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556 KiB
Plaintext
A Theory of Socialism and Capitalism
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Economics, Politics, and Ethics
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Hans-Hermann Hoppe
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The Ludwig von Mises Institute’s
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Studies in Austrian Economics
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Department of Economics
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University of Nevada, Las Vegas
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Kluwer Academic Publishers
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Boston/Dordrecht/London
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Distributors for North America:
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Kluwer Academic Publishers
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101 Philip Drive
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Assinippi Park
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Norwell, Massachusetts 02061 USA
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Distributors for the UK and Ireland:
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Kluwer Academic Publishers
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Falcon House, Queen Square
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Lancaster LA1 1RN, UNITED KINGDOM
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Distributors for all other countries:
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Kluwer Academic Publishers Group
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Distribution Centre
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Post Office Box 322
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3300 AH Dordrecht, THE NETHERLANDS
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Library of Congress Cataloging-in-Publication Data
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Hoppe, Hans-Hermann.
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A theory of socialism and capitalism : economics, politics, and ethics / by Hans-Hermann Hoppe.
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p. cm.
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Includes index.
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ISBN 0-89838-279-3
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1. Socialism. 2. Capitalism. 3. Property 4. Comparative economics. 5. Comparative government. I.
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Title.
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HX73.H67 1988
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306'.3–dc 19 88-14066
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CIP
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Copyright © 1989 by Kluwer Academic Publishers. Second Printing 1990.
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All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted
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in any form or by any means, mechanical, photocopying, recording, or otherwise, without the prior written
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permission of the publisher, Kluwer Academic Publishers, 101 Philip Drive, Assinippi Park, Norwell,
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Massachusetts 02061.
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Printed in the United States of America [p. vi]
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Contents
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About the Author. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii
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Acknowledgments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix
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1. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
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2. Property, Contract, Aggression, Capitalism, Socialism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
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3. Socialism Russian Style . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
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4. Socialism Social-Democratic Style . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
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5. The Socialism of Conservatism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6 5
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6. The Socialism of Social Engineering and the Foundations of Economic Analysis . . . . . . . . . .9 5
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7. The Ethical Justification of Capitalism and Why Socialism is Morally Indefensible . . . . . . . 127
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8. The Socio-Psychological Foundations of Socialism or the Theory of the State . . . . . . . . . . 145
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9. Capitalist Production and the Problem of Monopoly . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167
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10. Capitalist Production and the Problem of Public Goods . . . . . . . . . . . . . . . . . . . . . . . . . . 187
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Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 211
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References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 259
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Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 273 [p. vii]
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About the Author
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Hans-Hermann Hoppe was born on September 2, 1949, in Peine, West Germany. He attended the
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Universitatet des Saarlandes, Saarbruecken, the Goethe-Universitaet, Frankfurt/M, and the University of
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Michigan, Ann Arbor, for studies in Philosophy, Sociology, History, and Economics. He earned his Ph.D.
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(Philosophy, 1974) and his “Habilitation” (Sociology and Economics, 1981), both from the
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Goethe-Universitaet, Frankfurt/M.
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He taught at several German universities as well as at the Johns Hopkins University Bologna Center for
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Advanced International Studies, Bologna, Italy. He is presently a Professor of Economics at the University of
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Nevada, Las Vegas and a Senior Fellow of the Ludwig von Mises Institute.
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Hoppe is the author of Handeln und Erkennen (Bern 1976); Kritik der kausalwissenschaftlichen
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Sozialforschung (Opladen 1983); Eigentum, Anarchie und Staat (Opladen 1987) and numerous articles on
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philosophy, economics and the social sciences. [p. ix]
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Acknowledgements
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Three institutions assisted me while I wrote this treatise. As a Heisenberg Scholar I enjoyed the most
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generous financial support from the German Science Foundation (DFG) from 1982 through 1986. The present
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study is the most recent work I completed during this period. Additional support came from the Johns Hopkins
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University Bologna Center for Advanced In ternational Studies, where I spent the academic year 1984-1985
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as a Visit ing Professor. The lectures delivered there provided the core of what is presented here. Finally,
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during the academic year 1985/86, when my re search took on its present form and which I spent in New
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York City, I received the most unbureaucratic and cordial help from the Center for Libertarian Studies.
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My wife Margaret gave unflagging emotional support for my work. She also took on the task, often
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enough against my stubborn resistance, of edit ing my writing in a foreign language.
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My deepest gratitude is to my teacher and friend Murray N. Rothbard. To his scholarly and personal
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example I owe more than I can properly express. He read an earlier draft of the study and provided me with
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invaluable comments. Innumerous discussions with him were a never ending source of inspiration and his
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enthusiasm was a constant encouragement.
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To these people and institutions I owe a sincere “thank you.” [p. 1]
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A Theory of Socialism and Capitalism
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Chapter 1
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Introduction
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The following study on the economics, politics and morals of socialism and capitalism is a systematic
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treatise on political theory. Interdisciplinary in scope, it will discuss the central problems of political economy
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and political philosophy: how to organize society so as to promote the production of wealth and eradicate
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poverty, and how to arrange it so as to make it a just social order.
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But in doing this I will also constantly touch upon and illuminate social and political problems in the
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narrower, more common sense of these terms. In fact, it is one of the major goals of this treatise to develop
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and explain the conceptual and argumentative tools, economic and moral, needed to analyze and evaluate any
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kind of empirical social or political system, to understand or appraise any process of social change, and to
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explain or interpret similarities as well as differences in the social structure of any two or more different
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societies.
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At the end of the treatise it should be clear that only by means of a theory, economic or moral, which is
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not itself derived from experience but rather starts from a logically incontestable statement (which is something
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very different from an “arbitrarily postulated axiom”) and proceeds in a purely deductive way (perhaps using
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some explicitly introduced empirical and empirically testable assumption, in addition) to results which are
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themselves logically unassailable (and thus require no empirical testing whatsoever), will it become possible to
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organize or interpret an otherwise chaotic, overly complex array of unconnected, isolated facts or opinions
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about social reality to form a true, coherent economic or moral conceptual system. Hopefully it will be
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demonstrated that without such a theory, political economy and philosophy can be considered nothing other
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than groping in [p. 2] the dark, producing, at best, arbitrary opinions on what might have caused this or that, or
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what is better or worse than something else: opinions, that is, whose opposites can generally be defended as
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easily as the original posi tions themselves (which is to say that they cannot be defended in any strict sense at
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all!).
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Specifically, a theory of property and property rights will be developed. It will be demonstrated that
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socialism, by no means an invention of nineteenth century Marxism but much older, must be conceptualized as
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an institutionalized interference with or aggression against private property and private property claims.
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Capitalism, on the other hand, is a social system based on the explicit recognition of private property and of
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nonaggressive, contractual exchanges between private property owners. Implied in this remark, as will become
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clear in the course of this treatise, is the belief that there must then exist varying types and degrees of socialism
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and capitalism, i.e., varying degrees to which private property rights are respected or ig nored. Societies are
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not simply capitalist or socialist. Indeed, all existing societies are socialist to some extent. (Even the United
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States, certainly a society that is relatively more capitalist than most others, is, as will become apparent,
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amazingly socialist and has gradually become more so over time.)
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One goal then, is to demonstrate that the overall degree of socialism, i.e., the overall degree of
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interference with property rights that exists in a given country, explains its overall wealth. The more socialist a
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country, the more hampered will be the process of production of new and the upkeep of old, existing wealth,
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and the poorer the country will remain or become.1 The fact that the United States is, by and large, richer than
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Western Europe, and West Germany much richer than East Germany can be explained by their lesser degree
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of socialism, as can the fact that Switzerland is more prosperous than Austria, or that England, in the nineteenth
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century the richest country in the world, has now fallen to what is aptly called an underdeveloping [p. 3]
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country.
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But the concern here will not be exclusively with the overall wealth ef fects, nor with the economic side
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of the problem alone. For one thing, in analyzing different types of socialism for which there exist real, historical
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examples (examples which, to be sure, very often are not called socialism, but are given a more appealing
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name2), it is important to explain why, and in what way, every intervention anywhere, big or small, here or
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there, produces a particular disruptive effect on the social structure which a superficial, theoretically untrained
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observer, blinded by an immediate “positive” consequence of a particular intervention, might not perceive. Yet
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this negative effect nonetheless exists, and with some delay will cause problems at a different place in the social
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fabric more numerous or severe than the ones originally solved by the initial act of intervening. Thus, for
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instance, highly visible positive effects of socialist policies such as “cheap food prices,” “low rents,” “free” this
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and “free” that, are not just positive things hanging in midair, unconnected to everything else, but rather are
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phenomena that have to be paid for somehow: by less and lower quality food, by housing shortages, decay
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and slums, by queuing up and corruption, and, further, by lower living standards, reduced capital-formation,
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and/or increased capital consumption. And a much less conspicuous but almost always “positively” mentioned
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fact—a greater feeling of solidarity among the people, the greater value attached to things like family, relatives,
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or friends, which is found to exist between, for instance, the East Germans as compared to their more
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“individualistic,” egoistic West/German counterparts—is again not a simple, isolated, unanalyzable fact. Such
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feelings are the result of a social system of constant shortages and of continually repressed opportunities to
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improve one’s situation by one’s own means. In East Germany, in order to accomplish the most simple routine
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tasks, such as a house repair which in other countries requires no more than a telephone call, you simply must
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rely [p. 4] more heavily on “personal” relations (as compared to impersonal business relations); and where
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someone’s “public” life is under constant observation by “society,” you simply have to go private.
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Analyzed in some detail are the particular disruptive effects that are produced: (1) by a traditional
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Marxist policy of nationalizing or socializing the means of production, or rather, by the expropriation of private
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owners of means of production; (2) by a revisionist, social-democratic policy of egalitarian income
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redistribution; (3) by a conservatively minded policy of attempting to preserve the status quo through economic
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and behavioral regulations and price controls; and (4) by a technocratically minded system of pragmatic,
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piecemeal social and economic engineering and intervention.
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These policy types, which will be analyzed sequentially, are not com pletely homogeneous and mutually
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exclusive. Each one can be carried through to varying degrees, there are different ways of doing things under
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each of these categories of policy and the different policy schemes can be combined to a certain extent. In fact,
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every given society is a mixture of all of them as it is the result of diverse political forces which have varied at
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different times in strength and influence. The reason for analyzing them separately (apart from the obvious one
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that not all problems can be dis cussed at once) is that they constitute policy schemes associated with clear ly
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distinguishable social groups, movements, parties, etc., and that each policy scheme affects overall wealth in a
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somewhat different way.
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And socialism will by no means be analyzed solely from an economic point of view. Of course,
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socialism, especially its Marxist or so-called “scientific” brand, has always pretended to be an economically
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superior organization of society (apart from all of its other alleged qualities) compared to the so-called
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“anarchy of production” of capitalism3. But socialism does not [p. 5] collapse once it is demonstrated that in
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fact the opposite is true and it brings impoverishment, not wealth. Certainly, socialism loses much of its attrac
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tiveness for most people once this is understood. However, it is definitely not at its argumentative end so long
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as it can claim—whatever its economic performance may be—that it represents a higher morality, that it is
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more just, that it has an ethically superior foundation.
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Hopefully however, by a close analysis of the theory of property implicit in the different versions of
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socialism, this treatise will make clear that noth ing could be farther from the truth. It will be demonstrated that
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the property theory implicit in socialism does not normally pass even the first decisive test (the necessary if not
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sufficient condition) required of rules of human conduct which claim to be morally justified or justifiable. This
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test, as for mulated in the so-called golden rule or, similarly, in the Kantian categorical imperative, requires that
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in order to be just, a rule must be a general one applicable to every single person in the same way. The rule
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cannot specify different rights or obligations for different categories of people (one for the red-headed, and one
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for others, or one for women and a different one for men), as such a “particularistic” rule, naturally, could
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never, not even in principle, be accepted as a fair rule by everyone. Particularistic rules, however, of the type
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“I can hit you, but you are not allowed to hit me,” are, as will become clear in the course of this treatise, at the
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very base of all practiced forms of socialism. Not only economically but in the field of morals, too, socialism
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turns out to be an ill-conceived system of social organization. Again, in spite of its bad public reputation, it is
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capitalism, a social system based squarely on the recognition of private property and of contractual relations
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between owners of private property, that wins outright. It will be demonstrated that the property theory implicit
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in capitalism not only passes the first test of “universalization” but it turns out to be the logical precondition (die
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Bedingung der Moeglichkeit) of any kind of argumentative justification: [p. 6] Whoever argues in favor of
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anything, and in particular in favor of certain norms as being fair, must, implicitly at least, presuppose the
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validity of the property norms implicit in capitalism. To deny their validity as norms of universal acceptability
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and argue in favor of socialism is thus self-contradictory.
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The reconstruction of the morals of private property and its ethical jus tification then leads to a
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reevaluation of socialism and, as it turns out, the institution of the state, depending as it does for its very
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existence on taxation and forced membership (citizenship), as the very incorporation of socialist ideas on
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property. Without any solid economic or moral reasons for their existence, socialism and the state are then
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reduced to and will be explained as phenomena of merely socio-psychological relevance.
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Led by such considerations, the discussion finally returns to economics. The concluding chapters deal
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with the constructive task of explaining the workings of a pure capitalist social order as the morally and
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economically required alternative to socialism. More specifically, they will be devoted to an analysis of how a
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social system based on a private property ethics would come to grips with the problem of monopoly and the
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production of so-called “public goods,” and in particular with the production of security, i.e., of police and
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judicial services. It will be argued that, contrary to much that has been written in the economics literature on
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monopoly and public goods, neither problem exists or, if they did exist, would still not suffice in any meaningful
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sense to prove any economic deficiency in a pure market system. Rather, a capitalist order always, without
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exception and necessarily so, provides in the most efficient way for the most urgent wants of voluntary
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consumers, including the areas of police and the courts. With this constructive task completed, the argument
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will have been brought full circle, and the demolition of the intellectual credibility of socialism, morally and
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economically, should be complete. [p. 7]
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Chapter 2
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Property, Contract, Aggression,
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Capitalism, Socialism
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Before advancing to the more exciting field of analyzing diverse policy schemes from the standpoint of
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economic theory and political philosophy, it is essential to introduce and explain the basic concepts used
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throughout the following study. Indeed, the concepts explained in this chapter—the concepts of property,
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contract, aggression, capitalism and socialism—are so basic, so fundamental, that one cannot even avoid
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making use of them, if at times only implicitly. Unfortunately, though, the very fact that in analyzing any kind of
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human action and/or any kind of interpersonal relationship one must make use of these concepts does not
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imply that everyone has a precise understanding of them. It seems instead to be the other way around.
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Because the concept of property, for instance, is so basic that everyone seems to have some immediate
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understanding of it, most people never think about it carefully and can, as a consequence, produce at best a
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very vague definition. But starting from imprecisely stated or assumed definitions and building a complex
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network of thought upon them can lead only to intellectual disaster. For the original imprecisions and loopholes
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will then pervade and distort everything derived from them. To avoid this the concept of property must first be
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clarified.
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Next to the concept of action, property is the most basic category in the social sciences. As a matter
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of fact, all other concepts to be introduced in this chapter—aggression, contract, capitalism and socialism—are
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definable in terms of property: aggression being aggression against property, contract being a nonaggressive
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relationship between property owners, socialism being an institutionalized policy of aggression against
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property, and capitalism being an institutionalized policy of the recognition of property and contractualism. [p.
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8]
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Let us start with an elucidation of the precondition necessary for the concept of property to emerge.1
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For a concept of property to arise, there must be a scarcity of goods. Should there be no scarcity, and should
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all goods be so-called “free goods” whose use by any one person for any one purpose would not in any way
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exclude (or interfere with or restrict) its use by any other person or for any other purpose, then there would be
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no need for property. If, let us say, due to some paradisiac superabundance of bananas, my present
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consumption of bananas does not in any way reduce my own future supply (possible consumption) of bananas,
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nor the present or the future supply of bananas for any other person, then the assignment of property rights,
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here with respect to bananas, would be superfluous. To develop the concept of property, it is necessary for
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goods to be scarce, so that conflicts over the use of these goods can possibly arise. It is the func tion of
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property rights to avoid such possible clashes over the use of scarce resources by assigning rights of exclusive
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ownership. Property is thus a normative concept: a concept designed to make a conflict-free interaction
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possible by stipulating mutually binding rules of conduct (norms) regarding scarce resources.2 It does not need
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much comment to see that there is indeed scarcity of goods, of all sorts of goods, everywhere, and the need
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for property rights is thus evident. As a matter of fact, even if we were to as sume that we lived in the Garden
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of Eden, where there was a superabun dance of everything needed not only to sustain one’s life but to indulge
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in every possible comfort by simply stretching out one’s hand, the concept of property would necessarily have
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to evolve. For even under these “ideal” cir cumstances, every person’s physical body would still be a scarce
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resource and thus the need for the establishment of property rules, i.e., rules regard ing people’s bodies, would
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exist. One is not used to thinking of one’s own body in terms of a scarce good, but in imagining the most ideal
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situation one could ever hope for, the Garden of Eden, it becomes possible to realize [p. 9] that one’s body is
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indeed the prototype of a scarce good for the use of which property rights, i.e., rights of exclusive ownership,
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somehow have to be established, in order to avoid clashes.
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As a matter of fact, as long as a person acts,3 i.e., as long as a person intentionally tries to change a
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state of affairs that is subjectively perceived and evaluated as less satisfactory into a state that appears more
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rewarding, this action necessarily involves a choice regarding the use of this person’s body. And choosing,
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preferring one thing or state over another, evidently implies that not everything, not all possible pleasures or
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satisfactions, can be had at one and the same time, but rather that something considered less valuable must be
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given up in order to attain something else considered to be more valuable.4 Thus choosing always implies the
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incurrence of costs: foregoing possible enjoyments because the means needed to attain them are scarce and
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are bound up in some alternative use which promises returns valued more highly than the opportunities
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forfeited.5 Even in the Garden of Eden I could not simultaneously eat an apple, smoke a cigarette, have a
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drink, climb up a tree, read a book, build a house, play with my cat, drive a car, etc. I would have to make
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choices and could do things only sequen tially. And this would be so because there is only one body that I can
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use to do these things and enjoy the satisfaction derived from doing them. I do not have a superabundance of
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bodies which would allow me to enjoy all possible satisfactions simultaneously, in one single bliss. And I would
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be restrained by scarcity in another respect as well: as long as this scarce resource “body” is not indestructible
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and is not equipped with eternal health and energy, but rather is an organism with only a limited life span, time
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is scarce, too. The time used up in pursuing goal A reduces the time left to pursue other goals. And the longer
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it takes to reach a desired result, the higher the costs involved in waiting will be, and the higher the expected
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satisfaction must be in order to justify these costs. [p. 10]
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Thus, because of the scarcity of body and time, even in the Garden of Eden property regulations
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would have to be established. Without them, and assuming now that more than one person exists, that their
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range of action overlaps, and that there is no preestablished harmony and synchronization of interests among
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these persons, conflicts over the use of one’s own body would be unavoidable. I might, for instance, want to
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use my body to enjoy drinking a cup of tea, while someone else might want to start a love affair with it, thus
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preventing me from having my tea and also reducing the time left to pursue my own goals by means of this
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body. In order to avoid such possible clashes, rules of exclusive ownership must be formulated. In fact, so long
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as there is action, there is a necessity for the establishment of property norms.
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To keep things simple and free of distracting details let us continue to assume, for another stretch of
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analysis, that we indeed inhabit a Garden of Eden, where exclusively one’s body, its standing room, and time
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are scarce resources. What can the prototype of a scarce good, a person’s body, tell us about property and
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its conceptual derivatives?
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While even in a world with only one type of scarce resource all sorts of norms regulating exclusive
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ownership with respect to scarce means are conceivable in principle (for example, a rule such as “On
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Mondays I deter mine to which uses our bodies can be put, on Tuesdays you determine their use,” etc.), it is
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certain that not all of them would in fact have the same chance of being proposed and accepted. It then seems
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to be best to start one’s analysis with the property norm, which would most likely be accepted by the
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inhabitants of Eden as the “natural position” regarding the assignment of rights of exclusive ownership in
|
||
bodies. To be sure, at this stage of the argument we are not yet concerned with ethics, with the problem of the
|
||
moral justification of norms. Thus, while it can well be admitted from the very outset that I am indeed going to
|
||
argue later on that the natural position [p. 11] is the only morally defendable one, and while I am also
|
||
convinced that it is the natural one because it is morally defendable, at this stage, natural does not imply any
|
||
moral connotation. It is simply meant to be a socio-psychological category used to indicate that this position
|
||
would probably find the most support in public opinion.6 Indeed, its naturalness is reflected by the very fact
|
||
that in talking about bodies, it is almost impossible to avoid using possessive (possession-indicating)
|
||
expressions as well. A body is normally referred to as a specific person’s body: my body, yours, his, etc. (and,
|
||
incidentally, the same is done whenever one speaks of actions!); and one does not have the slightest problem
|
||
distinguishing what is mine, yours, etc.; clearly, in doing so, one is assigning property-titles and distinguishing
|
||
between proper owners of scarce resources.
|
||
What, then, is the natural position regarding property implicit in one’s natural way of speaking about
|
||
bodies? Every person has the exclusive right of ownership of his body within the boundaries of its surface.
|
||
Every person can put his body to those uses that he thinks best for his immediate or long-run interest,
|
||
well-being, or satisfaction, as long as he does not interfere with another person’s rights to control the use of
|
||
his/her respective body. This “ownership” of one’s own body implies one’s right to invite (agree to) another
|
||
person’s doing something with (to) one’s own body: my right to do with my body whatever I want, that is,
|
||
includes the right to ask and let someone else use my body, love it, examine it, inject medicines or drugs into it,
|
||
change its physical appearance and even beat, damage, or kill it, if that should be what I like and agree to.
|
||
Interpersonal relationships of this sort are and will be called contractual exchanges. They are characterized
|
||
by the fact that an agreement on the use of scarce resources is reached, which is based on mutual respect and
|
||
recognition of each and all of the exchanging partners’ domain of exclusive control over their respective
|
||
bodies. By definition, such contractual exchanges, while not necessarily advantageous for each and all [p. 12]
|
||
of the exchanging partners in retrospect (I might not like my looks after wards, even though the surgeon did
|
||
exactly what I told him to do to my face), are always, and necessarily so, mutually advantageous for every par
|
||
ticipant ex ante, otherwise the exchange simply would not take place.
|
||
If, on the other hand, an action is performed that uninvitedly invades or changes the physical integrity of
|
||
another person’s body and puts this body to a use that is not to this very person’s own liking, this action,
|
||
according to the natural position regarding property, is called aggression.7 It would be aggression if a person
|
||
tried to satisfy his sexual or sadistic desires by raping or beating another person’s body without having this
|
||
person’s explicit con sent. And it would be aggression as well, if a person were physically stopped from
|
||
performing certain actions with his body which might not be to someone else’s liking, such as wearing pink
|
||
socks or curly hair, or getting drunk everyday, or first sleeping and then philosophizing instead of doing it the
|
||
other way around, but which, if indeed performed, would not in itself cause a change in the physical integrity of
|
||
any other person’s body.8 By definition, then, an aggressive act always and necessarily implies that a person,
|
||
by performing it, increases his/her satisfaction at the expense of a decrease in the satisfaction of another
|
||
person.
|
||
What is the underlying rationale of this natural position regarding proper ty? At the bottom of the
|
||
natural property theory lies the idea of basing the assignment of an exclusive ownership right on the existence
|
||
of an objective, intersubjectively ascertainable link between owner and the property owned and, mutatis
|
||
mutandis, of calling all property claims that can only invoke purely subjective evidence in their favor aggressive.
|
||
While I can cite in favor of my property claim regarding my body the objective fact that I was the body’s first
|
||
occupant—its first user—anyone else who claims to have the right to control this body can cite nothing of the
|
||
sort. No one could call my body a product of his will, as I could claim it to be the product of mine; such [p.
|
||
13] a claim to the right to determine the use of the scarce resource “my body” would be a claim of nonusers,
|
||
of nonproducers, and would be based ex clusively on subjective opinion, i.e., on a merely verbal declaration
|
||
that things should be this or that way. Of course, such verbal claims could (and very likely always will) point to
|
||
certain facts, too (“I am bigger, I am smarter, I am poorer or I am very special, etc.!”), and could thereby try
|
||
to legitimize themselves. But facts such as these do not (and cannot) establish any objective link between a
|
||
given scarce resource and any particular person(s). Everyone’s ownership of every particular resource can
|
||
equally well be established or excluded on such grounds. It is such property claims, derived from thin air, with
|
||
purely verbal links between owners and things owned, which, according to the natural theory of property, are
|
||
called aggressive. As compared with this, my property claim regarding my body can point to a determinate
|
||
natural link; and it can do so because my body has been produced, and everything produced (as contrasted
|
||
with things “given”), logically, has a determinate connection with some definite individual producer(s); it has
|
||
been produced by me. To avoid any misunderstanding, ‘to produce” is not to say “to create out of nothing”
|
||
(after all, my body is also a naturally given thing); it means to change a naturally given thing according to a plan,
|
||
to transform nature. It is also not to say “to transform each and every part of it” (after all, my body has lots of
|
||
parts with respect to which I never did anything!); it means instead to transform a thing within
|
||
(including/excluding) borders, or, even more precisely, to produce borderlines for things. And finally, “to
|
||
produce” also is not to say that the process of production must go on indefinitely (after all, I am sleeping
|
||
sometimes, and my body is certainly not a product of my actions right then]), it simply means that it was
|
||
produced in the past and can be recognized as such. It is such property claims, then, which can be derived
|
||
from past, embordering productive efforts and which can be tied to specific individuals as producers, which
|
||
are [p. 14] called “natural” or “nonaggressive.”9
|
||
The ideas of capitalism and socialism should be almost clear at this point. But before leaving the
|
||
Garden of Eden once and for all, a look at the consequences of the introduction of elements of aggressively
|
||
founded ownership into paradise should be taken, as this will help elucidate, purely and simply, the central
|
||
economic and social problem of every type of real socialism, i.e., of socialism in a world of all-around scarcity,
|
||
the detailed analysis of which then is the concern of the following chapters.
|
||
Even in the land of milk and honey, people evidently could choose dif ferent lifestyles, set different
|
||
goals for themselves, have different standards as to what kind of personality they want to develop and what
|
||
achievements to strive for. True, one would not need to work in order to make a living as there would be a
|
||
superabundance of everything. But, put drastically, one could still choose to become a drunk or a philosopher,
|
||
which is to say, more technically, one could choose to put one’s body to uses that would be more or less
|
||
immediately rewarding from the point of view of the acting person, or one could put one’s body to such uses
|
||
which would only bear fruit in a more or less distant future. Decisions of the afore-mentioned type might be
|
||
called “consumption decisions.” Decisions, on the other hand, to put one’s body to a use that only pays later,
|
||
i.e., choices induced by some reward or satisfaction anticipated in a more or less distant future requiring the
|
||
actor to overcome disutility of waiting (time is scarce!), might be called “investment” decisions—decisions, that
|
||
is, to invest in “human capital,” in the capital embodied in one’s own physical body.10 Now assume that
|
||
aggressively founded ownership is introduced. Whereas before every person was the exclusive owner of his
|
||
body and could decide on his own whether to become a drunk or a philosopher, now a system is established
|
||
in which a person’s right to determine how to use his body is curtailed or completely eliminated, and instead,
|
||
this right is partly or fully delegated to another person [p. 15] who is not naturally linked to the respective body
|
||
as its producer. What would be the consequence of this? The abolition of private ownership of one’s body can
|
||
be far-reaching: the nonproducers can have the right to determine all of the uses of “my” body all of the time,
|
||
or their right to do so can be restricted with respect to time and/or domains, and these restrictions again can be
|
||
flexible (with the nonproducers having the right to change the restrictive definitions according to their own
|
||
taste) or fixed once and for all, and so the effects can, of course, be more or less drastic! But whatever the
|
||
degree, socialization of ownership always, and necessarily so, produces two types of effects. The first effect,
|
||
“economic” in the narrower sense of the term, is a reduction in the amount of investment in human capital as
|
||
defined above. The natural owner of a body cannot help but make decisions regarding that body as long as he
|
||
does not commit suicide and decides to stay alive, however restricted his ownership rights might be. But since
|
||
he can no longer decide on his own, undisturbed by others, to what uses to put his body, the value attached to
|
||
it by him is now lower; the want satisfaction, the psychic income, that is to say, which he can derive from his
|
||
body by putting it to certain uses is reduced because the range of options available to him has been limited. But
|
||
then, with every action necessarily implying costs (as explained above), and with a given inclination to
|
||
overcome costs in exchange for expected rewards or profits, the natural owner is faced with a situation in
|
||
which the costs of action must be reduced in order to bring them back in line with the reduced expected
|
||
income. In the Garden of Eden, there is only one way left to do this: by shortening the waiting time, reducing
|
||
the disutility of waiting, and choosing a course of action that promises earlier returns. Thus, the introduction of
|
||
aggressively founded ownership leads to a tendency to reduce investment decisions and favors consumption
|
||
decisions. Put drastically, it leads to a tendency to turn philosophers into drunks. This tendency is permanent
|
||
and more [p. 16] pronounced when the threat of intervention with the natural owner’s rights is permanent, and
|
||
it is less so to the degree that the threat is restricted to certain times or domains. In any case, though, the rate
|
||
of investment in human capital is lower than it would be with the right of exclusive control of natural owners
|
||
over their bodies being untouched and absolute.
|
||
The second effect might be called social. The introduction of elements of aggressively founded
|
||
ownership implies a change in the social structure, a change in the composition of society with respect to
|
||
personality or character types. Abandoning the natural theory of property evidently implies a redistribution of
|
||
income. The psychic income of persons in their capacity as users of their “own” natural body, as persons
|
||
expressing themselves in this body and deriving satisfaction from doing so, is reduced at the expense of an
|
||
increase in the psychic income of persons in their capacity as invaders of other peoples’ bodies. It has become
|
||
relatively more difficult and costly to derive satisfaction from using one’s body without invading that of others,
|
||
and relatively less difficult and costly to gain satisfaction by using other peoples’ bodies for one’s own
|
||
purposes. This fact alone does not imply any social change, but once a single empirical assumption is made, it
|
||
does: As suming that the desire to gain satisfaction at the expense of a loss in satis faction available to others by
|
||
instrumentalizing another person’s body exists as a human desire, that it may not be instilled in everybody and
|
||
to the same extent, but that it exists in some people sometimes to some degree and so conceivably can be
|
||
suppressed or encouraged and favored by some given institutional arrangement, consequences are imminent.
|
||
And surely, this as sumption is true. Then, the redistribution of chances for income acquisition must result in
|
||
more people using aggression to gain personal satisfaction and/or more people becoming more aggressive, i.e.,
|
||
shifting increasingly from nonaggressive to aggressive roles, and slowly changing their per sonality as a
|
||
consequence of this; and this change in the character structure, [p. 17] in the moral composition of society, in
|
||
turn leads to another reduction in the level of investment in human capital.
|
||
In short, with these two effects we have already pinpointed the most fun damental reasons for
|
||
socialism’s being an economically inferior system of property arrangements. Indeed, both effects will reappear
|
||
again and again in the course of the following analyses of socialist policy schemes. All that is left now is to
|
||
explain the natural theory of property as regards the real world of all around scarcity, for this is the point of
|
||
departure for all forms of real socialism.
|
||
Notwithstanding some evident differences between bodies and all other scarce resources, all
|
||
conceptual distinctions can be made and applied again without difficulties: Unlike bodies, which are never
|
||
“unowned” but always have a natural owner, all other scarce resources can indeed be unowned. This is the
|
||
case as long as they remain in their natural state, unused by anyone. They only become someone’s property
|
||
once they are treated as scarce means, that is, as soon as they are occupied in some objective bor ders and
|
||
put to some specific use by someone. This act of acquiring pre viously unowned resources is called “original
|
||
appropriation.”11 Once unowned resources are appropriated it becomes an aggression to uninvitedly change
|
||
their physical characteristics or to restrict the owner’s range of uses to which he can put these resources, as
|
||
long as a particular use does not affect the physical characteristics of anyone else’s property—just as in the
|
||
case of bodies. Only in the course of a contractual relationship, i.e., when the natural owner of a scarce means
|
||
explicitly agrees, is it possible for someone else to utilize and change previously acquired things. And only if the
|
||
original or previous owner deliberately transfers his property title to someone else, either in exchange for
|
||
something or as a free gift, can this other person himself become the owner of such things. Unlike bodies,
|
||
though, which for the same “natural” reason can never be unowned and also [p. 18] can never be parted with
|
||
by the natural owner completely but only be “lent out” as long as the owners’ agreement lasts, naturally all
|
||
other scarce resources can be “alienated” and a property title for them can be relinquished once and for all.12
|
||
A social system based on this natural position regarding the assignment of property rights is, and will
|
||
from now on be called pure capitalist. And since its ideas can also be discerned as the dominating ideas of
|
||
private law, i.e., of the norms regulating relations between private persons, it might also be termed a pure
|
||
private law system.13 This system is based on the idea that to be nonaggressive, claims to property must be
|
||
backed by the “objective” fact of an act of original appropriation, of previous ownership, or by a mutually
|
||
beneficial contractual relationship. This relationship can either be a deliberate cooperation between property
|
||
owners or the deliberate transfer of property titles from one owner to another. If this system is altered and
|
||
instead a policy is instituted that assigns rights of exclusive control over scarce means, however partial, to
|
||
persons or groups of persons that can point neither to an act of previous usership of the things concerned, nor
|
||
to a contractual relation with some previous user-owner, then this will be called (partial) socialism.
|
||
It will be the task of the next four chapters to explain how different ways of deviating from a pure
|
||
capitalist system, different ways of redistributing property titles away from natural owners of things (i.e., from
|
||
people who have put some particular resources to a specific use and so are naturally linked to them, and onto
|
||
people who have not yet done anything with the resources but who have simply made a verbal, declarative
|
||
claim regarding them) lowers investment and increases consumption, and in addition causes a change in the
|
||
composition of the population by favoring nonproductive over productive people. [p. 19]
|
||
Chapter 3
|
||
Socialism Russian Style
|
||
We have defined socialism as an institutionalized policy of redistribution of property titles. More
|
||
precisely, it is a transfer of property titles from people who have actually put scarce means to some use or who
|
||
have acquired them contractually from persons who have done so previously onto persons who have neither
|
||
done anything with the things in question nor acquired them contractually. For a highly unrealistic world—the
|
||
Garden of Eden—I then pointed out the socio-economic consequences of such a system of assigning property
|
||
rights were then pointed out: a reduction of investment in human capital and increased incentives for the
|
||
evolution of nonproductive personality types.
|
||
I now want to enlarge and concretize this analysis of socialism and its socio-economic impact by
|
||
looking at different though equally typical ver sions of socialism. In this chapter I will concentrate on the
|
||
analysis of what most people have come to view as “socialism par excellence” (if not the only type of socialism
|
||
there is), this probably being the most appropriate starting point for any discussion of socialism. This “socialism
|
||
par excellence” is a social system in which the means of production, that is, the scarce resources used to
|
||
produce consumption goods, are “nationalized” or “socialized.”
|
||
Indeed, while Karl Marx, and like him most of our contemporary intel lectuals of the left, was almost
|
||
exclusively concerned with the analysis of the economic and social defects of capitalism, and in all of his
|
||
writings made only a few general and vague remarks about the constructive problem of the organization of the
|
||
process of production under socialism, capitalism’s allegedly superior alternative, there can be no doubt that
|
||
this is what he considered the cornerstone of a socialist policy and the key to a better and more prosperous
|
||
future. 1 Accordingly, socialization of the means of production [p. 20] has been advocated by all socialists of
|
||
orthodox Marxist persuasion ever since. It is not only what the communist parties of the West officially have in
|
||
store for us, though they become increasingly reluctant to say so in order to seize power. In all of the Western
|
||
socialist and social-democratic parties a more or less numerous, outspoken, and eloquent minority of some in
|
||
fluence also exists, which arduously supports such a scheme and proposes socialization, if not of all means of
|
||
production, then at least of those of big industry and big business. Most importantly, smaller or bigger sectors
|
||
of nationalized industries have become part of social reality even in the so-called “most capitalist” countries;
|
||
and of course an almost complete socialization of the means of production has been tried out in the Soviet
|
||
Union and later in all of the Soviet-dominated countries of Eastern Europe, as well as in a number of other
|
||
countries all over the world. The following analysis should thus enable us to understand the economic and
|
||
social problems of societies, insofar as they are characterized by nationalized means of production. And in
|
||
particular, it should help us to understand the central problems that plague Russia and its satellites, as these
|
||
countries have carried a policy of socialization so far that it can justly be said to be their dominant structural
|
||
feature. It is because of this fact that the type of socialism under investigation is called “Russian” style.2
|
||
As regards the motivational forces pushing socialization schemes, they are avowedly egalitarian. Once
|
||
you allow private property in the means of production, you allow differences. If I own resource A, then you do
|
||
not own it, and our relationship to this resource is thus different. By abolishing private ownership everyone’s
|
||
position visa vis means of production is equalized with one stroke, or so it seems. Everyone becomes
|
||
co-owner of everything, reflecting everyone’s equal standing as human beings. And the economic rationale of
|
||
such a scheme is that it is supposedly more efficient. To the untrained observer unfamiliar with the
|
||
action-coordinating function of prices, [p. 21] capitalism as based on private ownership of means of
|
||
production simply appears chaotic. It seems to be a wasteful system characterized by duplicating efforts,
|
||
ruinous competition, and the absence of concerted, coordinated action. As Marxists call it depreciatively, it is
|
||
an “anarchy of production.” Only when collective ownership is substituted for private does it seemingly
|
||
become possible to eliminate this waste by implementing a single, comprehensive, coordinated production
|
||
plan.
|
||
More important, though, than motivation and promises is what a socialization of means of production
|
||
really amounts to.3 The property rules that are adopted under a socialization policy and which constitute the
|
||
basic legal principles of countries like Russia are characterized by two com plementary features. First, nobody
|
||
owns the socialized means of produc tion; they are “socially” owned, which is to say precisely: no person, or
|
||
no group of persons, or all taken together is allowed to either acquire them or sell them and keep the receipts
|
||
from their sale privately. Their use is deter mined by people not in the role of an owner but of a caretaker of
|
||
things. And secondly, no person or group of persons or all taken together is allowed to engage newly in private
|
||
investment and create new private means of production. They can neither invest by transforming the existing,
|
||
nonproductively used resources into productive ones, by original saving, by pooling resources with other
|
||
people, nor by a mixture of these techniques. Investment can only be done by caretakers of things, never for
|
||
private profit, always on behalf of the community of caretakers with whom the possible profits from
|
||
investments would have to be shared.4
|
||
What does it mean to have such a caretaker economy?. What, in par ticular, does it imply to change
|
||
from an economy built on the natural theory of property to a socialized one? In passing, two observations
|
||
should be made, which will already throw some light on the above-mentioned socialist promises of equality and
|
||
efficiency. Declaring everybody a co-owner of [p. 22] everything solves the problem of differences in
|
||
ownership only nominally. It does not solve the real underlying problem: differences in the power to control. In
|
||
an economy based on private ownership, the owner determines what should be done with the means of
|
||
production. In a socialized economy this can no longer happen, as there is no such owner. Nonetheless, the
|
||
problem of determining what should be done with the means of production still exists and must be solved
|
||
somehow, provided there is no prestabilized and presynchronized harmony of interests among all of the people
|
||
(in which case no problems whatsoever would exist anymore), but rather some degree of disagreement. Only
|
||
one view as to what should be done can in fact prevail and others must mutatis mutandis be excluded. But then
|
||
again there must be inequalities between people: someone’s or some groups’ opinion must win over that of
|
||
others. The difference between a private property economy and a socialized one is only how whose will
|
||
prevails in cases of disagreement is to be determined. In capitalism there must be somebody who controls, and
|
||
others who do not, and hence real differences among people exist, but the issue of whose opinion prevails is
|
||
resolved by original appropriation and contract. In socialism, too, real differences between con trollers and
|
||
noncontrollers must, of necessity, exist; only in the case of socialism, the position of those whose opinion wins
|
||
is not determined by previous usership or contract, but by political means.5 This difference is certainly a highly
|
||
important one, and our discussion will return to it later in this chapter and again in later chapters, but here it
|
||
suffices to say that—contrary to socialism’s egalitarian promises—it is not a difference between a
|
||
non-egalitarian and an egalitarian system as regards power of control.
|
||
The second observation is intimately connected with the first and con cerns socialism’s allegedly
|
||
superior coordinating capabilities. Again closer inspection reveals that the difference is merely illusory, created
|
||
only by semantics: to say that an economy of private owners is supplanted by a nationalized [p. 23] one
|
||
creates the impression that instead of a multitude of decision-making units, all of a sudden there is only one
|
||
such unit. In fact, nothing has changed at all. There are as many individuals with as many different in terests as
|
||
before. Just as much as capitalism then, socialism has to find a solution to the problem of determining how to
|
||
coordinate the uses of dif ferent means of production, given the fact of differing views among people on how
|
||
this should be accomplished. The difference between capitalism and socialism is again one of how coordination
|
||
is achieved, and not between chaos and coordination, as the socialist semantic insinuates. Instead of simply
|
||
letting individuals do what they want, capitalism coordinates actions by constraining people to respect previous
|
||
user-ownership. Socialism, on the other hand, instead of letting people do whatever pleases them, coordinates
|
||
individual plans by superimposing on one person’s or group of persons’ plan that of another disagreeing
|
||
person or group regardless of prior ownership and mutual exchange agreements.6 It hardly deserves comment
|
||
that this difference, too, is of the utmost importance. But it is not, as Marxist socialism would like us to believe,
|
||
a difference between social planning and no planning at all; on the contrary, as soon as the coordinating
|
||
mechanisms of socialism and capitalism are brought into the open and reconstructed, socialism’s claim to
|
||
greater efficiency immediately begins to lose much of its credibility, and the opposite thesis appears to be more
|
||
convincing.
|
||
How well-founded this thesis indeed is, and exactly why it is that capitalism’s, and not socialism’s,
|
||
coordinating mechanism proves to be economically superior will become clear when one turns away from ap
|
||
parent differences and concentrates on real ones instead, and looks at the redistribution of property titles, and
|
||
hence of income, which is implied in giving up capitalism in favor of a caretaker economy, as characterized
|
||
above. From the standpoint of the natural theory of property—the foundation [p. 24] of capitalism—the
|
||
adoption of the basic principles of a caretaker economy means that property titles are redistributed away from
|
||
actual producers and users of means of production, and away from those who have acquired these means by
|
||
mutual consent from previous users, to a community of caretakers in which, at the very best, every person
|
||
remains the caretaker of the things he previously owned. But even in this case each previous user and each
|
||
contractor would be hurt, as he could no longer sell the means of production and keep the receipt from the
|
||
sale privately, nor could he privately appropriate the profit from using them the way they are used, and hence
|
||
the value of the means of production for him would fall. Mutatis mutandis, every nonuser and noncontractor of
|
||
these means of production would be favored by being promoted to the rank of caretaker of them, with at least
|
||
partial say over resources which he had previously neither used nor contracted to use, and his income would
|
||
rise.
|
||
In addition to this redistributive scheme there is another one, implied by the prohibition of newly
|
||
created private capital or by the degree of hamper ing (dependent as it is on the size of the socialized part of
|
||
the economy) under which this process must now take place: a redistribution away from people who have
|
||
forgone possible consumption and instead saved up funds in order to employ them productively, i.e., for the
|
||
purpose of producing fu ture consumption goods, and who now can no longer do so or who now have fewer
|
||
options available, toward nonsavers, who in adopting the redistribution scheme, gain a say, however partial,
|
||
over the saver’s funds.
|
||
The socio-economic consequences of a policy of socialization are es sentially implied in these
|
||
formulations. But before taking a more detailed look at them, it might be worthwhile to review and clarify the
|
||
central features of the real world in which this socialization scheme would purportedly take place. It should be
|
||
recalled that one is dealing with a changing world; that man, in addition, can learn with respect to this world
|
||
and so does not necessarily [p. 25] know today what he will know at a later point in time; that there is a
|
||
scarcity of a multitude of goods and that accordingly man is pressed by a multitude of needs, not all of which
|
||
he can satisfy at the same time and/or without sacrificing the satisfaction of other needs; because of this, man
|
||
must choose and order his needs in a scale of preferences according to the rank of urgency that they have for
|
||
him; also, more specifically, that neither the process of original appropriation of resources perceived as scarce,
|
||
nor the process of production of new and the upkeep of old means of production, nor the process of
|
||
contracting, is costless for man; that all of these activities cost at the very least time, which could be spent
|
||
otherwise, e.g., for leisure activities; and in addition one should not forget that one is dealing with a world
|
||
characterized by the division of labor, which is to say that one is not talking about a world of self-sufficient
|
||
producers, but one in which production is carried out for a market of independent consumers.
|
||
With this in mind, then, what are the effects of socializing the means of production? To begin with,
|
||
what are the “economic” consequences, in the colloquial sense of the term? There are three intimately related
|
||
effects.7 First—and this is the immediate general effect of all types of socialism—there is a relative drop in the
|
||
rate of investment, the rate of capital formation. Since “socialization” favors the nonuser, the nonproducer, and
|
||
the noncontractor of means of production and, mutatis mutandis, raises the costs for users, producers, and
|
||
contractors, there will be fewer people acting in the latter roles. There will be less original appropriation of
|
||
natural resources whose scarcity is realized, there will be less production of new and less upkeep of old factors
|
||
of production, and there will be less contracting. For all of these activities involve costs and the costs of
|
||
performing them have been raised, and there are alternative courses of action, such as leisure-consumption
|
||
activities, which at the same time have become relatively less costly, and thus more open and available to
|
||
actors. Along the same line, because everyone’s [p. 26] investment outlets have dried up as it is no longer
|
||
permissible to convert private savings into private investment, or because the outlets have been limited to the
|
||
extent to which the economy is socialized, there will therefore be less saving and more consuming, less work
|
||
and more leisure. After all, you can not become a capitalist any longer, or your possibility of becoming one has
|
||
been restricted, and so there is at least one reason less to save! Needless to say, the result of this will be a
|
||
reduced output of exchangeable goods and a lowering of the living standard in terms of such goods. And since
|
||
these lowered living standards are forced upon people and are not the natural choice of consumers who
|
||
deliberately change their relative evaluation of leisure and exchangeable goods as the result of work, i.e., since
|
||
it is experienced as an unwanted impoverishment, a tendency will evolve to compensate for such losses by
|
||
going underground, by moonlight ing and creating black markets.
|
||
Secondly, a policy of the socialization of means of production will result in a wasteful use of such
|
||
means, i.e., in use which at best satisfies second-rate needs and at worst, satisfies no needs at all but
|
||
exclusively increases costs.8 The reason for this is the existence and unavoidability of change! Once it is
|
||
admitted that there can be change in consumer demand, change in technological knowledge, and change in the
|
||
natural environment in which the process of production has to take place—and all of this indeed takes place
|
||
constantly and unceasingly—then it must also be admitted that there is a constant and never-ending need to
|
||
reorganize and reshuffle the whole structure of social production. There is always a need to withdraw old in
|
||
vestments from some lines of production and, together with new ones, pour them into other lines, thus making
|
||
certain productive establishments, cer tain branches, or even certain sectors of the economy shrink and others
|
||
ex pand. Now assume—and this is precisely what is done under a socialization scheme—that it is either
|
||
completely illegal or extremely difficult to sell the [p. 27] collectively owned means of production into private
|
||
hands. This process of reorganizing the structure of production will then—even if it does not stop
|
||
al-together—at least be seriously hampered! The reason is basically a simple one, but still of the utmost
|
||
importance. Because the means of production either cannot be sold, or selling them is made very difficult for
|
||
the selling caretaker or the private buyer or both, no market prices for the means of production exist, or the
|
||
formation of such prices is hindered and made more costly. But then the caretaker-producer of the socialized
|
||
means of produc tion can no longer correctly establish the actual monetary costs involved in using the
|
||
resources or in making any changes in the production structure. Nor can he compare these costs with his
|
||
expected monetary income from sales. In not being permitted to take any offers from other private individuals
|
||
who might see an alternative way of using some given means of production, or in being restricted from taking
|
||
such offers, the caretaker simply does not know what he is missing, what the foregone opportunities are, and is
|
||
not able to correctly assess the monetary costs of withholding the resources. He cannot discover whether his
|
||
way of using them or changing their use is worth the result in terms of monetary returns, or whether the costs
|
||
involved are actually higher than the returns and so cause an absolute drop in the value of the output of
|
||
consumer goods. Nor can he establish whether his way of producing for consumer demand is indeed the most
|
||
efficient way (as compared with conceivable alternative ways) of satisfying the most urgent consumer needs, or
|
||
if less urgent needs are being satisfied at the expense of neglecting more urgent ones, thus causing at least a
|
||
relative drop in the value of the goods produced. Without being able to resort unrestrictedly to the means of
|
||
economic calculation, there is simply no way of knowing. Of course one could go ahead and try to do one’s
|
||
best. That might even be successful sometimes, though one would have no way of assuring oneself that it is.
|
||
But, in any case, the larger the consumer market is which one has [p. 28] to serve, and the more the
|
||
knowledge regarding preferences of different groups of consumers, special circumstances of historical time and
|
||
geographical space, and possibilities of technology is dispersed among different individuals, the more likely it is
|
||
that one will go wrong. A misallocation of means of production, with wastes and shortages as the two sides of
|
||
the same coin, must ensue. 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. Again, it hardly needs
|
||
to be pointed out that this, too, contributes to impoverishment.9
|
||
Thirdly, socializing the means of production causes relative impoverish ment, i.e., a drop in the general
|
||
standard of living, by leading to an over-utilization of the given factors of production. The reason for this, again,
|
||
lies in the peculiar position of a caretaker as compared with that of a private owner. A private owner who has
|
||
the right to sell the factors of production and keep the money receipts privately will, because of this, try to
|
||
avoid any increase in production which occurs at the expense of the value of the capital employed. His
|
||
objective is to maximize the value of the products produced plus that of the resources used in producing them
|
||
because he owns both of them. Thus he will stop producing when the value of the marginal product produced
|
||
is lower than the depreciation of the capital used to produce it. Accordingly, he will, for instance, reduce the
|
||
depreciation costs involved in producing, and instead engage in increased conservation, if he anticipates future
|
||
price rises for the products produced and vice versa. The situation of the caretaker, i.e., the incentive structure
|
||
which he is facing, is quite different in this respect. Because he cannot sell the means of production, his
|
||
incentive to not produce, and thereby utilize the capital employed, at the expense of an excessive reduction in
|
||
capital value is, if not completely [p. 29] gone, then at least relatively reduced. True, since the caretaker in a so
|
||
cialized economy also cannot privately appropriate the receipts from the sale of products, but must hand them
|
||
over to the community of caretakers at large to be used at their discretion, his incentive to produce and sell
|
||
products at all is relatively weakened as well. It is precisely this fact that explains the lower rate of capital
|
||
formation. But as long as the caretaker works and produces at all, his interest in gaining an income evidently
|
||
exists, even if it cannot be used for purposes of private capital formation, but only for private consumption
|
||
and/or the creation of private, nonproductively used wealth. The caretaker’s inability to sell the means of
|
||
production, then, implies that the incentive to increase his private income at the expense of capital value is
|
||
raised. Accordingly, to the extent that he sees his income dependent on the output of products produced (the
|
||
salary paid to him by the community of caretakers might be dependent on this!), his incentive will be raised to
|
||
increase this output at the expense of capital. Furthermore, since the actual caretaker, insofar as he is not
|
||
identical with the community of caretakers, can never be completely and permanently supervised and thus can
|
||
derive income from using the means of production for private purposes (i.e., the production of privately used,
|
||
non-or black-marketed goods) he will be encouraged to increase this output at the expense of capital value to
|
||
the extent that he sees his income dependent on such private production. In any case, capital consumption and
|
||
overuse of existing capital will occur; and increased capital consumption once more implies relative im
|
||
poverishment, since the production of future exchange goods will, as a con sequence, be reduced.
|
||
While implied in this analysis of the threefold economic consequences of socializing the means of
|
||
production—reduced investment, misallocation, and overutilization, all of which lead to reduced living
|
||
standards—in order to reach a full understanding of Russian-type societies it is interesting and indeed [p. 30]
|
||
important to point out specifically that the above analysis also applies to the productive factor of labor. With
|
||
respect to labor, too, socialization implies lowered investment, misallocation, and overutilization. First, since the
|
||
owners of labor factors can no longer become self-employed, or since the opportunity to do so is restricted,
|
||
on the whole there will be less investment in human capital. Second, since the owners of labor factors can no
|
||
longer sell their labor services to the highest bidder (for to the extent to which the economy is socialized,
|
||
separate bidders having independent control over specific complementary factors of production, including the
|
||
money needed to pay labor, and who take up opportunities and risks independently, on their own account, are
|
||
no longer allowed to exist!) the monetary cost of using a given labor factor, or of combining it with
|
||
complementary factors, can no longer be established, and hence all sorts of misallocations of labor will ensue.
|
||
And third, since the owners of labor factors in a socialized economy own at best only part of the proceeds
|
||
from their labor while the remainder belongs to the community of caretakers, there will be an increased
|
||
incentive for these caretakers to supplement their private income at the expense of losses in the capital value
|
||
embodied in the laborers, so that an overutilization of labor will result.10
|
||
Last, but certainly not least, a policy of the socialization of the means of production affects the
|
||
character structure of society, the importance of which can hardly be exaggerated. As has been pointed out
|
||
repeatedly, adopting Russian-type socialism instead of capitalism based on the natural theory of property
|
||
implies giving a relative advantage to nonusers, non producers, and noncontractors as regards property titles of
|
||
the means of production and the income that can be derived from using of these means. If people have an
|
||
interest in stabilizing and, if possible, increasing their income and they can shift relatively easily from the role of
|
||
a user-producer or contractor into that of a nonuser, nonproducer, or noncontractor—assumptions, [p. 31] to
|
||
be sure, whose validity can hardly be disputed—then, responding to the shift in the incentive structure affected
|
||
by socialization, people will in creasingly engage in nonproductive and noncontractual activities and, as time
|
||
goes on, their personalities will be changed. A former ability to per ceive and to anticipate situations of
|
||
scarcity, to take up productive oppor tunities, to be aware of technological possibilities, to anticipate changes
|
||
in demand, to develop marketing strategies and to detect chances for mutually advantageous exchanges, in
|
||
short: the ability to initiate, to work and to respond to other people’s needs, will be diminished, if not
|
||
completely extinguished. People will have become different persons, with different skills, who, should the
|
||
policy suddenly be changed and capitalism reintroduced, could not go back to their former selves immediately
|
||
and rekindle their old productive spirit, even if they wanted to. They will simply have forgotten how to do it
|
||
and will have to relearn, slowly, with high psychic costs involved, just as it involved high costs for them to
|
||
suppress their productive skills in the first place. But this is only half the picture of the social consequences of
|
||
socialization. It can be completed by recalling the above findings regarding capitalism’s and socialism’s
|
||
apparent differences. This will bring out the other side of the personality change caused by socializing,
|
||
complementing the just mentioned loss in productive capacity. The fact must be recalled that socialism, too,
|
||
must solve the problem of who is to control and coordinate various means of production. Contrary to
|
||
capitalism’s solution to this problem, though, in socialism the assignment of different positions in the production
|
||
structure to different people is a political matter, i.e., a matter accomplished irrespective of considerations of
|
||
previous user-ownership and the existence of contractual, mutually agreeable exchange, but rather by
|
||
superimposing one person’s will upon that of another (disagreeing) one. Evidently, a person’s position in the
|
||
production structure has an immediate effect on his income, be it in terms of exchangeable goods, psychic
|
||
income, [p. 32] status, and the like. Accordingly, as people want to improve their income and want to move
|
||
into more highly evaluated positions in the hierarchy of caretakers, they increasingly have to use their political
|
||
talents. It becomes irrelevant, or is at least of reduced importance, to be a more efficient producer or
|
||
contractor in order to rise in the hierarchy of income recipients. Instead, it is increasingly important to have the
|
||
peculiar skills of a politician, i.e., a person who through persuasion, demagoguery and intrigue, through
|
||
promises, bribes, and threats, manages to assemble public support for his own position. Depending on the
|
||
intensity of the desire for higher incomes, people will have to spend less time developing their productive skills
|
||
and more time cultivating political talents. And since different people have differing degrees of productive and
|
||
political talents, different people will rise to the top now, so that one finds increasing numbers of politicians
|
||
everywhere in the hierarchical order of caretakers. All the way to the very top there will be people
|
||
incompetent to do the job they are supposed to do. It is no hindrance in a caretaker’s career for him to be
|
||
dumb, indolent, inefficient, and uncaring, as long as he commands superior political skills, and accordingly
|
||
people like this will be taking care of the means of production everywhere.11
|
||
A look at Russia and other East-bloc countries in which a policy of socialization of means of
|
||
production has been carried out to a considerable degree can help illustrate the truth of the above conclusions.
|
||
Even a super ficial acquaintance with these countries suffices to see the validity of the first and main conclusion.
|
||
The general standard of living in the East-bloc countries, though admittedly different from country to country (a
|
||
difference that itself would have to be explained by the degree of strictness with which the socialization scheme
|
||
was and presently is carried through in practice), is clearly much lower than that in the so-called capitalist
|
||
countries of the West. (This is true even though the degree to which Western countries are [p. 33] socialized,
|
||
though differing from country to country, is itself quite con siderable and normally very much underestimated as
|
||
will become clear in later chapters.) Though the theory does not and cannot make a precise prediction of how
|
||
drastic the impoverishment effect of a socialization policy will be, except that it will be a noticeable one, it is
|
||
certainly worth mentioning that when almost complete socialization was first put into effect in immediate
|
||
post-World War I Russia, this experience cost literally millions of lives, and it required a marked change in
|
||
policy, the New Economic Policy (NEP), merely a few years later in 1921, reintroducing elements of private
|
||
ownership, to moderate these disastrous effects to levels that would prove tolerable.12 Indeed, repeated
|
||
changes in policy made Russia go through a similar experience more than once. Similar, though somewhat less
|
||
drastic, results from a policy of socialization were experienced in all of the East European countries after
|
||
World War II. There, too, moderate privatization of small farming, the crafts, or small businesses had to be
|
||
permitted repeatedly in order to prevent outright economic breakdowns.13 Nonetheless, in spite of such
|
||
reforms, which incidentally prove the point that contrary to socialist propaganda it is private and not social
|
||
ownership that improves economic performance, and in spite of the fact that moonlighting, illegal productive
|
||
activities, bartering, and black market trade are ubiquitous phenomena in all of these countries, just as the
|
||
theory would lead one to expect, and that this underground economy takes up part of the slack and helps to
|
||
improve things, the standard of living in the East-bloc countries is lamentably low. All sorts of basic consumer
|
||
goods are entirely lacking, in far too short supply or of extremely poor quality.14
|
||
The case of West and East Germany is particularly instructive. Here, history provides us with an
|
||
example that comes as close to that of a con trolled social experiment as one could probably hope to get. A
|
||
quite homogeneous population, with very much the same history, culture, character [p. 34] structure, work
|
||
ethics, divided after Hitler-Germany’s defeat in World War II. In West Germany, more because of lucky
|
||
circumstances than the pressure of public opinion, a remarkably free market economy was adopted, the
|
||
previous system of all-around price controls abolished in one stroke, and almost complete freedom of
|
||
movement, trade, and occupation intro duced.15 In East Germany, on the other hand, under Soviet Russian
|
||
dominance, socialization of the means of production, i.e., an expropriation of the previous private owners, was
|
||
implemented. Two different institution al frameworks, two different incentive structures have thus been applied
|
||
to the same population. The difference in the results is impressive.16 While both countries do well in their
|
||
respective blocs, West Germany has the highest standard of living among the major West-European nations
|
||
and East Germany prides itself in being the most well-off country in the East bloc, the standard of living in the
|
||
West is so much higher and has become relatively more so over time, that despite the transfer of considerable
|
||
amounts of money from West to East by government as well as private citizens and increasingly socialist
|
||
policies in the West, the visitor going from West to East is simply stunned as he enters an almost completely
|
||
different, impoverished world. As a matter of fact, while all of the East-European countries are plagued by the
|
||
emigration problem of people wanting to leave for the more prosperous capitalist West with its increased
|
||
opportunities, and while they all have gradually established tighter border controls, thus turning these countries
|
||
into sort of gigantic prisoner camps in order to prevent this outflow, the case of Germany is a most striking
|
||
one. With language differences, traditionally the most severe natural barrier for emigrants, nonexistent, the
|
||
difference in living standards between the two Germanys proved to be so great and emigration from East to
|
||
West took on such proportions, that in 1961 the socialist regime in East Germany, in a last desperate step,
|
||
finally had to close its borders to the West completely. To keep the population [p. 35] in, it had to build a
|
||
system the likes of which the world had never seen of walls, barbed wire, electrified fences, mine fields,
|
||
automatic shooting devices, watchtowers, etc., almost 900 miles long, for the sole purpose of preventing its
|
||
people from running away from the consequences of Russian-type socialism.
|
||
Besides exemplifying the main point, the case of the two Germanys, be cause of its experimental-like
|
||
character, proves particularly helpful in il lustrating the truth of the rest of the theoretically derived conclusions.
|
||
Looking at comparable social positions, almost nowhere in West Germany will one find people working as
|
||
little, as slowly, or as negligently (while the working hours, higher in the East, are of course regulated!) as their
|
||
East German counterparts. Not, to be sure, because of any alleged differences in mentality or work ethics, as
|
||
those are very much the same historically, but because the incentive to work is considerably reduced by a
|
||
policy scheme that effectively closes all or most outlets for private investment. Effective work in East Germany
|
||
is most likely to be found in the underground economy. And in response to the various disincentives to work,
|
||
and in par ticular to work in the “officially” controlled economy, there is also a tendency among East Germans
|
||
to withdraw from public life and to stress the importance of privacy, the family, relatives, and personal friends
|
||
and connections, significantly exceeding what is seen in the West.17
|
||
There is also ample evidence of misallocation, just as the theory would lead one to expect. While the
|
||
phenomenon of productive factors that are not used (at least not continuously) but are simply inactive because
|
||
com plementary factors are lacking can of course be observed in the West, in the East (and again, in the
|
||
German case certainly not because of differences in organizational talents) it is observed everywhere as a
|
||
permanent feature of life. And while it is normally quite difficult in the West, and requires special
|
||
entrepreneurial talent to point out changes in the use of certain means of [p. 36] production that would result in
|
||
an overall improvement in the output of consumer goods, this is relatively easy in the East-bloc countries.
|
||
Almost everyone working in East Germany knows many ways to put the means of production to more urgent
|
||
uses than ones that are currently being used, where they are evidently wasted and cause shortages of other,
|
||
more heavily demanded goods. But since they are not able to bid them away and must instead go through
|
||
tedious political procedures to initiate any changes, nothing much can be or indeed is done.
|
||
Experience also corroborates what has been said about the other side of the coin: the overutilization of
|
||
publicly owned means of production. In West Germany such public goods also exist, and as would be
|
||
expected, they are in relatively bad shape. But in East Germany, and no differently or in fact even worse in the
|
||
other Soviet-dominated countries, where all factors of production are socially owned, insufficiently maintained,
|
||
deteriorating, unrepaired, rusting, even simply vandalized production factors, machinery, and buildings are truly
|
||
rampant. Further, the ecology crisis is much more dramatic in the East, in spite of the relatively underdeveloped
|
||
state of the general economy, than in the West—and all this is not, as the case of Ger many proves clearly
|
||
enough, because there are differences in people’s “natural” inclination to care and to be careful.
|
||
Finally, as regards the theoretically predicted changes in the social and personality structure,
|
||
complaints about superiors are, of course, quite a common phenomenon everywhere. But in the countries of
|
||
Russian-type socialism, where the assignment of positions in the hierarchy of caretakers is and must be entirely
|
||
a political affair, such complaints about downright incompetent, unqualified, and ridiculous superiors are, even
|
||
if not more loudly voiced, most frequent, most severe, and best-founded, and decent people are most often
|
||
driven to despair or cynicism as a consequence. And since a few people from East Germany still go to West
|
||
Germany at an age [p. 37] where they are still members of the labor force, some as escapees but more
|
||
frequently because a sort of ransom has been paid for them, sufficient material also exists to illustrate the
|
||
conclusion that in the long run a social ized economy will reduce people’s productive capacities. Among those
|
||
going to the West there is a significant number who led quite normal productive lives in the East but who,
|
||
despite the absence of any linguistic and cultural barriers, prove to be incapable of, or have the greatest
|
||
difficulties, adapting to Western society with its increased demand for productive and competitive skills and
|
||
spirits. [p. 38] [p. 39]
|
||
Chapter 4
|
||
Socialism Social-democratic Style
|
||
In the last chapter I analyzed the orthodox marxist version of socialism—socialism Russian-style, as it
|
||
was called—and explained its effects on the process of production and the social moral structure. I went on to
|
||
point out that the theoretically foreseen consequences of relative impoverishment proved to be so powerful that
|
||
in fact a policy of socializing the means of production could never actually be carried through to its logical end:
|
||
the socialization of all production factors, without causing an immediate economic disaster. Indeed, sooner or
|
||
later all actual realizations of Marxist socialism have had to reintroduce elements of private ownership in the
|
||
means of production in order to overcome or prevent manifest bankruptcy. Even moderate “market” socialism,
|
||
however, cannot prevent a relative impoverishment of the population, if the idea of socialized production is not
|
||
abandoned entirely, once and for all.
|
||
Much more so than any theoretical argument, it has been the disap pointing experience with
|
||
Russian-type socialism which has led to a constant decline in the popularity of orthodox Marxist socialism and
|
||
has spurred the emergence and development of modern social-democratic socialism, which will be the concern
|
||
of this chapter. Both types of socialism, to be sure, derive from the same ideological sources.1 Both are
|
||
egalitarian in motivation, at least in theory,2 and both have essentially the same ultimate goal: the abolishment of
|
||
capitalism as a social system based on private ownership and the establishment of a new society, characterized
|
||
by brotherly solidarity and the eradication of scarcity; a society in which everyone is paid “according to his
|
||
needs.” From the very beginnings of the socialist movement in the mid-nineteenth century, though, there have
|
||
been conflicting ideas on the methods best suited for achieving these goals. While generally there [p. 40] was
|
||
agreement on the necessity of socializing the means of production, there were always diverging opinions on
|
||
how to proceed. On the one hand, within the socialist movement there were the advocates of a revolutionary
|
||
course of action. They propagated the violent overthrow of the existing governments, the complete
|
||
expropriation of all capitalists in one stroke, and the temporary (i.e., until scarcity would indeed, as promised,
|
||
be eradicated) dictatorship of the proletariat, i.e., of those who were not capitalists but who had to sell their
|
||
labor services, in order to stabilize the new order. On the other hand there were the reformists who advocated
|
||
a gradualist approach. They reasoned that with the enlargement of the franchise, and ultimately with a system
|
||
of universal suffrage, socialism’s victory could be attained through democratic, parliamentary action. This
|
||
would be so because capitalism, according to common socialist doctrine, would bring about a tendency
|
||
towards the proletarization of society, i.e., a tendency for fewer people to be self-employed and more to
|
||
become employees instead. And in accordance with common socialist beliefs, this tendency would in turn
|
||
produce an increasingly uniform proletarian class consciousness which then would lead to a swelling voter
|
||
turnout for the socialist party. And, so they reasoned, as this strategy was much more in line with public
|
||
opinion (more appealing to the mostly peacefully-minded workers and at the same time less frightening to the
|
||
capitalists), by adopting it, socialism’s ultimate success would only become more assured.
|
||
Both of these forces co-existed within the socialist movement, though their relationship was at times
|
||
quite strained, until the Bolshevik Revolution of October, 1917 in Russia. In practice, the socialist movement
|
||
generally took the reformist path, while in the field of ideological debate the revolutionaries dominated.3 The
|
||
Russian events changed this. With Lenin in the lead, for the first time the revolutionary socialists realized their
|
||
program and the socialist movement as a whole had to take a stand vis à vis the Russian [p. 41] experiment.
|
||
As a consequence, the socialist movement split into two branches with two separate parties: a communist party
|
||
either more or less in favor of the Russian events, and a socialist or social-democratic party with reservations,
|
||
or against them. Still, the split was not over the issue of socialization; both were in favor of that. It was an open
|
||
split over the issue of revolutionary vs. democratic parliamentary change. Faced with the actual experience of
|
||
the Russian revolution—the violence, the bloodshed, the practice of uncontrolled expropriation, the fact that
|
||
thousands of new leaders, very often of questionable reputation or simply shady, inferior characters, were
|
||
being swept to the political helm—the social democrats, in their attempt to gain public support, felt they had to
|
||
abandon their revolu tionary image and become, not only in practice but in theory as well, a decidedly
|
||
reformist, democratic party. And even some of the communist parties of the West, dedicated as they were to a
|
||
theory of revolutionary change, but just as much in need of public support, felt they had to find some fault, at
|
||
least, with the peculiar Bolshevik way of implementing the revolution. They, too, increasingly thought it
|
||
necessary to play the refor mist, democratic game, if only in practice.
|
||
However, this was only the first step in the transformation of the socialist movement effected by the
|
||
experience of the Russian revolution. The next step, as indicated, was forced upon it by the dim experience
|
||
with Soviet Russia’s economic performance. Regardless of their differing views on the desirability of
|
||
revolutionary changes and equally unfamiliar with or unable or unwilling to grasp abstract economic reasoning,
|
||
socialists and com munists alike could still, during a sort of honeymoon period which they felt the new
|
||
experiment deserved, entertain the most illusory hopes about the economic achievements of a policy of
|
||
socialization. But this period could not last forever, and the facts had to be faced and the results evaluated after
|
||
some time had elapsed. For every decently neutral observer of things, and [p. 42] later for every alert visitor
|
||
and traveler, it became evident that socialism Russian-style did not mean more but rather less wealth and that it
|
||
was a system above all, that in having to allow even small niches of private capital formation, had in fact
|
||
already admitted its own economic inferiority, if only implicitly. As this experience became more widely
|
||
known, and in particular when after World War II the Soviet experiment was repeated in the East European
|
||
countries, producing the very same dim results and thus disproving the thesis that the Soviet mess was only due
|
||
to a special Asian mentality of the people, in their race for public support the socialist, i.e., the
|
||
social-democratic and communist, parties of the West were forced to modify their programs further. The
|
||
communists now saw various flaws in the Russian implementation of the socialization program as well, and
|
||
increasingly toyed with the idea of more decentralized planning and decision-making and of partial
|
||
socialization, i.e., socialization only of major firms and industries, although they never entirely abandoned the
|
||
idea of socialized production.4 The socialist or social-democratic parties, on the other hand, less sympathetic
|
||
from the beginning towards the Russian model of socialism and through their decidedly reformist-democratic
|
||
policy already inclined to accept compromises such as partial socialization, had to make a further adaptive
|
||
move. These parties, in response to the Russian and East European experiences, increasingly gave up the
|
||
notion of socialized production altogether and instead put more and more emphasis on the idea of income
|
||
taxation and equalization, and, in another move, on equalization of opportunity, as being the true cornerstones
|
||
of socialism.
|
||
While this shift from Russian-type socialism towards a social-democratic one took place, and still is
|
||
taking place in all Western societies, it was not equally strong everywhere. Roughly speaking and only looking
|
||
at Europe, the displacement of the old by the new kind of socialism has been more pronounced, the more
|
||
immediate and direct the experience with Russian-type [p. 43] socialism for the population in which the
|
||
socialist and/or com munist parties had to find supporters and voters. Of all the major countries, in West
|
||
Germany, where the contact with this type of socialism is the most direct, where millions of people still have
|
||
ample opportunities to see with their own eyes the mischief that has been done to the people in East Ger many,
|
||
this displacement was the most complete. Here, in 1959, the social democrats adopted (or rather were forced
|
||
by public opinion to adopt) a new party program in which all obvious traces of a Marxist past were con
|
||
spicuously absent, that rather explicitly mentioned the importance of private ownership and markets, that
|
||
talked about socialization only as a mere pos sibility, and that instead heavily stressed the importance of
|
||
redistributive measures. Here, the protagonists of a policy of socialization of the means of production within the
|
||
social-democratic party have been considerably outnumbered ever since; and here the communist parties, even
|
||
when they are only in favor of peaceful and partial socialization, have been reduced to insignificance.5 In
|
||
countries further removed from the iron curtain, like France, Italy, Spain, and also Great Britain, this change
|
||
has been less dramatic. Nonetheless, it is safe to say that today only social-democratic socialism, as
|
||
represented most typically by the German social-democrats, can claim widespread popularity in the West. As
|
||
a matter of fact, due partly to the influence of the Socialist International—the association of socialist and
|
||
social-democratic parties—social-democratic socialism can now be said to be one of the most widespread
|
||
ideologies of our age, increasingly shap ing the political programs and actual policies not only of explicitly
|
||
socialist parties, and to a lesser degree those of the western communists, but also of groups and parties who
|
||
would not even in their most far-fetched dreams call themselves socialists, like the east coast “liberal”
|
||
Democrats in the United States.6 And in the field of international politics the ideas of social-democratic
|
||
socialism, in particular of a redistributive approach towards the [p. 44] so-called North-South conflict, have
|
||
almost become something like the of ficial position among all “well-informed” and “well-intentioned” men; a
|
||
consensus extending far beyond those who think of themselves as socialists.7
|
||
What are the central features of socialism social-democratic-style? There are basically two
|
||
characteristics. First, in positive contradistinction to the traditional Marxist-style socialism, social-democratic
|
||
socialism does not outlaw private ownership in the means of production and it even accepts the idea of all
|
||
means of production being privately owned—with the exception only of education, traffic and communication,
|
||
central banking, and the police and courts. In principle, everyone has the right to privately ap propriate and
|
||
own means of production, to sell, buy, or newly produce them, to give them away as a present, or to rent them
|
||
out to someone else under a contractual arrangement. But secondly, no owner of means of production
|
||
rightfully owns all of the income that can be derived from the usage of his means of production and no owner
|
||
is left to decide how much of the total income from production to allocate to consumption and investment.
|
||
Instead, part of the income from production rightfully belongs to society, has to be handed over to it, and is
|
||
then, according to ideas of egalitarianism or distributive justice, redistributed to its individual members.
|
||
Furthermore, though the respective income-shares that go to the producer and to society might be fixed at any
|
||
given point in time, the share that rightfully belongs to the producer is in principle flexible and the determination
|
||
of its size, as well as that of society’s share, is not up to the producer, but rightfully belongs to society.8
|
||
Seen from the point of view of the natural theory of property—the theory underlying capitalism—the
|
||
adoption of these rules implies that the rights of the natural owner have been aggressively invaded. According
|
||
to this theory of property, it should be recalled, the user-owner of the means of produc tion can do whatever
|
||
he wants with them; and whatever the outcome of his [p. 45] usage, it is his own private income, which he can
|
||
use again as he pleases, as long as he does not change the physical integrity of someone else’s property and
|
||
exclusively relies on contractual exchanges. From the standpoint of the natural theory of property, there are not
|
||
two separate processes—the production of income and then, after income is produced, its distribution. There
|
||
is only one process: in producing income it is automatically distributed; the producer is the owner. As
|
||
compared with this, socialism social-democratic style advocates the partial expropriation of the natural owner
|
||
by redistributing part of the income from production to people who, whatever their merits otherwise, definitely
|
||
did not produce the income in question and definitely did not have any contractual claims to it, and who, in
|
||
addition, have the right to determine unilaterally, i.e., without having to wait for the affected producer’s
|
||
consent, how far this partial expropriation can go.
|
||
It should be clear from this description that, contrary to the impression which socialism
|
||
social-democratic style is intended to generate among the public, the difference between both types of
|
||
socialism is not of a categorical nature. Rather, it is only a matter of degree. Certainly, the first mentioned rule
|
||
seems to inaugurate a fundamental difference in that it allows private ownership. But then the second rule in
|
||
principle allows the expropriation of all of the producer’s income from production and thus reduces his
|
||
ownership right to a purely nominal one. Of course, social-democratic socialism does not have to go as far as
|
||
reducing private ownership to one in name only. And admittedly, as the income-share that the producer is
|
||
forced to hand over to society can in fact be quite moderate, this, in practice, can make a tremendous
|
||
difference as regards economic performance. But still, it must be realized that from the standpoint of the
|
||
nonproducing fellowmen, the degree of expropriation of private producers’ income is a matter of expediency,
|
||
which suffices to reduce the difference between both [p. 46] types of socialism—Russian and
|
||
social-democratic style—once and for all to a difference only of degree. It should be apparent what this
|
||
important fact implies for a producer. It means that however low the presently fixed de gree of expropriation
|
||
might be, his productive efforts take place under the ever-present threat that in the future the income-share
|
||
which must be handed over to society will be raised unilaterally. It does not need much comment to see how
|
||
this increases the risk, or the cost of producing, and hence lowers the rate of investment.
|
||
With this statement a first step in the analysis that follows has already been taken. What are the
|
||
economic, in the colloquial sense of the term, con sequences of adopting a system of social-democratic
|
||
socialism? After what has just been said, it is probably no longer altogether surprising to hear that at least as
|
||
regards the general direction of the effects, they are quite similar to those of traditional Marxist-type socialism.
|
||
Still, to the extent that social-democratic socialism settles for partial expropriation and the redistribution of
|
||
producer incomes, some of the impoverishment effects that result from a policy of fully socializing means of
|
||
production can be circumvented. Since these resources can still be bought and sold, the problem most typical
|
||
of a caretaker economy—that no market prices for means of production exist and hence neither monetary
|
||
calculation nor accounting are possible, with ensu ing misallocations and the waste of scarce resources in
|
||
usages that are at best of only secondary importance—is avoided. In addition, the problem of overutilization is
|
||
at least reduced. Also, since private investment and capital formation is still possible to the extent that some
|
||
portion of income from production is left with the producer to use at his discretion, under socialism
|
||
social-democratic style there is a relatively higher incentive to work, to save, and to invest.
|
||
Nonetheless, by no means can all impoverishment effects be avoided. Socialism social-democratic
|
||
style, however good it might look in comparison [p. 47] with Russian-type socialism, still necessarily leads to a
|
||
reduction in investment and thus in future wealth as compared with that under capitalism.9 By taking part of the
|
||
income from production away from the owner-producer, however small that part may be, and giving it to
|
||
people who did not produce the income in question, the costs of production (which are never zero, as
|
||
producing, appropriating, contractings always imply at least the use of time, which could be used otherwise, for
|
||
leisure, consump tion, or underground work, for instance) rise, and, mutatis mutandis, the costs of
|
||
nonproducing and/or underground production fall, however slight ly. As a consequence there will be relatively
|
||
less production and investment, even though, for reasons to be discussed shortly, the absolute level of
|
||
production and wealth might still rise. There will be relatively more leisure, more consumption, and more
|
||
moonlighting, and hence, all in all, relative impoverishment. And this tendency will be more pronounced the
|
||
higher the income from production that is redistributed, and the more imminent the likelihood that it will be
|
||
raised in the future by unilateral, noncontractual societal decision.
|
||
For a long time by far the most popular idea for implementing the general policy goal of
|
||
social-democratic socialism was to redistribute monetary in come by means of income taxation or a general
|
||
sales tax levied on producers. A look at this particular technique shall further clarify our point and avoid some
|
||
frequently encountered misunderstandings and miscon ceptions about the general effect of relative
|
||
impoverishment. What is the economic effect of introducing income or sales taxation where there has been
|
||
none before, or of raising an existing level of taxation to a new height?10 In answering this, I will further ignore
|
||
the complications that result from the different possible ways of redistributing tax money to different individuals
|
||
or groups of individuals—these shall be discussed later in this chapter. Here we will only take into account the
|
||
general fact, true by definition for all [p. 48] redistributive systems, that any redistribution of tax money is a
|
||
transfer from monetary income producers and contractual money recipients to people in their capacity as
|
||
nonproducers and nonrecipients of contractual money incomes. Introducing or raising taxation thus implies that
|
||
monetary income flowing from production is reduced for the producer and increased for people in their roles
|
||
as nonproducers and noncontractors. This changes the relative costs of production for monetary return versus
|
||
nonproduction and production for nonmonetary returns. Accordingly, insofar as this change is perceived by
|
||
people, they will increasingly resort to leisurely con sumption and/or production for the purpose of barter,
|
||
simultaneously reduc ing their productive efforts undertaken for monetary rewards. In any case, the output of
|
||
goods to be purchased with money will fall, which is to say the purchasing power of money decreases, and
|
||
hence the general standard of living will decline.
|
||
Against this reasoning it is sometimes argued that it has been frequently observed empirically that a rise
|
||
in the level of taxation was actually ac companied by a rise (not a fall) in the gross national product (GNP), and
|
||
that the above reasoning, however plausible, must thus be considered em pirically invalid. This alleged
|
||
counter-argument exhibits a simple misunderstanding: a confusion between absolute and relative reduction. In
|
||
the above analysis the conclusion is reached that the effect of higher taxes is a relative reduction in production
|
||
for monetary returns; a reduction, that is, as compared with the level of production that would have been
|
||
attained had the degree of taxation not been altered. It does not say or imply anything with respect to the
|
||
absolute level of output produced. As a matter of fact, absolute growth of GNP is not only compatible with
|
||
our analysis but can be seen as a perfectly normal phenomenon to the extent that advances in productivity are
|
||
possible and actually take place. If it has become possible, through improvement in the technology of
|
||
production, to produce a [p. 49] higher output with an identical input (in terms of costs), or a physically
|
||
identical output with a reduced input, then the coincidence of increased taxation and increased output is
|
||
anything but surprising. But, to be sure, this does not at all affect the validity of what has been stated about
|
||
relative im poverishment resulting from taxation.
|
||
Another objection that enjoys some popularity is that raising taxes leads to a reduction in monetary
|
||
income, and that this reduction raises the mar ginal utility of money as compared with other forms of income
|
||
(like leisure) and thus, instead of lowering it, actually helps to increase the tendency to work for monetary
|
||
return. This observation, to be sure, is perfectly true. But it is a misconception to believe that it does anything
|
||
to invalidate the rela tive impoverishment thesis. First of all, in order to get the full picture it should be noted
|
||
that through taxation, not only the monetary income for some people (the producers) is reduced but
|
||
simultaneously monetary income for other people (nonproducers) is increased, and for these people the
|
||
marginal utility of money and hence their inclination to work for monetary return would be reduced. But this is
|
||
by no means all that need be said, as this might still leave the impression that taxation simply does not affect the
|
||
output of exchangeable goods at all—since it will reduce the marginal utility of money income for some and
|
||
increase it for others, with both effects cancelling each other out. But this impression would be wrong. As a
|
||
matter of fact, this would be a denial of what has been assumed at the outset: that a tax hike, i.e., a higher
|
||
monetary contribution forced upon disapproving income producers, has actually taken place and has been
|
||
perceived as such—and would hence involve a logical contradiction. Intuitively, the flaw in the belief that
|
||
taxation is “neutral” as regards output becomes apparent as soon as the argument is carried to its ultimate
|
||
extreme. It would then amount to the statement that even complete expropriation of all of the producers’
|
||
monetary income and the transfer of it to a group of nonproducers would [p. 50] not make any difference,
|
||
since the increased laziness of the nonproducers resulting from this redistribution would be fully compensated
|
||
by an in creased workaholism on the part of the producers (which is certainly ab surd). What is overlooked in
|
||
this sort of reasoning is that the introduction of taxation or the rise in any given level of taxation does not only
|
||
imply favor ing nonproducers at the expense of producers, it also simultaneously chan ges, for producers and
|
||
nonproducers of monetary income alike, the cost attached to different methods of achieving an (increasing)
|
||
monetary in come. For it is now relatively less costly to attain additional monetary in come through
|
||
nonproductive means, i.e., not through actually producing more goods but by participating in the process of
|
||
noncontractual acquisi tions of goods already produced. Even if producers are indeed more intent upon
|
||
attaining additional money as a consequence of a higher tax, they will increasingly do so not by intensifying their
|
||
productive efforts but rather through exploitative methods. This explains why taxation is not, and never can be,
|
||
neutral. With (increased) taxation a different legal incentive struc ture is institutionalized: one that changes the
|
||
relative costs of production for monetary income versus nonproduction, including nonproduction for leisurely
|
||
purposes and nonproduction for monetary return, and also versus production for nonmonetary return (barter).
|
||
And if such a different incen tive structure is applied to one and the same population, then, and neces sarily so,
|
||
a decrease in the output of goods produced for monetary return must result.11
|
||
While income and sales taxation are the most common techniques, they do not exhaust
|
||
social-democratic socialism’s repertoire of redistributive methods. No matter how the taxes are redistributed
|
||
to the individuals com posing a given society, no matter, for instance, to what extent monetary in come is
|
||
equalized, since these individuals can and do lead different lifestyles and since they allocate different portions of
|
||
the monetary income assigned [p. 51] to them to consumption or to the formation of nonproductively used
|
||
private wealth, sooner or later significant differences between people will again emerge, if not with respect to
|
||
their monetary income, then with respect to private wealth. And not surprisingly, these differences will steadily
|
||
become more pronounced if a purely contractual inheritance law exists. Hence, social-democratic socialism,
|
||
motivated as it is by egalitarian zeal, includes private wealth in its policy schemes and imposes a tax on it, too,
|
||
and in particular imposes an inheritance tax in order to satisfy the popular outcry over “unearned riches” falling
|
||
upon heirs.
|
||
Economically, these measures immediately reduce the amount of private wealth formation. As the
|
||
enjoyment of private wealth is made relatively more costly by the tax, less wealth will be newly created,
|
||
increased consumption will ensue—including that of existing stocks of nonproductively used riches—and the
|
||
overall standard of living, which of course also depends on the comforts derived from private wealth, will sink.
|
||
Similar conclusions about impoverishment effects are reached when the third major field of tax
|
||
policies—that of “natural assets”—is analyzed. For reasons to be discussed below, this field, next to the two
|
||
traditional fields of monetary income and private wealth taxation, has gained more prominence over time under
|
||
the heading of opportunity equalization. It did not take much to discover that a person’s position in life does
|
||
not depend exclusive ly on monetary income or the wealth of nonproductively used goods. There are other
|
||
things that are important in life and which bring additional income, even though it may not be in the form of
|
||
money or other exchange goods: a nice family, an education, health, good looks, etc. I will call these
|
||
nonexchangeable goods from which (psychic) income can be derived “natural assets.” Redistributive socialism,
|
||
led by egalitarian ideals, is also irritated by existing differences in such assets, and tries, if not to eradicate, then
|
||
at least to moderate them. But these assets, being nonexchangeable goods, cannot [p. 52] be easily
|
||
expropriated and the proceeds then redistributed. It is also not very practical, to say the least, to achieve this
|
||
goal by directly reducing the nonmonetary income from natural assets of higher income people to the level of
|
||
lower income people by, for instance, ruining the health of the heal thy and so making them equal to the sick,
|
||
or by smashing the good-looking people’s faces to make them look like their less fortunate bad-looking
|
||
fellows.12 Thus, the common method social-democratic socialism advocates in order to create “equality of
|
||
opportunity” is taxation of natural assets. Those people who are thought to receive a relatively higher
|
||
nonmonetary income from some asset, like health, are subject to an additional tax, to be paid in money. This
|
||
tax is then redistributed to those people whose respective income is relatively low to help compensate them for
|
||
this fact. An additional tax, for instance, is levied on the healthy to help the unhealthy pay their doctor bills, or
|
||
on the good-looking to help the ugly pay for plastic surgery or to buy themselves a drink so that they can
|
||
forget about their lot. The economic consequences of such redistributive schemes should be clear. Insofar as
|
||
the psychic income, represented by health, for instance, requires some productive, time and cost-consuming
|
||
effort, and as people can, in principle, shift from productive roles into nonproductive ones, or channel their
|
||
productive efforts into different, non- or less heavily taxed lines of nonexchangeable or exchangeable goods
|
||
production, they will do so because of the increased costs involved in the production of personal health. The
|
||
overall production of the wealth in question will fall, the general standard of health, that is, will be reduced. And
|
||
even with truly natural assets, like intelligence, about which people can admittedly do little or nothing,
|
||
consequences of the same kind will result, though only with a time lag of one generation. Realizing that it has
|
||
become relatively more costly to be intelligent and less so to be nonintelligent, and wanting as much income (of
|
||
all sorts) as possible for one’s offspring, the incentive for intelligent people to [p. 53] produce offspring has
|
||
been lowered and for nonintelligent ones raised. Given the laws of genetics, the result will be a population that
|
||
is all in all less intelligent. And besides, in any case of taxation of natural assets, true for the example of health
|
||
as well as for that of intelligence, because monetary income is taxed, a tendency similar to the one resulting
|
||
from income taxation will set in, i.e., a tendency to reduce one’s efforts for monetary return and instead
|
||
increasingly engage in productive activity for nonmonetary return or in all sorts of nonproductive enterprises.
|
||
And, of course, all this once again reduces the general standard of living.
|
||
But this is still not all that has to be said about the consequences of socialism social-democratic-style,
|
||
as it will also have remote yet nonethe less highly important effects on the social-moral structure of society,
|
||
which will become visible when one considers the long-term effects of introducing redistributive policies. It
|
||
probably no longer comes as a surprise that in this regard, too, the difference between Russian-type socialism
|
||
and socialism social-democratic style, while highly interesting in some details, is not of a principal kind.
|
||
As should be recalled, the effect of the former on the formation of per sonality types was twofold,
|
||
reducing the incentive to develop productive skills, and favoring at the same time the development of political
|
||
talents. This precisely is also the overall consequence of social-democratic socialism. As social-democratic
|
||
socialism favors nonproductive roles as well as productive ones that escape public notice and so cannot be
|
||
reached by taxation, the character of the population changes accordingly. This process might be slow, but as
|
||
long as the peculiar incentive structure es tablished by redistributive policies lasts, it is constantly operative.
|
||
Less in vestment in the development and improvement of one’s productive skills will take place and, as a
|
||
consequence, people will become increasingly unable to secure their income on their own, by producing or
|
||
contracting. And as [p. 54] the degree of taxation rises and the circle of taxed income widens, people will
|
||
increasingly develop personalities as inconspicuous, as uniform, and as mediocre as is possible—at least as far
|
||
as public appearance is concerned. At the same time, as a person’s income simultaneously becomes
|
||
dependent on Politics, i.e., on society’s decision on how to redistribute taxes (which is reached, to be sure, not
|
||
by contracting, but rather by superimposing one person’s will on another’s recalcitrant one!), the more
|
||
dependent it be comes, the more people will have to politicalize, i.e., the more time and energy they will have
|
||
to invest in the development of their special talents for achieving personal advantages at the expense (i.e., in a
|
||
noncontractual way) of others or of preventing such exploitation from occurring.
|
||
The difference between both types of socialism lies (only) in the follow ing: under Russian-type
|
||
socialism society’s control over the means of production, and hence over the income produced with them, is
|
||
complete, and so far there seems to be no more room to engage in political debate about the proper degree of
|
||
politicalization of society. The issue is settled—just as it is settled at the other end of the spectrum, under pure
|
||
capitalism, where there is no room for politics at all and all relations are exclusively contractual. Under
|
||
social-democratic socialism, on the other hand, social control over income produced privately is actually only
|
||
partial, and increased or full control exists only as society’s not yet actualized right, making only for a potential
|
||
threat hanging over the heads of private producers. But living with the threat of being fully taxed rather than
|
||
actually being so taxed explains an interesting feature of social-democratic socialism as regards the general
|
||
development toward increasingly politicalized characters. It explains why under a system of social-democratic
|
||
socialism the sort of politicalization is different from that under Russian-type socialism. Under the latter, time
|
||
and effort is spent nonproductively, discussing how to distribute the socially owned income; under the former,
|
||
to be sure, this is also [p. 55] done, but time and effort are also used for political quarrels over the issue of
|
||
how large or small the socially administered income-shares should ac tually be. Under a system of socialized
|
||
means of production where this issue is settled once and for all, there is then relatively more withdrawal from
|
||
public life, resignation, and cynicism to be observed. Social-democratic socialism, on the other hand, where
|
||
the question is still open, and where producers and nonproducers alike can still entertain some hope of
|
||
improving their position by decreasing or increasing taxation, has less of such privatization and, instead, more
|
||
often has people actively engaged in political agitation either in favor of increasing society’s control of privately
|
||
produced incomes, or against it.13
|
||
With the general similarity as well as this specific difference between both types of socialism explained,
|
||
the task remains of presenting a brief analysis of some modifying forces influencing the general development
|
||
toward unproductive politicalized personalities. These are effected by dif fering approaches to the desirable
|
||
pattern of income distribution. Russian and social-democratic socialism alike are faced with the question of
|
||
how to distribute income that happens to be socially controlled. For Russian-type socialism it is a matter of
|
||
what salaries to pay to individuals who have been assigned to various positions in the caretaker economy. For
|
||
redistributive socialism it is the question of how much tax to allocate to whom. While there are in principle
|
||
innumerable ways to do this, the egalitarian philosophy of both kinds of socialism effectively reduces the
|
||
available options to three general types.14 The first one is the method of more or less equalizing everybody’s
|
||
monetary income (and possibly also private, nonproductively used wealth). Teachers, doctors, construction
|
||
workers and miners, factory managers and cleaning ladies all earn pretty much the same salary, or the
|
||
difference between them is at least considerably reduced.15 It does not need much comment to realize that this
|
||
approach reduces the incentive to [p. 56] work most drastically, for it no longer makes much
|
||
difference—salary-wise—if one works diligently all day or fools around most of the time. Hence, disutility of
|
||
labor being a fact of life, people will increasingly fool around, with the average income that everyone seems to
|
||
be guaranteed constantly falling, in relative terms. Thus, this approach relatively strengthens the tendency
|
||
toward withdrawal, disillusionment, cynicism, and mutatis mutandis, contributes to a relative reduction in the
|
||
general atmosphere of politicalization. The second approach has the more moderate aim of guaranteeing a
|
||
minimum income which, though normally somehow linked to average income, falls well below it.16 This, too,
|
||
reduces the incentive to work, since, to the extent that they are only marginal income producers with incomes
|
||
from production only slightly above the minimum, people will now be more inclined to reduce or even stop
|
||
their work, enjoy leisure instead, and settle for the minimum income. Thus more people than otherwise will fall
|
||
below the minimum line, or more people than otherwise will keep or acquire those characteristics on whose
|
||
existence payment of minimum salaries is bound, and as a consequence, again, the average income to which
|
||
the minimum salary is linked will fall below the level that it otherwise would have reached. But, of course, the
|
||
incentive to work is reduced to a smaller degree under the second than the first scheme. On the other hand, the
|
||
second approach will lead to a relatively higher degree of active politicalization (and less of resigned
|
||
withdrawal), because, unlike average income, which can be objectively ascertained, the level at which the
|
||
minimum income is fixed is a completely subjective, arbitrary affair, which is thus particularly prone to
|
||
becoming a permanent political issue.
|
||
Undoubtedly, the highest degree of active politicalization is reached when the third distributional
|
||
approach is chosen. Its goal, gaining more and more prominence for social democracy, is to achieve equality
|
||
of oppor tunity.17 The idea is to create, through redistributional measures, a situation [p. 57] in which
|
||
everyone’s chance of achieving any possible (income) position in life is equal—very much as in a lottery where
|
||
each ticket has the same chance of being a winner or a loser—and, in addition, to have a corrective
|
||
mechanism which helps rectify situations of “undeserved bad luck” (whatever that may be) which might occur
|
||
in the course of the ongoing game of chance. Taken literally, of course, this idea is absurd: there is no way of
|
||
equalizing the opportunity of someone living in the Alps and someone residing at the seaside. In addition, it
|
||
seems quite clear that the idea of a corrective mechanism is simply incompatible with the lottery idea. Yet it is
|
||
precisely this high degree of vagueness and confusion which contributes to the popular appeal of this concept.
|
||
What constitutes an opportunity, what makes an opportunity different or the same, worse or better, how much
|
||
and what kind of compensation is needed to equalize opportunities which admittedly cannot be equalized in
|
||
physical terms (as in the Alpsseaside example), what is undeserved bad luck and what a rectification, are all
|
||
completely subjective matters. They are dependent on subjective evaluations, changing as they do, and there is
|
||
then—if one indeed applies the equality of opportunity concept—an unlimited reservoir of all sorts of
|
||
distributional demands, for all sorts of reasons and for all sorts of people. This is so, in particular, because
|
||
equalizing opportunity is compatible with demands for differences in monetary income or private wealth. A
|
||
and B might have the same income and might both be equally rich, but A might be black, or a woman, or have
|
||
bad eyesight, or be a resident of Texas, or may have ten children, or no husband, or be over 65, whereas B
|
||
might be none of these but something else, and hence A might argue that his opportunities to attain everything
|
||
possible in life are different, or rather worse, than B’s, and that he should somehow be compensated for this,
|
||
thus making their monetary incomes, which were the same before, now different. And B, of course, could
|
||
argue in exactly the same way by simply reversing the [p. 58] implied evaluation of opportunities. As a
|
||
consequence, an unheard of de gree of politicalization will ensue. Everything seems fair now, and producers
|
||
and nonproducers alike, the former for defensive and the latter for aggressive purposes, will be driven into
|
||
spending more and more time in the role of raising, destroying, and countering distributional demands. And to
|
||
be sure, this activity, like the engagement in leisurely activities, is not only nonproductive but in clear contrast to
|
||
the role of enjoying leisure, implies spending time for the very purpose of actually disrupting the undisturbed
|
||
enjoyment of wealth produced, as well as its new production.
|
||
But not only is increased politicalization stimulated (above and beyond the level implied by socialism
|
||
generally) by promoting the idea of equaliz ing opportunity. There is once more, and this is perhaps one of the
|
||
most interesting features of new social-democratic-socialism as compared with its traditional Marxist form, a
|
||
new and different character to the kind of politicalization implied by it. Under any policy of distribution, there
|
||
must be people who support and promote it. And normally, though not exclusively so, this is done by those
|
||
who profit most from it. Thus, under a system of income and wealth-equalization and also under that of a
|
||
minimum income policy, it is mainly the “have-nots” who are the supporters of the politicalization of social life.
|
||
Given the fact that on the average they happen to be those with relatively lower intellectual, in particular verbal
|
||
capabilities, this makes for politics which appears to lack much intellectual sophistication, to say the least. Put
|
||
more bluntly, politics tends to be outright dull, dumb, and appalling, even to a considerable number of the
|
||
have-nots themselves. On the other hand, in adopting the idea of equalizing opportunity, differences in
|
||
monetary income and wealth are not only allowed to exist but even become quite pronounced, provided that
|
||
this is justifiable by some underlying discrepancies in the opportunity structure for which the former differences
|
||
help compensate. Now in this sort of politics the haves can participate, too. As [p. 59] a matter of fact, being
|
||
the ones who on the average command superior ver bal skills, and the task of defining opportunities as better
|
||
or worse being es sentially one of persuasive rhetorical powers, this is exactly their sort of game. Thus the
|
||
haves will now become the dominant force in sustaining the process of politicalization. Increasingly it will be
|
||
people from their ranks that move to the top of the socialist party organization, and accordingly the appearance
|
||
and rhetoric of socialist politics will take on a different shape, becoming more and more intellectualized,
|
||
changing its appeal and attract ing a new class of supporters.
|
||
With this I have reached the stage in the analysis of social-democratic socialism where only a few
|
||
remarks and observations are needed which will help illustrate the validity of the above theoretical
|
||
considerations. Though it does not at all affect the validity of the conclusions reached above, depend ing as
|
||
they do exclusively on the truth of the premises and the correctness of the deductions, there unfortunately exists
|
||
no nearly perfect, quasi-experimental case to illustrate the workings of social-democratic socialism as
|
||
compared with capitalism, as there was in the case of East and West Ger many regarding Russian-type
|
||
socialism. Illustrating the point would involve a comparison of manifestly different societies where the ceteris
|
||
are clearly not paribus, and thus it would no longer be possible to neatly match certain causes with certain
|
||
effects. Often, experiments in social-democratic socialism simply have not lasted long enough, or have been
|
||
interrupted repeatedly by policies that could not definitely be classified as social-democratic socialism. Or else
|
||
from the very beginning, they have been mixed with such different—and even inconsistent—policies as a result
|
||
of political compromising, that in reality different causes and effects are so en tangled that no striking illustrative
|
||
evidence can be produced for any thesis of some degree of specificity. The task of disentangling causes and
|
||
effects then becomes a genuinely theoretical one again, lacking the peculiar persuasiveness [p. 60] that
|
||
characterizes experimentally produced evidence.
|
||
Nonetheless some evidence exists, if only of a more dubious quality. First, on the level of highly global
|
||
observations, the general thesis about relative impoverishment brought about by redistributive socialism is il
|
||
lustrated by the fact that the standard of living is relatively higher and has become more so over time in the
|
||
United States of America than in Western Europe, or, more specifically, than in the countries of the European
|
||
Com munity (EC). Both regions are roughly comparable with respect to popula tion size, ethnic and cultural
|
||
diversity, tradition and heritage, and also with respect to natural endowments, but the United States is
|
||
comparatively more capitalist and Europe more socialist. Every neutral observer will hardly fail to notice this
|
||
point, as indicated also by such global measures as state expenditure as percent of GNP, which is roughly 35
|
||
percent in the United States as compared to about 50 percent or more in Western Europe. It also fits into the
|
||
picture that the European countries (in particular Great Britain) exhibited more impressive rates of economic
|
||
growth in the nineteenth cen tury, which has been described repeatedly by historians as the period of classical
|
||
liberalism, than in the twentieth, which, in contrast, has been termed that of socialism and statism. In the same
|
||
way the validity of the theory is illustrated by the fact that Western Europe has been increasingly surpassed in
|
||
rates of economic growth by some of the Pacific countries, such as Japan, Hong Kong, Singapore, and
|
||
Malaysia; and that the latter, in adopting a relatively more capitalist course, have meanwhile achieved a much
|
||
higher standard of living than socialistically inclined countries which started at about the same time with roughly
|
||
the same basis of economic development, such as India.
|
||
Coming then to more specific observations, there are the recent ex periences of Portugal, where in
|
||
1974 the autocratic Salazar regime of con servative socialism (on this type of socialism see the following
|
||
chapter), [p. 61] which had kept Portugal one of the poorest countries in Europe, was sup planted in an
|
||
upheaval by redistributive socialism (with elements of nationalization) and where since then the standard of
|
||
living has fallen even further, literally turning the country into a third world region. There is also the socialist
|
||
experiment of Mitterand’s France, which produced an immediate deterioration of the economic situation, so
|
||
noticeable—most conspicuous being a drastic rise in unemployment and repeated currency devaluations—that
|
||
after less than two years, sharply reduced public support for the government forced a reversal in policy, which
|
||
was almost comic in that it amounted to a complete denial of what only a few weeks before had been
|
||
advocated as its dearest convictions.
|
||
The most instructive case, though, might again be provided by Germany and, this time, West
|
||
Germany.18 From 1949 to 1966 a liberal-conservative government which showed a remarkable commitment
|
||
to the principles of a market economy existed, even though from the very beginning there was a considerable
|
||
degree of conservative-socialist elements mixed in and these elements gained more importance over time. In
|
||
any case, of all the major European nations, during this period West Germany was, in relative terms, definitely
|
||
the most capitalist country, and the result of this was that it be came Europe’s most prosperous society, with
|
||
growth rates that surpassed those of all its neighbors. Until 1961, millions of German refugees, and afterwards
|
||
millions of foreign workers from southern European countries became integrated into its expanding economy,
|
||
and unemployment and inflation were almost unknown. Then, after a brief transition period, from 1969 to
|
||
1982 (almost an equal time span) a social-democratically led socialist-liberal government took over. It raised
|
||
taxes and social security contributions considerably, increased the number of public employees, poured
|
||
additional tax funds into existing social programs and created new ones, and significantly increased spending on
|
||
all sorts of so-called “public [p. 62] goods, “thereby allegedly equalizing opportunities and enhancing the over
|
||
all “quality of life.” By resorting to a Keynesian policy of deficit spending and unanticipated inflation, the effects
|
||
of raising the socially guaranteed minimum provisions for nonproducers at the expense of more heavily taxed
|
||
producers could be delayed for a few years (the motto of the economic policy of former West German
|
||
Chancellor Helmut Schmidt was “rather 5% inflation than 5% unemployment”). They were only to become
|
||
more drastic somewhat later, however, as unanticipated inflation and credit expansion had created and
|
||
prolonged the over- or rather malinvestment typical of a boom. As a result, not only was there much more than
|
||
5 percent inflation, but unemployment also rose steadily and approached 10 percent; the growth of GNP
|
||
became slower and slower until it actually fell in absolute terms during the last few years of the period. Instead
|
||
of being an expanding economy, the absolute number of people employed decreased; more and more pressure
|
||
was generated on foreign workers to leave the country and the immigration barriers were simultaneously raised
|
||
to ever higher levels. All of this happened while the importance of the underground economy grew steadily.
|
||
But these were only the more evident effects of a narrowly defined economic kind. There were other
|
||
effects of a different sort, which were ac tually of more lasting importance. With the new socialist-liberal
|
||
government the idea of equalizing opportunity came to the ideological forefront. And as has been predicted
|
||
theoretically, it was in particular the official spreading of the idea mehr Demokratie wagen (“risk more
|
||
Democracy”)—initially one of the most popular slogans of the new (Willy Brandt) era—that led to a degree of
|
||
politicalization unheard of before. All sorts of demands were raised in the name of equality of opportunity; and
|
||
there was hardly any sphere of life, from childhood to old age, from leisure to work conditions, that was not
|
||
examined intensely for possible differences that it offered to different people [p. 63] with regard to
|
||
opportunities defined as relevant. Not surprisingly, such op portunities and such differences were found
|
||
constantly,19 and, accordingly, the realm of politics seemed to expand almost daily. “There is no question that
|
||
is not a political one” could be heard more and more often. In order to stay ahead of this development the
|
||
parties in power had to change, too. In particular the Social Democrats, traditionally a blue-collar workers’
|
||
party, had to develop a new image. With the idea of equalizing opportunity gain ing ground, it increasingly
|
||
became, as could be predicted, the party of the (verbal) intelligentsia, of social scientists and of teachers. And
|
||
this “new” party, almost as if to prove the point that a process of politicalization will be sustained mainly by
|
||
those who can profit from its distributional schemes and that the job of defining opportunities is essentially
|
||
arbitrary and a mat ter of rhetorical power, then made it one of its central concerns to channel the most diverse
|
||
political energies set in motion into the field of equalizing, above all, educational opportunities. In particular,
|
||
they “equalized” the op portunities for a high school and university education, by offering the respective
|
||
services not only free of charge but by literally paying large groups of students to take advantage of them. This
|
||
not only increased the demand for educators, teachers, and social scientists, whose payment naturally had to
|
||
come from taxes. It also amounted, somewhat ironically for a socialist party which argued that equalizing
|
||
educational opportunities would imply an income transfer from the rich to the poor, in effect to a subsidy paid
|
||
to the more intelligent at the expense of a complementary income reduction for the less intelligent, and, to the
|
||
extent that there are higher numbers of intelligent people among the middle and upper social classes than
|
||
among the lower, a subsidy to the haves paid by the have-nots.20 As a result of this process of politicalization
|
||
led by increased numbers of tax-paid educators gaining influence over increased numbers of students, there
|
||
emerged (as could be predicted) a change in the mentality of the people. It was increasingly [p. 64] considered
|
||
completely normal to satisfy all sorts of demands through political means, and to claim all sorts of alleged rights
|
||
against other sup posedly better-situated people and their property; and for a whole genera tion of people
|
||
raised during this period, it became less and less natural to think of improving one’s lot by productive effort or
|
||
by contracting. Thus, when the actual economic crisis, necessitated by the redistributionist policy, arose, the
|
||
people were less equipped than ever to overcome it, because over time the same policy had weakened
|
||
precisely those skills and talents which were now most urgently required. Revealingly enough, when the
|
||
socialist-liberal government was ousted in 1982, mainly because of its obviously miserable economic
|
||
performance, it was still the prevalent opinion that the crisis should be resolved not by eliminating the causes,
|
||
i.e., the swollen minimum provisions for nonproducers or noncontractors, but rather by another redistributive
|
||
measure: by forcibly equalizing the available work—time for employed and unemployed people. And in line
|
||
with this spirit the new conservative-liberal government in fact did no more than slow down the rate of growth
|
||
of taxation. [p. 65]
|
||
Chapter 5
|
||
The Socialism of Conservatism
|
||
In the two preceding chapters the forms of socialism most commonly known and identified as such,
|
||
and that are indeed derived from basically the same ideological sources were discussed: socialism
|
||
Russian-style, as most conspicuously represented by the communist countries of the East bloc; and
|
||
social-democratic socialism, with its most typical representatives in the socialist and social-democratic parties
|
||
of Western Europe, and to a lesser extent in the “liberals” of the United States. The property rules underlying
|
||
their policy schemes were analyzed, and the idea presented that one can apply the property principles of
|
||
Russian or social-democratic socialism in varying degrees: one can socialize all means of production or just a
|
||
few, and one can tax away and redistribute almost all income, and almost all types of income, or one can do
|
||
this with just a small portion of only a few types of income. But, as was demonstrated by theoretical means
|
||
and, less stringently, through some illustrative empirical evidence, as long as one adheres to these principles at
|
||
all and does not once and for all abandon the notion of ownership rights belonging to nonproducers (nonusers)
|
||
and non-contractors, relative impoverishment must be the result.
|
||
This chapter will show that the same is true of conservatism, because it, too, is a form of socialism.
|
||
Conservatism also produces impoverishment, and all the more so, the more resolutely it is applied. But before
|
||
going into a systematic and detailed economic analysis of the peculiar ways in which conservatism produces
|
||
this effect, it would be appropriate to take a short look at history, in order to better understand why
|
||
conservatism indeed is socialism, and how it is related to the two egalitarian forms of socialism discussed
|
||
previously.
|
||
Roughly speaking, before the eighteenth century in Europe and [p. 66] throughout the world, a social
|
||
system of “feudalism” or “absolutism,” which was in fact feudalism on a grander scale, existed.1 In abstract
|
||
terms, the social order of feudalism was characterized by a regional overlord who claimed ownership of some
|
||
territory, including all of its resources and goods, and quite often also of all of the men placed upon it, without
|
||
having originally appropriated them himself through use or work, and without having a contractual claim to
|
||
them. On the contrary, the territory, or better, the various parts of it and the goods standing on it, had been
|
||
actively oc cupied, used, and produced by different people before (the “natural owners”). The ownership
|
||
claims of the feudal lords were thus derived from thin air. Hence, the practice, based on these alleged
|
||
ownership rights, of renting land and other production factors out to the natural owners in return for goods and
|
||
services unilaterally fixed by the overlord, had to be enforced against the will of these natural owners, by brutal
|
||
force and armed violence, with the help of a noble caste of military men who were rewarded by the overlord
|
||
for their services by being allowed to participate and share in his exploitative methods and proceeds. For the
|
||
common man subject to this order, life meant tyranny, exploitation, economic stagnation, poverty, star vation,
|
||
and despair.2
|
||
As might be expected, there was resistance to this system. Interestingly enough though (from a
|
||
present-day perspective), it was not the peasant population who suffered most from the existing order, but the
|
||
merchants and traders who became the leading opponents of the feudal system. Buying at a lower price in one
|
||
place and traveling and selling at a higher price in a different place, as they did, made their subordination to any
|
||
one feudal lord relatively weak. They were essentially a class of “international” men, crossing the borders of
|
||
various feudal territories constantly. As such, in order to do business they required a stable, internationally valid
|
||
legal sys tem: a system of rules, valid regardless of time and place, defining property [p. 67] and contract,
|
||
which would facilitate the evolution of the institutions of credit, banking and insurance essential to any
|
||
large-scale trading business. Naturally, this caused friction between the merchants and the feudal lords as
|
||
representatives of various arbitrary, regional, legal systems. The mer chants became feudalism’s outcasts,
|
||
permanently threatened and harassed by the noble military caste attempting to bring them under their control.3
|
||
In order to escape this threat the merchants were forced to organize themselves and help establish
|
||
small fortified trading places at the very frin ges of the centers of feudal power. As places of partial
|
||
exterritoriality and at least partial freedom, they soon attracted growing numbers of the peasantry running away
|
||
from feudal exploitation and economic misery, and they grew into small towns, fostering the development of
|
||
crafts and productive enterprises which could not have emerged in the surroundings of ex ploitation and legal
|
||
instability characteristic of the feudal order itself. This process was more pronounced where the feudal powers
|
||
were relatively weak and where power was dispersed among a great number of often very minor, rival feudal
|
||
lords. It was in the cities of northern Italy, the cities of the Hanseatic league, and those of Flanders that the
|
||
spirit of capitalism first blossomed, and commerce and production reached their highest levels.4
|
||
But this partial emancipation from the restrictions and the stagnation of feudalism was only temporary,
|
||
and was followed by reaction and decline. This was due in part to internal weaknesses in the movement of the
|
||
new merchant class itself. Still too much ingrained in the minds of men was the feudal way of thinking in terms
|
||
of different ranks assigned to people, of subordination and power, and of order having to be imposed upon
|
||
men through coercion. Hence, in the newly emerging commercial centers a new set of noncontractual
|
||
regulations and restrictions—now of “bourgeois” origin—was soon established, guilds that restrained free
|
||
competition were formed, and a new merchant oligarchy arose.5 More important, though, for this reactionary
|
||
[p. 68] process was yet another fact. In their endeavor to free themselves from the exploitative interventions of
|
||
the various feudal lords, the merchants had to look for natural allies. Understandably enough, they found such
|
||
allies among those from the class of feudal lords who, though comparatively more powerful than their noble
|
||
fellows, had the centers of their power at a relatively greater distance from the commercial towns seeking
|
||
assistance. In aligning themselves with the merchant class, they sought to extend their power beyond its present
|
||
range at the expense of other, minor lords.6 In order to achieve this goal they first granted certain exemptions
|
||
from the “normal” obligations falling upon the subjects of feudal rule to the rising urban centers, thus assuring
|
||
their existence as places of partial freedom, and offered protection from the neighboring feudal powers. But as
|
||
soon as the coalition had succeeded in its joint attempt to weaken the local lords and the merchant towns’
|
||
“foreign” feudal ally had thereby become established as a real power outside of its own traditional territory, it
|
||
moved ahead and established itself as a feudal super power, i.e., as a monarchy, with a king who
|
||
superimposed his own exploitative rules onto those of the already ex isting feudal system. Absolutism had been
|
||
born; and as this was nothing but feudalism on a larger scale, economic decline again set in, the towns
|
||
disintegrated, and stagnation and misery returned.7
|
||
It was not until the late seventeenth and early eighteenth centuries, then, that feudalism came under truly
|
||
heavy attack. This time the attack was more severe, because it was no longer simply the attempt of practical
|
||
men—the merchants—to secure spheres of relative freedom in order to do their prac tical business. It was
|
||
increasingly an ideological battle fought against feudalism. Intellectual reflection on the causes of the rise and
|
||
decline of commerce and industry that had been experienced, and a more intensive study of Roman and in
|
||
particular of Natural Law, which had both been rediscovered in the course of the merchants’ struggle to
|
||
develop an international [p. 69] merchant law and justify it against the competing claims of feudal law, had led
|
||
to a sounder understanding of the concept of liberty, and of liberty as a prerequisite to economic prosperity.8
|
||
As these ideas, culminating in such works as J. Locke’s “Two Treatises on Government,” 1688, and A.
|
||
Smith’s “Wealth of Nations,” 1776, spread and occupied the minds of a steadily expanding circle of people,
|
||
the old order lost its legitimacy. The old way of thinking in terms of feudal bonds gradually gave way to the
|
||
idea of a contractual society. Finally, as outward expressions of this changed state of affairs in public opinion,
|
||
the Glorious Revolution of 1688 in England, the American Revolution of 1776, and the French Revolution of
|
||
1789 came along; and nothing was the same after these revolutions had occurred. They proved, once and for
|
||
all, that the old order was not invincible, and they sparked new hope for further progress on the road toward
|
||
freedom and prosperity.
|
||
Liberalism, as the ideological movement that had brought about these earth-shattering events came to
|
||
be called, emerged from these revolutions stronger than ever and became for somewhat more than half a
|
||
century the dominating ideological force in Western Europe. It was the party of freedom and of private
|
||
property acquired through occupation and contract, assigning to the state merely the role of enforcer of these
|
||
natural rules.9 With remnants of the feudal system still in effect everywhere, however shaken in their ideological
|
||
foundation, it was the party representing an increasingly liberalized, deregulated, contractualized society,
|
||
internally and externally, i.e., regarding domestic as well as foreign affairs and relations. And as under the
|
||
pressure of liberal ideas the European societies became increasingly free of feudal restrictions, it also became
|
||
the party of the Industrial Revolution, which was caused and stimulated by this very process of liberalization.
|
||
Economic development set in at a pace never before experienced by mankind. Industry and commerce
|
||
flourished, and capital formation and accumulation [p. 70] reached new heights. While the standard of living
|
||
did not rise immediately for everyone, it became possible to support a growing number of people—people,
|
||
that is, who only a few years before, under feudalism, would have died of starvation because of the lack of
|
||
economic wealth, and who could now survive. In addition, with population growth leveling off below the
|
||
growth rate of capital, now everyone could realistically entertain the hope of rising living standards being just
|
||
around the corner.10
|
||
It is against this background of history (somewhat streamlined, of course, as it has just been presented)
|
||
that the phenomenon of conservatism as a form of socialism and its relation to the two versions of socialism
|
||
originating in Marxism must be seen and understood. All forms of socialism are ideological responses to the
|
||
challenge posed by the advance of liberalism; but their stand taken against liberalism and feudalism—the old
|
||
order that liberalism had helped to destroy—differs considerably. The ad vance of liberalism had stimulated
|
||
social change at a pace, to an extent, and in variations unheard of before. The liberalization of society meant
|
||
that in creasingly only those people could keep a given social position once ac quired who could do so by
|
||
producing most efficiently for the most urgent wants of voluntary consumers with as little cost as possible, and
|
||
by relying exclusively on contractual relationships with respect to the hiring of factors of production and, in
|
||
particular, of labor. Empires upheld solely by force were crumbling under this pressure. And as consumer
|
||
demand to which the production structure now increasingly had to adapt (and not vice versa) was changing
|
||
constantly, and the upspring of new enterprises became in creasingly less regulated (insofar as it was the result
|
||
of original appropria tion and/or contract), no one’s relative position in the hierarchy of income and wealth was
|
||
secure anymore. Instead, upward and downward social mobility increased significantly, for neither particular
|
||
factor-owners nor owners of particular labor services were any longer immune to respective [p. 71] changes in
|
||
demand. They were no longer guaranteed stable prices or a stable income.11
|
||
Old Marxist and new social-democratic socialism are the egalitarian, progressive answers to this
|
||
challenge of change, uncertainty, and mobility. Like liberalism, they hail the destruction of feudalism and the
|
||
advance of capitalism. They realize that it was capitalism that freed people from exploitative feudal bonds and
|
||
produced enormous improvements in the economy; and they understand that capitalism, and the development
|
||
of the productive forces brought about by it, was a necessary and positive evolu tionary step on the way
|
||
toward socialism. Socialism, as they conceive it, shares the same goals with liberalism: freedom and prosperity.
|
||
But socialism supposedly improves on the achievements of liberalism by sup planting capitalism—the anarchy
|
||
of production of private competitors which causes the just-mentioned change, mobility, uncertainty, and unrest
|
||
in the social fabric—at its highest stage of development by a rationally planned and coordinated economy
|
||
which prevents insecurities derived from this change from being felt at an individual level. Unfortunately, of
|
||
course, as the last two chapters have sufficiently demonstrated, this is a rather confused idea. It is precisely by
|
||
making individuals insensitive to change through redistributional measures that the incentive to adapt quickly to
|
||
any future change is taken away, and hence the value, in terms of consumer evaluations, of the output
|
||
produced will fall. And it is precisely because one plan is substituted for many seemingly uncoordinated ones
|
||
that individual freedom is reduced and, mutatis mutandis, government by one man over another increased.
|
||
Conservatism, on the other hand, is the anti-egalitarian, reactionary answer to the dynamic changes set
|
||
in motion by a liberalized society: It is anti-liberal and, rather than recognizing the achievements of liberalism,
|
||
tends to idealize and glorify the old system of feudalism as orderly and stable.12 As a postrevolutionary
|
||
phenomenon, it does not necessarily and [p. 72] outrightly advocate a return to the prerevolutionary status quo
|
||
ante and ac cepts certain changes, however regretfully, as irreversible. But it is hardly ruffled when old feudal
|
||
powers that had lost all or parts of their estates to the natural owners in the course of the liberalization process
|
||
are restored to their old position, and it definitely and openly propagates the conservation of the status quo,
|
||
i.e., the given highly unequal distribution of property, wealth, and income. Its idea is to stop or slow down the
|
||
permanent changes and mobility processes brought about by liberalism and capitalism as completely as
|
||
possible and, instead, to recreate an orderly and stable social system in which everyone remains securely in the
|
||
position that the past had assigned to him.13
|
||
In order to do so, conservatism must, and indeed does, advocate the legitimacy of noncontractual
|
||
means in the acquisition and retention of property and income derived from it, since it was precisely the
|
||
exclusive reliance on contractual relations that caused the very permanence of chan ges in the relative
|
||
distribution of income and wealth. Just as feudalism al lowed the acquisition and upholding of property and
|
||
wealth by force, so conservatism ignores whether or not people have acquired or retain their given income-and
|
||
wealth-position through original appropriation and con tract. Instead, conservatism deems it appropriate and
|
||
legitimate for a class of once-established owners to have the right to stop any social change that it considers a
|
||
threat to their relative position in the social hierarchy of income and wealth, even if the various individual
|
||
owner-users of various production factors did not contract into any such agreement. Conservatism, then, must
|
||
be addressed as the ideological heir of feudalism. And as feudalism must be described as aristocratic socialism
|
||
(which should be clear enough from its above characterization), so must conservatism be considered as the
|
||
socialism of the bourgeois establishment. Liberalism, to which both the egalitarian and the conservative
|
||
versions of socialism are ideological [p. 73] responses, reached the height of its influence around the
|
||
mid-nineteenth century. Probably its very last glorious achievements were the repeal of the Corn Laws in
|
||
England in 1846, accomplished by R. Cobden, J. Bright and the anti-corn law league, and the 1848
|
||
revolutions of continental Europe. Then, because of internal weaknesses and inconsistencies in the ideology of
|
||
liberalism,14 the diversions and the divisiveness which the various nation states’ imperialist adventures had
|
||
brought about, and last but not least be cause of the appeal that the different versions of socialism with their
|
||
various promises of security and stability had and still have for the public’s widespread distaste for dynamic
|
||
change and mobility,15 liberalism’s decline set in. Socialism increasingly supplanted it as a dominating
|
||
ideological force, thereby reversing the process of liberalization and once again impos ing more and more
|
||
noncontractual elements on society.16 At different times and places, different types of socialism found support
|
||
in public opinion to varying degrees, so that today traces of all of them can be found to coexist in different
|
||
degrees everywhere and to compound their respective im poverishment effects on the process of production,
|
||
the upkeep of wealth and the formation of character. But it is the influence of conservative socialism, in
|
||
particular, that must be stressed, especially because it is very often overlooked or underestimated. If today the
|
||
societies of Western Europe can be described as socialist, this is due much more to the influence of the
|
||
socialism of conservatism than to that of egalitarian ideas. It is the peculiar way in which conservatism exerts its
|
||
influence, though, that ex plains why this is often not recognized. Conservatism not only shapes the social
|
||
structure by enacting policy; especially in societies like the European ones where the feudal past has never
|
||
been completely shaken off but where a great number of feudal remnants survived even the peak of liberalism.
|
||
An ideology such as conservatism also exerts its influence, very inconspicuous ly, by simply maintaining the
|
||
status quo and letting things continue to be [p. 74] done according to age-old traditions. What then are the
|
||
specifically con servative elements in present-day societies, and how do they produce rela tive
|
||
impoverishment?. With this question, we turn to the systematic analysis of conservatism and its economic and
|
||
socio-economic effects. An abstract characterization of the property rules underlying conservatism and a
|
||
description of these rules in terms of the natural theory of property shall again be the starting point. There are
|
||
two such rules. First, conservative socialism, like social-democratic socialism, does not outlaw private
|
||
property. Quite to the contrary: everything—all factors of production and all of the nonproductively used
|
||
wealth—can in principle be privately owned, sold, bought, rented out, with the exception again only of such
|
||
areas as educa tion, traffic and communication, central banking, and security production. But then secondly, no
|
||
owner owns all of his property and all of the income that can be derived from its utilization. Rather, part of this
|
||
belongs to the society of present owners and income recipients, and society has the right to allocate present
|
||
and future produced income and wealth to its individual members in such a way that the old, relative
|
||
distribution of income and wealth is preserved. And it is also society’s right to determine how large or small the
|
||
income and wealth-share that is so administered should be, and what exactly is needed to preserve a given
|
||
income and wealth-distribution.17
|
||
From the perspective of the natural theory of property, the property ar rangement of conservatism
|
||
again implies an aggression against the rights of natural owners. Natural owners of things can do whatever they
|
||
wish with them, as long as they do not uninvitedly change the physical integrity of someone else’s property.
|
||
This implies, in particular, their right to change their property or to put it to different uses in order to adapt to
|
||
anticipated changes in demand and so preserve or possibly enhance its value; and it also gives them the right to
|
||
reap privately the benefits of increased property values that stem from unanticipated changes in demand—from
|
||
changes, [p. 75] that is, that were lucky for them, but which they did not foresee or effectuate. But at the same
|
||
time, since according to the principles of the natural theory of property every natural owner is only protected
|
||
against physical invasion and the noncontractual acquisition and transfer of property titles, it also implies that
|
||
everyone constantly and permanently runs the risk that through changes in demand or actions which other
|
||
owners perform with their property, property values will fall below their given level. According to this theory,
|
||
however, no one owns the value of his property and hence no one, at any time, has the right to preserve and
|
||
restore his property values. As compared with this, conservatism aims precisely at such a preservation or
|
||
restoration of values and their relative distribution. But this is only possible, of course, if a redistribution in the
|
||
assignment of property titles takes place. Since no one’s property values depend exclusively on one’s own
|
||
actions performed with one’s own property, but also, and inescapably so, on other peoples’ actions
|
||
performed with scarce means under their own control (and beyond that of another’s), in order to preserve
|
||
given property values someone—some single person or some group of persons—would have to rightfully own
|
||
all scarce means (far beyond those that are actually controlled or used by this person or group of persons).
|
||
Furthermore, this group must literally own all persons’ bodies, since the use that a person makes of his body
|
||
can also influence (increase or decrease) existing property values. Thus, in order to realize the goal of
|
||
conservatism, a redistribution of property titles must occur away from people as user-owners of scarce
|
||
resources onto people who, whatever their merits as past producers, did not presently use or contractually
|
||
acquire those things whose utilization had led to the change in the given distribution of values.
|
||
With this understood, the first conclusion regarding the general economic effect of conservatism lies at
|
||
hand: with the natural owners of things fully or partially expropriated to the advantage of nonusers,
|
||
nonproducers [p. 76] and noncontractors, conservatism eliminates or reduces the former’s incentive to do
|
||
something about the value of existing property and to adapt to changes in demand. The incentives to be aware
|
||
of and to an ticipate changes in demand, to quickly adjust existing property and to use it in a manner consistent
|
||
with such changed circumstances, to increase productive efforts, and to save and invest are reduced, as the
|
||
possible gains from such behavior can no longer be privately appropriated but will be so cialized. Mutatis
|
||
mutandis, the incentive is increased to do nothing in order to avoid the permanent risk of one’s property values
|
||
falling below their present level, as the possible losses from such behavior no longer have to be privately
|
||
appropriated, but will also be socialized. Thus, since all these activities—the avoidance of risk, awareness,
|
||
adaptability, work, and saving—are costly and require the use of time and possibly other scarce resources
|
||
which at the same time could be used in alternative ways (for leisure and consumption, for instance), there will
|
||
be fewer of the former activities and more of the latter, and as a consequence the general standard of living will
|
||
fall. Hence, one would have to conclude that the conservative goal of preserving existing values and existing
|
||
distributions of values among dif ferent individuals can only be accomplished at the expense of a general,
|
||
relative drop in the overall value of newly produced and old, maintained goods, i.e., reduced social wealth.
|
||
It has probably become apparent by now that from the point of view of economic analysis, there is a
|
||
striking similarity between the socialism of conservatism and social-democratic socialism. Both forms of
|
||
socialism involve a redistribution of property titles away from producers/contractors onto
|
||
nonproducers/noncontractors, and both thereby separate the processes of producing and contracting from that
|
||
of the actual acquisition of income and wealth. In doing this, both make the acquisition of income and wealth a
|
||
political affair—an affair, that is, in the course of which one (group of) person(s) [p. 77] imposes its will
|
||
regarding the use of scarce means onto the will of other, recalcitrant people; both versions of socialism, though
|
||
in principle claiming full ownership of all of the income and wealth produced on behalf of nonproducers, allow
|
||
their programs to be implemented in a gradual fashion and carried through to varying degrees; and both, as a
|
||
consequence of all this, must, to the extent that the respective policy is indeed enacted, lead to relative
|
||
impoverishment.
|
||
The difference between conservatism and what has been termed social-democratic socialism lies
|
||
exclusively in the fact that they appeal to different people or to different sentiments in the same people in that
|
||
they prefer a dif ferent way in which the income and wealth extracted noncontractually from producers is then
|
||
redistributed to nonproducers. Redistributive socialism assigns income and wealth to nonproducers regardless
|
||
of their past achievements as owners of wealth and income recipients, or even tries to eradicate existing
|
||
differences. Conservatism, on the other hand, allocates income to nonproducers in accordance with their past,
|
||
unequal income and wealth-position and aims at stabilizing the existing income distribution and existing income
|
||
differentials.18 The difference is thus merely one of social-psychology: in favoring different patterns of
|
||
distribution, they grant privileges to different groups of nonproducers. Redistributive socialism par ticularly
|
||
favors the have-nots among nonproducers, and especially disad vantages the haves among the producers; and,
|
||
accordingly, it tends to find its supporters mostly among the former and its enemies among the latter.
|
||
Conservatism grants special advantages to the haves among the group of nonproducers and particularly
|
||
damages the interests of the have-nots among productive people; and so it tends to find its supporters mainly in
|
||
the ranks of the former and spreads despair, hopelessness, and resentment among the latter group of people.
|
||
But although it is true that both systems of socialism are very much alike [p. 78] from an economic
|
||
point of view, the difference between them with respect to their socio-psychological basis still has an impact on
|
||
their respective economics. To be sure, this impact does not affect the general impoverish ment effects resulting
|
||
from the expropriation of producers (as explained above), which they both have in common. Instead, it
|
||
influences the choices that social-democratic socialism on the one hand and conservatism on the other make
|
||
among the specific instruments or techniques available for reaching their respective distributional goals.
|
||
Social-democratic socialism’s favorite technique is that of taxation, as described and analyzed in the preceding
|
||
chapter. Conservatism can use this instrument, too, of course; and indeed it must make use of it to some
|
||
extent, if only to finance the enforcement of its policies. But taxation is not its preferred technique, and the
|
||
explanation for this is to be found in the social-psychology of con servatism. Dedicated to the preservation of a
|
||
status quo of unequal posi tions of income, wealth, and status, taxation is simply too progressive an instrument
|
||
for reaching conservative goals. To resort to taxation means that one lets changes in the distribution of wealth
|
||
and income happen first, and only then, after they have come into existence, does one rectify things again and
|
||
restore the old order. However, to proceed in this way not only causes bad feelings, particularly among those
|
||
who through their own efforts have actually improved their relative position first and are then cut back again.
|
||
But also, by letting progress occur and then trying to undo it, conservatism weakens its own justification, i.e.,
|
||
its reasoning that a given distribution of income and wealth is legitimate because it is the one which has always
|
||
been in effect. Hence, conservatism prefers that changes do not occur in the first place, and it prefers to use
|
||
policy measures that promise to do just this, or rather, promise to help make such changes less apparent.
|
||
There are three such general types of policy measures: price-controls, regulations, and behavior
|
||
controls, all of which, to be sure, are socialistic [p. 79] measures, as is taxation, but all of which, interestingly
|
||
enough, have generally been as neglected in attempts to assess the overall degree of socialism in different
|
||
societies, as the importance of taxation in this regard has been overrated.19 I will discuss these specific
|
||
conservative policy schemes in turn.
|
||
Any change in (relative) prices evidently causes changes in the relative position of the people supplying
|
||
the respective goods or services. Hence, in order to fix their position it would seem that all that need be done
|
||
is fix prices—this is the conservative rationale for introducing price controls. To check the validity of this
|
||
conclusion the economic effects of price-fixings need to be examined.20 To begin with, it is assumed that a
|
||
selective price control for one product or one group of products has been enacted and that the current market
|
||
price has been decreed as the price above or below which the product may not to be sold. Now, as long as
|
||
the fixed price is identical to the market price, the price control will simply be ineffective. The peculiar effects
|
||
of price-fixing can only come about once this identity no longer exists. And as any price-fixing does not
|
||
eliminate the causes that would have brought about price changes, but simply decrees that no atten tion be paid
|
||
to them, this occurs as soon as there are any changes in demand, for whatever reason, for the product in
|
||
question. If the demand in creases (and prices, not being controlled, would go up as well) then the fixed price
|
||
turns into an effective maximum price, i.e., a price above which it is illegal to sell. If the demand decreases
|
||
(and prices, without controls, would fall), then the fixed price becomes an effective minimum price, i.e., a price
|
||
below which it becomes illegal to sell.21
|
||
The consequence of imposing of a maximum price is an excess demand for the goods supplied. Not
|
||
everyone willing to buy at the fixed price can do so. And this shortage will last as long as prices are not
|
||
allowed to rise with the increased demand, and hence, no possibility exists for the [p. 80] producers (who
|
||
assumedly had already been producing up to the point at which marginal costs, i.e., the cost of producing the
|
||
last unit of the product concerned, equaled marginal revenue) to direct additional resources into the specific
|
||
line of production, thus increasing output without incurring losses. Queues, rationing, favoritism,
|
||
under-the-table payments, and black markets will become permanent features of life. And the shortages and
|
||
other side effects which they bring along will even increase, as excess demand for the price-controlled goods
|
||
will spill over to all other noncontrolled goods (in particular, of course, to substitutes), increase their (relative)
|
||
prices, and thereby create an additional incentive to shift resources from controlled into noncontrolled lines of
|
||
production.
|
||
Imposing a minimum price, i.e., a price above the potential market price below which sales become
|
||
illegal, mutatis mutandis produces an excess of supply over demand. There will be a surplus of goods
|
||
produced that simply cannot find buyers. And again: this surplus will continue as long as prices are not allowed
|
||
to drop along with the reduced demand for the product in question. Milk and wine lakes, butter and grain
|
||
mountains, to cite just a few examples, will develop and grow; and as the storage bins fill up it will be come
|
||
necessary to repeatedly destroy the surplus production (or, as an al ternative, to pay the producers not to
|
||
produce the surplus anymore). Surplus production will even become aggravated as the artificially high price
|
||
attracts an even higher investment of resources in this particular field, which then will be lacking in other
|
||
production lines where there is actually a greater need for them (in terms of consumer demand), and where, as
|
||
a consequence, product prices will rise.
|
||
Maximum or minimum prices—in either case price controls will result in relative impoverishment. In
|
||
any event they will lead to a situation in which there are too many (in terms of consumer demand) resources
|
||
bound up in production lines of reduced importance and not enough are available in lines [p. 81] of increased
|
||
relevance. Production factors can no longer be allocated so that the most urgent wants are satisfied first, the
|
||
next urgent ones second, etc., or, more precisely, so that the production of any one product is not extended
|
||
above (or reduced below) the level at which the utility of the marginal product falls below (or remains above)
|
||
the marginal utility of any other product. Rather, the imposition of price controls means that less urgent wants
|
||
are satisfied at the expense of reduced satisfaction of more urgent wants. And this is to say nothing else than
|
||
that the standard of living will be reduced. That people waste their time scrambling for goods because they are
|
||
in artificially low supply or that goods are thrown away because they are held in artificially high supply are only
|
||
the two most conspicuous symptoms of this reduced social wealth.
|
||
But this is not all. The preceding analysis also reveals that conservatism cannot even reach its goal of
|
||
distributional stability by means of partial price control. With only partially controlled prices, disruptions in the
|
||
existing income and wealth position still must occur, as producers in uncontrolled lines of production, or in lines
|
||
of production with minimum product prices are favored at the expense of those in controlled lines, or lines with
|
||
maximum product prices. Hence there will continue to be an incentive for individual producers to shift from one
|
||
line of production into a different, more profitable one, with the consequence that differences in the
|
||
entrepreneurial alertness and ability to foresee and implement such profitable shifts will arise and result in
|
||
disruptions of the established order. Conservatism then, if it is indeed uncompromising in its commitment to the
|
||
preservation of the status quo, is driven to constantly enlargening the circle of goods subject to price controls
|
||
and actually cannot stop short of complete price controls or price-freezing.22 Only if the prices of all goods
|
||
and services, of capital and of consumer goods alike, are frozen at some given level, and the production
|
||
process is thus completely separated from demand—instead of disconnecting [p. 82] production and demand
|
||
at only a few points or sectors as under partial price control—does it seem possible to preserve an existing
|
||
distributional order in full. Not surprisingly, though, the price that has to be paid for such full-blown
|
||
conservatism is even higher than that of only partial price controls.23 With all-around price control, private
|
||
ownership of means of produc tion is in fact abolished. There can still be private owners in name, but the right
|
||
to determine the use of their property and to engage in any contractual exchange that is deemed beneficial is
|
||
lost completely. The immediate consequence of this silent expropriation of producers then will be a reduc tion
|
||
in saving and investing and, mutatis mutandis, an increase in consump tion. As one can no longer charge for the
|
||
fruits of one’s labor what the market will bear, there is simply less of a reason to work. And in addition, as
|
||
prices are fixed—independent of the value that consumers attach to the products in question—there is also less
|
||
of a reason to be concerned about the quality of the particular type of work or product that one still happens
|
||
to perform or produce, and hence the quality of each and every product will fall.
|
||
But even more important than this is the impoverishment that results from the allocational chaos created
|
||
by universal price controls. While all product prices, including those of all cost factors and, in particular, of
|
||
labor are frozen, the demand for the various products still changes constantly. Without price controls, prices
|
||
would follow the direction of this change and thereby create an incentive to constantly move out of less valued
|
||
lines of production into more valued ones. Under universal price controls this mechanism is completely
|
||
destroyed. Should the demand for a product in crease, a shortage will develop as prices are not allowed to
|
||
rise, and hence, because the profitability of producing the particular product has not been altered, no additional
|
||
production factors will be attracted. As a conse quence, excess demand, left unsatisfied, will spill over to other
|
||
products, increasing [p. 83] the demand for them above the level that otherwise would have been established.
|
||
But here again, prices are not allowed to rise with the in creased demand, and again a shortage will develop.
|
||
And so the process of shifting demand from most urgently wanted products to products of secon dary
|
||
importance, and from there to products of still lesser relevance, since again not everyone’s attempt to buy at
|
||
the controlled price can be satisfied, must go on and on. Finally, since there are no alternatives available and
|
||
the paper money that people still have to spend has a lower intrinsic value than even the least valuable product
|
||
available for sale, excess demand will spill over to products for which demand had originally declined. Hence,
|
||
even in those lines of production where a surplus had emerged as the consequence of declining demand but
|
||
where prices had not been allowed to fall accord ingly, sales again will pick up as a consequence of unsatisfied
|
||
demand else where in the economy; in spite of the artificially high fixed price surpluses will become saleable;
|
||
and, with profitability thus restored, an outflow of capital will be prevented even here.
|
||
The imposition of all-around price controls means that the system of production has become
|
||
completely independent of the preferences of con sumers for whose satisfaction production is actually
|
||
undertaken. The producers can produce anything and the consumers have no choice but to buy it, whatever it
|
||
is. Accordingly, any change in the production structure that is made or ordered to be made without the help
|
||
offered by freely float ing prices is nothing but a groping in the dark, replacing one arbitrary array of goods
|
||
offered by another equally arbitrary one. There is simply no con nection anymore between the production
|
||
structure and the structure of demand. On the level of consumer experience this means, as has been described
|
||
by G. Reisman, “. . . flooding people with shirts, while making them go barefoot, or inundating them with shoes
|
||
while making them go shirtless; of giving them enormous quantities of writing paper, but no pens or ink, or [p.
|
||
84] vice versa; . . . indeed of giving them any absurd combination of goods.” But, of course, “. . . merely giving
|
||
consumers unbalanced combinations of goods is itself equivalent to a major decline in production, for it
|
||
represents just as much of a loss in human well-being.”24 The standard of living does not simply depend on
|
||
some total physical output of production; it depends much more on the proper distribution or proportioning of
|
||
the various specific production factors in producing a well-balanced composition of a variety of consumer
|
||
goods. Universal price controls, as the ‘ultima ratio’ of conservatism, prevent such a well-proportioned
|
||
composition from being brought about. Order and stability are only seemingly created; in truth they are a
|
||
means of creating allocational chaos and arbitrariness, and thereby drastically reduce the general standard of
|
||
living.
|
||
In addition, and this leads to the discussion of the second specifically conservative policy instrument,
|
||
i.e., regulations, even if prices are control led all-around this can only safeguard an existing order of income
|
||
and wealth distribution if it is unrealistically assumed that products as well as their producers are “stationary.”
|
||
Changes in the existing order cannot be ruled out, though, if there are new and different products produced,
|
||
new technologies for producing products are developed, or additional producers spring up. All of this would
|
||
lead to disruptions in the existing order, as the old products, technologies, and producers, subject as they are
|
||
to price con trols, would then have to compete with new and different products and ser vices (which, since
|
||
they are new, cannot have been price-controlled), and they would probably lose some of their established
|
||
income-share to the newcomers in the course of this competition. To compensate for such disruptions,
|
||
conservatism could once again make use of the instrument of taxation, and indeed to some extent it does. But
|
||
to let innovations occur first without hindrance and to then tax the gains away from the innovators and restore
|
||
the old order is, as was explained, too progressive an instrument for a policy [p. 85] of conservatism.
|
||
Conservatism prefers regulations as a means of preventing or slowing down innovations and the social
|
||
changes that they bring about.
|
||
The most drastic way of regulating the system of production would be simply to outlaw any innovation.
|
||
Such a policy, it should be noted, has its adherents among those who complain about others’ consumerism,
|
||
i.e., about the fact that today there are already “all too many” goods and services on the market, and who wish
|
||
to freeze or even reduce this present diversity; and also, for slightly different reasons, among those who want
|
||
to freeze present production technology out of the fear that technological innova tions, as labor-saving devices,
|
||
would “destroy” (existing) jobs. Nonethe less, an outright prohibition of all innovative change has hardly ever
|
||
been seriously attempted—perhaps with the recent exception of the Pol Pot regime—because of a lack of
|
||
support in public opinion which could not be convinced that such a policy would not be extremely costly in
|
||
terms of wel fare losses. Quite popular, though, has been an only slightly more moderate approach: While no
|
||
change is ruled out in principle, any innovation must be officially approved (approved, that is, by people other
|
||
than the innovator himself) before it can be implemented. This way, conservatism argues, it is assured that
|
||
innovations are indeed socially acceptable, that progress is gradual, that it can be introduced simultaneously by
|
||
all producers, and that everyone can share in its advantages. Compulsory, i.e., government-enforced, cartels
|
||
are the most popular means for achieving this effect. By re quiring all producers, or all producers of one
|
||
industry, to become members of one supervisory organization—the cartel—it becomes possible to avoid the
|
||
all-too-visible excess supply brought about by minimum price controls—through the imposition of production
|
||
quotas. Moreover, the disruptions caused by any innovative measure can then be centrally monitored and
|
||
moderated. But while this approach has been gaining ground constantly in [p. 86] Europe and to a somewhat
|
||
lesser degree in the United States, and while certain sectors of the economy are indeed already subject to very
|
||
similar controls, the most popular and most frequently used conservative-socialist regulatory instrument is still
|
||
that of establishing predefined standards for predefined categories of products or producers to which all
|
||
innovations must conform. These regulations lay down the kind of qualifications a per son must fulfill (other
|
||
than the “normal” ones of being the rightful owner of things and of not damaging the physical integrity of other
|
||
peoples’ property through one’s own actions) in order to have the right to establish himself as a producer of
|
||
some sort; or they stipulate the kinds of tests (as regards, for instance, materials, appearance, or
|
||
measurements) a product of a given type must undergo before being newly allowed on the market; or they
|
||
prescribe definite checks that any technological improvement must pass in order to become a newly
|
||
approbated method of production. With such regulatory means innovations can neither be completely ruled
|
||
out, nor can it be altogether avoided that some changes might even be quite surprising. But as the predefined
|
||
standards to which changes have to conform must of necessity be “conservative,” i.e., formulated in terms of
|
||
existing products, producers, or technologies, they serve the purpose of conservatism in that they will indeed at
|
||
least slow down the speed of innovative changes and the range of possible surprises.
|
||
In any case, all these types of regulations, the first mentioned ones more and the latter less, will lead to
|
||
a reduction in the general standard of living.25 An innovation, to be sure, can only be successful, and thus allow
|
||
the innovator to disrupt the existing order of income and wealth distribution, if it is indeed more highly valued
|
||
by the consumers than the competing old products. The imposition of regulations, however, implies a
|
||
redistribution of property titles away from the innovators and onto the established producers, products, and
|
||
technologies. Hence, in fully or partially socializing [p. 87] possible income and wealth gains stemming from
|
||
innovative changes in the process of production and mutatis mutandis by fully or partially socializing the
|
||
possible losses from not innovating, the process of innova tion will be slowed down, there will be fewer
|
||
innovators and innovations, and instead, a strengthened tendency will emerge to settle for the way things are.
|
||
This means nothing else than that the process of increasing consumer satisfaction by producing more highly
|
||
evaluated goods and services in more efficient, cost-saving ways is brought to a standstill, or is at least
|
||
hampered. Thus, even if in a somewhat different way than price controls, regulations will make the production
|
||
structure fall out of line with demand, too. And while this might help safeguard an existing distribution of wealth,
|
||
it must once again be paid for by a general decline in the overall wealth that is in corporated in this very same
|
||
production structure.
|
||
Finally, the third specifically conservative policy instrument is behavioral controls. Price controls and
|
||
regulations freeze the supply side of an economic system and thereby separate it from demand. But this does
|
||
not preclude changes in demand from coming into existence; it only makes the supply side irresponsive to it.
|
||
And so it can still happen that discrepancies not only emerge, but that they also become appallingly apparent
|
||
as such. Behavioral controls are policy measures designed to control the demand side. They aim at the
|
||
prevention or retardation of changes in demand in order to make the irresponsiveness of the supply side less
|
||
visible, thereby completing the task of conservatism: the preservation of an existing order from disruptive
|
||
changes of any kind.
|
||
Price controls and regulations on one side, and behavioral controls on the other are thus the two
|
||
complementary parts of a conservative policy. And of these two complementary sides of conservatism, it might
|
||
well be argued that it is the side of behavioral controls that is the most distinctive feature of a conservative
|
||
policy. Though the different forms of socialism favor [p. 88] different categories of nonproductive and
|
||
noninnovative people at the ex pense of different categories of potential producers and innovators, just as
|
||
much as any other variant of socialism conservatism tends to produce less productive, less innovative people,
|
||
forcing them to increase consumption or channel their productive and innovative energies into black markets.
|
||
But of all the forms of socialism, it is only conservatism which as part of its program interferes directly with
|
||
consumption and noncommercial exchan ges. (All other forms, to be sure, have their effect on consumption,
|
||
too, in sofar as they lead to a reduction in the standard of living; but unlike conservatism, they leave the
|
||
consumer pretty much alone with whatever is left for him to consume.) Conservatism not only cripples the
|
||
development of one’s productive talents; under the name “paternalism” it also wants to freeze the behavior of
|
||
people in their roles as isolated consumers or as ex change partners in noncommercial forms of exchanges,
|
||
thereby stifling or suppressing one’s talent to develop a consumer lifestyle that best satisfies one’s recreational
|
||
needs, too.
|
||
Any change in the pattern of consumer behavior has its economic side effects. (If I let my hair grow
|
||
longer this affects the barbers and the scissors industry; if more people divorce this affects lawyers and the
|
||
housing market; if I start smoking marijuana this has consequences not only for the use of agricultural land but
|
||
also for the ice cream industry, etc.; and above all, all such behavior disequilibrates the existing value system of
|
||
whoever happens to feel affected by it.) Any change could thus appear to be a disruptive element vis à visa
|
||
conservative production structure, conservatism, in principle, would have to consider all actions—the whole
|
||
lifestyle of people in their roles as individual consumers or noncommercial exchangers as proper objects of
|
||
behavioral controls. Full-blown conservatism would amount to the establishment of a social system in which
|
||
everything except the traditional way of behaving (which is explicitly allowed) is outlawed. In practice,
|
||
conservatism [p. 89] could never go quite this far, as there are costs connected with controls and as it would
|
||
normally have to reckon with rising resistance in the public opinion. “Normal” conservatism, then, is
|
||
characterized instead by smaller or greater numbers of specific laws and prohibitions which out law and punish
|
||
various forms of nonaggressive behavior of isolated con sumers, or of people engaging in noncommercial
|
||
exchanges—of actions, that is to say, which if indeed performed, would neither change the physical integrity of
|
||
anyone else’s property, nor violate anyone’s right to refuse any exchange that does not seem advantageous,
|
||
but which would rather (only) disrupt the established “paternal” order of social values.
|
||
Once again the effect of such a policy of behavioral controls is, in any case, relative impoverishment.
|
||
Through the imposition of such controls not only is one group of people hurt by the fact that they are no longer
|
||
allowed to perform certain nonaggressive forms of behavior but another group benefits from these controls in
|
||
that they no longer have to tolerate such dis liked forms of behavior. More specifically, the losers in this
|
||
redistribution of property rights are the user-producers of the things whose consumption is now hampered, and
|
||
those who gain are nonusers/nonproducers of the con sumer goods in question. Thus, a new and different
|
||
incentive structure regarding production or nonproduction is established and applied to a given population. The
|
||
production of consumer goods has been made more costly since their value has fallen as a consequence of the
|
||
imposition of controls regarding their use, and, mutatis mutandis, the acquisition of consumer satisfaction
|
||
through nonproductive, noncontractual means has been made relatively less costly. As a consequence, there
|
||
will be less production, less saving and investing, and a greater tendency instead to gain satisfaction at the
|
||
expense of others through political, i.e., aggressive, methods. And, in particular, insofar as the restrictions
|
||
imposed by behavioral controls con cern the use that a person can make of his own body, the consequence
|
||
will [p. 90] be a lowered value attached to it and, accordingly, a reduced investment in human capital.
|
||
With this we have reached the end of the theoretical analysis of conser vatism as a special form of
|
||
socialism. Once again, in order to round out the discussion a few remarks which might help illustrate the
|
||
validity of the above conclusions shall be made. As in the discussion of social-democratic socialism, these
|
||
illustrative observations should be read with some precau tions: first, the validity of the conclusions reached in
|
||
this chapter has been, can, and must be established independent of experience. And second, as far as
|
||
experience and empirical evidence are concerned, there are unfortunately no examples of societies that could
|
||
be studied for the effects of conservatism as compared to the other variants of socialism and capitalism. There
|
||
is no quasi-experimental case study which alone could provide one with what is normally considered “striking”
|
||
evidence. Reality is rather such that all sorts of policy measures—conservative, social-democratic,
|
||
Marxist-socialist, and also capitalist-liberal—are so mixed and combined, that their respective effects cannot
|
||
usually be neatly matched with definite causes, but must be disentangled and matched once more by purely
|
||
theoretical means.
|
||
With this in mind, though, something might well be said about the actual performance of conservatism
|
||
in history. Once more, the difference in the living standards between the United States and the countries of
|
||
Western Europe (taken together) permits an observation that fits the theoretical picture. Surely, as mentioned
|
||
in the previous chapter, Europe has more redistributive socialism—as indicated roughly by the overall degree
|
||
of taxation—than the United States, and is poorer because of this. But more striking still is the difference that
|
||
exists between the two with respect to the degree of conservatism.26 Europe has a feudal past that is
|
||
noticeable to this very day, in particular in the form of numerous regulations that restrict [p. 91] trade and
|
||
hamper entry and prohibitions of nonaggressive actions, whereas the United States is remarkably free of this
|
||
past. Connected with this is the fact that for long periods during the nineteenth and twentieth centuries, Europe
|
||
had been shaped by policies of more or less explicitly conservative parties rather than by any other political
|
||
ideology, whereas a genuinely con servative party never existed in the United States. Indeed, even the socialist
|
||
parties of Western Europe were infected to a notable extent by conser vatism, in particular under the influence
|
||
of the labor unions, and imposed numerous conservative-socialist elements (regulations and price controls, that
|
||
is) on the European societies during their periods of influence (while they admittedly helped abolish some of the
|
||
conservative behavioral controls). In any case then, given that Europe is more socialist than the United States
|
||
and its living standards are relatively lower, this is due less to the greater influence of social-democratic
|
||
socialism in Europe and more to the influence of the socialism of conservatism—as indicated not so much by
|
||
its higher overall degrees of taxation, but rather by the significantly higher numbers of price controls,
|
||
regulations, and behavioral controls in Europe. I should hasten to add that the United States is not richer than it
|
||
actually is and no longer exhibits its nineteenth century economic vigor not only be cause they adopted more
|
||
and more of redistributive socialism’s policies over time, but more so because they, too, increasingly fell prey
|
||
to the con servative ideology of wanting to protect a status quo of income and wealth distribution from
|
||
competition, and in particular the position of the haves among existing producers, by means of regulations and
|
||
price controls.27
|
||
On even a more global level, another observation fits the theoretically derived picture of conservatism
|
||
causing impoverishment. For outside the so-called Western world, the only countries that match the miserable
|
||
economic performance of the outrightly Marxist-socialist regimes are precisely those societies in Latin America
|
||
and Asia that have never seriously [p. 92] broken with their feudal past. In these societies, vast parts of the
|
||
economy are even now almost completely exempt from the sphere and the pressure of freedom and
|
||
competition and are instead locked in their traditional position by regulatory means, enforced, as it were, by
|
||
outright aggression.
|
||
On the level of more specific observations the data also clearly indicate what the theory would lead
|
||
one to expect. Returning to Western Europe, there can be little doubt that of the major European countries,
|
||
Italy and France are the most conservative, especially if compared with the northern nations which, as far as
|
||
socialism is concerned, have been leaning more toward its redistributive version.28 While the level of taxation
|
||
in Italy and France (state expenditure as part of GNP) is not higher than elsewhere in Europe, these two
|
||
countries clearly exhibit more conservative-socialist ele ments than can be found anywhere else. Both Italy and
|
||
France are studded with literally thousands of price controls and regulations, making it highly doubtful that
|
||
there is any sector in their economies that can be called “free” with some justification. As a consequence (and
|
||
as could have been predicted), the standard of living in both countries is significantly lower than that of northern
|
||
Europe, as anyone who is not traveling exclusively in resort towns cannot fail to notice. In both countries, to be
|
||
sure, one objective of conservatism seems to have been reached: the differences between the haves and the
|
||
have-nots have been well-preserved—one will hardly find as extreme income and wealth differentials in West
|
||
Germany or the United States as in Italy or France—but the price is a relative drop in social wealth. As a
|
||
matter of fact, this drop is so significant that the standard of living for the lower and lower-middle class in both
|
||
countries is at best only a bit higher than that in the more liberalized countries of the East bloc. And the
|
||
southern provinces of Italy, in particular, where even more regulations have been piled on top of those valid
|
||
everywhere in the country, have just barely left the camp of the third world nations. [p. 93]
|
||
Finally, as a last example that illustrates the impoverishment caused by conservative policies, the
|
||
experience with national-socialism in Germany and to a lesser degree with Italian fascism should be mentioned.
|
||
It is often not understood that both were conservative-socialist movements.29 It is as such, i.e., as movements
|
||
directed against the change and the social disrup tions brought about by the dynamic forces of a free economy,
|
||
that they—other than Marxist-socialist movements—could find support among the class of established
|
||
proprietors, shop owners, farmers and entrepreneurs. But to derive from this the conclusion that it must have
|
||
been a pro-capitalist movement or even the highest stage in the development of capitalism before its final
|
||
demise, as Marxists normally do, is entirely wrong. Indeed, fascism’s and Nazism’s most fervently abhorred
|
||
enemy was not socialism as such, but liberalism. Of course, both also despised the socialism of the Marxists
|
||
and Bolshevists, because at least ideologically they were internationalists and pacifists (relying on the forces of
|
||
history that would lead to a destruction of capitalism from within), while fascism and Nazism were nationalist
|
||
movements devoted to war and conquest; and, probably even more important regarding its public support,
|
||
because Marxism implied that the haves would be expropriated by the have-nots and the social order thus
|
||
would be turned upside-down, while fascism and Nazism promised to preserve the given order.30 But, and
|
||
this is decisive for their classification as socialist (rather than capitalist) movements, to pursue this goal
|
||
implies—as has been explained in detail above—just as much a denial of the rights of the individual user-owner
|
||
of things to do with them whatever seems best (provided one does not physically damage another’s property
|
||
or engage in noncontractual exchanges), and just as much an expropriation of natural owners by “society’ (that
|
||
is, by people who neither produced nor contractually acquired the things in question) as does the policy of
|
||
Marxism. And indeed, in order to reach this goal both fascism and Nazism did exactly what their classification
|
||
[p. 94] as conservative-socialist would have led one to expect: they established highly controlled and regulated
|
||
economies in which private ownership was still existent in name, but had in fact become meaningless, since the
|
||
right to determine the use of the things owned had been almost completely lost to political institutions. The
|
||
Nazis, in particular, imposed a system of almost complete price controls (including wage controls), devised the
|
||
institution of four-year plans (almost like in Russia, where the plans spanned the period of five years) and
|
||
established economic planning and supervising boards which had to approve all significant changes in the
|
||
production structure. An “owner” could no longer decide what to produce or how to produce it, from whom
|
||
to buy or to whom to sell, what prices to pay or to charge, or how to implement any changes. All this, to be
|
||
sure, created a feeling of security. Everyone was assigned a fixed position, and wage-earners as well as
|
||
owners of capital received a guaranteed, and in nominal terms, stable or even growing income. In addition,
|
||
giant forced labor programs, the reintroduction of conscription, and finally the implementation of a war
|
||
economy strengthened the illusion of economic expansion and prosperity.31 But as would have to be expected
|
||
from an economic system that destroys a producer’s incentive to adjust to demand and avoid not adjusting to
|
||
it, and that thereby separates demand from production, this feeling of prosperity proved to be nothing but an
|
||
illusion. In reality, in terms of the goods that people could buy for their money the standard of living fell, not
|
||
only in relative but even in absolute terms.32 And in any case, even disregarding here all of the destruction that
|
||
was caused by the war, Germany and to a lesser extent Italy were severely impoverished after the defeat of
|
||
the Nazis and fascists. [p. 95]
|
||
Chapter 6
|
||
The Socialism of Social Engineering
|
||
and The Foundations of Economic Analysis
|
||
In light of the theoretical arguments presented in the preceding chapters it appears that there is no
|
||
economic justification for socialism. Socialism promised to bring more economic prosperity to the people than
|
||
capitalism, and much of its popularity is based on this promise. The arguments brought forward, though, have
|
||
proved that the opposite is true. It has been shown that Russian-type socialism, characterized by nationalized
|
||
or socialized means of production, necessarily involves economic waste since no prices for factors of
|
||
production would exist (because means of production would not be allowed to be bought or sold), and hence
|
||
no cost-accounting (which is the means for directing scarce resources with alternative uses into the most
|
||
value-productive lines of production) could be accomplished. And as regards social-democratic and
|
||
conservative socialism, it has been demonstrated that in any event, both imply a rise in the costs of production
|
||
and, mutatis mutandis, a decline in the costs of its alternative, i.e., non-production or black-market production,
|
||
and so would lead to a relative reduction in the production of wealth, since both versions of socialism establish
|
||
an incentive structure that (compared to a capitalist system) relatively favors nonproducers and noncontractors
|
||
over producers and contractors of goods, products and services.
|
||
Experience, too, supports this. By and large, living standards in the East European countries are
|
||
significantly lower than in Western Europe, where the degree to which the socialization of means of production
|
||
that has taken place, though certainly remarkable, is relatively much lower. Also, wherever one extends the
|
||
degree of redistributive measures and the proportion of [p. 96] produced wealth that is redistributed is
|
||
increased, as, for instance, in West Germany during the 1970s under social-democratic liberal government
|
||
coalitions, there is a retardation in the social production of wealth or even an absolute reduction in the general
|
||
standard of living. And wherever a society wants to preserve the status quo, that is, a given income and wealth
|
||
distribution, by means of price controls, regulations, and behavioral controls—as, for instance, in Hitler’s
|
||
Germany or present-day Italy and France—the living standards will constantly fall further behind those of more
|
||
liberal (capitalist) societies.
|
||
Nonetheless, socialism is very much alive and well, even in the West where social-democratic
|
||
socialism and conservatism have remained powerful ideologies. How could this come about? One important
|
||
factor is that its adherents abandoned the original idea of socialism’s economic su periority and instead,
|
||
resorted to a completely different argument: that socialism might not be economically superior but is morally
|
||
preferable. This claim will be considered in Chapter 7. But that is certainly not the end of the story. Socialism
|
||
has even regained strength in the field of economics. This became possible because socialism combined its
|
||
forces with the ideology of empiricism, which traditionally has been strong in the Anglo-Saxon world and
|
||
which, in particular through the influence of the so-called Vienna-circle of positivist philosophers, became the
|
||
dominant philosophy-epistemology-methodology of the twentieth century, not only in the field of the natural
|
||
sciences but also in the social sciences and economics. This applies not only to the philosophers and
|
||
methodologists of these sciences (who, incidentally, have since freed themselves from the spell of empiricism
|
||
and positivism) but probably even more so to the practitioners (who are still very much under its influence).
|
||
Combining its force with empiricism or positivism, which includes for our purposes the so-called critical
|
||
rationalism of K. R. Popper and his followers, socialism developed into what will henceforth [p. 97] be called
|
||
the”socialism of social engineering.”1 It is a form of socialism very different in its style of reasoning from
|
||
traditional Marxism, which was much more rationalistic and deductive—one that Marx had adopted from the
|
||
classical economist D. Ricardo, the most important source for Marx’s own economic writings. But it seems to
|
||
be precisely because of this difference in style that the socialism of social-engineering has been able to win
|
||
more and more support from the traditional camps of social-democratic and conservative socialists. In West
|
||
Germany, for instance, the ideology of “piecemeal social engineering,” as K. R. Popper has called his social
|
||
philosophy,2 has now become something like the common ground of “moderates” in all political parties, and
|
||
only doctrinaires, so it seems, of either side do not subscribe to it. The former SPD-chancellor Helmut Schmidt
|
||
even publicly endorsed Popperianism as his own philosophy.3 However, it is in the United States that this
|
||
philosophy is probably more deeply rooted, as it is almost custom-tailored to the American way of thinking in
|
||
terms of practical problems and pragmatic methods and solutions.
|
||
How could empiricism-positivism help save socialism? On a highly abstract level the answer should be
|
||
clear. Empiricism-positivism must be able to provide reasons why all the arguments given so far have failed to
|
||
be decisive; it must try to prove how one can avoid drawing the conclusions that I have drawn and still claim to
|
||
be rational and to operate in accordance with the rules of scientific inquiry. But how, in detail, can this be ac
|
||
complished? On this the philosophy of empiricism and positivism offers two seemingly plausible arguments.
|
||
The first and indeed the most central of its tenets is this:4 knowledge regarding reality, which is called empirical
|
||
knowledge, must be verifiable or at least falsifiable by experience; and experience is always of such a type that
|
||
it could, in principle, have been other than it actually was so that no one could ever know in advance, i.e.,
|
||
before actually having had some particular experience, if the outcome would be [p. 98] one way or another. If,
|
||
mutatis mutandis, knowledge is not verifiable or falsifiable by experience, then it is not knowledge about
|
||
anything real—empirical knowledge, that is—but simply knowledge about words, about the use of terms,
|
||
about signs and transformational rules for them—or analytical knowledge. And it is highly doubtful that
|
||
analytical knowledge should be ranked as “knowledge”at all.
|
||
If one assumes this position, as I will do for the moment, it is not difficult to see how the above
|
||
arguments could be severely rebuffed. The arguments regarding the impossibility of economic calculation and
|
||
the cost-raising character of social-democratic or conservative measures necessarily leading to a decline in the
|
||
production of goods and services and hence to reduced standards of living evidently claimed to be valid a
|
||
priori, i.e., not falsifiable by any kind of experience, but rather known to be true prior to any later experiences.
|
||
Now if this were indeed true, then according to the first and central tenet of empiricism-positivism, this
|
||
argument could not contain any information about reality, but instead would have to be considered idle verbal
|
||
quibbling—an exercise in tautological transformations of words such as “cost,” “production,” “output of
|
||
production,” “consumption”—which do not say anything about reality. Hence, empiricism concludes that
|
||
insofar as reality, i.e., the real consequences of real socialism, is concerned, the arguments presented thus far
|
||
carry no weight whatsoever. Rather, in order to say anything convincing about socialism, experience and
|
||
experience alone would have to be the decisive thing to consider.
|
||
If this were indeed true (as I will still assume), it would at once dispose of all of the economic
|
||
arguments against socialism which I have presented as being of a categorical nature. There simply could not be
|
||
anything categorical about reality. But even then, wouldn’t empiricism-positivism still have to face up to the real
|
||
experiences with real socialism and wouldn’t the result of this be just as decisive? In the preceding chapters,
|
||
much more emphasis [p. 99] was placed on logical, principle, categorical (all used synonomously here)
|
||
reasons directed against socialism’s claims of offering a more promising way to economic prosperity than
|
||
through capitalism; and ex perience was cited only loosely in order to illustrate a thesis whose validity could
|
||
ultimately have been known independent of illustrative experience. Nonetheless, wouldn’t even the somewhat
|
||
unsystematically cited ex perience be sufficient to make a case against socialism?
|
||
The answer to these questions is a decisive “no.” The second tenet of empiricism-positivism explains
|
||
why. It formulates the extension or rather the application of the first tenet to the problem of causality and causal
|
||
ex planation or prediction. To causally explain or predict a real phenomenon is to formulate a statement of
|
||
either the type “if A, then B” or, should the vari ables allow quantitative measurement, “if an increase (or
|
||
decrease) of A, then an increase (or decrease) of B.” As a statement referring to reality (with A and B being
|
||
real phenomena), its validity can never be established with certainty, i.e., by examination of the proposition
|
||
alone or of any other proposition from which the one in question could in turn be logically deduced, but will
|
||
always be and remain hypothetical, depending on the out come of future experiences which cannot be known
|
||
in advance. Should ex perience confirm a hypothetical causal explanation, i.e., should one observe an instance
|
||
where B indeed followed A, as predicted, this would not prove that the hypothesis is true, since A and B are
|
||
general, abstract terms (“universals,” as opposed to “proper names”) which refer to events or processes of
|
||
which there are (or, at least might, in principle, be) an indefinite number of instances, and hence later
|
||
experiences could still possibly falsify it. And if an experience falsified a hypothesis, i.e., if one observed an
|
||
instance of A that was not followed by B, this would not be decisive either, as it would still be possible that the
|
||
hypothetically related phenomena were indeed causally linked and that some other previously neglected and
|
||
uncontrolled circumstance [p. 100] (“variable”) had simply prevented the hypothesized relationship from being
|
||
actually observed. A falsification would only prove that the par ticular hypothesis under investigation was not
|
||
completely correct as it stood, but rather needed some refinement, i.e., some specification of additional
|
||
variables which one would have to watch out for and control in order to be able to observe the hypothesized
|
||
relationship between A and B. But to be sure, a falsification would never prove once and for all that a
|
||
relationship between some given phenomena did not exist.
|
||
Given that this empiricist-positivist position on causal explanation is cor rect, it is easy to see how
|
||
socialism could be rescued from empirically jus tified criticism. Of course, a socialist-empiricist would not deny
|
||
the facts. He would not argue that there indeed is a lower standard of living in Eastern than in Western Europe,
|
||
and that increased taxation or a conservative policy of regulations and controls have indeed been found to
|
||
correlate with a retardation or shrinking in the production of economic wealth. But within the boundaries of his
|
||
methodology he could perfectly well deny that based on such experiences a principled case against socialism
|
||
and its claim of offering a more promising path toward prosperity could be formulated. He could, that is to say,
|
||
play down the (seemingly) falsifying experiences, and any other that might be cited, as merely accidental; as
|
||
experiences that had been produced by some unfortunately neglected and uncontrolled circumstances which
|
||
would disappear and indeed turn into its very opposite, revealing the true relationship between socialism and
|
||
an increased production of social wealth, as soon as these circumstances had been controlled. Even the
|
||
striking differences in the standard of living between East and West Germany—the example that I stressed so
|
||
heavily because it most closely resembles that of a controlled social experiment—could thus be explained
|
||
away: in arguing, for instance, that the higher living standards in the West must be explained not by its more
|
||
capitalist mode of production, but by the [p. 101] fact that Marshall aid had streamed into West Germany
|
||
while East Germany had to pay reparations to the Soviet Union; or by the fact that from the very beginning,
|
||
East Germany encompassed Germany’s less developed, rural, agricultural provinces and so had never had the
|
||
same starting point; or that in the eastern provinces the tradition of serfdom had been discarded much later
|
||
than in the western ones and so the mentality of the people was indeed different in both East and West
|
||
Germany, etc.
|
||
In fact, whatever empirical evidence one brings forward against socialism, as soon as one adopts the
|
||
empiricist-positivist philosophy, i.e., as soon as the idea of formulating a principled case either in favor of or
|
||
against socialism is dropped as in vain and ill-conceived, and it is instead only admitted that one can, of course,
|
||
err with respect to the details of some socialist policy plan but would then be flexible enough to amend certain
|
||
points in one’s policy whenever the outcome was not satisfactory, socialism is made immune to any decisive
|
||
criticism, because any failure can always be ascribed to some as yet uncontrolled intervening variable. Not
|
||
even the most perfectly conducted, controlled experiment, it should be noted, could change this situation a bit.
|
||
It would never be possible to control all variables that might conceivably have some influence on the variable to
|
||
be explained—for the practical reason that this would involve controlling literally all of the universe, and for the
|
||
theoretical reason that no one at any point in time could possibly know what all the variables are which make
|
||
up this universe. This is a question whose answer must permanently remain open to newly discovered and
|
||
discerned experiences. Hence, the above characterized immunization strategy would work without exception
|
||
and unfailingly. And since, as we know from the writings of the empiricists themselves, and in particular those
|
||
of D. Hume, there exists no “band” that one could observe to connect visibly certain variables as causes and
|
||
effects,5 it should be noted that there would be no way whatsoever to exclude any variable as a possible [p.
|
||
102] disturbing influence from the outset without indeed trying it out and controlling it. Not even the seemingly
|
||
most absurd and ridiculous variables, such as, for instance, differences in weather, or a fly passing by in one
|
||
case but not in the other, could be ruled out in advance; all that could be done would be to point to experience
|
||
again. (“Flies passing or not passing by never made a difference for the outcome of an experiment.”) But
|
||
according to the empiricist doctrine itself, this experience, referring as it does only to past instances, would
|
||
once again not help decide the matter definitively, and a reference to it would only amount to a begging of the
|
||
question.
|
||
No matter what the charges brought against socialism are, then, as long as they are based on empirical
|
||
evidence the empiricist-socialist could argue that there is no way of knowing in advance what the results of a
|
||
certain policy scheme will be without actually enacting it and letting experience speak for itself. And whatever
|
||
the observable results are, the original socialist idea—the “hard-core” of one’s “research programme” as the
|
||
neo-Popperian philosopher Lakatos would have called it6—can always be rescued easily by pointing out
|
||
some previously neglected, more or less plausible variable, whose noncontrol is hypothesized to be responsible
|
||
for the negative result, with the newly revised hypothesis again needing to be tried out indefinitely, ad infinitum.7
|
||
Experience only tells us that a particular socialist policy scheme did not reach the goal of producing more
|
||
wealth; but it can never tell us if a slightly different one will produce any different results, or if it is possible to
|
||
reach the goal of improving the production of wealth by any socialist policy at all.
|
||
I have now reached the point in my argument where I shall challenge the validity of these two central
|
||
tenets of empiricism-positivism. What is wrong with them, and why cannot even empiricism help save
|
||
socialism? The answer will be given in three stages. First, I will demonstrate that the empiricist position proves
|
||
to be self-defeating at closer analysis because it [p. 103] itself must at least implicitly assume and presuppose
|
||
the existence of non-empirical knowledge as knowledge about reality. This being mainly a destructive task, I
|
||
will then have to address the question of how it is possible to have or conceive of knowledge that informs
|
||
about reality, but which is not itself subject to confirmation or falsification by experience. And thirdly, I will
|
||
show that such knowledge not only is conceivable and must be presupposed but that there are positive
|
||
instances of it which serve as the firm epistemological foundation on which the economic case against socialism
|
||
can be and indeed all along has been built.
|
||
In spite of the apparent plausibility of empiricism’s central ideas, it might be noted at the very outset
|
||
that even on the level of intuition things do not seem to be exactly the way empiricism would want them to be.
|
||
It certainly is not evident that logic, mathematics, geometry, and also certain statements of pure economics, like
|
||
the law of supply and demand or the quantity theory of money, because they do not allow any falsification by
|
||
experience, or rather because their validity is independent of experience, do not give us any information about
|
||
reality but are merely verbal quibble. The opposite seems much more plausible: that the propositions advanced
|
||
by these disciplines—for instance, a statement of geometry such as “If a straight line S and a circle C have
|
||
more than one point in common then S has exactly two points in common with C,” or a statement more closely
|
||
related to the field of action with which I am concerned here, such as “One cannot have his cake and eat it,
|
||
too”—do in fact inform about reality and inform about what cannot possibly be different in reality at pain of
|
||
contradiction.8 If I had a cake and ate it, it can be concluded that I do not have it anymore—and this clearly is
|
||
a conclusion that informs about reality without being falsifiable by experience.
|
||
But much more important than intuition, of course, is reflexive analysis, and this will prove the
|
||
empiricist position to be simply self-defeating. If it [p. 104] were true that empirical knowledge must be
|
||
falsifiable by experience and that analytical knowledge, which is not so falsifiable, thus cannot contain any
|
||
empirical knowledge, then what kind of statement is this fundamental statement of empiricism itself? It must
|
||
again be either analytical or empiri cal. If analytical, then according to its own doctrine this proposition is noth
|
||
ing but some scribbling on paper, hot air, entirely void of any meaningful content. It is only because the terms
|
||
used in the statement such as “knowledge,” “experience,” “falsifiable,” etc., have already been given some
|
||
meaningful interpretation that this might at first be overlooked. But the entire meaninglessness of analytical
|
||
statements follows conclusively from the empiricist-positivist ideology. Of course, and this is the first
|
||
self-defeating trap, if this were true, then empiricism could not even say and mean what it seems to say and
|
||
mean; it would be no more than a rustling of leaves in the wind. To mean anything at all, an interpretation must
|
||
be given to the terms used, and an interpretation of terms, to be sure, is always (as long as one expression
|
||
cannot be explained in terms of another one) a practical affair; an affair, that is, in which the usage of a term is
|
||
practiced and learned with real instances of the concept designated by the term, and by which a term is thus
|
||
tied to reality.9 However, not just any arbitrary interpretation would do: “falsifiable,” for instance, does not
|
||
mean what one means by “red” or “green.” In order to say what empiricism-positivism evidently wants to say
|
||
when formulating its basic tenets, the terms must be given the meaning that they actually have for the empiricist
|
||
as well as for those whom he wants to convince of the appropriateness of his methodology. But if the
|
||
statement indeed means what we thought it did all along, then it evidently contains information about reality. As
|
||
a matter of fact it informs us about the fundamental structure of reality: that there is nothing in it that can be
|
||
known to be true in advance of future confirming or falsifying experiences. And if this proposition now is taken
|
||
to be analytical, i.e., as a statement that does not allow falsification [p. 105] but whose truth can be
|
||
established by an analysis of the meanings of the terms used alone, as has been assumed for the moment, then
|
||
one has no less than a glaring contradiction at hand and empiricism once again proves to be self-defeating.10
|
||
Hence, it seems that empiricism-positivism would have to choose the other available option and
|
||
declare its central creed itself to be an empirical statement. But then, clearly, the empiricist position would no
|
||
longer carry any weight whatsoever: after all, the fundamental proposition of empiricism serving as the basis
|
||
from which all sorts of rules of correct scientific inquiry are derived could be wrong, and no one could ever be
|
||
sure if it was or was not so. One could equally well claim the exact opposite and within the con fines of
|
||
empiricism there would be no way of deciding which position was right or wrong. Indeed, if its central tenet
|
||
were declared an empirical proposition, empiricism would cease to be a methodo-logy—a logic of
|
||
science—altogether, and would be no more than a completely arbitrary ver bal convention for calling certain
|
||
(arbitrary) ways of dealing with certain statements certain (arbitrary) names. It would be a position void of any
|
||
jus tification of why it, rather than any other one, should be adopted.11
|
||
However, this is not all that can be mustered against empiricism, even if the second available alternative
|
||
is chosen. Upon closer inspection this es cape route leads to another trap of self-defeat. Even if this route were
|
||
chosen, it can be shown that the empiricist-positivist position must tacitly presuppose the existence of
|
||
nonempirical knowledge as “real” knowledge. In order to realize this, let it be assumed that a causal
|
||
explanation relating two or more events has been found to fit one particular instance of experiences regarding
|
||
such events, and is then applied to a second instance, presumably to undergo some further empirical testing.
|
||
Now, one should ask oneself what is the presupposition which must be made in order to relate the second
|
||
instance of experience to the first as either confirming or falsifying [p. 106] it? At first it might seem almost
|
||
self-evident that if in the second in stance of experience the observations of the first were repeated, this would
|
||
be a confirmation, and if not, a falsification—and clearly, the empiricist methodology assumes this to be
|
||
evident, too, and does not require further explanation. But this is not true.12 Experience, it should be noted,
|
||
only reveals that two or more observations regarding the temporal sequence of two or more types of events
|
||
can be “neutrally” classified as “repetition” or “nonrepetition.” A neutral repetition only becomes a “positive”
|
||
confirmation and a nonrepetition a “negative” falsification if, independent of what can actually be discovered by
|
||
experience, it is assumed that there are constant causes which operate in time-invariant ways. If, contrary to
|
||
this, it is assumed that causes in the course of time might operate sometimes this way and sometimes that way,
|
||
then these repetitive or nonrepetitive occurrences simply are and remain neutrally registered experiences,
|
||
completely independent of one another, and are not in any way logically related to each other as confirming or
|
||
falsifying one another. There is one experience and then there is another, they are the same or they are
|
||
different, but that is all there is to it; nothing else follows.
|
||
Thus, the prerequisite of being able to say ‘falsify’ or “confirm” is the constancy principle: the
|
||
conviction that observable phenomena are in prin ciple determined by causes that are constant and
|
||
time-invariant in the way they operate, and that in principle contingency plays no part in the way causes
|
||
operate. Only if the constancy principle is assumed to be valid does it follow from any failure to reproduce a
|
||
result that there is something wrong with an original hypothesis; and only then can a successful reproduction
|
||
indeed be interpreted as a confirmation. For only if two (or more) events are indeed cause and effect and
|
||
causes operate in a time-invariant way must it be concluded that the functional relationship to be observed
|
||
between causally related variables must be the same in all actual instances, and that [p. 107] if this is not
|
||
indeed the case, something must be at fault with the particular specification of causes.
|
||
Obviously now, this constancy principle is not itself based on or derived from experience. There is not
|
||
only no observable link connecting events. Even if such a link existed, experience could not reveal whether or
|
||
not it was time-invariant. The principle cannot be disproved by experience either, since any event which might
|
||
appear to disprove it (such as a failure to duplicate some experience) could be interpreted from the outset as if
|
||
experience had shown here that merely one particular type of event was not the cause of another (otherwise
|
||
the experience would have been successfully repeated). However, to the extent that experience cannot exclude
|
||
the possibility that another set of events might actually be found which would turn out to be time-invariant in its
|
||
way of operating, the validity of the constancy principle cannot be disproved.
|
||
Nonetheless, although neither derived from nor disprovable by ex perience, the constancy principle is
|
||
nothing less than the logically necessary presupposition for there being experiences which can be regarded as
|
||
either confirming or falsifying each other (in contrast to isolated, logically unconnected experiences). And
|
||
hence, since empiricism-positivism as sumes the existence of such logically related experiences, it must be con
|
||
cluded that it also implicitly assumes the existence of nonempirical knowledge about reality. It must assume that
|
||
there are indeed time-invariantly operating causes, and it must assume that this is the case although experience
|
||
could never possibly prove nor disprove it. Once again, then, empiricism turns out to be an inconsistent,
|
||
contradictory philosophy.
|
||
By now it should be sufficiently clear that aprioristic knowledge must exist, or at least, that
|
||
empiricism-positivism—the philosophy which is the most skeptical about its possibility—must in fact
|
||
presuppose its existence. [p. 108] Admittedly, though, the very idea of knowledge as knowledge about real
|
||
things whose validity can be ascertained independent of experience is a dif ficult one to grasp—otherwise the
|
||
overwhelming success of the philosophy of empiricism-positivism in the scientific community and in the opinion
|
||
of the “educated public” could hardly be explained. Hence, before proceeding to the more concrete task of
|
||
elucidating the specific aprioristic foundations on which the economic case against socialism rests, it would
|
||
seem appropriate to make a few rather general comments which should help make it more plausible that there
|
||
is indeed something like aprioristic knowledge.
|
||
It seems to be of great importance to first rid oneself of the notion that aprioristic knowledge has
|
||
anything to do with “innate ideas” or with “intui tive” knowledge which would not have to be discovered
|
||
somehow or learned. Innate or not, intuitive or not: these are questions that concern the psychology of
|
||
knowledge. In comparison, epistemology is concerned ex clusively with the question of the validity of
|
||
knowledge and of how to ascertain validity—and, to be sure, the problem of aprioristic knowledge is solely an
|
||
epistemological one. Aprioristic knowledge can be, and in fact quite often is, very similar to empirical
|
||
knowledge from a psychological point of view, in that both types of knowledge must be acquired, discovered,
|
||
learned. The process of discovering aprioristic knowledge might and very often indeed seems to be even more
|
||
difficult and painstaking than that of acquiring empirical knowledge, which frequently enough simply seems to
|
||
press itself onto us without our having done much about it; and also, it might well be the case genetically that
|
||
the acquisition of aprioristic knowledge requires one’s having previously had some sort of experience. But all
|
||
this, it should be repeated, does not affect the question of the validation of knowledge, and it is precisely and
|
||
exclusively in this regard that aprioristic and empirical knowledge differ categorically.13
|
||
On the positive side, the most important notion for understanding the [p. 109] possibility of a priori
|
||
knowledge, I submit, is that there are not only nature-given things which one has to learn about through
|
||
experience, but that there are also artificial, man-made things which may require the existence or use of natural
|
||
materials, but which to the very extent that they are constructs can nonetheless not only be fully understood in
|
||
terms of their structure and implications, but which also can be analyzed for the question of whether or not their
|
||
method of construction can conceivably be altered.14
|
||
There are three major fields of constructs: language and thought, actions, and fabricated objects, all of
|
||
which are man-made things. We shall not deal here with fabricated objects but will only mention in passing that
|
||
Euclidean geometry, for instance, can be conceived of as ideal norms we cannot avoid using in constructing
|
||
measurement instruments that make empirical measurements of space possible. (In so far, then, Euclidean
|
||
geometry cannot be said to have been falsified by the theory of relativity; rather, this theory presupposes its
|
||
validity through the use of its instruments of measuring.)15 The field of action, as our area of main concern, will
|
||
be analyzed when the aprioristic foundations of economics are discussed. The first explanation of aprioristic
|
||
knowledge, then, as knowledge of rules of construction which cannot conceivably be altered, shall be given
|
||
using the example of language and thought. This is chosen as the starting point, because it is language and
|
||
thought which one uses in doing what is being done here, that is, in communicating, discussing, and arguing.
|
||
As empiricists see it, language is a conventionally accepted system of signs and sign-combinations,
|
||
which, again by convention, are given some meaning, ultimately by means of ostensive definitions. According to
|
||
this view, it may seem that although language is an artificial, man-made product, nothing can be known about it
|
||
a priori. And indeed, there are lots of different languages, all using different signs, and the meaning of the terms
|
||
used can be assigned and changed arbitrarily, so that everything there is to know [p. 110] about language
|
||
must, or so it seems, be learned from experience. But this view is incorrect, or at best is only half of the truth.
|
||
True, any language is a conventional sign system, but what is a convention? Evidently, it cannot be suggested
|
||
that “convention” in turn be defined conventionally, as that would simply be begging the question. Everything
|
||
can be called a convention (and, for that matter, a language), but surely not everything that can be called one
|
||
is in fact a conventional agreement. Saying and being understood in saying “convention is used in such and
|
||
such a way” presupposes that one already knows what a convention is, as this statement would already have
|
||
to make use of language as a means of communication. Hence, one is forced to conclude that language is a
|
||
conventional sign system and as such knowledge about it can only be empirical knowledge. But in order for
|
||
there to be such a system it must be assumed that every speaker of a language already knows what a
|
||
convention is, and he must know this not simply in the way he knows that “dog” means dog, but he must know
|
||
the real, true meaning of convention. As such his knowledge of what a language is must be considered a priori.
|
||
This insight can be repeated for more particular levels. There are all sorts of specific statements that can be
|
||
made in a language, and surely experience plays a role here. However, knowing what it means to make a
|
||
proposition can definitely not be learned from experience, but rather must be presupposed of any speaker of a
|
||
language. What a proposition is cannot be explained to a speaker by just another statement unless he already
|
||
knows how to interpret this as a proposition. And the same is true with definitions: it would not do to define
|
||
“definition” ostensively by pointing to someone who is just pointing out some definition, because just as in the
|
||
case in which the word “dog” is defined by pointing to a dog, an understanding of the meaning of ostensive
|
||
definitions must already be presupposed when it is understood that pointing to a dog, accompanied by the
|
||
sound [dog] means that “dog” means dog, so in the case of [p. 111] “definition.” To define definition
|
||
ostensively would be entirely meaningless, unless one already knew that the particular sound made was
|
||
supposed to signify something whose identification should be assisted by pointing, and how then to identify
|
||
particular objects as instances of general, abstract properties. In short, in order to define any term by
|
||
convention, a speaker must be assumed to have a priori knowledge of the real meaning—the real
|
||
definition—of “definition.”16
|
||
The knowledge about language, then, that must be considered a priori in that it must be presupposed
|
||
of any speaker speaking any language, is that of how to make real conventions, how to make a proposition by
|
||
making a statement (i.e., how to mean something by saying something) and how to make a real definition and
|
||
identify particular instances of general properties. Any denial of this would be self-refuting, as it would have to
|
||
be made in a language, making propositions and using definitions. And as any experience is conceptual
|
||
experience, i.e., experience in terms of some language—and to say that this is not so and mean it would only
|
||
prove the point as it would have to be cast in a language, too—by knowing this to be true of a language a
|
||
priori, one would also know an a priori truth about reality: that it is made of particular objects that have
|
||
abstract properties, i.e., properties of which it is possible to find other instances; that any one object either
|
||
does or does not have some definite property and so there are facts that can be said to be the case, true or
|
||
wrong; and also that it cannot be known a priori what all the facts are, except that they indeed also must be
|
||
facts, i.e., instances of particular abstract properties. And once again, one does not know all this from
|
||
experience, as experience is only what can appear in the forms just described.17
|
||
With this in mind we can turn to the field of action in order to prove the specific point that one also has
|
||
positive, aprioristic knowledge of actions and consequences of actions because actions, too, are man-made
|
||
constructs [p. 112] which can be fully understood regarding their rules of construction; and that
|
||
empiricism-positivism cannot—at pain of contradiction—possibly be thought to be weakening or even
|
||
seriously challenging the economic case against socialism, as this case ultimately rests on such foundations,
|
||
whereas the empiricist philosophy stands in contradiction to it.
|
||
In the first argumentative step I shall demonstrate that the empiricist methodology, contrary to its own
|
||
claim, cannot possibly apply to actions and thereby reveal a first, albeit rather negative, instance of aprioristic
|
||
knowledge about actions. Empiricism claims that actions, just as any other phenomenon, can and must be
|
||
explained by means of causal hypotheses which can be confirmed or refuted by experience. Now if this were
|
||
the case, then empiricism would be forced to assume (contrary to its own doctrine that there is no a priori
|
||
knowledge as knowledge about reality) that time- invariantly operating causes with respect to actions exist.
|
||
One would not know in advance which particular event might be the cause of a particular action—experience
|
||
would have to reveal this. But in order to proceed the way that empiricism wants us to proceed—to relate
|
||
different experiences regarding sequences of events as either confirming or falsifying each other, and if
|
||
falsifying, then responding with a reformulation of the original causal hypothesis—a constancy over time in the
|
||
operation of causes must be presupposed. However, if this were true, and actions could indeed be con ceived
|
||
as governed by time-invariantly operating causes, what about ex plaining the explainers, i.e., the persons who
|
||
carry on the very process of hypothesis creation, of verification and falsification;—all of us, that is, who act the
|
||
way the empiricists tell us to act? Evidently, to do all this—to assimi late confirming or falsifying experiences, to
|
||
replace old hypotheses with new ones—one must assumedly be able to learn. However, if one is able to learn
|
||
from experience, and the empiricist is compelled to admit this, then one cannot know at any given time what
|
||
one will know at later time and how one will [p. 113] act on the basis of this knowledge. Rather, one can only
|
||
reconstruct the causes of one’s actions after the event, as one can only explain one’s knowledge after one
|
||
already possesses it. Thus, the empiricist methodology applied to the field of knowledge and action, which
|
||
contains knowledge as its necessary ingredient, is simply contradictory—a logical absurdity.18 The constancy
|
||
principle may be correctly assumed within the sphere of natural objects and as such the methodology of
|
||
empiricism may be applicable there, but with respect to actions, any attempt at causal empirical explanation is
|
||
logically impossible, and this, which is definitely knowledge about something real, can be known with certainty.
|
||
Nothing can be known a priori about any particular action; but a priori knowledge exists regarding actions
|
||
insofar as they are actions at all. It can be known a priori that no ac tion can be conceived of as predictable on
|
||
the basis of constantly operating causes.
|
||
The second insight regarding action is of the same type. I will demonstrate that while actions
|
||
themselves cannot be conceived of as caused, anything that is an action must presuppose the existence of
|
||
causality in the physical world in which actions are performed. Causality—which the empiricist-positivist
|
||
philosophy somehow had to assume existed in order to make its own methodological procedures logically
|
||
feasible, even though its assumption definitely could not be said to be derived from experience and justified in
|
||
terms of it—is a category of action, i.e., it is produced or constructed by us in following some procedural rule;
|
||
and this rule, as it turns out, proves to be necessary in order to act at all. In other words, this rule is such that it
|
||
cannot conceivably be falsified, as even the attempt to falsify it would have to presuppose it.
|
||
After what has been said about causality, it should indeed be easy to see that it is a produced rather
|
||
than a given feature of reality. One does not experience and learn that there are causes which always operate
|
||
in the same [p. 114] way and on the basis of which predictions about the future can be made. Rather, one
|
||
establishes that phenomena have such causes by following a particular type of investigative procedure, by
|
||
refusing on principle to allow any exceptions, i.e., instances of inconstancy, and by being prepared to deal with
|
||
them by producing a new causal hypothesis each time any such an apparent inconstancy occurs. But what
|
||
makes this way of proceeding necessary?. Why does one have to act this way?. Because behaving this way is
|
||
what performing intentional actions is; and as long as one acts inten tionally, presupposing constantly operating
|
||
causes is precisely what one does. Intentional acts are characterized by the fact that an actor interferes in his
|
||
environment and changes certain things, or prevents them from changing, and so diverts the “natural” course of
|
||
events in order to achieve a preferred result or state of affairs; or should an active interference prove
|
||
impossible, that he prepares himself for a result he cannot do anything about except anticipate in time, by
|
||
watching out for temporally prior events which indicate the later result. In any case, in order to produce a result
|
||
that otherwise would not have happened, or to be able to adapt to an inevitable result that otherwise would
|
||
have come as a complete surprise, the actor must presuppose constantly operating causes. He would not
|
||
interfere if he did not assume this would help bring about the desired result; and he would not prepare for and
|
||
adjust to anything unless he thought the events on whose basis he began his preparations were indeed the
|
||
constantly operating causal forces that would produce the result in question, and the preparation taken would
|
||
indeed lead to the goal desired. Of course, an actor could go wrong with respect to his particular assumptions
|
||
of cause-and-effect rela tions and a desired result might not come about in spite of the interference, or an
|
||
anticipated event for which preparations had been made might fail to occur. But no matter what happens in this
|
||
respect, whether or not the results conform to the expectations, whether or not actions regarding some given
|
||
[p. 115] result or event are upheld for the future, any action, changed or unchanged, presupposes that there
|
||
are constantly operating causes even if no particular cause for a particular event can be pre-known to any
|
||
actor at any time. In fact, disproving that any natural phenomenon is governed by time-invariantly operating
|
||
causes would require one to show that given phenomenon can not be anticipated or produced on the basis of
|
||
antecedent variables. But clearly, trying to prove this would again necessarily presuppose that the oc currence
|
||
or nonoccurrence of the phenomenon under scrutiny could be effected by taking appropriate action and that
|
||
the phenomenon must thus assumedly be embedded in a network of constantly operating causes. Hence, one
|
||
is forced to conclude that the validity of the constancy principle cannot be falsified by any action as any action
|
||
would have to presuppose it.19 (There is only one way in which it might be said that “experience” could
|
||
‘falsify” the constancy principle: if the physical world were indeed so chaotic that one could no longer act at all,
|
||
then of course it would not make much sense to speak of a world with constantly operating causes. But then
|
||
human beings, whose essential characteristic is to act intentionally, would also no longer be the ones who
|
||
experience this inconstancy. As long as one survives as a human being—and this is what the argument in effect
|
||
says—the constancy principle must be assumed to be valid a priori, as any action must presuppose it and no
|
||
experience that anyone could actually have could pos sibly disprove this.)20
|
||
Implied in the category of causality is that of time. Whenever one produces or prepares for a certain
|
||
result and thereby categorizes events as causes and effects, one also distinguishes between earlier and later
|
||
events. And to be sure, this categorization is not simply derived from experience, i.e., the mere observance of
|
||
things and events. The sequence of experiences as it appears in the temporal order of one’s observations is
|
||
quite a different thing from the real sequence of events in real time. As a matter of [p. 116] fact, one can
|
||
observe things in an order that is exactly the opposite of the real temporal order in which they stand to each
|
||
other. That one knows how to interpret observations in a way that might deviate from and correct on the
|
||
temporal order in which they were made and can even locate events in ob jective time requires that the
|
||
observer be an actor and know what it means to produce or prepare for some result.21 Only because one is
|
||
an actor, and experiences are those of an acting person, can events be interpreted as oc curring earlier and
|
||
later. And, one cannot know from experience that ex periences must be interpreted with reference to actions,
|
||
as the performance of any action already presupposes the possession of experiences interpreted this way. No
|
||
person who did not know what it means to act could ever experience events placed in real time, and hence the
|
||
meaning of time must be assumed to be known a priori to any actor because of the fact that he is an actor.
|
||
Furthermore, actions not only presuppose causality and an objective time order, they also require
|
||
values. Values, too, are not known to us through experience; rather, the opposite is true. One only experiences
|
||
things because they are things on which positive or negative value can be placed in the course of action. Only
|
||
by an actor, that is to say, can things be experienced as value-laden and, even more generally, only because
|
||
one is an actor does one have conscious experiences at all, as they inform about things which might be valuable
|
||
for an acting person to know. More precise ly: with every action an actor pursues a goal.22 He wants to
|
||
produce a definite result or be prepared for a result that he cannot prevent from hap pening. Whatever the goal
|
||
of his action (which, of course, one could only know from experience), the fact that it is pursued by an actor
|
||
reveals that he places value on it. As a matter of fact, it reveals that at the very start of his action he places a
|
||
relatively higher value on it than on any other goal of action he could think of, otherwise he would have acted
|
||
differently. Furthermore, [p. 117] since in order to achieve his most highly valued goal any actor must interfere
|
||
at an earlier point in time or must watch out for an earlier event in order to start preparations for some later
|
||
occurrence, every action must also employ means (at least those of the actor’s own body and the time
|
||
absorbed by the interference or the preparations) to produce the desired end. And as these means are
|
||
assumed to be causally necessary for achieving the valued goal, otherwise the actor would not employ them,
|
||
value must also be placed on them. Not only the goals, then, have value for an actor, but the means do, too—a
|
||
value that is derived from that of the desired end, as one could not reach an end without employing some
|
||
means. In addition, as actions can only be performed sequentially by an actor, every action involves making a
|
||
choice. It involves taking up that course of action which at the moment of acting promises the most highly
|
||
valued result to the actor and hence is given preference by him; at the same time it involves excluding other
|
||
possible actions with expected results of a lesser value. As a consequence of having to choose whenever one
|
||
acts—of not being able to realize all valued goals simultaneously—the performance of each and every action
|
||
implies the incurrence of costs. The cost of an action is the price that must be paid for having to prefer one
|
||
course of action over another, and it amounts to the value attached to the most highly valued goal that cannot
|
||
be realized or whose realization must now be deferred, because the means necessary to produce it are bound
|
||
up in the production of another, even more highly valued end. And while this implies that at its starting point
|
||
every action must be considered to be worth more than its costs and able to secure a profit to the actor, i.e., a
|
||
result whose value is ranked higher than the costs, every action is also threatened by the possibility of a loss.
|
||
Such a loss would occur if in retrospect an actor found that—contrary to his own previous expectation—the
|
||
result in fact had a lower value than that of the relinquished alternative. And just as every action necessarily
|
||
aims at a profit, the pos- [p. 118] sibility of a loss, too, is a necessary accompaniment to any action. For an
|
||
actor can always go wrong regarding his causal-technological knowledge, and the results aimed for cannot be
|
||
produced successfully or the events for which they were produced do not occur; or he can go wrong because
|
||
every action takes time to complete and the value attached to different goals can change in the meantime,
|
||
making things less valuable now that earlier ap peared to be highly valuable.
|
||
All of these categories—values, ends, means, choice, preference, cost, profit and loss—are implied in
|
||
the concept of action. None of them is derived from experience. Rather, that one is able to interpret
|
||
experiences in the above categories requires that one already know what it means to act. No one who is not
|
||
an actor could understand them as they are not “given,” ready to be experienced, but experience is cast in
|
||
these terms as it is constructed by an actor according to the rules necessary for acting. And to be sure, as
|
||
actions are real things and one cannot not act—as even the attempt to do so would itself be an action aimed at
|
||
a goal, requiring means, excluding other courses of action, incurring costs, subjecting the actor to the possibility
|
||
of not achieving the desired goal and so suffering a loss—the knowledge of what it means to act must be
|
||
considered knowledge about reality which is a priori. The very possession of it could not be undone or
|
||
disproved, since this would already presuppose its very existence. As a matter of fact, a situation in which
|
||
these categories of action would cease to have a real existence could not itself ever be observed, as making an
|
||
ob servation is itself an action.23
|
||
Economic analysis, and the economic analysis of socialism in particular, has as its foundation this a
|
||
priori knowledge of the meaning of action as well as its logical constituents. Essentially, economic analysis
|
||
consists of: (1) an understanding of the categories of action and an understanding of the meaning of a change
|
||
in values, costs, technological knowledge, etc.; (2) a [p. 119] description of a situation in which these
|
||
categories assume concrete mean ing, where definite people are identified as actors with definite objects
|
||
specified as their means of action, with definite goals identified as values and definite things specified as costs;
|
||
and (3) a deduction of the consequences that result from the performance of some specified action in this
|
||
situation, or of the consequences that result for an actor if this situation is changed in a specified way. And this
|
||
deduction must yield a priori-valid conclusions, provided there is no flaw in the very process of deduction and
|
||
the situation and the change introduced into it being given, and a priori—valid conclusions about reality if the
|
||
situation and situation—change, as described, can themselves be identified as real, because then their validity
|
||
would ultimately go back to the indisputable validity of the categories of action.
|
||
It is along this methodological path that in the preceding discussion of socialism the conclusion was
|
||
derived, for instance, that if the labor expended by an actor was not itself his goal of action, but rather only his
|
||
means of reaching the goal of producing income and if this income then is reduced against his consent—by
|
||
taxation—then for him the cost of expending labor has been increased, as the value of other, alternative goals
|
||
that can be pursued by means of his body and time has gone up in relative terms, and hence a reduced
|
||
incentive to work must result. Along this path, too, the conclusion—as an a priori conclusion—was reached
|
||
that, for instance, if the actual users of means of production do not have the right to sell them to the highest
|
||
bidder, then no one can establish the monetary costs involved in producing what is actually produced with
|
||
them (the monetary value, that is, of the opportunities foregone by not using them differently), and no one can
|
||
assure any longer that these means are indeed employed in the production of those goods considered to be the
|
||
most highly valued ones by the actors at the beginning of their productive efforts. Hence a reduced output in
|
||
terms of purchasing power must ensue. [p. 120]
|
||
After this rather lengthy digression into the field of epistemology, let us now return to the discussion of
|
||
the socialism of social engineering. This digression was necessary in order to refute the claim of
|
||
empiricism-positivism, which if true would have saved socialism, that nothing categorical can be said against
|
||
any policy-scheme, as only experience can reveal the real consequences of certain policies. Against this I have
|
||
pointed out that empiricism clearly seems to contradict intuition. According to intuition, logic is more
|
||
fundamental than experience and it is also knowledge about real things. Furthermore, empiricism-positivism
|
||
turns out to be self-contradictory, as it itself must presuppose the existence of a priori knowledge as real
|
||
knowledge. There indeed exists a stock of positive a priori knowledge which must be presupposed of every
|
||
experiencing and acting person, because he knows what it means to act, and which cannot possibly be refuted
|
||
by experience, as the very attempt to do so would itself presuppose the validity of what had been disputed.
|
||
The discussion has led us to a conclusion which can be summed up as follows: “Experience does not
|
||
beat logic, but rather the opposite is true.” Logic improves upon and corrects experience and tells us what kind
|
||
of ex periences we can possibly have and which ones are instead due to a mud died mind, and so would be
|
||
better labeled “dreams” or “fantasies” rather than as experiences regarding “reality.” With this reassurance
|
||
about the solidity of the foundations on which the economic case against socialism has been built, a
|
||
straightforward criticism of the socialism of social engineering is now possible; a criticism which is again a
|
||
logical one, drawing on a priori knowledge, and demonstrating that the goals pursued by the socialism of social
|
||
engineering can never be reached by its proposed means, since this would stand in contradiction to such
|
||
knowledge. The following critique can now be brief, as the ideology of social engineering, apart from its
|
||
empiricist-positivist methodology which has been proven faulty, is really no different [p. 121] from the other
|
||
versions of socialism. Hence, the analyses provided in the preceding chapters regarding Marxist,
|
||
social-democratic and conservative socialism find application here, too.
|
||
This becomes clear once the property rules of the socialism of social engineering are stated. First, the
|
||
user-owners of scarce resources can do whatever they want with them. But secondly, whenever the outcome
|
||
of this process is not liked by the community of social engineers (people, that is, who are not the user-owners
|
||
of the things in question and who do not have a contractually acquired title to them), it has the right to interfere
|
||
with the practices of the actual user-owners and determine the uses of these means, thereby restricting their
|
||
property rights. Further, the community of social engineers has the right to determine unilaterally what is or is
|
||
not a preferred outcome, and can thus restrict the property rights of natural owners when ever, wherever, and
|
||
to the extent that it thinks necessary in order to produce a preferred outcome.
|
||
Regarding these property rules, one realizes at once that although socialism of social engineering allows
|
||
for a gradual implementation of its goals with only a moderate degree of intervention in the property rights of
|
||
natural owners, since the degree to which their rights can be curtailed is to be determined by society (the social
|
||
engineers), private ownership is in principle abolished and peoples’ productive enterprises take place under the
|
||
threat of an ever-increasing or even total expropriation of private owners. In these respects there is no
|
||
difference whatsoever between social-democratic and conservative socialism and socialism’s socially
|
||
engineered version. The difference again is reduced to one of social psychology. While Marxist, redistributive,
|
||
and conservative socialism all want to achieve a general goal determined in advance—a goal of égalité or of
|
||
the preservation of a given order—the socialism of social engineering does not have any such design. Its idea is
|
||
one of punctuated, unprincipled intervention; flexible, piece-meal [p. 122] engineering. The engineering socialist
|
||
is thus seemingly much more open to criticism, changing responses, new ideas—and this attitude certainly
|
||
appeals to a lot of people who would not willingly subscribe to any of the other forms of socialism. On the
|
||
other hand, though, and this should be kept in mind as well, there is almost nothing, including even the most
|
||
ridiculous thing, that some social engineers would not like to try out on their fellowmen, whom they regard as
|
||
bundles of variables to be technically manipulated like pawns on a chessboard by setting the right stimuli.
|
||
In any case, since the socialism of social engineering does not differ in principle from any of the other
|
||
versions of socialism, in that it implies a redistribution of property titles away from the users and contractors of
|
||
scarce resources and onto nonusers and noncontractors, it, too, raises the cost of production and so leads to a
|
||
reduction in the production of wealth; and this is necessarily so and no one need try it out first to reach this con
|
||
clusion. This general conclusion is true regardless of the specific course social engineering might take. Let us
|
||
say that the community of social en gineers does not approve of some people having a low income and so
|
||
decides to fix minimum wages above the current market level.24 Logic tells one that this implies a restriction of
|
||
the property rights of the employers as well as the employees who are no longer allowed to strike certain kinds
|
||
of mutually beneficial bargains. The consequence is and must be unemploy ment. Instead of getting paid at a
|
||
lower market wage, some people now will not get paid at all, as some employers cannot pay the additional
|
||
costs or hire as many people as they would be willing to hire at lower costs. The employers will be hurt as they
|
||
can only employ fewer people and the output of production hence will be lower, in relative terms; and the
|
||
employees will be hurt, as instead of some income, albeit low, they now have no income. It cannot be stated a
|
||
priori who of the employees and the employers will suffer most from this, except that it will be those of the
|
||
former whose [p. 123] specific labor services have a relatively low value on the market, and those of the latter
|
||
who specifically hire precisely this type of labor. However, knowing from experience, for instance, that
|
||
low-skilled labor services are particularly frequent among the young, among blacks, among women, among
|
||
older people who want to reenter the labor force after a longer period of household-work, etc., it can be
|
||
predicted with certainty that these will be the groups hit the hardest by unemployment. And to be sure, the very
|
||
fact that the problem which intervention was originally supposed to cure (the low income of some people) is
|
||
now even worse than before could have been known a priori, independent of any experience! To think that,
|
||
misled by faulty empiricist methodology, all this first has to be tried out as it otherwise could not have been
|
||
known is not only scientific humbug; like all acting based on ill-conceived intellectual foundations, it is
|
||
extremely costly as well.
|
||
To look at yet another example, the community of social engineers does not like the fact that rents for
|
||
houses or apartments are as high as they are, and hence some people are not able to live as comfortably as
|
||
they think they should. Accordingly, rent-control legislation is passed, establishing maximum rents for certain
|
||
apartments.25 This is the situation, for instance, in New York City, or on a much grander scale, in all of Italy.
|
||
Again, without having to wait for the consequences to become real one knows what they will be. The
|
||
construction of new apartments will decrease, as the returns from investment are now lower. And with respect
|
||
to old apartments, immediate shortages will appear, as the demand for them, their prices being lower, will rise.
|
||
Some older apartments might not even be rented out anymore, if the fixed rents are so low that the rent would
|
||
not even cover the cost of the deterioration that occurs by just living in and using the apart ment. Then there
|
||
would be a tremendous shortage of housing next to thousands of empty apartments (and New York City and
|
||
Italy provide us with perfect illustrations of this). And there would be no way out of this, as [p. 124] it still
|
||
would not pay to construct new apartments. In addition, the increased shortages would result in very costly
|
||
inflexibilities, as people who had hap pily gotten into one of the low-priced apartments would be increasingly
|
||
un willing to move out again, in spite of the fact that, for instance, the family size normally changes during the
|
||
life cycle and so different needs as regards housing emerge, and in spite of the fact that different job
|
||
opportunities might appear at different places. And so a huge waste of rental space occurs, because old
|
||
people, for example, who occupy large apartments that were just the right size when the children were still
|
||
living at home but are much too big now, still will not move into smaller apartments as there are none available;
|
||
and young families who are in need of larger premises cannot find those either, precisely because such places
|
||
will not be vacated. Waste also occurs because people do not move to the places where there is the greatest
|
||
demand for their specific labor services, or they spend large amounts of time commuting to rather distant
|
||
places, merely because they cannot find a place to live where there is work for them, or they can only find
|
||
accommodations at a much higher price than their presently fixed low rent. Clearly, the problem that the social
|
||
engineers wanted to solve by means of introducing rent control legislation is much worse than before and the
|
||
general standard of living, in relative terms, has declined. Once again, all of this could have been known a
|
||
priori. For the social engineer, however, misled by an empiricist-positivist methodology which tells him that
|
||
there is no way of knowing results unless things are actually tried out, this experience will probably only set the
|
||
stage for the next intervention. Perhaps the results were not exactly as expected because one had forgotten to
|
||
control some other important variable, and one should now go ahead and find out. But as this chapter has
|
||
demonstrated, there is a way of knowing in advance that neither the first nor any subsequent acts of
|
||
intervention will ever reach their goal, as they all imply an interference with the rights of the natural owners [p.
|
||
125] of things by nonusers and noncontractors.26
|
||
In order to understand this, it is only necessary to return to sound economic reasoning; to realize the
|
||
unique epistemological nature of economics as an aprioristic science of human action that rests on founda tions
|
||
whose very denial must presuppose their validity; and to recognize, in turn, that a science of action grounded in
|
||
an empiricist-positivist methodol ogy is as ill-founded as the statement that “one can have his cake and eat it,
|
||
too.” [p. 126] [p. 127]
|
||
Chapter 7
|
||
The Ethical Justification of Capitalism
|
||
and Why Socialism Is Morally Indefensible
|
||
The last four chapters have provided systematic reasons and empirical evidence for the thesis that
|
||
socialism as a social system that is not thoroughly based on the “natural theory of property” (the
|
||
first-use-first-own rule) which characterizes capitalism must necessarily be, and in fact is, an inferior system
|
||
with respect to the production of wealth and the average standard of living. This may satisfy the person who
|
||
believes that economic wealth and living standards are the most important criteria in judging a society—and
|
||
there can be no doubt that for many, one’s standard of living is a matter of utmost importance—and because
|
||
of this it is certainly necessary to keep all of the above economic reasoning in mind. Yet there are people who
|
||
do not attach much importance to economic wealth and who rank other values even higher—happily, one
|
||
might say, for socialism, because it can thus quietly forget its original claim of being able to bring more
|
||
prosperity to mankind, and instead resort to the altogether different but even more inspiring claim that whereas
|
||
socialism might not be the key to prosperity, it would mean justice, fairness, and morality (all terms used
|
||
synonymously here). And it can argue that a trade-off between efficiency and justice, an exchange of “less
|
||
wealth” for “more justice” is justified, since justice and fairness, are fundamentally more valuable than
|
||
economic wealth.
|
||
This claim will be examined in some detail in this chapter. In so doing, two separate but related claims
|
||
will be analyzed: (1) the claim made in par ticular by socialists of the Marxist and the social-democratic camp,
|
||
and to a lesser degree also by the conservatives, that a principled case in favor of [p. 128] socialism can be
|
||
made because of the moral value of its principles and, mutatis mutandis, that capitalism cannot be defended
|
||
morally; and (2) the claim of empiricist socialism that normative statements (“should” or “ought”
|
||
statements)—since they neither solely relate to facts, nor simply state a verbal definition, and thus are neither
|
||
empirical nor analytical statements—are not really statements at all, at least not statements that one could call
|
||
“cognitive” in the widest of all senses, but rather mere “verbal expressions” used to express or arouse feelings
|
||
(such as ‘Wow” or “grrrrr”).1
|
||
The second, empiricist or, as its position applied to the field of morals is called, “emotivist” claim will
|
||
be dealt with first, as in a way it is more far-reaching.2 The emotivist position is derived by accepting the
|
||
central empiricist-positivist claim that the dichotomous distinction between empirical and analytical statements
|
||
is of an all-inclusive nature; that is, that any statement whatsoever must be empirical or analytical and never can
|
||
be both. This position, it will be seen, turns out to be self-defeating on closer inspection, just as empiricism in
|
||
general turned out to be self-defeating.3 If emotivism is a valid position, then its basic proposition regarding
|
||
normative statements must itself be analytical or empirical, or else it must be an ex pression of emotions. If it is
|
||
taken to be analytical, then it is mere verbal quibble, saying nothing about anything real, but rather only defining
|
||
one sound by another, and emotivism would thus be a void doctrine. If, instead, it is empirical, then the
|
||
doctrine would not carry any weight, as its central proposition could well be wrong. In any case, right or
|
||
wrong, it would only be a proposition stating a historical fact, i.e., how certain expressions have been used in
|
||
the past, which in itself would not provide any reason what soever why this would have to be the case in the
|
||
future, too, and hence why one should or rather should not look for normative statements that are more than
|
||
expressions of emotions in that they are meant to be justifiable. And the emotivist doctrine would also lose all
|
||
its weight if it adopted the third alternative [p. 129] and declared its central tenet itself a “wow” statement, too.
|
||
For if this were the case, then it would not contain any reason why one should re late to and interpret certain
|
||
statements in certain ways, and so if one’s own instincts or feelings did not happen to coincide with somebody
|
||
else’s “wowing,” there would be nothing that could stop one from following one’s own feelings instead. Just as
|
||
a normative statement would be no more than the barking of a dog, so the emotivist position then is no more
|
||
than a bark ing comment on barking.
|
||
On the other hand, if the central statement of empiricism-emotivism, i.e., that normative statements
|
||
have no cognitive meaning but are simply expres sions of feelings, is itself regarded as a meaningful statement
|
||
communicat ing that one should conceive of all statements that are not analytical or empirical as mere
|
||
expressive symbols, then the emotivist position becomes outrightly contradictory. This position must then
|
||
assume, at least implicitly, that certain insights, i.e., those relating to normative statements, cannot simply be
|
||
understood and meaningful, but can also be given justification as statements with specific meanings. Hence, one
|
||
must conclude that emotivism falters, because if it were true, then it could not even say and mean what it
|
||
says—it simply would not exist as a position that could be dis cussed and evaluated with regard to its validity.
|
||
But if it is a meaningful position which can be discussed, then this fact belies its very own basic premise.
|
||
Moreover, the fact that it is indeed such a meaningful position, it should be noted, cannot even be disputed, as
|
||
one cannot communicate and argue that one cannot communicate and argue. Rather, it must be presupposed
|
||
of any intellectual position, that it is meaningful and can be argued with regard to its cognitive value, simply
|
||
because it is presented in a language and communicated. To argue otherwise would already implicitly admit its
|
||
validity. One is forced, then, to accept a rationalist approach towards ethics for the very same reason that one
|
||
was forced to adopt a rationalist instead [p. 130] of an empiricist epistemology.4 Yet with emotivism so
|
||
rebuffed, I am still far away, or so it seems, from my set goal, which I share with the Marxist and conservative
|
||
socialists, of demonstrating that a principled case in favor of or against socialism or capitalism can be made.
|
||
What I have reached so far is the conclusion that the question of whether or not normative statements are
|
||
cognitive ones is itself a cognitive problem. However, it still seems to be a far cry from there to the proof that
|
||
actual norm proposals can indeed be shown to be either valid or invalid.
|
||
Fortunately, this impression is wrong and there is already much more won here than might be
|
||
suspected. The above argument shows us that any truth claim—the claim connected with any proposition that
|
||
it is true, objec tive, or valid (all terms used synonymously here)—is and must be raised and decided upon in
|
||
the course of an argumentation. And since it cannot be disputed that this is so (one cannot communicate and
|
||
argue that one cannot communicate and argue), and it must be assumed that everyone knows what it means to
|
||
claim something to be true (one cannot deny this statement without claiming its negation to be true), this has
|
||
been aptly called “the apriori of communication and argumentation.”5
|
||
Now, arguing never just consists of free-floating propositions claiming to be true. Rather,
|
||
argumentation is always an activity, too. But given that truth claims are raised and decided upon in
|
||
argumentation and that ar gumentation, aside from whatever is said in its course, is a practical affair, it follows
|
||
that intersubjectively meaningful norms must exist—precisely those which make some action an
|
||
argumentation—which have special cognitive status in that they are the practical preconditions of objectivity
|
||
and truth.
|
||
Hence, one reaches the conclusion that norms must indeed be assumed to be justifiable as valid. It is
|
||
simply impossible to argue otherwise, because the ability to argue so would in fact presuppose the validity of
|
||
those [p. 131] norms which underlie any argumentation whatsoever.6 The answer, then, to the question of
|
||
which ends can or cannot be justified is to be derived from the concept of argumentation. And with this, the
|
||
peculiar role of reason in determining the contents of ethics is given a precise description, too. In contrast to
|
||
the role of reason in establishing empirical laws of nature, reason can claim to yield results in determining moral
|
||
laws which can be shown to be valid a priori. It only makes explicit what is already implied in the concept of
|
||
argumentation itself; and in analyzing any actual norm proposal, its task is merely confined to analyzing whether
|
||
or not it is logically consistent with the very ethics which the proponent must presuppose as valid insofar as he
|
||
is able to make his proposal at all.7
|
||
But what is the ethics implied in argumentation whose validity cannot be disputed, as disputing it would
|
||
implicitly have to presuppose it? Quite commonly it has been observed that argumentation implies that a
|
||
proposi tion claims universal acceptability, or, should it be a norm proposal, that it is “universalizable.”
|
||
Applied to norm proposals, this is the idea, as formu lated in the Golden Rule of ethics or in the Kantian
|
||
Categorical Imperative, that only those norms can be justified that can be formulated as general principles
|
||
which are valid for everyone without exception.8 Indeed, as ar gumentation implies that everyone who can
|
||
understand an argument must in principle be able to be convinced of it simply because of its argumenta tive
|
||
force, the universalization principle of ethics can now be understood and explained as grounded in the wider
|
||
“apriori of communication and ar gumentation.” Yet the universalization principle only provides a purely for mal
|
||
criterion for morality. To be sure, checked against this criterion all proposals for valid norms which would
|
||
specify different rules for different classes of people could be shown to have no legitimate claim of being
|
||
universally acceptable as fair norms, unless the distinction between different classes of people were such that it
|
||
implied no discrimination, but could instead [p. 132] be accepted as founded in the nature of things again by
|
||
everyone. But while some norms might not pass the test of universalization, if enough attention were paid to
|
||
their formulation, the most ridiculous norms, and what is of course even more relevant, even openly
|
||
incompatible norms could easily and equally well pass it. For example, “everybody must get drunk on Sundays
|
||
or be fined” or “anyone who drinks alcohol will be punished” are both rules that do not allow discrimination
|
||
among groups of people and thus could both claim to satisfy the condition of universalization.
|
||
Clearly then, the universalization principle alone would not provide one with any positive set of norms
|
||
that could be demonstrated to be justified. However, there are other positive norms implied in argumentation
|
||
aside from the universalization principle. In order to recognize them, it is only necessary to call three
|
||
interrelated facts to attention. First, that argumenta tion is not only a cognitive but also a practical affair.
|
||
Second, that argumen tation, as a form of action, implies the use of the scarce resource of one’s body. And
|
||
third, that argumentation is a conflict-free way of interacting. Not in the sense that there is always agreement on
|
||
the things said, but in the sense that as long as argumentation is in progress it is always possible to agree at
|
||
least on the fact that there is disagreement about the validity of what has been said. And this is to say nothing
|
||
else than that a mutual recognition of each person’s exclusive control over his own body must be presupposed
|
||
as long as there is argumentation (note again, that it is impossible to deny this and claim this denial to be true
|
||
without implicitly having to admit its truth).
|
||
Hence, one would have to conclude that the norm implied in argumen tation is that everybody has the
|
||
right of exclusive control over his own body as his instrument of action and cognition. Only if there is at least an
|
||
implicit recognition of each individual’s property right in his own body can argumentation take place.9 Only as
|
||
long as this right is recognized is it possible for [p. 133] someone to agree to what has been said in an
|
||
argument and hence can what has been said be validated, or is it possible to say “no” and to agree only on the
|
||
fact that there is disagreement. Indeed, anyone who would try to justify any norm would already have to
|
||
presuppose the property right in his body as a valid norm, simply in order to say, “This is what I claim to be
|
||
true and objective.” Any person who would try to dispute the property right in his own body would become
|
||
caught up in a contradiction, as arguing in this way and claiming his argument to be true, would already
|
||
implicitly accept precisely this norm as being valid.
|
||
Thus it can be stated that whenever a person claims that some statement can be justified, he at least
|
||
implicitly assumes the following norm to be justified: “Nobody has the right to uninvitedly aggress against the
|
||
body of any other person and thus delimit or restrict anyone’s control over his own body.” This rule is implied
|
||
in the concept of justification as argumentative justification. Justifying means justifying without having to rely on
|
||
coercion. In fact, if one formulates the opposite of this rule, i.e., “everybody has the right to uninvitedly aggress
|
||
against other people” (a rule, by the way, that would pass the formal test of the universalization principle!), then
|
||
it is easy to see that this rule is not, and never could be, defended in argumentation. To do so would in fact
|
||
have to presuppose the validity of precisely its opposite, i.e., the aforementioned principle of nonaggression.
|
||
With this justification of a property norm regarding a person’s body it may seem that not much is won,
|
||
as conflicts over bodies, for whose pos sible avoidance the nonaggression principle formulates a universally
|
||
justifi able solution, make up only a small portion of all possible conflicts. However, this impression is not
|
||
correct. To be sure, people do not live on air and love alone. They need a smaller or greater number of other
|
||
things as well, simply to survive—and of course only he who survives can sustain an argumentation, let alone
|
||
lead a comfortable life. With respect to all of [p. 134] these other things norms are needed, too, as it could
|
||
come to conflicting evaluations regarding their use. But in fact, any other norm must be logi cally compatible
|
||
with the nonaggression principle in order to be justified it self, and, mutatis mutandis, every norm that could be
|
||
shown to be incompatible with this principle would have to be considered invalid. In ad dition, as the things
|
||
with respect to which norms have to be formulated are scarce goods—just as a person’s body is a scarce
|
||
good—and as it is only necessary to formulate norms at all because goods are scarce and not be cause they
|
||
are particular kinds of scarce goods, the specifications of the nonaggression principle, conceived of as a
|
||
special property norm referring to a specific kind of good, must in fact already contain those of a genera/
|
||
theory of property.
|
||
I will first state this general theory of property as a set of rules applicable to all goods with the purpose
|
||
of helping one to avoid all possible conflicts by means of uniform principles, and will then demonstrate how
|
||
this general theory is implied in the nonaggression principle. Since according to the nonaggression principle a
|
||
person can do with his body whatever he wants as long as he does not thereby aggress against another
|
||
person’s body, that person could also make use of other scarce means, just as one makes use of one’s own
|
||
body, provided these other things have not already been ap propriated by someone else but are still in a
|
||
natural, unowned state. As soon as scarce resources are visibly appropriated—as soon as someone “mixes his
|
||
labor,” as John Locke phrased it,10 with them and there are objective traces of this—then property, i.e., the
|
||
right of exclusive control, can only be acquired by a contractual transfer of property titles from a previous to a
|
||
later owner, and any attempt to unilaterally delimit this exclusive control of previous owners or any unsolicited
|
||
transformation of the physical characteristics of the scarce means in question is, in strict analogy with ag
|
||
gressions against other people’s bodies, an unjustifiable action.11 [p. 135]
|
||
The compatibility of this principle with that of nonaggression can be demonstrated by means of an
|
||
argumentum a contrario. First, it should be noted that if no one had the right to acquire and control anything
|
||
except his own body (a rule that would pass the formal universalization test), then we would all cease to exist
|
||
and the problem of the justification of normative statements (or, for that matter, any other problem that is of
|
||
concern in this treatise) simply would not exist. The existence of this problem is only pos sible because we are
|
||
alive, and our existence is due to the fact that we do not, indeed cannot, accept a norm outlawing property in
|
||
other scarce goods next and in addition to that of one’s physical body. Hence, the right to ac quire such goods
|
||
must be assumed to exist. Now, if this is so, and if one does not have the right to acquire such rights of
|
||
exclusive control over un used, nature-given things through one’s own work, i.e., by doing something with
|
||
things with which no one else had ever done anything before, and if other people had the right to disregard
|
||
one’s ownership claim with respect to such things which they had not worked on or put to some particular use
|
||
before, then this would only be possible if one could acquire property titles not through labor, i.e., by
|
||
establishing some objective, intersubjectively controllable link between a particular person and a particular
|
||
scarce resource, but simply by verbal declaration; by decree.12 However, acquiring property titles through
|
||
declaration is incompatible with the above justified nonaggression principle regarding bodies. For one thing, if
|
||
one could Indeed appropriate property by decree, then this would imply that it would also be possible for one
|
||
to simply declare another person’s body to be one’s own. Yet this, clearly enough, would conflict with the
|
||
ruling of the nonaggression principle which makes a sharp distinction between one’s own body and the body of
|
||
another person. And this distinction can only be made in such a clear-cut and unambiguous way because for
|
||
bodies, as for anything else, the separation between “mine” and “yours” is not based on verbal declarations [p.
|
||
136] but on action. (Incidentally, a decision between rival declarative claims could not be made unless there
|
||
were some objective criterion other than declaration.) The separation is based on the observation that some
|
||
par ticular scarce resource had in fact—for everyone to see and verify, as objective indicators for this would
|
||
exist—been made an expression or materialization of one’s own will, or, as the case may be, of someone
|
||
else’s will. Moreover, and more importantly, to say that property is acquired not through action but through a
|
||
declaration involves an open practical contradiction, because nobody could say and declare so unless in
|
||
spite of what was actually said his right of exclusive control over his body as his own in strument of saying
|
||
anything was in fact already presupposed.
|
||
It has now been demonstrated that the right of original appropriation through actions is compatible with
|
||
and implied in the nonaggression principle as the logically necessary presupposition of argumentation.
|
||
Indirectly, of course, it has also been demonstrated that any rule specifying different rights, such as a socialist
|
||
property theory, cannot be justified. Before entering a more detailed analysis, though, of why any socialist
|
||
ethic is indefensible—a discussion which should throw some additional light on the importance of some of the
|
||
stipulations of the “natural,” capitalist theory of property—a few remarks about what is or is not implied by
|
||
classifying these latter norms as justified seem to be in order.
|
||
In making this assertion, one need not claim to have derived an “ought” from an “is.” In fact, one can
|
||
readily subscribe to the almost generally accepted view that the gulf between “ought” and “is” is logically
|
||
unbridgeable.13 Rather, classifying the rulings of the natural theory of property in this way is a purely cognitive
|
||
matter. It no more follows from the classification of the principle underlying capitalism as “fair” or “just” that
|
||
one ought to act according to it, than it follows from the concept of validity or truth that one should always
|
||
strive for it. To say that this principle is just also does not [p. 137] preclude the possibility of people proposing
|
||
or even enforcing rules that are incompatible with it. As a matter of fact, with respect to norms the situation is
|
||
very similar to that in other disciplines of scientific inquiry. The fact, for instance, that certain empirical
|
||
statements are justified or justifiable and others are not does not imply that everyone only defends objective,
|
||
valid statements. Rather, people can be wrong, even intentionally. But the distinction between objective and
|
||
subjective, between true and false, does not lose any of its significance because of this. Rather, people who are
|
||
wrong would have to be classified as either uninformed or intentionally lying. The case is similar with respect to
|
||
norms. Of course there are many people who do not propagate or enforce norms which can be classified as
|
||
valid according to the meaning of justification which I have given above. But the distinction between justifiable
|
||
and nonjustifiable norms does not dissolve because of this, just as that between objective and subjective
|
||
statements does not crumble because of the existence of uninformed or lying people. Rather, and accordingly,
|
||
those people who would propagate and enforce such different, invalid norms would again have to be classified
|
||
as uninformed or dishonest, insofar as one had explained to them and indeed made it clear that their alternative
|
||
norm proposals or enforcements could not and never would be justifiable in argumentation. And there would
|
||
be even more justification for doing so in the moral case than in the empirical one, since the validity of the
|
||
nonaggression principle and that of the principle of original appropriation through action as its logically
|
||
necessary corollary must be considered to be even more basic than any kind of valid or true statements. For
|
||
what is valid or true has to be defined as that upon which everyone acting according to this principle can
|
||
possibly agree. As a matter of fact, as has just been shown, at least the implicit acceptance of these rules is the
|
||
necessary prerequisite to being able to live and to argue at all.14
|
||
Why is it, then, precisely, that socialist property theories of any kind fail [p. 138] to be justifiable as
|
||
valid? First, it should be noted that all of the actually practiced versions of socialism and most of its
|
||
theoretically proposed models as well would not even pass the first formal universalization test, and would fail
|
||
for this fact alone! These versions all contain norms within their framework of legal rules which have the form
|
||
“some people do, and some people do not.” However, such rules, which specify different rights or obligations
|
||
for different classes of people, have no chance of being accepted as fair by every potential participant in an
|
||
argumentation for simply formal reasons. Unless the distinction made between different classes of people
|
||
happens to be such that it is acceptable to both sides as grounded in the nature of things, such rules would not
|
||
be acceptable because they would imply that one group is awarded legal privileges at the expense of complementary
|
||
discriminations against another group. Some people, either those who are allowed to do something
|
||
or those who are not, therefore could not agree that these were fair rules.15 Since most kinds of socialism, as
|
||
practiced or preached, have to rely on the enforcement of rules such as “some people have the obligation to
|
||
pay taxes, and others have the right to consume them” or “some people know what is good for you and are
|
||
allowed to help you get these alleged blessings even if you do not want them, but you are not allowed to know
|
||
what is good for them and help them accordingly’ or “some people have the right to determine who has too
|
||
much of something and who too little, and others have the obligation to comply” or even more plainly, “the
|
||
computer industry must pay to subsidize the farmers,” “the employed for the unemployed,” “the ones without
|
||
kids for those with kids,” etc., or vice versa, they all can be discarded easily as serious contenders to the claim
|
||
of being part of a valid theory of norms qua property norms, because they all indicate by their very formulation
|
||
that they are not universalizable.
|
||
But what is wrong with the socialist property theories if this is taken care [p. 139] of and there is
|
||
indeed a theory formulated that contains exclusively universalizable norms of the type “nobody is allowed to”
|
||
or “everybody can”? Even then—and this, more ambitiously, is what has been demonstrated indirectly above
|
||
and shall be argued directly-socialism could never hope to prove its validity, no longer because of formal
|
||
reasons, but because of its material specifications. Indeed, while those forms of socialism that can easily be
|
||
refuted regarding their claim to moral validity on simple formal grounds can at least be practiced, the
|
||
application of those more sophisticated versions that would pass the universalization test prove, for material
|
||
reasons, to be fatal: even if we tried, they simply could never be put into effect.
|
||
There are two related specifications in the norms of the natural theory of property with at least one of
|
||
which a socialist property theory comes into conflict. The first such specification is that according to the
|
||
capitalistic ethic, aggression is defined as an invasion of the physical integrity of another person’s property.16
|
||
Socialism, instead, would define aggression as an invasion of the value or psychic integrity of another
|
||
person’s property. Conservative socialism, it should be recalled, aimed at preserving a given distribution of
|
||
wealth and values, and attempted to bring those forces which could change the status quo under control by
|
||
means of price controls, regulations, and behavioral controls. Clearly, in order to do so, property rights to the
|
||
value of things must be assumed to be justifiable, and an in vasion of values, mutatis mutandis, must be
|
||
classified as unjustifiable ag gression. Yet not only conservatism uses this idea of property and aggression.
|
||
Social-democratic socialism does, too. Property rights to values must be assumed to be legitimate when
|
||
social-democratic socialism allows me, for instance, to demand compensation from people whose chances or
|
||
opportunities negatively affect mine. And the same is true when com pensation for committing psychological or
|
||
“structural violence”—a particularly dear term in the leftist political science literature—is permitted.17 [p. 140]
|
||
In order to be able to ask for such compensation, what was done—affecting my opportunities, my psychic
|
||
integrity, my feeling of what is owed to me—would have to be classified as an aggressive act.
|
||
Why is this idea of protecting the value of property unjustifiable? First, while every person, at least in
|
||
principle, can have full control over whether or not his actions cause the physical characteristics of something
|
||
to change, and hence also can have full control over whether or not those actions are justifiable, control over
|
||
whether or not one’s actions affect the value of someone else’s property does not rest with the acting person,
|
||
but rather with other people and their subjective evaluations. Thus no one could determine ex ante if his actions
|
||
would be classified as justifiable or unjustifiable. One would first have to interrogate the whole population to
|
||
make sure that one’s planned actions would not change another person’s evaluations regarding his own
|
||
property. And even then nobody could act until universal agree ment was reached on who is supposed to do
|
||
what with what, and at which point in time. Clearly, for all the practical problems involved, one would be long
|
||
dead and nobody would argue anything any longer long before this was ever accomplished.18 But more
|
||
decisively still, the socialist position regarding property and aggression could not even be effectively argued,
|
||
because arguing in favor of any norm, socialist or not, implies that there is conflict over the use of some scarce
|
||
resource, otherwise there would simply be no need for discussion. However, in order to argue that there is a
|
||
way out of such conflicts, it must be presupposed that actions must be allowed to be performed prior to any
|
||
actual agreement or disagreement, because if they were not, one could not even argue so. Yet if one can do
|
||
this—and socialism too must assume that one can, insofar as it exists as an argued intellectual position—then
|
||
this is only possible because the existence of objective borders of property i.e., borders which every person
|
||
can recognize as such on his own, without having to agree first with anyone else with [p. 141] respect to one’s
|
||
system of values and evaluations. Socialism, too, then, in spite of what it says, must in fact presuppose the
|
||
existence of objective property borders, rather than of borders determined by subjective evalua tions, if only in
|
||
order to have any surviving socialist who can make his moral proposals.
|
||
The socialist idea of protecting value instead of physical integrity also fails for a second, related reason.
|
||
Evidently, the value of a person, for ex ample, on the labor or marriage market, can be and indeed is affected
|
||
by other people’s physical integrity or degree of physical integrity. Thus, if one wanted property values to be
|
||
protected, one would have to allow physical aggression against people. However, it is only because of the
|
||
very fact that a person’s borders—that is, the borders of a person’s property in his body as his domain of
|
||
exclusive control with which another person is not allowed to interfere unless he wishes to become an
|
||
aggressor—are physical borders (intersubjectively ascertainable, and not just subjectively fancied borders) that
|
||
everyone can agree on anything independently (and, of course, agreement means agreement of independent
|
||
decision-making units!). Only because the protected borders of property are objective then, i.e., fixed and
|
||
recognizable as fixed prior to any conventional agreement, can there at all be argumentation, and possibly
|
||
agreement, between independent decision-making units. There simply could not be anyone arguing anything
|
||
unless his existence as an independent physical unit was first recognized. No one could argue in favor of a
|
||
property system defining borders of property in subjective, evaluative terms—as does socialism—because
|
||
simply to be able to say so presupposes that, contrary to what the theory says, one must in fact be a physically
|
||
independent unit saying it.
|
||
The situation is no less dire for socialism when one turns to the second essential specification of the
|
||
rulings of the natural theory of property. The basic norms of capitalism were characterized not only by the fact
|
||
that [p. 142] property and aggression were defined in physical terms; it was of no less importance that in
|
||
addition property was defined as private, individualized property and that the meaning of original
|
||
appropriation, which evidently implies making a distinction between prior and later, had been specified. It is
|
||
with this additional specification as well that socialism comes into conflict. Instead of recognizing the vital
|
||
importance of the prior-later distinction in deciding between conflicting property claims, socialism proposes
|
||
norms which in effect state that priority is irrelevant in making such a decision and that late-comers have as
|
||
much of a right to ownership as first-comers. Clearly, this idea is involved when social-democratic socialism,
|
||
for instance, makes the natural owners of wealth and/or their heirs pay a tax so that the unfortunate latecomers
|
||
might be able to participate in its consumption. And this idea is also involved, for instance, when the owner of a
|
||
natural resource is forced to reduce (or increase) its present exploitation in the interest of posterity. Both times
|
||
it only makes sense to do so when it is assumed that the person accumulating wealth first, or using the natural
|
||
resource first, thereby commits an aggression against some late-comers. If they have done nothing wrong, then
|
||
the late-comers could have no such claim against them.19
|
||
What is wrong with this idea of dropping the prior-later distinction as morally irrelevant? First, if the
|
||
late-comers, i.e., those who did not in fact do something with some scarce goods, had indeed as much of a
|
||
right to them as the first-comers, i.e., those who did do something with the scarce goods, then literally no one
|
||
would be allowed to do anything with anything, as one would have to have all of the late-comers’ consent prior
|
||
to doing whatever one wanted to do. Indeed, as posterity would include one’s children’s children—people,
|
||
that is, who come so late that one could never possibly ask them—advocating a legal system that does not
|
||
make use of the prior-later distinction as part of its underlying property theory is simply absurd in [p. 143] that
|
||
it implies advocating death but must presuppose life to advocate any thing. Neither we, our forefathers, nor our
|
||
progeny could, do, or will survive and say or argue anything if one were to follow this rule. In order for any
|
||
person—past, present, or future—to argue anything it must be possible to survive now. Nobody can wait and
|
||
suspend acting until everyone of an indeterminate class of late-comers happens to appear and agree to what
|
||
one wants to do. Rather, insofar as a person finds himself alone, he must be able to act, to use, produce,
|
||
consume goods straightaway, prior to any agreement with people who are simply not around yet (and perhaps
|
||
never will be). And insofar as a person finds himself in the company of others and there is conflict over how to
|
||
use a given scarce resource, he must be able to resolve the problem at a definite point in time with a definite
|
||
number of people instead of having to wait unspecified periods of time for unspecified numbers of people.
|
||
Simply in order to survive, then, which is a prerequisite to arguing in favor of or against anything, property
|
||
rights cannot be conceived of as being timeless and nonspecific regarding the number of people concerned.
|
||
Rather, they must necessarily be thought of as originating through acting at definite points in time for definite
|
||
acting individuals.20
|
||
Furthermore, the idea of abandoning the prior-later distinction, which socialism finds so attractive,
|
||
would again simply be incompatible with the nonaggression principle as the practical foundation of
|
||
argumentation. To argue and possibly agree with someone (if only on the fact that there is dis agreement)
|
||
means to recognize each other’s prior right of exclusive control over his own body. Otherwise, it would be
|
||
impossible for anyone to first say anything at a definite point in time and for someone else to then be able to
|
||
reply, or vice versa, as neither the first nor the second speaker would be independent physical decisionmaking
|
||
units anymore, at any time. Eliminat ing the prior-later distinction then, as socialism attempts to do, is
|
||
tantamount to eliminating the possibility of arguing and reaching agreement. However, [p. 144] as one cannot
|
||
argue that there is no possibility for discussion without the prior control of every person over his own body
|
||
being recognized and accepted as fair, a late-comer ethic that does not wish to make this difference could
|
||
never be agreed upon by anyone. Simply saying that it could implies a contradiction, as one’s being able to
|
||
say so would presuppose one’s ex istence as an independent decision-making unit at a definite point in time.
|
||
Hence, one is forced to conclude that the socialist ethic is a complete failure. In all of its practical
|
||
versions, it is no better than a rule such as “1 can hit you, but you cannot hit me,” which even fails to pass the
|
||
universalization test. And if it did adopt universalizable rules, which would basically amount to saying
|
||
“everybody can hit everybody else,” such rulings could not conceivably be said to be universally acceptable on
|
||
account of their very material specification. Simply to say and argue so must presuppose a person’s property
|
||
right over his own body. Thus, only the first-come-first-own ethic of capitalism can be defended effectively as
|
||
it is implied in argumentation. And no other ethic could be so justified, as justifying something in the course of
|
||
argumentation implies presupposing the validity of precisely this ethic of the natural theory of property. [p. 145]
|
||
Chapter 8
|
||
The Socio-psychological Foundations of
|
||
Socialism or The Theory of The State
|
||
In the preceding chapters it has been demonstrated that socialism as a social system implying a
|
||
redistribution of property titles away from user-owners and contractors to nonuser-owners and noncontractors
|
||
necessarily involves a reduction in the production of wealth, since the use and contracting of resources are
|
||
costly activities whose performance is made even more costly as compared with alternatives available to
|
||
actors. Secondly, such a system cannot be defended as a fair or just social order from a moral point of view
|
||
because to argue so, in fact to argue at all, in favor or against anything, be it a moral, nonmoral, empirical, or
|
||
logico-analytical position, necessarily presupposes the validity of the first-use-first-own rule of the natural
|
||
theory of property and capitalism, as otherwise no one could survive and then say, or possibly agree on,
|
||
anything as an inde pendent physical unit.
|
||
If neither an economic nor a moral case for socialism can be made, then socialism is reduced to an
|
||
affair of merely social-psychological significance. What, then, are the socio-psychological foundations on which
|
||
socialism rests? Or, since socialism has been defined as an institutionalized policy of redistribution of
|
||
property titles away from user-owners and contractors, how is an institution that implements a more or less
|
||
total expropriation of natural owners possible?
|
||
If an institution exists that is allowed to appropriate property titles other than through original
|
||
appropriation or contract, it must assumedly damage some people who consider themselves to be the natural
|
||
owners of these things. By securing and possibly increasing its monetary and/or non [p. 146] monetary income
|
||
it reduces that of other people—something categorically different from the situation that exists when there is a
|
||
contractual relation ship among people in which no one gains at the expense of anyone else but everyone
|
||
profits, as otherwise there simply would not be any exchange. In this case one can expect resistance to the
|
||
execution of such a policy. This inclination to resist can, of course, be more or less intensive, and it can change
|
||
over time and become either more or less pronounced and pose a greater or smaller threat to the institution
|
||
carrying out the policy of redistribution. But as long as it exists at all, the institution must reckon with it. In
|
||
particular, it must reckon with it if one assumes that the people representing this institution are ordinary people
|
||
who, like everyone else, have an interest not only in stabilizing their current income which they are able to
|
||
secure for themselves in their roles as representatives of this institution but also in increasing this income as
|
||
much as possible. How, and this is precisely the problem, can they stabilize and possibly increase their income
|
||
from noncontractual exchanges, even though this necessarily creates victims—and, over time, increasing
|
||
numbers of victims, or victims who are increasingly hurt?
|
||
The answer can be broken down into three parts which will be discussed in turn: (1) by aggressive
|
||
violence; (2) by corrupting the public through let ting them or rather parts of them share in the enjoyment of the
|
||
receipts coer cively extracted from natural owners of things; and (3) by corrupting the public through letting
|
||
them or parts of them participate in the specific policy of expropriation to be enacted.
|
||
To assure its very existence, any institution that enforces a socialist theory of property must rely on the
|
||
continual threat of violence. Any such institution threatens people who are unwilling to accept its noncontractual
|
||
appropriations of their natural property with physical assault, imprisonment, enslavement, or even death, and it
|
||
must carry out such threats if necessary, [p. 147] in order to stay ‘trust-worthy” as the kind of institution that it
|
||
is. Since one is dealing with an institution—an organization, that is, which performs these actions on a regular
|
||
basis—it is almost self-explanatory that it refuses to call its own practice of doing things “aggression,” and
|
||
instead adopts a different name for it, with neutral or possibly even positive connotations. In fact, its
|
||
representatives might not even think that they themselves are aggressors when acting in the name of this
|
||
organization. However, it is not names or terms that matter here or elsewhere, but what they really mean.1
|
||
Regarding the content of its actions, violence is the cornerstone of socialism’s existence as an institution. And
|
||
to leave no room for misunderstanding here, the violence on which socialism rests is not the kind of violence
|
||
that a natural owner of things would use or threaten to use against aggressive intruders of his property. It is not
|
||
the defensive threat toward a prospective murderer of, let us say, subjecting him to capital punishment, should
|
||
he in fact murder someone. Rather, it is aggressive violence directed at innocent victims. An institution carrying
|
||
out socialism literally rests on the threat posed by a prospective murderer against innocent people (i.e., people
|
||
who have not done any physical harm whatsoever to anyone) to kill them should they not comply with his
|
||
demands, or even to kill them just for the “fun” of killing.
|
||
It is not at all difficult to recognize the truth of this. In order to do so, it is only necessary to assume a
|
||
boycott of any exchange-relation with the representatives of socialism because such an exchange, for whatever
|
||
reasons, no longer seems profitable. It should be clear that in a social sys tem based on the natural theory of
|
||
property—under capitalism—anyone would have the right to boycott at any time, as long as he was indeed the
|
||
person who appropriated the things concerned by using them before anyone else did or by acquiring them
|
||
contractually from a previous owner. However much a person or institution might be affected by such a
|
||
boycott, it would have to tolerate it and suffer silently, or else try to persuade the [p. 148] boycotter to give up
|
||
his position by making a more lucrative offer to him. But it is not so with an institution that puts socialist ideas
|
||
regarding proper ty into effect. Try, for instance, to stop paying taxes or to make your future payments of taxes
|
||
dependent on certain changes or improvements in the services that the institution offers in return for the
|
||
taxes—it would fine, as sault, imprison you, or perhaps do even worse things to you. Or to use another
|
||
example, try to ignore this institution’s regulations or controls im posed on your property. Try, that is to say, to
|
||
make the point that you did not consent to these limitations regarding the use of your property and that you
|
||
would not invade the physical integrity of anyone else’s property by ig noring such impositions, and hence, that
|
||
you have the right to secede from its jurisdiction, to “cancel your membership” so to speak, and from then on
|
||
deal with it on equal footing, from one privileged institution to another. Again, assumedly without having
|
||
aggressed against anyone through your secession, this institution would come and invade you and your
|
||
property, and it would not hesitate to end your independence. As a matter of fact, if it did not do so, it would
|
||
stop being what it is. It would abdicate and become a regular private property owner or a contractual
|
||
association of such owners. Only because it does not so abdicate is there socialism at all. Indeed, and this is
|
||
why the title of this chapter suggested that the question regarding the socio-psychological foundations of
|
||
socialism is identical to that of the foundations of a state, if there were no institution enforcing socialistic ideas
|
||
of property, there would be no room for a state, as a state is nothing else than an institution built on taxation
|
||
and unsolicited, noncontractual interference with the use that private people can make of their natural property.
|
||
There can be no socialism without a state, and as long as there is a state there is socialism. The state, then, is
|
||
the very institution that puts socialism into action; and as socialism rests on aggressive violence directed against
|
||
innocent victims, aggressive violence is the nature of any [p. 149] state.2
|
||
But socialism, or the state as the incorporation of socialist ideas, does not rest exclusively on
|
||
aggression. The representatives of the state do not engage solely in aggressive acts in order to stabilize their
|
||
incomes, though without it there would not be any state! As long as the relationship between the state and
|
||
private property owners is exclusively a parasitic one, and the activities of the representatives of the state
|
||
consist entirely of unsolicited in terferences with other people’s property rights, designed to increase the in
|
||
come of the former at the expense of a corresponding reduction in income of the latter, and these agents of
|
||
socialism then do nothing else with their income than consume it for their own private purposes, then the
|
||
chances for the state’s growth and the spread of socialism are at least very limited and narrow. Certainly, one
|
||
man, or one group of men, possessed with sufficient aggressive energies can inspire enough fear in one and
|
||
possibly even in a few others, or in another more numerous group of men who, for whatever reason, lack such
|
||
characteristics, and can establish a stable relationship of exploitation. But it is impossible to explain the fact,
|
||
characteristic of all states and each and every socialist social system, that the group of men representing the
|
||
state can hold people ten, a hundred, or even a thousand times more numerous than they themselves in
|
||
submission, and extract from them the incredibly large amounts of income that they in fact do, only by instilling
|
||
fear in them.
|
||
It might be thought that an increase in the degree of exploitation could explain the size of income. But
|
||
from the economic reasoning of previous chapters we know that a higher degree of exploitation of natural
|
||
owners necessarily reduces their incentive to work and produce, and so there is a narrow limit to the degree to
|
||
which one person (or group of persons) can lead a comfortable life on the income coercively extracted from
|
||
another person (or a roughly equally sized group of persons) who would have to support [p. 150] this life style
|
||
through his (their) work. Hence, in order for the agents of socialism to be able to lead a comfortable life and
|
||
prosper as they do, it is essential that the number of exploited subjects be considerably larger and grow
|
||
over-proportionally as compared with those of the representatives of the state itself. With this, however, we
|
||
are back to the question of how the few can rule the many.
|
||
There would also be no convincing way around this explanatory task by arguing that the state could
|
||
simply solve this problem by improving its weaponry; by threatening with atomic bombs instead of with guns
|
||
and rifles, so to speak, thereby increasing the number of its subjects. Since realistically one must assume that
|
||
the technological know-how of such improved weaponry can hardly be kept secret, especially if it is in fact
|
||
applied, then with the state’s improved instruments for instilling fear, mutatis mutandis the victims’ ways and
|
||
means of resisting improve as well, and hence, such advances can hardly be thought of as explaining what has
|
||
to be explained.3 One must conclude, then, that the problem of explaining how the few can rule the many is
|
||
indeed real, and that socialism and the state as the incorporation of socialism must rest in addition to aggression
|
||
on some sort of active support among the public.
|
||
David Hume is one of the classic expositors of this insight. In his essay on “The first principles of
|
||
government” he argues:
|
||
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 [p. 151] governments,
|
||
as well as to the most free and most popular. The soldan of Egypt, or the emperor of
|
||
Rome, might drive his harmless subjects, like brute beasts, against their sentiments and
|
||
inclination. But he must, at least, have led his mamalukes or praetorian bands, like
|
||
men, by their opinion.4
|
||
How indeed is this support brought about?. One important component in the process of generating it is
|
||
Ideology. The state spends much time and effort persuading the public that it is not really what it is and that the
|
||
conse quences of its actions are positive rather than negative. Such Ideologies, spread to stabilize a state’s
|
||
existence and increase its income, claim that socialism offers a superior economic system or a social order that
|
||
is more just than capitalism, or claim that there is no such thing as justice at all prior to the state’s stepping in
|
||
and simply declaring certain norms to be just.5 And such ideologies, too, less attractive now, but once
|
||
extremely powerful, are those, for example, of the state being sanctified by religion, or of the rulers not being
|
||
ordinary people but instead god-like superhumans, who must be obeyed because of their natural superiority. I
|
||
have gone to great lengths in previous chapters to demonstrate that such Ideas are false and unjustified, and I
|
||
will return to the task of analyzing and unmasking another fashionable Ideology in the final chapter of this
|
||
treatise. But regardless of the falsity of these Ideologies, it must be recognized that they certainly do have some
|
||
effect on people, and that they do contribute—some more so than others—to their submission to a policy of
|
||
aggressive invasion of the property rights of natural owners.
|
||
Yet there is another more important component contributing to public support and this is not verbal
|
||
propaganda, but rather actions with a clear-cut, tangible impact. Instead of being a mere parasitic consumer of
|
||
goods that other people have produced, the state, in order to stabilize itself and in crease its income as much
|
||
as possible, adds some positive ingredients to [p. 152] its policy, designed to be of use to some people outside
|
||
the circle of its own personnel. Either it is engaged as an agent of income transfer, i.e., as an organization that
|
||
hands out monetary or nonmonetary income to B that it has previously taken away from A without A’s
|
||
consent—naturally after sub tracting a handling charge for the never costless act of such a transfer—or it
|
||
engages in the production of goods or services, using the means ex propriated earlier from natural owners, and
|
||
thus contributes something of value to the users/buyers/consumers of these goods. Either way, the state
|
||
generates support for its role. The recipients of transferred incomes as well as the users/consumers of
|
||
state-produced goods and services become de pendent to varying degrees on the continuation of a given state
|
||
policy for their current incomes, and their inclination to resist the socialism embodied in state rule is reduced
|
||
accordingly.
|
||
But this is only half of the picture. The positive achievements of the state are not undertaken simply to
|
||
do something nice for some people, as, for in stance, when someone gives somebody else a present. Nor are
|
||
they done simply to gain as high an income as possible from the exchange for the or ganization doing them, as
|
||
when an ordinary, profit-oriented institution engages in trade. Rather, they are undertaken in order to secure
|
||
the exist ence and contribute to the growth of an institution that is built on aggressive violence. As such, the
|
||
positive contributions emanating from the state must serve a strategic purpose. They must be designed to
|
||
break up resistance to or add support for the continued existence of an aggressor as an aggressor. Of course,
|
||
the state can err in this task, as can any ordinary business, because its decisions about what measures best
|
||
serves its strategic purposes have to be made in anticipation of certain expected results. And if it errs with
|
||
respect to the responses following its policy decisions, instead of rising its income can fall, jeopardizing its very
|
||
existence, just as a profit-oriented institution can make losses or even go bankrupt if the public is not [p. 153]
|
||
willing to deliberately buy what it was expected to buy. But only if the peculiar strategic purpose of state
|
||
transfers and state production as com pared with private transfers or production is understood does it become
|
||
possible to explain typical, recurring structural patterns of a state’s actions, and to explain why states generally
|
||
and uniformly prefer to go into certain lines of activities rather than others.
|
||
As regards the first problem: it does not make sense for a state to exploit every individual to the same
|
||
extent, since this would bring everyone against it, strengthen the solidarity among the victims, and in any case, it
|
||
would not be a policy that would find many new friends. It also does not make sense for a state to grant its
|
||
favors equally and indiscriminately to everybody. For if it did, the victims would still be victims, although
|
||
perhaps to a lesser degree. However, there would then be less income left to be distributed to people who
|
||
would truly profiteer from state action, and whose increased support could help compensate for the lack of
|
||
support from victimized persons. Rather, state policy must be and indeed is guided by the motto “divide et
|
||
impera”: treat people differently, play them against each other, exploit one possibly smaller group and favor
|
||
another possibly larger group at the former’s expense, and so counterbalance increased resentment or
|
||
resistance of some by increased support of others. Politics, as politics of a state, is not “the art of doing the
|
||
possible,” as statesmen prefer to describe their business. It is the art, building on an equilibrium of terror, of
|
||
helping to stabilize state income on as high a level as possible by means of popular discrimination and a
|
||
popular, discriminatory scheme of distributional favors. To be sure, a profit-oriented institution can also engage
|
||
in dis criminatory business policies, but to do so and to follow a discriminatory employment policy or not to sell
|
||
indiscriminately to anyone who is willing to pay the price set for a given service or product is costly, and so an
|
||
economic incentive to avoid such action exists. For the state, on the other hand, there [p. 154] is every
|
||
incentive in the world to engage in such discriminatory practices.6
|
||
Regarding the kinds of services preferably offered by the state: clearly, the state cannot produce
|
||
everything, or at least not everything to the same extent, for if it tried to do so its income would actually
|
||
fall—as the state can only appropriate what has in fact been produced earlier by natural owners, and the
|
||
incentive to produce anything in the future would be almost completely gone in a system of all-around
|
||
socialization. It is of utmost im portance in trying to implement socialism, then, that a state engage in and
|
||
concentrate on the production and provision of such goods and services (and, mutatis mutandis, drive private
|
||
competitors out of competition in such lines of productive activities, thereby monopolizing their provision)
|
||
which are strategically relevant for preventing or suppressing any actual revolt, rebellion, or revolution.7
|
||
Thus, all states—some more extensively than others, but every state to a considerable degree—have
|
||
felt the need to take the system of education, for one thing, into their own hands. It either directly operates the
|
||
educational institutions, or indirectly controls such institutions by making their private operation dependent on
|
||
the granting of a state license, thus insuring that they operate within a predefined framework of guidelines
|
||
provided by the state. Together with a steadily extended period of compulsory schooling, this gives the state a
|
||
tremendous head start in the competition among dif ferent ideologies for the minds of the people. Ideological
|
||
competition which might pose a serious threat to state rule can thereby be eliminated or its im pact
|
||
considerably reduced, especially if the state as the incorporation of socialism succeeds in monopolizing the job
|
||
market for intellectuals by making a state license the prerequisite for any sort of systematic teaching activity.8
|
||
The direct or indirect control of traffic and communication is of similar [p. 155] strategic importance
|
||
for a state. Indeed, all states have gone to great pains to control rivers, coasts and seaways, streets and
|
||
railroads, and especially, mail, radio, television, and telecommunication systems. Every prospective dissident is
|
||
decisively restrained in his means of moving around and coor dinating the actions of individuals if these things
|
||
are in the hand or under the supervision of the state. The fact, well known from military history, that traffic and
|
||
communication systems are the very first command posts to be occupied by any state attacking another vividly
|
||
underlines their central strategic significance in imposing state rule on a society.
|
||
A third central concern of strategic relevance for any state is the control and possible monopolization
|
||
of money. If the state succeeds in this task and, as is the case now all over the world, supplants a system of
|
||
free bank ing and metal-based currency—most commonly the gold standard—with a monetary system
|
||
characterized by a state-operated central bank and paper-money backed by nothing but paper and ink, a
|
||
great victory has indeed been reached. In its permanent struggle for higher income, the state is no longer
|
||
dependent on the equally unpopular means of increased taxation or currency depreciation (coin-clipping),
|
||
which at all times has been unmasked quickly as fraudulent. Rather, it can now increase its own revenue and
|
||
decrease its own debt almost at will by printing more money, as long as the additional money is brought into
|
||
circulation before the inflationary consequences of this practice have taken effect or have been anticipated by
|
||
the market.9
|
||
Fourth and last, there is the area of the production of security, of police, defense, and judicial courts.
|
||
Of all the state-provided or controlled goods or services this is certainly the area of foremost strategic
|
||
importance. In fact, it is of such great significance for any state to gain control of these things, to outlaw
|
||
competitors, and to monopolize these activities, that “state” and “producer of law and order” have frequently
|
||
been considered [p. 156] synonyms. Wrongly so, of course, as the state must be correctly described as an
|
||
institution of organized aggression attempting only to appear as an ordinary producer in order to continue
|
||
aggressing against innocent natural owners. But the fact that this confusion exists and is widely shared can be
|
||
explained with reference to the observation that all states must monopolize the production of security because
|
||
of its central strategic importance, and hence, these two terms, different as they are with respect to their
|
||
intentional meaning, indeed have the same extensional meaning.
|
||
It is not difficult to see why in order to stabilize its existence, a state can not, under any circumstances,
|
||
leave the production of security in the hands of a market of private property owners.10 Since the state
|
||
ultimately rests on coercion, it requires armed forces. Unfortunately (for any given state, that is), other armed
|
||
states exist which implies that there is a check on a state’s desire to expend its reign over other people and
|
||
thereby increase its revenue appropriated through exploitation. It is unfortunate for a given state, too, that such
|
||
a system of competing states also implies that each individual state is somewhat limited regarding the degree to
|
||
which it can exploit its own subjects, as their support might dwindle if its own rule is perceived as more
|
||
oppressive than that of competing states. For then the likelihood of a state’s subjects collaborating with a
|
||
competitor in its desire to ‘take over,” or that of voting with their feet (leaving one’s own country and going to
|
||
a different one) might increase.11 It is even more important, then, for each in dividual state to avoid any such
|
||
unpleasant competition from other poten tially dangerous armed organizations at least within the very territory
|
||
it happens to control. The mere existence of a private protection agency, armed as it would have to be to do
|
||
its job of protecting people from aggres sion and employing people trained in the use of such arms, would
|
||
constitute a potential threat to a state’s ongoing policy of invading private people’s property rights. Hence,
|
||
such organizations, which would surely spring upon [p. 157] the market as the desire to be protected against
|
||
aggressors is a genuine one, are eagerly outlawed, and the state arrogates this job to itself and its monopolistic
|
||
control. As a matter of fact, states everywhere are highly in tent on outlawing or at least controlling even the
|
||
mere possession of arms by private citizens—and most states have indeed succeeded in this task—as an
|
||
armed man is clearly more of a threat to any aggressor than an unarmed man. It bears much less risk for the
|
||
state to keep things peaceful while its own aggression continues, if rifles with which the taxman could be shot
|
||
are out of the reach of everyone except the taxman himself!
|
||
With respect to the judicial system matters are quite similar. If the state did not monopolize the
|
||
provision of judicial services, it would be unavoidable that, sooner or later (and most likely sooner), the state
|
||
would come to be regarded as the unjust institution it in fact is. Yet no unjust organization has any interest in
|
||
being recognized as such. For one thing, if the state did not see to it that only judges appointed and employed
|
||
by the state itself administered the law, it is evident that public law (those norms regulating the relationship
|
||
between the state and private individuals or associations of such individuals) would have no chance of being
|
||
accepted by the public, but instead would be unveiled immediately as a system of legalized aggression, existing
|
||
in violation of almost everyone’s sense of justice. And secondly, if the state did not also monopolize the
|
||
administration of private law (those norms regulating the relationships among private citizens) but left this task
|
||
to competing courts and judges, dependent on the public’s deliberate financial support, it is doubtful that norms
|
||
implying an asymmetrical distribution of rights or obligations between different persons or classes of persons
|
||
would have even the slightest chance of becoming generally accepted as valid laws. Courts and judges who
|
||
laid down such rules would immediately go bankrupt due to a lack of continued financial assistance.12
|
||
However, since the state is dependent on a policy of divide et impera to maintain its [p. 158] power, it must
|
||
stop the emergence of a competitive system of private law courts at all costs.
|
||
Without a doubt, all of these state-provided services—education, traffic and communication, money
|
||
and banking, and, most importantly, security and the administration of justice—are of vital importance to any
|
||
society whatsoever. All of them would certainly have to be provided, and would, in fact, be produced by the
|
||
market if the state did not take these things into its own hands. But this does not mean that the state is simply a
|
||
substitute for the market. The state engages in these activities for an entirely different reason than any private
|
||
business would—not simply because there is a demand for them, but rather because these areas of activities
|
||
are of essential strategic importance in assuring the state’s continued existence as a privileged institution built on
|
||
aggressive violence. And this different strategic intent is responsible for a peculiar kind of product. Since the
|
||
educators, employees of traffic and communication systems, those of central banks, the police and judges, are
|
||
all paid by taxes, the kind of products or services provided by a state, though certainly of some positive value
|
||
to some people, can never be of such quality that everyone would deliberately spend his own money on them.
|
||
Rather, these services all share the characteristic that they contribute to letting the state increase its own
|
||
coercively extracted income by means of benefiting some while harming others.13
|
||
But there is even more to the socio-psychological foundations of the state as an institution of continued
|
||
aggression against natural owners than the popular redistribution of strategically important goods and services.
|
||
Equally important for the state’s stability and growth is the decision-making structure which it adopts for itself:
|
||
its constitution. An ordinary profit-oriented business would try to adopt a decision-making structure best suited
|
||
to its goal of maximizing income through the perception and implementa tion of entrepreneurial opportunities,
|
||
i.e., differences in production costs and [p. 159] anticipated product demand. The state, in comparison, faces
|
||
the entirely different task of adopting a decision-making structure which allows it to in crease maximally its
|
||
coercively appropriated income—given its power to threaten and bribe persons into supporting it by granting
|
||
them special favors.
|
||
I submit that the best decision-making structure for doing so is a democratic constitution, i.e., the
|
||
adoption of majority rule. In order to real ize the validity of this thesis, only the following assumption need be
|
||
made. Not only the persons actually representing the state have the desire (which they, incidentally, are always
|
||
permitted to satisfy) to increase their income at the expense of a corresponding income reduction of natural
|
||
owners, producers, and contractors; this lust for power and the desire to rule others also exists among the
|
||
people governed. Not everyone has this desire to the same extent; indeed some people might never have it.
|
||
But most people have it quite normally on recurring occasions. If this is so (and experience informs us that this
|
||
is indeed the case), then the state must reckon with resistance from two analytically distinct sources. On the
|
||
one hand there is resistance by the victims which any state policy creates. The state can try to break this up by
|
||
making supportive friends; and indeed it will succeed in doing so to the extent that people can be corrupted
|
||
through bribery. On the other hand, if lust for power exists among the victims and/or the persons favored by a
|
||
given state policy, then there must also be resistance or at least discontent originating from the fact that any
|
||
given policy of expropriation and discriminatory distribution automatically excludes any other such policy with
|
||
its advocates in the state-ruled population, and hence must frustrate their particular plan of how power should
|
||
be used. By definition, no change in the expropriation-redistribution policy of the state can eliminate this sort of
|
||
discontent, as any change would necessarily exclude a different policy. Thus, if the state wants to do something
|
||
to reduce the resistance (stemming [p. 160] from the frustration of one’s lust for power) that any one particular
|
||
policy implies, it can only do so by adopting a decision-making structure which minimizes the disappointment
|
||
of potential power wielders: by opening up a popular scheme of participation in decision making, so that
|
||
everyone lust ing for his particular power policy can hope to have a shot at it in the future.
|
||
This, precisely, is the function of a democracy. Since it is based on a respect for the majority, it is by
|
||
definition a popular constitution for decision making. And as it indeed opens up the chance for everyone to
|
||
lobby for his own specific plan of wielding power at regular intervals, it maximally reduces current frustrated
|
||
lust for power through the prospect of a better future. Contrary to popular myth, the adoption of a democratic
|
||
constitution has nothing to do with freedom or justice.14 Certainly, as the state restrains itself in its use of
|
||
aggressive violence when engaging in the provision of some positively valued goods and services, so it accepts
|
||
additional constraints when the incumbent rulers subject themselves to the control of the majority of those
|
||
being ruled. Despite the fact, though, that this constraint fulfills the positive function of satisfying certain desires
|
||
of certain people by reducing the intensity of the frustrated lust for power, it by no means implies the state’s
|
||
forsaking its privileged position as an institution of legalized aggression. Rather, democratizing the state is an
|
||
organizational measure undertaken for the strategic purpose of rationalizing the execution of power, thereby
|
||
increasing the amount of income to be aggressively appropriated from natural owners. The form of power is
|
||
changed, but majority rule is aggression, too. In a system based on the natural theory of property—under
|
||
capitalism—majority rule does not and cannot play any role (apart from the fact, of course, that if accepted,
|
||
anyone could join an association adopting majority rule, such as a sports club or an association of animal
|
||
lovers, whose jurisdiction is deliberately accepted by members as binding for the duration of one’s
|
||
membership). In such a system, only the rules of original appropriation [p. 161] of goods through use or
|
||
contractual acquisition from previous owners are valid. Appropriation by decree or without a previous
|
||
user-owner’s con sent regardless of whether it was carried out by an autocrat, a minority, against a majority,
|
||
or by a majority against a minority is without exception an act of aggressive violence. What distinguishes a
|
||
democracy from an autocracy, monarchy, or oligarchy is not that the former means freedom, whereas the
|
||
others mean aggression. The difference between them lies solely in the techniques used to manage, transform,
|
||
and channel popular resistance fed by the frustrated lust for power. The autocrat does not allow the population
|
||
to influence policy in any regular, formalized way, even though he, too, must pay close attention to public
|
||
opinion in order to stabi lize his existence. Thus, an autocracy is characterized by the lack of an in
|
||
stitutionalized outlet for potential power wielders. A democracy, on the other hand, has precisely such an
|
||
institution. It allows majorities, formed according to certain formalized rules, to influence policy changes
|
||
regularly. Accordingly, if disappointed lust for power becomes more tolerable when there is a regular outlet for
|
||
it, then there must be less resistance to democratic rule than to autocratic power. This important
|
||
socio-psychological difference between autocratic and democratic regimes has been described masterfully by
|
||
B. de Jouvenel:
|
||
From the twelfth to the eighteenth century governmental authority grew continuously.
|
||
The process was understood by all who saw it happening; it stirred them to incessant
|
||
protest and to violent reaction.—In later times its growth has continued at an
|
||
accelerated pace, and its extension has brought a corresponding extension of war.
|
||
And now we no longer understand the process, we no longer protest, we no longer
|
||
react. This quiescence of ours is a new thing, for which Power has to thank the
|
||
smoke-screen in which it has wrapped itself. Formerly it could be seen, manifest in the
|
||
person of the king, who did not disclaim being the master he was, and in whom human
|
||
passions were discernible. [p. 162] Now, masked in anonymity, it claims to have no
|
||
existence of its own, and to be but the impersonal and passionless instrument of the
|
||
general will. – But that is clearly a fiction. – . . . Today as always Power is in the
|
||
hands of a group of men who control the power house . . . . All that has changed is
|
||
that it has now been made easy for the ruled to change the personnel of the leading
|
||
wielders of Power. Viewed from one angle, this weakens Power, because the wills
|
||
which control a society’s life can, at the society’s pleasure, be replaced by other wills,
|
||
in which it feels more confidence. – But by opening the prospect of Power to all the
|
||
ambitious talents, this arrangement makes the extension of Power much easier. Under
|
||
the “ancien regime,” society’s moving spirits, who had, as they knew, no chance of a
|
||
share in Power, were quick to denounce its smallest encroachment. Now, on the other
|
||
hand, when everyone is potentially a minister, no one is concerned to cut down an
|
||
office to which he aspires one day himself, or to put sand in a machine which he means
|
||
to use himself when his turn comes. Hence, it is that there is in the political circles of a
|
||
modern society a wide complicity in the extension of Power.15
|
||
Given an identical population and an identical state policy of the dis criminatory provision of goods and
|
||
services, a democratic state has more opportunities for increasing its own aggressively appropriated income.
|
||
And mutatis mutandis, an autocracy must settle for a relative lower income. In terms of the classics of political
|
||
thought, it must rule more wisely, i.e., rule less. Since it does not allow any will other than that of the autocrat,
|
||
and per haps his immediate advisors, to gain power or influence policy on a regular basis, its execution of
|
||
power appears less tolerable to those ruled. Thus, its stability can only be secured if the overall degree of
|
||
exploitation enacted by the state is relatively reduced.
|
||
The situation over the last two centuries vividly illustrates the validity of this thesis. During this time we
|
||
have experienced an almost universal sub stitution of relatively democratic regimes for relatively
|
||
autocratic-monarchical [p. 163] systems.16 (Even Soviet Russia is notably more democratic than czarist
|
||
Russia ever was.) Hand in hand with this change has gone a process never experienced before regarding its
|
||
speed and extent: a permanent and seem ingly uncontrollable growth of the state. In the competition of different
|
||
states for exploitable populations, and in these states’ attempts to come to grips with internal resistance, the
|
||
democratic state has tended to win outright over the autocratic one as the superior power-variant. Ceteris
|
||
paribus, it is the democratic state—and the democratic socialism incorporated in it—which commands the
|
||
higher income and so proves to be superior in wars with other states. And ceteris paribus, it is this state, too,
|
||
that succeeds better in the management of internal resistance: it is, and historically this has been shown
|
||
repeatedly, easier to save the power of a state by democratizing it than by doing the opposite and autocratizing
|
||
its decision-making structure.
|
||
Here, then, we have the socio-psychological foundations of the state as the very institution enacting
|
||
socialism. Any state rests on the monopolization or the monopolistic control of strategically important goods
|
||
and services which it discriminately provides to favored groups of people, thereby breaking down resistance to
|
||
a policy of aggression against natural owners. Furthermore, it rests on a policy of reducing the frustrated lust
|
||
for power by creating outlets for public participation in future changes in a policy of exploration. Naturally,
|
||
every historical description of a state and its specific socialist policy and policy changes will have to give a
|
||
more detailed account of what made it possible for socialism to become established and to grow. But if any
|
||
such description is supposedly complete and is not to fall prey to ideological deception, then all measures
|
||
taken by the state must be described as embedded in this very institutional framework of violence, divide et
|
||
impera, and democratization.
|
||
Whatever any given state does in terms of positively evaluated contribu tions to society, and however
|
||
great or small the extent of such contributions [p. 164] might be; whether the state provides help for working
|
||
mothers with depend ent children or gives medical care, engages in road or airport construction; whether it
|
||
grants favors to farmers or students, devotes itself to the production of educational services, society’s
|
||
infrastructure, money, steel or peace; or even if it does all of these things and more, it would be completely
|
||
fallacious to enumerate all of this and leave it at that. What must be said in ad dition is that the state can do
|
||
nothing without the previous noncontractual expropriation of natural owners. Its contributions to welfare are
|
||
never an or dinary present, even if they are given away free of charge, because some thing is handed out that
|
||
the state does not rightfully own in the first place. If it sells its services at cost, or even at a profit, the means of
|
||
production employed in providing them still must have been appropriated by force. And if it sells them at a
|
||
subsidized price, aggression must continue in order to uphold the current level of production.
|
||
The situation is similar with respect to a state’s decision-making struc ture. Whether a state is
|
||
organized autocratically or democratically, has a centralized or decentralized decision-making structure, a
|
||
single or multi stage representational structure; whether it is organized as a system of par ties or as a corporate
|
||
state, it would be delusory to describe it in these terms and leave it at that. In order to be exhaustive, what
|
||
must be added is that first and foremost, the constitution of a state is an organizational device for promoting its
|
||
existence as an institution of aggression. And insofar as its stability rests on constitutionally guaranteed rights to
|
||
participate in the in auguration of policy changes, it must be stressed that the state rests on an institutionalized
|
||
appeal to motivational energies that people in their private lives would regard as criminal and accordingly
|
||
would do everything to sup press. An ordinary business enterprise has a decision-making structure that must
|
||
adapt to the purpose of enabling it to secure as high a profit as pos sible from sales to deliberately supportive
|
||
customers. A state’s constitution [p. 165] has nothing in common with this, and only superficial sociological
|
||
“studies in organization” would engage in investigations of structural similarities or differences between the
|
||
two.17
|
||
Only if this is thoroughly understood can the nature of the state and socialism be fully grasped. And
|
||
only then can there be a complete under standing of the other side of the same problem: what it takes to
|
||
overcome socialism. The state cannot be fought by simply boycotting it, as a private business could, because
|
||
an aggressor does not respect the negative judg ment revealed by boycotts. But it also cannot simply be fought
|
||
by counter ing its aggression with defensive violence, because the state’s aggression is supported by public
|
||
opinion.18 Thus, everything depends on a change in public opinion. More specifically, everything depends on
|
||
two assumptions and the change that can be achieved regarding their status as realistic or unrealistic. One such
|
||
assumption was implied when it was argued above that the state can generate support for its role by providing
|
||
certain goods and services to favored groups of people. There, evidently, the assumption involved was that
|
||
people can be corrupted into supporting an aggressor if they receive a share, however small, of the benefits.
|
||
And, since states exist everywhere, this assumption, happily for the state, must indeed be said to be realistic
|
||
everywhere, today. But then, there is no such thing as a law of nature stating that this must be so forever. In
|
||
order for the state to fail in reaching its objective, no more and no less than a change in general public opinion
|
||
must take place: state-supportive action must come to be regarded and branded as immoral because it is
|
||
support given to an organization of institutionalized crime. Socialism would be at its end if only people stopped
|
||
letting themselves be corrupted by the state’s bribes, but would, let us say, if offered, take their share of the
|
||
wealth in order to reduce the state’s bribing power, while continuing to regard and treat it as an aggressor to
|
||
be resisted, ignored, and ridiculed, at any time and in any place. [p. 166]
|
||
The second assumption involved was that people indeed lust for power and hence can be corrupted
|
||
into state-supportive action if given a chance to satisfy this lust. Looking at the facts, there can hardly be any
|
||
doubt that today this assumption, too, is realistic. But once again, it is not realistic be cause of natural laws, for
|
||
at least in principle, it can deliberately be made unrealistic.19 In order to bring about the end of statism and
|
||
socialism, no more and no less must be accomplished than a change in public opinion which would lead people
|
||
away from using the institutional outlets for policy participation for the satisfaction of power lust, but instead
|
||
make them suppress any such desire and turn this very organizational weapon of the state against it and push
|
||
uncompromisingly for an end to taxation and regulation of natural owners wherever and whenever there is a
|
||
chance of influencing policy.20 [p. 167]
|
||
Chapter 9
|
||
Capitalist Production and
|
||
The Problem of Monopoly
|
||
The previous chapters have demonstrated that neither an economic nor a moral case for socialism can
|
||
be made. Socialism is economically and morally inferior to capitalism. The last chapter examined why socialism
|
||
is nonetheless a viable social system, and analyzed the socio-psychological characteristics of the state—the
|
||
institution embodying socialism. Its exist ence, stability, and growth rest on aggression and on public support of
|
||
this aggression which the state manages to effect. This it does, for one thing, through a policy of popular
|
||
discrimination; a policy, that is, of bribing some people into tolerating and supporting the continual exploitation
|
||
of others by granting them favors; and secondly, through a policy of popular participa tion in the making of
|
||
policy, i.e., by corrupting the public and persuading it to play the game of aggression by giving prospective
|
||
power wielders the consoling opportunity to enact their particular exploitative schemes at one of the
|
||
subsequent policy changes.
|
||
We shall now return to economics, and analyze the workings of a capitalist system of production—a
|
||
market economy—as the alternative to socialism, thereby constructively bringing my argument against
|
||
socialism full circle. While the final chapter will be devoted to the question of how capitalism solves the
|
||
problem of the production of so-called “public goods,” this chapter will explain what might be termed the
|
||
normal functioning of capitalist production and contrast it with the normal working of a system of state or social
|
||
production. We will then turn to what is generally believed to be a special problem allegedly showing a peculiar
|
||
economic deficiency in a pure capitalist production system: the so-called problem of monopolistic production.
|
||
[p. 168]
|
||
Ignoring for the moment the special problems of monopolistic and public goods production, we will
|
||
demonstrate why capitalism is economically superior as compared to its alternative for three structural reasons.
|
||
First, only capitalism can rationally, i.e., in terms of consumer evaluations, allocate means of production;
|
||
second, only capitalism can ensure that, with the quality of the people and the allocation of resources being
|
||
given, the quality of the output produced reaches its optimal level as judged again in terms of consumer
|
||
evaluations; and third, assuming a given allocation of production factors and quality of output, and judged again
|
||
in terms of con sumer evaluations, only a market system can guarantee that the value of production factors is
|
||
efficiently conserved over time.1
|
||
As long as it produces for a market, i.e., for exchange with other people or businesses, and subject as
|
||
it is to the rule of nonaggression against the property of natural owners, every ordinary business will use its
|
||
resources for the production of such goods and such amounts of these goods which, in anticipation, promise a
|
||
return from sales that surpasses as far as possible the costs which are involved in using these resources. If this
|
||
were not so, a business would use its resources for the production of different amounts of such goods or of
|
||
different goods altogether. And every such business has to decide repeatedly whether a given allocation or use
|
||
of its means of production should be upheld and reproduced, or if, due to a change in demand or the
|
||
anticipation of such a change, a reallocation to different uses is in order. The question of whether or not
|
||
resources have been used in the most value-productive (the most profitable) way, or if a given reallocation was
|
||
the most economic one, can, of course, only be decided in a more or less distant future under any conceivable
|
||
economic or social system, be cause invariably time is needed to produce a product and bring it onto the
|
||
market. However, and this is decisive, for every business there is an objec tive criterion for deciding the extent
|
||
to which its previous allocational [p. 169] decisions were right or wrong. Bookkeeping informs us—and in
|
||
principle anyone who wanted to do so could check and verify this information—whether or not and to what
|
||
extent a given allocation of factors of produc tion was economically rational, not only for the business in total
|
||
but for each of its subunits, insofar as market prices exist for the production factors used in it. Since the
|
||
profit-loss criterion is an ex post criterion, and must necessarily be so under any production system because of
|
||
the time factor involved in production, it cannot be of any help when deciding on future ex ante allocations.
|
||
Nevertheless, from the consumers’ point of view it is possible to conceive of the process of resource allocation
|
||
and reallocation as rational, because every allocational decision is constantly tested against the profit-loss
|
||
criterion. Every business that fails to meet this criterion is in the short or long run doomed to shrink in size or be
|
||
driven out of the market entirely, and only those enterprises that successfully manage to meet the profit-loss
|
||
criterion can stay in operation or possibly grow and prosper. To be sure, then, the institutionalization of this
|
||
criterion does not insure (and no other criterion ever could) that all individual business decisions will always
|
||
turn out to be rational in terms of consumer evaluations. However, by eliminating bad forecasters and
|
||
strengthening the position of consistently successful ones, it does insure that the structural changes of the whole
|
||
production system which take place overtime can be described as constant movements toward a more rational
|
||
use of resources and as a never-ending process of directing and redirecting factors of production out of less
|
||
value-productive lines of production into lines which are valued more highly by the consumer.2
|
||
The situation is entirely different and arbitrariness from the point of view of the consumer (for whom, it
|
||
should be recalled, production is undertaken) replaces rationality as soon as the state enters the picture.
|
||
Because it is dif ferent from ordinary businesses in that it is allowed to acquire income by noncontractual
|
||
means, the state is not forced to avoid losses if it wants to [p. 170] stay in business as are all other producers.
|
||
Rather, since it is allowed to im pose taxes and/or regulations on people, the state is in a position to deter mine
|
||
unilaterally whether or not, to what extent, and for what length of time to subsidize its own productive
|
||
operations. It can also unilaterally choose which prospective competitor is allowed to compete with the state
|
||
or pos sibly outcompete it. Essentially this means that the state becomes inde pendent of cost-profit
|
||
considerations. But if it is no longer forced to test continually any of its various uses of resources against this
|
||
criterion, i.e., if it no longer need successfully adjust its resource allocations to the changes in demand of
|
||
consumers in order to survive as a producer, then the se quence of allocational decisions as a whole must be
|
||
regarded as an ar bitrary, irrational process of decision making. A mechanism of selection forcing those
|
||
allocational “mutations” which consistently ignore or exhibit a maladjustment to consumer demand out of
|
||
operation simply no longer ex ists.3 To say that the process of resource allocation becomes arbitrary in the
|
||
absence of the effective functioning of the profit-loss criterion does not mean that the decisions which
|
||
somehow have to be made are not subject to any kind of constraint and hence are pure whim. They are not,
|
||
and any such decision faces certain constraints imposed on the decision maker. If, for instance, the allocation
|
||
of production factors is decided democratically, then it evidently must appeal to the majority. But if a decision
|
||
is constrained in this way or if it is made autocratically, respecting the state of public opinion as seen by the
|
||
autocrat, then it is still arbitrary from the point of view of voluntarily buying or not-buying consumers.4 Hence,
|
||
the allocation of resources, whatever it is and however it changes over time, embodies a wasteful use of scarce
|
||
means. Freed from the necessity of making profits in order to survive as a consumer-serving institution, the
|
||
state necessarily substitutes allocational chaos for rationality. M. Rothbard nicely summarizes the problem as
|
||
follows: [p. 171]
|
||
How can it (i.e. the government, the state) know whether to build road A or road B,
|
||
whether to invest in a road or in a school—in fact, how much to spend for all its
|
||
activities? There is no rational way that it can allocate funds or even decide how much
|
||
to have. When there is a shortage of teachers or schoolrooms or police or streets, the
|
||
government and its supporters have only one answer: more money. Why is this answer
|
||
never offered on the free market? The reason is that money must be withdrawn from
|
||
some other uses in consumption or investment . . . . and this withdrawal must be
|
||
justified. This justification is provided by the test of profit and loss: the indication that
|
||
the most urgent wants of the consumers are being satisfied. If an enterprise or product
|
||
is earning high profits for its owners and these profits are expected to continue, more
|
||
money will be forthcoming; if not, and losses are being incurred, money will flow out of
|
||
the industry. The profit-and-loss-test serves as the critical guide for directing the flow
|
||
of productive services. No such guide exists for the government, which has no rational
|
||
way to decide how much money to spend, either in total, or in each specific line. The
|
||
more money it spends, the more service it can supply—but where to stop?5
|
||
Besides the misallocation of factors of production that results from the decision to grant the state the
|
||
special right to appropriate revenue in a non contractual way, state production implies a reduction in the quality
|
||
of the output of whatever it decides to produce. Again, an ordinary profit-oriented business can only maintain a
|
||
given size or possibly grow if it can sell its products at a price and in such quantity that allow it to recover at
|
||
least the costs involved in production and is hopefully higher. Since the demand for the goods or services
|
||
produced depends either on their relative quality or on their price—this being one of many criteria of
|
||
quality—as perceived by potential buyers, the producers must constantly be concerned about “per ceived
|
||
product quality” or “cheapness of product.” A firm is dependent ex clusively on voluntary consumer purchases
|
||
for its continued existence, so [p. 172] there is no arbitrarily defined standard of quality for a capitalist
|
||
enterprise (including so-called scientific or technological standards of quality) set by an alleged expert or
|
||
committee of experts. For it there is only the quality as perceived and judged by the consumers. Once again,
|
||
this criterion does not guarantee that there are no low-quality or overpriced products or services offered on the
|
||
market because production takes time and the sales test comes only after the products have appeared on the
|
||
market. And this would have to be so under any system of goods production. Nonetheless, the fact that every
|
||
capitalist enterprise must undergo this sales test and pass it to avoid being eliminated from the market
|
||
guarantees a sovereign position to the consumers and their evaluations. Only if product quality is constantly
|
||
improved and adjusted to consumer tastes can a business stay in operation and prosper.
|
||
The story is quite different as soon as the production of goods is under taken by the state. Once future
|
||
revenue becomes independent of cost covering sales—as is typically the case when the state produces a
|
||
good—there is no longer a reason for such a producer to be concerned about product quality in the same way
|
||
that a sales-dependent institution would have to be. If the producer’s future income can be secured, regardless
|
||
of whether according to consumer evaluations the products or services produced are worth their money, why
|
||
undertake special efforts to improve anything? More precisely, even if one assumes that the employees of the
|
||
state as a productive enterprise with the right to impose taxes and to regu late unilaterally the competitiveness
|
||
of its potential rivals are, on the average, just as much interested or uninterested in work as those working in a
|
||
profit-dependent enterprise,6 and if one further assumes that both groups of employees and workers are on
|
||
the average equally interested or uninterested in an increase or decrease in their income, then the quality of
|
||
products, measured in terms of consumer demand and revealed in actual [p. 173] purchases, must be lower in
|
||
a state enterprise than in private business, be cause the income of the state employees would be far less
|
||
dependent on product quality. Accordingly, they would tend to devote relatively less ef fort to producing
|
||
quality products and more of their time and effort would go into doing what they, but not necessarily the
|
||
consumer, happen to like.7 Only if the people working for the state were superhumans or angels, while
|
||
everyone else was simply an ordinary, inferior human being, could the result be any different. Yet the same
|
||
result, i.e., the inferiority of product quality of any state-produced goods, would again ensue if the human race
|
||
in the aggregate would somehow improve: if they were working in a state enterprise even angels would
|
||
produce a lower quality output than their angel-colleagues in private business, if work implied even the slightest
|
||
disutility for them.
|
||
Finally, in addition to the facts that only a market system can ensure a rational allocation of scarce
|
||
resources, and that only capitalist enterprises can guarantee an output of products that can be said to be of
|
||
optimal quality, there is a third structural reason for the economic superiority, indeed unsurpassability of a
|
||
capitalist system of production. Only through the operation of market forces is it possible to utilize resources
|
||
efficiently over time in any given allocation, i.e., to avoid overutilization as well as underutilization. This problem
|
||
has already been addressed with reference to Russian style socialism in Chapter 3. What are the institutional
|
||
constraints on an ordinary profit-oriented enterprise in its decisions about the degree of exploitation or
|
||
conservation of its resources in the particular line of production in which they happen to be used? Evidently,
|
||
the owner of such an enterprise would own the production factors or resources as well as the products
|
||
produced with them. Thus, his income (used here in a wide sense of the term) consists of two parts: the income
|
||
that is received from the sales of the products produced after various operating costs have been subtracted;
|
||
and the value [p. 174] that is embodied in the factors of production which could be translated into current
|
||
income should the owner decide to sell them. Institutionalizing a capitalist system—a social order based on
|
||
private property—thus implies es tablishing an incentive structure under which people would try to maximize
|
||
their income in both of these dimensions. What exactly does this mean?8 Every act of production evidently
|
||
affects both mentioned income dimen sions. On one hand, production is undertaken to reach an income return
|
||
from sales. On the other hand, as long as the factors of production are ex haustible, i.e., as long as they are
|
||
scarce and not free goods, every produc tion act implies a deterioration of the value of the production factors.
|
||
Assuming that private ownership exists, this produces a situation in which every business constantly tries not to
|
||
let the marginal costs of production (i.e., the drop in value of the resources that results from their usage) to be
|
||
come greater than the marginal revenue product, and where with the help of bookkeeping an instrument for
|
||
checking the success or failure of these attempts exists. If a producer were not to succeed in this task and the
|
||
drop in the value of capital were higher than the increase in the income returns from sales, the owner’s total
|
||
income (in the wider sense of the term) would be reduced. Thus, private ownership is an institutional device for
|
||
safeguard ing an existing stock of capital from being overexploited or if it is, for punishing an owner for letting
|
||
this happen through losses in income. This helps make it possible for values produced to be higher than values
|
||
destroyed during production. In particular, private ownership is an institution in which an incentive is
|
||
established to efficiently adjust the degree of conserving or consuming a given stock of capital in a particular
|
||
line of production to anticipated price changes. If, for instance, the future price of oil were expected to rise
|
||
above its current level, then the value of the capital bound up in oil production would immediately rise as would
|
||
the marginal cost involved in producing the marginal product. Hence, the enterprise would immediately [p.
|
||
175] be impelled to reduce production and increase conservation accordingly, because the marginal revenue
|
||
product on the present market was still at the unchanged lower level. On the other hand, if in the future oil
|
||
prices were expected to fall below their present level, this would result in an immediate drop in the respective
|
||
capital values and in marginal costs, and hence the enterprise would immediately begin to utilize its capital
|
||
stock more inten sively since prices on the present market would still be relatively higher. And to be sure, both
|
||
of these reactions are exactly what is desirable from the point of view of the consumers.
|
||
If the way in which a capitalist production system works is compared with the situation that becomes
|
||
institutionalized whenever the state takes care of the means of production, striking differences emerge. This is
|
||
true especially when the state is a modern parliamentary democracy. In this case, the managers of an enterprise
|
||
may have the right to receive the returns from sales (after subtracting operation costs), but, and this is decisive,
|
||
they do not have the right to appropriate privately the receipts from a possible sale of the production factors.
|
||
Under this constellation, the incentive to use a given stock of capital economically over time is drastically
|
||
reduced. Why?. Because if one has the right to privately appropriate the income return from product sales but
|
||
does not have the right to appropriate the gains or losses in capital value that result from a given degree of
|
||
usage of this capital, then there is an incentive structure institutionalized not of maximizing total income—i.e.,
|
||
total social wealth in terms of consumer evaluations—but rather of maximizing income returns from sales at the
|
||
expense of losses in capital value. Why, for instance, should a government official reduce the degree of
|
||
exploitation of a given stock of capital and resort to a policy of conservation when prices for the goods
|
||
produced are expected to rise in the future? Evi dently, the advantage of such a conservationist policy (the
|
||
higher capital value resulting from it) could not be reaped privately. On the other hand, [p. 176] by resorting to
|
||
such a policy one’s income returns from sales would be reduced, whereas they would not be reduced if one
|
||
forgot about conserving. In short, to conserve would mean to have none of the advantages and all of the
|
||
disadvantages. Hence, if the state managers are not super-humans but ordinary people concerned with their
|
||
own advantages, one must conclude that it is an absolutely necessary consequence of any state production that
|
||
a given stock of capital will be overutilized and the living standards of consumers impaired in comparison to the
|
||
situation under capitalism.
|
||
Now it is fairly certain that someone will argue that while one would not doubt what has been stated so
|
||
far, things would in fact be different and the deficiency of a pure market system would come to light as soon as
|
||
one paid attention to the special case of monopolistic production. And by necessity, monopolistic production
|
||
would have to arise under capitalism, at least in the long run. Not only Marxist critics but orthodox economic
|
||
theorists as well make much of this alleged counter-argument.9 In answer to this challenge four points will be
|
||
made in turn. First, available historical evidence shows that contrary to these critics’ thesis, there is no
|
||
tendency toward increased monopoly under an unhampered market system. In addition, there are theoretical
|
||
reasons that would lead one to doubt that such a tendency could ever prevail on a free market. Third, even if
|
||
such a process of increasing monopolization should come to bear, for whatever reason, it would be harmless
|
||
from the point of view of consumers provided that free entry into the market were indeed ensured. And fourth,
|
||
the concept of monopoly prices as distinguished from and contrasted to competitive prices is illusory in a
|
||
capitalist economy.
|
||
Regarding historical evidence, if the thesis of the critics of capitalism were true, then one would have to
|
||
expect a more pronounced tendency toward monopolization under relatively freer, unhampered, unregulated
|
||
laissez-faire capitalism than under a relatively more heavily regulated system of [p. 177] “welfare” or “social”
|
||
capitalism. However, history provides evidence of precisely the opposite result. There is general agreement
|
||
regarding the as sessment of the historical period from 1867 to World War I as being a rela tively more
|
||
capitalist period in history of the United States, and of the subsequent period being one of comparatively more
|
||
and increasing business regulations and welfare legislation. However, if one looks into the matter one finds that
|
||
there was not only less development toward monopolization and concentration of business taking place in the
|
||
first period than in the second but also that during the first period a constant trend towards more severe
|
||
competition with continually falling prices for almost all goods could be observed.10 And this tendency was
|
||
only brought to a halt and reversed when in the course of time the market system became more and more
|
||
obstructed and destroyed by state intervention. Increasing monopolization only set in when leading
|
||
businessmen became more suc cessful at persuading the government to interfere with this fierce system of
|
||
competition and pass regulatory legislation, imposing a system of “orderly” competition to protect existing large
|
||
firms from the so-called cutthroat com petition continually springing up around them.11 G. Kolko, a left-winger
|
||
and thus certainly a trustworthy witness, at least for the critics from the left, sums up his research into this
|
||
question as follows:
|
||
There was during this [first] period a dominant trend toward growing competition.
|
||
Competition was unacceptable to many key business and financial leaders, and the
|
||
merger movement was to a large extent a reflection of voluntary, unsuccessful business
|
||
effects to bring irresistible trends under control . . . As new competitors sprang up, and
|
||
as economic power was diffused throughout an expanding nation, it became apparent
|
||
to many important businessmen that only the national government could [control and
|
||
stabilize] the economy . . . Ironically, contrary to the consensus of historians, it was not
|
||
the existence of monopoly which caused the government to intervene in the economy,
|
||
but the lack of it.12 [p. 178]
|
||
In addition, these findings, which stand in clear contradiction to much of the common wisdom on the
|
||
matter, are backed by theoretical considera tions.13 Monopolization means that some specific factor of
|
||
production is withdrawn from the market sphere. There is no trading of the factor, but there is only the owner
|
||
of this factor engaging in restraint of trade. Now if this is so, then no market price exists for this monopolized
|
||
production fac tor. But if there is no market price for it, then the owner of the factor can also no longer assess
|
||
the monetary costs involved in withholding it from the market and in using it as he happens to use it. In other
|
||
words, he can no longer calculate his profits and make sure, even if only ex post facto, that he is indeed
|
||
earning the highest possible profits from his investments. Thus, provided that the entrepreneur is really
|
||
interested in making the highest pos sible profit (something, to be sure, which is always assumed by his critics),
|
||
he would have to offer the monopolized production factors on the market continually to be sure that he was
|
||
indeed using them in the most profitable way and that there was no other more lucrative way to use them, so as
|
||
to make it more profitable for him to sell the factor than keep it. Hence, it seems, one would reach the
|
||
paradoxical result that in order to maximize his profits, the monopolist must have a permanent interest in
|
||
discontinuing his position as the owner of a production factor withheld from the market and, instead, desire its
|
||
inclusion in the market sphere.
|
||
Furthermore, with every additional act of monopolization the problem for the owner of monopolized
|
||
production factors—i.e., that because of the impossibility of economic calculation, he can no longer make sure
|
||
that those factors are indeed used in the most profitable way—becomes ever more acute. This is so, in
|
||
particular, because realistically one must assume that the monopolist is not only not omniscient but that his
|
||
knowledge regarding future competing goods and services by the consumers in future markets becomes more
|
||
and more limited as the process of monopolization advances. [p. 179] As production factors are withdrawn
|
||
from the market, and as the circle of consumers served by the goods produced with these factors widens, it
|
||
will be less likely that the monopolist, unable to make use of economic cal culation, can remain in command of
|
||
all the relevant information needed to detect the most profitable uses for his production factors. Instead, it be
|
||
comes more likely in the course of such a process of monopolization, that other people or groups of people,
|
||
given their desire to make profits by en gaging in production, will perceive more lucrative ways of employing
|
||
the monopolized factors.14 Not necessarily because they are better entrepreneurs, but simply because they
|
||
occupy different positions in space and time and thus become increasingly aware of entrepreneurial oppor
|
||
tunities which become more and more difficult and costly for the monopo list to detect with every new step
|
||
toward monopolization. Hence, the likelihood that the monopolist will be persuaded to sell his monopolized
|
||
factors to other producers—nota bene: for the purpose of thereby increasing his profits—increases with every
|
||
additional step toward monopolization.15
|
||
Now, let us assume that what historical evidence as well as theory proves to be unlikely happens
|
||
anyway, for whatever reason. And let us assume straightaway the most extreme case conceivable: there is only
|
||
one single business, one super-monopolist so to speak, that provides all the goods and services available on
|
||
the market, and that is the sole employer of everyone. What does this state of affairs imply regarding consumer
|
||
satisfaction, provided, of course, as assumed, that the super-monopolist has acquired his position and upholds
|
||
it without the use of aggression? For one thing, it evidently means that no one has any valid claims against the
|
||
owner of this firm; his enterprise is indeed fully and legitimately his own. And for another thing it means that
|
||
there is no infringement on anyone’s right to boycott any possible exchange. No one is forced to work for the
|
||
monopolist or buy anything from him, and everyone can do with his earnings from [p. 180] labor services
|
||
whatever he wants. He can consume or save them, use them for productive or nonproductive purposes, or
|
||
associate with others and combine their funds for any sort of joint venture. But if this were so, then the
|
||
existence of a monopoly would only allow one to say this: the monop olist clearly could not see any chance of
|
||
improving his income by selling all or part of his means of production, otherwise he would do so. And no one
|
||
else could see any chance of improving his income by bidding away factors from the monopolist or by
|
||
becoming a capitalist producer himself through original saving, through transforming existing nonproductively
|
||
used private wealth into productive capital, or through combining funds with others, otherwise it would be
|
||
done. But then, if no one saw any chance of improv ing his income without resorting to aggression, it would
|
||
evidently be absurd to see anything wrong with such a super-monopoly. Should it indeed ever come into
|
||
existence within the framework of a market economy, it would only prove that this self-same super-monopolist
|
||
was indeed providing con sumers with the most urgently wanted goods and services in the most effi cient way.
|
||
Yet the question of monopoly prices remains.16 Doesn’t a monopoly price imply a suboptimal supply
|
||
of goods to consumers, and isn’t there then an important exception from the generally superior economic
|
||
working of capitalism to be found here? In a way this question has already been answered by the above
|
||
explanation that even a super-monopolist estab lishing itself in the market cannot be considered harmful for
|
||
consumers. But in any case, the theory that monopoly prices are (allegedly) categorically different from
|
||
competitive prices has been presented in different, technical language and hence deserves special treatment.
|
||
The result of this analysis, which is hardly surprising now, only reinforces what has already been dis covered:
|
||
monopoly does not constitute a special problem forcing anyone to make qualifying amendments to the general
|
||
rule of a market economy [p. 181] being necessarily more efficient than any socialist or statist system. What is
|
||
the definition of “monopoly price” and, in contrast to it, of “competitive price” according to economic
|
||
orthodoxy (which in the matter under inves tigation includes the so-called Austrian school of economics as
|
||
represented by L. v. Mises)? The following definition is typical:
|
||
Monopoly is a prerequisite for the emergence of monopoly prices, but it is not the only
|
||
prerequisite. There is a further condition required, namely a certain shape of the
|
||
demand curve. The mere existence of monopoly does not mean anything in this regard.
|
||
The publisher of a copyrighted book is a monopolist. But he may not be able to sell a
|
||
single copy, no matter how low the price he asks. Not every price at which a
|
||
monopolist sells a monopolized commodity is a monopoly price. Monopoly prices are
|
||
only prices at which it is more advantageous for the monopolist to restrict the total
|
||
amount to be sold than to expand its sales to the limit which a competitive market
|
||
would allow.17
|
||
However plausible this distinction might seem, it will be argued that neither the producer himself nor
|
||
any neutral outside observer could ever decide if the prices actually obtained on the market were monopoly or
|
||
com petitive prices, based on the criterion “restricted versus unrestricted supply’ as offered in the above
|
||
definition. In order to understand this, suppose a monopolist producer in the sense of “a sole producer of a
|
||
given good” ex ists. The question of whether or not a given good is different from or homogeneous to other
|
||
goods produced by other firms is not one that can be decided based on a comparative analysis of such goods
|
||
in physical or chemical terms ex ante, but will always have to be decided ex post facto, on future markets, by
|
||
the different or equal treatment and evaluations that these goods receive from the buying public. Thus every
|
||
producer, no matter what his product is, can be considered a potential monopolist in this sense of the term, at
|
||
the point of decision making. What, then, is the decision [p. 182] with which he and every producer is faced?
|
||
He must decide how much of the good in question to produce in order to maximize his monetary income (with
|
||
other, nonmonetary income considerations assumed to be given). To be able to do this he must decide how the
|
||
demand curve for the product concerned will be shaped when the products reach the market, and he must
|
||
take into consideration the various production costs of producing various amounts of the good to be produced.
|
||
This done, he will establish the amount to be produced at that point where returns from sales, i.e., the amount
|
||
of goods sold times price, minus production costs involved in producing that amount, will reach a maximum.
|
||
Let us assume this happens and the monopolist also happens to be correct in his evaluation of the future
|
||
demand curve in that the price he seeks for his products indeed clears the market. Now the question is, is this
|
||
market price a monopoly or a com petitive price? As M. Rothbard realized in his path-breaking but much
|
||
neglected analysis of the monopoly problem, there is no way of knowing. Was the amount of the good
|
||
produced “restricted” in order to take advantage of inelastic demand and was a monopoly price thus reaped,
|
||
or was the price reached a competitive one established in order to sell an amount of goods that was expanded
|
||
“to the limit that a competitive market would allow”? There is no way to decide the matter.18 Clearly, every
|
||
producer will always try to set the quantity produced at a level above which demand would become elastic
|
||
and would hence yield lower total returns to him because of reduced prices paid. He thus engages in restrictive
|
||
practices. At the same time, based on his estimate of the shape of future demand curves, every producer will
|
||
always try to expand his production of any good up to the point at which the marginal cost of production (that
|
||
is, the opportunity cost of not producing a unit of an alternative good with the help of scarce production factors
|
||
now bound up in the process of producing another unit of x) equals the price per unit of x that one expects to
|
||
be able to charge at the respective [p. 183] level of supply. Both restriction and expansion are part of
|
||
profit-maximizing and market-price formation, and neither of these two aspects can be separated from the
|
||
other to make a valid distinction between monopolistic and competitive action.
|
||
Now, suppose that at the next point of decision making the monopolist decides to reduce the output of
|
||
the good produced from a previously higher to a new lower level, and assume that he indeed succeeds in
|
||
securing higher total returns now than at the earlier point in time. Wouldn’t this be a clear instance of a
|
||
monopoly price? Again, the answer must be no. And this time the reason would be the indistinguishability of
|
||
this reallocational “restriction” from a “normal” reallocation that takes account of changes in demand. Every
|
||
event that can be interpreted in one way can also be interpreted in the other, and no means for deciding the
|
||
matter exist, for once again both are essentially two aspects of one and the same thing: of action, of choosing.
|
||
The same result, i.e., a restriction in supply coupled not only with higher prices but with prices high enough to
|
||
increase total revenue from sales, would be brought about if the monopolist who, for example, produces a
|
||
unique kind of apples faces an increase in the demand for his apples (an upward shift in the demand curve) and
|
||
simultaneously an even higher increase in demand (an even more drastic upward shift of the demand curve) for
|
||
oranges. In this situation he would reap greater returns from a reduced output of apples, too, because the
|
||
previous market price for his apples would have become a subcompetitive price in the meantime. And if he
|
||
indeed wanted to maximize his profits, instead of simply expanding apple production according to the
|
||
increased demand, he now would have to use some of the factors previously used for the production of apples
|
||
for the production of oranges, because in the meantime changes in the system of relative prices would have
|
||
occurred. However, what if the monopolist who restricts apple production does not engage in producing
|
||
oranges with the now available [p. 184] factors, but instead does nothing with them? Again, all that this would
|
||
indi cate is that besides the increase in demand for apples, in the meantime an even greater increase in the
|
||
demand for yet another good—leisure (more precisely, the demand for leisure by the monopolist who is also a
|
||
consumer)-had taken place. The explanation for the restricted apple supply is thus found in the relative price
|
||
changes of leisure (instead of oranges) as compared with other goods.
|
||
Neither from the perspective of the monopolist himself nor from that of any outside observer could
|
||
restrictive action then be distinguished concep tually from normal reallocations which simply follow anticipated
|
||
changes in demand. Whenever the monopolist engages in restrictive activities which are followed by higher
|
||
prices, by definition he must use the released factors for another more highly valued purpose, thereby indicating
|
||
that he adjusts to changes in relative demand. As M. Rothbard sums up,
|
||
We cannot use “restriction of production” as the test of monopoly vs. competitive
|
||
price. A movement from a sub-competitive to a competitive price also involves a
|
||
restriction of production of this good, coupled, of course, with an expansion of
|
||
production in other lines by the released factors. There is no way whatever to
|
||
distinguish such a restriction and corollary expansion from the alleged “monopoly
|
||
price” situation. If the restriction is accompanied by increased leisure for the owner of
|
||
the labor factor rather than increased production of some other good on the market, it
|
||
is still the expansion of the yield of a consumer good—leisure. There is still no way of
|
||
determining whether the “restriction” resulted in a “monopoly” or a “competitive” price
|
||
or to what extent the motive of increased leisure was involved. To define a monopoly
|
||
price as a price attained by selling a smaller quantity of a product at a higher price is
|
||
therefore meaningless, since the same definition applies to the “competitive” price as
|
||
compared with a subcompetitive price.19 [p. 185]
|
||
The analysis of the monopoly question, then, provides no reason what soever to modify the description
|
||
given above of the way a pure market economy normally works and its superiority over any sort of socialist or
|
||
statist system of production. Not only is a process of monopolization highly unlikely to occur, empirically as
|
||
well as theoretically, but even if it did, from the point of view of the consumers it would be harmless. Within the
|
||
framework of a market system a restrictive monopolistic price could not be distinguished from a normal price
|
||
hike stemming from higher demand and changes in relative prices. And as every restrictive action is
|
||
simultaneously expansionary, to say that the curtailment of production in one production line coupled with an
|
||
increase in total revenue implies a misallocation of production factors and an exploitation of consumers is
|
||
simply nonsense. The misunderstanding involved in such reasoning has been accurately revealed in the
|
||
following passage from one of L. v. Mises’ later works in which he implicitly refutes his own above-cited
|
||
orthodox position regarding the monopoly-price problem. He states:
|
||
An entrepreneur at whose disposal are 100 units of capital employs, for instance, 50
|
||
units for the production of p and 50 units for the production of q. If both lines are
|
||
profitable, it is odd to blame him for not having employed more, e.g., 75 units, for the
|
||
production of p. He could increase the production of p only by curtailing
|
||
correspondingly the production of q. But with regard to q the same fault could be
|
||
found with the grumblers. If one blames the entrepreneur for not having produced
|
||
more p, one must blame him also for not having produced more q. This means: one
|
||
blames the entrepreneur for the fact that there is scarcity of factors of production and
|
||
that the earth is not a land of Cockaigne.20
|
||
The monopoly problem as a special problem of markets requiring state action to be resolved does not
|
||
exist.21 In fact, only when the state enters [p. 186] the scene does a real, nonillusory problem of monopoly
|
||
and monopoly prices emerge. The state is the only enterprise whose prices and business practices can be
|
||
conceptually distinguished from all other prices and prac tices, and whose prices and practices can be called
|
||
‘too high” or “exploitative” in a completely objective, nonarbitrary way. These are prices and practices which
|
||
consumers are not voluntarily willing to pay and accept, but which instead are forced upon them through
|
||
threats of violence. And only for so privileged an institution as the state is it also normal to expect and to find a
|
||
permanent process of increasing monopolization and concentration. As compared to all other enterprises,
|
||
which are subject to the control of voluntarily buying or not-buying consumers, the enterprise “state” is an
|
||
organization that can tax people and need not wait until they accept the tax, and can impose regulations on the
|
||
use people make of their property without gaining their consent for doing so. This evidently gives the state, as
|
||
compared to all other institutions, a tremendous advantage in the competition for scarce resources. If one only
|
||
assumes that the representatives of the state are as equally driven by the profit motive as anyone else, it follows
|
||
from this privileged position that the organization “state” must have a relatively more pronounced tendency
|
||
toward growth than any other organization. And indeed, while there was not evidence for the thesis that a
|
||
market system would bring about a tendency toward monopolistic growth, the thesis that a statist system
|
||
would do so is amply supported by historical experience. [p. 187]
|
||
Chapter 10
|
||
Capitalist Production And The
|
||
Problem of Public Goods
|
||
We have tried to demolish socialism on the economic as well as moral fronts. Having reduced it to a
|
||
phenomenon of exclusively socio-psychological significance, i.e., a phenomenon for whose existence neither
|
||
good economic nor good moral reasons can be found, its roots were explained in terms of aggression and the
|
||
corruptive influence that a policy of divide et impera exercises on public opinion. The last chapter returned to
|
||
economics in order to give the final blows to socialism by engaging in the constructive task of explaining the
|
||
workings of a capitalist social order as socialism’s economically superior rival, ready for adoption at any time.
|
||
In terms of consumer evaluations, capitalism was indicated as being superior with respect to the allocation of
|
||
production factors, the quality of the output of goods produced, and the preservation of values embodied in
|
||
capital over time. The so-called monopoly problem allegedly associated with a pure market system was in fact
|
||
demonstrated not to constitute any special problem at all. Rather, everything said about the normally more
|
||
efficient functioning of capitalism is true also with respect to monopolistic producers, as long as they are indeed
|
||
subject to the control of voluntary purchases or voluntary abstentions from purchases by consumers.
|
||
This final chapter will analyze an even more frequently cited special case which allegedly requires one
|
||
to make qualifying amendments regarding the thesis of the economic superiority of capitalism: the case of the
|
||
production of so-called public goods. Considered in particular will be the production of security.
|
||
If what has been stated in the foregoing chapter regarding the working of a market economy is true,
|
||
and if monopolies are completely harmless to consumers as long as the consumers have the right to boycott
|
||
them and [p. 188] freely enter the market of competing producers themselves, then one must draw the
|
||
conclusion that for economic as well as moral reasons, the produc tion of all goods and services should be left
|
||
in private hands. And in par ticular it follows that even the production of law and order, justice and
|
||
peace—those things that one has come to think of as being the most likely candidates for state-provided
|
||
goods for reasons explained in Chapter 8—should be provided privately, by a competitive market. This
|
||
indeed is the conclusion that G. de Molinari, a renowned Belgian economist, formulated as early as 1849—at
|
||
a time when classical liberalism was still the dominant ideological force, and “economist” and “socialist” were
|
||
generally (and rightly so) considered to be antonyms:
|
||
If there is one well established truth in political economy, it is this: That in all cases, for all commodities
|
||
that serve to provide for the tangible or in tangible need of the consumer, it is in the consumer’s best interest
|
||
that labor and trade remain free, because the freedom of labor and trade have as their necessary and
|
||
permanent result the maximum reduction of price. And this: That the interests of the consumer of any
|
||
commodity whatsoever should al ways prevail over the interests of the producer. Now, in pursuing these prin
|
||
ciples, one arrives at this rigorous conclusion: That the production of security should, in the interest of
|
||
consumers of this intangible commodity, remain subject to the law of free competition. Whence it follows: That
|
||
no government should have the right to prevent another government from going into competition with it, or
|
||
require consumers of security to come ex clusively to it for this commodity.1
|
||
And he comments on this argument by saying: “Either this is logical and true, or else the principles on
|
||
which economic science is based are invalid.”2
|
||
There is apparently only one way out of this unpleasant (for all socialists, [p. 189] that is) conclusion:
|
||
to argue that there are particular goods to which for some special reasons the above economic reasoning does
|
||
not apply. It is this that the so-called public goods theorists are determined to prove.3 However, we will
|
||
demonstrate that in fact no such special goods or special reasons exist, and that the production of security in
|
||
particular does not pose any problem different from that of the production of any other good or ser vice, be it
|
||
houses, cheese, or insurance. In spite of its many followers, the whole public goods theory is faulty, flashy
|
||
reasoning, ridden with internal inconsistencies, nonsequiturs, appealing to and playing on popular prejudices
|
||
and assumed beliefs, but with no scientific merit whatsoever.4
|
||
What, then, does the “escape route” that socialist economists have found in order to avoid drawing
|
||
Molinari’s conclusion look like? Since Molinari’s time it has become increasingly common to answer the
|
||
question of whether there are goods to which different sorts of economic analyses apply in the affirmative. As a
|
||
matter of fact, nowadays it is almost impossible to find a single economic textbook that does not make and
|
||
stress the vital importance of the distinction between private goods, for which the truth of the economic
|
||
superiority of a capitalist order of production is generally admitted, and public goods, for which it is generally
|
||
denied.5 Certain goods or services, and among them, security, are said to have the special charac teristic that
|
||
their enjoyment cannot be restricted to those persons who have actually financed their production. Rather,
|
||
people who have not participated in their financing can draw benefits from them, too. Such goods are called
|
||
public goods or services (as opposed to private goods or services, which exclusively benefit those people who
|
||
actually paid for them). And it is due to this special feature of public goods, it is argued, that markets cannot
|
||
produce them, or at least not in sufficient quantity or quality, and hence compensatory state action is required.6
|
||
The examples given by different authors for alleged public goods vary widely. Authors often classify [p. 190]
|
||
the same good or services differently, leaving almost no classification of a particular good undisputed.7 This
|
||
clearly foreshadows the illusory character of the whole distinction. Nonetheless, some examples that enjoy par
|
||
ticularly popular status as public goods are the fire brigade that stops a neighbor’s house from catching fire,
|
||
thereby letting him profit from my fire brigade, even though he did not contribute anything to financing it; or the
|
||
police that by walking around my property scare away potential burglars from my neighbor’s property as well,
|
||
even if he did not help finance the patrols; or the lighthouse, a particularly dear example to economists,8 that
|
||
helps ships find their way, even though they did not contribute a penny to its construction or upkeep.
|
||
Before continuing with the presentation and critical examination of the theory of public goods let us
|
||
investigate how useful the distinction between private and public goods is in helping decide what should be
|
||
produced privately and what by the state or with state help. Even the most superficial analysis could not fail to
|
||
point out that using this alleged criterion, rather than presenting a sensible solution, would get one into deep
|
||
trouble. While at least at first glance it seems that some of the state-provided goods and services might indeed
|
||
qualify as public goods, it certainly is not obvious how many of the goods and services that are actually
|
||
produced by states could come under the heading of public goods. Railroads, postal services, telephone,
|
||
streets, and the like seem to be goods whose usage can be restricted to the persons who actually finance them,
|
||
and hence appear to be private goods. And the same seems to be the case regarding many aspects of the
|
||
multidimensional good “security”: everything for which insurance could be taken out would have to qualify as a
|
||
private good. Yet this does not suffice. Just as a lot of state-provided goods appear to be private goods, so
|
||
many privately produced goods seem to fit in the category of a public good. Clearly my neighbors would profit
|
||
from my well-kept rose [p. 191] garden—they could enjoy the sight of it without ever helping me garden. The
|
||
same is true of all kinds of improvements that I could make on my property that would enhance the value of
|
||
neighboring property as well. Even those people who do not throw money in his hat could profit from a street
|
||
musician’s performance. Those fellow travellers on the bus who did not help me buy it profit from my
|
||
deodorant. And everyone who ever comes into contact with me would profit from my efforts, undertaken
|
||
without their financial support, to turn myself into a most lovable person. Now, do all these goods—rose
|
||
gardens, property improvements, street music, deodorants, personality improvements—since they clearly seem
|
||
to possess the characteristics of public goods, then have to be provided by the state or with state assistance?
|
||
As these latter examples of privately produced public goods indicate, there is something seriously
|
||
wrong with the thesis of public goods theorists that these goods cannot be produced privately but instead
|
||
require state in tervention. Clearly they can be provided by markets. Furthermore, historical evidence shows
|
||
us that all of the alleged public goods which states now provide had at some time in the past actually been
|
||
provided by private entrepreneurs or even today are so provided in one country or another. For example, the
|
||
postal service was once private almost everywhere; streets were privately financed and still are sometimes;
|
||
even the beloved ligh thouses were originally the result of private enterprise;9 private police forces, detectives,
|
||
and arbitrators exist; and help for the sick, the poor, the elderly, orphans, and widows has been a traditional
|
||
field for private charity organizations. To say, then, that such things cannot be produced by a pure market
|
||
system is falsified by experience one hundredfold.
|
||
Apart from this, other difficulties arise when the public-private goods distinction is used to decide what
|
||
to leave to the market and what not. What, for instance, if the production of so-called public goods did not
|
||
have positive [p. 192] but negative consequences for other people, or if the consequences were positive for
|
||
some and negative for others? What if the neighbor whose house was saved from burning by my fire brigade
|
||
had wished (perhaps be cause he was overinsured) that it had burned down, or my neighbors hate roses, or
|
||
my fellow travellers find the scent of my deodorant disgusting? In addition, changes in the technology can
|
||
change the character of a given good. For example, with the development of cable TV, a good that was
|
||
formerly (seemingly) public has become private. And changes in the laws of property—of the appropriation of
|
||
property—can have the very same effect of changing the public-private character of a good. The lighthouse,
|
||
for in stance, is a public good only insofar as the sea is publicly (not privately) owned. But if it were permitted
|
||
to acquire pieces of the ocean as private property, as it would be in a purely capitalist social order, then as the
|
||
ligh thouse only shines over a limited territory, it would clearly become possible to exclude nonpayers from the
|
||
enjoyment of its services.
|
||
Leaving this somewhat sketchy level of discussion and looking into the distinction between private and
|
||
public goods more thoroughly, it turns out to be a completely illusory distinction. A clear-cut dichotomy
|
||
between private and public goods does not exist, and this is essentially why there can be so many
|
||
disagreements on how to classify given goods. All goods are more or less private or public and can—and
|
||
constantly do—change with respect to their degree of privateness/publicness with people’s changing values
|
||
and evaluations, and with changes in the composition of the popula tion. They never fall, once and for all, into
|
||
either one or the other category. In order to recognize this, one must only recall what makes something a good.
|
||
For something to be a good it must be realized and treated as scarce by someone. Something is not a
|
||
good-as-such, that is to say, but goods are goods only in the eyes of the beholder. Nothing is a good without
|
||
at least one person subjectively evaluating it as such. But then, since goods [p. 193] are never
|
||
goods—as-such—since no physico-chemical analysis can identify something as an economic good—there is
|
||
clearly no fixed, objective criterion for classifying goods as either private or public. They can never be private
|
||
or public goods as such. Their private or public character depends on how few or how many people consider
|
||
them to be goods, with the degree to which they are private or public changing as these evaluations change,
|
||
and ranging from one to infinity. Even seemingly completely private things like the interior of my apartment or
|
||
the color of my underwear thus can become public goods as soon as somebody else starts caring about
|
||
them.10 And seemingly public goods, like the exterior of my house or the color of my overalls, can become
|
||
extremely private goods as soon as other people stop caring about them. Moreover, every good can change
|
||
its characteristics again and again; it can even turn from a public or private good to a public or private bad and
|
||
vice versa, depending solely on the changes in this caring or uncaring. However, if this is so, no decision
|
||
whatsoever can be based on the classification of goods as private or public.11 In fact, to do so it would not
|
||
only become necessary to ask virtually every individual person with respect to every single good whether or
|
||
not he happened to care about it, positively or negatively and perhaps to what extent, in order to determine
|
||
who might profit from what and should hence participate in its financing. (And how could one know if they
|
||
were telling the truth?I) It would also become necessary to monitor all changes in such evaluations continually,
|
||
with the result that no definite decision could ever be made regarding the production of anything, and as a
|
||
consequence of a nonsensical theory all of us would be long dead.12
|
||
But even if one were to ignore all these difficulties, and were willing to admit for the sake of argument
|
||
that the private-public good distinction did hold water, even then the argument would not prove what it is
|
||
supposed to. It neither provides conclusive reasons why public goods—assuming that [p. 194] they exist as a
|
||
separate category of goods—should be produced at all, nor why the state rather than private enterprises
|
||
should produce them. This is what the theory of public goods essentially says, having introduced the
|
||
above-mentioned conceptual distinction: The positive effects of public goods for people who do not contribute
|
||
anything to their production or financing proves that these goods are desirable. But evidently, they would not
|
||
be produced, or at least not in sufficient quantity and quality, in a free, competitive market, since not all of
|
||
those who would profit from their production would also contribute financially to make the production
|
||
possible. So in order to produce these goods (which are evidently desirable, but would not be produced
|
||
otherwise), the state must jump in and assist in their production. This sort of reasoning, which can be found in
|
||
almost every textbook on economics (Nobel laureates not excluded13) is completely fal lacious, and fallacious
|
||
on two counts.
|
||
For one thing, to come to the conclusion that the state has to provide public goods that otherwise
|
||
would not be produced, one must smuggle a norm into one’s chain of reasoning. Otherwise, from the
|
||
statement that be cause of some special characteristics of theirs certain goods would not be produced, one
|
||
could never reach the conclusion that these goods should be produced. But with a norm required to justify
|
||
their conclusion, the public goods theorists clearly have left the bounds of economics as a positive, wertfrei
|
||
science. Instead they have transgressed into the field of morals or ethics, and hence one would expect to be
|
||
offered a theory of ethics as a cognitive discipline in order for them to legitimately do what they are doing and
|
||
to justifiably derive the conclusion that they actually derive. But it can hardly be stressed enough that nowhere
|
||
in the public goods theory literature can there be found anything that even faintly resembles such a cognitive
|
||
theory of ethics.14 Thus it must be stated at the outset, that the public goods theorists are misusing whatever
|
||
prestige they might have as positive [p. 195] economists for pronouncements on matters on which, as their
|
||
own writings indicate, they have no authority whatsoever. Perhaps, though, they have stumbled on something
|
||
correct by accident, without supporting it with an elaborate moral theory?. It becomes apparent that nothing
|
||
could be further from the truth as soon as one explicitly formulates the norm that would be needed to arrive at
|
||
the above-mentioned conclusion about the state’s having to assist in the provision of public goods. The norm
|
||
required to reach the above conclusion is this: whenever it can somehow be proven that the production of a
|
||
particular good or service has a positive effect on someone but would not be produced at all, or would not be
|
||
produced in a definite quantity or quality unless others participated in its financing, then the use of aggressive
|
||
violence against these persons is allowed, either directly or indi rectly with the help of the state, and these
|
||
persons may be forced to share in the necessary financial burden. It does not need much comment to show
|
||
that chaos would result from implementing this rule, as it amounts to saying that everyone can aggress against
|
||
everyone else whenever he feels like it. Moreover, it should be sufficiently clear from the discussion of the
|
||
problem of the justification of normative statements (Chapter 7) that this norm could never be justified as a fair
|
||
norm. For to argue in that way and to seek agree ment for this argument must presuppose, contrary to what
|
||
the norm says, that everyone’s integrity as a physically independent decision-making unit is assured.
|
||
But the public goods theory breaks down not just because of the faulty moral reasoning implied in it.
|
||
Even the utilitarian, economic reasoning contained in the above argument is blatantly wrong. As the public
|
||
goods theory states, it might well be that it would be better to have the public goods than not to have them,
|
||
though it should not be forgotten that no a priori reason exists that this must be so of necessity (which would
|
||
then end the public goods theorists’ reasoning right here). For it is clearly possible, and [p. 196] indeed known
|
||
to be a fact, that anarchists exist who so greatly abhor state action that they would prefer not having the
|
||
so-called public goods at all to having them provided by the state!15 is In any case, even if the argument is
|
||
conceded so far, to leap from the statement that the public goods are desirable to the statement that they
|
||
should therefore be provided by the state is anything but conclusive, as this is by no means the choice with
|
||
which one is confronted. Since money or other resources must be withdrawn from possible alternative uses to
|
||
finance the supposedly desirable public goods, the only relevant and appropriate question is whether or not
|
||
these alterna tive uses to which the money could be put (that is, the private goods which could have been
|
||
acquired but now cannot be bought because the money is being spent on public goods instead) are more
|
||
valuable—more urgent—than the public goods. And the answer to this question is perfectly clear. In terms of
|
||
consumer evaluations, however high its absolute level might be, the value of the public goods is relatively lower
|
||
than that of the competing private goods, because if one had left the choice to the consumers (and had not
|
||
forced one alternative upon them), they evidently would have preferred spending their money differently
|
||
(otherwise no force would have been necessary). This proves beyond any doubt that the resources used for
|
||
the provision of public goods are wasted, as they provide consumers with goods or services which at best are
|
||
only of secondary importance. In short, even if one assumed that public goods which can be distinguished
|
||
clearly from private goods existed, and even if it were granted that a given public good might be useful, public
|
||
goods would still compete with private goods. And there is only one method for finding out whether or not
|
||
they are more urgently desired and to what extent, or, mutatis mutandis, if, and to what extent, their production
|
||
would take place at the expense of the nonproduction or reduced production of more urgently needed private
|
||
goods: by having everything provided by freely competing private enterprises. Hence, contrary [p. 197] to the
|
||
conclusion arrived at by the public goods theorists, logic forces one to accept the result that only a pure market
|
||
system can safeguard the rationality, from the point of view of the consumers, of a decision to produce a public
|
||
good. And only under a pure capitalist order could it be ensured that the decision about how much of a public
|
||
good to produce (provided it should be produced at all) is rational as well.16 No less than a semantic
|
||
revolution of truly Orwellian dimensions would be required to come up with a different result. Only if one were
|
||
willing to interpret someone’s “no” as really meaning “yes,” the “nonbuying of something” as meaning that it is
|
||
really “preferred over that which the nonbuying person does instead of non-buying,” of “force” really meaning
|
||
“freedom,” of “non-contracting” really meaning “making a contract” and so on, could the public goods
|
||
theorists’ point be “proven.”17 But then, how could we be sure that they really mean what they seem to mean
|
||
when they say what they say, and do not rather mean the exact opposite, or don’t mean anything with a
|
||
definite content at all, but are simply babbling? We could not! M. Rothbard is thus completely right when he
|
||
comments on the endeavors of the public goods ideologues to prove the existence of so-called market failures
|
||
due to the nonproduction or a quantitatively or qualitatively “deficient” production of public goods. He writes,
|
||
“. . . such a view completely misconceives the way in which economic science asserts that free-market action
|
||
is ever optimal. It is optimal, not from the standpoint of the personal ethical views of an economist, but from
|
||
the standpoint of free, voluntary actions of all participants and in satisfying the freely expressed needs of the
|
||
consumers. Government interference, therefore, will necessarily and always move away from such an
|
||
optimum.”18
|
||
Indeed, the arguments supposedly proving market failures are nothing short of being patently absurd.
|
||
Stripped of their disguise of technical jargon all they prove is this: a market is not perfect, as it is characterized
|
||
by [p. 198] the nonaggression principle imposed on conditions marked by scarcity, and so certain goods or
|
||
services which could only be produced and provided if aggression were allowed will not be produced. True
|
||
enough. But no market theorist would ever dare deny this. Yet, and this is decisive, this “imperfec tion” of the
|
||
market can be defended, morally as well as economically, whereas the supposed “perfections” of markets
|
||
propagated by the public goods theorists cannot.19 It is true enough, too, that a termination of the state’s
|
||
current practice of providing public goods would imply some change in the existing social structure and the
|
||
distribution of wealth. And such a reshuffling would certainly imply hardship for some people. As a matter of
|
||
fact, this is precisely why there is widespread public resistance to a policy of privatizing state functions, even
|
||
though in the long run overall social wealth would be enhanced by this very policy. Surely, however, this fact
|
||
cannot be accepted as a valid argument demonstrating the failure of markets. If a man had been allowed to hit
|
||
other people on the head and is now not permitted to continue with this practice, he is certainly hurt. But one
|
||
would hardly accept that as a valid excuse for upholding the old (hitting) rules. He is harmed, but harming him
|
||
means substituting a social order in which every consumer has an equal right to determine what and how much
|
||
of anything is produced, for a system in which some consumers have the right to determine in what respect
|
||
other consumers are not allowed to buy voluntarily what they want with the means justly acquired by them and
|
||
at their disposal. And certainly, such a substitution would be preferable from the point of view of all consumers
|
||
as voluntary consumers.
|
||
By force of logical reasoning, then, one must accept Molinari’s above-cited conclusion that for the
|
||
sake of consumers, all goods and services be provided by markets.20 It is not only false that clearly
|
||
distinguishable categories of goods exist, which would render special amendments to the general thesis of
|
||
capitalism’s economic superiority necessary; even if they [p. 199] did exist, no special reason could be found
|
||
why these supposedly special public goods should not also be produced by private enterprises since they
|
||
invariably stand in competition with private goods. In fact, in spite of all the propaganda from the side of the
|
||
public goods theorists, the greater efficien cy of markets as compared with the state has been realized with
|
||
respect to more and more of the alleged public goods. Confronted daily with ex perience, hardly anyone
|
||
seriously studying these matters could deny that nowadays markets could produce postal services, railroads,
|
||
electricity, telephone, education, money, roads and so on more effectively, i.e., more to the liking of the
|
||
consumers, than the state. Yet people generally shy away from accepting in one particular sector what logic
|
||
forces upon them: in the field of the production of security. Hence, the rest of this chapter will explain the
|
||
superior functioning of a capitalist economy in this particular area—a superiority whose logical case has
|
||
already been made, but which shall be rendered more persuasive once some empirical material is added to the
|
||
analysis and it is studied as a problem in its own right.21
|
||
How would a system of nonmonopolistic, competing producers of security work?. It should be clear
|
||
from the outset that in answering this question one is leaving the realm of purely logical analysis and hence the
|
||
answers must necessarily lack the certainty, the apodictic character of pronouncements on the validity of the
|
||
public goods theory. The problem faced is precisely analogous to that of asking how a market would solve the
|
||
problem of hamburger production, especially if up to this point hamburgers had been produced exclusively by
|
||
the state, and hence no one could draw on past experience. Only tentative answers could be formulated. No
|
||
one could possibly know the exact structure of the hamburger industry—how many competing companies
|
||
would come into existence, what importance this industry might have compared to others, what the
|
||
hamburgers would look like, how many different sorts of hamburgers would appear on the market [p. 200]
|
||
and perhaps disappear again because of a lack of demand, and so on. No one could know all of the
|
||
circumstances and the changes which would in fluence the very structure of the hamburger industry that would
|
||
take place over time—changes in demand of various consumer groups, changes in technology, changes in the
|
||
prices of various goods that affect the industry directly or indirectly, and so on. It must be stressed that all this
|
||
is no dif ferent when it comes to the question of the private production of security. But this by no means implies
|
||
that nothing definitive can be said on the mat ter. Assuming certain general conditions of demand for security
|
||
services which are known to be more or less realistic by looking at the world as it presently is, what can and
|
||
will be said is how different social orders of security production, characterized by different structural
|
||
constraints under which they have to operate, will respond differently.22 Let us first analyze the specifics of
|
||
monopolistic, state-run security production, as at least in this case one can draw on ample evidence regarding
|
||
the validity of the con clusions reached, and then turn to comparing this with what could be ex pected if such a
|
||
system were replaced by a nonmonopolistic one.
|
||
Even if security is considered to be a public good, in the allocation of scarce resources it must compete
|
||
with other goods. What is spent on security can no longer be spent on other goods that also might increase
|
||
consumer satisfaction. Moreover, security is not a single, homogeneous good, but rather consists of numerous
|
||
components and aspects. There is not only prevention, detection, and enforcement but there is also security
|
||
from robbers, rapists, polluters, natural disasters, and so on. Moreover, security is not produced in a “lump,”
|
||
but can be supplied in marginal units. In addition, different people attach different importance to security as a
|
||
whole and also to different aspects of the whole thing, depending on their personal characteristics, their past
|
||
experiences with various factors of insecurity, and the time and place in which they happen to live.23 Now, and
|
||
[p. 201] here we return to the fundamental economic problem of allocating scarce resources to competing
|
||
uses, how can the state—an organization which is not financed exclusively by voluntary contributions and the
|
||
sales of its products, but rather partially or even wholly by taxes—decide how much security to produce, how
|
||
much of each of its countless aspects, to whom and where to provide how much of what? The answer is that it
|
||
has no ra tional way to decide this question. From the point of view of the consumers its response to their
|
||
security demands must thus be considered arbitrary. Do we need one policeman and one judge, or 100,000 of
|
||
each? Should they be paid $100 a month, or $10,000? Should the policemen, however many we might have,
|
||
spend more time patrolling the streets, chasing robbers, recovering stolen loot, or spying on participants in
|
||
victimless crimes such as prostitution, drug use, or smuggling? And should the judges spend more time and
|
||
energy hearing divorce cases, traffic violations, cases of shoplifting, murder, or antitrust cases? Clearly, all of
|
||
these questions must be answered somehow because as long as there is scarcity and we do not live in the
|
||
Garden of Eden, the time and money spent on one thing cannot be spent on another. The state must answer
|
||
these questions, too, but whatever it does, it does it without being subject to the profit-and-loss criterion.
|
||
Hence, its action is arbitrary and thus necessarily involves count less wasteful misallocations from the
|
||
consumer’s viewpoint.24 Independent to a large degree of consumer wants, the state-employed security
|
||
producers instead do, as everyone knows, what they like. They hang around instead of doing anything, and if
|
||
they do work they prefer doing what is easiest or work where they can wield power rather than serve
|
||
consumers. Police of ficers drive around a lot in cars, hassle petty traffic violators, and spend huge amounts of
|
||
money investigating victimless crimes which a lot of people (i.e., nonparticipants) do not like, but which few
|
||
would be willing to spend their money on to fight, as they are not immediately affected by it. Yet with [p. 202]
|
||
respect to the one thing that consumers want most urgently—the prevention of hard-core crime (i.e., crimes
|
||
with victims), the detection and effective punishment of hard-core criminals, the recovery of loot, and the
|
||
securement of compensation to victims of crimes from the aggressors—they are notoriously inefficient, in spite
|
||
of ever higher budget allocations.
|
||
Further, and here I return to the problem of a lowered quality of output (with given allocations),
|
||
whatever state-employed police or judges happen to do (arbitrary as it must be), since their income is more or
|
||
less independent of the consumers’ evaluations of their respective services, they will tend to do poorly. Thus
|
||
one observes police arbitrariness and brutality and the slowness in the judicial process. Moreover, it is
|
||
remarkable that neither the police nor the judicial system offers consumers anything even faintly resembling a
|
||
service contract in which it is laid down in unambiguous terms what procedure the consumer can expect to be
|
||
set in motion in a specific situation. Rather, both operate in a contractual void which over time allows them to
|
||
change their rules of procedure arbitrarily, and which explains the truly ridiculous fact that the settlement of
|
||
disputes between police and judges on the one hand and private citizens on the other is not assigned to an
|
||
independent third party, but to another police or judge who shares employers with one party—the
|
||
government—in the dispute.
|
||
Third, anyone who has seen state-run police stations and courts, not to mention prisons, knows how
|
||
true it is that the factors of production used to provide us with such security are overused, badly maintained,
|
||
and filthy. There is no reason for them to satisfy the consumers who provide their in come. And if, in an
|
||
exceptional case, this happens not to be so, then it has only been possible at costs that are comparatively much
|
||
higher than those of any similar private business.25
|
||
Without a doubt, all of these problems inherent in a system of monopolistic [p. 203] security
|
||
production would be solved relatively quickly once a given demand for security services was met by a
|
||
competitive market with its en tirely different incentive structure for producers. This is not to say that a
|
||
“perfect” solution to the problem of security would be found. There would still be robberies and murders; and
|
||
not all loot would be recovered nor all murderers caught. But in terms of consumer evaluations the situation
|
||
would improve to the extent that the nature of man would allow this. First, as long as there is a competitive
|
||
system, i.e., as long as the producers of security services depend on voluntary purchases, most of which
|
||
probably take the form of service and insurance contracts agreed to in advance of any actual “occurrence” of
|
||
insecurity or aggression, no producer could increase its in come without improving services or quality of
|
||
product as perceived by the consumers. Furthermore, all security producers taken together could not bolster
|
||
the importance of their particular industry unless, for whatever reason, consumers indeed started evaluating
|
||
security more highly than other goods, thus ensuring that the production of security would never and nowhere
|
||
take place at the expense of the non- or reduced production of, let us say, cheese, as a competing private
|
||
good. In addition, the producers of security services would have to diversify their offerings to a considerable
|
||
degree because a highly diversified demand for security products among millions and millions of consumers
|
||
exists. Directly dependent on voluntary consumer support, they would immediately be hurt financially if they
|
||
did not appropriately respond to the consumers’ various wants or changes in wants. Thus, every consumer
|
||
would have a direct influence, albeit small, on the output of goods appearing on or disappearing from the
|
||
security market. Instead of offering a uniform “security packet” to everyone, as is characteristic of state
|
||
production policy, a multitude of service packages would appear on the market. They would be tailored to the
|
||
different security needs of different people, taking account of different occupations, different risk-taking [p.
|
||
204] behavior, different things to be protected and insured, and different geographical locations and time
|
||
constraints.
|
||
But that is far from all. Besides diversification, the content and quality of the products would improve,
|
||
too. Not only would the treatment of con sumers by the employees of security enterprises improve
|
||
immediately, the “I could care less” attitude, the arbitrariness and even brutality, the negligence and tardiness of
|
||
the present police and judicial systems would ultimately disappear. Since they then would be dependent on
|
||
voluntary consumer support, any maltreatment, impoliteness, or ineptitude could cost them their jobs. Further,
|
||
the above-mentioned peculiarity—that the settle ment of disputes between a client and his service provider is
|
||
invariably entrusted to the latter’s judgment—would almost certainly disappear from the books, and conflict
|
||
arbitration by independent parties would become the standard deal offered by producers of security. Most
|
||
importantly though, in order to attract and retain customers the producers of such services would have to offer
|
||
contracts which would allow the consumer to know what he was buying and enable him to raise a valid,
|
||
intersubjectively ascertainable complaint if the actual performance of the security producer did not live up to its
|
||
obligations. And more specifically, insofar as they are not in dividualized service contracts where payment is
|
||
made by the customers for covering their own risks exclusively, but rather insurance contracts proper which
|
||
involve pooling one’s own risks with those of other people, contrary to the present statist practice, these
|
||
contracts most certainly would no longer contain any deliberately built-in redistributive scheme favoring one
|
||
group of people at the expense of another. Otherwise, if anyone had the feeling that the contract offered to him
|
||
involved his paying for other people’s peculiar needs and risks—factors of possible insecurity, that is, that he
|
||
did not perceive as applicable to his own case—he would simply reject signing it or discontinue his payments.
|
||
[p. 205]
|
||
Yet when all this is said, the question will inevitably surface, “Wouldn’t a competitive system of
|
||
security production still necessarily result in per manent social conflict, in chaos and anarchy?.” There are
|
||
several points to be made regarding this alleged criticism. First, it should be noted that such an impression
|
||
would by no means be in accordance with historical, empiri cal evidence. Systems of competing courts have
|
||
existed at various places, such as in ancient Ireland or at the time of the Hanseatic league, before the arrival of
|
||
the modern nation state, and as far as we know they worked well.26 Judged by the then existent crime rate
|
||
(crime per capita), the private police in the Wild West (which incidentally was not as wild as some movies
|
||
insinuate) was relatively more successful than today’s state-supported police.27 And turning to contemporary
|
||
experience and examples, millions and millions of international contacts exist even now—contacts of trade and
|
||
travel—and it certainly seems to be an exaggeration to say, for instance, that there is more fraud, more crime,
|
||
more breach of contract there than in domestic relations. And this is so, it should be noted, without there being
|
||
one big monopolistic security producer and law-maker. Finally it is not to be forgotten that even now in a great
|
||
number of countries there are various private security producers alongside to the state: private investigators,
|
||
insurance detectives, and private arbitrators. Regarding their work, the impression seems to confirm the thesis
|
||
that they are more, not less, successful in resolving social conflicts than their public counterparts.
|
||
However, this historical evidence is greatly subject to dispute, in par ticular regarding whether any
|
||
general information can be derived from it. Yet there are systematic reasons, too, why the fear expressed in the
|
||
above criticism is not well-founded. Paradoxical as it may seem at first, this is be cause establishing a
|
||
competitive system of security producers implies erect ing an institutionalized incentive structure to produce an
|
||
order of law and law-enforcement that embodies the highest possible degree of consensus [p. 206] regarding
|
||
the question of conflict resolution, and hence will tend to generate less rather than more social unrest and
|
||
conflict than under monopolistic auspices!28 In order to understand this it is necessary to take a closer look at
|
||
the only typical situation that concerns the skeptic and allows him to believe in the superior virtue of a
|
||
monopolistically organized order of security production. This is the situation when a conflict arises between A
|
||
and B, both are insured by different companies and the companies cannot come to an immediate agreement
|
||
regarding the validity of the conflicting claims brought forward by their respective clients. (No problem would
|
||
exist if such an agreement were reached, or if both clients were insured by one and the same company—at
|
||
least the problem then would not be different in any way from that emerging under a statist monopoly!)
|
||
Wouldn’t such a situation always result in an armed confrontation? This is highly unlikely. First, any violent
|
||
battle between companies would be costly and risky, in particular if these companies had reached a
|
||
respectable size which would be important for them to have in order to appear as effective guarantors of
|
||
security to their prospective clients in the first place. More importantly though, under a competitive system with
|
||
each company dependent on the continuation of voluntary consumer payments, any battle would have to be
|
||
deliberately supported by each and every client of both companies. If there were only one person who
|
||
withdrew his payments because he was not convinced the battle was necessary in the particular conflict at
|
||
hand, there would be immediate economic pressure on the company to look for a peaceful solution to the
|
||
conflict.29 Hence, any competitive producer of security would be extremely cautious about his dedication to
|
||
engaging in violent measures in order to resolve conflicts. Instead, to the extent that it is peaceful
|
||
conflict-resolution that consumers want, each and every security producer would go to great lengths to provide
|
||
such measures to its clients and to establish in advance, for everyone to know, to what arbitration process it
|
||
would be willing to submit [p. 207] itself and its clients in case of a disagreement over the evaluation of
|
||
conflicting claims. And as such a scheme could only appear to the clients of different firms to be really working
|
||
if there were agreement among them regarding such arbitrational measures, a system of law governing relations
|
||
between companies which would be universally acceptable to the clients of all of the competing security
|
||
producers would naturally evolve. Moreover, the economic pressure to generate rules representing consensus
|
||
on how conflicts should be handled is even more far-reaching. Under a competitive system the independent
|
||
arbitrators who would be entrusted with the task of finding peaceful solutions to conflicts would be dependent
|
||
on the continued support of the two disagreeing companies insofar as they could and would select different
|
||
judges if either one of them were sufficiently dissatisfied with the outcome of their arbitration work. Thus, these
|
||
judges would be under pressure to find solutions to the problems handed over to them which, this time not with
|
||
respect to the procedural aspects of law, but its content, would be acceptable to all of the clients of the firms
|
||
involved in a given case as a fair and just solution.30 Otherwise one or all of the companies might lose some of
|
||
their customers, thus inducing those firms to turn to a different arbitrator the next time they were in need of
|
||
one.31
|
||
But wouldn’t it be possible under a competitive system for a security-producing firm to become an
|
||
outlaw company—a firm, that is, which, sup ported by its own clients, started to aggress against others? There
|
||
is certainly no way to deny that this might be possible, though again it must be emphasized that here one is in
|
||
the realm of empirical social science and no one could know such a thing with certainty. And yet the tacit
|
||
insinuation that the possibility of a security firm becoming an outlaw company would somehow indicate a
|
||
severe deficiency in the philosophy and economics of a pure capitalist social order is fallacious.32 First, it
|
||
should be recalled that any social system, a statist-socialist order no less than a pure market [p. 208]
|
||
economy, is dependent for its continued existence on public opinion, and that a given state of public opinion at
|
||
all times delimits what can or cannot occur, or what is more or less likely to occur in a given society. The
|
||
current state of public opinion in West Germany, for instance, makes it highly un likely or even impossible that
|
||
a statist-socialist system of the present-day Russian type could be imposed on the West German public. The
|
||
lack of public support for such a system would doom it to failure and make it col lapse. And it would be even
|
||
more unlikely that any such attempt to impose a Russian-type order could ever hope to succeed among
|
||
Americans, given American public opinion. Hence, in order to see the problem of outlaw companies correctly,
|
||
the above question should be phrased as follows: How likely is it that any such event would occur in a given
|
||
society with its specific state of public opinion? Formulated in this way, it is clear that the answer would have
|
||
to be different for different societies. For some, characterized by socialist ideas deeply entrenched in the
|
||
public, there would be a greater likelihood of the reemergence of aggressor companies, and for other societies
|
||
there would be a much smaller chance of this happening. But then, would the prospect of a competitive system
|
||
of security production in any given case be better or worse than that of the continuation of a statist system? Let
|
||
us look, for instance, at the present-day United States. Assume that by a legislative act the state had abolished
|
||
its right to provide security with tax funds, and a competitive system of security production were intro duced.
|
||
Given the state of public opinion, how likely would it then be that outlaw producers would spring up, and what
|
||
if they did? Evidently, the answer would depend on the reactions of the public to this changed situa tion. Thus,
|
||
the first reply to those challenging the idea of a private market for security would have to be: what about you?
|
||
What would your reaction be? Does your fear of outlaw companies mean that you would then go out and
|
||
engage in trade with a security producer that aggressed against other [p. 209] people and their property, and
|
||
would you continue supporting it if it did? Certainly the critic would be much muted by this counterattack. But
|
||
more important than this is the systematic challenge implied in this personal counterattack. Evidently, the
|
||
described change in the situation would imply a change in the cost-benefit structure that everyone would face
|
||
once he had to make his decisions. Before the introduction of a competitive system of security production it
|
||
had been legal to participate in and support (state) aggression. Now such an activity would be an illegal
|
||
activity. Hence, given one’s conscience, which makes each of one’s own decisions appear more or less costly,
|
||
i.e., more or less in harmony with one’s own principles of cor rect behavior, support for a firm engaging in the
|
||
exploitation of people un willing to deliberately support its actions would be more costly now than before.
|
||
Given this fact, it must be assumed that the number of people—among them even those who otherwise would
|
||
have readily lent their sup port to the state—who would now spend their money to support a firm committed
|
||
to honest business would rise, and would rise everywhere this social experiment was tried. In contrast, the
|
||
number of people still com mitted to a policy of exploitation, of gaining at the expense of others, would fall.
|
||
How drastic this effect would be would, of course, depend on the state of public opinion. In the example at
|
||
hand—the United States, where the natural theory of property is extremely widespread and accepted as a
|
||
private ethic, the libertarian philosophy being essentially the ideology on which the country was founded and
|
||
that let it develop to the height it reached33—the above-mentioned effect would naturally be particularly
|
||
pronounced. Ac cordingly, security-producing firms committed to the philosophy of protect ing and enforcing
|
||
libertarian law would attract the greatest bulk of public support and financial assistance. And while it may be
|
||
true that some people, and among them especially those who had profited from the old order, might continue
|
||
their support of a policy of aggression, it is very unlikely that they [p. 210] would be sufficient in number and
|
||
financial strength to succeed in doing so. Rather, the likely outcome would be that the honest companies would
|
||
develop the strength needed—alone or in a combined effort and supported in this effort by their own voluntary
|
||
customers—to check any such emergence of outlaw producers and destroy them wherever and whenever they
|
||
came into existence.34 And if against all odds the honest security producers should lose their fight to retain a
|
||
free market in the production of security and an outlaw monopoly reemerged, one would simply have a state
|
||
again.35
|
||
In any case, implementing a pure capitalist social system with private producers of security—a system
|
||
permitting freedom of choice—would neces sarily be better than what one has now. Even if such an order
|
||
should then collapse because too many people were still committed to a policy of ag gression against and
|
||
exploitation of others, mankind would at least have ex perienced a glorious interlude. And should this order
|
||
survive, which would seem to be the more likely outcome, it would be the beginning of a system of justice and
|
||
unheard-of economic prosperity. [p. 211]
|
||
Notes
|
||
Chapter 1
|
||
1. To avoid any misunderstanding from the outset: the thesis presented here is that any given society’s
|
||
overall wealth will be relatively increased, i.e., will grow more than it otherwise would, if the overall
|
||
degree of socialism is decreased and vice versa. The United States, for instance, would improve their
|
||
standards of living by adopting more capitalism (above the level that would be attained otherwise), and so
|
||
would Germany, etc. It is a somewhat different task, though, to explain the relative position (as regards
|
||
overall wealth) of different societies at any given time because then, of course, the “ceteris” are no
|
||
longer necessarily “paribus,” while, of course, other things, in addition to an existing degree of socialism,
|
||
undoubtedly affect a society’s overall wealth. A given society’s history, for instance, has a tremendous
|
||
ef fect on its present wealth. Every society is rich or poor not only because of present but also past
|
||
conditions; because of capital having been accumulated or destroyed in the past by our fathers and
|
||
forefathers. So it can easily happen that a society which is presently more capitalist can still be
|
||
significantly poorer than a more socialist one. And the same, only seemingly paradoxical result can
|
||
emerge because societies can (and do) differ with respect to other formerly or presently operating
|
||
factors affecting the production of wealth. There can and do exist, for instance, differences in the work
|
||
ethic and/or in prevalent world-views and habits among societies and these can and do account for
|
||
divergencies (or similarities) in the production of wealth of societies alike or different with respect to their
|
||
present degree of socialism. Thus, the most straightforward and best way to illustrate the validity of the
|
||
thesis that the degree of socialism is inversely related to a society’s wealth in any comparative social
|
||
analysis, would be to compare societies which, except for differences in their degree of socialism, are
|
||
paribus with respect to their history and the present socio- psychological characteristics of their people,
|
||
or are at least very similar, like, for instance, West and East Germany: and here the predicted effect
|
||
indeed shows in the most dramatic way, as will be dealt with in the following.
|
||
2. Incidentally, “socialism” in the United States is called “liberalism” and the socialist, or social democrat
|
||
there, who calls himself “liberal” would generally detest being called “socialist.”
|
||
3. Recall the repeated pronouncements in the early days of Soviet-Russian communism, up to the days of
|
||
Khrushchev, that the capitalist world would soon be economically surpassed! [p. 212]
|
||
Chapter 2
|
||
1. Cf. D. Hume, A Treatise of Human Nature (ed. Selby-Bigge), Oxford, 1968, esp. 3, 2, p.484; and,
|
||
“Enquiry Concerning the Principles of Morals,” in: Hume, Enquiries (ed. Selby-Bigge), Oxford, 1970; cf.
|
||
also: L. Robbins, Political Economy: Past and Present, London, 1977, esp. pp. 29-33.
|
||
2. Incidentally, the normative character of the concept of property also makes the sufficient precondition
|
||
for its emergence as a concept clear: Besides scarcity “rationality of agents” must exist, i.e., the agents
|
||
must be capable of communicating, discussing, arguing, and in particular, they must be able to engage
|
||
in an argumentation of normative problems. If there were no such capability of communication,
|
||
normative concepts simply would not be of any use. We do not, for instance, try to avoid clashes over the
|
||
use of a given scarce resource with, let us say, an elephant, by defining property rights, for we cannot
|
||
argue with the elephant and hence arrive at an agreement on rights of ownership. The avoidance of
|
||
future clashes in such a case is exclusively a technical (as opposed to a normative) problem.
|
||
3. It should be noted that a person cannot intentionally not act, as even the attempt not to act, i.e., one’s
|
||
decision not to do anything and instead remain in some previously occupied position or state would itself
|
||
qualify as an action, thus rendering this statement aprioristically true, i.e., a statement that cannot be
|
||
challenged by experience, as anyone who would try to disprove it thereby would have to choose and put
|
||
his body willy-nilly to some specific use.
|
||
4. Cf. L. v. Mises, Human Action, Chicago, 1966, esp. part 1; M. N. Rothbard, Man, Economy and State,
|
||
Los Angeles, 1970; also: L. Robbins, Nature and Significance of Economic Science, London, 1935.
|
||
5. On the concept of cost cf. in particular, M. Buchanan, Cost and Choice, Chicago, 1969; L.S.E. Essays
|
||
on Cost (ed. Buchanan and Thirlby), Indianapolis, 1981.
|
||
6. It is worth mentioning here that the validity of all of what follows, of course, in no way depends on the
|
||
correctness of the description of the natural position as “natural.” Even if someone would only be willing
|
||
to grant the so-called natural position the status of an arbitrary starting point, our [p. 213] analysis
|
||
assumes validity. Terms don’t matter; what counts is what the natural position really is and implies as
|
||
such. The following analyses are concerned exclusively with this problem.
|
||
7. Note again that the term “aggression” is used here without evaluative connotations. Only later in this
|
||
treatise will I demonstrate that aggression as defined above is indeed morally indefensible. Names are
|
||
empty; what alone is important is what it really is that is called aggression.
|
||
8. When I discuss the problem of moral justification in Chapter 7, I will return to the importance of the
|
||
distinction just made of aggression as an invasion of the physical integrity of someone and, on the other
|
||
hand, an invasion of the integrity of someone’s value system, which is not classified as aggression. Here
|
||
it suffices to notice that it is some sort of technical necessity for any theory of property (not just the
|
||
natural position described here) that the delimitation of the property rights of one person against those of
|
||
another be formulated in physical, objective, intersubjectively ascertainable terms. Otherwise it
|
||
would be impossible for an actor to determine ex ante if any particular action of his were an aggression
|
||
or not, and so the social func tion of property norms (any property norms), i.e., to make a conflict—free
|
||
interaction possible, could not be fulfilled simply for technical reasons.
|
||
9. It is worth mentioning that the ownership right stemming from production finds its natural limitation only
|
||
when, as in the case of children, the thing produced is itself another actor- producer. According to the
|
||
natural theory of property, a child, once born, is just as much the owner of his own body as anyone else.
|
||
Hence, not only can a child expect not to be physically aggressed against but as the owner of his body a
|
||
child has the right, in particular, to abandon his parents once he is physically able to run away from them
|
||
and say “no” to their possible attempts to recapture him. Parents only have special rights regarding their
|
||
child—stemming from their unique status as the child’s producers—insofar as they (and no one else) can
|
||
rightfully claim to be the child’s trustee as long as the child is physically unable to run away and say “no.”
|
||
10. On the disutility of work and waiting cf. the theory of time-preference as espoused by L. v. Mises,
|
||
Human Action, Chicago, 1966, chapters 5, 18, 21 ; the same, Socialism, Indianapolis, 1981, chapter 8;
|
||
M. N. Rothbard, Man, Economy and State, Los Angele s, 1970, chapters 6, 9; also: E.v.
|
||
Boehm-Bawerk, Kapital und Kapitalzins. Positive Theory des Kapitals, Meisenheim, 1967; F. Fetter,
|
||
Capital, Interest and Rent, Kansas City, 1976.
|
||
On a critical assessment of the term “human capital,” in particular of the [p. 214] absurd
|
||
treatment that this concept has had at the hands of some Chicago-economists (notably G. Becker,
|
||
Human Capital, New York, 1975), cf. A. Rub-ner, The Three Sacred Cows of Economics, New York,
|
||
1970.
|
||
11. On the theory of original appropriation cf. J. Locke, Two Treatises of Government (ed. Laslett),
|
||
Cambridge, 1960, esp. 2, 5.
|
||
12. On the distinction, flowing naturally from the unique character of a person’s body as contrasted with all
|
||
other scarce goods, between “inalienable” and “alienable” property titles cf. W. Evers, “Toward a
|
||
Reformation of a Law of Contracts,” in: Journal of Libertarian Studies, 1977.
|
||
13. The superimposition of public on private law has tainted and compromised the latter to some extent
|
||
everywhere. Nonetheless, it is not difficult to disentangle existing private law systems and find what is
|
||
here called the natural position as constituting its central elements—a fact which once again underlines
|
||
the “naturalness” of this property theory. Cf. also Chapter 8, n. 13. [p. 215]
|
||
Chapter 3
|
||
1. On Marxism and its development cf. L. Kolakowski, Main Currents of Marxism, 3 vols., Oxford, 1978;
|
||
W. Leonhard, Sovietideologie. Die politischen Lehren, Frankfurt/M., 1963.
|
||
2. When one speaks of socialism Russian style it is evident that one abstracts from the multitude of
|
||
concrete data which characterize any social system and with respect to which societies may differ.
|
||
Russian style socialism is what has been termed by M. Weber an “ideal type.” It “is arrived at through
|
||
the one-sided intensification of one or several aspects and through integration into an immanently
|
||
consistent conceptual representation of a multiplicity of scattered and discrete individual phenomena” (M.
|
||
Weber, Gesammelte Aufsaetze zur Wissenschaftslehre, Tuebingen, 1922, p.191). But to stress the
|
||
abstract character of the concept by no means implies any deficiency in it. On the contrary, it is the very
|
||
purpose of constructing ideal types to bring out those features which the acting individuals themselves
|
||
regard as constituting relevant resemblances or differences in meaning, and to disregard those which
|
||
they themselves consider to be of little or no importance in understanding either one’s own or another
|
||
person’s actions. More specifically, describing Russian style socialism on the level of abstraction chosen
|
||
here and developing a typology of various forms of socialism later on should be understood as the attempt
|
||
to reconstruct those conceptual distinctions which people use to attach themselves ideologically to various
|
||
political parties or social movements, hence enabling an understanding of the ideological forces that in
|
||
fact shape present-day societies. On ideal types as prerequisites for historico-sociologic al research cf. L.
|
||
v. Mises, Epistemological Problems of Economics, New York, 1981, esp. pp.75ff; the same, Human
|
||
Action, Chicago, 1966, esp. pp.59ff. On the methodology of “meaning reconstruction” of empirical social
|
||
research cf. H. H. Hoppe, Kritik der kausalwis- senschaftlichen Sozialforschung, Opladen, 1983,
|
||
chapter 3, esp. pp.33ff.
|
||
3. For the following cf. in particular L. v. Mises, Socialism, Indianapolis, 1981.
|
||
4. Of course, this complete outlawing of private investment, as stated under (2) only applies strictly to a
|
||
fully socialized economy. If next to a socialized part of the economy a private part also exists, then
|
||
private investment would only become curtaile d and hampered to the degree to which the economy [p.
|
||
216] is socialized.
|
||
5. The related, crucial difference between capitalism and socialism is that under the former, the voluntary
|
||
actions of consumers ultimately determine the structure and process of production, whereas it is the
|
||
producer-caretakers who do so under socialism. Cf. in particular Chapter 9 below.
|
||
6. Writes Mises, “The essential mark of socialism is that one will alone acts. It is immaterial whose will it
|
||
is. The director may be anointed king or a dictator, ruling by virtue of his charisma, he may be a Fuehrer
|
||
or a board of Fuehrers 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’ (L. v. Mises, Human Action, Chicago, 1966,
|
||
p.695).
|
||
7. Cf. L. v. Mises, Socialism, Indianapolis, 1981, esp. part 2; also Human Action, Chicago, 1966, esp.
|
||
Chapters 25, 26.
|
||
8. On the following cf. also F. A. Hayek (ed.), Collectivist Economic Planning, London, 1935; Journal of
|
||
Libertarian Studies 5, 1, 1981 (An Economic Critique of Socialism).
|
||
9. On the free market as the necessary prerequisite for economic calculation and rational resource
|
||
allocation cf. also Chapters 9, 10 below.
|
||
10. Incidentally, this proves that a socialized economy will be even less productive than a slave economy. In
|
||
a slave economy, which of course also suffers from a relatively lower incentive to work on the part of
|
||
the slaves, the slaveholder, who can sell the slave and capture his market value privately, would not have
|
||
a comparable interest in extracting from his slave an amount of work which reduces the slave’s value
|
||
below the value of his marginal product. For a caretaker of labor no such disincentive exists. Cf. also G.
|
||
Reisman, Government Against the Economy, New York, 1979.
|
||
11. Cf. H. H. Hoppe, Eigentum, Anarchie und Staat, Opladen, 1987, esp. Chapter 5, 3.2.
|
||
12. To be sure, Russia was a poor country to begin with, with little accumulated capital to be drawn on and
|
||
consumed in an “emergency.” On the socio-economic history of Soviet Russia cf. B. Brutzkus,
|
||
Economic Planning [p. 217] in Soviet Russia, London, 1935; also, e.g., A. Nove, Economic History
|
||
of the USSR, Harmondsworth, 1969; also S. Wellisz, The Economies of the Soviet Bloc, New York,
|
||
1964.
|
||
13. On the economic system of the Soviet-dominated East bloc cf. T. Rakowska- Harmstone (ed).,
|
||
Communism in Eastern Europe, Bloomington, 1984; H. H. Hohmann, M. Kaser, and K. Thalheim
|
||
(eds.), The New Economic Systems of Eastern Europe, London, 1975; C.M. Cipolla (ed.), Economic
|
||
History of Europe. Contemporary Economies, vol 2, Glasgow, 1976.
|
||
14. On everyday life in Russia cf., e.g., H. Smith, The Russians, New York, 1983; D.K. Willis, Klass. How
|
||
Russians Really Live, New York, 1985; S. Pejovich, Life in the Soviet Union, Dallas, 1979; M. Miller,
|
||
Rise of the Russian Consumer, London, 1965.
|
||
15. Cf. L. Erhard, the initiator and major political exponent of post-war economic policy, Prosperity through
|
||
Competition, New York, 1958; and The Economics of Success, London, 1968. For theoreticians of the
|
||
German “soziale Marktwirtschaft” cf. W. Eucken, Grundsaetze der Wirtschaftspolitik , Hamburg,
|
||
1967; W. Roepke, A Humane Economy, Chicago, 1960; the same, Economics of a Free Society,
|
||
Chicago, 1963. For a critique of the West German economic policy as insufficiently capitalist and ridden
|
||
with inconsistencies which would lead to increasingly socialist interventions in the course of time cf. the
|
||
prophetic observations by L. v. Mises, Human Action, Chicago, 1966, p.723.
|
||
16. For comparative studies on the two Germanys cf. E. Jesse (ed.), BRD und DDR, Berlin, 1982; H. v.
|
||
Hamel (ed.), BRD-DDR. Die Wirtschaftssys-teme, Muenchen, 1983; also K. Thalheim, Die
|
||
wirtschaftliche Entwicklung der beiden Staaten in Deutschland, Opladen, 1978.
|
||
An honest but naive empirically minded comparative study which illustrates that at best,
|
||
economic statistics has very little to do with reality as perceived by acting persons is P. R. Gregory and
|
||
R.C. Stuart, Comparative Economic Systems, Boston, 1985, Chapter 13 (East and West Germany). For
|
||
a valuable critique of economic statistics cf. O. Morgenstern, National Income Statistics: A Critique of
|
||
Macroeconomic Aggregation, San Francisco, 1979. For an even more fundamental criticism cf. L. v.
|
||
Mises, Theory of Money and Credit, Irvington, 1971, part II, Chapter 5.
|
||
17. On life in East Germany cf. E. Windmoeller and T. Hoepker, Leben in der DDR, Hamburg, 1976. [p.
|
||
218]
|
||
Chapter 4
|
||
1. Cf. L. Kolakowski, Main Currents of Marxism, 3 vols., Oxford, 1978; also W. Leonhard,
|
||
Sovietideologie heute. Die politischen Lehren, Frankfurt/M., 1963.
|
||
2. Cf. note 16 below on the assessment of the somewhat different practice.
|
||
3. Cf. E. Bernstein, Die Voraussetzungen des Sozialismus und die Auf-gaben der Sozialdemokratie,
|
||
Bonn, 1975, as a major expositor of the refor-mist-revisionist course; K. Kautsky, Bernstein und das
|
||
sozialdemokratische Programm, Bonn, 1976, as exponent of the Marxist orthodoxy.
|
||
4. On the idea of a “market-socialism” cf. one of its leading representatives, O. Lange, “On the Economic
|
||
Theory of Socialism,” in M. I. Goldman (ed.), Comparative Economic Systems, New York, 1971.
|
||
5. On the ideology of the German Social Democrats cf. T. Meyer (ed.), Demokratischer Sozialismus,
|
||
Muenchen, 1980; G. Schwan (ed.), Demok-ratischer Sozialismus fuer Industriegeselischaften,
|
||
Frankfurt/M., 1979.
|
||
6. Indicators for the social-democratization of the socialist movement are the rise of the socialist party and
|
||
the corresponding decline of the orthodox communist party in France; the emergence of a
|
||
social-democratic party as a rival to the more orthodox labour party in Great Britain; the moderation of
|
||
the communists in Italy as the only remaining powerful communist party in Western Europe toward an
|
||
increasingly social-democratic policy; and the growth of the socialist-social-democratic parties in Spain
|
||
and Portugal under Gonzales and Soares, both with close ties to the German SPD. Furthermore, the
|
||
socialist parties of Scandinavia, which traditionally had close ly followed the German path and which later
|
||
provided safe haven to a number of prominent socialists during the Nazi persecution (most notably W.
|
||
Brandt and B. Kreisky), have long given credence to the revisionist beliefs.
|
||
7. On the social-democratic position regarding the North-South conflict cf. North- South: A Programme
|
||
for Survival, Independent Commission on International Development Issues (Chair: W. Brandt), 1980.
|
||
[p. 219]
|
||
8. Note again that this characterization of social-democratic socialism has the status of an “ideal type” (cf.
|
||
Chapter 3, n. 2). It is not to be taken as a description of the policy or ideology of any actual party.
|
||
Rather, it should be understood as the attempt to reconstruct what has become the essence of modern
|
||
social-democratic style socialism, underlying a much more diverse reality of programs and policies of
|
||
various parties or movements of different names as the ideologically unifying core.
|
||
9. On the following cf. L. v. Mises, Socialism, Indianapolis, 1981, esp. part V; Human Action, Chicago,
|
||
1966, esp. part 6.
|
||
10. Cf. M. N. Rothbard, Power and Market, Kansas City, 1977.
|
||
11. In addition, it should not be overlooked that even if it led to increased work by those taxed, a higher
|
||
degree of taxation would in any case reduce the amount of leisure available to them and thereby reduce
|
||
their standard of living. Cf. M.N. Rothbard, Power and Market, Kansas City, 1977, pp.95f.
|
||
12. A fictional account of the implementation of such a policy, supervised by “The unceasing vigilance of
|
||
agents of the United States Handicapper General” has been given by K. Vonnegut in “Harrison
|
||
Bergeron,” in: K. Von-negut, Welcome to the Monkey House, New York, 1970.
|
||
13. On the phenomenon of politicalization cf. also K. S. Templeton (ed.), The Politicalization of Society,
|
||
Indianapolis, 1977.
|
||
14. On the concern of orthodox and social-democratic socialism for equality cf. S. Lukes, “Socialism and
|
||
Equality,” in: L. Kolakowski and S. Hampshire (eds.), The Socialist Idea, New York, 1974; also B.
|
||
Williams, “The Idea of Equality,” in P. Laslett and W. G. Runciman (eds.), Philosophy, Politics, and
|
||
Society, 2nd series, Oxford, 1962.
|
||
For a critique of the socialist concept of equality cf. M. N. Rothbard, “Freedom, Inequality,
|
||
Primitivism and the Division of Labor,” in K. S. Templeton (ed.), The Politicalization of Society,
|
||
Indianapolis, 1977; and Egalitarianism as a Revolt Against Nature, (title essay), Washington, 1974; H.
|
||
Schoeck, Envy, New York, 1966; and 1st Leistung unanstaendig?, Osnabrueck, 1971; A. Flew, The
|
||
Politics of Procrustes, London, 1980; and Sociology, Equality and Education, New York, 1976. [p.
|
||
220]
|
||
15. Traditionally, this approach has been favored, at least in theory, by orthodox Marxist socialism—in line
|
||
with Marx’ famous dictum in his “Critique of the Gotha Programme,” (K. Marx, Selected Works, vol. 2,
|
||
London, 1942, p.566), ‘from each according to his ability, to each according to his needs.” Economic
|
||
reality, however, has forced the Russian-style countries to make considerable concessions in practice.
|
||
Generally speaking, an effort has indeed been made to equalize the (assumedly highly visible) monetary
|
||
income for various occupations, but in order to keep the economy going, considerable difference in
|
||
(assumedly less visible) nonmonetary rewards (such as special privileges regarding travel, education,
|
||
housing, shopping, etc.) have had to be introduced.
|
||
Surveying the literature, P. Gregory and R. Stuart (Comparative Economic Systems, Boston,
|
||
1985), state: “. . . earnings are more equally distributed in Eastern Europe, Yugoslavia and the Soviet
|
||
Union than in the United States. For the USSR, this appears to be a relatively new phenomenon, for as
|
||
late as 1957, Soviet earnings were more unequal than the United States.” However, in Soviet-style
|
||
countries “a relatively larger volume of resources . . . is provided on an extra market bases . . .” (p.502).
|
||
In conclusion: “Income is distributed more unequally in the capitalist countries in which the state plays a
|
||
relatively minor redistributive role . . . (United States, Italy, Canada). Yet even where the state plays a
|
||
major redistributive role (United Kingdom, Sweden), the distribution of incomes appears to be slightly
|
||
more unequal than in the planned socialist countries (Hungary, Czechoslovakia, Bulgaria). The Soviet
|
||
Union in 1966 appears to have a less egalitarian distribution of income than its East European
|
||
counterparts” (p.504). Cf. also, F. Parkin, Class Inequality and Political Order, New York, 1971, esp.
|
||
Chapter 6.
|
||
16. This approach is traditionally most typical for social-democratic socialism. In recent years it has been
|
||
given much publicized support—from the side of the economics profession—by M. Friedman with his
|
||
proposal for a “negative income tax” (Friedman, Capitalism and Freedom, Chicago, 1962, Chapter 12);
|
||
and by J. Rawls—from the philosophical side—with his “difference principle” (Rawls, A Theory of
|
||
Justice, Cambridge, 1971, pp. 60, 75ff, 83). Accordingly, both authors have received much attention from
|
||
social-democratic party intellectuals. Generally, Friedman was only found “guilty” of not wanting to set
|
||
the minimum income high enough—but then, he had no principled criterion for setting it at any specific
|
||
point anyway. Rawls, who wants to coerce the “most advantaged person” into letting the “least
|
||
advantaged one” share in his fortune whenever he happens to improve his own position, was at times
|
||
even found to have gone too far with his egalitarianism. Cf. G. Schwan, Sozialismus in der
|
||
Demokratie. Theorie eine [p. 221] konsequent sozialdemokratischen Politik, Stuttgart, 1982, Chapter 3.
|
||
D.
|
||
17. A representative example of social-democratically inclined research on equality of opportunity, in
|
||
particular regarding education, is C. Jencks, and others, Inequality, London, 1973; the increasing
|
||
prominence of the idea of equalizing opportunity also explains the flood of sociological studies on “quality
|
||
of life” and “social indicators” that has appeared since the late 1960s. Cf., for instance, A. Szalai and F.
|
||
Andrews (eds.), The Quality of Life, London, 1980.
|
||
18. On the following cf. also R. Merklein, Griff in die eigene Tasche, Hamburg, 1980; and Die Deutschen
|
||
werden aermer, Hamburg, 1982.
|
||
19. Cf. as a representative example, W. Zapf (ed.), Lebensbedingungen in der Bundesrepublik ,
|
||
Frankfurt/M., 1978.
|
||
20. Cf. on this A. Alchian, “The Economic and Social Impact of Free Tuition” in: A. Alchian, Economic
|
||
Forces at Work, Indianapolis, 1977. [p. 222]
|
||
Chapter 5
|
||
1. On the following cf. in particular M. N. Rothbard’s brilliant essay”Left and Right: The Prospects for
|
||
Liberty’ in the same, Egalitarianism as a Revolt Against Nature, Washington, 1974.
|
||
2. On the social structure of feudalism cf. M. Bloch, Feudal Society, Chicago, 1961; P. Anderson,
|
||
Passages from Antiquity to Feudalism, London, 1974; R. Hilton (ed.), The Transition from Feudalism
|
||
to Capitalism, London, 1978.
|
||
3. Cf. H. Pirenne, Medieval Cities. Their Origins and the Revival of Trade, Princeton, 1974, Chapter 5,
|
||
esp. pp. 126ff; also cf. M. Tigar and M. Levy, Law and the Rise of Capitalism, New York, 1977.
|
||
4. It is worth stressing that contrary to what various nationalist historians have taught, the revival of trade
|
||
and industry was caused by the weakness of central states, by the essentially anarchistic character of
|
||
the feudal system. This insight has been emphasized by J. Baechler in The Origins of Capitalism, New
|
||
York, 1976, esp. Chapter 7. He writes: “The constant expansion of the market, both in extensiveness and
|
||
in intensity, was the result of an absence of a political order extending over the whole of Western
|
||
Europe.” (p.73) “The expansion of capitalism owes its origin and raison d’eetre to political anarchy . . . .
|
||
Collectivism and State management have only succeeded in school text-books (look, for example, at the
|
||
constantly favourable judgement they give to Colbertism).” (p.77) “All power tends toward the absolute.
|
||
If it is not absolute, this is because some kind of limitations have come into play . . . those in positions of
|
||
power at the centre ceaselessly tried to erode these limitations. They never succeeded, and for a reason
|
||
that also seems to me to be tied to the international system: a limitation of power to act externally and the
|
||
constant threat of foreign assault (the two characteristics of a multi-polar system) imply that power is
|
||
also limited internally and must rely on autonomous centres of decisionmaking and so may use them only
|
||
sparingly.” (p.78)
|
||
On the role of ecological and reproductive pressures for the emergence of capitalism cf. M.
|
||
Harris, Cannibals and Kings, New York, 1978, Chapter 14. [p. 223]
|
||
5. Cf. on this the rather enthusiastic account given by H. Pirenne, Medieval Cities, Princeton, 1974,
|
||
pp.208ff.
|
||
6. On this coalition cf. H. Pirenne, Medieval Cities, Princeton, 1974. “The clear interest of the monarchy
|
||
was to support the adversaries of high feudalism. Naturally, help was given whenever it was possible to
|
||
do so without becoming obligated to these middle classes who in arising against their lords fought, to all
|
||
intents and purposes, in the interests of royal prerogatives. To accept the king as arbitrator of their
|
||
quarrel was, for the parties in conflict, to recognize his sovereignty . . . It was impossible that royalty
|
||
should not take count of this and seize every chance to show its goodwill to the communes which,
|
||
without intending to do so, labored so usefully in its behalf” (p.179-80; cf. also pp.227f).
|
||
7. Cf. P. Anderson, Lineages of Absolutism, London, 1974.
|
||
8. Cf. L. Tigar and M. Levy, Law and the Rise of Capitalism, New York, 1977.
|
||
9. Cf. L. v. Mises, Liberalismus, Jena, 1929; also E. K. Bramsted and K. J. Melhuish (eds.), Western
|
||
Liberalism, London, 1978.
|
||
10. Cf. F. A. Hayek (ed.), Capitalism and the Historians, Chicago, 1963.
|
||
11. On the social dynamics of capitalism as well as the resentment caused by it cf. D. Mc. C. Wright,
|
||
Democracy and Progress, New York, 1948; and Capitalism, New York, 1951.
|
||
12. In spite of their generally progressive attitude, the socialist left is not entirely free of such conservative
|
||
glorifications of the feudal past, either. In their contempt for the “alienation” of the producer from his
|
||
product, which of course is the normal consequence of any market system based on division of labor,
|
||
they have frequently presented the economically self-sufficient feudal manor as a cozy, wholesome
|
||
social model. Cf., for instance, K. Polanyi, The Great Transformation, New York, 1944.
|
||
13. Cf. R. Nisbet, “Conservatism,” in: R. Nisbet and T. Bottomore, History of Sociological Analysis, New
|
||
York, 1978; also G. K. Kaltenbrunner (ed.), Rekonstruktion des Konservatismus, Bern, 1978; on the
|
||
relationship between [p. 224] liberalism and conservatism cf. F. A. Hayek, The Constitution of Liberty,
|
||
Chicago, 1960 (Postscript).
|
||
14. On the inconsistencies of liberalism cf. Chapter 10, n. 21.
|
||
15. Normally, peoples’ attitudes toward change are ambivalent: on the one hand, in their role as consumers
|
||
people see change as a positive phenomenon since it brings about a greater variety of choice. On the
|
||
other hand, in their role as producers people tend to embrace the ideal of stability, as this would save
|
||
them from the need to continually adapt their productive efforts to changed circumstances. It is, then,
|
||
largely in their capacity as producers that people lend support to the various socialist stabilization
|
||
schemes and promises, only to thereby harm themselves as consumers. Writes D. Mc. C. Wright in
|
||
Democracy and Progress, New York, 1948, p.81: “From freedom and science came rapid growth and
|
||
change. From rapid growth and change came insecurity. From insecurity came demands which ended
|
||
growth and change. Ending growth and change ended science and freedom.”
|
||
16. On liberalism, its decline, and the rise of socialism cf. A. V. Dicey, Lectures on the Relation Between
|
||
Law and Public Opinion in England during the Nineteenth Century, London, 1914; W. H. Greenleaf,
|
||
The British Political Tradition, 2 vols., London, 1983.
|
||
17. I might again mention that the characterization of conservatism, too, has the status of an ideal-type (cf.
|
||
Chapter 3, n. 2; Chapter 4, n. 8). It is the attempt to reconstruct those ideas which people either
|
||
consciously or unconsciously accept or reject in attaching or detaching themselves to or from certain
|
||
social policies or movements.
|
||
The idea of a conservative policy as described here and in the following can also be said to be a
|
||
fair reconstruction of the underlying, unifying ideological force of what is indeed labeled “conservative” in
|
||
Europe. However, the term “conservative” is used differently in the United States. Here, quite
|
||
frequently, everyone who is not a left-liberal-(social)-democrat is labeled a conservative. As compared
|
||
with this terminology, our usage of the term conservative is much narrower, but also much more in line
|
||
with ideological reality. Labeling everything that is not “liberal” (in the American sense) “conservative”
|
||
glosses over the fundamental ideological differences that—despite some partial agreement regarding
|
||
their opposition to “liberalism”—exist in the United States between libertarians, as advocates of a pure
|
||
[p. 225] capitalist order based on the natural theory of property, and conservatives proper, who, from W.
|
||
Buckley to I. Kristol, nominally hail the institution of private property, only to disregard private owners’
|
||
rights whenever it is deemed necessary in order to protect established economic and political powers
|
||
from eroding in the process of peaceful competition. And in the field of foreign affairs they exhibit the
|
||
same disrespect for private property rights through their advocacy of a policy of aggressive
|
||
interventionism. On the polar difference between libertarianism and conservatism cf. G. W. Carey (ed.),
|
||
Freedom and Virtue. The Conservative/Libertarian Debate, Lanham, 1984.
|
||
18. D. Mc. C. Wright (Capitalism, New York, 1951, p.198) correctly describes that both—left-liberalism, or
|
||
rather social democracy, and conservatism—imply a partial expropriation of producers/contractors. He
|
||
then misinterprets the difference, though, when he sees it as a disagreement over the question of how far
|
||
this expropriation should go. In fact, there is disagreement about this among social-democrats and
|
||
conservatives. Both groups have their “radicals” and “moderates.” What makes them social-democrats
|
||
or conservatives is a different idea about which groups are to be favored at the expense of others.
|
||
19. Note the interesting relationship between our sociological typology of socialist policies and the logical
|
||
typology of market interventions as developed by M. N. Rothbard. Rothbard (Power and Market,
|
||
Kansas City, 1977, pp. 10ff) distinguishes between “autistic intervention” where ‘the intervener may
|
||
command an individual subject to do or not to do certain things when these actions directly involve the
|
||
individual’s person or property a/one . . . (i.e.) when exchange is not involved”; “binary intervention”
|
||
where ‘the intervener may enforce a coerced exchange between the individual subject and himself’; and
|
||
‘triangular intervention” where ‘the intervener may either compel or prohibit an exchange between a
|
||
pair of subjects” (p. 10). In terms of this distinction, the characteristic mark of conservatism then is its
|
||
preference for “triangular intervention”—and as will be seen later in this Chapter, “autistic intervention”
|
||
insofar as autistic actions also have natural repercussions on the pattern of inter-individual
|
||
exchanges—for such interventions are uniquely suited, in accordance with the social psychology of
|
||
conservatism, to helping “freeze” a given pattern of social exchanges. As compared with this, egalitarian
|
||
socialism, in line with its described “progressive” psychology, exhibits a preference for”binary
|
||
interventions” (taxation). Note, however, that the actual policies of socialist and social-democratic parties
|
||
do not always coincide precisely with our ideal-typical description of socialism social-democratic style.
|
||
While they generally do, the socialist parties—most [p. 226] notably under the influence of labor
|
||
unions—have also adopted typically conservative policies to a certain extent and are by no means totally
|
||
opposed to any form of triangular intervention.
|
||
20. Cf. on the following M. N. Rothbard, Power and Market, Kansas City, 1977, pp.24ff.
|
||
21. While in order to stabilize social positions, price-freezing is needed and price- freezing can result in
|
||
maximum or minimum prices, conservatives distinctly favor minimum price controls to the extent that it is
|
||
commonly considered even more urgent that one’s absolute—rather than one’s relative—wealth position
|
||
be prevented from eroding.
|
||
22. To be sure, conservatives are by no means always actually willing to go quite as far. But they recurringly
|
||
do so—the last time in the United States being during the Nixon presidency. Moreover, conservatives
|
||
have always exhibited a more or less open admiration for the great unifying social spirit brought about by
|
||
a war-economy which is typically characterized precisely by full-scale price controls.
|
||
23. Cf. G. Reisman, Government Against the Economy, New York, 1979. For an apologetic treatment of
|
||
price-controls cf. J. K. Galbraith, A Theory of Price Control, Cambridge, 1952.
|
||
24. G. Reisman, Government Against the Economy, New York, 1979, p.141.
|
||
25. On the politics and economics of regulation cf. G. Stigler, The Citizen and the State. Essays on
|
||
Regulation, Chicago, 1975; M. N. Rothbard, Power and Market, Kansas City, 1977, Chapter 3.3; on
|
||
licenses cf. also M. Friedman, Capitalism and Freedom, Chicago, 1962, Chapter 9.
|
||
26. Cf. also B. Badie and P. Birnbaum, The Sociology of the State, Chicago, 1983, esp. pp.107f.
|
||
27. Cf. on this R. Radosh and M. N. Rothbard (eds.), A New History of Leviathan, New York, 1972.
|
||
28. Cf. Badie and Birnbaum, The Sociology of the State, Chicago, 1983. [p. 227]
|
||
29. Cf. L. v. Mises, Omnipotent Government, New Haven, 1944; F. A. Hayek, The Road to Serfdom,
|
||
Chicago, 1956; W. Hock, Deutscher Antikapitalismus, Frankfurt/M, 1960.
|
||
30. Cf. one of the foremost representatives of the German “Historical School,” the “Kathedersozialisr’ and
|
||
naziapologist: W. Sombart, Deutscher Sozialimus, Berlin, 1934.
|
||
31. Cf. W. Fischer, Die Wirtschaftspolitik Deutschlands 1918-45, Hannover, 1961; W. Treue,
|
||
Wirtschaftsgeschichte der Neuzeit, vol. 2, Stuttgart, 1973; R. A. Brady, “Modernized Cameralism in
|
||
the Third Reich: The Case of the National Industry Group,” in: M. I. Goldman (ed.), Comparative
|
||
Economic Systems, New York, 1971.
|
||
32. The average gross income of employed persons in Germany in 1938 (last figure available) was (in
|
||
absolute terms, i.e., not taking inflation into account!) still lower than that of 1927. Hitler then started the
|
||
war and resources were increasingly shifted from civilian to non-civilian uses, so that it can safely be
|
||
assumed that the standard of living decreased even further and more drastically from 1939 on. Cf.
|
||
Statistisches Jahrbuch fuer die BRD, 1960, p.542; cf. also V. Trivanovitch, Economic Development
|
||
of Germany Under National Socialism, New York, 1937, p.44. [p. 228]
|
||
Chapter 6
|
||
1. Of. on the classical positivist position A.J. Ayer, Language, Truth and Logic, New York, 1950; on
|
||
critical rationalism K. R. Popper, Logic of Scientific Discovery, London, 1959; Conjectures and
|
||
Refutations, London, 1969; and Objective Knowledge, Oxford, 1973; on representative statements of
|
||
empiricism-positivism as the appropriate methodology of economics cf. e.g. M. Blaug, The Methodology
|
||
of Economics, Cambridge, 1980; T. W. Hutchinson, The Significance and Basic Postulates of
|
||
Economic Theory, London, 1938; and Positive Economics and Policy Objectives, London, 1964; and
|
||
Politics and Philosophy of Economics, New York, 1981; also M. Friedman, “The Methodology of
|
||
Positive Economics,” in: M. Friedman, Essays in Positive Economics, Chicago, 1953; H. Albert,
|
||
Marktsoziologie und Entscheidungslogik , Neuwied, 1967.
|
||
2. On piecemeal social engineering cf. K. R. Popper, The Poverty of His-toricism, London, 1957.
|
||
3. Cf. G. Luehrs (ed.), Kritischer Rationalismus und Sozialdemokratie, 2 vols., Bonn, 1975-76.
|
||
4. On the following cf. M. Hollis and E. Nell, Rational Economic Man, Cambridge, 1975, pp.3ff.
|
||
5. Cf. D. Hume, A Treatise of Human Nature and Enquiry Concerning Human Understanding, in:
|
||
Selby-Bigge (ed.), Hume’s Enquiries, Oxford, 1970; also H. H. Hoppe, Handeln und Erkennen, Bern,
|
||
1976.
|
||
6. Cf. I. Lakatos, “Falsification and the Methodology of Scientific Research Programmes,” in: Lakatos and
|
||
Musgrave (eds.), Criticism and the Growth of Knowledge, Cambridge, 1970.
|
||
7. All of this has been brought home to Popperianism, mainly by T. S. Kuhn, The Structure of Scientific
|
||
Revolutions, Chicago, 1964; and it was then P. Feyerabend who drew the most radical conclusion: to
|
||
throw out science’s claim to rationality altogether, and to embrace nihilism under the banner “everything
|
||
goes” (P. Feyerabend, Against Method, London, 1978; and Science in a Free Society, London, 1978).
|
||
For a critique of this unfounded [p. 229] conclusion cf. note 20 below.
|
||
8. Cf. on this and the following A. Pap, Semantics and Necessary Truth, New Haven, 1958; M. Hollis and
|
||
E. Nell, Rational Economic Man, Cambridge, 1975; B. Blanshard, Reason and Analysis, La Salle,
|
||
1964.
|
||
9. Cf. on this W. Kamlah and P. Lorenzen, Logische Propaedeutik , Mann-heim, 1967.
|
||
10. Cf. L. v. Mises, The Ultimate Foundation of Economic Science, Kansas City, 1978, p.5: “The essence
|
||
of logical positivism is to deny the cognitive value of a priori knowledge by pointing out that all a priori
|
||
propositions are merely analytic. They do not provide new information, but are merely verbal or
|
||
tautological . . . Only experience can lead to synthetic propositions. There is an obvious objection against
|
||
this doctrine, viz., that this proposition is in itself a—as the present writer thinks, false—synthetic a priori
|
||
proposition, for it can manifestly not be established by experience.”
|
||
11. M. Hollis and E. Nell remark: “Since every significant statement is, for a positivist, analytic or synthetic
|
||
and none is both, we can ask for a classification . . . . We know of no positivist who has tried to produce
|
||
empirical evidence for statements of (the sort in question). Nor can we see how to do so, unless by
|
||
arguing that this is a matter of fact how people use terms . . . which would prompt us to ask simply ‘So
|
||
what’?” (M. Hollis and E. Nell, Rational Economic Man, Cambridge, 1975, p. 110).
|
||
12. Cf. on this H. H. Hoppe, Kritik der kausalwissenschaftlichen Sozial-forschung, Opladen, 1983; and
|
||
“Is Research Based on Causal Scientific Principles Possible in the Social Sciences,” in Ratio, XXV, 1,
|
||
1983.
|
||
13. Cf. I. Kant, Kritik der reinen Vernunft, in Kant, Werke (ed. Weischedel), Wiesbaden, 1956, vol. II,
|
||
p.45.
|
||
14. This, of course, is a Kantian idea, expressed in Kant’s dictum that “reason can only understand what it
|
||
has itself produced according to its own design” (Kritik der reinen Vernunft, in: Kant, Werke (ed.
|
||
Weischedel), Wiesbaden, 1956, vol. II, p.23).
|
||
15. Cf. on this P. Lorenzen, “Wieist Objektivitaet in der Physik moeglich”; [p. 230] “Das
|
||
Begruendungsproblem der Geometrie als Wissenschaft der raeum-lichen Ordnung,” in: Methodisches
|
||
Denken, Frankfurt/M., 1968; and Normative Logic and Ethics, Mannheim, 1969; F. Kambartel,
|
||
Erfahrung und Struktur, Frankfurt/M., 1968, Kap. 3; also H. Dingier, Die Ergreifung des Wirklichen,
|
||
Muenchen, 1955; P. Janich, Protophysik der Zeit, Mannheim, 1969.
|
||
16. On the problem of real vs. conventional or stipulated definitions cf. M. Hollis and E. Nell, Rational
|
||
Economic Man, Cambridge, 1975, pp.177ff. “Honest definitions are, from an empiricist point of view, of
|
||
two sorts, lexical and stipulative.” (p.177) But “when it comes to justifying (this) view, we are
|
||
presumably being offered a definition of ‘definition’. Whichever category of definition the definition . . .
|
||
falls in, we need not accept it as of any epistemological worth. Indeed, it would not be even a possible
|
||
epistemological thesis, unless it were neither lexical nor stipulative. The view is both inconvenient and
|
||
self-refuting. A contrary opinion with a long pedigree is that there are ‘real’ definitions, which capture
|
||
the essence of the thing defined” (p.178); cf. also B. Blanshard, Reason and Analysis, La Salle, 1964,
|
||
pp.268f.
|
||
17. Cf. A. v. Melsen, Philosophy of Nature, Pittsburgh, 1953, esp. Chapters 1,4.
|
||
18. Cf. also H. H. Hoppe. Kritik der kausalwissenschaftlichen Sozial-forschung, Opladen, 1983; and “Is
|
||
Research Based on Causal Scientific Principles Possible in the Social Sciences” in Ratio XXV, 1, 1983.
|
||
Here the argument is summed up thus (p.37): “(1) I and—as possible opponents in an argument—other
|
||
people are able to learn. (This statement cannot be challenged without implicitly admitting that it is
|
||
correct. Above all, it must be assumed by anyone undertaking research into causes. To this extent,
|
||
proposition (1) is valid a priori.) (2) If it is possible to learn, one cannot know at any given time what one
|
||
will know at any later time and how one will act on the basis of this knowledge. (If one did know at any
|
||
given time what one will come to know at some later time, it would be impossible ever to learn
|
||
anything—but see proposition (1) on this point.) (3) The assertion that it is possible to predict the future
|
||
state of one’s own and/or another’s knowledge and the corresponding actions manifesting that
|
||
knowledge (i.e. find the variables which can be interpreted as the causes) involves a contradiction. If the
|
||
subject of a given state of knowledge or of an intentional act can learn, then there are no causes for this;
|
||
however, if there are causes, then the subje ct cannot learn—but see again proposition (1).” [p. 231]
|
||
19. M. Singer, Generalization in Ethics, London, 1863; P. Lorenzen, Normative Logic and Ethics,
|
||
Mannheim, 1969; S. Toulmin, The Place of Reason in Ethics, Cambridge, 1970; F. Kambartel (ed.),
|
||
Praktische Philosophie und konstruktive Wissenschaftstheorie, Frankfurt/M, 1974; A. Gewirth,
|
||
Reason and Morality, Chicago, 1978.
|
||
20. Causality, then, is not a contingent feature of physical reality, but rather a category of action, and as such,
|
||
a logically necessary trait of the physical world. This fact explains why in spite of the possibility explained
|
||
above of immunizing any hypothesis against possible refutations by postulating ever new uncontrolled
|
||
variables, no nihilistic consequences regarding the undertaking of causal scientific research follow (cf.
|
||
note 7 above). For if it is understood that natural science is not a contemplative enterprise but ultimately
|
||
an instrument of action (cf. on this also J. Habermas, Knowledge and Human Interests, Boston, 1971,
|
||
esp. Chapter 6), then neither the fact that hypotheses can be immunized nor that a selection between
|
||
rival theories may not always seem possible (because theories are, admittedly, under- determined by
|
||
data) ever affects the permanent existence of the rationality criterion of “instrumental success.” Neither
|
||
immunizing hypotheses nor referring to paradigmatic differences makes anyone less subject to this
|
||
criterion in whose light every theory ultimately proves commensurable. It is the inexorability of the
|
||
rationality criterion of instrumental success which explains why—not withstanding Kuhn, Feyerabend et
|
||
al.—the development of the natural sciences could bring about an ultimately undeniable, constant
|
||
technological progress.
|
||
On the other hand, in the field of human action, where, as has been demonstrated above, no
|
||
causal scientific research is possible, where predictive knowledge can never attain the status of
|
||
empirically testable scientific hypotheses but rather only that of informed, not-systematically teachable
|
||
foresight, and where in principle the criterion of instrumental success is thus inapplicable, the spectre of
|
||
nihilism would seem indeed to be real, if one were to take the empiricist methodological prescriptions
|
||
seriously. However, not only are these prescriptions inapplicable to the social sciences as empirical
|
||
sciences (cf. on this H. H. Hoppe, Kritik der kausalwissenschaftlichen Sozialforschung, Opladen,
|
||
1983, esp. Chapter 2); as I show here, contrary to the empiricist doctrine according to which everything
|
||
must be tried out before its outcome can be known, a priori knowledge regarding action exists, and
|
||
apodictically true predictions regarding the social world can be made based on this a priori knowledge. It
|
||
is this, then, that proves all nihilistic temptations unfounded. [p. 232]
|
||
21. Cf. also, H. H. Hoppe, Handeln und Erkennen, Bern, 1976, pp.62f.
|
||
22. Cf. also L. v. Mises, Human Action, Chicago, 1966; Epistemological Problems of Economics, New
|
||
York, 1981; and The Ultimate Foundation of Economic Science, Kansas City, 1978.
|
||
23. The aprioristic character of the concept of action—i.e., the impossibility of disproving the proposition that
|
||
man acts and acting involves the categories explained above, because even the attempt to disprove it
|
||
would itself be an action—has its complement in the field of epistemology, in the law of contradiction and
|
||
the unthinkability of its denial. Regarding this law B. Blanshard writes: “To deny the law means to say
|
||
that it is false rather than true, that its being false excludes its being true. But this is the very thing that is
|
||
supposedly denied. One cannot deny the law of contradiction without presupposing its validity in the act
|
||
of denying it” (B. Blanshard, Reason and Analysis, La Salle, 1964, p.276).
|
||
In fact, as L v. Mises indicates, the law of contradiction is implied in the epistemologically more
|
||
fundamental “axioms of action.” (L v. Mises, The Ultimate Foundation of Economic Science, Kansas
|
||
City, 1978, p.35). On the relation between praxeology and epistemology cf. also Chapter 7, n. 5.
|
||
24. On the effects of minimum wages cf. also Y. Brozen and M. Friedman, The Minimum Wage: Who
|
||
Pays?, Washington, 1966.
|
||
25. On the effects of rent control cf. also C. Baird, Rent Control: The Perennial Folly, San Francisco,
|
||
1980; F. A. Hayek et al., Rent Control: A Popular Paradox, Vancouver, 1975.
|
||
26. Cf. also L. v. Mises, A Critique of Interventionism, New Rochelle, 1977. [p. 233]
|
||
Chapter 7
|
||
1. For such a position cf. A. J. Ayer, Language, Truth and Logic, New York, 1950.
|
||
On the emotivist position cf. C. L. Stevenson, Facts and Values, New Haven, 1963; and Ethics
|
||
and Language, London, 1945; cf. also the instructive discussion by G. Harman, The Nature of
|
||
Morality, New York, 1977; the classical exposition of the idea that “reason is and can be no more than
|
||
the slave of the passions” is to be found in D. Hume, Treatise on Human Nature, (ed. Selby-Bigge),
|
||
Oxford, 1970.
|
||
3. Cf. also Chapter 6 above.
|
||
4. For various “cognitivist” approaches toward ethics cf. K. Baier, The Moral Point of View, Ithaca, 1958;
|
||
M. Singer, Generalization in Ethics, London, 1863; P. Lorenzen, Normative Logic and Ethics,
|
||
Mannheim, 1969; S. Toul-min, The Place of Reason in Ethics, Cambridge, 1970; F. Kambartel (ed.),
|
||
Praktische Philosophie und konstruktive Wissenschaftstheorie, Frankfurt/M., 1974; A. Gewirth,
|
||
Reason and Morality, Chicago, 1978.
|
||
Another cognitivist tradition is represented by various “natural rights” theorists. Cf. J. Wild,
|
||
Plato’s Modern Enemies and the Theory of Natural Law, Chicago, 1953; H. Veatch, Rational Man.
|
||
A Modern Interpretation of Aristotelian Ethics, Bloomington, 1962; and For An Ontology of Morals.
|
||
A Critique of Contemporary Ethical Theory, Evanston, 1968; and Human Rights. Fact or Fancy?,
|
||
Baton Rouge, 1985; L. Strauss, Natural Right and History, Chicago, 1970.
|
||
5. Cf. K. O. Apel, Transformation der Philosophie, Vol. 2, Frankfurt/M, 1973, in particular the essay
|
||
“Das Apriori der Kommunikationsgemeinschaft und die Grundlagen der Ethilk”; also J. Habermas,
|
||
“Wahrheitstheorien,” in: H. Fahrenbach (ed.), Wirklichkeit und Reflexion, Pfullingen, 1974; Theorie
|
||
des kommunikativen Handelns, Vol. 1, Frankfurt/M, 1981, pp.44ff; and Moralbewusstsein und
|
||
kommunikatives Handeln, Frankfurt/M., 1983.
|
||
Note the structural resemblance of the “a priori of argumentation” to the “a priori of action,” i.e.,
|
||
the fact, as explained in Chapter 6 above, that there is no way of disproving the statement that everyone
|
||
knows what it means to act, since the attempt to disprove this statement would presuppose one’s
|
||
knowledge of how to perform certain activities. Indeed, the indisputability of the knowledge of the
|
||
meaning of validity claims and action are intimately related. On the one hand, actions are more
|
||
fundamental than argumentation [p. 234] with whose existence the idea of validity emerges, as
|
||
argumentation is clearly only a subclass of action. On the other hand, to say what has just been said
|
||
about action and argumentation and their relation to each other already requires argumentation and so in
|
||
this sense—epistemologically, that is—argumentation must be considered to be more fundamental than
|
||
nonargumentative action. But then, as it is epistemology, too, which reveals the insight that although it
|
||
might not be known to be so prior to any argumentation, in fact the development of argumentation
|
||
presupposes action in that validity claims can only be explicitly discussed in an argument if the persons
|
||
doing so already know what it means to have knowledge implied in actions; both, the meaning of action in
|
||
general and argumentation in particular, must be thought of as logically necessary interwoven strands of
|
||
a priori knowledge.
|
||
6. Methodologically, our approach exhibits a close resemblance to what A. Gewirth has described as the
|
||
“dialectically necessary method” (Reason and Morality, Chicago, 1978, p.42-47)—a method of a priori
|
||
reasoning modeled after the Kantian idea of transcendental deductions. Unfortunately, though, in his
|
||
important study Gewirth chooses the wrong starting point for his analyses. He attempts to derive an
|
||
ethical system not from the concept of argumentation, but from that of action. However, this surely
|
||
cannot work, because from the correctly stated fact that in action an agent must, by necessity,
|
||
presuppose the existence of certain values or goods, it does not follow that such goods then are
|
||
universalizable and should thus be respected by others as the agent’s goods by right. (On the requirement
|
||
of normative statements to be universalizable cf. the following discussion in the text.) Rather, the idea of
|
||
truth, or regarding morals, of universalizable rights or goods only emerges with argumentation as a special
|
||
subclass of actions but not with action as such, as is clearly revealed by the fact that Gewirth, too, is not
|
||
engaged simply in action, but more specifically in argumentation when he tries to convince us of the
|
||
necessary truth of his ethical system. However, with argumentation recognized as the one and only
|
||
appropriate starting point for the dialectically necessary method, a capitalist (i.e., non-Gewirthian) ethic
|
||
follows, as will be seen. On the faultiness of Gewirth’s attempt to derive universalizable rights from the
|
||
notion of action cf. also the perceptive remarks by M. MacIntyre, After Virtue, Notre Dame, 1981,
|
||
pp.6465; J. Habermas, Moralbewusstsein und kommunikatives Handeln, Frankfurt/M., 1983,
|
||
pp.110-111; and H. Veatch, Human Rights, Baton Rouge, 1985, pp. 159-160.
|
||
7. The relationship between our approach and a “natural rights” approach can now be described in some
|
||
detail, too. The natural law or natural rights [p. 235] tradition of philosophic thought holds that universally
|
||
valid norms can be discerned by means of reason as grounded in the very nature of man. It has been a
|
||
common quarrel with this position, even on the part of sympathetic readers, that the concept of human
|
||
nature is far “too diffuse and varied to provide a determinate set of contents of natural law” (A. Gewirth,
|
||
“Law, Action, and Morality” in: Georgetown Symposium on Ethics. Essays in Honor of H. Veatch
|
||
(ed. R. Porreco), New York, 1984, p.73). Furthermore, its description of rationality is equally ambiguous
|
||
in that it does not seem to distinguish between the role of reason in establishing empirical laws of nature
|
||
on the one hand, and normative laws of human conduct on the other. (Cf., for instance, the discussion in
|
||
H. Veatch, Human Rights, Baton Rouge, 1985, p.62-67.)
|
||
In recognizing the narrower concept of argumentation (instead of the wider one of human
|
||
nature) as the necessary starting point in deriving an ethic, and in assigning to moral reasoning the status
|
||
of a priori reasoning, clearly to be distinguished from the role of reason performed in empirical research,
|
||
our approach not only claims to avoid these difficulties from the outset, but claims thereby to be at once
|
||
more straightforward and rigorous. Still, to thus dissociate myself from the natural rights tradition is not to
|
||
say that I could not agree with its critical assessment of most of contemporary ethical theory; indeed I do
|
||
agree with H. Veatch’s complementary refutation of all desire (teleological, utilitarian) ethics as well as
|
||
all duty (deontological) ethics (see Human Rights, Baton Rouge, 1985, Chapter 1). Nor do I claim that it
|
||
is impossible to interpret my approach as falling in a “rightly conceived” natural rights tradition after all.
|
||
What I claim, though, is that the following approach is clearly out of line with what the natural rights
|
||
approach has ac tually come to be, and that it owes nothing to this tradition as it stands.
|
||
8. The universalization principle figures prominently indeed among all cognitivist approaches to morals. For
|
||
the classical exposition cf. I. Kant, “Grundlegung zur Metaphysik der Sitten” and “Kritik der praktischen
|
||
Vernunft” in: Kant, Werke (ed. Weischedel), vol. IV, Wiesbaden, 1956.
|
||
9. It might be noted here that only because scarcity exists is there even a problem of formulating moral
|
||
laws; insofar as goods are superabundant (“free” goods) no conflict over the use of goods is possible and
|
||
no action-coordination is needed. Hence, it follows that any ethic, correctly conceived, must be
|
||
formulated as a theory of property, i.e., a theory of the assignment of rights of exclusive control over
|
||
scarce means. Because only then does it become possible to avoid otherwise inescapable and
|
||
unresolvable conflict. Unfortunately, moral philosophers, in their widespread ig norance of economics,
|
||
have hardly ever seen this clearly enough. Rather, [p. 236] like H. Veatch (Human Rights, Baton
|
||
Rouge, 1985, p. 170), for instance, they seem to think that they can do without a precise definition of
|
||
property and property rights only to then necessarily wind up in a sea of vagueness and ad-hoceries. On
|
||
human rights as property rights cf. also M. N. Rothbard, The Ethics of Liberty, Atlantic Highlands, 1982,
|
||
Chapter 15.
|
||
10. Cf. J. Locke, Two Treatises on Government (ed. P. Laslett), Cambridge, 1970, esp. 2, 5.
|
||
11. On the nonaggression principle and the principle of original appropriation cf. also M. N. Rothbard, For A
|
||
New Liberty, New York, 1978, Chapter 2; and The Ethics of Liberty, Atlantic Highlands, 1982,
|
||
Chapters 6-8.
|
||
12. This, for instance, is the position taken by J. J. Rousseau, when he asks us to resist attempts to privately
|
||
appropriate nature given resources by, for example, fencing them in. In his famous dictum, he says,
|
||
“Beware of listening to this impostor; you are undone if you once forget that the fruits of the earth belong
|
||
to us all, and the earth itself to nobody” (“Discourse upon the Origin and Foundation of Inequality among
|
||
Mankind” in: J. J. Rousseau, The Social Contract and Discourses (ed. G. Cole), New York, 1950,
|
||
p.235). However, it is only possible to argue so if it is assumed that property claims can be justified by
|
||
decree. Because how else could “all” (i.e., even those who never did anything with the resources in
|
||
question) or “nobody” (i.e., not even those who actually made use of it) own something—unless property
|
||
claims were founded by mere decree?!
|
||
13. On the problem of the deriveability of “ought” from “is” statements cf. W. D. Hudson (ed.), The
|
||
Is-Ought Question, London, 1969; for the view that the fact-value dichotomy is an ill-conceived idea cf.
|
||
the natural rights literature cited in note 4 above.
|
||
14. Writes M. N. Rothbard in The Ethics of Liberty, Atlantic Highlands, 1982, p.32: “Now, any person
|
||
participating in any sort of discussion, including one on values, is, by virtue of so participating, alive and
|
||
affirming life. For if he were really opposed to life he would have no business in such a discussion,
|
||
indeed he would have no business continuing to be alive. Hence, the supposed opponent of life is really
|
||
affirming it in the very process of discussion, and hence the preservation and furtherance of one’s life
|
||
takes on the stature of an incontestable axiom.” Cf. also D. Osterfeld, “the Natural Rights Debate” in:
|
||
Journal of Libertarian Studies, VII, I, 1983, pp.106f. [p. 237]
|
||
15. Cf. also M. N. Rothbard, The Ethics of Liberty, Atlantic Highlands, 1982, p.45.
|
||
16. On the importance of the definition of aggression as physical aggression cf. also M. N. Rothbard, The
|
||
Ethics of Liberty, Atlantic Highlands, 1982, Chapters 8-9; the same, “Law, Property Rights and
|
||
Pollution,” in: Cato Journal, Spring 1982, esp. pp. 60-63.
|
||
17. On the idea of structural violence as distinct from physical violence cf. D. Senghaas (ed.), Imperialismus
|
||
und strukturelle Gewalt, Frankfurt/M., 1972.
|
||
The idea of defining aggression as an invasion of property values also underlies the theories of
|
||
justice of both J. Rawls and R. Nozick, however different these two authors may have appeared to be to
|
||
many commentators. For how could he think of his so-called difference-principle—“Social and economic
|
||
inequalities are to be arranged so that they are . . . reasonably expected to be to everyone’s—including
|
||
the least advantaged one’s—ad-vantage or benefit” (J. Rawis, A Theory of Justice, Cambridge, 1971,
|
||
pp. 60-83; see also pp.75ff)—as justified unless Rawls believes that simply by increasing his relative
|
||
wealth a more fortunate person commits an aggres sion, and a less fortunate one then has a valid claim
|
||
against the more fortunate person only because the former’s relative position in terms of value has
|
||
deteriorated?! And how could Nozick claim it to be justifiable for a “dominant protection agency” to
|
||
outlaw competitors, regardless of what their actions would have been like (R. Nozick, Anarchy, State
|
||
and Utopia, New York, 1974, pp.55f)? Or how could he believe it to be morally correct to outlaw
|
||
so-called nonproductive exchanges, i.e., exchanges where one party would be better off if the other one
|
||
did not exist at all, or at least had nothing to do with it (as, for instance, in the case of a blackmailee and a
|
||
blackmailer), regardless of whether or not such an exchange involved physical invasion of any kind
|
||
(ibid., pp. 83-86), unless he thought that the right existed to have the integrity of one’s property values
|
||
(rather than its physical integrity) preserved?! For a devastating critique of Nozick’s theory in particular
|
||
cf. M. N. Rothbard, The Ethics of Liberty, Atlantic Highlands, 1982, Chapter 29; on the fallacious use of
|
||
the indifference curve analysis, employed both by Rawls and Nozick, cf. the same, “Toward a
|
||
Reconstruction of Utility and Welfare Economics,” Center for Libertarian Studies, Occasional Paper
|
||
No. 3, New York, 1977.
|
||
18. Cf. also M. N. Rothbard, The Ethics of Liberty, Atlantic Highlands, 1982, p.46. [p. 238]
|
||
19. For an awkward philosophical attempt to justify a late-comer ethic cf. J. Rawls, A Theory of Justice,
|
||
Cambridge, 1971, pp.284ff; J. Sterba, The Demands of Justice, Notre Dame, 1980, esp. pp.58ff,
|
||
pp.137ff; On the absurdity of such an ethic cf. M. N. Rothbard, Man, Economy and State, Los
|
||
Angeles, 1972, p.427.
|
||
20. It should be noted here, too, that only if property rights are conceptualized as private property rights
|
||
originating in time, does it then become possible to make contracts. Clearly enough, contracts are
|
||
agreements between enumerable physically independent units which are based on the mutual recognition
|
||
of each contractor’s private ownership claims to things acquired prior to the agreement, and which then
|
||
concern the transfer of property titles to definite things from a specific prior to a specific later owner. No
|
||
such thing as contracts could conceivably exist in the framework of a late-comer ethic! [p. 239]
|
||
Chapter 8
|
||
1. On the difference between institutional aggression committed by the state as the very incorporation of
|
||
socialism and common, criminal action cf. L. Spooner, No Treason, Colorado Springs, 1973, pp. 19-20.:
|
||
.”..the government, like a highwayman, says to a man: “Your money, or your life.” And many, if not
|
||
most, taxes are paid under the compulsion of that threat. 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 any 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 travellers, 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 of more money as
|
||
often as he finds it for his interest or pleasure to do so; and by brandishing 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.
|
||
The proceedings of those robbers and murderers, who call themselves “the government,” are directly the
|
||
opposite of these of the “single highwayman.”
|
||
2. On the theory of the state cf. M. N. Rothbard, “The Anatomy of the State,” in: the same,
|
||
Egalitarianism As A Revolt Against Nature, Washington, 1974; For A New Liberty, New York, 1978;
|
||
and The Ethics of Liberty, Atlantic Highlands, 1982; H. H. Hoppe, Eigentum, Anarchie und Staat,
|
||
Opladen, 1987; cf. also A. Herbert, The Right and Wrong of Compulsion by the State (ed. E. Mack),
|
||
Indianapolis, 1978; H. Spencer, Social Statics, London, 1851; F. Oppenheimer, The State, New York,
|
||
1926; A. J. Nock, Our Enemy, the State, [p. 240] Delevan, 1983; cf. also J. Schumpeter’s remark
|
||
directed against then as now prevalent views, notably among economists, that “the theory which
|
||
construes taxes on the analogy of club dues or the purchase of a service of, say, a doctor only
|
||
proves how far removed this part of the social sciences is from scientific habits of minds” (J.
|
||
Schumpeter, Capitalism, Socialism and Democracy, New York, 1942, p. 198).
|
||
3. In addition, the use of at least some weaponry, such as atomic bombs, against one’s subjects would be
|
||
prohibitive, since the rulers could hardly prevent that they themselves would be hurt or killed by it, too.
|
||
4. D. Hume, Essays, Moral, Political and Literary, Oxford, 1971, p.19; cf. also E. de La Boetie, The
|
||
Politics of Obedience: The Discourse of Voluntary Servitude, New York, 1975.
|
||
5. The classical exposition of the idea that in the “state of nature” no distinction between “just” and “unjust”
|
||
can be made and that only the state creates justice is to be found in T. Hobbes, Leviathan, Oxford, 1946.
|
||
That this “positivistic” theory of la w is untenable has been implicitly demonstrated in Chapter 7 above. In
|
||
addition, it should be noted that such a theory does not even succeed in doing what it is supposed to do: in
|
||
justifying the state. Because the transition from the state of nature to a statist system can of course only
|
||
be called justified (as opposed to arbitrary) if natural (pre- statist) norms exist that are the justificatory
|
||
basis for this very transition.
|
||
For modern positivists cf. G. Jellinek, Allgemeine Staatslehre, Bad Homburg, 1966; H. Kelsen,
|
||
Reine Rechtslehre, Wien, 1976; for a critique of legal positivism cf. F. A. Hayek, Law, Legislation and
|
||
Liberty, 3 vols., Chicago, 1973-79.
|
||
6. For the classical exposition of this view of politics cf. N. Machiavelli, The Prince, Harmondsworth, 1961;
|
||
cf. also Q. Skinner, The Foundations of Modern Political Thought, Cambridge, 1978.
|
||
7. Cf. on this and the following, M. N. Rothbard, Power and Market, Kansas City, 1977, pp. 182f.
|
||
8. On the role of the intellectuals and teachers as advocates of socialism and statism cf. B. de Jouvenel,
|
||
“The Treatment of Capitalism by Continental Intellectuals,” in: F.A. Hayek, Capitalism and the
|
||
Historians, Chicago, 1954; L. v. Mises, The Anti- Capitalist Mentality, South Holland, 1972. [p. 241]
|
||
9. On a free market monetary system and the effects of government intervention on this system cf. R. Paul
|
||
and L. Lehrman, The Case For Gold, San Francisco, 1983, Chapters 2, 3; M. N. Rothbard, What Has
|
||
Government Done to Our Money?, Novato, 1973.
|
||
10. On the problem of a free market production of law and order cf. Chapter 10 below.
|
||
11. Cf. on this also Chapter 5, n. 4.
|
||
12. On this point cf. also Chapter 10 below.
|
||
13. F. Oppenheimer, System der Soziologie, VoL II, Der Staat, Stuttgart, 1964. Oppenheimer sums up the
|
||
peculiar, discriminatory character of state-provided goods, in particular of its production of law and order,
|
||
in this way (pp.322-323): ‘the basic norm of the state is power. That is, seen from the side of its origin:
|
||
violence transformed into might. Violence is one of the most powerful forces shaping society, but is not
|
||
itself a form of social interaction. It must become law in the positive sense of this term, that is,
|
||
sociologically speaking, it must permit the development of a system of ‘subjective reciprocity’: and this is
|
||
only possible through a system of self- imposed restrictions on the use of violence and the assumption of
|
||
certain obligations in exchange for its arrogated rights. In this way violence is turned into might, and a
|
||
relationship of domination emerges which is accepted not only by the rulers, but under not too severely
|
||
oppressive circumstances by their subjects as well, as expressing a ‘just reciprocity.’ Out of this basic
|
||
norm secondary and tertiary norms now emerge as implied in it: norms of private law, of inheritance,
|
||
criminal, obligational, and constitutional law, which all bear the mark of the basic norm of power and
|
||
domination, and which are all designed to influence the structure of the state in such a way as to increase
|
||
economic exploitation to the maximum level which is compatible with the continuation of legally regulated
|
||
domination.” The insight is fundamental that “law grows out of two essentially different roots ( . . . ): on
|
||
the one hand, out of the law of the association of equals, which can be called a ‘natural’ right, even if it is
|
||
no ‘natural right,’ and on the other hand, out of the law of violence transformed into regulated might, the
|
||
law of unequals.”
|
||
14. Only the fact that democracy has become a sacred cow in modern politics can explain why the extent to
|
||
which the idea of majority rule is ridden [p. 242] with inner contradictions is almost generally overlooked:
|
||
first, and this is already decisive, if one accepts democracy as justified, then one would also have to
|
||
accept a democratic abolishment of democracy and a substitution of either an autocracy or a libertarian
|
||
capitalism for democracy—and this would demonstrate that democracy as such cannot be regarded as a
|
||
moral value. In the same way it would have to be accepted as justified if majorities decided to eliminate
|
||
minorities until the point at which there were only two people, the last majority, left, for which majority
|
||
rule could no longer be applied, for logico-arithmetic reasons. This would prove once again that
|
||
democracy cannot in itself be regarded as justifiable. Or, if one did not want to accept these
|
||
consequences and instead adopted the idea of a constitutionally limited, liberal democracy, one would at
|
||
the same time have to admit that the principles from which these limitations are derived must then be
|
||
logically more fundamental than the majority rule—and this again would point to the fact that there can
|
||
be nothing of particular moral value in democracy. Second, by accepting majority rule it is not
|
||
automatically clear what the population is to which it should be applied. (The majority of which
|
||
population is to decide?) Here there are exactly three possibilities. Either one applies the democratic
|
||
principle once again with regard to this question, and decides to opt for the idea that greater majorities
|
||
should always prevail over smaller ones—but then, of course, there would be no way of saving the idea
|
||
of national or regional democracy, as one would have to choose the total, global population as one’s
|
||
group of reference. Or, one decides that determining the population is an arbitrary matter—but in this
|
||
case, one would have to accept the possibility of increasingly smaller minorities seceding from larger
|
||
ones, with every individual being his own self-determining majority, as the logical end point of such a
|
||
process of secession—and once again the unjustifiability of democracy as such would have been
|
||
demonstrated. Third, one could adopt the idea that selecting the population to which the majority principle
|
||
is applied is neither done democratically nor arbitrarily, but somehow differently—but then again, one
|
||
would have to admit that whatever this different principle that would justify such a decision might be, it
|
||
must be more fundamental than the majority rule itself, and majority rule in itself must be classified as
|
||
completely arbitrary. Cf. on this M. N. Rothbard Power and Market, Kansas City, 1977, pp. 189ff., H.
|
||
H. Hoppe, Eigentum, Anarchie und Staat, Opladen, 1987, Chapter 5.
|
||
15. B. de Jouvenel, On Power, New York, 1949, pp. 9-10; on the social psychology of democracy cf. also
|
||
the same, On Sovereignty, Cambridge, 1957; G. Mosca, The Ruling Class, New York, 1939; H. A.
|
||
Mencken, Notes on Democracy, New York, 1926; on the tendency of democratic rule to “degenerate”
|
||
to oligarchic rule cf. R. Michels, Zur Soziologie des Parteiwesens [p. 243] in der modernen
|
||
Demokratie, Stuttgart, 1957.
|
||
16. Cf. on this process, R. Bendix, Kings or People, Berkeley, 1978.
|
||
17. On the fundamental difference between private business organizations and the state cf. L. v. Mises,
|
||
Bureaucracy, New Haven, 1944.
|
||
18. L. Spooner describes the supporters of the state as falling into two categories: “1. Knaves, a numerous
|
||
and active class, who see in the government an instrument which they can use for their own
|
||
aggrandizement or wealth. 2. Dupes—a large class, no doubt—each of whom, because he is allowed one
|
||
voice out of millions in deciding what he may do with his own person and his own property, and because
|
||
he is permitted to have the same voice in robbing, enslaving, and murdering others, that others have in
|
||
robbing, enslaving and murdering himself, is stupid enough to imagine that he is a ‘free man,’ a
|
||
‘sovereign,’ that this is a ‘free government,’ ‘the best government on earth,’ and such like absurdities” (L
|
||
Spooner, No Treason. The Constitution of No Authority, Colorado Springs, 1973, p. 18).
|
||
19. Writes E. de la Boetie (The Politics of Obedience: The Discourse of Voluntary Servitude, New
|
||
York, 1975, pp. 52-53): “He who domineers over you . . . has indeed nothing more than the power that
|
||
you confer upon him to destroy you . . . . Resolve to serve no more, and you are at once freed. I do not
|
||
ask that you place hands upon the tyrant to topple him over, but simply that you support him no longer;
|
||
then you will behold him, like a great Colossus whose pedestal has been pulled away, fall of his own
|
||
weight and break into pieces.”
|
||
20. On a strategy for liberty, and in particular on the importance of a libertarian movement for the
|
||
achievement of these goals, cf. M. N. Rothbard, For A New Liberty, New York, 1978, Chapter 15; and
|
||
The Ethics of Liberty, Atlantic Highlands, 1982, part 5. [p. 244]
|
||
Chapter 9
|
||
1. Cf. on this also Chapter 3 above and Chapter 10 below.
|
||
2. On the function of profit and loss cf. L. v. Mises, Human Action, Chicago, 1966, Chapter 15; and “Profit
|
||
and Loss,” in: the same, Planning for Freedom, South Holland, 1974; M. N. Rothbard, Man, Economy
|
||
and State, Los Angeles, 1970, Chapter 8.
|
||
3. On the economics of government cf., esp. M. N. Rothbard, Power and Market, Kansas City, 1977,
|
||
Chapter 5.
|
||
4. Regarding democratically controlled allocations, various deficiencies have become quite evident. For
|
||
instance J. Buchanan and R. Wagner write (The Consequences of Mr. Keynes, London, 1978, p. 19),
|
||
“Market competition is continuous; at each purchase, a buyer is able to select among competing sellers.
|
||
Political competition is intermittent; a decision is binding generally for a fixed number of years. Market
|
||
competition allows several competitors to survive simultaneously . . . . Political competition leads to an
|
||
all-or-nothing outcome . . . . in market competition the buyer can be reasonably certain as to just what it
|
||
is that he will receive from his purchase. In political competition, the buyer is in effect purchasing the
|
||
services of an agent, whom he cannot bind . . . . Moreover, because a politician needs to secure the
|
||
cooperation of a majority of politicians, the meaning of a vote for a politician is less clear than that of a
|
||
‘vote’ for a private firm.” (Cf. on this also J. Buchanan, “Individual Choice in Voting and the Market,” in:
|
||
the same, Fiscal Theory and Political Economy, Chapel Hill, 1962; for a more general treatment of the
|
||
problem J. Buchanan and G. Tullock, The Calculus of Consent, Ann Arbor, 1962.)
|
||
What has commonly been overlooked, though—especially by those who try to make a virtue of
|
||
the fact that a democracy gives equal voting power to everyone, whereas consumer sovereignty allows
|
||
for unequal “votes”—is the most important deficiency of all: that under a system of consumer
|
||
sovereignty people might cast unequal votes but, in any case, they exercise control exclusively over
|
||
things which they acquired through original appropriation or contract and hence are forced to act morally.
|
||
Under a democracy of production everyone is assumed to have something to say regarding things one did
|
||
not so acquire, and hence one is permanently invited thereby not only to create legal instability with all its
|
||
negative effects [p. 245] on the process of capital formation, but, moreover, to act immorally. Cf. on this
|
||
also L. v. Mises, Socialism, Indianapolis, 1981, Chapter 31; also cf. Chapter 8 above.
|
||
5. M. N. Rothbard, Power and Market, Kansas City, 1977, p. 176.
|
||
6. This is a very generous assumption, to be sure, as it is fairly certain that the so- called public sector of
|
||
production attracts a different type of person from the very outset and boasts an unusually high number
|
||
of inefficient, lazy, and incompetent people.
|
||
7. Cf. L. v. Mises, Bureaucracy, New Haven, 1944; Rothbard, Power and Market, Kansas City, 1977,
|
||
pp. 172ff; and For A New Liberty New York, 1978, Chapter 10; also M. and R. Friedman, The Tyranny
|
||
of the Status Quo, New York, 1984, pp. 35-51.
|
||
8. On the following cf. L. v. Mises, Human Action, Chicago, 1966, Chapter 23.6; M.N. Rothbard, Man
|
||
Economy and State, Los Angeles, 1970, Chapter 7, esp. 7.4-6; “Conservation in the Free Market,” in:
|
||
Egalitarianism As A Revolt Against Nature, Washington, 1974; and For A New Liberty, New York,
|
||
1978, Chapter 13.
|
||
9. On this and the following cf. L. v. Mises, Socialism, Indianapolis, 1981, part 3.2.
|
||
10. Thus states J. W. McGuire, Business and Society, New York, 1963, pp. 38-39: “From 1865 to 1897,
|
||
declining prices year after year made it difficult for businessmen to plan for the future. In many areas
|
||
new railroad links had resulted in a nationalization of the market east of the Mississippi, and even small
|
||
concerns in small towns were forced to compete with other, often larger firms located at a distance. At
|
||
the same time there were remarkable advances in technology and productivity. In short it was a
|
||
wonderful era for the consumer and a frightful age for the producers especially as competition became
|
||
more and more severe.”
|
||
11. Cf. on this G. Kolko, The Triumph of Conservatism, Chicago, 1967; and Railroads and Regulation,
|
||
Princeton, 1965; J. Weinstein, The Corporate /deal in the Liberal State, Boston, 1968; M. N. Rothbard
|
||
and R. Radosh (eds.), A New History of Leviathan, New York, 1972. [p. 246]
|
||
12. G. Kolko, The Triumph of Conservatism, Chicago, 1967, pp.4-5; cf. also the investigations of M. Olson,
|
||
The Logic of Collective Action, Cambridge, 1965, to the effect that mass organizations (in particular
|
||
labor unions), too, are not market phenomena but owe their existence to legislative action.
|
||
13. On the following cf. L. v. Mises, Socialism, Indianapolis, 1981, part 3.2; and Human Action, Chicago,
|
||
1966, Chapters 25-26; M. N. Rothbard, Man, Economy and State, Los Angeles, 1970, pp.544ff;
|
||
pp.585ff; and “Ludwig von Mises and Economic Calculation under Socialism,” in: L. Moss (ed.), The
|
||
Economics of Ludwig von Mises, Kansas City, 1976, pp. 75-76.
|
||
14. Cf. F. A. Hayek, Individualism and Economic Order, Chicago, 1948, esp. Chapter 9; I. Kirzner,
|
||
Competition and Entrepreneurship, Chicago, 1973.
|
||
15. Regarding large-scale ownership, in particular of land, Mises observes that it is normally only brought
|
||
about and upheld by nonmarket forces: by coercive violence and a state-enforced legal system outlawing
|
||
or hampering the selling of land. “Nowhere and at no time has the large scale ownership of land come
|
||
into being through the working of economic forces in the market. Founded by violence, it has been upheld
|
||
by violence and that alone. As soon as the latifundia are drawn into the sphere of market transactions
|
||
they begin to crumble, until at last they disappear completely . . . . That in a market economy it is difficult
|
||
even now to uphold the latifundia, is shown by the endeavors to create legislation institutions like the
|
||
‘Fideikommiss’ and related legal institutions such as the English ‘entail’ . . . . Never was the ownership
|
||
of the means of production more closely concentrated than at the time of Pliny, when half the province of
|
||
Africa was owned by six people, or in the day of the Merovingian, when the church possessed the
|
||
greater part of all French soil. And in no part of the world is there less large-scale land ownership than in
|
||
capitalist North America,” Socialism, Indianapolis, 1981, pp.325326.
|
||
16. Cf. on the following in M. N. Rothbard, Man, Economy and State, Los Angeles, 1970, Chapter 10, esp.
|
||
pp.586ff; also W. Block, “Austrian Monopoly Theory. A Critique,” in: Journal of Libertarian Studies,
|
||
1977.
|
||
17. L.v. Mises, Human Action, Chicago, 1966, p.359; cf. also any current textbook, such as P. Samuelson,
|
||
Economics, New York, 1976, p.500. [p. 247]
|
||
18. Cf. M. N. Rothbard, Man, Economy and State, Los Angeles, 1970, Chapter 10, esp. pp.604-614.
|
||
19. M. N. Rothbard, Man, Economy and State, Los Angeles, 1970, p.607.
|
||
20. L.v. Mises, “Profit and Loss,” in: Planning for Freedom, South Holland, 1974, p.116.
|
||
21. In fact, historically, governmental anti-trust policy has almost exclusively been a practice of providing less
|
||
successful competitors with the legal tools needed to hamper the operation of their more successful
|
||
rivals. For an impressive assembly of case studies to this effect cf. D. Armentano, Antitrust and
|
||
Monopoly, New York, 1982; also Y. Brozen, Is Government the Source of Monopoly? And Other
|
||
Essays, San Francisco, 1980. [p. 248]
|
||
Chapter 10
|
||
1. G. de Molinari, “The Production of Security,” Center for Libertarian Studies, Occasional Paper No. 2,
|
||
New York, 1977, p.3.
|
||
2. Ibid., p.4.
|
||
3. For various approaches of public goods theorists cf. J. Buchanan and G. Tullock, The Calculus of
|
||
Consent, Ann Arbor, 1962; J. Buchanan, The Public Finances, Homewood, 1970; and The Limits of
|
||
Liberty, Chicago, 1975; G. Tullock, Private Wants, Public Means, New York, 1970; M. Olson, The
|
||
Logic of Collective Action, New York, 1965; W. Baumol, Welfare Economics and the Theory of the
|
||
State, Cambridge, 1952.
|
||
4. Cf. on the following M. N. Rothbard, Man, Economy and State, Los Angeles, 1970, pp.883ff; and “The
|
||
Myth of Neutral Taxation,” in: Cato Journal, 1981; W. Block, “Free Market Transportation:
|
||
Denationalizing the Roads,” in: Journal of Libertarian Studies, 1979; and “Public Goods and
|
||
Externalities: The Case of Roads,” in: Journal of Libertarian Studies, 1983.
|
||
5. Cf. for instance, W. Baumol and A. Blinder, Economics, Principles and Policy, New York, 1979,
|
||
Chapter 31.
|
||
6. Another frequently used criterion for public goods is that of “non-rival-rous consumption.” Generally,
|
||
both criteria seem to coincide: when free riders cannot be excluded, nonrivalrous consumption is possible;
|
||
and when they can be excluded, consumption becomes rivalrous, or so it seems. However, as public
|
||
goods theorists argue, this coincidence is not perfect. It is, they say, conceivable that while the exclusion
|
||
of free riders might be possible, their inclusion might not be connected with any additional cost (the
|
||
marginal cost of admitting free riders is zero, that is), and that the consumption of the good in question by
|
||
the additionally admitted free rider will not necessarily lead to a subtraction in the consumption of the
|
||
good avail able to others. Such a good would be a public good, too. And since exclusion would be
|
||
practiced on the free market and the good would not become available for nonrivalrous consumption to
|
||
everyone it otherwise could—even though this would require no additional costs—this, according to
|
||
statist- socialist logic, would prove a market failure, i.e., a suboptimal level [p. 249] of consumption.
|
||
Hence, the state would have to take over the provision of such goods. (A movie theater, for instance,
|
||
might only be half-full, so it might be “costless” to admit additional viewers free of charge, and their
|
||
watching the movie also might not affect the paying viewers; hence the movie would qualify as a public
|
||
good. Since, however, the owner of the theater would be engaging in exclusion, instead of letting free
|
||
riders enjoy a “costless” performance, movie theaters would be ripe for nationalization.) On the
|
||
numerous fallacies involved in defining public goods in terms of nonrivalrous consumption cf. notes 12
|
||
and 16 below.
|
||
7. Cf. on this W. Block, “Public Goods and Externalities,” in: Journal of Libertarian Studies, 1983.
|
||
8. Cf. for instance, J. Buchanan, The Public Finances, Homewood, 1970, p.23; P. Samuelson, Economics,
|
||
New York, 1976, p.160.
|
||
9. Cf. R. Coase, “The Lighthouse in Economics,” in: Journal of Law and Economics, 1974.
|
||
10. Cf. for instance, the ironic case that W. Block makes for socks being public goods in “Public Goods and
|
||
Externalities,” in: Journal of Libertarian Studies, 1983.
|
||
11. To avoid any misunderstanding here, every single producer and every association of producers making
|
||
joint decisions can, at any time, decide whether or not to produce a good based on an evaluation of the
|
||
privateness or publicness of the good. In fact, decisions on whether or not to produce public goods
|
||
privately are constantly made within the framework of a market economy. What is impossible is to
|
||
decide whether or not to ignore the outcome of the operation of a free market based on the assessment
|
||
of the degree of privateness or publicness of a good.
|
||
12. In fact, then, the introduction of the distinction between private and public goods is a relapse into the
|
||
presubjectivist era of economics. From the point of view of subjectivist economics no good exists that
|
||
can be categorized objectively as private or public. This, essentially, is why the second proposed criterion
|
||
for public goods, i.e., permitting nonrivalrous consumption (cf. note 6 above), breaks down, too. For how
|
||
could any outside observer determine whether or not the admittance of an additional free rider at no
|
||
charge would not indeed lead to a reduction in the enjoyment of [p. 250] a good by others?! Clearly,
|
||
there is no way that he could objectively do so. In fact, it might well be that one’s enjoyment of a movie
|
||
or driving on a rood would be considerably reduced if more people were allowed in the theater or on the
|
||
rood. Again, to find out whether or not this is the case one would have to ask every individual—and not
|
||
everyone might agree. (What then?) Furthermore, since even a good that allows nonrivalrous
|
||
consumption is not a free good, as a consequence of admitting additional free riders “crowding” would
|
||
eventually occur, and hence everyone would have to be asked about the appropriate “margin.” In
|
||
addition, my consumption may or may not be affected, depending on who it is that is admitted free of
|
||
charge, so I would have to be asked about this, too. And finally, everyone might change his opinion on all
|
||
of these questions over time. It is thus in the same way impossible to decide whether or not a good is a
|
||
candidate for state (rather than private) production based on the criterion of nonrivalrous consumption as
|
||
on that of nonexcludability. (Cf. also note 16 below).
|
||
13. Cf. P. Samuelson, “The Pure Theory of Public Expenditure,” in: Review of Economics and Statistics,
|
||
1954; and Economics, New York, 1976, Chapter 8; M. Friedman, Capitalism and Freedom, Chicago,
|
||
1962, Chapter 2; F. A. Hayek, Law, Legislation and Liberty, vol. 3, Chicago, 1979, Chapter 14.
|
||
14. In recent years economists, in particular of the so-called Chicago-school, have been increasingly
|
||
concerned with the analysis of property rights (cf. H. Demsetz, ‘9"he Exchange and Enforcement of
|
||
Property Rights,” in: Journal of Law and Economics, 1964; and ‘Toward a Theory of Property Rights,”
|
||
in: American Economic Review, 1967; R. Coase, ‘The Problem of Social Cost,” in: Journal of Law and
|
||
Economics, 1960; A. Alchian, Economic Forces at Work, Indianapolis, 1977, part 2; R. Posner,
|
||
Economic Analysis of Law, Boston, 1977). Such analyses, however, have nothing to do with ethics. On
|
||
the contrary, they represent attempts to substitute economic efficiency considerations for the
|
||
establishment of justifiable ethical principles (on the critique of such endeavors cf. M. N. Rothbard, The
|
||
Ethics of Liberty, Atlantic Highlands 1982, Chapter 26; W. Block, “Coase and Demsetz on Private
|
||
Property Rights,” in: Journal of Libertarian Studies, 1977; R. Dworkin, “Is Wealth a Value,” in:
|
||
Journal of Legal Studies, 1980; M. N. Rothbard, “The Myth of Efficiency,” in: M. Rizzo (ed.), Time,
|
||
Uncertainty, and Disequilibrium, Lexington, 1979). Ultimately, all efficiency arguments are irrelevant
|
||
because there simply exists no nonarbitrary way of measuring, weighing, and aggregating individual
|
||
utilities or disutilities that result from some given allocation of property rights. Hence, any attempt to
|
||
recommend some particular system of assigning property rights in terms of its alleged maximization of
|
||
“social welfare” is pseudo-scientific humbug (see [p. 251] in particular, M. N. Rothbard, ‘Toward a
|
||
Reconstruction of Utility and Welfare Economics,” Center for Libertarian Studies, Occasional Paper No.
|
||
3, New York, 1977; also, L. Robbins, “Economics and Political Economy,” in: American Economic
|
||
Review, 1981 ).
|
||
The “Unanimity Principle” which J. Buchanan and G. Tullock, following K. Wicksell
|
||
(Finanztheoretische Untersuchungen, Jena, 1896), have repeatedly proposed as a guide for economic
|
||
policy is also not to be confused with an ethical principle proper. According to this principle only such
|
||
policy changes should be enacted which can find unanimous consent—and that surely sounds attractive;
|
||
but then, mutatis mutandis, it also determines that the status quo be preserved if there is less than
|
||
unanimous agreement on any proposal of change—and that sounds far less attractive because it implies
|
||
that any given, present state of affairs regarding the allocation of property rights must be legitimate either
|
||
as a point of departure or as a to-be-continued state. However, the public choice theorists offer no
|
||
justification in terms of a normative theory of property rights for this daring claim as would be required.
|
||
Hence, the unanimity principle is ultimately without ethical foundation. In fact, because it would legitimize
|
||
any conceivable status quo, the Buchananites most favored principle is no less than outrightly absurd as a
|
||
moral criterion (cf. on this also M. N. Rothbard, The Ethics of Liberty, Atlantic Highlands, 1982,
|
||
Chapter 26; and “The Myth of Neutral Taxation,” in: Cato Journal, 1981, pp.549f).
|
||
Whatever might still be left for the unanimity principle, Buchanan and Tullock, following the lead
|
||
of Wicksell again, then give away by reducing it in effect to one of “relative” or “quasi” unanimity.
|
||
15. Cf. on this argument M. N. Rothbard, “The Myth of Neutral Taxation,” in: Cato Journal, 1981, p.533.
|
||
Incidentally, the existence of one single anarchist also invalidates all references to Paretooptimality as a
|
||
criterion for economically legitimate state action.
|
||
16. Essentially the same reasoning that leads one to reject the socialist-statist theory built on the allegedly
|
||
unique character of public goods as defined by the criterion of nonexcludability, also applies when
|
||
instead, such goods are defined by means of the criterion of nonrivalrous consumption (cf. notes 6 and 12
|
||
above). For one thing, in order to derive the normative statement that they should be so offered from the
|
||
statement of fact that goods which allow nonrivalrous consumption would not be offered on the free
|
||
market to as many consumers as could be, this theory would face exactly the same problem of requiring
|
||
a justifiable ethics. Moreover, the utilitarian reasoning is blatantly wrong, too. To reason, as the public
|
||
goods theorists do, that the free-market practice of excluding free riders from the [p. 252] enjoyment of
|
||
goods which would permit nonrivalrous consumption at zero marginal costs would indicate a suboptimal
|
||
level of social welfare and hence would require compensatory state action is faulty on two related
|
||
counts. First, cost is a subjective category and can never be objectively measured by any outside
|
||
observer. Hence, to say that additional free riders could be admitted at no cost is totally inadmissible. In
|
||
fact, if the subjective costs of admitting more consumers at no charge were indeed zero, the private
|
||
owner-producer of the good in question would do so. If he does not do so, this reveals that to the
|
||
contrary, the costs for him are not zero. The reason for this may be his belief that to do so would reduce
|
||
the satisfaction available to the other consumers and so would tend to depress the price for his product;
|
||
or it may simply be his dislike for uninvited free riders as, for instance, when I object to the proposal that
|
||
I turn over my less-than-capacity-filled living room to various self- inviting guests for nonrivalrous
|
||
consumption. In any case, since for whatever reason the cost cannot be assumed to be zero, it is then
|
||
fallacious to speak of a market failure when certain goods are not handed out free of charge. On the
|
||
other hand, wel fare losses would indeed become unavoidable if one accepted the public goods theorists’
|
||
recommendation of letting goods that allegedly allow for nonrivalrous consumption to be provided free of
|
||
charge by the state. Besides the insurmountable task of determining what fulfills this criterion, the state,
|
||
independent of voluntary consumer purchases as it is, would first face the equally insoluble problem of
|
||
rationally determining how much of the public good to provide. Clearly, since even public goods are not
|
||
free goods but are subject to “crowding” at some level of use, there is no stopping point for the state,
|
||
because at any level of supply there would still be users who would have to be excluded and who, with a
|
||
larger supply, could enjoy a free ride. But even if this problem could be solved miraculously, in any case
|
||
the (necessarily inflated) cost of production and operation of the public goods distributed free of charge
|
||
for nonrivalrous consumption would have to be paid for by taxes. And this then, i.e., the fact that
|
||
consumers would have been coerced into enjoying their free rides, again proves beyond any doubt that
|
||
from the consumers’ point of view these public goods, too, are inferior in value to the competing private
|
||
goods that they now no longer can acquire.
|
||
17. The most prominent modern champions of Orwellian double talk are J. Buchanan and G. Tullock (cf.
|
||
their works cited in note 3 above). They claim that government is founded by a “constitutional contract”
|
||
in which everyone “conceptually agrees” to submit to the coercive powers of government with the
|
||
understanding that everyone else is subject to it, too. Hence, government is only seemingly coercive but
|
||
really voluntary. There are several evident [p. 253] objections to this curious argument. First, there is no
|
||
empirical evidence whatsoever for the contention that any constitution has ever been voluntarily accepted
|
||
by everyone concerned. Worse, the very idea of all people voluntarily coercing themselves is simply
|
||
inconceivable, much in the same way that it is inconceivable to deny the law of contradiction. For if the
|
||
voluntarily accepted coercion is voluntary, then it would have to be possible to revoke one’s subjection to
|
||
the constitution and the state would be no more than a voluntarily joined club. If, however, one does not
|
||
have the “right to ignore the state”—and that one does not have this right is, of course, the characteristic
|
||
mark of a state as compared to a club—then it would be logically inadmissible to claim that one’s
|
||
acceptance of state coercion is voluntary. Furthermore, even if all this were possible, the constitutional
|
||
contract could still not claim to bind anyone except the original signers of the con stitution.
|
||
How can Buchanan and Tullock come up with such absurd ideas? By a semantic trick. What
|
||
was “inconceivable” and “no agreement” in pre- Orwellian talk is for them “conceptually possible” and a
|
||
“conceptual agreement.” For a most instructive short exercise in this sort of reasoning in leaps and
|
||
bounds cf. J. Buchanan, “A Contractarian Perspective on Anarchy,” in: Freedom in Constitutional
|
||
Contract, College Station, 1977. Here we learn (p. 17) that even the acceptance of the 55 m.p.h, speed
|
||
limit is possibly voluntary (Buchanan is not quite sure), since it ultimately rests on all of us conceptually
|
||
agreeing on the constitution, and that Buchanan is not really a statist, but in truth an anarchist (p. 11).
|
||
18. M. N. Rothbard, Man, Economy and State, Los Angeles, 1970, p.887.
|
||
19. This, first of all, should be kept in mind whenever one has to assess the validity of statist-interventionist
|
||
arguments such as the following, by J. M. Keynes (“The End of Laissez Faire,” in: J. M. Keynes,
|
||
Collected Writings, London 1972, vol. 9, p.291): “The most important Agenda of the state relate not to
|
||
those activities which private individuals are already fulfilling but to those functions which fall outside the
|
||
sphere of the individual, to those decisions which are made by no one if the state does not make them.
|
||
The important thing for government is not to do things which individuals are doing already and to do them
|
||
a little better or a little worse: but to do those things which are not done at all.” This reasoning not only
|
||
appears phony, it truly is.
|
||
20. Some libertarian minarchists object that the existence of a market presupposes the recognition and
|
||
enforcement of a common body of law, and hence a government as a monopolistic judge and
|
||
enforcement agency. [p. 254] (Cf., for instance, J. Hospers, Libertarianism, Los Angeles, 1971; T.
|
||
Machan, Human Rights and Human Liberties, Chicago, 1975.) Now, it is certainly correct that a
|
||
market presupposes the recognition and enforcement of those rules that underlie its operation. But from
|
||
this it does not follow that this task must be entrusted to a monopolistic agency. In fact, a common
|
||
language or sign-system is also presupposed by the market; but one would hardly think it convincing to
|
||
conclude that hence the government must ensure the observance of the rules of language. Just as the
|
||
system of language then, the rules of market behavior emerge spontaneously and can be enforced by the
|
||
“invisible hand” of self-interest. Without the observance of common rules of speech people could not
|
||
reap the advantages that communication offers, and without the observance of common rules of conduct,
|
||
people could not enjoy the benefits of the higher productivity of an exchange economy based on the
|
||
division of labor. In addition, as I have demonstrated in Chapter 7, independent of any government, the
|
||
rules of the market can be defended a priori as just. Moreover, as I will argue in the conclusion of this
|
||
Chapter, it is precisely a competitive system of law administration and law enforcement that generates
|
||
the greatest possible pressure to elaborate and enact rules of conduct that incorporate the highest degree
|
||
of consensus conceivable. And, of course, the very rules that do just this are those that a priori reasoning
|
||
establishes as the logically necessary presupposition of argumentation and argumentative agreement.
|
||
21. Incidentally, the same logic that would force one to accept the idea of the production of security by
|
||
private business as economically the best solution to the problem of consumer satisfaction also forces
|
||
one, as far as moral-ideological positions are concerned, to abandon the political theory of classical
|
||
liberalism and take the small but nevertheless decisive step (from there) to the theory of libertarianism, or
|
||
private property anarchism. Classical liberalism, with L. v. Mises as its foremost representative in this
|
||
century, advocates a social system based on the fundamental rules of the natural theory of property. And
|
||
these are also the rules that libertarianism advocates. But classical liberalism then wants to have these
|
||
laws enforced by a monopolistic agency (the government, the state)—an organization, that is, which is
|
||
not exclusively dependent on voluntary, contractual support by the consumers of its respective services,
|
||
but instead has the right to unilaterally determine its own income, i.e., the taxes to be imposed on
|
||
consumers in order to do its job in the area of security production. Now, however plausible this might
|
||
sound, it should be clear that it is inconsistent. Either the principles of the natural property theory are
|
||
valid, in which case the state as a privileged monopolist is immoral, or business built on and [p. 255]
|
||
around aggression—the use of force and of noncontractual means of acquiring resources—is valid, in
|
||
which case one must toss out the first theory. It is impossible to sustain both contentions and not be
|
||
inconsistent unless, of course, one could provide a principle that is more fundamental than both the
|
||
natural theory of property and the state’s right to aggressive violence and from which both, with the
|
||
respective limitations regarding the domains in which they are valid, can be logically derived. However,
|
||
liberalism never provided any such principle, nor will it ever be able to do so, since, as I demonstrated in
|
||
Chapter 7, to argue in favor of anything presupposes one’s right to be free of aggression. Given the fact
|
||
then that the principles of the natural theory of property cannot be argumentatively contested as morally
|
||
valid principles without implicitly acknowledging their validity, by force of logic one is committed to
|
||
abandoning liberalism and accepting instead its more radical child: libertarianism, the philosophy of pure
|
||
capitalism, which demands that the production of security be undertaken by private business, too.
|
||
22. Cf. on the problem of competitive security production G. de Molinad, “The Production of Security”
|
||
Center for Libertarian Studies, Occasional Paper No. 2, New York, 1977; M. N. Rothbard, Power and
|
||
Market, Kansas City, 1977, Chapter 1; and For A New Liberty, New York, 1978, Chapter 12; also:
|
||
W.C. Wooldridge, Uncle Sam the Monopoly Man, New Rochelle, 1970, Chapters 5-6; M. and L.
|
||
Tannehill, The Market for Liberty, New York, 1984, part 2.
|
||
23. Cf. M. Murck, Soziologie der oeffentlichen Sicherheit, Frankfurt/M., 1980.
|
||
24. On the deficiencies of democratically controlled allocation decisions cf. above, Chapter 9, n. 4.
|
||
25. Sums up Molinari (“Production of Security,” Center for Libertarian Studies, Occasional Paper No. 2,
|
||
New York, 1977, pp. 13-14): “If . . . the consumer is not free to buy security wherever he pleases, you
|
||
forthwith see open up a large profession dedicated to arbitrariness and bad management. Justice
|
||
becomes slow and costly, the police vexatious, individual liberty is no longer respected, the price of
|
||
security is abusively inflated and inequitably apportioned, according to the power and influence of this or
|
||
that class of consumers.” [p. 256]
|
||
26. Cf. the literature cited in note 21 above; also: B. Leoni, Freedom and the Law, Princeton, 1961; J.
|
||
Peden, “Property Rights in Celtic Irish Law,” in: Journal of Libertarian Studies, 1977.
|
||
27. Cf. T. Anderson and P. J. Hill, “The American Experiment in Anarcho- Capitalism: The Not So Wild,
|
||
Wild West,” in: Journal of Libertarian Studies, 1980.
|
||
28. Cf. on the following H. H. Hoppe, Eigentum, Anarchie und Staat, Opladen, 1987, Chapter 5.
|
||
29. Contrast this with the state’s policy of engaging in battles without having everyone’s deliberate support
|
||
because it has the right to tax people; and ask yourself if the risk of war would be lower or higher if one
|
||
had the right to stop paying taxes as soon as one had the feeling that the state’s handling of foreign
|
||
affairs was not to one’s liking!
|
||
30. And it may be noted here again that norms that incorporate the highest possible degree of consensus are,
|
||
of course, those that are presupposed by argumentation and whose acceptance makes consensus on
|
||
anything at all possible, as shown in Chapter 7.
|
||
31. Again, contrast this with state-employed judges who, because they are paid from taxes and so are
|
||
relatively independent of consumer satisfaction, can pass judgments which are clearly not acceptable as
|
||
fair by everyone; and ask yourself if the risk of not finding the truth in a given case would be lower or
|
||
higher if one had the possibility of exerting economic pressure whenever one had the feeling that a judge
|
||
who one day might have to adjudicate in one’s own case had not been sufficiently careful in assembling
|
||
and judging the facts of a case, or simply was an outright crook.
|
||
32. Cf. on the following in particular, M. N. Rothbard, For A New Liberty, New York, 1978, pp.233ff.
|
||
33. Cf. B. Bailyn, The Ideological Origins of the American Revolution, Cambridge, 1967; J. T. Main, The
|
||
Anti-Federalists: Critics of the Constitution, Chapel Hill, 1961; M. N. Rothbard, Conceived in
|
||
Liberty, 4 vols., New Rochelle, 1975-1979. [p. 257]
|
||
34. Naturally, insurance companies would assume a particularly important role in checking the emergence of
|
||
outlaw companies. Note M. and L. Tan-nehill: “Insurance companies, a very important sector of any
|
||
totally free economy, would have a special incentive to dissociate themselves from any aggressor and, in
|
||
addition, to bring all their considerable business influence to bear against him. Aggressive violence
|
||
causes value loss, and the insurance industry would suffer the major cost in most such value losses. An
|
||
unrestrained aggressor is a walking liability, and no insurance company, however remotely removed from
|
||
his original aggression, would wish to sustain the risk that he might aggress against one of its own clients
|
||
next. Besides, aggressors and those who associate with them are more likely to be involved in situations
|
||
of violence and are, thus, bad insurance risks. An insurance company would probably refuse coverage to
|
||
such people out of a foresighted desire to minimize any future losses which their aggressions might
|
||
cause. But even if the company were not motivated by such foresight, it would still be forced to raise
|
||
their premiums up drastically or cancel their coverage altogether in order to avoid carrying the extra risk
|
||
involved in their inclination to violence. In a competitive economy, no insurance company could afford to
|
||
continue covering aggressors and those who had dealings with aggressors and simply pass the cost on to
|
||
its honest customers; it would soon lose these customers to more reputable firms which could afford to
|
||
charge less for their insurance coverage.
|
||
What would loss of insurance coverage mean in a free economy?. Even if [the aggressor] could
|
||
generate enough force to protect itself against any aggressive or retaliatory force brought against it by
|
||
any factor or combination of factors, it would still have to go completely without several economic
|
||
necessities. It could not purchase insurance protection against auto accidents, natural disasters, or
|
||
contractual disputes. It would have no protection against damage suits resulting from accidents occurring
|
||
on its property. It is very possible that [it] would even have to do without the services of a fire
|
||
extinguishing company, since such companies are natural outgrowths of the fire insurance business.
|
||
In addition to the terrific penalties imposed by the business ostracism which would naturally
|
||
follow its aggressive act [it] would have trouble with its employees . . . . [For] if a defense service agent
|
||
carried out an order which involved the intentional initiation of force, both the agent and the entrepreneur
|
||
or manager who gave him the order, as well as any other employees knowledgeably involved, would be
|
||
liable for any damages caused” (M. and L. Tannehill, The Market for Liberty, New York, 1984,
|
||
pp.110-111).
|
||
35. The process of an outlaw company emerging as a state would be even [p. 258] further complicated,
|
||
since it would have to reacquire the “ideological legitimacy’ that marks the existence of the presently
|
||
existing states and which took them centuries of relentless propaganda to develop. Once this legitimacy is
|
||
lost through the experience with a pure free market system, it is difficult to imagine how it could ever be
|
||
easily regained. [p. 259]
|
||
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Trivanovitch, V. Economic Development of Germany Under National Socialism. New York,
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||
1937.
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||
Tullock, G. Private Wants, Public Means. New York, 1970.
|
||
Veatch, H. Human Rights. Fact or Fancy?. Baton Rouge, 1985.
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||
__________. For an Ontology of Morals. A Critique of Contemporary Ethical Theory.
|
||
Evanston, 1968. [p. 271]
|
||
__________. Rational Man. A Modern Interpretation of Aristotelian Ethics. Bloomington, 1962.
|
||
Vonnegut, K. Welcome to the Monkey House. New York, 1970.
|
||
Weber, M. Gesammelte Aufsaetze zur Wissenschaftslehre. Tuebingen, 1922.
|
||
Weinstein, J. The Corporate Ideal in the Liberal State. Boston, 1968.
|
||
Wellisz, S. The Economies of the Soviet Bloc. New York, 1964.
|
||
Wicksell, K. Finanztheoretische Untersuchungen. Jena, 1896.
|
||
Wild, J. Plato’s Modern Enemies and the Theory of Natural Law. Chicago, 1953.
|
||
Williams, B. “The Idea of Equality” in: Laslett/Runciman (eds.), Philosophy, Politics and Society
|
||
(2nd series). Oxford, 1962.
|
||
Willis, D. K. K/ass. How Russians Really Live. New York, 1985.
|
||
Windmoeller, E. and Hoepker, T. Leben in der DDR. Hamburg, 1976.
|
||
Wooldridge, W. C. Uncle Sam the Monopoly Man. New Rochelle, 1970.
|
||
Wright, D. Mc. C. Capitalism. New York, 1951.
|
||
__________. Democracy and Progress. New York, 1948.
|
||
Zapf, W. (ed.). Lebensbedingungen in der Bundesrepublik. Frankfurt/M., 1978. [p. 272] [p. 273]
|
||
Index
|
||
Note: A figure in parentheses following a page number indicates
|
||
the number of a reference note on that page.
|
||
Albert, H., 228 (1)
|
||
Alchian, A., 221 (20), 250 (14)
|
||
Anderson, P., 222 (2), 223 (7)
|
||
Anderson, T., 256 (27)
|
||
Andres, F., 221 (17)
|
||
Apel, K. O., 233 (5)
|
||
Armentano, D., 247 (21)
|
||
Ayer, A. J., 228 (1), 233 (1)
|
||
Badie, B., 226 (26,28)
|
||
Baechler, J., 222 (4)
|
||
Baler, K., 233 (4)
|
||
Bailyn, B., 256 (33)
|
||
Baird, C., 232 (25)
|
||
Baumol, W., 248 (3,5)
|
||
Becker, G., 214 (10)
|
||
Bendix, R., 243 (16)
|
||
Bernstein, E., 218 (3)
|
||
Birnbaum, P., 226 (26,28)
|
||
Blanshard, B., 229 (8), 230 (16), 232 (23)
|
||
Blaug, M., 228 (1)
|
||
Blinder, A., 248 (5)
|
||
Bloch, M., 222 (2)
|
||
Block, W., 246 (16), 248 (4), 249 (7,10), 250 (14)
|
||
Boehm-Bawerk, E. v., 213 (10)
|
||
Boetie, E. de I.a, 240 (4), 243 (19)
|
||
Bottomore, T., 223 (13)
|
||
Brady, R. A., 227 (31)
|
||
Bramsted, E. K., 223 (9)
|
||
Brandt, W., 62, 218 (6,7)
|
||
Bright, J., 73
|
||
Brozen, Y., 232 (24), 247 (21)
|
||
Brutzkus, B., 216 (12)
|
||
Buchanan, J. M., 212 (5), 244 (4), 248 (3), 249 (8), 251 (14), 252 (17)
|
||
Buckley, W., 225 (17)
|
||
Carey, G. W., 225 (17)
|
||
Cipolla, C. M., 217 (13)
|
||
Coase, R., 249 (9), 250 (14)
|
||
Cobden, R., 73
|
||
Demsetz, H., 250 (14)
|
||
Dicey, A. V., 224 (16)
|
||
Dingier, H., 230 (15)
|
||
Dworkin, R., 250 (14)
|
||
Erhard, L., 217 (15)
|
||
Eucken, W., 217 (15)
|
||
Evers, W., 214 (12)
|
||
Fahrenbach, H., 233 (5)
|
||
Fetter, F., 213 (10)
|
||
Feyerabend, P., 226 (7)
|
||
Fischer, W., 227 (31)
|
||
Flew, A., 219 (14)
|
||
Friedman, M., 220 (16), 226 (25), 228 (1), 232 (24), 245 (7), 250 (13)
|
||
Friedman, R., 245 (7)
|
||
Galbraith, J. K., 226 (23)
|
||
Gewirth, A., 231 (19), 233 (4), 234 (6), 235 (7)
|
||
Goldman, M. t., 218 (4), 227 (31)
|
||
Gonzales, F., 218 (6)
|
||
Greenleaf, W. H., 224 (16)
|
||
Gregory, P. R., 217 (16), 220 (15)
|
||
Habermas, J., 231 (20), 233 (5), 234 (6)
|
||
Hamel, H. v., 217 (16)
|
||
Hampshire, S., 219 (14)
|
||
Harris, M., 222 (4)
|
||
Harman, G., 233 (1)
|
||
Hayek, F. A., 216 (8), 224 (13), 227 (29), 232 (250), 240 (5,8), 246 (14), 250 (13)
|
||
Herbert, A., 239 (2)
|
||
Hill, P. J., 256 (27)
|
||
Hilton, R., 222 (2)
|
||
Hitler, A., 227 (32)
|
||
Hobbes, T., 240 (5)
|
||
Hock, W., 227 (29)
|
||
Hoepker, T., 217 (17)
|
||
Hohmann, H. H., 217 (13)
|
||
Hollis, M., 228 (4), 229 (8,11), 230 (16)
|
||
Hoppe, H. H., 215 (2), 216 (11), 228 (5), 229 (12), 230 (18), 231 (20), 232 (21), 239 (2), 242 (14), 256 (28)
|
||
Hospers, J., 254 (20)
|
||
Hudson, W. D., 236 (13)
|
||
Hume, D., 101, 150, 212 (1), 228 (5), 233 (1), 240 (4)
|
||
Hutchinson, T. W., 228 (1)
|
||
Janich, P., 230 (15) [p. 274]
|
||
Jellinek, G., 240 (5)
|
||
Jencks, C., 221 (17)
|
||
Jesse, E., 217 (16)
|
||
Jouvenel, B. de, 181, 242 (8), 242 (15)
|
||
Kaltenbrunner, G. K., 223 (13)
|
||
Kambartel, F., 230 (9,15), 231 (19), 233 (4)
|
||
Kamlah, W., 229 (9)
|
||
Kant, I., 229 (13,14), 235 (8)
|
||
Kaser, M., 217 (13)
|
||
Kautsky, K., 218 (3)
|
||
Kelsen, H., 240 (5)
|
||
Keynes, M., 253 (19)
|
||
Khrushchev, N., 211 (3)
|
||
Kirzner, I., 246 (14)
|
||
Kolakowski, L., 215 (1), 217 (1), 219 (14)
|
||
Kolko, G., 177, 245 (11), 246 (12)
|
||
Kreisky, B., 218 (6)
|
||
Kristol, I., 225 (17)
|
||
Kuhn, T. S., 228 (7)
|
||
Lakatos, I., 102, 228 (6)
|
||
Lange, 0., 218 (4)
|
||
Laslett, P., 219 (14)
|
||
Lehrman, L, 241 (9)
|
||
Lenin, V., 40
|
||
Leonhard, W., 215 (1), 218 (1)
|
||
Leonl, B., 256 (26)
|
||
Levy, M., 222 (3), 223 (8)
|
||
Locke, J., 69, 134, 214 (11), 238 (10)
|
||
Lorenzen, P., 229 (9,15), 231 (19), 232 (4)
|
||
Luehrs, G., 228 (3)
|
||
Lukes, S., 219 (14)
|
||
Machan, T., 254 (20)
|
||
Machiavelli, N., 240 (6)
|
||
MacIntyre, A., 234 (6)
|
||
Main, J. T., 256 (33)
|
||
Marx, K., 19, 97, 220 (15)
|
||
McGuire, J. W., 245 (10)
|
||
Melhuish, K. J., 223 (9)
|
||
Melsen, A. v., 230 (1 7)
|
||
Mencken, H. A., 242 (15)
|
||
Merklein, R., 221 (18)
|
||
Meyer, T., 218 (5)
|
||
Michels, R., 242 (15)
|
||
Miller, M., 217 (14)
|
||
Mises, L. v., 181, 185, 212 (4), 213 (10), 215 (2,3), 216 (6,7) 217 (15,16), 219 (9), 223 (9), 227 (29), 229 (10), 232
|
||
(22,23,26), 240 (8), 243 (17), 244 (2), 245 (4), 245 (7, 8, 9), 246 (13,15,17), 247 (20), 254 (21)
|
||
Mitterand, F., 61
|
||
Molinari, G. de, 188, 189, 198, 248 (1,2), 255 (22,25)
|
||
Morgenstern, 0., 219 (16)
|
||
Mosca, G., 242 (15)
|
||
Moss, L, 246 (13)
|
||
Murck, M., 255 (23)
|
||
Musgrave, A., 228 (6)
|
||
Nell, E., 228 (4), 229 (8,11), 230 (16)
|
||
Nisbet, R., 223 (13)
|
||
Nixon, R., 226 (22)
|
||
Nock, 239 (2)
|
||
Nove, A., 217 (12)
|
||
Nozick, R., 237 (17)
|
||
Olson, M., 246 (12)
|
||
Oppenheimer, F., 239 (2)
|
||
Osterfeld, D., 236 (14)
|
||
Pap, A., 229 (8)
|
||
Parkin, F., 220 (15)
|
||
Paul, R., 241 (9)
|
||
Peden, J., 256 (26)
|
||
Pejovich, S., 217 (14)
|
||
Pirenne, H., 222 (3), 223 (5,6)
|
||
Polanyl, K., 223 (12)
|
||
Pol Pot, 85
|
||
Popper, K. R., 96, 97, 228 (1,2)
|
||
Porreco, R., 235 (7)
|
||
Posner, P., 250 (14)
|
||
Radosh, R., 226 (27), 245 (11)
|
||
Rakowska-Harmstone, T., 217 (13)
|
||
Pawls, J., 220 (16), 237 (17), 238 (19)
|
||
Reisman, G., 83, 218 (10), 226 (23,24)
|
||
Ricardo, D., 97
|
||
Rizzo, M., 250 (14)
|
||
Robbins, L., 212 (1,4), 251 (14)
|
||
Roepke, W., 217 (15)
|
||
Rothbard, M., 170, 182, 184, 197, 212 (4), 213 (10), 219 (10,11,14), 222 (1), 226 (19), 226 (20,25,27), 236
|
||
(9,11,14), 237 (15,16,17,18), 238 (19), 239 (2), 240 (7), 241 (9), 242 (14), 243 (20), 244 (2,3), 245
|
||
(5,7,8,11), 246 (13,16), 247 (18,19), 248 (4), 250 (14), 251 (15), 253 (18), 255 (22), 255 (32,33)
|
||
Rousseau, J. J., 236 (12)
|
||
Rubner, A., 214 (10)
|
||
Runciman, W. G., 219 (14)
|
||
Samuelson, P., 246 (17), 249 (8), (13)
|
||
Schmidt, H., 62, 97
|
||
Schoeck, H., 219 (14)
|
||
Schumpeter, J., 240 (2)
|
||
Schwan, G., 218 (5), 220 (16) [p. 275]
|
||
Senghaas, D., 237 (17)
|
||
Singer, M., 231 (10), 233 (4)
|
||
Skinner, Q., 241 (6)
|
||
Smith, A., 69
|
||
Smith, H., 217 (14)
|
||
Soares, M., 218 (6)
|
||
Sombad, W., 227 (30)
|
||
Spencer, H., 239 (2)
|
||
Spooner, L, 239 (1), 243 (18)
|
||
Sterba, J., 238 (19)
|
||
Stevenson, C. L, 233 (1)
|
||
Stigler, G., 226 (25)
|
||
Strauss, L, 233 (4)
|
||
Stuart, R. C., 217 (16), 220 (15)
|
||
Szalal, A., 221 (17)
|
||
Tannehill, M. and L, 255 (22), 257 (34)
|
||
Templeton, K. S., 219 (13,14)
|
||
Tigar, M., 222 (3), 223 (8)
|
||
Thalheim, K., 217 (13,16)
|
||
Thirlby, J. F., 212 (5)
|
||
Toulmin, S., 231 (19), 233 (4)
|
||
Treue, W., 227 (31)
|
||
Trivanovitch, V., 227 (32)
|
||
Tullock, G., 244 (4), 248 (3), 251 (14), 252 (17)
|
||
Veatch, H., 233 (4), 234 (6), 235 (7), 238 (9)
|
||
Vonnegut, K., 219 (12)
|
||
Wagner, R., 244 (4)
|
||
Weber, M., 215 (2)
|
||
Weinstein, J., 245 (I I)
|
||
Wellisz, S., 217 (12)
|
||
Wicksell, K., 251 (14)
|
||
Wild, J., 233 (4)
|
||
Williams, B., 219 (14)
|
||
Willis, D. K., 217 (14)
|
||
Windmoeller, E., 217 (17)
|
||
Woolridge, W. C., 255 (22)
|
||
Wright, D. McC., 223 (11), 224 (15), 225 (18)
|
||
Zapf, W., 221 (19) |