DemocracyThe God That Failed (19 page)

that without resort to compulsion, the existence of society would be endangered and that behind the rules of conduct whose observance is necessary to assure peaceful human cooperation must stand the threat of force if the whole edifice of society is not to be continually at the mercy of any one of its members. One must be in a position to compel the person who will not respect the lives, health, personal freedom, or private property of others to acquiesce in the rules of life in society. This is the function that the liberal doctrine assigns to the state: the protection of property, liberty, and peace.
³

If this is accepted, how is a government to be organized so as to assure that it will in fact do what it is supposed to do: protect pre-existing private property rights? In view of what I shall say later on in favor of the institution of monarchy, Mises's liberal opposition to the
ancien
regime
of absolute kings and princes is worth noting here. Kings and princes were privileged personae. Almost by definition, they stood opposed to the liberal idea of the unity and universality of law. Thus, Mises stated, the liberal theory of the state is hostile to princes.

The princely state has no natural boundaries. To be an increaser of his family estate is the ideal of the prince; he strives to leave his successor more land than he inherited from his father. To keep on acquiring new possessions until one encounters an equally strong or stronger adversary—that is the striving of kings Princes regard countries no differently from the way an estate owner regards his forests, meadows, and fields. They sell them, they exchange them (e.g., "rounding off" boundaries); and each time rule over the inhabitants is transferred also. ... Lands and peoples are, in the eyes of princes, nothing but objects of princely ownership; the former form the basis of sovereignty, the latter the appurtenances of landownership. From the people who live in "his" land the prince demands obedience and loyalty; he regards them almost as his property.
⁴

³
Mises,
Liberalism,
p. 37.

⁴
Ludwig von Mises,
Nation,
State,
and
Economy:
Contributions
to
the
Politics
and
History
of
Our
Time
(New York: New York University Press, 1983), pp. 32-33. Further,

Mises notes,

[t]he princely state strives restlessly for expansion of its territory and for increase in the number of its subjects. On the one hand it aims at the acquisition of land and fosters immigration; on the other hand it sets the strictest penalties against emigration. The more land and the more subjects,
the more revenue and the more soldiers. Only in the size of the state does assurance of its preservation lie. Smaller states are always in danger of being swallowed up by larger ones. (p. 39)

As Mises rejected a princely state as incompatible with the protection of private property rights, what was to be substituted for it? His answer was democracy and democratic government. However, Mises's definition of democratic government is fundamentally different from its colloquial meaning. Mises grew up in a multinational state and was painfully aware of the antiliberal results of majority rule in ethnically mixed territories.
⁵
Rather than majority rule, to Mises democracy meant literally "self-determination, self-government, self-rule,"
⁶
and accordingly, a democratic government was an essentially voluntary membership organization in that it recognized each of its constituents' unrestricted right to secession. "Liberalism," explained Mises,

forces no one against his will into the structure of the state. Whoever wants to emigrate is not held back. When a part of the people of a state wants to drop out of the union, liberalism does not hinder it from doing so. Colonies that want to become independent need only do so. The nation as an organic entity can be neither increased nor reduced by changes in states; the world as a whole can neither win nor lose from them.
⁷

The right of self-determination in regard to the question of membership in a state thus means: whenever the inhabitants of a particular territory, whether it be a single village, a whole district, or a series of adjacent districts, make it known, by a freely conducted plebiscite, that they no longer wish to remain united to the state to which they belong at the time, their wishes are to be respected and complied with. This is the only feasible and effective way of preventing revolutions and international wars.... If it were in any way possible to grant this right of
self-determination to every individual person, it would have t
o be done.
⁸

⁵
"In polyglot territories," Mises writes, "the application of the majority principle leads not to the freedom of all but to the rule of the majority over the minority.... Majority rule signifies ... for a part of the people . . . not popular rule but foreign rule" (ibid., pp. 55 and 50). Under the special circumstances of Habsburg-Austria as a multinational and yet fundamentally German state, the application of majoritarian principles would not only promote the dissolution of the Empire. In particular, whether the Empire was dissolved or not, democracy would systematically work against the Germans and ultimately lead to German "national suicide" (p. 117). This, according to Mises, was the "tragic position" of the German liberals in Austria (p. 115). "Democratization in Austria was identical with de-Germanization"(p.l26).

⁶
Ibid.,p.46.

⁷
Ibid., pp. 39-40.

Hence, Mises's answer as to how to assure that a government will protect property rights is through the threat of unlimited secession and its own characteristic of voluntary membership.

II

I do not wish to further investigate Mises's idea of democratic government here but to turn instead to the modern definition of democracy and the question of its compatibility with the foundation of liberalism: that of private property and its protection.

It might be argued that Mises's definition of democratic government was applicable to the U.S. until 1861. Until then, it was generally held that the right to secession existed and that the Union was nothing but a voluntary association of independent states. However, after the crushing defeat and devastation of the secessionist Confederacy by Lincoln and the Union, it was clear that the right to secede no longer existed and that democracy meant absolute and unlimited majority rule. Nor does it appear that any state since that time has met Mises's definition of democratic government. Instead, like their American model, all modern democracies are compulsory membership organizations.

It is all the more surprising that Mises never subjected this modern model of democracy to the same systematic analysis that he had applied to princely government. To be sure, no one has been more farsighted regarding the destructive effects of modern governments' social and
economic policies than Mises, and no one has recognized more clearly the dramatic increase of state power in the course of the twentieth century, but Mises never connected these phenomena systematically with modern compulsory democracy. Nowhere did he suggest that the decline of liberalism and the dominance of anticapitalist political ideologies in this century of socialism, social democracy, democratic capitalism, social market economics or whatever other label has been attached to various antiliberal programs and policies finds its systematic explanation in majoritarian democracy itself.

⁸
Mises,
Liberalism,
pp. 109-10. The objections Mises has against unlimited secession are solely technical in nature (economies of scale, etc.). Thus, for instance, Mises admits having difficulties imagining "in a nationally mixed city to create two police forces, perhaps a German and a Czech, each of which could take action only against members of its own nationality."
Nation,
State,
and
Economy,
p. 53. On the other hand, Mises notes that

the political ideas of modern times allow the continued existence of small states more secure today than in earlier centuries. . . . There can be no question of a test of economic self-sufficiency in the formation of states at a time when the division of labor embraces broad stretches of land, whole continents, indeed the whole world. It does not matter whether the inhabitants of a state meet their needs directly or indirectly by production at home; what is important is only that they can meet them at all.... Even at the time when the state structure was unified, they [seceding inhabitants] did not obtain [their imported] goods for nothing but only for value supplied in return, and this value in return does not become greater when the political community has fallen apart.... The size of a state's territory therefore does not matter, (pp. 81-82)

What I propose to do here is to fill in the gap left by Mises and provide an analysis of the logic of majoritarian democracy, thereby making modern history—our age—intelligible and predictable.

Ill

Without the right to secession, a democratic government is, economically speaking, a compulsory territorial monopolist of protection and ultimate decisionmaking (jurisdiction) and is in this respect indistinguishable from princely government. Just as princes did not allow secession, so it is outlawed under democracy. Furthermore, as implied in the position of a compulsory monopolist, both democratic government as well as princes possess the right to tax. That is, both are permitted to determine unilaterally, without consent of the protected, the sum that the protected must pay for their own protection.

From this common classification as compulsory monopolies, a fundamental similarity of both princely and democratic government can be deduced
⁹
: Under monopolistic auspices, the price of justice and protection will continually rise and the quantity and quality of justice and protection fall.
Qua
expropriating property protector, a tax-funded protection agency is a contradiction in terms and will inevitably lead to more taxes and less protection. Even if, as liberals advocate, a government limited its activities exclusively to the protection of pre-existing property rights, the further question of how much protection to produce arises. Motivated (as everyone is) by self-interest and the disutility of
labor but with the unique power to tax, a government agent's response will invariably be the same: To maximize expenditures on protection, and conceivably almost all of a nation's wealth can be consumed by the cost of protection, and at the same time to minimize the actual production of protection. The more money one can spend and the less one must work to produce, the better off one will be.

⁹
On the economic theory of monopoly see Murray N. Rothbard,
Man,
Economy,
and
State:
A
Treatise
on
Economic
Principles,
2
vols. (Auburn, Ala.: Ludwig von Mises Institute, 1993), chap. 10; on the monopolistic production of security in particular see idem,
For
A
New
Liberty
(New York: Collier, 1978), chaps. 12 and 14; Gustave de Molinari,
The
Production
of
Security
(New York: Center for Libertarian Studies, 1977); Morris and Linda Tannehill,
The
Market
for
Liberty
(New York: Laissez Faire Books, 1984); and Hans-Hermann Hoppe,
The
Private
Production
of
Defense
(Auburn, Ala.: Ludwig von Mises Institute, I 998).

Moreover, a monopoly of jurisdiction will inevitably lead to a steady deterioration in the quality of protection. If one can appeal exclusively to government for justice, justice will be distorted in favor of government, constitutions and appeals courts notwithstanding. Constitutions and appeals courts are government constitutions and agencies, and any limitations on government action they might provide are invariably decided by agents of one and the same institution. Predictably, the definition of property and protection will continually be altered and the range of jurisdiction expanded to the government's advantage.

IV

While they are both inconsistent with the protection of life and property, princely and democratic government are also different in one fundamental respect. The decisive difference lies in the fact that entry into a princely government is systematically restricted by the prince's personal discretion, while under democracy entry into and participation in government is open to everyone on equal terms. Anyone not just a hereditary class of nobles is permitted to become a government official and exercise any government function, all the way up to that of prime minister or president.

Typically, this distinction between restricted versus free entry into government and the transition from princely to democratic government has been interpreted as an advance toward liberalism: from a society of status and privilege to one of equality before the law. But this interpretation rests on a fundamental misunderstanding. From a classical-liberal point of view, democratic government must be considered worse than and a regression from princely government.

Free and equal entry into government democratic equality is something entirely different from and incompatible with the classical-liberal concept of one universal law, equally applicable to everyone, everywhere, and at all times. Liberalism, Mises noted, "strives for the greatest possible unification of law, in the last analysis for world unity of law."
¹⁰
However, free entry into government does not accomplish
this
goal. To
the contrary, the objectionable inequality of the higher law of princes versus the subordinate law of ordinary subjects is preserved under democracy in the separation of public versus private law and the supremacy of the former over the latter. Under democracy, everyone is equal insofar as entry into government is open to all on the same terms. In a democracy no
personal
privileges or privileged persons exist. However,
functional
privileges and privileged functions exist. As long as they act in an official capacity, democratic government agents are governed and protected by public law and thereby occupy a privileged position
vis-a
vis
persons acting under the mere authority of private law (most fundamentally in being permitted to support their own activities by taxes imposed on private law subjects). Privileges, discrimination, and protectionism do not disappear. To the contrary. Rather than being restricted to princes and nobles, privileges, discrimination, and protectionism can be exercised by and accorded to everyone.

Mises,
Nation,
State,
and
Economy,
p.
38.