Property, Freedom & Society

Mateusz Machaj

In hampering and of course even more so, in making it outright illegal for private entrepreneurs to bid away means of production from caretakers, a system of socialized production prevents opportunities for improvement from being taken up to the full extent they are perceived.

—Hans-Hermann Hoppe1

I first met Professor Hans-Hermann Hoppe in 2003, when he visited Poland for a libertarian conference. Most of the participants were interested in normative issues and political philosophy, whereas very few were interested in Austrian economics. Hence, I was coincidentally the only one to engage with Professor Hoppe in extensive discussions on theories of the Austrian School. I did not hesitate shamelessly to consume his time for the personal benefit of learning more about economics from one of Rothbard’s most important followers. After this meeting, fortune continued to smile on me—it turned out that despite substantial geographical distance, I have enjoyed such productive conversations with my German mentor at least few times a year.

One of my favorite books, and among the most important for my intellectual development was Hoppe’s A Theory of Socialism and Capitalism, which could be labeled “property economics in one lesson,” and, in the opinion of the present writer, is as important for introduction to Austrian economics as Hazlitt’s classic. After reading Hoppe’s book, one understands that political economy and comparative analysis of economic systems are about the external effects of different property regimes. As Hoppe proves, society and economy are themselves great positive external effects of private property,2 whereas socialism and interventionism are associated with negative external effects that eventually lead to destruction of society and economy.3 We would like to follow Hoppe’s insights here: the article below attempts to reformulate Mises’s calculation argument into a property argument. Private property provides enormous, positive, external effects that will disappear once it is abolished.

A BAD, GOOD ANALOGY

Imagine a dancing contest in which a group of judges is assessing the dancers. Three essential elements are required, without which any judging of that kind would not be possible. The first one is a cardinal numeration system. Every judge has certain qualitative evaluations about each performance; he could rank all the performances in order according to his view. However, there would be no way to compare those individual assessments vis-à-vis each other without the existence of a common denominator. The use of cardinal numbers serves this function. Numbers offered by judges are simply added, and then the final result shows us a ranking of all performances.

The second element, necessarily connected to those numbers, is a quasi-“competition” between views of judges. Obviously, if all judges expressed the same opinion, there would be no point in having more than one. To certain extent, they do differ and do make different judgments (even though they might end up with the same conclusion). Having more than one judge justifies the use of numeric rankings, because these will serve as common quantitative denominator for all qualitative opinions. If there were only one judge, then we would not need cardinal numbers, as he could just rank the performances without assigning cardinal numbers to them.

The third essential element is a set of rules and constraints. Judges act within certain limits set by the rules. For example, they are constrained in their choice of numbers 1–10 and, therefore, cannot bid their scoring infinitely. Apart from this, no judge is allowed to overrule the decision of another judge, and there is no supreme judge who would assign possible numbers to other judges of a lower level. Otherwise, if there were one ultimate judge, for example, allowing judges to use only certain numbers, then he would of course decide about the final assessment, and not the judges themselves. Under this absurd condition, the decision process would boil down to a process in which neither the judges of the lower level nor the numbers they use would be needed. The situation in place would be the same as one in which one judge assesses the performances based on his preferences. In this case, qualitative valuation could substitute for a numerical one.

These three elements are integrated and cannot do without one another. Without numbers, there can be no common denominator for all qualitative assessments. If judges do not differ in their assessments, then there is no point in using numbers in the first place. (The use of a denominator would not be needed.) And if there are no rules concerning numerical assessment, then the whole process will not make sense.

However trivial this might seem, it actually provides us with a demonstration of the difference between socialism and capitalism. I call this analogy a “bad, good analogy,” because it is both good and bad. It is good, because it demonstrates some connections that are also present in the capitalist economy. The analogy is also very bad, because the market process is not otherwise like a dancing competition, hence the analogy could be easily misinterpreted.

CALCULATION IN CAPITALISM:
THE ANALOGY APPLIED

The purpose of this paper is to point out that “price ratios,” as numerical ratios per se, are not the key element in the analysis of socialism, for it is a property structure that makes it differ from capitalism. Although the above, contest analogy does not exactly describe the market process, we can make sense of some observations concerning it. The market itself is necessarily linked to three interconnected elements, which cannot exist apart from each other: economic calculation, the intellectual division of labor, and private property constraints.4

Economic calculation allows for the comparison of many different ways of producing things. Imagine that one wants to produce a table—the range of possibilities is huge. One can use different tools, machines, resources, or laborers. These all are heterogeneous and cannot be added together in either physical terms or labor hours. Fortunately, there is economic calculation—all the factors have their monetary prices, hence one can add them together in terms of money and then decide which decision is the most economical. In this sense, money units are a way to “measure” the amount of used factors of production, which cannot be expressed together in one physical unit.

The term “intellectual division of labor” conveys the idea that different entrepreneurs have their own property and that they compete within property boundaries for factors of production. Each of them speculates and assesses conditions of the market. Competition between them allows for factors to be valued in terms of money. The calculus becomes the link that connects different opportunities and entrepreneurial expectations. Without competition transmitted through prices this way, there would be no point to economic calculation.5

The third group of elements, private property constraints, is a set of rules without which the process of competition could not be realized. Each entrepreneur controls money capital and factors that he owns—his economic decision-making about these scarce resources is the driving force for successful employment of the factors. He does not decide about all the other factors, and his current decisions will have an important effect upon his future income. This introduces a real boundary on his choices, for he personally will lose or gain in the process of competition (in terms of ownership). Only because of this influence can the intellectual division of labor have real effects on the economy. The owner of particular resources is making a decision only about a small element of the whole economy, since only he controls his ownership, and not the ownership of other people. In this sense, the intellectual division of labor is shaped by distribution of ownership. Without this division of ownership we could not speak of the entrepreneurial division of labor.

Socialist systems differ from the capitalist process by being establishing one compulsory owner, who becomes the ultimate decision maker in the economic system.6 The consequences of that step are unavoidable, since without private property there can be no intellectual division of labor. Instead of the market process, there is a physical and compulsory exclusion of competition, which substitutes for the market one ultimate decision making process, directing allocations of factors. The central owner does not determine the value of factors of production as the market process does, because he has no means to relate his assessment to other opportunities that might have been perceived by other entrepreneurs. There is no basis for quantitative discrimination between production projects, for there only can be a straight ordinal valuation of them (a valuation of completely vertically integrated processes). The so-called “social appraisement process” is abolished once private property is abolished.7

POSSIBLE RESPONSES AND SUGGESTED REPLIES

Socialists have responded to Mises’s challenge in many different ways. Unfortunately, in his critique he concentrates too much on only one aspect of the problem, namely economic calculation. In the previous section, Mises’s argument has been reformulated mainly in terms of the following emphasis: we have now changed the focus from prices to the intellectual division of labor being a product of property distribution.

Socialism is a system organized by one owner, where there are no entrepreneurs competing for the most valuable use of resources. Even if one owner establishes some numerical system, this in no way differs from a straight ranking of all the possible ways of producing things. These centrally administered “prices” do not change anything since one owner establishes them, one owner acts upon them, and one owner changes them ex post. From the very beginning he employs the managers (there is no market for corporate control) and decides what in the accounting books is registered as profits and losses. In contrast, market economy prices are the result of different actions of competing owners and this is their nature: as a common denominator for different property assessments.8 If only one owner establishes prices, then they lose their basic feature as a denominator for the competition process and become only the expression of one owner’s preferences (hence they cannot be used as an independent economic indicator).9 Using prices in a socialist system is equivalent to a straight ordinal ranking of the processes by a central planner.

Let us now consider some responses to Mises.

1. Abolish property and leave prices for the factors

This certainly makes calculation possible, but does not get us far, since prices alone are not enough. Along with prices allocation decisions are needed, which will then reconstruct the price system. In a capitalist system, expectations and property decisions of competing owners constantly rearrange prices. In socialist systems, we have one owner and previous capitalist prices. But what’s next? How is a planner supposed to act upon these prices or reshape them? Competition is not based on the existence of past prices, but on speculations upon the future state of the market.10 Just because some prices existed in the past does not solve the problem of economic calculation as posed by Mises.11

2. A mathematical solution12

We do not have enough room here to criticize the mathematical approach, but we take the opportunity here to reject the myth that Barone solved the problem on paper. A completely neglected quote in extenso from the source should suffice:

Many of the writers who have criticized collectivism have hesitated to use as evidence the practical difficulties in establishing on paper the various equivalent; but it seems they have not perceived what really are the difficulties—or, more frankly, the impossibility—of solving such equations a priori. If, for a moment, we assume that economic variability of the technical coefficients may be neglected and we take account of their technical variability only, it is not impossible to solve on paper the equations of the equilibrium. . . . But it is frankly inconceivable that the economic determination of the technical coefficients can be made a priori, in such a way as to satisfy the condition of the minimum cost of production which is an essential condition for obtaining that maximum to which we have referred. This economic variability of the technical coefficients is certainly neglected by the collectivists. . . . The determination of the coefficients economically most advantageous can only be done in an experimental way: and not on a small scale, as could be done in a laboratory; but with experiments on a very large scale.

Some collectivist writers, bewailing the continual destruction of firms (those with higher costs) by free competition, think that the creation of enterprises to be destroyed later can be avoided, and hope that with organized production it is possible to avoid the dissipation and destruction of the wealth which such experiments involved, and which they believe to be peculiar property of “anarchist” production. Thereby these writers simply show that they have no clear idea of what production really is, and that they are not even disposed to prove a little deeper into the problem which will concern the Ministry which will be established for the purpose in the Collectivist State.13

3. The collectivist decision14

In this proposition, the planner is supposed to employ the specialists, perhaps past entrepreneurs and businessmen; while sitting around the table, they should figure out which range of production processes would be the best (or as in the case of democratic socialism this could be put to a vote). As we saw above, this would be only a paper game since the real competitive process requires that each market participant owns some resources and by his expectations and anticipations, within the property limits, competes with others for more ownership. As a planner and his employees determine the range of production processes in absence of bidding and exclusion based on property boundaries, their effort is completely different in nature than in capitalism. No competition exists in this scenario, for “competition” in it is as real as that between children who, without funds, bid at the auction. Our “good, bad” analogy shows us that juries in the dancing contest must act within properly set numerical limits. Somewhat similarly, entrepreneurs are acting within real limits—possibility of control of resources. If they sit around the table without the limit set by property constraints, how can they compete and bid for the factors? How can one discriminate within plain proposition and suggestions? The fact that public service differs from business transactions in the marketplace does not stem from the incentive problem, or from the vanity of government employees. The problem lies exactly in the difference between acting on paper and actually bidding on prices with the use of property. Otherwise, the bidding process is in no way different from a game of Monopoly.15

4. The central planner should introduce competition between managers of public enterprises16

This solution mistakenly assumes that entrepreneurship is a result of management, not of control. It ignores the fact that entrepreneurship is a result of being an owner, supreme controller, i.e. final decision maker.17 Naturally, in capitalism, owners might delegate to others the authority to act on their behalf, but this does not change the nature of entrepreneurship, i.e. ultimate control of a particular resource.18 But, this feature changes under socialism, where only one owner delegates responsibility for decisions to subordinates in the economy. Following our dancing analogy, if there was one person deciding which judge should use which number, then it would be obvious who is, in fact, making the assessment. It is exactly the same case in “competition” between the managers, as they all have one ultimate boss. The central planner appoints the managers; the central planner decides about wages. The central planner decides about structure of industries, about which part is to be controlled by the manager and how particular inventories can be affected. Surely, he is the one who ultimately decides, although he might transfer some of his duties to his subordinates. This, however, does not change the fact that the whole system is subjected to one will acting.19 There is no capital market, no land and real estate market, no asset market, nor any market for corporate control. Similarly, although managers in capitalism control resources to some extent (which creates a possibility for agency problems), ultimately owners still control the assets.

5. Socialist prices are supposed to be accounting prices balancing quantity demanded and quantity supplied

This proposition was to be mixed with the previous one; however, we will deal with separately. Specifically, Taylor, and then Lange after him, suggested that prices are supposed to be indicators responding to physical quantities.20 If hammers are piling up in a warehouse, the central planner is supposed to lower the price. If a delivery is late, then the planner should raise the price. However, the problem noted earlier still remains: decisions about all industrial structures, employment, and possible actions are set up from the beginning by the central planner. Nothing, in this regard, is a result of the competitive process. He, of course, must instruct his subordinates how to act using his invented “price system.” Instructions to the managers about what rules to follow are given by the planner himself. These two decisions will cause surpluses and shortages somewhere, and so the central planner will have to continually adjust his ratios to arrive at the accounting, which equalizes the quantity demanded with the quantity supplied. But what does this mean exactly? Isn’t each factor at a factory subjected to central planner’s decision? Every factor is already put in the central plan—what then is a “surplus” or “shortage” supposed to mean? The planner decides when and how the prices are supposed to change—he then bounds himself and adjusts his decisions to his own decisions (in the capitalist system, a pricing mechanism for one entrepreneur is a mechanism of adjusting his actions to actions of others in the area of intellectual division of labor).

Apart from this, there are no real “bankruptcies” as we see them in the capitalist system. “Losses” in capitalism are linked to a rearrangement of ownership, for costs which are higher than prices cause “liquidation”—a transfer of assets between different parties. None of this is present in socialism, since one owner makes all decisions concerning officially administered prices, factor distribution, and alternative employment. We see then that everything is a derivative of the central planner’s ultimate decision making. Apart from that, it is useful to point out that a process of production is not instantaneous. In other words, just because some factors or goods are stored for a certain time, not employed at every single moment, it does not mean that such storage is uneconomical. Under capitalism, such storage is under the boundary of the intellectual division of labor. Under socialism, it is a product of authoritative use of aggressive force. Or to put it differently, categories of shortages and surpluses are not simple accounting and physical categories, but complex economic phenomena judged by entrepreneurs within the framework of monetary appraisement.

CONCLUSION

The argument about the economic chaos resulting from the establishment of socialism (understood as one compulsory owner) was restated in this article. It was shown that socialism’s economic deficiency does not result from the lack of a numerical system; rather, it flows from essential characteristics of socialism. Socialism means dictatorship, necessarily survives as dictatorship, and no centrally produced accounting ratios will change that fact. As such, competition is literally impossible under socialism, and this cannot be changed by the introduction of centrally administered accounting ratios.

Mateusz Machaj (mateusz.machaj@mises.pl) is Instructor of economics at the University of Wroclaw in Poland.

21 Hans-Hermann Hoppe, A Theory of Socialism and Capitalism: Economics, Politics, and Ethics (London: Kluwer, 1989), p. 28

22A motto of Hoppe’s Property and Freedom Society is Bastiat’s aphorism, “Property does not exist because there are laws, but laws exist because there is property.” Frédéric Bastiat, “Property and Law,” in Selected Essays on Political Economy, Seymour Cain, trans., George B. De Huszar, ed. (Irvington-on-Hudson, New York: Foundation for Economic Education, 1995 [1848]); the website of the Property and Freedom Society is located at <www.PropertyAndFreedom.org>.

23Curiously, it is often argued that free market economists, as opposed to more interventionist ones, ignore “external effects.” In fact, rather the opposite statement is true. Free market economists analyze these elements in detail, but perhaps do not use the term “external effects” very often. On the other hand, interventionist theorists use the term quite often, but usually completely ignore external effects of institutionalized aggression in their analysis. This defect is completely absent from Hoppe’s works.

24The term “intellectual division of labor” was used by Mises. Ludwig von Mises, Economic Calculation in the Socialist Commonwealth (Auburn, Ala.: Mises Institute, 1990), p. 18. See also the great work by Misesian Joseph Salerno, “Ludwig von Mises as Social Rationalist,” Review of Austrian Economics 4 (1990). In Mises’s Socialism, the term was translated as “mental division of labor.” Ludwig von Mises, Socialism: An Economic and Sociological Analysis (New Haven, Conn.: Yale University Press, 1951), p. 118. Both terms might be misleading— it would be better to use the term “entrepreneurial division of labor,” as I discuss in my “Market Socialism and the Property Problem: Different Perspective of the Socialist Calculation Debate,” Quarterly Journal of Austrian Economics 10, no. 4 (December 2007): 257–80.

25Different firms exist because of the competition within the uncertain world; this differs from the Coasian view that some monetary costs cause the existence of firms. See Ronald H. Coase, “The Nature of the Firm,” Economica 4, no. 16 (1937).

26Writes Mises:

The essential mark of socialism is that one will alone acts. It is immaterial whose will it is. The director may be an anointed king or a dictator, ruling by virtue of his charisma, he may be a Fuhrer or a board of Fuhrers appointed by the vote of the people. The main thing is that the employment of all factors of production is directed by one agency only.

Ludwig von Mises, Human Action: A Treatise on Economics (Chicago: Contemporary Books, 1966), p. 695.

27This is the term used by Salerno, “Ludwig von Mises as Social Rationalist.”

28See also Jeffrey M. Herbener, “Calculation and the Question of Arithmetic,” Review of Austrian Economics 9, no. 1 (1996): 151–62.

29On this point see G.D.H. Cole, Economic Planning (New York: Kennikat Press, 1971), pp. 183–85; Walter Eucken and Terence H. Hutchinson, “On the Theory of the Centrally Administrated Economy: An Analysis of the German Experiment. Part I,” Economica, n.s. 15, no. 58 (1948); idem, “On the Theory of the Centrally Administrated Economy: An Analysis of the German Experiment. Part II,” Economica, n.s. 15, no. 59 (1948); Morris Bornstein, “The Soviet Price System,” American Economic Review 52, no. 1 (1962).

30See Mises, Human Action, p. 58:

Understanding is not a privilege of the historians. It is everybody’s business. In observing the conditions of his environment everybody is a historian. Everybody uses understanding in dealing with the uncertainty of future events to which he must adjust his own actions. The distinctive reasoning of the speculator is an understanding of the relevance of the various factors determining future events. And—let us emphasize it even at this early point of our investigations—action necessarily always aims at future and therefore uncertain conditions and thus is always speculation. Acting man looks, as it were, with the eyes of a historian into the future.

31For Mises’s response to initial criticism that was particularly weak, see Ludwig von Mises, “New Contributions to the Problem of Socialist Economic Calculation,” in Richard Ebeling, ed., Selected Writings of Ludwig von Mises: Between the Two World Wars: Monetary Disorder, Interventionism, Socialism, and the Great Depression (Indianapolis, Liberty Fund, 2002).

32Sometimes improperly mixed with a dynamic market socialism model.

33Enrico Barone, “The Ministry of Production in the Collectivist State,” in F.A. Hayek, ed. Collectivist Economy Planning (London: Routledge and Kegan Paul, 1935 [1908]), p. 287; emphasis added.

34See, for example, G.D.H. Cole, Chaos and Order in Industry (London: Metheun & Co. Ltd., 1920).

35We can echo here Mises’s phrase “play[ing] market.” Mises, Human Action, p. 709.

36This has been suggested especially by Oscar Lange and Fred M. Taylor, On the Economic Theory of Socialism (New York: McGraw-Hill, 1956).

37Interestingly, another brilliant Austrian economist, Israel Kirzner, seems to commit the same fallacy. His mistake is a result of “confusing the category of entrepreneurship as it is defined in the imaginary construction of functional distribution with conditions in a living and operating economy.” See Mises’s argument on this, in Human Action, p. 306.

38For an application of this to modern corporation theory as it relates to insider trading, see Henry G. Manne, Insider Trading and the Stock Market (New York: The Free Press, 1966).

39Again see on this Cole, Economic Planning; Eucken and Hutchinson, “On the Theory of the Centrally Administrated Economy” (Parts I & II); and Bornstein, “The Soviet Price System.”

40Fred Taylor, “The Guidance of Production in a Socialist State,” American Economic Review 19, no. 1 (1929).

• 1Professors Hoppe’s publications, including links to translations and a detailed bibliography, are available at his website, www.hanshoppe.com.
• 2“Hans-Hermann Hoppe: Potret Intelektual Anti-Intelektual” [“Interview with Hans-Hermann Hoppe, an Anti-Intellectual Intellectual”], interview by Sukasah Syahdan, Akal dan Kehendak (Indonesia) (Apr. 28, 2008) (English translation available at www.hanshoppe.com/publications).
• 3“Principles of the Property and Freedom Society,” available at www.propertyandfreedom.org (quoting the Opening Declaration from the Inaugural Meeting: Bodrum, Turkey, May 2006).
• 4Hans-Hermann Hoppe, A Theory of Socialism and Capitalism: Economics, Politics, and Ethics (Boston: Kluwer Academic Publishers, 1989), chs. 2 & 7; idem, The Economics and Ethics of Private Property: Studies in Political Economy and Philosophy, 2nd ed. (Auburn, Ala.: Ludwig von Mises Institute, 2006 [1993]), chs. 11–13, 15, and “Appendix: Four Critical Replies.”
• 5Idem, Democracy.
• 6Idem, “Government and the Private Production of Defense,” in idem, ed., The Myth of National Defense: Essays on the Theory and History of Security Production (Auburn, Ala.: Ludwig von Mises Institute, 2003).
• 7On immigration, see Hans-Hermann Hoppe, “The Case for Free Trade and Restricted Immigration,” Journal of Libertarian Studies 13, no. 2 (Summer 1998): 221–33; idem, “Natural Order, the State, and the Immigration Problem,” Journal of Libertarian Studies 16, no. 1 (Winter 2002): 75–97.
• 8Idem, “On Time Preference, Government, and the Process of De-Civilization,” p. 24, n. 25.
• 9Cf. Hoppe’s discussion of Robert Nozick’s “disparate or loosely jointed arguments, conjectures, puzzles, counterexamples, experiments, paradoxes, surprising turns, startling twists, intellectual flashes, and philosophical razzle-dazzle,” in “Murray N. Rothbard and the Ethics of Liberty,” Introduction to Murray N. Rothbard, The Ethics of Liberty, 2nd ed. (New York and London: New York University Press, 1998), pp. xxiv.
• 10Stephan Kinsella & Jeffrey Tucker, “The Ordeal of Hoppe,” The Free Market 26, no. 4 (April 2005).
• 11Ibid., p. 71; and Hans-Hermann Hoppe, Eigentum, Anarchie und Staat: Studien zur Theorie des Kapitalismus (Opladen: Westdeutscher Verlag, 1987).
• 12Hoppe, Democracy, p. 74; and Hans-Hermann Hoppe, The Economics and Ethics of Private Property: Studies in Political Economy and Philosophy (Boston: Kluwer, 1993).
• 13Hoppe, Democracy, p. 71.
• 14Domenico Losurdo, Nietzsche il Ribelle Aristocratico: Biografia Intelettualle e Bilancio Critico (Turin: Bollati Boringhieri, 2002).
• 15Hans-Hermann Hoppe, Der Gott, der keiner ist, Robert Grözinger, trans. (Waltrop & Leipzig: Manuscriptum Verlagsbuchhandlung, 2003), pp. 7–8 (English translation from Hans-Hermann Hoppe, “Demokratie. Der Gott, Der Keiner Ist,” LewRockwell.com (December 5, 2003)). See also similar comments in Hoppe, Democracy, pp. x–xi; and xxiii, noting that “both Mises and Rothbard had a soft spot for democracy and tended to view the transition from monarchy to democracy as progress.”
• 16Caspar von Schrenck-Notzing, Charakterwäsche: Die Politik der amerikanischen Umerziehung in Deutschland (Graz: Ares Verlag, 2004); and Ernst von Salomon, Der Fragebogen, seventeenth ed. (Rowohlt Taschenbuch Verlag, 2007).
• 17Stephan Kinsella, “The Undeniable Morality of Capitalism [review essay of Hoppe’s The Economics and Ethics of Private Property (1993)],” St. Mary’s Law Journal 25 (1994), p. 1434.
• 18Hans-Hermann Hoppe, “Reflections on the Origin and the Stability of the State,” LewRockwell.com (June 23, 2008).
• 19Alan Pendleton Grimes, American Political Thought (New York: Holt, 1960), p. 283.
• 20Michael Vorenberg, Final Freedom: The Civil War, the Abolition of Slavery, and the Thirteenth Amendment (Cambridge: Cambridge University Press, 2001), p. 64.
• 21Eventually, Hoppe turned into a full-blown Austrian when, in the early 1980s, he went to the United States on a prestigious Heisenberg fellowship. This time his research project concerned political philosophy, but it was again squarely built on Austrian economics. In 1986, he became Rothbard’s colleague at the University of Nevada, Las Vegas (UNLV), where he would teach for the next 21 years. After Rothbard’s untimely death in 1995, Professor Hoppe assumed a place of uncontested leadership among Austro-libertarian scholars, becoming the editor of the Journal of Libertarian Studies, a co-editor of the Review of Austrian Economics, and then a co-editor of the Quarterly Journal of Austrian Economics. Professor Hoppe, now Professor Emeritus of Economics at UNLV and Distinguished Fellow with the Ludwig von Mises Institute, also serves on on the editorial board of Libertarian Papers. In addition to authoring numerous scholarly articles, his important books include Handeln und Erkennen (1976), Kritik der Kausalwissenschaftlichen Sozialforschung (1983), Eigentum, Anarchie, und Staat (1987), A Theory of Socialism and Capitalism (1989), The Economics and Ethics of Private Property (1993, enlarged 2nd edition 2006), Democracy—The God that Failed (2001), and The Myth of National Defense (editor, 2003). His works have been translated into at least 21 languages, not counting English.
• 22Among Professor Hoppe’s many achievements we should stress in particular his brilliant critique of positivist methodology as applied to the social sciences, a new praxeological approach to political philosophy, an encompassing comparative analysis of socialism and capitalism, and a theory of secession as a means of political reform. Most importantly, in his book Democracy—The God that Failed, Professor Hoppe has delivered a profound critique of democracy, as well as an original reinterpretation of Western history in the twentieth century, both of which have stirred international debate in academia and among the wider public. Other influential works from his pen have dealt with the role of migrations within a free society, and with the role of public intellectuals in political transformation processes. Moreover, he has excelled as an historian of thought and made path-breaking contributions to other areas such as monopoly theory; the theory of public goods; the sociology of taxation; the positive methodology of the social sciences; the theory of risk; the production of security; the transformation of formerly socialist countries; and the evolution of monetary institutions and their impact on international relations. And Professor Hoppe’s work is ongoing: he is currently working on a major book project that will restate and elaborate on his previous work in the fields of epistemology and ethics—more generally, the nature of human rationality. The goal of the book is to provide “a systematic and interdisciplinary reconstruction of human history (pre-history, hunter-gatherer societies, agricultural societies, industrial societies).”
• 23for justly acquired private property, freedom of contract, freedom of association—which logically implies the right to not associate with, or to discriminate against—anyone in one’s personal and business relations—and unconditional free trade. It condemns imperialism and militarism and their fomenters, and champions peace. It rejects positivism, relativism, and egalitarianism in any form, whether of “outcome” or “opportunity,” and it has an outspoken distaste for politics and politicians.
• 24Hoppe’s axiom of private property is also of crucial importance. If you debate about ethical issues, it means that you presuppose your own right, as well as the right of other people, to debate the issue. This acceptance implies that you do respect the rights of others people involved in the debate to control their own bodies. And the conclusion is crucial: if you even begin debating what is right and what is wrong, it means that you already have acknowledged that private property is necessary and inescapable for any moral judgment. This applies even to those who try to argue against private property. The ethical ground for private property has never been so strong and deep before.
• 25There are also many other fields where Hans Hoppe has pushed the limits of political and economic science. Monarchy is not as bad as democracy, he argues. This was and still is unacceptable to many intellectuals, and most people have followed the lead of the intellectuals because they have had no good arguments to the contrary. A simple reference to the “strong hand” of a dictator was not only politically incorrect and old fashioned, but also contrary to the goals and the image of society most people actually have. Hoppe provides a clear explanation to sort through this intellectual mess. The absence of democracy in public decision-making does not necessarily mean dictatorship and the most terrible exploitation of the people. On the contrary: democracy is the system which leads to dictatorship, exploitation of others, ignorance, and vulgarity.
• 26The private provision of security is another topic which has benefitted from Hoppe’s insights. Every decent person often feels that the police are actually not providing adequate protection. But what is the alternative? Better this than nothing, or so many of those unsatisfied with government tend to conclude. An army of intellectuals is ready to help them reach this conclusion. Hoppe provides sound arguments and explains the economics of the private production of defense. No serious scholar can ignore Hoppe’s important arguments. Those who claim that there will be no security without government are simply mistaken. Now, you can direct them to Hans Hoppe’s works.
• 27Immigration, democracy, regulation—so many bad ideas abound concerning all of these issues, and Hoppe addresses them so well in his writings and speeches.
• 28Hans knows how to present an argument in a way which is very understandable, even to a man of average intellectual capacities. His examples are sometimes so unexpected and direct that they really help or even force you to rethink what you have thought about the world before. It appears very natural for him, for example, to put a footnote in a book with a short explanation why public slavery is even worse than private slavery. It does not mean that Hans tries to be simple. He is just very straightforward. He does not hesitate to criticize even free-market advocates who are not consistent in their argumentation. If you say something absurd or make flawed arguments, he usually will not hide the fact from you. Perhaps for this reason, some people even seem to be intimidated by Hans Hoppe. Understandably, it is not always pleasant to have your arguments smashed in public.
• 29Hans does not present himself as a big scholar. On the contrary, his ambition is not very great when he speaks about the role of the scholar (including himself) in society. It is not his ambition to invent some completely new theory or find a terra incognito. On the contrary, Hoppe claims that the role of a decent scholar is, first of all, to preserve what is already found, explained, and discovered. Not to waste the knowledge of the mankind, but to preserve and explain it in modern language to new generations, is to him an already ambitious task. He does it perfectly. Contrary to many of those who are happy with their ambitious and often fallacious new theories, or with “philosophical razzle-dazzle,” he is always stressing the role of his teachers and predecessors, Rothbard and Mises.
• 30Courage is another thing which goes well with Hans Hoppe’s name. Political correctness is not a good principle to hold to when you are looking for the truth, and while many people pay lip service to the importance of truth, not everyone will defend it even when his own career and name are at stake. But when liberty and the truth are at the stake, Hans Hoppe will never give up. The well-known controversy surrounding an example given about the different time preferences among different groups of people perfectly illustrates this courage.
• 31Significantly, Hans does not hold back in criticizing monarchies for doing in a quite primitive way what democratic administrations have succeeded in accomplishing with less fallout, which is monopolizing power. Like democrats, kings tried to marginalize their opposition by declaring all political authority to be a prerogative of the centralized state. Monarchical sovereignty was a prelude to democratic sovereignty, and it was based the same “original sin,” “the monopolization of the function of judge and peacemaker.” The best form of authority for Hans is, in fact, “the natural order,” one that is “[t]he natural outcome of the voluntary transactions between various private property owners” and which is “decidedly nonegalitarian, hierarchical, and elitist.” Any effort to bring this about in our democratic, late modernity is hailed as a positive step: “Thus, in addition to advocating the abdication of democracy, it is now of central strategic importance that at the same time ideological support be given to all decentralizing or even secessionist social forces.”
• 32Significantly, Hans does not hold back in criticizing monarchies for doing in a quite primitive way what democratic administrations have succeeded in accomplishing with less fallout, which is monopolizing power. Like democrats, kings tried to marginalize their opposition by declaring all political authority to be a prerogative of the centralized state. Monarchical sovereignty was a prelude to democratic sovereignty, and it was based the same “original sin,” “the monopolization of the function of judge and peacemaker.” The best form of authority for Hans is, in fact, “the natural order,” one that is “[t]he natural outcome of the voluntary transactions between various private property owners” and which is “decidedly nonegalitarian, hierarchical, and elitist.” Any effort to bring this about in our democratic, late modernity is hailed as a positive step: “Thus, in addition to advocating the abdication of democracy, it is now of central strategic importance that at the same time ideological support be given to all decentralizing or even secessionist social forces.”
• 33A question that might be raised is whether the generality of humankind would endorse the tendencies that Hans is promoting. Would democratic populations (who have ceased to be citoyens (citizens) or Staatsbürger in any meaningful sense) really want to live in the decentralized, elitist society that Hans recommends, one in which a “natural elite” possess “natural authority,” and, because of “selective mating” and the “laws of civil and genetic inheritance,” these “positions of natural authority are more likely than not passed on within a few noble families.” Why would the majority want to acknowledge these “authority persons,” who presumably would arbitrate conflicts on the basis of the social deference that others extend to them? It is hard to see why most people would accept such arrangements, as opposed to a democracy, in which the promise is made and often fulfilled of redistributing goods to the voters. The question is not whether the democratic state robs from Peter to pay Paul (it obviously does that!) but whether Hans’s “natural order” offers most people what they want. The answer is an emphatic “no” and therefore this order (which looks a bit like Friedrich Hayek’s conception of “spontaneous order”) depends for its realization on the possibility of “decentralization and secession.” Absent such a possibility, this order is in no way feasible.
• 34Two other observations may be appropriate for understanding more fully the libertarianism of the Right that Hans exemplifies. One, this libertarianism is a recognizable subspecies of what the Italian Marxist Domenico Losurdo calls “aristocratic radicalism,” which he explores in voluminous works on Friedrich Nietzsche (1844–1901). According to Losurdo, Nietzsche’s “critique of modernity” is based on his opposition to the leveling tendencies that he perceives in democracy and socialism. It was therefore perfectly consistent for Nietzsche to praise aristocratic societies, including the Indian caste system, and to advocate liberty in the Western world of his time. That is because the state, as Nietzsche understood it, was becoming an instrument of equalization; and its attack on property relations would belong to a larger effort to remove all social and gender distinctions. Nietzsche, as Losurdo points out, also disliked Christianity, because he thought the “slave morality” that pervaded this religion and the culture it nurtured rendered them ineffective against the Left. He therefore broke with classical conservatives, who had viewed established religions as bulwarks against revolution. From Nietzsche’s perspective, Christianity and the Left were related worldviews, and only a new aristocratic order, one that had shed its Christian past, could save civilization from the unfolding of the egalitarian ideal, going from democracy into socialism and feminism.
• 35“Politically incorrect” is what the rulers and in particular the victors among the rulers proclaim. The great victor of the 20th century, in particular as far as Germany is concerned, is the USA. Hence, the USA has determined the “correct” interpretation especially of recent history. Defeated Germany was not only occupied, but also reeducated. Germany’s schools and universities, under almost complete government control, and the governmentally licensed mass media, have proclaimed to this day the official American view of history and in particular of the 20th century as a triumph of good over evil.
• 36It is hard to ignore the likely connection between Hans’s detestation of the “State” in all of its modern manifestations and the use of postwar public administration in West Germany, perhaps even more than in the Communist East, to humiliate his nation. His sense of what was done to “reeducate” defeated Germans after the War, which is documented in detail in Caspar von Schrenk-Notzing’s Charakterwäsche: Die Politik der amerikanischen Umerziehung in Deutschland, has left Hans understandably skeptical about the modern democratic project. His relation as a student to Jürgen Habermas, the German thinker and publicist who more than anyone else in his country has called for a rejection of a German national identity and for the creation of a new “constitutional patriotism,” based on supposedly universal democratic values, may explain even more about Hans’s intellectual odyssey.
• 37His study at the Johann Wolfgang Goethe University with Habermas and Karl-Otto Apel was time well spent, however, as it shaped Hoppe as a first class social scientist and helped him to put forth an “argumentation ethics” defense of individual rights, based in part on the discourse ethics theories of the Frankfurt School. His intellectual independence prevented him from accepting his mentors’ apology for socialism and their anti-capitalist mentality. As one reviewer noted, “Hoppe believes his former teacher Habermas’s discourse-ethics theories, while correct at core, are applied incorrectly by Habermas to yield a socialistic ethic; Hoppe feels that Habermas’s theories, if correctly applied (as Hoppe himself does), yield the libertarian non-aggression norm.”
• 38The first and foremost task of the intellectual anti-intellectuals, then, is to counter this dogmatic slumber of the masses by offering a precise definition of the state, as I have done at the outset, and then to ask if there is not something truly remarkable, odd, strange, awkward, ridiculous, indeed ludicrous about an institution such as this. I am confident that such simple, definitional work will produce some serious doubt regarding an institution that one previously had been taken for granted.
• 39Lieber’s doctrine is “a prophetic conception,” according to Vernon Parrington, based on “the principle of an evolving state that draws all lesser sovereignties into its orbit by the law of attraction.” Parrington was well aware of the importance of Francis Lieber, who “provided a philosophical background” to the legal theory of Joseph Story. “Under the combined legal and philosophical attack the compact theory found its philosophical breastworks leveled, its natural rights theory undermined, and its commanding position effectively turned.” Alan Grimes places Lieber at the transition between “the constitutional and legal approach to an understanding of the nature of the American Union, and the rise of the organic concept of the nation.” The importance of the German professor in shaping the ideas which Lincoln exploited fully has been noticed by other historians. Lieber “had indeed argued before the war that the original Constitution was insufficient to the needs of the nation . . . in the 1830s and 1840s, he had gained prominence, North and South, by attacking the idea of a fixed Constitution.” A staunch advocate of federal growth, he thought “that federal power should expand slowly and organically—and thus constitutionally—as the nation grew. . . . He believed that the war would solidify the Union and thus fulfill his dream, nurtured during his school years in Germany, of living in a modern nation-state.” Later on, during the war Lieber became very popular, wrote dozens of articles and pamphlets in order “to popularize his distinctive brand of nationalism.” In practice, “[h]is many public statements used the South’s insurrection to justify an expansion of federal power beyond what the Constitution expressly sanctioned.”
• 40Lieber’s doctrine is “a prophetic conception,” according to Vernon Parrington, based on “the principle of an evolving state that draws all lesser sovereignties into its orbit by the law of attraction.” Parrington was well aware of the importance of Francis Lieber, who “provided a philosophical background” to the legal theory of Joseph Story. “Under the combined legal and philosophical attack the compact theory found its philosophical breastworks leveled, its natural rights theory undermined, and its commanding position effectively turned.” Alan Grimes places Lieber at the transition between “the constitutional and legal approach to an understanding of the nature of the American Union, and the rise of the organic concept of the nation.” The importance of the German professor in shaping the ideas which Lincoln exploited fully has been noticed by other historians. Lieber “had indeed argued before the war that the original Constitution was insufficient to the needs of the nation . . . in the 1830s and 1840s, he had gained prominence, North and South, by attacking the idea of a fixed Constitution.” A staunch advocate of federal growth, he thought “that federal power should expand slowly and organically—and thus constitutionally—as the nation grew. . . . He believed that the war would solidify the Union and thus fulfill his dream, nurtured during his school years in Germany, of living in a modern nation-state.” Later on, during the war Lieber became very popular, wrote dozens of articles and pamphlets in order “to popularize his distinctive brand of nationalism.” In practice, “[h]is many public statements used the South’s insurrection to justify an expansion of federal power beyond what the Constitution expressly sanctioned.”