Because of their legitimacy, then, government violations of property rights affect individual time preferences systematically differently and much more profoundly than does crime. Like crime, government interference with private-property rights reduces someone's supply of present goods and thus raises his effective time-preference rate. Yet government offenses—unlike crime—simultaneously raise the time-preference degree of actual and potential victims because they also imply a reduction in the supply of future goods (a reduced rate of return on investment). Crime, because it is illegitimate, occurs only intermittently—the robber disappears from the scene with his loot and leaves his victim alone. Thus, crime can be dealt with by increasing one's demand for protection goods and services (relative to that for nonprotection goods) so as to restore or even increase one's future rate of investment return and make it less likely that the same or a different robber will succeed a second time with the same or a different victim. In contrast, because they are legitimate, governmental property-rights violations are continual. The offender does not disappear into hiding but stays around, and the victim does not "arm" himself but must (at least he is generally expected to) remain defenseless.14 Consequently future property-rights violations, rather than becoming less frequent, become institutionalized. The rate, regularity, and duration of future victimization increases. Instead of by improved protection, the actual and potential victims of government property-rights violations—as demonstrated by their continued defenselessness vis-a-vis their offenders—respond by associating a permanently higher risk with all future production and systematically adjusting their expectations concerning the rate of return on all future investment downward.
14LysanderSpooner, No Treason: The Constitution of No Authority (Larkspur, Colo.: Pine Tree Press, 1966) writes:
Competing with the tendency toward a falling rate of time preference, another opposing tendency comes into operation with the existence of government. By simultaneously reducing the supply of present and (expected) future goods, governmental property-rights violations not only raise time-preference rates (with given schedules) but also time-preference schedules. Because appropriator-producers are (and see themselves as) defenseless against future victimization by government agents, their expected rate of return on productive, future-oriented actions is reduced all-around, and accordingly all actual and potential victims become more present-oriented.
As will be explained in the course of the following section, if government property-rights violations take their course and grow extensive enough, the natural tendency of humanity to build an expanding stock of capital and durable consumer goods and to become increasingly more farsighted and provide for ever-more distant goals may not only come to a standstill, but may be reversed by a tendency toward decivilization: formerly provident providers will be turned into drunks or daydreamers, adults into children, civilized men into barbarians, and producers into criminals.
The government does not, indeed, waylay a man in a lonely place, spring upon him from the roadside, and holding a pistol to his head, proceed to rifle his pockets. But the robbery is none the less a robbery on that account; and it is far more dastardly and shameful.
The highwayman takes solely upon himself the responsibility, danger, and crime of his own act. He does not pretend that he has a rightful claim to your money, or that he intends to use it for your own benefit. He does not pretend to be anything but a robber. He has not acquired impudence enough to profess to be merely a "protector," and that he takes men's money against their will, merely to enable him to "protect" those infatuated travelers, who feel perfectly able to protect themselves, or do not appreciate his peculiar system of protection. He is too sensible a man to make such professions as these. Furthermore, having taken your money, he leaves you, as you wish him to do. He does not persist in following you on the road, against your will; assuming to be your rightful "sovereign," on account of the "protection" he affords you. He does not keep "protecting" you, by commanding you to bow down and serve him; by requiring you to do this, and forbidding you to do that; by robbing you out of more money as often as he finds it for his interest or pleasure to do so; and by branding you as a rebel, a traitor, and an enemy to your country, and shooting you down without mercy, if you dispute his authority, or resist his demands. He is too much of a gentleman to be guilty of such impostures, and insults, and villainies as these. In short, he does not, in addition to robbing you, attempt to make you either his dupe or his slave, (p. 17)
Government, Government Growth, And The Process Of Decivilization: From Monarchy To Democracy
Every government, and that means every agency that engages in continual, institutionalized property-rights violations (expropriations), is by its nature a territorial monopolist. There can be no "free entry" into the business of expropriations; otherwise, soon nothing would be left that could be expropriated, and any form of institutionalized expropriation would thus become impossible. Under the assumption of self-interest, every government will use this monopoly of expropriation to its own advantage—in order to maximize its wealth and income. Hence every government should be expected to have an inherent tendency toward growth. And in maximizing its own wealth and income by means of expropriation, every government represents a constant threat to the process of civilization—of falling time preferences and increasingly wider and longer provision—and an expanding source of decivilizing forces.
However, not every government prospers equally and produces decivilizing forces of the same strength. Different forms of government lead to different degrees of decivilization. Nor is every form of government, and every sequence of government forms, equally probable.
Given that all expropriation creates victims and victims cannot be relied upon to cooperate while being victimized, an agency that institutionalizes expropriation must have legitimacy. A majority of the nongovernmental public must regard the government's actions as just or at least as fair enough not to be resisted so as to render the victim defenseless.15 Yet acquiring legitimacy is not an easy task. For this reason, it is not likely, for instance, that a single world government could initially arise. Instead, all governments must begin territorially small. Nor is it likely, even for as small a population as that of a clan, a tribe, a village, or a town, that a government will initially be democratic, for who would not rather trust a specific known individual—especially in as sensitive a matter as that of a territorial monopoly of expropriation—than an anonymous, democratically elected person? Having to begin small, the original form of government is typically that of personal rule: of private ownership of the governmental apparatus of compulsion (monarchy).16 In every society of any degree of complexity, specific individuals quickly acquire elite status as a result of having diverse talents. Owing to achievements of superior wealth, wisdom, bravery, or a combination thereof, particular individuals command respect, and their opinions and judgments possess natural authority. As an outgrowth of this authority, members of the elite are most likely to succeed in establishing a legitimate territorial monopoly of compulsion, typically via the monopolization of judicial services (courts and legislation) and law enforcement (police).17 And because they owe their privileged position to their personal elitist character and achievements, they will consider themselves and be regarded by their fellows as the monopoly's personal owner. Democratic rule—in which the government apparatus is considered "public" property administered by regularly elected officials who do not personally own and are not viewed as owning the government but as its temporary caretakers or trustees—typically only follows personal rule and private government ownership. Because masses or majorities cannot possibly possess any natural authority (this being a personal, individual trait), democratic governments can acquire legitimacy only unnaturally—most typically through war or revolution. Only in activities such as war and revolution do masses act in concert and do victory and defeat depend on mass effort. And only under exceptional circumstances such as these can mass majorities gain the
legitimacy needed to transform government into public property.
13On the fundamental importance of favorable public opinion for the exercise of government power see the classic treatment by Etienne de la Boetie, The Politics of Obedience: The Discourse of Voluntary Servitude (New York: Free Life Editions, 1975), with an introduction by Murray N. Rothbard; see also David Hume, "The First Principles of Government" in Essays: Moral, Political, and Literary (Oxford: Oxford University Press, 1971). Thus, Hume writes:
Nothing appears more surprising to those who consider human affairs with a philosophical eye, than the easiness with which the many are governed by the few, and the implicit submission, with which men resign their own sentiments and passions to those of their rulers. When we inquire by what means this wonder is effected we shall find, that as Force is always on the side of the governed, the governors have nothing to support them but opinion. It is, therefore, on opinion only that government is founded, and this maxim extends to the most despotic and most military governments, as well as to the most free and popular. The sultan of Egypt, or the emperor of Rome, might drive his harmless subjects, like brute beasts, against their sentiment and inclination. But he must, at least, have led his mamalukes or praetorian bands, like men, by their opinions. (Essays, p. 19) See also Mises, Human Action, pp. 863-64.
16On the lengthy historical process of the acquisition of government power, and the primacy of monarchical rule, see Bertrand de Jouvenel, Sovereignty: An Inquiry into the Political Good (Chicago: University of Chicago Press, 1957), esp. chap. 10; idem, On Power: The Natural History of its Growth (New York: Viking, 1949); idem, "The Principate" in idem, The Nature of Politics (New York: Schocken Books, 1987); Riistow, Freedom and Domination, esp. pp. 101-05.
17On the ubiquity of natural authority see de Jouvenel, Sovereignty, chap. 2.
All that was needed [for the formation of associations] was that some one man should feel within him a natural ascendancy and should then inspire others with trust in himself. . . . when we can see every day associations forming all around us, why should we imagine them forming in the distant past in some different way? What makes leaders, now as always, is natural ascendancy-—authority as such. We see them arising under our very eyes whenever there is a rescue to organize or a fire to put out. (pp. 31-32)
These two forms of government—private or public ownership of government (monarchy or democracy)—have systematically different effects on social time preference and the attendant process of civilization, and with the transition from personal (monarchical) to democratic (public) rule in particular, contrary to conventional wisdom, the decivilizing forces inherent in any form of government are systematically strengthened.18
The defining characteristic of private government ownership and the reason for a personal ruler's relatively lower degree of time preference (as compared to criminals and democratic governments) is that the expropriated resources and the monopoly privilege of future expropriation are individually owned. The expropriated 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 the private owner of the government estate, the ruler is entitled to pass his possessions on to 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 appoint or dismiss every administrator and employee of his estate.19
And on the transition from authority to power, de Jouvenel goes on to say: Power, however, is something very different from authority. The distinguishing mark of the latter is that it is exercised only over those who voluntarily accept it: if the rulers have authority over only a part of their subjects, they may receive from that part a strength sufficient to subject the others to their power Authority ends where voluntary assent ends. There is in every state a margin of obedience which is won only by the use of force or the threat of force: it is this margin which breaches liberty and demonstrates the failure of authority. Among free peoples it is a very small margin, because there authority is very great, (pp. 32-33)
18See on the following also the literature on the "tragedy of the commons," e.g., Managing The Commons, Garrett Hardin and John Baden, eds. (San Francisco: W.H. Freeman, 1977). See also Mancur Olson, "Dictatorship, Democracy, and Development," American Political Science Review 87, no. 3 (1993).
The institution of private government ownership systematically shapes the incentive structure confronting the ruler and distinctly influences his conduct of government affairs. Assuming no more than self-interest, the ruler tries to maximize his total wealth, i.e., the present value of his estate and his current income. He would not want to increase current income at the expense of a more than proportional drop in the present value of his assets. Furthermore, because acts of current income acquisition invariably have repercussions on present asset values
19According to this characterization of monarchy, present-day "monarchies" such as Great Britain, the Netherlands, Belgium, Sweden, Norway, Denmark, or Spain are clearly monarchies in name only. In fact, they represent examples of what is here and in the following referred to as democracies. The term "monarchy," as here defined, applies instead most appropriately to the form of government that characterized Europe through the end of the eighteenth century: the ancien regime—whence, stimulated by the American and in particular the French Revolution and in a process that was not completed until after the end of World War I, monarchies were gradually transformed into democracies.
Indeed, monarchy and democracy can be conceived of analytically as representing the two endpoints of a continuum, with various possible forms of government located at greater or lesser distances from one or the other extreme. Elective monarchies as they existed for periods of time in Poland, Bohemia, and Hungary, for instance, are obviously less monarchic than are hereditary monarchies. Likewise, "constitutional" monarchies are less monarchic than preconstitutional ones. And "parliamentary" monarchies may well have to be placed closer to a democracy than to a monarchy, or, with universal suffrage, they may be no monarchy at all. On the other hand, while a republican form of government implies by definition that the government apparatus is not privately but publicly owned (by "the people"), and a republic thus possesses an inherent tendency to gravitate toward the adoption of universal suffrage, i.e., democratic republicanism, not all republics are in fact equally close to democracy. For example, an aristocratic "republic" such as that of the Dutch United Provinces before 1673 (when William of Orange was elected hereditary stadtholder) may actually have to be classified as a quasi-monarchy rather than a democracy.
On the distinction between monarchy, republic, and democracy and their various historical manifestations see Erik von Kuehnelt-Leddihn, Leftism Revisited: From de Sadeand Marx loHitlerand Pol Pot (Washington, D.C.: Regnery Gateway, 1990).
(reflecting the value of all future expected asset earnings discounted by the rate of time preference), private ownership in and of itself leads to economic calculation and thus promotes farsightedness.
While this is true of private ownership generally, in the special case of private ownership of government it implies a distinct moderation with respect to the ruler's drive to exploit his monopoly privilege of expropriation, for acts of expropriation are by their nature parasitic upon prior acts of production by the nongovernmental public. Where nothing has first been produced, nothing can be expropriated, and where everything has been expropriated, all future production will come to a shrieking halt. Hence, a private owner of government (a king) would avoid taxing his subjects so heavily as to reduce his future earning potential to the extent that the present value of his estate (his kingdom) would actually fall, for instance. Instead, to preserve or even enhance the value of his personal property, he would systematically restrain himself in his taxing policies, for the lower th
e degree of taxation, the more productive the subject population will be, and the more productive the population, the higher the value of the ruler's parasitic monopoly of expropriation will be. He will use his monopolistic privilege, of course. He will not not tax. 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—always and without any effort on his part—also increase his own wealth and prosperity. Tax rates would thus tend to be low.20
Further, it is in a personal ruler's interest to use his monopoly of law (courts) and order (police) for the enforcement of the pre-established private property law. With the sole exception of himself (for the nongovernment public and all of its internal dealings, that is), he will want to enforce the principle that all property and income should be acquired productively and/or contractually, and accordingly, he will want to threaten all private rule-transgressions as crimes with punishment. The less private crime there is, the more private wealth there will be and the higher will be the value of the ruler's monopoly of taxation and expropriation. In fact, a private ruler will not want to lean exclusively on tax revenue to finance his own expenditures. Rather, he will also want to rely on productive activities and allocate part of his estate to the production and provision of "normal" goods and services, with the purpose of earning its owner a "normal" (market) sales revenue.21
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