to the awful, embarrassing arguments of Hans-Hermann Hoppe and his acolytes, who have a bad habit of claiming that anarcho-monarchism is somehow libertarian. I’m going to skip over the specifics of their arguments (Zak has done great work on this topic, but in short Hoppeans claim that anarcho-monarchist societies would be able to physically remove undesirable people from their societies; “undesirables” mostly mean socialists, homosexuals, and non-Europeans), and instead point out that Hoppe and company are simply wrong about what a monarchy actually is.

Monarchies had porous borders, they constantly warred against their neighbors (sometimes for “interests of state”), and their populations were polyglot and illiterate. I haven’t spent any time reading Hoppe, so maybe I am treating him unfairly here and he is perhaps an advocate of a new type of monarchy, but as a student of Habermas I would assume Hoppe likes to use history as a guide for understanding and explaining the world around him. How on earth could he be so wrong about what monarchy actually is, unless he is being disingenuous about his whole anarcho-monarchist utopia?

On a completely unrelated note, Benedict’s Anderson’s book on nationalism is published by Verso Books, rather than a traditional academic press (such as Princeton University Press or University of California Press). Verso Books is a left-wing publishing house dedicated to radical critiques of everything non-leftist, so I find it a bit odd that Anderson’s book has come to be so well-cited in the academic literature on a number of topics. It’s a great book, don’t get me wrong, but I think it’s popularity, despite being an explicitly ideological book rather than an academic one, explains much of the strife currently happening on campuses across the West regarding freedom of speech and freedom of assembly.

Libertarians and Pragmatists on Democracy Part 2: Classical Liberal and Libertarian Criticisms of Democratic Institutions

Zachary Woodman Economics, History, Liberty, Philosophy , , , , , , , , , , , , , , , , ,

Note: This is part of a series on democracy. It is assumed the reader is familiar with part one prior to reading, in which the basic direction of this series is introduced and democracy is more concretely defined. This post is meant to do be a non-comprehensive, though fairly inclusive, look at a variety of views of democracy in classical liberal thought. The next post will survey progressive and pragmatist views of democracy, and the final post will argue that the truth in classical liberalism and pragmatism perspectives on democracy lead to a defense of market anarchy.

As alluded to in the introduction to this series, democracy has occupied a tricky place in the history of classical liberal thought. Despite the fact that the prevalence of democratic institutions in the West is at least partially a result of the influence of classical liberalism (in fact, I’d argue classical liberalisms’ role has been extremely significant in this regard), classical liberals have always been at best ambivalent to democracy. In recent years, libertarians have been critical and outright hostile towards democracy. For this reason, I’d argue that classical liberalism is, on net, critical of democracy, and there is a lot to learn from these criticisms. As a matter of housekeeping, it is important to note that I am using the term “democracy” in the second sense—as a system of political decision making—through most of this section unless otherwise noted.

Early Liberalism’s Cautious Enthusiasm for Democracy

At classical liberalism’s conception, democracy was in many ways the end-goal. No doubt, most classical liberals of the Enlightenment preferred democracy to the absolutist monarchism that had dominated Europe in their times. John Locke’s entire political project can be read as a criticism of absolutism, and he tended to more democratic views. In his Second Treatise on Government “democracy” is only mentioned twice by name in Chapter 10, mostly to define it in contrast to oligarchy and monarchy. However, throughout Locke there is a tendency to emphasize what we today would call “popular sovereignty”—a concept which strikes at the heart of the appeal of democracy. As Peter Laslett writes in his introduction to the Cambridge edition of Locke’s Two Treatises:

In his analysis of politics in terms of force as well as in rightful authority Locke is closer to the thought of our own day on the subject of sovereignty than the assumptions of his own time. Behind the superior power of the legislative in his system there is always to be seen the finally supreme, all-important power of the people themselves, again conceived of as a force, though justified once more by the concept of trust. It was a power which would only rarely display itself, and, as we have tried to show, there is considerable obscurity about the actual circumstances in which it could come to action and more about what it might achieve. Nevertheless, this residual power must be called Locke’s idea of what we now think of as popular sovereignty.

Drawing off of Locke, the American founders; inherited a skepticism towards absolutism and a little bit of faith in popular sovereignty. Of course, there is a slight difference in the founders’ conception of popular sovereignty and Locke’s in that it is far more individualist; in fact, it might be more accurate to say the founders did not so much believe in popular sovereignty as individual self-governance, but there is still an affinity between Locke and most of the founders’ on this point. Contra most west coast Straussians (ahem, Tom West and Harry Jaffa), it is important to note that the founders’ were influenced by much more than the classical liberal philosophy of John Locke. They, particularly John Madison, John Dickinson, and most of the early federalists, were just as influenced (if not more-so) by classical Greek and Roman political philosophy and the style of old whig conservatism of Burke and his contemporaries as classical liberalism. This can be illustrated in their perspective on democracy.

Though certainly wary of democracy’s dangers, most of the founders overall could still be described as democratic in some sense of the term. Of course, this point must be nuanced with the founders’ healthy criticisms of democracy influenced by classical liberal thought, whiggish conservatism, and Aristotelianism. Maddison is probably the most frequently cited example of an American founder who waxed pessimistic about democracy, given his writings on the “problem of factions” in Federalist No. 10. To be sure, most of the founders, as Ben Franklin famously said at the end of the constitutional convention, would have probably preferred the term “republic” to “democracy.”

Because of Madison’s Federalist No. 10 and a variety of quotes that were harshly critical democracy from the founders (many of which are false), a number of right-wingers today, particularly populist and nationalistic constitutional conservatives, argue that the founders were not democratic at all and are adverse to anything that refers to America as a “democracy.” To be sure, America is not a pure democracy, however there is little doubt that the founders still had at least some affinity for democracy, particularly in contrast to absolutist monarchy, with the possible exception of Hamilton sometimes (I would also argue that Hamilton was the least classically liberal of the founders and is largely my least favorite founder, but that’s another issue).

Further,  it is obvious the constitution incorporated democratic decision-making far more than any other of that time; in fact, the preamble beginning with “We the People” screams of the democratic, Lockean notion of popular sovereignty. Further, there is little doubt that even the America of the founders can be described as “democratic” at least in the third sense of the term (as a general term for modern Western governments).

Finally, some of the founders were pretty avidly pro-democratic, particularly Thomas Jefferson. As Jefferson wrote to John Taylor:

It must be acknowledged that the term “republic” is of very vague application in every language… Were I to assign to this term a precise and definite idea, I would say purely and simply it means a government by its citizens in mass, acting directly and personally according to rules established by the majority; and that every other government is more or less republican in proportion as it has in its composition more or less of this ingredient of direct action of the citizens.

Note how Jefferson’s definition of a “republic” is virtually indistinguishable from the way democracy is typically defined (in the second sense). Of course, Jefferson, especially in his later years in his later years was skeptical about the workability of this democratic/republican vision, writing “[s]uch a government is evidently restrained to very narrow limits of space and population. I doubt if it would be practicable beyond the extent of a New England township.” Nonetheless, it’s hard to consider Jefferson anti-democratic, especially in his younger years, when the notion of Jeffersonian democracy has been so influential in the history of American politics or if one considers Jefferson’s excuberance for the much more populist French Revolution prior to the Reign of Terror.

The Decline of Democracy in Classical Liberal Thought

After the founder’s era, however, experience with real-world democratic institutions began to contrast sharply with the theoretical hopes Enlightenment-era liberals had for democracy. The Jacobin reign of terror and aftermath of the French Revolution were sobering reminders of the dangers of the tyranny of the majority. As Edmund Burke wrote in Further Reflections of the French Revolution “such a Democracy is a thing which cannot subsist by itself” and the specter of Robespierre led Burke to continually warn of mob-rule and the excesses of democracy. In America, the extremely low level of decorum in early elections (particularly in 1800 between Jefferson and Adams) must have made the more aristocratic and conservative of the founders (the likes of Washington, Hamilton, and John Dickinson) fearful of the direction in which their experiment was going.

By the Jacksonian era, it is safe to say that most classical liberal observers were waxing a bit more pessimistic on the prospects of democracy than their intellectual ancestors. The rise of a populist president in Andrew Jackson who had committed so many acts of tyranny against the Native Americans, the democratization of religious faith by the likes of Lorenzo Dow in the Second Great Awakening, and the growing of democracy into almost a political religion were signals of a disturbing trend to many of the surviving founders and European liberals like Mill and de Tocqueville. In fact, Jefferson even said of Jackson, in an interview with Daniel Webster:

I feel much alarmed at the prospect of seeing General Jackson President.  He is one of the most unfit men I know of for such a place.  He has had very little respect for laws and constitutions, and is, in fact, an able military chief.  His passions are terrible.  When I was President of the Senate, he was Senator; and he could never speak on account of the rashness of his feelings.  I have seen him attempt it repeatedly, and as often choke with rage.  His passions are, no doubt, cooler now; he has been much tried since I knew him, but he is a dangerous man.

No doubt, Jefferson’s critique of Jackson’s inability to control his passions mirror Plato’s critique of the “democratic soul” in the Republic.

However, it wasn’t until Alexis de Tocqueville’s famous Democracy in America that the classical liberal view of democracy truly turned critical. De Tocqueville saw democracy’s influence in America as resulting in the decline of an aristocratic class that “furnished the best leaders of the American revolution.” Socioeconomic egalitarianism was far from the worst of democracy’s problems in de Tocqueville’s eyes. He saw the concept of popular sovereignty as leading to “unlimited power of the majority” that was corroding the checks and balances of the American constitution in every branch of government. Indeed, there has perhaps never been as eloquent a critic of “tyranny of the majority” as de Tocqueville.

In England, JS Mill also was beginning to see the dangers of excessive democracy. Much of On Liberty can be read as building on and responding to de Tocqueville. For example, his warnings against the tyranny of majority opinion in the first chapter of On Liberty echo de Tocqueville’s concerns and are worth quoting at length (also, note how much of this anticipates much of the later insights of the Virginia School of Political Economy):

The notion, that the people have no need to limit their power over themselves, might seem axiomatic, when popular government was a thing only dreamed about, or read of as having existed at some distant period of the past. Neither was that notion necessarily disturbed by such temporary aberrations as those of the French Revolution….In time, however, a democratic republic came to occupy a large portion of the earth’s surface, and made itself felt as one of the most powerful members of the community of nations; and elective and responsible government became the subject of the observations and criticisms which wait upon a great existing fact. It was now perceived that such phrases as “self-government” and “the power of the people over themselves” do not express the true state of the case. The “people” who exercise the power are not always the same people with those over whom it is exercised; and the “self-government” spoken of is not the government of each by himself, but of each by all the rest. The will of the people, moreover, practically means, the will of the most numerous or the most active part of the people; the majority, or those who succeed in making themselves accepted as the majority: the people, consequently, may desire to oppress a part of their number; and precautions are as much needed against this as against any other abuse of power. The limitation, therefore, of the power of government over individuals, loses none of its importance when the holders of power are regularly accountable to the community, that is, to the strongest party therein.

…Like other tyrannies, the tyranny of the majority was at first, and is still vulgarly, held in dread, chiefly as operating through the acts of public authorities. But reflecting persons perceived that when society is itself the tyranny—society, collectively, over the separate individuals who compose it—its means of tyrannizing are not restricted to the acts which it may do by the hands of its political functionaries….Protection, therefore, against the tyranny of the magistrate is not enough: there needs to be protection also against the tyranny of the prevailing opinion and feeling[.]

By the generation of liberals after Mill, the insight that democracy itself can turn into tyranny became influential on the continent as well. French liberals such as Bastiat and Germans such as Mises became critical of democratic institutions. Both Bastiat and Mises noted how democracies are ultimately controlled by public opinion which can, often times, be irrational. Bastiat took note of this in regards to protectionist economics writing, “Protectionism is too popular for its adherents to be regarded as insincere. If the majority had faith in free trade, we should have free trade.” Mises elaborated on Bastiat’s insights more writing in Human Action:

Democracy guarantees a system of government in accordance with the wishes and plans of the majority. But it cannot prevent majorities from falling victim to erroneous ideas and from adopting inappropriate policies which not only fail to realize the ends aimed at but result in disaster.

(Note: Bryan Caplan has a great, more detailed analysis of Bastiat and Mises’ criticisms of democracy, it is highly recommended.)

Most of these problems of the tyranny of the majority highlighted by de Tocqueville and Mill, as well as the issue of a completely misinformed public, seemed confirmed in World War II after the rise of fascism via the democratic process in Germany and Italy.

Public Choice Theory and Democracy’s Continued Decline

In the middle of the twentieth century, classical liberals became influenced by a field of study that seemed to confirm and deepen their worst fears of democracy. I’m referring, of course, to the public choice theory of the Virginia School of Political Economy associated with the likes of James Buchanan, Richard Wagner, and Gordon Tulloch. It is important to note at this point, of course, that public choice theory itself is not a part of classical liberalism as it is a positive scientific research program that simply applies economic analysis to the political process that has been contributed to by libertarians, conservatives, and liberals like rather than any sort of political ideology; however, many of the founders of Public Choice Theory were themselves classical liberals and there is little doubt that this style of economic thinking has had more influence on libertarianism than any other political philosophy.

The new public choice theory found that democracy could result not only in the potential tyranny of the majority, but also in horrible policies thanks to the accumulation of special interests (akin to Madison’s analysis of the problem of factions). The idea that voters are rationally ignorant, the insight that elected representatives do not act in the public interest but out of their own rational self-interest and those of their lobbyist friends, and a number of concepts from the short-sightedness effect to the Arrow’s impossibility theorem seemed to cast poor prospects on democracy’s ability to protect individual liberty. The fact that so many democracies were adopting horrible Keynesian economic policies, and the explanation that this is due to the self-interest of politicians, caused further doubt on the compatibility of free markets and democratic institutions. Later insights from public choice theory revealed that voters were not only ignorant but also systemically biased and irrational, as Bryan Caplan’s Myth of the Rational Voter argued, only added to this anxiety.

This is not to say, of course, that classical liberals since the mid-nineteenth century have been wholly opposed to democracy. Indeed, Mill, Bastiat, Mises, and most of the public choice economists continued to prefer representative democracy strongly limited by a well-designed (well, at least for Buchanan) constitution to alternative systems of political organization. Even Mises in Liberalism: In the Classical Tradition defended democracy on the following grounds:

In the long run, no government can maintain itself in power if it does not have public opinion behind it, i.e., if those governed are not convinced that government is good….There is, therefore, in every form of polity a means for making the government at least ultimately dependent on the will of the governed, viz., civil war, revolution, insurrection. But it is just this expedient that liberalism wants to avoid. There can be no lasting economic improvement if the peaceful course of affairs is continually interrupted by internal struggles…Here is where the social function of democracy finds its point of application. Democracy is that form of political constitution which makes possible the adaptation of the government to the wishes of the governed without violent struggles.

The attitude of FA Hayek in The Constitution of Liberty towards democracy is perhaps the most typical attitude of most classical liberals and libertarians since the days of de Tocqueville, and the majority of libertarians in mainstream political discourse today. Hayek defends a heavily limited concept of democracy as a means to the end of individual liberty; as the most efficient of current possible political constitutions to ensure the freedom of the individual. He echoes Mises in the fifth chapter entitled “Majority Rule” where he writes:

If democracy is a means rather than an end, its limits must be determined in the light of the purpose we want it to serve. There are three chief arguments by which democracy can be justified, each of which may be regarded as conclusive. The first is that, whenever it is necessary that one of several conflicting opinions should prevail and when one would have to be made to prevail by force if need be, it is less wasteful to determine which has the stronger support by counting numbers than by fighting. Democracy is the only method of peaceful change that man has yet discovered.

Modern Libertarianism’s Hostile Opposition to Democracy

Since Hayek penned those words in 1960, before many of the most depressing insights of public choice had risen to prominence, classical liberals and libertarians—particularly more radical anarchists—have grown even more skeptical of democracy and are, at times, outright hostile to it. Hayek himself in his next major work on political theory, Law, Legislation, and Liberty, waxed a bit more pessimistic on constitutional representative democracy than he did in The Constitution of Liberty. Just thirteen years after he spent over five-hundred pages defending and articulating liberal constitutionalism, he opens the introduction to the first volume of his next major work by declaring “The first attempt to secure individual liberty by constitutions has evidently failed.” Though he still proclaims the destruction of liberty that was running rampant in the immediate aftermath of World War II was “not a necessary consequence of democracy,” he laments the role democracy had played in recent politics:

If I am right, it would indeed seem that the particular form of representative government which now prevails in the Western world, and which many feel they must defend because they mistakenly regard it as the only possible form of democracy, has an inherent tendency to lead away from the ideals it was intended serve. It can hardly be denied that, since this type of democracy has come to be accepted, we have been moving away from that ideal of individual liberty of which it had been regarded as the surest safeguard, and are now drifting towards a system which nobody wanted.

In other corners of classical liberal thought, the prospects for democracy were even grimmer. This hostile attitude is perhaps best exemplified by Hans Herman Hoppe’s book Democracy: The God that Failed. Hoppe argues that democracy suffers from a problem akin to the tragedy of the commons; whereas medieval monarchies, aristocracies, and feuds had some sense of ownership over the state, democracies have no clear sense of ownership and so democratic representatives have little incentive to make good policies that protect liberty and economic prosperity.

Though Hoppe spends far too much of the book on anti-intellectual, abrasive, and, at times, bigoted (in the literal meaning of the term) polemics, there is some truth to his central insight and it certainly has a resonance with the public choice research on the short-sightedness effect. I doubt that Hoppe’s insights have the radical implications he draws of by necessity (mainly that monarchy is preferable to democracy); there might be a case to be made that pre-democratic institutions had lower taxes and better protection of property rights, on virtually every non-tax matters it is fairly obvious that such governments were far more tyrannical. Freedom of movement, which was so important to Mises in Liberalism and is among our most important of liberties, was non-existent in feudal Europe; indeed, serfs in many European manors were little more than slaves, pieces of property tied to their land, rather than sovereign, free individuals. Further, social freedom and freedom of religion were virtually non-existent in such polities; homosexuals were executed, Muslims and Jews were persecuted, and there were a number of other violations of human rights I doubt even Hoppe (in his implicit and occasionally explicit homophobia) would defend. (Of course, Hoppe would throw a fit because his argument is purely deductive and a priori whereas mine actually uses empirical evidence, but his simpleton, idiosyncratic, and laughably unintelligent economic methodology and epistemology is another topic.) I highly doubt even the most dogmatic Rothbardian Hoppe-lover would rather live in a medieval Europe feudal manor or monarchy than a modern democracy, despite their flashy polemics.

More recently, Michael Huemer has had criticisms of democracy’s morality in his book (which I highly recommend) The Problem of Political Authority. Heumer’s argument throughout the book is that all attempts to justify the legitimacy of government authority or to argue that there is any real consent between real-world governments and citizens fail, and a better form of government may be found in market anarchism. He notes how democracy has created a false identification of voting with actual consent that can morally legitimize government, and argues against all attempts to claim that citizens of democracies—real world or hypothetical—are under legitimate authority by virtue of the fact that they are living in a democracy. In another chapter, Huemer analyzes the problematic psychology of authority and how democracy contributes to the idolization of government.

Even more recently, Jason Brennan has a forthcoming book out that is perhaps more critical of democracy than any other classical liberal—save perhaps Hoppe—aptly titled Against Democracy. Brennan argues, like Huemer, that our relationship to democracy is non-consensual. In line with most public choice theory, he argues that democracy is truly the “rule of the irrational and the ignorant” and that democratic deliberation, voting, and electoral participation actually makes people worse, more biased, more irrational citizens. Brennan, instead, defends what he dubs “epistocracy”—a sort of aristocratic rule of the knowledgeable. (I have yet to read through Brennan’s book as it hasn’t been released yet and I’m basing this entirely off of reviews and Brennan’s other writings, particularly BHL blog posts, so I may be butchering some of the details of his argument in this description.)

Clearly, the classical liberals—from de Tocqueville to Jason Brennan—have very good reason to be skeptical of democracy, and perhaps even to feverishly oppose democracy. I still do not take the conclusions to the extremes of Hoppe and (at least from my limited knowledge of his writing on this topic) Brennan. I would agree with Hayek and Mises that constitutional representative democracy is the nth best alternative to other systems such as feudalism, absolutist monarchy, and any form of authoritarianism. (Although my general opposition to nation-states for both anarchist and communitarian reasons makes me more critical of democracy than most moderate classical liberals.)

However, it is clear that democracy is far from the best of all possible governmental arrangements. At the very least, the truth that Aristotle emphasized in his Politics that it matters not so much the make-up of the government (rule of the many, few, or one) but the quality of government, whether it is tyrannical or not. There is very good reason to believe, due to most of the arguments by the great thinkers discussed above, that democracy is, unfortunately, more likely than not to lead to tyranny—even if it is less likely to do so than the existing alternatives.

Having said that, perhaps not all is lost for the spirit of democracy. In the next post, I will analyze the pragmatist conception of democracy perhaps most popular among American twentieth-century liberals and progressives. This conception of democracy is far more than a form of political decision making discussed by the classical liberals, but a broader social epistemology and philosophy as mentioned in the introduction. I hope it will be clear by the end of the next post in this series that it is possible to affirm some of the philosophical commitments of democracy extolled by thinkers such as John Dewey, Sidney Hook, and Richard Rorty without necessarily embracing democracy as a political decision-making progress or, as Hayek would argue, democracy as it presently exists.

Giving Up On The Masses

Chhay Lin Lim Liberty, Philosophy, Politics , , , , , , , , , , , ,

In 2012, during Ron Paul’s second presidential candidacy as a Republican, I felt deflated with the masses again. Again, the masses were not going to vote a libertarian into office. It was the same year in which I read Murray Rothbard’s Ethics of Liberty and Hans-Hermann Hoppe’s Democracy: The God That Failed. What struck me at that time was the realization that democracy is actually an extremely poor political system to make society become more libertarian. Democracy is not even a guarantee whatsoever for political and economic freedoms. Its success is dependent on the uprightness of the masses, but where are the masses to stand up against war, bank bailouts, taxation, police aggression etc? If the government is truly a gang of thieves and murderers, as I believe it is, then the voting masses are advocates of theft, harassment, assault, and murder.

I do not believe that the masses are ready for freedom, because freedom means taking responsibility for one’s life and actions – a frightening prospect for the masses who lack the strength to face insecurities in life. Ingrained with fear of their own and their neighbours’ incapability to live a ‘responsible’ life, they are attracted to masters who can arrange their lives for them. The masses have also never thirsted for truth. Whoever can supply them with illusions is easily their master, and whoever attempts to destroy their illusions is always their victim. They want to be comfortable and cuddled to death. Thinking is too much hassle for the mass-man. The masses have moreover a love for egalitarianism and a disdain for those who are different, who are more successful and more beautiful. They hate freedom, because in freedom man naturally maintains his distance from his fellow human beings.

Being discontent with the masses and deflated in my philosophical views on politics and economics, I took Peter Thiel’s following dictum to heart: “The masses have given up on unregulated capitalism, so those who still support unregulated capitalism should give up on the masses.” Instead, I have put my hope on such technological advances of decentralization as cryptocurrencies, seasteading, 3D-printing, and localized energy conservation and production.

Book Review: Hans-Hermann Hoppe – Economic Science and the Austrian Method

Chhay Lin Lim Books, Economics, Liberty, Philosophy , , , , , , , , , , , , , , , , , ,

I decided to read Hans-Hermann Hoppe’s Economic Science And The Austrian Method (1995) in order to grasp a deeper philosophical understanding of the Austrian School’s methodology of economic inquiry. I was especially interested in Immanuel Kant’s influence on Ludwig von Mises and how Mises had used Kant’s epistemological insights to construct praxeology, the study of human action (economics included) that is purely deductive in nature.

Those who are acquainted with scientific methodologies in the field of economics may have heard of the controversies surrounding praxeology. Living in an empirical age, many people may be inclined to question the validity of a science that claims to arrive at economic laws from pure deduction whose validity can be established independently from observations. Praxeological propositions are indeed much more “like those of logic and mathematics, a priori” (Mises, 1966, p. 32). Such a science may strike the skeptics as being disquietly dogmatic.

In this book review, I will firstly give a brief discussion why it is important at all to discuss the epistemological foundations of economic science. Thereafter, I will discuss Hoppe’s thesis. I will describe the philosophical aspects of praxeology that can be traced back to Kantian epistemology. I will moreover summarize Hoppe’s critique of empiricism and historicism, and why Mises believed that economics is essentially praxeology. Lastly, I will give my personal thoughts on the book.

Why should we discuss the epistemological foundations of economic science?
The most immediate answer to this question is that different epistemological foundations lead to different methodologies and different theories, which can lead to different interpretations of real-life phenomena. Take for example the interpretation of an historical economic event, the Great Depression. Murray Rothbard, because he is working within the context of praxeology makes use of the praxeological Austrian Business Cycle Theory. This theory focuses on the expansion of the money supply as an explanation of the onset of the ‘boom’ in the 1920’s which eventually resulted in the ‘bust’ in 1929. Milton Friedman and Anna Schwartz in A Monetary History Of The United States (1963), while not applying the ABCT, have focused only on the contraction of the money supply and the resulting higher interest rates in 1928 as the main cause of the Great Depression. Their application of different economic methods has led them to look for different possible historical causes of the Great Depression which has effectively resulted in different accounts of the same historical event. It therefore matters what economic methods are employed in economic research.

Now that we have established the importance of inquiring epistemological foundations and methodologies of economic science, I will turn to Hoppe’s thesis.

Kant and synthetic a priori propositions
Working within the rationalist tradition of Leibniz and Kant, Mises attempts to present the proper way through which economic science – a science that according to Mises falls within the broader science of human action, praxeology – should be conducted. He resorts to the Kantian conception of the nature of knowledge and explains praxeology in terms of Kantian terminology. Hence, Hoppe firstly directs the reader to Kantian epistemology.

Kant had developed the idea that all propositions are either analytic or synthetic and either a priori or a posteriori. The difference between analytic and synthetic propositions is that the former is true by virtue of their meaning or as Kant would have phrased it himself, “the predicate B belongs to the subject A as something that is (covertly) contained in this concept A” (Kant, 1781, A:6-7). Take for instance the following proposition: “Bachelors are unmarried.” This proposition is analytic, because the predicate, ‘unmarried’, is part of the concept of a bachelor. Analytic propositions are regarded as tautological propositions; they simply restate the definition or a concept incorporated within a word and therefore they do not tell us anything meaningful about the world. A synthetic proposition on the other hand is a proposition whose predicate concept is not contained in the subject’s concept. It could therefore express something meaningful about the world. An example of a synthetic proposition is: “All bachelors are unhappy.” The concept ‘unhappy’ is not contained within the definition of ‘bachelor’, and expresses something meaningful about ‘bachelors’.

The distinction between a priori and a posteriori is as follows: a priori propositions are propositions whose justification does not rely upon experience, but solely on logical reasoning. The justifications of a posteriori propositions on the other hand, do rely upon experience. Examples of a posteriori propositions are “Some bachelors I have met are unhappy” or “Siddharta Gautama left the palace.”

The big question is: do synthetic a priori propositions exist? Kant certainly believed that they do exist, “and it is because Mises subscribes to this claim that he can be called a Kantian” (Hoppe, 1995, p. 18). In Critique of Pure Reason (1781), Kant contended that synthetic a priori propositions do exist and as an example he took mathematics (Kant, 1781, p. 55). The statement “7 + 5 = 12” is not dependent on experimentation and the concept 12 is not contained in either the definitions of 7 or 5. According to Kant, a priori propositions are derived from self-evident axioms. We can find such axioms by reflecting upon ourselves and understanding ourselves as knowing subjects. However, how can truth claims derived from reflection in our mind have any basis in reality? Is Kant here running into the problem of idealism – a notion that it is the mind that constructs reality and superimposes itself upon reality in such a way that it fits within the mind’s necessary laws?

According to Hoppe, Kant had not given a satisfactory response to this issue and future thinkers would have to take on the challenge of solving this problem. Hoppe believes that Mises had done so successfully when he had averred that action provides the link between mind – body and between mind – external world: “[W]e must recognize that such necessary truths are not simply categories of our mind, but that our mind is one of acting persons. Our mental categories have to be understood as ultimately grounded in categories of action” (Hoppe, 1995, p. 20). It is through action that the mind and reality are related: “[A]cting is a cognitively guided adjustment of a physical body in physical reality” (Hoppe, 1995, p. 70).

Another issue that arises with regards to the possibility of synthetic a priori propositions, and which I have found quite confusing myself is the following: does Hoppe suggest that we can arrive at knowledge without any experience of ourselves or the external world at all? No, according to Hoppe “the truth of a priori synthetic propositions derives ultimately from inner, reflectively produced experience” (Hoppe, 1995, p. 19). This experience is phrased by Stolyarov II as “the mind’s identification of facts about actually existing entities, including the identifier himself” (Stolyarov II, 2007, p. 53). In this sense, the action axiom is experientially-derived, but it is not subjected to the empiricists’ narrow view that all knowledge must be testable, verifiable, or falsifiable.

Empiricism, Historicism, and Praxeology
When Mises systematically constructed the foundations of praxeology, he faced a double-challenge; (A) empiricism which was quickly becoming the main influence in the economics discipline, and (B) historicism which was then a prevailing ideology at German-speaking universities.

(A) Empiricism
Empiricism is the “philosophy which thinks of economics and the social sciences in general as following the same logic of research of that, for instance, of physics” (Hoppe, 1995, p. 28). Hoppe writes that empiricism is governed by the following two related basic propositions:

(1) that empirical knowledge, knowledge about reality, must be subjected to falsifiability and verifiability by observational experience;
(2) and that empiricist research formulates their explanations in terms of causality, i.e. “if A, then B”. (Hoppe, 1995, pp. 28-29)

Hoppe continues to write that the validity of empirical statements

can never be established with certainty… The statement will always be and always remain hypothetical… Should experience confirm a hypothetical causal explanation, this would not prove that the hypothesis was true. Should one observe an instance where B indeed followed A as predicted, it verifies nothing… Later experiences could still possibly falsify it. (Hoppe, 1995, p. 29)

Empirical knowledge is hence contingent on historical facts. Neither confirmation nor falsification by observational experience can prove that a relationship between phenomena does not or does exist. By emphasizing that our knowledge of reality must stem from observational experience, they directly deny a science that avers that a priori knowledge can give us any meaningful explanation of real phenomena. However, as Hoppe and Mises point out, the statement that meaningful synthetic a priori propositions cannot exist is itself a synthetic a priori proposition. Mises has put this empiricist contradiction the following way in The Ultimate Foundation of Economic Science (1962):

The essence of logical positivism [logical empiricism] is to deny the cognitive value of a priori knowledge by pointing out that all a priori propositions are merely analytic. They do not provide new information, but are merely verbal or tautological, asserting what has already been implied in the definitions and premises. Only experience can lead to synthetic propositions. There is an obvious objection against this doctrine, viz., that this proposition that there are no synthetic a priori propositions is in itself a … synthetic a priori proposition, for it can manifestly not be established by experience. (Mises, 1962, p. 5)

Hoppe mentions a second contradiction of empiricism which regards historical events. Empiricists believe that particular events may cause any particular human action. They attempt to find such causal relationships in order to explain historical events. However, in order to do so, empiricists must assume that causality within historical sequences exists through all times. This assumption itself is not based on experiential observations, and must presuppose a priori knowledge that “time-invariantly operating causes with respect to actions exist” (Hoppe, 1995, p. 36). In addition, Hoppe identifies a third contradiction with respect to social phenomena. The empiricists believe that in order to confirm and falsify hypotheses, one must be able to learn from historical and social experience. If one would deny this, then why should one engage in empirical research at all? This however presupposes that “one admittedly cannot know at any given time what one will know at a later time and, accordingly, how one will act on the basis of this knowledge” (Hoppe, 1995, p. 37). Admitting that humans learn from historical and social experience, one cannot deny that empirical causal constants in human action do not exist. “The empiricist-minded social scientists who formulate prediction equations regarding social phenomena are simply doing nonsense” (Hoppe, 1995, p. 38). Predicting human action is not a science according to Hoppe.[1]

The empiricists are mistaken in applying the methodology of the natural sciences into the fields of social science in order to predict human actions. Unlike natural elements, human beings can and do act differently under equal conditions. Thus, social history cannot yield any knowledge that can be employed for predictive purposes. Relating this to the quantity theory of money; if the money supply for instance increases, one can still not predict whether the demand of money will change as this is entirely dependent on human action. Nonetheless, one could assert that if the demand for money stays constant and the money supply increases, then the purchasing power of money will fall (Hoppe, 1995, pp. 44-45).

(B) Historicism
Historicism, the second challenge that Mises had to face, does not take nature as its model but literary texts. Historicists believe that there are no objective laws in economics, and that “historical and economic events are whatever someone expresses or interprets them to be” (Hoppe, 1995, p. 54). Historicism is therefore extremely relativist. However, according to Hoppe also historicism is fundamentally self-contradictory. If there are only interpretations and hence no constant time-invariant relations, then there is also no historicist constant truth about history and economics. If historicism does not give us any reason to believe in its doctrine, why should we adhere to its epistemological philosophy if its proposition implies that they themselves may not be true?

Next to his refutations of empiricism and historicism, Mises had hoped that he could demonstrate the existence of true synthetic a priori propositions. Such propositions would (1) not be derived from experience, and (2) they must yield self-evident axioms so that when one tries to deny it one is involved in self-contradiction. Mises believes that these two requirements are met by the axiom of action – the proposition that human beings act and display intentional behaviour (Hoppe, 1995, pp. 60-61). According to Mises, purposeful human behaviour exhibits a person’s pursuit of an end which he attempts to reach through the employment of particular means (at least time and body). The fact that a person pursues a particular goal with his action reveals that he places a relatively higher value (preference) on the goal than any other goals of action that he could have thought of at the beginning of his action. Human action also happens sequentially, implying that the actor can only pursue one goal at a time in which he has to forego other valuable goals temporally. Action therefore also implies choices and costs. An action furthermore implies loss (and profit), because every action accompanies a certain degree of uncertainty, whether the goal achieved has resulted in the value one has expected can only be known in retrospect. All these categories of action – values, ends, means, choices, preferences, costs, profit, loss, and time – are at the heart of economics (Hoppe, 1995, pp. 61-63). This insight establishes economics as a science of human action. Or as Hoppe asserts more precisely,

all true economic theorems consist of (a) an understanding of the meaning of action, (b) a situation or situational change – assumed to be given or identified as being given – and described in terms of action-categories, and (c) a logical deduction of the consequences – again in terms of such categories – which are to result for an actor from this situation or situational change (Hoppe, 1995, pp. 63-64).

The existence of the categories of action is derived a priori from the axiom of action, and not through observation. Any attempt to disprove it is futile, since “a situation in which the categories of action would cease to have a real existence could itself never be observed or spoken of, since to make an observation and to speak are themselves actions” (Hoppe, 1995, p. 63).

My thoughts on Hoppe’s book
The book serves as an excellent summary of praxeological philosophy and is a must-read for anyone who wants to start learning more about the subject. Reading the book, one feels that it is extremely concise (around 80 pages), but also dense. Hoppe directly discusses the essential philosophical aspects that one must know in order to understand praxeology as developed by Mises, and fortunately he leaves many footnotes for further reading.

I believe that Hoppe has skillfully shown that economics is part of praxeology, and that it indisputably deals with such categories of human action as values, ends, means, choices, preferences, profit, loss, time, and causality. He has furthermore provided a well-reasoned critique of the empiricist and historicist-hermeneutical interpretations of economics by showing that they are necessarily self-contradictory.

Understanding that economics should not be conducted within the methodological framework of the natural sciences has severe implications to the ways we should deal with data of real world phenomena. If, like praxeologists claim, we cannot predict human action then there is also little reason to believe that effective social engineering is possible. The fundamentals of the praxeological methodology are therefore also immediately relevant within discussions on the roles of the state in planning the economy.

Footnotes
[1] Hoppe calls it entrepreneurship.

Bibliography
Friedman, M. & Schwartz, A.J. (1963). A Monetary History of the United States 1867-1960. Princeton: Princeton University Press.
Hoppe, H.H. (1995). Economic Science and the Austrian Method. Auburn: Ludwig von Mises Institute.
Kant, I. (1781). Critique of Pure Reason. (W.S. Pluhar, Trans.) Indianapolis: Hackett Publishing Company, Inc.
Mises von, L. (1942). Social Science and Natural Science. In R.M. Ebeling (Ed.) Money, Methods, and the Market Process (pp. 3-15). Retrieved from http://mises.org
Mises von, L. (1966). The Ultimate Foundation of Economic Science. Retrieved fromhttp://mises.org
Stolyarov II, G. (2007). The Compatibility of Hoppe’s and Rothbard’s Views of the Action Axiom. The Quarterly Journal of Austrian Economics, 10, 2, pp. 45-62.

The Poverty Of Democracy

Chhay Lin Lim Economics, Liberty, Philosophy, Politics , , , , , , , , , ,

I have been a strong proponent of democracy until the Spring of 2012 when I picked up Hans-Hermann Hoppe’s Democracy: The God That Failed. Since then, I have never looked at democracy with the same warm feelings again. Now, in this post, I would like to explore why democratic political representation is an impossibility and why it deals poorly with value pluralism – the fact that society holds various fundamental values that are in conflict with each other. In addition, I would like to urge that we should look for other political possibilities and stop maintaining that democracy is the end of all forms of social organization.

What most people find attractive about democracy is its underlying idea that the electorate is an embodiment of the general will of the public as if the public has reached some kind of general agreement on public policies and legislation. It is believed that with regular elections, the rulers are in power for a limited time and they “will be compelled by the threat of dismissal to do what public opinion wants them to do” (Popper, 1963, p. 345). Gerard Casey writes in Libertarian Anarchy (2012) that “[T]he central characteristic of representation by agency is that the agent is responsible to his principal and is bound to act in the principal’s interest” (Casey, 2012, p. 125). It is however questionable to what extent the electorate can truly represent the constituency and to what extent the public voice can be considered univocal. We must also beware of attributing “to the voice of the people a kind of final authority and unlimited wisdom” (Popper, 1963, p. 347). When society holds a vox populi vox dei attitude, it can easily slip into a tyranny of the majority. A society ruled by public opinion by no means guarantees social justice.

It is important to realize that the notion of representation is highly questionable. According to public choice theory, political agents cannot possibly truly represent their constituencies when members of a society have different comprehensive doctrines, hold different values, and have different interests. Public choice theory applies economic methods in the field of political theory and provides some interesting insights that are relevant for political philosophy. It maintains that politics is ruled by clashing opinions among policy makers and clashing opinions among members of the constituency. One may for example desire to build new roads with public funds, another may want to use public funds for the modernization of the military and defense, a third may desire to spend more on social welfare, a fourth on education etc.

Given that we live in a world of value pluralism, it is difficult for policy makers to pursue and represent the ‘public interest’. Furthermore, special minority interest groups may have incentives to organize themselves in order to influence public policies through lobbying. When the expected gain of lobbying of such minority interest groups is greater than the cost of lobbying efforts, they have greater incentive to influence legislators. Large interest groups, such as taxpayers in general, have fewer incentives to campaign for particular legislations, because the benefits of their actions, if they are successful, are spread much more widely among each individual taxpayer.

When the principal believes that the cost of being politically active – keeping oneself up-to-date with political actualities and being involved with political campaigns – is not worth the benefits, the principal may become ‘rationally ignorant’ of politics. This gives representatives more incentives not to pay attention to the public interests. Rationally ignorant principals do not know who their representatives are or what they do. This consequently discourages the politicians’ feeling of accountability for their actions and it encourages the politicians to sell themselves to donors and to pursue personal agendas. Different interests, incentives, and ideologies among principals and political agents therefore result in unequal representation.

I believe that Casey is right when he asserts that there is

“no interest common to the constituency as a whole, or, if there is, it is so rare as to be practically non-existent. That being the case, there is nothing that can be represented” (Casey, 2012, p. 125).

Imagine that there is a piece of legislation that our representatives can either pass or not with 35 per cent of the public in favour of the legislation and 65 per cent who oppose it. If our representatives pass the legislation, they will represent the 35 per cent and ignore the interests of the 65 per cent. If they do not pass the legislation, they will represent the 65 per cent and cease to represent the interests of the 35 per cent.

“In this very normal political scenario, it is not that it is difficult to represent a constituency – it is rather that it is impossible” (Casey, 2012, p. 125).

A representative democracy is therefore actually quite inadequate in dealing with a pluralistic society as it cannot fulfill its promise: representing the will of the peoples. Democracy is moreover a system that is inherently violent, because it divides people along the lines of their comprehensive doctrines. People with similar political thoughts organize themselves into groups to campaign against people who hold conflicting ideas. In a democracy, these people then vote for their preferred ruler to rule over people who may have contrasting views or who may be indifferent to political issues at all. It has never happened that the turnout at elections is 100 per cent. According to Eurostat.com, the average turnout rate in Europe is around 43 per cent. Nonetheless, the 43 per cent are choosing political agents who are expected to represent the 57 per cent of the non-voting constituency. The violent nature of democracy is that with every vote the voter attempts to enforce their preferred rulers or legislation unto others. This basically makes it a system in which people lose their political autonomy to other voters.

I believe that in order to deal more adequately with value pluralism we have to look for political possibilities that lie beyond a representative democracy. Instead of considering democracy as the end of all forms of social organization, we should ask ourselves how we could discover better forms of social organization.

References
Popper, K. (1963). Conjectures and Refutations. London: Routledge.

Casey, G. (2012). Libertarian Anarchy: against the state. London: Continuum International Publishing Group.

Contra Argumentation Ethics

Fred Foldvary Philosophy , , , , , , , , , ,

The proposition in argumentation ethics is that “arguing for any political position other than libertarian anarchism is logically inconsistent” (wiki).  This proposition was set forth in 1988 by Professor Hans-Hermann Hoppe of the University of Nevada at Las Vegas. The basic idea is that the non-aggression principle is a premise implied in every argument, and so it cannot be logically denied in any doctrine. The concept of argumentation or discourse ethics had been developed by several German philosophers, such as Jürgen Habermas.

The non-aggression principle is that aggression – the initiation of force or fraud against a person –  is morally evil. The argumentation proposition is that non-aggression is a presupposition of every argument, and so the concept cannot be logically denied within an argument. If a person argues that slavery is justified, the contradiction is that by engaging in argument with another person, he is implying that they are both seeking to arrive at truth by persuasion as equal independent non-slave parties. Since the person who argues for slavery is not using force to make the other person a slave, that implies that he is thereby rejecting slavery. It is then logically and performatively inconsistent for him to argue that enslaving any other person would be justified.

The prevailing argument for a libertarian ethic, based on natural moral law, is based on human nature applied to human action, rather than argumentation. The two premises set forth by John Locke in his Second Treatise of Government are human independence and equality.

Independence is the biological statement that persons think and feel as independent beings. Equality means that human beings have an equal moral worth, which is the basis of Jefferson’s statement that we are created equal, and is the basis of equality before the law. The equality premise is based on the observation that there is no inherent master-slave relation among human beings, and so equality is more consistent with human biology than any inherent moral superiority of any race, sex, or culture.

Hoppe states that concept of human nature is too diffuse to provide a determinate set of premises for natural law. Locke’s premises of independence and equality indeed have fuzzy edges, such as for beings not yet born, but they seem to be clear enough for practical purposes. Libertarians have no consensus on issues such as abortion, capital punishment, land value subsidies, the use of the military, and the justification of imposed government, but argumentation does not resolve such issues either. One needs additional premises to solve issues such as personhood, e.g. under which conditions is a human organism a person with rights. After all, one cannot have discourse with a newly born baby.

The concept of argumentation ethics has been rejected by several libertarian scholars, for example the article in The Journal of Libertarian Studies (Spring 2006) by Robert Murphy and Gene Callahan. They point out that at most, argumention establishes self-ownership only to one’s mind and mouth, and only during the argument. A slave owner can argue with a slave while the slave is in chains, and then murder the slave. The superiority of the slave owner is not refuted by the owner’s asking the slave whether he prefers to be strangled or shot with a bullet.

As pointed out by Murphy and Callahan, a statist may believe that under particular conditions, the initiation of force is justified, even though when this is discussed, the parties are equally in their ability to argue.

Another refutation was made by Jason Brennan in “Hoppe’s Argumentation Ethics Argument Refuted in Under 60 Seconds.” Brennan first presents two definitions. “A liberty right is something that grants me permission to do something. A claim right is something that entails others have obligations, responsibilities, or duties toward me.”

He then writes:

“all I need to avoid a performative contradiction here is for me to have a liberty right to say, ‘I propose such and such.’ I need not presuppose I have a claim right to say ‘I propose such and such.’ Instead, at most, I presuppose that it’s permissible for me to say, ‘I propose such and such’. I also at most presuppose that you have a liberty right to believe what I say. I do not need to presuppose that you have a claim right to believe what I say. However, libertarian self-ownership theory consists of claim rights… Hoppe’s argument illicitly conflates a liberty right with a claim right, and so fails.”

Yet another refutation of argumentation is made in “Justopia” by Justin:

“That flaw is revealed by showing that intent matters. This flaw eliminates the performative contradiction aspect because one cannot, without further information, determine whether many of the statements that Hoppe would claim are performative contradictions actually are performative contradictions.”

The Lockean foundation for natural moral law does not suffer from such flaws. Based on its premises from human nature, the universal ethic has three basic rules:

  1. Acts which are welcomed benefits are good.
  2. All acts, and only those acts, which coercively harm others are evil.
  3. All other acts are neutral.

It is curious why some natural-law libertarians have not accepted Locke’s libertarian ethic and have instead turned to German discourse philosophy. Perhaps the answer involves psychology and sociology rather than pure philosophy. At any rate, argumentation ethics is not the answer.

(This article also appears in http://www.progress.org )