DemocracyThe God That Failed
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If one is to make a rational choice among such rival and incompatible interpretations, this is only possible if one has a theory at one's disposal, or at least a theoretical proposition, whose validity does not depend on historical experience but can be established a priori, i.e., once and for all by means of the intellectual apprehension or comprehension of the nature of things. In some circles this kind of theory is held in low esteem; and some philosophers, especially of the empiricist-positivist variety, have declared any such theory off-limits or even impossible. This is not a philosophical treatise devoted to a discussion of issues of epistemology and ontology. Here and in the following, I do not want to directly refute the empiricist-positivist thesis that there is no such thing as a priori theory, i.e., propositions which assert something about reality and can be validated independent of the outcome of any future experience.10 It is only appropriate, however, to acknowledge from the outset that I consider this thesis—and indeed the entire empiricist-positivist research program, which can be interpreted as the result of the application of the (egalitarian) principles of democracy to the realm of knowledge and research and has therefore dominated ideologically during most of the twentieth century,—as fundamentally mistaken and thoroughly refuted.11 Here it suffices to present just a few examples of what is meant by a priori theory—and in particular to cite some such examples from the realm of the social sciences—in order to put any possible suspicion to rest and recommend my theoretical approach as intuitively plausible and in accordance with common sense.12
10See on this subject Ludwig von Mises, Theory and History: An Interpretation of Social and Economic Evolution (Auburn, Ala.: Ludwig von Mises Institute, 1985); idem, The Ultimate Foundation of Economic Science: An Essay on Method (Kansas City: Sheed Andrews and McMeel, 1978); Hans-Hermann Hoppe, Kritik der kausalwissenschaftlichen Sozialforschung. Untersuchungen zur Grundlegung von Soziologie und Okonomie (Opladen: Westdeutscher Verlag, 1983); idem, Economic Science and the Austrian Method (Auburn, Ala.: Ludwig von Mises Institute, 1995).
Examples of what I mean by a priori theory are: No material thing can be at two places at once. No two objects can occupy the same place. A straight line is the shortest line between two points. No two straight lines can enclose a space. Whatever object is red all over cannot be green (blue, yellow, etc.) all over. Whatever object is colored is also extended. Whatever object has shape has also size. If A is a part of B and B is a part of C, then A is a part of C. 4 = 3+1. 6 = 2 (33-30). Implausibly, empiricists must denigrate such propositions as mere linguistic-syntactic conventions without any empirical content, i.e., "empty" tautologies. In contrast to this view and in accordance with common sense, I understand the same propositions as asserting some simple but fundamental truths about the structure of reality. And in accordance with common sense, too, I would regard someone who wanted to "test" these propositions, or who reported "facts" contradicting or deviating from them, as confused. A priori theory trumps and corrects experience (and logic overrules observation), and not vice-versa.
11See Brand Blanshard, Reason and Analysis (LaSalle, Ind.: Open Court, 1964); also Arthur Pap, Semantics and Necessary Truth (New Haven, Conn.: Yale University Press, 1958); Saul Kripke, "Naming and Necessity," in Semantics of Natural Language, Donald Davidson and Gilbert Harman, eds. (New York: Reidel, 1972); and Paul Lorenzen, Methodisches Denken (Frankfurt/M.: Suhrkamp, 1968).
12Even a "good empiricist" would have to admit that, according to his own doctrine, he cannot possibly know a priori whether or not a priori theorems exist and may be used to decide between incompatible explanations of one and the same set of historical data; hence, he would have to adopt a wait-and-see attitude, too.
More importantly, examples of a priori theory also abound in the social sciences, in particular in the fields of political economy and philosophy: Human action is an actor's purposeful pursuit of valued ends with scarce means. No one can purposefully not act. Every action is aimed at improving the actor's subjective well-being above what it otherwise would have been. A larger quantity of a good is valued more highly than a smaller quantity of the same good. Satisfaction earlier is preferred over satisfaction later. Production must precede consumption. What is consumed now cannot be consumed again in the future. If the price of a good is lowered, either the same quantity or more will be bought than otherwise. Prices fixed below market clearing prices will lead to lasting shortages. Without private property in factors of production there can be no factor prices, and without factor prices cost-accounting is impossible. Taxes are an imposition on producers and/or wealth owners and reduce production and/or wealth below what it otherwise would have been. Interpersonal conflict is possible only if and insofar as things are scarce. No thing or part of a thing can be owned exclusively by more than one person at a time. Democracy (majority rule) is incompatible with private property (individual ownership and rule). No form of taxation can be uniform (equal), but every taxation involves the creation of two distinct and unequal classes of taxpayers versus taxreceiver-consnmers. Property and property titles are distinct entities, and an increase of the latter without a corresponding increase of the former does not raise social wealth but leads to a redistribution of existing wealth.
For an empiricist, propositions such as these must be interpreted as either stating nothing empirical at all and being mere speech conventions, or as forever testable and tentative hypotheses. To us, as to common sense, they are neither. In fact, it strikes us as utterly disingenuous to portray these propositions as having no empirical content. Clearly, they state something about "real" things and events! And it seems similarly disingenuous to regard these propositions as hypotheses. Hypothetical propositions, as commonly understood, are statements such as these: Children prefer McDonald's over Burger King. The worldwide ratio of beef to pork spending is 2:1. Germans prefer Spain over Greece as a vacation destination. Longer education in public schools will lead to higher wages. The volume of shopping shortly before Christmas exceeds that of shortly after Christmas. Catholics vote predominantly "Democratic." Japanese save a quarter of their disposable income. Germans drink more beer than Frenchmen. The United States produces more computers than any other country. Most inhabitants of the U.S. are white and of European descent. Propositions such as these require the collection of historical data to be validated. And they must be continually reevaluated, because the asserted relationships are not necessary (but "contingent") ones; that is, because there is nothing inherently impossible, inconceivable, or plain wrong in assuming the opposite of the above: e.g., that children prefer Burger King to McDonald's, or Germans Greece to Spain, etc. This, however, is not the case with the former, theoretical propositions. To negate these propositions and assume, for instance, that a smaller quantity of a good might be preferred to a larger one of the same good, that what is being consumed now can possibly be consumed again in the future, or that cost-accounting could be accomplished also without factor prices, strikes one as absurd; and anyone engaged in "empirical research" and "testing" to determine which one of two contradictory propositions such as these does or does not hold appears to be either a fool or a fraud.
According to the approach adopted here, theoretical propositions like the ones just cited are accepted for what they apparently are: as statements about necessary facts and relations. As such, they can be illustrated by historical data, but historical data can neither establish nor refute them.13 To the contrary. Even if historical experience is necessary in order to initially grasp a theoretical insight, this insight concerns facts and relations that extend and transcend logically beyond any particular historical experience. Hence, once a theoretical insight has been grasped it can be employed as a constant and permanent standard of "criticism," i.e., for the purpose of correcting, revising, and rejecting as well as of accepting historical reports and interpretations. For instance, based on theoretical insights it must be considered impossible that higher taxes and regulations can be the cause of higher living standards. Living st
andards can be higher only despite higher taxes and regulations. Similarly, theoretical insights can rule out reports such as that increased consumption has led to increased production (economic growth), that below-market-clearing (maximum) prices have resulted in unsold surpluses of goods, or that the absence of democracy has been responsible for the economic malfunctioning of socialism as nonsensical. As a matter of theory, only more saving and capital formation and/or advances in productivity can lead to increased production, only guaranteed abovemarket-clearing (minimum) prices can result in lasting surpluses, and only the absence of private property is responsible for the economic plight under socialism. And to reiterate, none of these insights requires further empirical study or testing. To study or test them is a sign of confusion.
13To avoid any misunderstanding: To say that something is "necessary" (and can be recognized as such "a priori"), is not to claim that one is infallible. Mathematicians and logicians, too, claim to be concerned with necessary relations, and yet they do not claim to be infallible. Rather, what is claimed in this regard is only that in order to refute a theoretical proposition (in contrast to a hypothetical one) another, even more fundamental theoretical argument is required, just as another mathematical or logical proof or argument is required (and not "empirical evidence") in order to refute a mathematical or logical theorem.
When I noted earlier that this is not the work of a historian but of a political economist and philosopher, I obviously did not believe this to be a disadvantage. Quite to the contrary. As has been indicated, historians qua historians cannot rationally decide between incompatible interpretations of the same set of data or sequence of events; hence, they are unable to provide answers to most important social questions. The principal advantage that the political economist and philosopher has over the mere historian (and the benefits to be gained from the study of political economy and philosophy by the historian) is his knowledge of pure—a priori—social theory, which enables him to avoid otherwise unavoidable errors in the interpretation of sequences of complex historical data and present a theoretically corrected or "reconstructed," and a decidedly critical or "revisionist" account of history.
Based on and motivated by fundamental theoretical insights from both, political economy and political philosophy (ethics), in the following studies I propose the revision of three central—indeed almost mythical—beliefs and interpretations concerning modern history.
In accordance with elementary theoretical insights regarding the nature of private property and ownership versus "public" property and administration and of firms versus governments (or states), I propose first a revision of the prevailing view of traditional hereditary monarchies and provide instead an uncharacteristically favorable interpretation of monarchy and the monarchical experience. In short, monarchical government is reconstructed theoretically as privately-owned government, which in turn is explained as promoting future-orientedness and a concern for capital values and economic calculation by the government ruler. Second, equally unorthodox but by the same theoretical token, democracy and the democratic experience are cast in an untypically unfavorable light. Democratic government is reconstructed as publiclyowned government, which is explained as leading to present-orientedness and a disregard or neglect of capital values in government rulers, and the transition from monarchy to democracy is interpreted accordingly as civilizational decline.
Still more fundamental and unorthodox is the proposed third revision.
Despite the comparatively favorable portrait presented of monarchy, I am not a monarchist and the following is not a defense of monarchy. Instead, the position taken toward monarchy is this: if one must have a state, defined as an agency that exercises a compulsory territorial monopoly of ultimate decisionmaking (jurisdiction) and of taxation, then it is economically and ethically advantageous to choose monarchy over democracy. But this leaves the question open whether or not a state is necessary, i.e., if there exists an alternative to both, monarchy and democracy. History again cannot provide an answer to this question. By definition, there can be no such thing as an "experience" of counterfactuals and alternatives; and all one finds in modern history, at least insofar as the developed Western world is concerned, is the history of states and statism. Only theory can again provide an answer, for theoretical propositions, as just illustrated, concern necessary facts and relations; and accordingly, just as they can be used to rule certain historical reports and interpretations out as false or impossible, so can they be used to rule certain other things in as constructively possible, even if such things have never been seen or tried.
In complete contrast to the orthodox opinion on the matter, then, elementary social theory shows, and will be explained as showing, that no state as just defined can be justified, be it economically or ethically. Rather, every state, regardless of its constitution, is economically and ethically deficient. Every monopolist, including one of ultimate decisionmaking, is "bad" from the viewpoint of consumers. Monopoly is hereby understood in its classical meaning, as the absence of free entry into a particular line of production: only one agency, A, may produce X. Any such monopolist is "bad" for consumers because, shielded from potential new entrants into his line of production, the price for his product will be higher and the quality lower than otherwise. Further, no one would agree to a provision that allowed a monopolist of ultimate decisonmaking, i.e., the final arbiter and judge in every case of interpersonal conflict, to determine unilaterally (without the consent of everyone concerned) the price that one must pay for his service. The power to tax, that is, is ethically unacceptable. Indeed, a monopolist of ultimate decisionmaking equipped with the power to tax does not just produce less and lower quality justice, but he will produce more and more "bads," i.e., injustice and aggression. Thus, the choice between monarchy and democracy concerns a choice between two defective social orders. In fact, modern history provides ample illustration of the economic and ethical shortcomings of all states, whether monarchic or democratic.
Moreover, the same social theory demonstrates positively the possibility of an alternative social order free of the economic and ethical shortcomings of monarchy and democracy (as well as any other form of state). The term adopted here for a social system free of monopoly and taxation is "natural order." Other names used elsewhere or by others to refer to the same thing include "ordered anarchy," "private property anarchism," "anarcho-capitalism," "autogovernment," "private law society," and "pure capitalism."
Above and beyond monarchy and democracy, the following is concerned with the "logic" of a natural order, where every scarce resource is owned privately, where every enterprise is funded by voluntarily paying customers or private donors, and where entry into every line of production, including that of justice, police, and defense services, is free. It is in contrast to a natural order that the economic and ethical errors of monarchy are brought into relief. It is before the backdrop of a natural order that the still greater errors involved in democracy are clarified and that the historic transformation from monarchy to democracy is revealed as a civilizational decline. And it is because of the natural order's logical status as the theoretical answer to the fundamental problem of social order—of how to protect liberty, property, and the pursuit of happiness—that the following also includes extensive discussions of strategic matters and concerns, i.e., of the requirements of social change and in particular the radical transformation from democracy to natural order.
Regardless of the unorthodox interpretations and conclusions reached in the following studies, the theories and theorems used to do so are definitely not new or unorthodox. Indeed, if one assumes, as I do, that a priori social theory and theorems exist, then one should also expect that most of such knowledge is old and that theoretical progress is painstakingly slow. This indeed appears to be the case. Hence, even if my conclusions may seem radical or extreme, as a theoretician I am decidedly a conservative. I place myself in an intellectual tradition that stretches back at least to the sixte
enth-century Spanish Scholastics and that has found its clearest modern expression in the so-called Austrian School of Economics: the tradition of pure social theory as represented above all by Carl Menger, Eugen von Bohm-Bawerk, Ludwig von Mises, and Murray N. Rothbard.14