—Joseph Schumpeter

From its beginning, the common wisdom has been that capitalism is bad. It is claimed that capitalism is ethically wrong, has bad practical consequences, and is unnecessary. But this claim is entirely false—in fact, the opposite is true: capitalism is both morally and practically optimal, and there is no other possible social arrangement compatible with modern society.

It is important to precisely define ‘capitalism’ from the outset to avoid being misunderstood. Capitalism is the free market system, based on property, contract, and voluntary exchange. In a truly free society, where people are free to live as they please, free markets are practically guaranteed to arise as the result of voluntary production and trade undertaken by people seeking to improve their conditions. In other words, capitalism is the default social system of a free society.

Much of the anti-capitalistic sentiment is aimed not at this voluntaristic conception, but at the currently existing system of state capitalism. This interventionist system is characterized by a market that is no longer free but hampered by all sorts of government restrictions, which result in many undesirable and unintended consequences. It is primarily these outcomes that the anti-capitalists—in mistakenly attributing them to free market capitalism—object to.

Morality

A widely held objection to capitalism is that it is immoral. This charge is mainly based on Marx’s claim that capitalists exploit laborers by taking as profits what properly belongs to the workers. This incredibly naive view was exploded long ago, but it persists today among those ignorant of economics—it can hardly be denied that profits are widely considered antisocial and evil.

Marxian exploitation can only exist if goods acquire their value from the labor imbued in them. But this notion—the labor theory of value—was long ago rejected and replaced by the subjectivist notion of prices being determined by the relationship between supply and demand. It turned out that the persistent profit that Marx thought was a sure sign of exploitation was in fact an interest return—compensation to the capitalist for purchasing inputs such as materials and labor up front and only collecting revenue from sales later on. In fact, if the workers wished to earn this interest return, they could arrange to be paid only once the goods are sold. The fact that they do not indicates that they prefer to forgo the interest return in favor of regular, steady pay.

As capitalism has showered the common man with wealth and eliminated mass poverty wherever freedom has existed, the anti-capitalists have resorted to accusing capitalism of corroding virtue. According to them, capitalism breeds consumerism, materialism, and selfishness. While this is manifestly not true, even if it were, what is the alternative? People can only exhibit virtue if they are free to choose so. Forced virtue is not virtue at all. Only freedom—which entails capitalism—can allow people to exhibit virtue.

Capitalism is merely the result of leaving people free to live as they please (provided that they do not infringe on the freedom of others.) If they decide to engage in mutually consensual capitalist acts, who has any right to interfere? Capitalism is the outcome of freedom: any attempts by government to curtail capitalism must do so at the expense of freedom. Capitalism and freedom share the same fate.

Economics

Another popular myth is that capitalism enriches the capitalists and impoverishes the masses. This is flatly contradicted by history—the common person has been lifted out of poverty and has gone on to become fantastically wealthy as a result of capitalistic mass production. Economic science can explain: competition among firms brings prices down to the level of costs, and it also creates strong incentives for innovation. Large scale production has brought the unit cost, and hence price, of most goods down to levels easily within the reach of the common person.

This myth is rooted in zero-sum thinking—that the gains of business come at the expense of the rest of us. But voluntary exchanges benefit both parties, otherwise the exchanges would not occur. Capitalism is positive-sum: businesses earn their incomes by competing to sell goods that consumers want. Capitalists become rich by enriching consumers with better and cheaper goods. They lose their wealth as soon as they fail to stay abreast of the competition to serve consumers.

In fact, the fruits of capitalist efforts largely accrue to workers. Increased capital investment reduces unit production costs while competition quickly eats away any profits that arise. But more capital also increases the productivity of labor, so wages get bid up by competing employers. So, while capitalists earn fleeting profits, workers enjoy a steady rise in wages. Truly, capitalism is good to the common person, both as a consumer and a worker.

Faced with these arguments, opponents of capitalism often turn around and blame capitalism for being unsustainable. Capitalism, they say, is short-sighted. It depletes the earth’s resources without concern for the future. Such arguments are totally wrong, ignoring the fact that prices serve to allocate resources through time. For example, if it was forecast that X would run out in a few years, speculators would buy lots of X now in order to sell it later at a higher price. By doing so, speculators conserve X today for use in the future. The higher present price of X would guide people to use X more efficiently and sparingly, and to find substitutes.

Necessity

Finally, for all their hatred of capitalism, the critics have no workable alternative compatible with modern living standards for the common person. The more the market is hampered by government interventions, the worse off the common person will be. And there are no non-market alternatives that could sustain modern society. Society is a bottom up, emergent order, incompatible with top down management.

Conclusion

But if all these claims of the anti-capitalists are false, why are these ideas so popular? Why have the correct ideas not slowly gained acceptance over time? Evolutionary psychology provides the answer: the aversion to capitalism is an artifact of our evolution in small communal bands. In the world of our distant ancestors, such things as zero-sum thinking and judging actions based on their intentions were pretty good rules to follow. But in the modern world, they are wholly inaccurate and can only serve to stand in the way of progress for the bulk of humanity.

The claims of the anti-capitalists are not only completely false, but totally backwards. Capitalism is the product of a society where each is free to live and associate as they wish. Interventionism and socialism depend on government force and are thus inescapably exploitative. Capitalism, far from impoverishing the masses, enriches them at an incredible rate. Far from being unsustainable, capitalism allocates resources optimally between present and future.

Capitalism is the optimal social arrangement on both moral and practical grounds. But if people are bound to believe otherwise because of their evolved preferences, then a counteracting educational program is of utmost importance. The ideas are simple yet powerful, but the challenge is to get them heard.

In his article “The Irrelevance of Responsibility,” Roderick Long presents an Aristotelian Golden Mean justification of the NAP. He argues that a flourishing human life requires striking a balance between the subhuman and the superhuman. Since reason is the essential human trait, a truly human life requires relating to others through persuasion. Dealing with others through force is subhuman; but refusing to use force against aggressors is superhuman. Thus the NAP—using force only in defense—represents a Golden Mean between the extremes of subhuman aggression and superhuman pacifism.

What follows is an excerpt from Long’s article (p. 119, 121-124).

***********

(1) Every person has the right not to be treated as a mere means to the ends of others. …

Man is a naturally political animal; and he who is without a polis by nature (and not through chance) is either base or superhuman. … He who is unable to share (in a political community), or who through self-sufficiency has no need to, is no part of the polis—thus, either a beast or a god.

The Aristotelian virtues, too, can be seen as a mean between the subhuman vice of overvaluing, and the superhuman vice of undervaluing, our vulnerable embodiedness. To err on the side of the beasts is to be excessively concerned with our animal nature, our physical desires and physical security; this is the error of the common people, whom Aristotle regards as all too prone to take pleasure and material advantage as their primary goals, and to neglect the possibility of higher values that may require us to sacrifice comfort or even continued existence. To err on the side of the gods, by contrast, is to treat human beings as disembodied intellects for whom the animal nature is irrelevant; this is the error of philosophers like Socrates who see knowledge and virtue as sufficient for happiness, and dismiss external goods as unnecessary, aiming for a transcendent self-sufficiency that is not an option for embodied beings like us.

For he who flees and fears everything, and endures nothing, becomes a coward; and he who fears nothing whatsoever and approaches everything becomes rash. And likewise he who indulges in every pleasure and holds back from none is undisciplined, while he who flees them all, as boors do, is an insensible sort.

Sober-mindedness and indiscipline are concerned with those pleasures that other animals also share in, which thus appear slavish and bestial. … Indiscipline seems to be justly reviled, since it belongs to us not as humans but as animals. … Those who fall short with regard to pleasures and take less enjoyment than they ought do not often arise; such insensibility is not human.

[Aristotle] used to say that some people are as stingy as if they were going to live forever, while others are as profligate as if they were going to perish the next day.

In short, one set of vices places too much value, and the other too little, on the animal side of human nature. How, then, can it be shown that principle (1) expresses an attitude appropriate to someone who is virtuous in Aristotle’s sense? That is, how can it be shown that (1) is the truly human attitude, that it neither falls short of, nor exceeds, what can properly be demanded of our humanity? Consider what Aristotle says about the political nature of human beings:

Now that man is more of a political animal than the bee and every other gregarious animal is clear. For nature, as we say, makes nothing in vain, and among the animals only man has logos [reason, speech]. So while mere voice is an indication of pain or pleasure, and hence is found in other animals (for their nature reaches as far as this: having the perception of pain and pleasure, and indicating these to one another), logos is for revealing the advantageous and the disadvantageous, and so also the right and the wrong. For this is peculiar to man, as opposed to the other animals: to be the sole possessor of the perception of good and evil, of right and wrong, and the others. And a community of these makes a household and a polis.

In other words, Aristotle identifies the distinctively human capacity for reason and speech as the basis of our being naturally political animals, for it enables us to pursue our goals through discussion with one another. Moreover, Aristotle famously regards logos, reason or speech, as the essential trait around which a flourishing human life must be organized. This, it seems, is why Aristotle regards it as an essential component of a truly human life to deal with others politically, i.e., through reason and discourse—i.e., as conversation partners. But such an idea creates a strong presumption against the use of force, and in favor of relying on persuasion as far possible. Aristotle indeed affirms that it is unjust to rule by force rather than persuasion, insisting that statesmen should be as dependent on the consent of their subjects as doctors and pilots are on the consent of their patients and passengers, respectively. I think, however, that Aristotle’s insight points in the direction of a more radical critique of force than he is likely to have recognized. To deal with others by force is to act in a subhuman manner, like a beast of prey; we live a more human life (and therefore, in Aristotelian terms, a better life) to the extent that our relations with other people embody reason and persuasion rather than coercion. Therefore, the need to avoid the bestial type of vice gives the virtuous agent reason to accept an obligation to respect other people as ends in themselves, rather than to treat them as mere means to her own ends. If this high-level human end places a constraint on the pursuit of lower-level, animal ends, so be it.

This, however, gives us only the B-component of principle (1)—the prohibition on using the rights-holder as a mere means. This, by itself, does not entail the C-component—the permissibility of the rights-holder’s (or her agent’s) compelling others to comply with this prohibition. I suggest that what legitimates the C-component is the need to avoid the corresponding godlike type of vice, the pure pacifist position that requires the virtuous agent to cling to cooperation even when the other party abandons cooperation and resorts to aggression. The saintlike commitment to turn the other cheek accords less respect to one’s own material needs than they deserve. Principle (1) can thus be seen a striking an appropriate balance—a Golden Mean—between subhuman aggression and superhuman pacifism.

“Capitalism is the best. It’s free enterprise. Barter. Gimbels, if I get really rank with the clerk, ‘Well I don’t like this’, how I can resolve it? If it really gets ridiculous, I go, ‘Frig it, man, I walk.’ What can this guy do at Gimbels, even if he was the president of Gimbels? He can always reject me from that store, but I can always go to Macy’s. He can’t really hurt me. Communism is like one big phone company. Government control, man. And if I get too rank with that phone company, where can I go? I’ll end up like a schmuck with a dixie cup on a thread.” —Lenny Bruce

A common refrain among people unfamiliar with libertarian theory is that corporations are the problem and government is the solution—that government needs to tightly regulate private business to rein in corporate greed. This view is fundamentally confused. It entails that private business—which derives its means by voluntary exchange—is the problem, while government—which derives its means through violence—is the solution.

First, greed is a universal feature of human nature that’s here to stay. Businessmen have always been and will always be greedy. And the rest of us are greedy too, in the sense of being self-interested. That includes the agents of the government. Since government can use violence to achieve its ends, we should be much more worried about predation by greedy politicians and bureaucrats.

Of course, businessmen are not angels. Like all people, they can be jerks and criminals. Adam Smith’s great insight was that businessmen benefit others not out of benevolence, but by their own greedy pursuits in a free market. Under the institution of free market competition, private predation can be minimized and the social benefits of greed can be maximized. But this cannot be achieved with a government in existence.

Greedy businessmen don’t passively submit to regulations, they lobby and do whatever they can to gain control of the regulatory body. Once they have access to the political means, they use it as a tool to hinder their competition, to the detriment of everybody else. Gabriel Kolko has shown that even the Progressive Era regulations were pushed through by big business to restrict competition. Where there is government, businesses will fight to control it for their benefit. Under government, the corporation becomes an exploiter.

In fact, free market competition is the best kind of “regulation”. Where there is competition, people have choice and can avoid businesses they don’t like. And businesses have incentives to publicize the misbehavior of their competitors. Competition is simply the best check on private predation. Furthermore, it can be supplemented by other voluntary measures, like boycotts, to seal any cracks. There is no reason to introduce legalized violence in the form of a government.

Government is not the solution, it is the root problem. Government brings with it the problem of public predation, and creates the avenues for systematic private predation. Advocating more government as the solution to private predation is like trying to put out a fire by dousing it with gasoline. Without government, private predation can be restrained through market competition. In other words, government is the ultimate cause and corporations are the proximate cause of the problems. Don’t be a branch-striker. Strike the root.

[Further reading: Roderick Long, Can We Escape the Ruling Class]

Hans Hoppe has found the answer. In his outstanding book, Democracy—The God That Failed, he shows that democracy is the cause of these modern ills. This is a very bold claim, given democracy’s current status as a secular religion. But Hoppe’s careful theoretical reasoning is airtight—this is a paradigm-shifting book.

The process of civilization

To understand how democracy destroys civilization, we must first understand how civilization comes about. Civilization is the outcome of saving and investment, in other words: capital accumulation. As people save and invest in capital goods (e.g., tools and machines), the production of goods increases—they become wealthier. With more resources at their disposal, saving becomes less costly, and people can invest even more in capital goods. This again results in greater production and a corresponding drop in the cost of saving and investing. This self-reinforcing cycle of capital accumulation is known as the process of civilization.

As Hoppe explains in Chapter 1, people’s time preferences—their degree of present- or future-mindedness—determine the amount of saving and thus the rate of capital accumulation. A high time preference denotes a high premium on the present over the future: the cost of foregoing consumption in favor of saving is higher. Alternately, a low time preference denotes a low premium on the present over the future: the cost of foregoing consumption in favor of saving is lower. To illustrate, a person with a high time preference would engage in activities that pay out in the present (and even at the expense of the future), such as impulse spending, eating junk food, promiscuity, drunkenness, drug abuse, etc. A person with a low time preference would take on activities that pay out in the long term, such as saving and investing, maintaining good health, improving skills or education, developing a good reputation, etc.

The process of civilization is characterized by a fall in the time preference of society. As people become wealthier from the increased production of capital goods, the cost of saving (foregoing consumption) falls—their time preference falls. As this process unfolds, people become ever wealthier and more farsighted.

The decivilization effect of democracy

The existence of government weakens the process of capital accumulation. Under democratic rule, this weakening effect is considerably enhanced. Unless it is stopped, democracy will eventually raise time preferences to the point of capital consumption, and a self-reinforcing process of decivilization will be set in motion—ultimately leading towards the destruction of society.

There are many ways that democracy destroys civilization; the most significant being taxation, war, legislation, and redistribution. These effects are further amplified because public resistance to government is systematically weakened under democracy.

Taxation

Any and all taxation falls directly on producers—taxation is a penalty on production. As a result of taxation, the rate of return on investment is diminished. Saving to invest becomes less lucrative, so people consume more and save less than they otherwise would have. People become more present-minded and the process of civilization is impeded. The amount of taxation determines how significant this effect will be.

If the government is privately owned (i.e., a monarchy), then this effect will be limited. Since the government is his personal property, a monarch has an interest in both the present tax revenues and the long-term capital value of his kingdom. His incentive is to tax moderately, so as not to diminish the future productivity of his subjects, and hence his future tax revenues. On the other hand, if the government is publicly owned (i.e., a democracy), then this effect will be significantly more prominent. Since elected rulers are only temporary caretakers, not owners, of government property, their time horizons are very short—they’re very present-minded. They have no interest in the long term value of the government. Rather, their incentive is to maximize their own benefits while they are in power. Accordingly, democratic rulers tend to tax (and inflate the currency) as much as politically possible, even if it decreases the productivity of private citizens and hence future tax revenues. But this should come as no surprise, as public government, like all public property, is plagued by the tragedy of the commons.

Consider the analogy of public farming. Imagine a farmer who is given the use of some land to grow crops on, but he doesn’t own the land and only gets to use it for four years. His incentive will be to maximize his benefit over the four year term, without regard for the soil quality after the fourth year. Because he can’t reap the benefits of maintaining good soil quality after his term ends, his incentive is to deplete the soil to squeeze out as much benefit from it as possible before he loses its use—in other words, he engages in capital consumption. The same incentives are at work under public government. Without private property ownership, there can be no long-term economic planning.

War

While all governments can externalize the costs of war, a public government will be much more warlike than a private one. A king personally owns the resources that pay for the war and thus his incentive is to keep warfare limited (war is outrageously expensive) and pursue his foreign policy through peaceful means, such as contractual acquisitions of territory and intermarriage with other ruling families. Democratic rulers have no such interest in saving money—it’s not their money to begin with and they can’t privately pocket the funds if they don’t go to war. Consequently, democracies lack a major deterrent to engaging in warfare.

Democratic warfare is also excessively brutal. Once again, because the rulers have no incentive to save money, war spending is much higher, resulting in larger wars. And because the government is public, the government’s wars are the public’s wars: nationalist fervor sweeps the people and support for the war becomes the unquestioned norm. Wars also become open-ended ideological wars (e.g., “making the world safe for democracy” or the “war on terror”). The entire populace becomes part of the war machine, resulting in total war: domestic tyranny (extreme taxation and regulation), conscription, enormous war expenditures, mass destruction, and mass murder of both militants and civilians.

Legislation

Since the kingdom is the private property of the king, he has a strong incentive to uphold the integrity of private property law (the validity of his ownership of the kingdom depends upon it). The king also has an incentive to uphold economically beneficial law—private property law—to increase value of his kingdom. Democratic rulers have no private ownership stake in the government and thus have no incentive to uphold the integrity of private property law. Nor do they have an incentive to maintain economically beneficial law. On the contrary, they can benefit by creating artificial laws—legislation—that serve to undermine private property law for their own benefit. Under democracy, mountains of legislation erode private property law: property owners become increasingly restricted in what they can do with their property. As private property law is continually weakened, long-term planning becomes more and more uncertain and people become more and more present-minded.

Redistribution

Because of the electoral nature of democracies, special interest politics becomes the name of the game. In order to win an election, politicians must compete for the support of interest groups. The largest and most lucrative interest group (most votes) is the “have-nots”, and politicians can cater to them with wealth redistribution policies. Thus, democracies take on a redistributionist role: the welfare state is born. As basic economic reasoning tells us, if you tax productivity and subsidize non-productivity, you will end up with less producers and more nonproducers. A destructive cycle sets in: as producing becomes less and less lucrative and nonproducing becomes more and more so, welfare spending increases while production and thus taxable income decreases. Thus, welfare policies only exacerbate the problems they intend to cure. They reward present-mindedness and discourage future-mindedness and, if left to run their course, will inevitably lead to a Soviet-style economic collapse.

Public resistance

It’s worth noting that democracy’s tendency towards big government is significantly helped along by its public image. Any government ultimately rests on the consent of the governed, and democracy can more easily secure such consent. By fostering the illusion of self-rule (i.e., “We are the government”, “We are doing it to ourselves”), democracy systematically weakens public resistance to government interventions. Under monarchy, one has no hope of joining the ruling family and benefiting from the state’s activities. Under democracy, however, one has the opportunity to be part of a majority or even to become one of the rulers, and so can potentially benefit from state activities. Thus, monarchical subjects tend to be more resistant to government than citizens of democratic states. This acceptance allows democracies to become much larger and much more interventionist without igniting revolutionary sentiment.

Evidence

The devastation of democracy is clearly evident in the historical record. As Hoppe writes:

Let’s take a closer look at the historical evidence concerning taxation, war, legislation and redistribution under monarchy and democracy (discussed by Hoppe in Chapter 2):

Taxation

• Monarchy: 5-8% of national income; no inflation (commodity money).
• Democracy: Over 50% of national income; plus paper-money inflation. Remarks Hoppe: “Now, year in and year out the American government expropriates more than 40 percent of the incomes of private producers, making even the economic burden imposed on slaves and serfs seem moderate in comparison.” (pp. 243)

War

• Monarchy: Limited wars for settling territorial disputes. Battles fought by hired mercenaries with minimal bloodshed. Civilian life was unaffected by wars.
• Democracy: Total wars fought for ideological goals (“Liberty”, “Democracy”, “fighting terrorism”, etc.) and thus open-ended and grotesquely brutal. Civilian life is heavily disrupted by wars, not only because of domestic burdens (taxation, regulation and conscription), but because civilians are no longer considered “off limits” to combatants.

Legislation

• Monarchy: Kings were considered judges, not legislators. Law was considered fixed and immutable (and the king’s own property rights rested on its validity). Legislation was unheard of.
• Democracy: Rulers rise above the law, they become judges and lawmakers. Vast mountains of legislation regulate virtually every aspect of private life. This is effectively totalitarian power.

Redistribution

• Monarchy: Consumption state—wealth redistributed from subject to sovereign.
• Democracy: Welfare state—wealth redistributed not only from citizen to state, but between citizens. Public welfare spending typically amounts to 25% of the national product.

Ideological progress

Was the change from monarchy to democracy a step backwards? In practical terms, there is no question: democracy has had tremendously bad effects compared to monarchy. But in terms of ideological progress, democracy has been a (confused and pathetic) step towards more justice. While monarchy and democracy are both forms of unjust political rule, monarchy is exclusive rule by accident of birth while democratic rule is open to anyone. Democracy is fairer in the sense that the opportunity to rule is universal, whereas monarchy only allows for arbitrary family rule. In other words, if there must be rulers, then it’s more just that the rulers are selected through open competition than by arbitrary heredity. But this was the fateful error of the classical liberals: to see exclusivity rather than privilege as the problem. They merely replaced personal privileges (of the king) with functional privileges (of the democratic ruler). Of course, the real solution is to remove the privilege of ruling altogether, so that there is no ruler-ruled distinction.

To be sure, when democracy is rejected as illegitimate, we won’t be headed back to monarchy. Democracy will join monarchy as laughable and politically unthinkable. Given the natural human inclination to justice, we will move towards something perceived to be right and just. Anarchy, a society without rulers, is the pinnacle of this progress in political ideology. Once it dawns on the public that democracy is the dead-end sign on the road of statism, we will have a stateless society. Then the process of civilization will take off and humanity will prosper like never before.

The downside is that, until democracy is delegitimized in the public eye, we should expect an accelerating decivilization, and even the ultimate destruction of society through complete economic disintegration. Chances are that it won’t get that far, because the failures of democracy will become ever more apparent and people will eventually be forced to recognize their error if they want to maintain modern living standards. The sooner people realize that democracy is a social death wish, the less devastation we will have to endure. What we need then, is an ideological revolution to make the world safe from democracy! Democracy is insane—it ought to be called democrazy!

Conclusion

While all of this may seem no more than an intellectual curiosity, it has extremely important ramifications for the general public, as well as for minarchists. What better way of delegitimizing democracy than to show people that democracy is the destroyer of civilization and even worse than monarchy? People in democratic countries are deeply indoctrinated with a quasi-religious faith in democracy, so this is an explosive subject, but if used carefully it could ruin democracy forever in many minds. Democracy is the last remaining bastion of statism, and by attacking democracy we strike at the very heart of statism.

As for minarchists, if they are truly interested in limited government, then they must grapple with the fact that public government is prone to cancerous growth and that private government is the only sustainable form of limited government. Since they generally believe that democracy is legitimate while monarchy isn’t, this forces them into an awkward choice: either limited government through private government ownership (i.e., monarchy); or democracy (i.e., constitutional republic) and its inevitable big government. The cognitive dissonance is delicious!

Perhaps most importantly, Hoppe’s insight is the key to understanding and interpreting the 20th century. We now have the answer to the previously baffling question of why civilization is in decline despite enormous scientific and technological progress. It is public government that causes a vicious cycle of rising time preference, and is responsible for the accelerating destruction of society. It is public government that inexorably pushes mankind from civilization back to the jungle. Practically all social ills can be traced back to the effects of the democratic state, from war and poverty to dysfunctional families and widespread bad health. Happily, we also have the solution to this problem: a market anarchist society based on universal private property rights. Only by abandoning democracy and statism will we be able to reap the enormous increases in prosperity that we should expect from such incredible progress in science and technology.

Further reading

For more on this topic, see Democracy—The God That Failed, especially chapter 1. Chapter 2 contains a highly informative historical analysis of monarchy and democracy.

Here’s the abstract:

Gun control violates the right of individuals to control their own property. It also violates economic law. Enforcement of gun control creates incentives to produce guns on the black market. Gun control causes crime and corruption, whereas gun ownership actually deters crime, and is a check against tyrannical government. In a free society, weapons can be controlled through voluntary, peaceful means.

I wrote this after reading John Lott’s More Guns, Less Crime. I wasn’t impressed with his empirical approach, so my goal was to build a case against gun control based on economic principles and theoretical, a priori arguments.

Here’s the abstract:

Prohibition violates the right of individuals to control their own bodies, and violates economic law. Any increased enforcement of prohibition creates greater incentives to produce drugs. Prohibition causes crime and corruption. It increases the potency and reduces the quality of drugs, causing consumption-related deaths. The solution to drug abuse is not aggressive violence, but voluntary cooperation.

This article is primarily based on the arguments from Mark Thornton’s The Economics of Prohibition (PDF here). I was also inspired by Milton Friedman’s arguments in his interview on drugs. I think readers will be most surprised by the arguments that prohibition is self-defeating and increases the potency of drugs.

Here’s the abstract:

Free trade is both morally and practically superior to protectionism. First, protectionism violates the right of individuals to engage in voluntary exchange. Second, specialization and trade are beneficial whenever there is absolute or comparative advantage between individuals. Finally, protectionism is a negative-sum game: it makes everyone worse off, including the “protected” industries.

For those readers familiar with the Paul Craig Roberts/capital mobility debate, I’d like to know what you think of my critique (in the “Objections” section).

In his article Law, Property Rights, and Air Pollution, Rothbard writes (p.145-46):

The “first ownership to first use” principle for natural resources is also popularly called the “homesteading principle.” If each man owns the land that he “mixes his labor with,” then he owns the product of that mixture, and he has the right to exchange property titles with other, similar producers. This establishes the right of free contract in the sense of transfer of property titles. It also establishes the right to give away such titles, either as a gift or bequest.

Most of us think of homesteading unused resources in the old-fashioned sense of clearing a piece of unowned land and farming the soil. There are, however, more sophisticated and modern forms of homesteading, which should establish a property right. Suppose, for example, that an airport is established with a great deal of empty land around it. The airport exudes a noise level of, say, X decibels, with the sound waves traveling over the empty land. A housing development then buys land near the airport. Some time later, the homeowners sue the airport for excessive noise interfering with the use and quiet enjoyment of the houses.

Excessive noise can be considered a form of aggression but in this case the airport has already homesteaded X decibels worth of noise. By its prior claim, the airport now “owns the right” to emit X decibels of noise in the surrounding area. In legal terms, we can then say that the airport, through homesteading, has earned an easement right to creating X decibels of noise. This homesteaded easement is an example of the ancient legal concept of “prescription,” in which a certain activity earns a prescriptive property right to the person engaging in the action.

On the other hand, if the airport starts to increase noise levels, then the homeowners could sue or enjoin the airport from its noise aggression for the extra decibels, which had not been homesteaded. Of course if a new airport is built and begins to send out noise of X decibels onto the existing surrounding homes, the airport becomes fully liable for the noise invasion.

It should be clear that the same theory should apply to air pollution. If A is causing pollution of B’s air, and this can be proven beyond a reasonable doubt, then this is aggression and it should be enjoined and damages paid in accordance with strict liability, unless A had been there first and had already been polluting the air before B’s property was developed. For example, if a factory owned by A polluted originally unused property, up to a certain amount of pollutant X, then A can be said to have homesteaded a pollution easement of a certain degree and type.

Similarly, Hoppe has written:

If A currently physically damages the property of B (for example by air pollution or noise), the situation must be judged differently depending on whose property right was established earlier. If A’s property was founded first, and if he had performed the questionable activities before the neighboring property of B was founded, then A may continue with his activities. A has established an easement. From the outset, B had acquired dirty or loud property, and if B wants to have his property clean and quiet he must pay A for this advantage. Conversely, if B’s property was founded first, then A must stop his activities; and if he does not want to do this, he must pay B for this advantage.

But imagine a scenario where a vast territory is completely unowned and untouched by humans, like the moon, or a desert. Imagine also that I have a lifetime supply of nuclear weapons.

Then, can I homestead an easement right to nuke that unowned desert, say, once a month? The desert is completely uninhabited, so my nuking would not violate anyone’s rights. If pollution easements can be homesteaded, I don’t see why nuking rights would be excluded. After all, what is a nuclear bomb but a form of pollution? Smoke from a factory alters the landscape, just as nuclear weapons do. Sure, nukes emit radioactive particles, but this is only a difference in degree from smoke particles. Because I am nuking once a month, rather than a one-time event, I can claim that this is actually an act of homesteading, not just a one-time use of the land. In Hoppe’s words, “From the outset, B had acquired nuked property, and if B wants to have his property clean and quiet he must pay A for this advantage.”

Now, intuitively we would reject nuclear homesteading; the idea that someone could establish a right to destroy huge amounts of land does not seem very plausible. But if we reject it, what are the consequences for homesteading theory? If we reject nuclear homesteading, how can we coherently support pollution easements? I imagine supporters of the Lockean proviso could reject nuclear homesteading on grounds that it does not leave “enough and as good” for others; but libertarians generally reject the proviso. Libertarians might appeal to forestalling, where potential homesteaders are prevented from accessing unowned property, but I’m not sure it applies in this scenario.

So how do we resolve this? Should we even reject nuclear homesteading to begin with?

Toward a Theory of Strategy for Liberty

In chapter thirty of his book “The Ethics of Liberty”, Rothbard laid down the groundwork of anarchist strategy. Basically, there are two principles libertarians must keep in mind when pursuing strategy. First, we must not violate the nonaggression principle. Second, we must be abolitionists, for advocating anything less than the immediate abolition of aggressive violence would mean the sanctioning of injustice.

On this latter point, Rothbard writes: “If liberty is to be the highest political end, then this implies that liberty is to be pursued by the most efficacious means, i.e., those means which will most speedily and thoroughly arrive at the goal. This means that the libertarian must be an “abolitionist”, i.e., he must wish to achieve the goal of liberty as rapidly as possible. If he balks at abolitionism, then he is no longer holding liberty as the highest political end.” (259)

To those people who charge abolitionism as being “unrealistic”, Rothbard responds that these anti-radicals “hopelessly confuse the desired goal with a strategic estimate of the probable path toward that goal. It is essential to make a clear-cut distinction between the ultimate goal itself, and the strategic estimate of how to reach that goal; in short, the goal must be formulated before questions of strategy or “realism” enter the scene.” (259)

The problem with advocating gradualism in theory is that it “totally undercuts the overriding goal of liberty itself; its import, therefore, is not simply strategic but an opposition to the end itself and hence impermissible as any part of a strategy toward liberty. The reason is that once immediate abolitionism is abandoned, then the goal is conceded to take second or third place to other, anti-libertarian considerations, for these considerations are now placed higher than liberty…. In fact, [gradualism] would mean that the libertarian advocated the prolongation of crime and injustice.” (260-61)

Rothbard continues: “Another contradictory means would be to commit aggression (e.g., murder or theft) against persons or just property in order to reach the libertarian goal of nonaggression. But this too would be a self-defeating and impermissible means to pursue. For the employment of such aggression would directly violate the goal of nonaggression itself.” (261)

With these strategic constraints in mind, Rothbard asks: “Must the libertarian necessarily confine himself to advocating immediate abolition? Are transitional demands, steps toward liberty in practice, therefore illegitimate? Surely not, since realistically there would then be no hope of achieving the final goal. It is therefore incumbent upon the libertarian, eager to achieve his goal as rapidly as possible, to push the polity ever further in the direction of that goal. Clearly, such a course is difficult, for the danger always exists of losing sight of, or even undercutting, the ultimate goal of liberty…. The transitional demands, then, must be framed while (a) always holding up the ultimate goal of liberty as the desired end of the transitional process; and (b) never taking steps, or using means, which explicitly or implicitly contradict that goal.” (262)

The problem with not following this last point is that it “implies that the State is not really the enemy of mankind, that it is possible and desirable to use the State in engineering a planned and measured pace toward liberty. The insight that the State is the permanent enemy of mankind, on the other hand, leads to a very different strategic outlook: namely that libertarians push for and accept with alacrity any reduction of State power or State activity on any front; any such reduction at any time is a reduction in crime and aggression, and is a reduction of the parasitic malignity with which State power rules over and confiscates social power.” (262-63)

Rothbard concludes ”by affirming that the victory of total liberty is the highest political end; that the proper groundwork for this goal is a moral passion for justice; that the end should be pursued by the speediest and most efficacious possible means; that the end must always be kept in sight and sought as rapidly as possible; and that the means taken must never contradict the goal—whether by advocating gradualism, by employing or advocating any aggression against liberty, by advocating planned programs, or by failing to seize any opportunity to reduce State power or by ever increasing it in any area.” (264)

Strategy and libertarian principles

Next, it is fundamental to understand that the immigration debate is wholly about strategy. There is no controversy as to how immigration would work in an anarchic society. The debate is on how to get there.

Open borders

The open border advocates say that libertarians must oppose all government institutions, and closed borders, as a government institution, must therefore be opposed. Government borders are the root cause of forced exclusion; hence government borders should be abolished. Government property and antidiscrimination laws are the root causes of forced integration; hence these should be abolished.

On the face of it, this position seems consistent with libertarian principles: addressing the root cause is the most efficient means to achieving the end, hence it is abolitionist. It only advocates abolishing government functions, and so does not violate the nonaggression principle. This strategy realizes that the State is “the permanent enemy of mankind”, and pushes for the “reduction of State power or State activity on any front”, specifically by abolishing government borders, government property, and antidiscrimination laws. Finally, it always holds up the ultimate goal of a society of free integration and free exclusion.

Closed borders

The closed border advocates, following Hoppe, have advanced the following argument:

1. Public property rightfully belongs to taxpayers.
2. Taxpayers have a right to government protection of their property.
3. Foreigners who are not invited explicitly can be assumed to be unwanted.
4. Therefore, government ought to restrict access to all foreigners who are not invited.

Or, as Hoppe writes:

“A popular government that wants to safeguard its citizens and their domestic property from forced integration and foreign invaders has two methods of doing so: a corrective and a preventative one. [First, the corrective method:] the government must reduce the quantity of public property and expand that of private property as much as possible, and whatever the ratio of private to public property may be, the government should help rather than hinder the enforcement of a private property owner’s right to admit and exclude others from his property. [Second, the] government must also engage in preventative measures. At all ports of entry and along its borders, the government, as trustee of its citizens, must check all newly arriving persons for an entrance ticket; that is, a valid invitation by a domestic property owner; and anyone not in possession of such a ticket must be expelled at his own expense.” – Democracy: the God that Failed, p. 167

Now, there are some problems with this argument. First, public property actually belongs to all victims of the State, not just taxpayers. Second, since when do anarchists accept the theory of government as the “servant” of the people? Government is a criminal gang, plain and simple. If the mafia forces you to pay protection money, does that give you a right to their protection services? Third, assuming that uninvited foreigners are unwanted is sketchy – what if immigrants move in, and an entrepreneur, noticing the surplus of labor, decides to start a business and hire the immigrants to work for him? They would no longer be unwanted.

But even if we ignore these problems and accept the argument, we must still ask: Is this strategy congruent with libertarian principles?

Abolitionism

First we must determine if the closed border position meets the libertarian abolitionism criterion. If the root causes of forced integration are government property and antidiscrimination laws, shouldn’t the closed border advocates be calling for the immediate abolition of these things, instead of closed borders? However, one might respond that closed borders are a transitional step on the path to full anarchism. That is, the closed border advocates are still holding the ultimate goal of anarchism, but are pursuing intermediate means to bring us closer to the final end. Thus, according to this argument, advocating closed borders is not gradualism in theory.

But does this response hold? Problem solving logic tells us that addressing the root cause is the fastest and most thorough way to solve a problem. In the case of forced integration it is not open borders but government property and antidiscrimination laws that are the root cause; open borders are only a contributing cause. Hence, the proper abolitionist strategy is to strike the root, i.e. privatize government property and abolish antidiscrimination laws. Moreover, under anarchy there are no government borders; advocating closed borders now only to abolish them later means engaging in the same gradualism that Rothbard warned against. Supporting government borders for X years and then abolishing them is exactly the kind of planned program that epitomizes gradualism in theory. As Rothbard said, we libertarians must call for the immediate abolition of all government programs; anything less would be sanctioning injustice. Thus, the closed border position falls into the trap of gradualism in theory and accordingly fails the abolitionism test.

Using the State

But even if we ignore the abolitionism criterion, there is still a more fundamental critique. Rothbard said that libertarians cannot follow any strategy that “implies that the State is not really the enemy of mankind, that it is possible and desirable to use the State in engineering a planned and measured pace toward liberty.” But what is the closed border position except an advocacy of using the State to restrict immigration? Of using the State to engineer a path to anarchism? As libertarians we must “push for and accept with alacrity any reduction of State power or State activity on any front”. Advocating government borders, i.e. advocating an increase in State power, is clearly a violation of libertarian principles. For supporting government borders means supporting government border guards, government border checkstops, and a government bureaucracy to manage the border. On this point then, the closed border position utterly and decisively fails. Closed borders cannot be a libertarian strategy because they violate libertarian principles.

Nonaggression Principle

Furthermore, does the closed border position violate the nonaggression principle? The answer seems to be yes, as government borders violate the right of admission and hence cause forced exclusion. However, a closed border advocate might respond that they are calling for sponsored immigration, not completely restricted immigration. Thus, the government would admit all invited immigrants, and the right of admission remains unviolated.

First, this response still faces the problem of trying to use the State as a means to libertarian ends. Second, and more importantly, the government would be guilty of forestalling: preventing potential homesteaders from accessing unowned property. By engaging in sponsored immigration, the government would be preventing uninvited immigrants who would have homesteaded unowned property, which is surely in abundance in North America. (The government “claiming” frontier land does not count as legitimate ownership.) Thus, although sponsored immigration would not cause forced exclusion, it would cause forestalling, and hence violate the nonaggression principle. Again, we find that closed borders cannot be a libertarian strategy.

Last, but not least, is the issue of taxation. As noted above, a government border means border guards, checkstops, and a border bureaucracy. As these are all government institutions, they must be funded by taxation, i.e. robbery. Thus, advocating government borders means advocating robbery! Surely it is obvious that libertarians cannot use statist means to achieve anarchist ends; we cannot use aggression to reach the goal of nonaggression. Thus, closed borders are a self-defeating and impermissible strategy.

One might object that closed border advocates are just getting restitution for past injustices. It is true that someone could receive welfare as restitution, for example; however, to advocate increasing the power of the welfare state is completely illegitimate. Likewise, one can benefit from closed borders; but it is totally illegitimate to advocate increasing the State’s power and control over the borders.

Conclusion

Thus, even if we accept the premises of Hoppe’s rights argument, his conclusion still violates libertarian principles. First, advocating closed borders fails the criterion of abolitionism. Supporting government borders for X years and then abolishing them afterward is gradualism in theory, plain and simple. Second, closed borders means using the State to achieve libertarian ends, and implies that “the State is not really the enemy of mankind”. Closed borders fail because they increase State power. Third, closed borders violate the nonaggression principle, once through forestalling and again through taxation. Thus, closed borders fail the test of libertarian principle, and cannot be a legitimate strategy.

Lastly, I want to point out the inconsistencies inherent in the closed border position. Libertarians are constantly pointing out that government doesn’t work. Mises has shown that economic calculation under government is impossible. Hayek has shown that central planners cannot gather the knowledge to run the economy. The perverse incentives stemming from tax-funded monopolies are well known. Do closed border advocates really expect us to believe that these arguments hold true in all cases except for borders?!

With his 1979 article “Do we really ever get out of anarchy?” Alfred Cuzán provides us with a wonderful insight: “Anarchy, like matter, never disappears – it only changes form.” Cuzán argues that anarchy, defined as the absence of a third party territorial monopolist of ultimate jurisdiction, is omnipresent: Regardless of what political system we live under, there will always be anarchic relationships, namely those between the actual members of government. James Ostrowski, in his article “The Myth of Democratic Peace”, extends this argument to show that there are four more anarchic relationships in current society. The omnipresence of anarchy is undeniable. However, there are problems with this analysis. It is not compatible with the root word definition of anarchy as “no rulers”, nor does it incorporate such governmental (non-anarchic) relationships as taxation and regulation. Happily, the analysis can be repaired by applying Murray Rothbard’s “typology of intervention” and creating a corresponding “typology of anarchy”.

My plan is to have this published in the Journal of Libertarian Studies. Academia, here I come!