DemocracyThe God That Failed (12 page)

Retrospective
And
Prospects

The process of civilization set in motion by individual saving, investment, and the accumulation of durable consumer goods and capital goods—of gradually falling time preferences and an ever widening and lengthening range and horizon of private provisions—may be temporarily upset by crime. But because a person is permitted to defend himself against crime, the existence of criminal activities does not alter the direction of the process. It merely leads to more defense spending and less nondefense spending.

Instead, a change in direction—stagnating or even rising time preferences—can be brought about only if property-rights violations become
institutionalized;
i.e., in the environment of a government. Whereas all governments must be assumed to have a tendency toward internal growth as well as territorial expansion (political centralization), not all forms of government can be expected to be equally successful in their endeavors. If the government is privately owned (under monarchical rule), the incentive structure facing the ruler is such that it is in his selfinterest to be relatively farsighted and to engage only in moderate taxation and warfare. The speed of the process of civilization will be slowed

³⁹
William A. Orton,
The
Liberal
Tradition:
A
Study
of
the
Social
and
Spiritual
Condi
tions
of
Freedom
(Port Washington, N. Y.: Kennikat Press, l 969), pp. 251-52.

down systematically. However, the decivilizing forces arising from monarchical rule may be expected to be insufficiently strong to overcome the fundamental, countervailing tendency toward falling time-preference rates and ever-expanding ranges of private provisions. Rather, it is only when a government is
publicly
owned (under democratic-republican rule) that the decivilizing effects of government can be expected to grow strong enough to actually halt the civilizing process, or even to alter its direction and bring about an opposite tendency toward decivilization: capital consumption, shrinking planning horizons and provisions, and a progressive infantilization and brutalization of social life.

Retrospectively, in light of these theoretical conclusions much of modern European and Western history can be rationally reconstructed and understood. In the course of one and a half centuries—beginning with the American and French Revolutions and continuing to the present—Europe, and in its wake the entire western world, has undergone an epochal transformation. Everywhere, monarchical rule and sovereign kings were replaced by democratic-republican rule and sovereign "peoples.""

The first direct attack by republicanism and popular sovereignty on the monarchical principle was repelled with the military defeat of Napoleon and the restoration of Bourbon rule in France. As a result of the Napoleonic experience, republicanism was widely discredited during much of the nineteenth-century. "Republicanism was still thought to be violent—bellicose in its foreign policy, turbulent in its political workings, unfriendly to the church, and socialistic or at least equalitarian in its view of property and private wealth."
⁴¹
Still, the democratic-republican spirit of the French Revolution left a permanent imprint. From the restoration of the monarchical order in 1815 until the outbreak of World War I in 1914, popular political participation and representation was systematically expanded all across Europe. Everywhere the franchise
was successively widened, and the powers of popularly elected parliaments were gradually increased.
⁴²

⁴⁰
On the historical significance and the revolutionary character of this transformation see Guglielmo Ferrero,
Peace
and
War,
esp. pp. 155ff; idem,
Macht
(Bern: A. Francke, 1944); Robert R. Palmer and Joel Colton,
A
History
of
the
Modern
World,
esp. chaps. 14 and 18; also Reinhard Bendix,
Kings
or
People
(Berkeley: University of California Press, 1978).

On the intellectual debate on the idea of popular sovereignty, and universal suffrage, in particular in Great Britain, see Elie Halevy,
The
Growth
of
Philosophical
Radicalism
(Boston: BeaconPress, 1955),esp. pp. 120-50.
⁴¹
Palmer and Colton,
A
History
of
the
Modern
World,
p. 606.

Nonetheless, although increasingly emasculated, the principle of monarchical government remained dominant until the cataclysmic events of World War I. Before the war only two republics existed in Europe: Switzerland and France. Only four years later, after the United States government had entered the European war and decisively determined its outcome, monarchies had all but disappeared, and Europe had turned to democratic republicanism. With the involvement of the U.S., the war took on a new dimension. Rather than being an old-fashioned territorial dispute, as was the case before 1917, it turned into an ideological war. The U.S. had been founded as a republic, and the democratic principle in particular, inherent in the idea of a republic, had only recently been carried to victory as the result of the violent defeat and devastation of the secessionist Confederacy by the centralist Union government. At the time of World War I, this triumphant ideology of expansionist democratic-republicanism had found its very personification in then-U.S. President Woodrow Wilson. Under Wilson's administration the European war became an ideological mission—to make the world safe for democracy and free of dynastic rulers.
⁴³
Hence, the defeated Romanovs, Hohenzollerns, and Habsburgs had to abdicate or resign, and Russia, Germany, and Austria became democratic republics with universal—male and female—suffrage and parliamentary governments. Likewise, all of the newly created successor states—Poland, Finland, Estonia, Latvia, Lithuania, Hungary, and Czechoslovakia adopted democratic-republican constitutions, with Yugoslavia as the only exception. In Turkey and Greece, the monarchies were overthrown. And even where monarchies remained in existence, as in Great Britain, Italy, Spain, Belgium, the Netherlands, and the Scandinavian countries, monarchs no longer exercised any governmental power. Everywhere, universal adult suffrage was introduced, and all government power was invested in parliaments and "public" officials.
⁴⁴
A new era—the democratic-republican age under the aegis of a dominating U.S. government—had begun.

⁴²
For the details of this process see Flora,
State,
Economy,
and
Society
in
Western
Europe,
chap. 3.

⁴³
On the U.S. war involvement see Fuller,
The
Conduct
of
War,
chap. 9; on the role of Woodrow Wilson in particular, see Murray N. Rothbard, "World War I as Fulfillment: Power and the Intellectuals,"
Journal
of
Libertarian
Studies
9, no. 1 (1989); Paul Gottfried, "Wilsonianism: The Legacy that Won't Die,"
Journal
of
Libertarian
Studies
9, no. 2 (1990).

⁴⁴
Interestingly, the Swiss republic, which was the first country to firmly establish the institution of universal suffrage for males above the age of 20 (1848), was the last to expand the suffrage also to women (1971).

From the perspective of economic theory, the end of World War I can be identified as the point in time at which private-government ownership was completely replaced by public government ownership, and from which a tendency toward rising degrees of social time preference, government growth, and an attending process of decivilization should be expected to have taken off. Indeed, as indicated in detail above, such has been the grand underlying theme of twentieth century Western history.
⁴⁵
Since 1918, practically all indicators of high or rising time preferences have exhibited a systematic upward tendency: as far as government is concerned, democratic republicanism produced communism (and with this public slavery and government sponsored mass murder even in peacetime), fascism, national socialism and, lastly and most enduringly, social democracy ("liberalism").
⁴⁶
Compulsory military service has become almost universal, foreign and civil wars have increased in frequency and in brutality, and the process of political centralization has advanced further than ever. Internally, democratic republicanism has led to permanently rising taxes, debts, and public employment. It has led to the destruction of the gold standard, unparalleled paper-money inflation, and increased protectionism and migration controls. Even the most fundamental private law provisions have been perverted by an unabating flood of legislation and regulation. Simultaneously, as regards civil society, the institutions of marriage and family have been increasingly weakened, the number of children has declined, and the rates of divorce, illegitimacy, single parenthood, singledom, and abortion have increased. Rather than rising with rising incomes, savings rates have been stagnating or even falling. In comparison to the nineteenth century, the cognitive prowess of the political and intellectual elites and the quality of public education have declined. And
the rates of crime, structural unemployment, welfare dependency, parasitism, negligence, recklessness, incivility, psychopathy, and hedonism have increased.

⁴⁵
On the worldwide growth of statism since World War I see Paul Johnson,
Mod
ern
Times:
The
World
from
the
Twenties
to
the
Eighties
(New York: Harper and Row, 1983); on U.S. government growth, and its relation to war, see Robert Higgs, Crisis
and
Leviathan:
Critical
Episodes
in
the
Growth
of
American
Government
(New York: Oxford University Press, 1987).

⁴⁶
On the common historical roots of Soviet communism, and of fascism and national socialism as "tyrannies" (literally: "arbitrary powers, the holders of which claim to use it for the people and in fact appeal to the people, for support")—in World War I, and on the "primary" character of the former and the "derivative" of the latter, see Elie Halevy,
The
Era
of
Tyrannies
(Garden City, NY: Anchor Books, 1965).

Ultimately, the course of human history is determined by ideas, whether they are true or false. Just as kings could not exercise their rule unless public opinion accepted their rule as legitimate, so democratic rulers are equally dependent on public opinion to sustain their political power. It is public opinion, therefore, that must change if we are to prevent the process of decivilization from running its full course. And just as monarchy was once accepted as legitimate but is today considered to be an unthinkable solution to the current social crisis, it is not inconceivable that the idea of democratic rule might someday be regarded as morally illegitimate and politically unthinkable. Such a delegitimation is a necessary precondition to avoiding ultimate social catastrophe. It is not government (monarchical or democratic) that is the source of human civilization and social peace but private property, and the recognition and defense of private property rights, contractualism, and individual responsibility.

2

On
Monarchy,
Democracy,
and
the
Idea
of
Natural
Order

THEORY:
The
Comparative
Economics
Of
Private
And
Public
Government
Ownership

A government is a territorial monopolist of compulsion—an
agency which may engage in continual, institutionalized property rights violations and the exploitation—in the form of expropriation, taxation and regulation—of private property owners. Assuming no more than self-interest on the part of government agents, all governments must be expected to make use of this monopoly and exhibit a tendency toward
increased
exploitation.
¹
However, not every form of government can be expected to be equally successful in this endeavor or to go about it in the same way. Rather, in light of elementary economic theory, the conduct of government and the effects of government policy on civil society can be expected to be systematically different, depending on whether the government apparatus is owned privately or publicly.
²

The defining characteristic of private government ownership is that the expropriated resources and the monopoly privilege of future expropriation are individually
owned.
The appropriated resources are added to the ruler's private estate and treated as if they were a part of it, and the monopoly privilege of future expropriation is attached as a title to this
estate and leads to an instant increase in its present value ('capitalization' of monopoly profit). Most importantly, as private owner of the government estate, the ruler is entitled to pass his possessions onto his personal heir; he may sell, rent, or give away part or all of his privileged estate and privately pocket the receipts from the sale or rental; and he may personally employ or dismiss every administrator and employee of his estate.

¹
On the theory of the state see Murray N. Rothbard,
For
A
New
Liberty
(New York: Macmillan, 1978); idem,
The
Ethics
of
Liberty
(New York: New York University Press, 1998); idem,
Power
and
Market
(Kansas City: Sheed Andrews and McMeel, 1977); Hans-Hermann Hoppe,
Eigentum,
Anarchie
und
Stoat
(Opladen: Westdeutscher Verlag, 1987); idem,
A
Theory
of
Socialism
and
Capitalism
(Boston: Kluwer, 1989); idem,
The
Economics
and
Ethics
of
Private
Property
(Boston: Kluwer, 1993); also Albert J. Nock,
Our
Enemy,
the
State
(Delevan, Wise.: Hallberg Publishing, 1983); Franz Oppenheimer,
The
State
(New York: Vanguard Press, 1914); idem,
System
der
Soziologie,
vol.,
DerStaat
(Stuttgart: Gustav Fischer, 1964).

²
See on the following also chaps. 1,3, and 13.