20Carlo M. Cipolla, Before the Industrial Revolution: European Society and Economy, 1000-1700 (New York: W.W. Norton, 1980), p. 48, concludes: "All in all, one must admit that the portion of income drawn by the public sector most certainly increased from the eleventh century onward all over Europe, but it is difficult to imagine that, apart from particular times and places, the public power ever managed to draw more than 5 to 8 percent of national income." He notes further that this portion was not systematically exceeded until the second half of the nineteenth century. See also the two following notes.
Moreover, private ownership of government implies moderation for yet another systematic reason. All private property is by definition exclusive property. He who owns property is entitled to exclude everyone else from its use and enjoyment, and he is at liberty to choose with whom, if anyone, he is willing to share in its usage. Typically, a private-property owner will include his family and exclude all others. The property becomes family property with him as the head of the family, and every nonfamily person will be excluded from using family property, except as invited guests or as paid employees or contractors. In the case of government, this exclusive character of private property takes on a special meaning. In this case it implies that everyone but the ruler and his family is excluded from benefiting from nonproductively acquired property and income. Only the ruling family—and to a minor extent its friends, employees, and business partners—shares in the enjoyment of tax revenues and can lead a parasitic life. The position as head of government—and of the government estate—is typically passed on within the ruling family, such that no one outside the king's family can realistically hope to become the next king. While entrance into the ruling family might not be closed entirely, it is highly restrictive. It might be possible to become a family member through marriage. However, the larger the ruling family, the smaller each member's share in the government's total confiscations will be. Hence, marriage typically will be restricted to members of the ruler's extended family. Only in exceptional cases will a member of the ruling family marry a complete "outsider"; even if this occurs, a family member by marriage will not normally become the head of the ruling family.
21 On the recognition of the pre-existing private-property law by monarchs see Bertrand de Jouvenel, Sovereignty, esp. chaps. 10 and 11.
The attitude of the sovereign toward rights is expressed in the oath of the first French kings: "I will honor and preserve each one of you, and I will maintain for each the law and justice pertaining to him." When the king was called "debtor for justice," it was no empty phrase. If his duty was suum cuique tribuere, the suum was a fixed datum. It was not the case of rendering to each what, in the plenitude of his knowledge, he thought would be best for him, but what belonged to him according to custom. Subjective rights were not held on the precarious tenure of grant but were freehold possessions. The sovereign's right also was a freehold. It was a subjective right as much as the other rights, though of a more elevated dignity, but it could not take the other rights away. (pp. 172-73) de Jouvenel later goes on to say:
The much-cited anecdote of Frederick the Great and the miller of Sans-Souci faithfully represents the ancient state of affairs. The king's rights have incomparably greater scope than those of the miller; but as far as the miller's right goes it is as good as the king's; on his own ground, the miller is entitled to hold off the king. Indeed there was a deep-seated feeling that all positive rights stood or fell together; if the king disregarded the miller's title to his land, so might the king's title to his throne be disregarded. The profound if obscure concept of legitimacy established the solidarity of all rights, (p. 189) And on the funding of kings, de Jouvenel notes that:
State expenditures, as we now call them, were thought of in feudal times as the king's own expenditures, which he incurred by virtue of his station. When he came into his station, he simultaneously came into an "estate" (in the modern sense of the word); i.e., he found himself endowed with property rights ensuring an income adequate to "the king's needs." It is somewhat as if a government of our own times were expected to cover its ordinary expenditures from the proceeds of state-owned industries, (p. 178)
However, it remains worth emphasizing that any monopolization of law and order still implies higher prices and/or lower product quality than those prevailing under competitive conditions, and that even a king will still employ his monopoly of punishment to his own advantage: by shifting increasingly from the principle of restituting and compensating the victim of a rights violation to that of compensating himself, the king. See on this Bruce L. Benson, "The Development of Criminal Law and Its Enforcement," Journaldes Economisteset des Etudes Humaines 3 (1992).
Owing to these restrictions regarding entrance into government and the exclusive status of the individual ruler and his family (as king and nobles), private-government ownership (monarchism) stimulates the development of a clear "class consciousness" on the part of the governed public and promotes opposition and resistance to any expansion of the government's power to tax. A clear-cut distinction between the few rulers and the many ruled exists, and there is little or no risk or chance of a person's moving from one class to the other. Confronted with an almost insurmountable barrier to "upward" mobility, solidarity among the ruled—their mutual identification as actual or potential victims of government violations of property rights—is strengthened, and the ruling class's risk of losing its legitimacy as a result of increased taxation is accordingly heightened.22
22Bertrand de Jouvenel writes: "A man of our time cannot conceive the lack of real power which characterized the medieval king, from which it naturally followed that in order to secure the execution of a decision he needed to involve other leaders whose say-so reinforced his own." Bertrand de Jouvenel, "On the Evolution of Forms of Government" in idem, The Nature of Politics, p. 113. Elsewhere, de Jouvenel noted:
In fact, the class consciousness among the ruled exerts a moderating effect not only on the government's internal policies, but also on its conduct of external affairs. Every government must be expected to pursue an expansionist foreign policy. The larger the territory and the greater the population over which a monopoly of confiscation extends, the better off those in charge of this monopoly will be. Because only one monopoly of expropriation can exist in any given territory, this expansionary tendency must be expected to go hand in hand with a tendency toward centralization (with ultimately only one, worldwide government remaining). Moreover, because centralization implies reduced opportunities for interterritorial migration—of voting with one's feet against one's government and in favor of another—the process of intergovernmental competition, of expansive elimination, should be expected to generate simultaneous tendencies toward increasingly higher rates of government expropriation and taxation.23
The king could not exact contributions, he could only solicit "subsidies." It was stressed that his loyal subjects granted him help of their free will, and they often seized this occasion to stipulate conditions. For instance, they granted subsidies to John the Good (of France), subject to the condition that he should henceforth refrain from minting money which was defective in weight. In order to replenish his Treasury, the king might go on a begging tour from town to town, expounding his requirements and obtaining local grants, as was done on the eve of the Hundred Years' War; or he might assemble from all parts of the country those whose financial support he craved. It is a serious mistake to confuse such an assembly with a modern sitting of parliament, though the latter phenomenon has arisen from the former. The Parliament is sovereign and may exact contributions. The older assemblies should rather be thought of as a gathering of modern company directors agreeing to turn over to the Exchequer a part of their profits, with some trade union leaders present agreeing to part with some of their unions' dues for public purposes. Each group was called on for a grant, and each was thus well placed to make conditions. A modern parliament could not be treated like that, but would impose its will by majority vote.
(Sovereignty, pp. 178-79)
See also Douglass C. North and Robert P. Thomas, The Rise of the Western World: A New Economic History (Cambridge: Cambridge University Press, 1973), p. 96.
23On political decentralization—"political anarchy"—as a constraint on government power and a fundamental reason for the evolution of markets and capitalism, as well as on the tendency toward political centralization—expansive elimination—and the accompanying tendency toward an increase in governments' taxing and regulatory powers see Jean Baechler, The Origins of Capitalism (New York: St. Martin's Press, 1976), esp. chap. 7; Hoppe, The Economics and Ethics of Private Property, esp. chaps. 3 and 4; idem, "Migrazione, centralismo e secessione nell'Europa contemporanea," Biblioteca delta liberta 118 (1992); idem, "Nationalism and Secession,"
However, a privately-owned government significantly affects the form and pace of this process. Owing to its exclusive character and the correspondingly developed class consciousness of the ruled, government attempts at territorial expansion tend to be viewed by the public as the ruler's private business, to be financed and carried out with his own personal funds. The added territory is the king's, and so he, not the public, should pay for it. Consequently, of the two possible methods of enlarging his realm, war and military conquest or contractual acquisition, a private ruler tends to prefer the latter. It must not be assumed that he is opposed to war, for he may well employ military means if presented with an opportunity. But war typically requires extraordinary resources, and since higher taxes and/or increased conscription to fund a war perceived by the public as somebody else's will encounter immediate popular resistance and thus pose a threat to the government's internal legitimacy, a personal ruler will have to bear all or most of the costs of a military venture himself. Accordingly, he will generally prefer the second, peaceful option as the less costly one. Instead of through conquest, he will want to advance his expansionist desires through land purchases or, even less costly and still better, through a policy of intermarriage between members of different ruling families. For a monarchical ruler, then, foreign policy is in large measure family and marriage policy, and territorial expansion typically proceeds via the contractual conjunction of originally independent kingdoms.24
Chronicles (November 1993); also Nathan Rosenberg and Luther E. Birdzell, How the West Grew Rich (New York: Basic Books, 1986).
24As a prominent example of this type of foreign policy, the case of the Habsburgs of Austria may be cited, whose conduct has been characterized by the motto "bella geruntalii; tujelix Austria, nubes." Maximilian I (1493-1519)
married the heiress of the dukes of Burgundy, who, over the past century, had acquired a number of provinces in the western extremities of the [Holy Roman] Empire—the Netherlands and the Free County of Burgundy, which bordered upon France. Maximilian by this marriage had a son Philip, whom he married to Joanna, heiress to Ferdinand and Isabella of Spain. Philip and Joanna produced a son Charles. Charles combined the inheritances of his four grandparents: Austria from Maximilian, the Netherlands and Free County from Mary of Burgundy, Castile and Spanish America from Isabella, Aragon and its Mediterranean and Italian possessions from Ferdinand. In addition, in 1519, he was elected Holy Roman Emperor and so became the symbolic head of all Germany. (Robert R. Palmer and Joel Colton, A History of the Modern World [New York: Alfred Knopf, 1992], p. 74)
On the limited and moderate character of monarchical wars see the discussion on democratic warfare below.
In contrast to the internal and external moderation of a monarchy, a democratic (publicly owned) government implies increased excess, and the transition from a world of kings to one of democratically-elected presidents must be expected to lead to a systematic increase in the intensity and extension of government power and a significantly strengthened tendency toward decivilization.
A democratic ruler can use the government apparatus to his personal advantage, but he does not own it. He cannot sell government resources and privately pocket the receipts from such sales, nor can he pass government possessions on to his personal heir. He owns the current use of government resources, but not their capital value. In distinct contrast to a king, a president will want to maximize not total government wealth (capital values and current income) but current income (regardless and at the expense of capital values). Indeed, even if he wished to act differently, he could not, for as public property, government resources are unsaleable, and without market prices economic calculation is impossible. Accordingly, it must be regarded as unavoidable that public-government ownership results in continual capital consumption. Instead of maintaining or even enhancing the value of the government estate, as a king would do, a president (the government's temporary caretaker or trustee) will use up as much of the government resources as quickly as possible, for what he does not consume now, he may never be able to consume. In particular, a president (as distinct from a king) has no interest in not ruining his country. For why would he not want to increase his confiscations if the advantage of a policy of moderation—the resulting higher capital value of the government estate—cannot be reaped privately, while the advantage of the opposite policy of higher taxes—a higher current income—can be so reaped? For a president, unlike for a king, moderation offers only disadvantages.25
25On the nature of public ownership and its inherent irrationality see also Rothbard, Power and Market, pp. 172-84; Hoppe, A Theory of Socialism and Capitalism, chap. 9.
The fundamental difference between private ownership of government (and low time preference) and public ownership of government (and high time preference) may be further illustrated by considering the institution of slavery, and contrasting the case of private slave ownership, as it existed for instance in antebellum America, with that of public slave ownership, as it existed for instance in the former Soviet Union and its Eastern European empire.
Just as privately owned slaves were threatened with punishment if they tried to escape, in all of the former Soviet empire emigration was outlawed and punished as a criminal offense, if necessary, by shooting those who tried to run away. Moreover, anti-loafing laws existed everywhere, and governments could assign any task and all rewards and punishments to any citizen. Hence the classification of the Soviet system as slavery. Unlike a private slave owner, however, Eastern-European slave owners—from Lenin to Gorbachev—could not sell or rent their subjects in a labor market and privately appropriate the receipts from the sale or rental of their "human capital." Hence the system'sclassification as public (or socialist) slavery.
Moreover, with public instead of private government ownership the second reason for moderation is also gone: the clear and developed class-consciousness of the ruled. There can never be more than one supreme ruler, whether king or president. Yet while entrance into the position of king and a promotion to the rank of nobility is systematically restricted under a monarchy, in a publicly owned government, anyone, in theory, can become a member of the ruling class—or even president. The distinction between the rulers and the ruled is blurred, and the class-consciousness of the ruled becomes fuzzy. The illusion even arises that such a distinction no longer exists: that with a democratic government no one is ruled by anyone but everyone instead rules himself. Indeed, it is largely due to this illusion that the transition from monarchy to democracy could be interpreted as progress and, hence, as deserving public support. Accordingly, public resistance against government power is systematically weakened. While expropriation and taxation before may have appeared clearly oppressive and evil to the public, they seem much less so, mankind being what it is, once anyone may freely enter the ranks of those who are at the receiving end.
Without markets for slaves and slave labor, matters are worse, not better, for the slave, for without prices for slaves and their labor, a slave owner can no longer rationally allocate his "human capital." He cannot determine the scarcity value of his various, heterogeneous pieces of human capital, and he can neither determine the opportunity-cost of using this ca
pital in any given employment, nor compare it to the corresponding revenue. Accordingly, permanent misallocation, waste, and "consumption" of human capital results.
The empirical evidence indicates as much. While it occasionally happened that a private slave owner killed his slave, which is the ultimate "consumption" of human capital, socialist slavery in Eastern Europe resulted in the murder of millions of civilians. Under private slave ownership the health and life expectancy of slaves generally increased. In the Soviet Empire healthcare standards steadily deteriorated and life expectancies actually declined in recent decades. The level of practical training and education of private slaves generally rose. That of socialist slaves fell. The rate of reproduction among privately-owned slaves was positive. Among the slave populations of Eastern Europe it was generally negative. The rates of suicide, self-incapacitation, family breakups, promiscuity, "illegitimate" births, birth defects, venereal disease, abortion, alcoholism, and dull or brutish behavior among private slaves were high. But all such rates of "human capital consumption" were higher still for the socialist slaves of the former Soviet Empire. Similarly, while morally senseless and violent behavior among privately owned slaves occurred after their emancipation, the brutalization of social life in the aftermath of the abolition of socialist slavery has been far worse, revealing an even greater degree of moral degeneration. See also Hans-Hermann Hoppe's "Note on Socialism and Slavery" in Chronicles (August 1993): 6.
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