Chapter 3 On Monarchy, Democracy, Public Opinion, and Delegitimation

"'The program of [classical] liberalism,' wrote Mises, 'if condensed into a single word, would have to read: property, that is private ownership of the means of production....' [T]he emergence of society-human cooperation was the result of the natural diversity of people and property and the recognition that work performed under division of labor is more productive than work performed in self-sufficient isolation."

Beginning with this a priori thesis that the private ownership of property is the fundamental building block of a classical liberal social order, Hoppe recognizes that it is essential that the rights of owners be protected from criminals who would steal from from him or murder him, i.e. there must exist an entity protecting the rights of producers.  Again, quoting Mises, Hoppe finds it is the function of the state to protect the property owner.  How can the government be organized to carry out that protective function? Not by a monarch as Mises rejected the monarchy as anti-thetical to classical liberalism.  Instead, Mises answer was a democratic government.

What did Mises mean when he spoke of a democratic government? "Rather than majority rule, to Mises democracy meant literally 'self-determination, self-government, self-rule and essentially voluntary membership organization in that it recognized each of its constitutents' unrestricted right to secession. 'Liberalism...forces no one against his will into the structure of the state'....Hence, Mises answer to how to assure that a government will protect property rights is through the threat of unlimited secession...."

"Without the right of secession, a democratic government is, economically speaking, a compulsory territorial monopolist of protection and ultimate decision making (jurisdiction) and is in this respect indistinguishable from princely government....Motivated (as everyone is) by self interest and the disutility of labor [work is hard], but with a unique power to tax, a government...[will] maximize expenditures on protection...[and]minimize the actual production of protection....Moreover, the monopoly of jurisdiction will inevitably lead to a steady deterioration in the quality of protection....[T]he definition of propety and protection will continually be altered and the range of jurisdiction expanded to the government's advantage."  Here Hoppe reiterates the idea central to public choice theory-those in government are not uniquely good, disinterested selfless people.  They are like everyone else, so have the same motivations of self-interest as all humans do.   

There is a further difficulty that means that democratic government will necessarily be worse than monarchy.  Under the classical liberal ideal, there is one universal law applicable to everyone at all times, but democratic government, while open to all, does not advance this ideal.  While a role in the government is theoretically open to all, "functional privileges and priviliged functions exist."  [While not noted by Hoppe, we can see these in our daily lives with the concept of sovereign immunity, with the special privileges accorded police officers in grand jury proceedings following an officer shooting a citizen, with the US Congress exempting itself from employment and health care laws that it imposes on American citizens and many other instances.] Of course, no private parties have the right to support their own activities through taxation.  This function is accorded only to government, i.e. the concept of universal law is undermined and, in a democracy, there exists two tiers of law, one for citizens and another for government officials.

Thirdly, Hoppe notes that the short term interest of the public government (as opposed to the monarch) means that he cares nothing about depleting the capital or productive resources of those he rules.  What he and his proteges do not expropriate now, they may never have the opportunity to expropriate.  

Finally, both private and public government can use their monopoly powers to gain control of the money supply, but the nature of their interests mean they will act differently.  The monarch knows that if he inflates the money supply, his own money (capital stock) will be worthless.  The public government is not constrained by such concerns as he can only spend what is available to spend while he is in office and will always seek to maximize expenditures.

Both types of government can use "their monopoly of jurisdiction for the redistribution of income and wealth within civil society."  But once again, the incentives to do so are quite different depending upon the type of government.

The rights of the prince are private rights and if he "undermines the property of one person and distributes it to another, he undermines the principle on which his own position and security...rests.  Further, redistribution to the 'have-nots' "reduces the overall value of the territory....Accordingly, princes typically grant personal rather than group privileges...and they attend to 'social problems' by reallocating labor cultivation, acculturation, and colonization policies rather than redistributing income and wealth."

The democratic government's is concerned primarily with the "protection and advancement of his own position against competitors" and its legitimacy "does not rest on the legitimacy of private property.  It rests instead on the legitimacy of "'social' or 'public' property," i.e. the private law of personal property and contract are constantly circumscribed and altered in "accordance with a caretaker's unilateral determination of the requirements of 'public safety' and 'social security.'" 

Under the rule of one man one vote, the public government will award privileges to groups rather than to individuals in order to secure their support, which will result in a "progressively deformed" society.  "The incentive to be an original owner or producer reduced, and the incentive to be a nonowner and non producer is in society will become increasingly less pleasant....democracy will bring about social degeneration, corruption and decay." [Again, this phenomena of politicians pitting one group against another is something that can be readily observed in the US during the presidential election campaign of 2016.]

Hoppe goes on to note that "free competition is not always good.  Free competition in the production of goods is good, but free competition in the production of bads is not."  The logical consequence of opening government to entry by anyone is that coveting the property of others is no longer considered immoral, but is now considered a "legitimate sentiment"  and one that those running for public office will promise to address through more redistribution. Those who are "most talented in assembling majorities from a multitude of morally unihibited and mutually incompatible popular demands, efficient demagogues, will...rise to the top of government."  In fact, "democracy virtually assures that only bad and dangerous men will ever rise to the top of government..."

What does Hoppe advise we do under the circumstances?  "[I]t is only necessary that one decide to withdraw from the complusory union and reassume one's right to self protection.  Indeed, it is essential that one proceed in no other way than by peaceful secession and noncooperation....The decision to secede involves that one regard the central government as illegitimate, and that one accordingly treat it and its agents as an outlaw agency and 'foreign' occupying forces."  Hoppe recognizes that this shift will not begin as a shift of the masses, but will begin with the "natural elite."  These people [citing La Boe'tie] are "'possessed of clear minds and farsighted spirit, are not satisfied, like the brutish mass, to see only what is at their feet, but rather look about them, behind and before, and ever recall the things of the past in order to judge those of the future, and compare both with their present condition....[f]or slavery has no satisfaction, no matter how well disguised."

It is the job of these people to teach and lead the masses by spreading true ideas in the place of the false ones spread by demagogues.  What are the two pillars upon which government power rests, which must be refuted?

1.  "The belief that the protection of private property, unique among all goods, ncessitates a compulsory monopoly (a non-voluntary membership organization), and

[2.] That private property and protection are best secured if entry into this monopoly of law and order is free and its directors are elected democratically."

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