Montreal, January 19, 2002  /  No 96  
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Daniel M. Ryan is a self-educated Misesian economist. He lives in Toronto. His work can be found at
Hans-Hermann Hoppe, Democracy: The God That Failed (Transaction Publishers, Rutgers, NJ: 2001).
by Daniel M. Ryan
          Back in 1990 or so, when I was with the University of Toronto Investment Club, we didn't confine ourselves to the discussion of what stocks were going to go up and which were going down. We also took some time to discuss political ideals, as is normal for university students. Back when I was there, us right-wing reactionaries still clung to the old-man ideal that the university was a place where you learned to think, as opposed to the new young-man ideal which makes it a higher trade school.  
          One of the plans shot around by the right-wing idealists among us was direct democracy. If you thought that the MP and party system was too narrow-minded and/or constricting, you would have the option of directly lobbying for a new bill to be put forth to the public directly, referendum style. It was envisioned that the development of what then was the modem-and-BBS network would continue to the point where such a system would be feasible. 
          How's that for keeping up with technology? None of us knew that the Internet even existed, and yet we were beginning to anticipate the new options a wired world would give a citizen of Canada. I myself had reservations about this, of the conservative-theoretic kind – namely, direct democracy would lead to mob rule. But someone such as Hans-Hermann Hoppe has a lot more reservations, and he's attempted to ground them in a right-wing idealism which was markedly different from what the Investment Club was discussing ten years ago.
Democracy is present-oriented  
          Hoppe's thesis is that the more democracy there is in a society, the more that society becomes present-centered. The future becomes more obscure and less important: the subjective value of a future good dwindles. In economist's terms, it means that the particular incentive structure presented to citizens in a democratic regime makes the "level of social time preference" go up. What this means, in common-sense terms, is that an individual's planning for the future and executing these plans – an example would be going to school – is seen as less shrewd and more futile. 
          It also means that the thousand forms of prejudice against long-term planning become stronger and more numerous. An entry-level job becomes "chump change." Going to school is interpreted less and less as an investment and more and more as "recreation for book boys." Keeping your body looked after isn't worth the sacrifice anymore because "it'll wear out anyway." Taking an interest in how the government is working is scorned as "sucking up" or laughed at because "you only have one vote anyway." And any advice recommending the opposite is seen more and more as either an imposition of someone else's class interest or just simply dismissed out of hand as fly food for the gullible. 
          This is a society which is becoming "proletarianized" in Marxian lingo. Hoppe's characterization of it is more economic in thrust: The Austrian School of Economics, which Professor Hoppe is a member of, links such increase in present-centeredness as the main force which drives the real rate of interest up. This is because the most primal form of long-term planning is saving more than you earn. That's where the supply of credit comes from, and if the incentive to save dwindles, so does the supply, which pushes the price of borrowing up. Especially since such diminished value of future goods makes borrowing seem more of a good idea too, which would increase the demand for borrowed funds. This would further push up interest rates. 
          The reason why Professor Hoppe chose the title The God That Failed is because the democratic ideal promised the opposite. The old theory of democracy was that the "natural aristocrats" among people would raise the others up simply by the power of their good example. When the sovereign franchise is placed in the hands of the common person, he or she becomes a more responsible citizen, as they now have a voice in the running of the government. This would tend to promote political sophistication and maturity that the common people would otherwise not have an incentive to acquire. Assuming this responsibility would spill over into mature behaviour in other parts of their lives, because a citizen with a vote has more at stake in the maintenance of the good in society than a peasant with a dependency attitude does. 
A catechism of lies  
          That was the God of the Demos, and according to Hoppe, his catechism is one of lies. In order to demonstrate this, Hoppe contrasts the theoretical model of unrestrained democracy with that of absolutism. The professor writes that an absolute monarchy gives the king property rights over the entire country: he owns everything. Since he has an interest in keeping the value of the property up, he and his staff will be forward-thinking, and pass policies that will not wreck the economy because he will suffer as a result of this. Whether the king has gleams of riches in his eyes or has a more practical motive for keeping his country rich, such as the financing of future wars, his ukases will not be polluted by short-termism. 
          Those of you who are history buffs know what the real-world analog to this ideal type is: France's Ancient Regime. A lot of the King's policy – done without the consent of the Estates-General – was aiming at exactly this end. Hoppe himself calls this the "Austrian-Habsburg" model, but it's clear that Colbertist France is a better fit. 
          Hoppe confines himself to an economic analysis, so the political drawbacks of such a regime are not brought up. Ones such as the innate sense that a king's job is to dispense justice. But he seems aware of them. He mentions that the first French kings considered themselves to be in debt to the people for justice (p. 20) – in other words, any resident of France had the right to seek justice from the King, who was obligated to dispense it. He also mentions that exploitation is normal under absolutism. 
     « In a regime of universal suffrage, combined with the fact that some people earn more than others and that the ability to acquire real riches is confined to a small minority, it's only a matter of time before the general public figures out that they can use the franchise to take the wealth out of the rich people's pocket. »
          Professor Hoppe is not promoting Colbertist mercantilism, with its view of the entire country as a treasure chest which the King can draw on in an emergency: his purpose is different. The Colbert model is contrasted with a universal suffrage regime. 
          Here, the exploitation is worse, according to the author. In a regime of universal suffrage, combined with the fact that some people earn more than others and that the ability to acquire real riches is confined to a small minority, it's only a matter of time before the general public figures out that they can use the franchise to take the wealth out of the rich people's pocket. This makes the political exploitation worse because under democracy, there's no authorities above the fray that the target can run to for protection. Strange as it may sound, a regime of full democracy can make socialism seem more preferable from a justice standpoint, because forbidding the earning of great fortunes by talented people means they're no longer a target. 
          But this hope is a mistake, because socialism, with its complete absence of property rights, leaves the State with no incentive to treat people as anything other than raw material. This gibes with how the slave labour camps in the USSR were run: there were even bookkeeping entries for the amount of lives lost during a year, and how many replaced them. People were treated in the same way that trees were by a lumber mill. 
Missing individual rights  
          The conclusion that Hoppe leaves the reader with is that both systems are defective. What's missing from them are individual rights. And an ideal which backs them up. We all know that a right which is seen as not worth fighting for by the holder of it is a right lost. If individual rights are successfully characterized as another form of money-seeking, as the socialists have done, this will create the impression that the exercise of them is simply another form of begging, and the exerciser of them as simply an opportunistic pleader. If I eject a trespasser from my apartment, then – according to socialists – I simply want to get my money's worth from the rent I pay. A corresponding homeowner has no other motive than to keep the value of his property up. 
          How this decays the will to fight for your rights is simple. If it's generally accepted that rights have nothing more than a cash value, then it's sensible for a rights holder to give them up for a cash payment. If they don't, they're either greedy or just plain stupid. But if they're fighting for an ideal, then they're neither. They're standing up for their humanity. This requires a theory of rights. No-one will stand up and be counted unless they are clear as to what they are battling for, and why. 
          What Hoppe recommends is the neo-Lockean scheme that all rights flow from property rights, which themselves flow from productive work. If I grow food in my backyard, it's my food. That's because I was the one that grew it. This doesn't mean that I am obliged to sell it or eat it all myself, but what it does mean is that I have the right to decide where it's going to go. 
          The same thing would apply to you building a cabin in the wilderness. If you cut down the trees and assembled them into a shack, then it's your shack because you built it. The notion of exchange is introduced as giving up one's property in exchange for property of another kind. (Note: This model assumes away mutual help because this is considered a personal act of kindness, not something that is relevant to politics.) 
          And there's one primal property right that everyone has, regardless of how much or little they do. This is the ownership of their own body. From this flows the right to speak freely, the right to spread your opinions around, the right to assemble, etc. There's also another right that comes with this theory: the right to withdraw from any polity and join another, or protect yourself alone. From this, Hoppe deduces that the ideal of liberty implies anarchy. What this means, specifically, is that people have the right of free choice when it comes to protecting themselves and their property. 
Go to the Old West, young man 
          To answer those who think that this implies that every citizen will become an anchoritic gun nut, he draws from both anarchist theory (comparing government to insurance, which is well-established in the voluntary sector) and scholarship which shows this ideal to be workable under some circumstances, one being the Old West. The article he cites, "The Not So Wild Wild West," concludes that the myths of gun-totin', black-hatted thugs we grew up with has the same correspondence to fact as the average singles-bar story. 
          This is the ideal that Hoppe concludes will eliminate the defects of both absolute monarchy and absolute democracy: rights-based anarchy. He rejects the traditional American one of "to Secure these Rights, Governments are Instituted among Men" – the Declaration of Independence – as having collapsed into absolute democracy already. This model has been tried and has clearly failed in his eyes: this is not only because of the institution of universal suffrage, but also because it is in the nature of government to shove the citizenry around. He cites Mencken as support for this, who himself offers the opinion that the Revolutionary Government was more inefficient, more tyrannical and more wealth-eating for the American people than the continuation of colonialism would have been. (p. 274, n.) 
          As you may have already guessed, this is a book that is targeted at the twenty-year-old mind, the age in your life when folding the world into three distinct models, and highlighting one of them as the best for humanity, makes excellent sense. Hoppe's citations of Phillipe Rushton's work are clearly consistent with this: it says that the author is not really in the mood to entertain notions of self-censorship. Chances are, the young 'uns would also forgive the repetition of a few points, including a quote from Bertrand de Jouvenal concerning the extent and limit of the king's powers in medieval France (p. 22 and p. 55), as being there for either emphasis or for readers who squeeze in a single chapter or section between school and part-time job. 
          This is a book for the kids, all right. More mature people might find a little unintentional humor in it. 
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