DemocracyThe God That Failed

by Hans-Hermann Hoppe

  See also Murray N. Rothbard, For A New Liberty (New York: Collier, 1978), pp. 215ff.

  23Comments Rothbard:

  The idea of primacy for restitution to the victim has great precedent in law; indeed, it is an ancient principle of law which has been allowed to wither away as the State has aggrandized and monopolized the institutions of justice In fact, in the Middle Ages generally, restitution to the victim was the dominant concept of punishment; only as the State grew more powerful... the emphasis shifted from restitution to the victim,... to punishment for alleged crimes committed "against the State." . . . What happens nowadays is the following absurdity: A steals $15,000 from B. The government tracks down, tries, and convicts A, all at the expense of B, as one of the numerous taxpayers victimized in this process. Then, the government, instead of forcing A to repay B or work at forced labor until that debt is paid, forces B, the victim, to pay taxes to support the criminal in prison for ten or twenty years' time. Where in the world is the justice here? (The Ethics of Liberty, pp. 86-87)

  Third and most importantly, because the relationship between insurers and their clients is voluntary, insurers must accept private property as an ultimate "given" and private property rights as immutable law. That is, in order to attract or retain paying clients, insurers will have to offer contracts with specified property and property damage descriptions, rules of procedure, evidence, compensation, restitution, and punishment as well as intra- and interagency conflict resolution and arbitration procedures. Moreover, out of the steady cooperation between different insurers in mutual interagency arbitration proceedings, a tendency toward the unification of law—of a truly universal or "international" law—will emerge. Everyone, by virtue of being insured, would thus become tied into a global competitive effort to minimize conflict and aggression; and every single conflict and damage claim, regardless of where and by or against whom, would fall into the jurisdiction of exactly one or more specific and innumerable insurance agencies and their contractually agreed to arbitration procedures, thereby creating "perfect" legal certainty. In striking contrast, as tax-funded monopoly protectors states do not offer the consumers of protection anything even faintly resembling a service contract. Instead, they operate in a contractual void that allows them to make up and change the rules of the game as they go along. Most remarkably, whereas insurers must submit themselves to independent third party arbitrators and arbitration proceedings in order to attract voluntary paying clients, states, insofar as they allow for arbitration at all, assign this task to another state-funded and state-dependent judge.24

  24Insurance agencies, insofar as they enter into a bilateral contract with each of their clients, fully satisfy the ancient and original desideratum of "representative" government of which Bruno Leoni has noted that "political representation was closely connected in its origin with the idea that the representatives act as agents of other people and according to the latter's will" (Freedom and the Law, pp. 118-19; see also note 8 above). In distinct contrast, moder n democratic government involves the complete perversion—indeed, the nullification—of the original idea of representative government. Today, a person is deemed to be politically "represented" no matter what, i.e., regardless of his own will and actions or that of his representative.

  Further implications of this fundamental contrast between insurers as contractual versus states as noncontractual providers of security deserve special attention.

  Because they are not subject to and bound by contracts, states typically outlaw the ownership of weapons by their "clients," thus increasing their own security at the expense of rendering their alleged clients defenseless. In contrast, no voluntary buyer of protection insurance would agree to a contract that required him to surrender his right to self-defense and be unarmed or otherwise defenseless. To the contrary, insurance agencies would encourage the ownership of guns and other protective devices among their clients by means of selective price cuts, because the better the private protection of their clients, the lower the insurers' protection and indemnification costs will be.

  A person is considered represented if he votes, but also if he does not vote. He is considered represented if the candidate he has voted for is elected, but also if another candidate is elected. He is represented, whether the candidate he voted or did not vote for does or does not do what he wished him to do. And he is considered politically represented, whether "his" representative will find majority support among all elected representatives or not. "In truth," as Lysander Spooner has pointed out,

  voting is not to be taken as proof of consent On the contrary, it is to be considered that, without his consent having even been asked a man finds himself environed by a government that he cannot resist; a government that forces him to pay money, render service, and forego the exercise of many of his natural rights, under peril of weighty punishments. He sees, too, that other men practice this tyranny over him by use of the ballot. He sees further, that, if he will but use the ballot himself, he has some chance of relieving himself from this tyranny of others, by subjecting them to his own. In short, he finds himself, without his consent, so situated that, if he uses the ballot, he may become a master, if he does not use it, he must become a slave. And he has no other alternative than these two. In self-defense, he attempts the former. His case is analogous to that of a man who has been forced into battle, where he must either kill others, or be killed himself. Because, to save his own life in battle, a man attempts to take the lives of his opponents, it is not to be inferred that the battle is one of his own choosing, (p. 15)... [Consequently, the elected government officials] are neither our servants, agents, attorneys, nor representatives ... [for] we do not make ourselves responsible for their acts. If a man is my servant, agent, or attorney, I necessarily make myself responsible for all his acts done within the limits of the power that I have entrusted to him. If I have entrusted him, as my agent, with either absolute power, or any power at all, over the persons or properties of other men than myself, I thereby necessarily make myself responsible to those other persons for any injuries he may do them, so long as he acts within the limits of the power I have granted him. But no individual who may be injured in his person or property, by acts of Congress, can come to the individual electors, and hold them responsible for these acts of their so-called agents or representatives. This fact proves that these pretended agents of the people, of everybody, are really the agents of nobody. (No Treason, p. 29)

  Moreover, because they operate in a contractual void and are independent of voluntary payment, states arbitrarily define and redefine what is and what is not a punishable "aggression" and what does and does not require compensation. By imposing a proportional or progressive income tax and redistributing income from the rich to the poor, for instance, states in effect define the rich as aggressors and the poor as their victims. (Otherwise, if the rich were not aggressors and the poor not their victims, how could taking something from the former and giving it to the latter be justified?) Or by passing affirmative action laws, states effectively define whites and males as aggressors and blacks and women as their victims. For insurance agencies, any such business conduct would be impossible for two fundamental reasons.25

  First, every insurance involves the pooling of particular risks into risk classes. It implies that to some of the insured more will be paid out than what they paid in, and to others less. However, and this is decisive, no one knows in advance who the "winners" and who the "losers" will be. Winners and losers—and any income redistribution among them—will be randomly distributed. Otherwise, if winners and losers could be systematically predicted, losers would not want to pool their risk with winners but only with other losers because this would lower their insurance premium.

  Second, it is not possible to insure oneself against any conceivable "risk." Rather, it is only possible to insure oneself against "accidents," i.e., risks over whose outcome the insured has no control whatsoever and to which he contributes nothing. Thus, it is possible to insur
e oneself against the risk of death or fire, for instance, but it is not possible to insure oneself against the risk of committing suicide or setting one's own house on fire. Similarly, it is impossible to insure oneself against the risk of business failure, of unemployment, of not becoming rich, of not feeling like getting up and out of bed in the morning, or of disliking one's neighbors, fellows or superiors, because in each of these cases one has either full or partial control over the event in question. That is, an individual can affect the likelihood of the risk. By their very nature, the avoidance of risks such as these falls into the realm of individual responsibility, and any agency that undertook their insurance would be slated for immediate bankruptcy. Most significantly for the subject under discussion, the uninsurability of individual actions and sentiments (in contradistinction to accidents) implies that it is also impossible to insure oneself against the risk of damages which are the result of one's prior aggression or provocation. Rather, every insurer must restrict the actions of its clients so as to exclude all aggression and provocation on their part. That is, any insurance against social disasters such as crime must be contingent on the insured submitting themselves to specified norms of nonaggressive—civilized—conduct.

  25On the "logic" of insurance see Ludwig von Mises, Human Action: A Treatise on Economics, Scholar's Edition (Auburn, Ala.: Ludwig von Mises Institute, 1998), chap. 6; Murray N. Rothbard, Man, Economy, and State, 2 vols. (Auburn, Ala.: Ludwig von Mises Institute, 1993), pp. 498ff.; Hans-Hermann Hoppe, "On Certainty and Uncertainty, Or: How Rational Can Our Expectations Be?" Review of Austrian Economics 10, no. 1 (1997).

  Accordingly, while states as monopolistic protectors can engage in redistributive policies benefiting one group of people at the expense of another, and while as tax-supported agencies they can even "insure" uninsurable risks and protect provocateurs and aggressors, voluntarily funded insurers would be systematically prevented from doing any such thing. Competition among insurers would preclude any form of income and wealth redistribution among various groups of insured, for a company engaging in such practices would lose clients to others refraining from them. Rather, every client would pay exclusively for his own risk, respectively that of people with the same (homogeneous) risk exposure as he faces.26 Nor would voluntarily funded insurers be able to "protect" any person from the consequences of his own erroneous, foolish, risky, or aggressive conduct or sentiment. Competition between insurers would instead systematically encourage individual responsibility, and any known provocateur and aggressor would be excluded as a bad insurance risk from any insurance coverage whatsoever and be rendered an economically isolated, weak, and vulnerable outcast.

  26In being compelled, on the one hand, to place individuals with the same or similar risk-exposure into the same risk group and to charge each of them the same price per insured value; and in being compelled, on the other hand, to distinguish accurately between various classes of individuals with objectively (factually) different group risks and to charge a different price per insured value for members of different risk groups (with the price differentials accurately reflecting the degree of heterogeneity between the members of such different groups), insurance companies would systematically promote the above-mentioned natural human tendency (see note 2 above) of "like people" to associate and to discriminate against and physically separate themselves from "unlikes." On the tendency of states to break up and destroy homogeneous groups and associations through a policy of forced integration see chaps. 7,9, and 10.

  Finally, with regard to foreign relations, because states can externalize the costs of their own actions onto hapless taxpayers, they are permanently prone to becoming aggressors and warmongers. Accordingly, they tend to fund and develop weapons of aggression and mass destruction. In distinct contrast, insurers will be prevented from engaging in any form of external aggression because any aggression is costly and requires higher insurance premiums, implying the loss of clients to other, nonaggressive competitors. Insurers will engage exclusively in defensive violence and instead of acquiring weapons of aggression and mass destruction, they will tend to invest in the development of weapons of defense and of targeted retaliation.27

  V

  Even though all of this is clear, how can we ever succeed in implementing such a fundamental constitutional reform? Insurance agencies are presently restricted by countless regulations which prevent them from doing what they could and naturally would do. How can they be freed from these regulations?

  Essentially, the answer to this question is the same as that given by the American revolutionaries more than two-hundred years ago: through the creation of free territories and by means of secession.

  In fact today under democratic conditions this answer is even truer than it was in the days of kings. For then, under monarchical conditions, the advocates of an antistatist liberal-libertarian social revolution still had an option that has since been lost. Liberal-libertarians in the old days could—and frequently did—believe in the possibility of simply converting the king to their view, thereby initiating a "revolution from the top." No mass support was necessary for this—just the insight of an enlightened prince.28 However realistic this might have been then, today this top-down strategy of social revolution would be impossible. Not only are political leaders selected nowadays according to their demagogic talents and proven record as habitual immoralists, as has been explained above; consequently, the chance of converting them to liberal-libertarian views must be considered even lower than that of converting a king who simply inherited his position. Moreover, the state's protection monopoly is now considered public rather than private property, and government rule is no longer tied to a particular individual but to specified functions exercised by anonymous functionaries. Hence, the one-or-few-men-conversion strategy can no longer work. It does not matter if one converts a few top government officials—the president and some leading senators or judges, for instance—because within the rules of democratic government no single individual has the power to abdicate the government's monopoly of protection. Kings had this power, but presidents do not. The president can resign from his position, of course, only to have it taken over by someone else. He cannot dissolve the governmental protection monopoly because according to the rules of democracy, "the people," not their elected representatives, are considered the "owners" of government.

  27See also chap. 12; and Tannehill and Tannehill, The Market for Liberty, chaps. 11, 13, and 14.

  28See on this Murray N. Rothbard, "Concepts of the Role of Intellectuals in Social Change Toward Laissez-Faire," Journal of Libertarian Studies 9, no. 2 (1990).

  Thus, rather than by means of a top-down reform, under the current conditions one's strategy must be one of a bottom-up revolution. At first, the realization of this insight would seem to make the task of a liberallibertarian social revolution impossible. For does this not imply that one would have to persuade a majority of the public to vote for the abolition of democracy and an end to all taxes and legislation? And is this not sheer fantasy, given that the masses are always dull and indolent, and even more so given that democracy, as explained above, promotes moral and intellectual degeneration? How in the world can anyone expect that a majority of an increasingly degenerate people accustomed to the "right" to vote should ever voluntarily renounce the opportunity of looting other people's property? Put this way, one must admit that the prospect of a social revolution must indeed be regarded as virtually nil. Rather, it is only on second thought, upon regarding secession as an integral part of any bottom-up strategy, that the task of a liberal-libertarian revolution appears less than impossible, even if it still remains a daunting one.

  How does secession fit into a bottom-up strategy of social revolution? More importantly, how can a secessionist movement escape the Southern Confederacy's fate of being crushed by a tyrannical and dangerously armed central government?

  In response to these questions it is first necessary to remember that neither the original American Rev
olution nor the American Constitution were the result of the will of the majority of the population. A third of the American colonists were actually Tories, and another third was occupied with daily routines and did not care either way. No more than a third of the colonists were actually committed to and supportive of the revolution, yet they carried the day. And as. far as the Constitution is concerned, the overwhelming majority of the American public was opposed to its adoption, and its ratification represented more of a coup 'd'etat by a tiny minority than the general will. All revolutions, whether good or bad, are started by minorities; and the secessionist route toward social revolution, which necessarily involves the breaking-away of a smaller number of people from a larger one, takes explicit cognizance of this important fact.

  Second, it is necessary to recognize that the ultimate power of every government—whether of kings or caretakers—rests solely on opinion and not on physical force. The agents of government are never more than a small proportion of the total population under their control. This implies that no government can possibly enforce its will upon the entire population unless it finds widespread support and voluntary cooperation within the nongovernmental public. It implies likewise that every government can be brought down by a mere change in public opinion, i.e., by the withdrawal of the public's consent and cooperation.29 And while it is undeniably true that after more than two centuries of democracy the American public has become so degenerate, morally and intellectually, that any such withdrawal must be considered impossible on a nationwide scale, it would not seem insurmountably difficult to win a secessionist-minded majority in sufficiently small districts or regions of the country. In fact, given an energetic minority of intellectual elites inspired by the vision of a free society in which law and order is provided by competitive insurers, and given furthermore that—certainly in the U.S., which owes its very existence to a secessionist act—secession is still held to be legitimate and in accordance with the "original" democratic ideal of self-determination (rather than majority rule)30 by a substantial number of people, there seems to be nothing unrealistic about assuming that such secessionist majorities exist or can be created at hundreds of locations all over the country. In fact, under the rather realistic assumption that the U.S. central government as well as the social-democratic states of the West in general are bound for economic bankruptcy (much like the socialist peoples' democracies of the East collapsed economically some ten years ago), present tendencies toward political disintegration will likely be strengthened in the future. Accordingly, the number of potential secessionist regions will continue to rise, even beyond its current level.