Wednesday, February 22, 2017

A Critique of Hans-Hermann Hoppe: Monarchy vs Democracy

A Critique of Hans-Hermann Hoppe: Monarchy vs Democracy

Which is better, a monarchy or a democracy?
According to economist Hans-Hermann Hoppe, both are not good, but a monarchies probably do less harm than a democracies. In his book, “Democracy: The God that Failed,” Hoppe wrote that a monarchy is like a private government, and a democracy is like a public government. In that sense, the monarchies benefit from the advantages of private property, and have a higher incentive to invest in the long-term value of the country.
However, Jacek Sierpinski argued that there may be flaws in this theory. In his paper titled, “A Critique of Hans-Hermann Hoppe’s Thesis on Lesser Harmfulness of Monarchy than Democracy,” Sierpinski examined data which shows that monarchies may not be much better for citizens after all.
Jacek Sierpinski’s paper has been posted below, along with Mr. Sierpinski’s introduction. The paper has been translated from Polish.

The aim of this paper is to critically analyse the thesis of Hans-Herman Hoppe that although any government – taken as a territorial monopolist in the field of jurisdiction and tax imposition – is an organisation harmful both from the economic and ethical point of view since it violates property rights in an institutionalized and legal manner, exploiting private owners and contributing to the process of “decivilization,” yet the monarchy is less harmful than any democratic state.
The ultimate point is to prove that Hoppe’s assumption on lower time preference of the governing monarch is not sufficient to conclude that monarchy is less responsible for violating property rights and that it contributes to the process of “decivilization” less than democracy.
Introduction: Hoppe on monarchy and democracy
In his works, Hans-Hermann Hoppe presents the thesis that any government – regarded as a territorial monopolist in the field of jurisdiction and tax imposition – is an organisation harmful both from economic and ethical point of view, since it violates property rights in an institutionalized and legal manner, exploiting private owners and contributing to the process of “decivilization.” However, he continues to argue that monarchy is less harmful than democracy.1
The fundamental argument used by Hoppe to prove his thesis is that of the lower time preference of monarchs (who usually rule for a lifetime, often hereditarily) than people in power in democratic states (chosen for a fixed period of time). A monarch, who could potentially rule for a lifetime and with a prospect of passing the function down to his relative will undertake actions only after considering their long-term consequences in order to guarantee the long-term benefits, which, according to Hoppe, could be identified with the care for maintaining and increasing the wealth of the people living on the territory over which he rules:
[…] the more productive the population, the higher will be the value of the rul-er’s parasitic monopoly of expropriation. He will use his monopolistic privilege, of course […]. But as the government’s private owner, it is in his interest to draw parasitically on a growing, increasingly productive and prosperous nongovernment economy as this would effortlessly also increase his own wealth and prosperity.
As a consequence, he will exploit his subjects less, borrow money more reason-ably, he will be less willing to spend money on wars and will care for respecting property rights (since their elimination constitutes a threat to his own wealth). On the contrary, heads of democratic states, who are not the owners of the government, but only temporary clerks, will pursuit only the increase of the present income and wealth. This implies that they will be more willing to expropriate, increase taxes (both directly and indirectly, through inflation) and borrow money irresponsibly since they are aware that paying these debts will be the problem of their successors and not their own. In order to assume and hold power, they will promise various privileges to different groups and carry out the policy of redistribution at a great scale – through taxation or regulations imposed on private property and the market. They will also be more willing to engage in wars, which, owing to the greater identification of the society with the state that results from “blurring” of the border between the rulers and their subjects, will be more violent.
As the empirical data that prove his thesis, Hoppe presents examples that show the greater increase in the extortion by the state – higher tax rates and larger debt, more regulations, higher inflation, higher employment in the state institutions, and the evolution of wars into total wars – during the “democratic republican age” (Hoppe acknowledges the end of the I World War as the beginning of this era) than during the prior, “monarchy age.”
However, should we assume that data referred to by Hoppe prove that there is in fact a causal relationship between democracy and the increase in the extortion by the state? It needs to be noted that Hoppe’s approach is an ahistoric one: he contrasts societies that lived in two different historic periods, neglecting the possibility that other factors (such as e.g. the level of material development) could influence the extortion by the state as well, and that the causal relationship has an opposite direction
– i.e. the change of the form of the state from monarchy to democracy is a result, not a cause of the increase in the extortion by the state (influenced by other factors). Were Hoppe’s thesis to be true, it should be proven by conclusions drawn from the comparison of democratic and non-democratic states existing during the same period of history, the states of societies that were culturally similar and similarly developed. However, Hoppe failed to present such comparison, probably because he trusts his theoretical analysis completely and because in his approach, “a priori theory” is superior to the empirical data.
This paper aims at providing such comparison. Although Hoppe is right claiming that the dominance of democratic states started only after the I World War, it is true that democratic states, or at least those including elements of democracy, existed throughout history.

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