Democracy: The God That Failed
by Hans-Herman Hoppe

Hans-Herman Hoppe is an intellectual heir to Murray Rothbard. They were close associates on the faculty of the University of Las Vegas. Hoppe’s writing is like Rothbard’s on a bad day when he was not his usual jolly, happy, optimistic self. I spent hours enjoying Murray Rothbard’s company on many occasions in the late 1960s and early 70s. He was a great guy as well as a genius. I have not met Hans-Herman Hoppe. He might be very personable for all I know, but in this book he comes across as an uptight, intolerant, elitist prude.

He argues in favor of intolerance and asserts that the ideal system of free-market anarchy would be characterized by segregation, discrimination, racial prejudice, and inequality. This will offend many neolibertarians, but that is all right with Hoppe because he doesn’t believe they are true libertarians, and he would like to alienate them from the movement.

A free-market economy would allow people to associate with people they like and would not force them to integrate with people they dislike. If we assume that people prefer people who think like they do, ceteris paribus, Hoppe is right that a free society would be segregated. But other things are not always equal. For sexual activity most people prefer the opposite sex rather than the sex that thinks like them. For vacations many people prefer to get away from their familiar surroundings and travel to exotic places. For partying and having fun many otherwise careful middle-class people prefer to hang out with carefree low-lifes rather than boring clones of themselves. So there would be somewhat more integration in a free-market anarchy than what Hoppe depicts.

Hoppe agrees completely with Rothbard on all economic and social issues except on the question of whether monarchy is better or worse than democracy. Unlike the ex-Stalinists who confessed their disillusionment with communism in the 1949 book The God That Failed, Hans-Herman Hoppe in this book does say whether he ever believed in democracy. By his tone it seems to me that before he became a free-market anarchist he had a preference for monarchy and that one of his goals in writing this book was to justify this bias by showing that monarchy is still preferable to democracy. He does this by using a priori arguments to show that, other things being equal, monarchs, as the owners of the government, have incentives to consider the long-range health of their kingdoms so as not to use up all its capital reserves before they die, in contrast to democratically elected rulers who, as merely temporary caretakers of the state, have incentives to take as much from the productive sector as they can get while they are in office. He argues that democracy leads logically to socialism, poverty, incivility, and war. So, even though monarchy is bad because it tends to destroy society over time, it is not as bad as democracy, which uncivilizes a society much more quickly.

After making his theoretical arguments against democracy, Hoppe uses his theory to reinterpret many generally accepted facts and events in modern history. He regards World War I as the watershed that changed western governments from primarily monarchist to primarily democratic. Then he points out that in the relatively short time since World War I the western democracies did all the things predicted by his theory: warfare became more widespread and frequent; the causes of war changed from territorial disputes to ideological conflicts; the victims of war changed from primarily military personnel to civilians because under democracy entire populations are deemed responsible for their governments; limited-government democracies rapidly degraded into either fascist regimes as in Hitler’s Germany and Mussolini’s Italy, communist regimes as in the Soviet Union and its post-World-War-II satellites, or welfare-state socialist administrations as in England, France, and the United Stated; governments increasingly usurped the role of fathers, with the predictable results of skyrocketing divorce rates, illegitimate children, single parenthood, and street crime; average income stagnated or even declined; the public debt soared; all governments went off the gold standard; the values of all currencies plummeted; the average tax rate climbed to 40% (under monarchical government taxation rarely exceeded 15% of national income and averaged less than 8%); government legislation and regulations multiplied, intruded into almost every aspect of life, and led to increased crime and disrespect for law; private property rights became insecure, causing that the average rate of savings to decline and private debt to rise to the point that we have nearly exhausted all the capital accumulated over centuries; collective responsibility largely replaced personal responsibility; the present-orientation promoted by the policies of rewarding the indigent at the expense of the provident led to an overall decline in moral values and a rise in recklessness, hedonism, drug addiction, welfare dependency; and child abuse; the emphasis on democratic equality reduced the public’s respect for discrimination, segregation, middle-class values, natural authority, and excellence; socialized schooling led to lower education standards, lower test scores, and lower overall cognitive ability.

Hoppe’s claim that democratic governments tend to engage in larger and more frequent wars than monarchies seems to have already been refuted by the empirical research of fellow libertarian R. J. Rummel. However, their different conclusions are due to their different ways of classifying regimes as democracies. For R. J. Rummel, a government is democratic if it allows freedom of speech, a free press, freedom of assembly, and so on, and its rulers are selected by the public in open and fair elections as contrasted with an authoritarian government that suppresses dissent and has sham elections or no elections. For Hans-Hermann Hoppe, a democracy is a government that is said to be owned by the public in contrast to a monarchy, which is a government owned by an individual ruler and his descendants. So Rummel classifies the USSR, Red China, and other communist states as authoritarian rather then democratic regimes and Hoppe classifies them as public-owned democratic-style states rather than hereditary monarchies. This difference between what these two men are comparing explains how they can both draw correct conclusions about democracies that seem to be diametrically opposed to each other.

Hoppe’s chapter on the private production of defense is of the most interest to readers of Formulations. He does not provide a detailed business case for a prospective defense company. Instead he argues on general theoretical grounds that free-market companies are more efficient than government monopolies. In a free-market anarchy, defense services would be provided by insurance agencies, which even under current restrictions are highly capitalized, national and even international in scope, and “connected through a network of contractual agreements of mutual assistance and arbitration as well as a system of international reinsurance agencies, representing a combined economic power which dwarfs that of most existing governments.”

Defense is not a single commodity that would have a single market price. Insurance against injury for highly dangerous activities such as drunk driving or building your home on a flood plane would cost more than insurance for less risky activities. Insurance for self-inflicted injuries such as suicide or deliberately burning down your own house would probably not be available at any price. Individuals know for aggressive or provocative behavior would not be able to get insurance and would be economically isolated and vulnerable. This would encourage people to behave better, which, combined with competition among insurers, would tend to lead to falling prices for insured property values.

In a free-market anarchy, insurance would be contractual, conditional, and specific. “Insurers (unlike states) would offer their clients contracts with well-specified property and product descriptions and clearly delineated duties and obligations.” Customers could choose the kind of laws they will agree to abide. Insurance agencies might specialize in Canon law to attract Catholic clients, Mosaic law to appeal to the Jewish market, Islamic law for Muslims, and secular law of one form or another to appeal to other market demands. Conflicts between parties who subscribe to the same laws would be resolved in accordance with those laws. This would take care of most cases if Hoppe is correct about the amount of segregation that would arise in a free society. Conflicts between parties who do not subscribe to the same system of law would be resolved in accordance with a developing body of law that represents the greatest common denominator among the competing law codes. This common law would be developed by independent arbitrators chosen by the insurance companies representing the parties to a dispute. The relationship between the insurers and arbitrators would be defined by contracts, and information about it could be made available to customers before they agree to sign on with the insurers.

Year Read: 2002

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