DemocracyThe God That Failed (7 page)

¹⁶
On the lengthy historical process of the acquisition of government power, and the primacy of monarchical rule, see Bertrand de Jouvenel,
Sovereignty:
An
Inquiry
into
the
Political
Good
(Chicago: University of Chicago Press, 1957), esp. chap. 10; idem,
On
Power:
The
Natural
History
of
its
Growth
(New York: Viking, 1949); idem, "The Principate" in idem,
The
Nature
of
Politics
(New York: Schocken Books, 1987); Riistow,
Freedom
and
Domination,
esp. pp. 101-05.

¹⁷
On the ubiquity of natural authority see de Jouvenel,
Sovereignty,
chap. 2.

All that was needed [for the formation of associations] was that some one man should feel within him a natural ascendancy and should then inspire others with trust in himself. . . . when we can see every day associations forming all around us, why should we imagine them forming in the distant past in some different way? What makes leaders, now as always, is natural ascendancy-—authority as such. We see them arising under our very eyes whenever there is a rescue to organize or a fire to put out. (pp. 31-32)

These two forms of government—private or public ownership of government (monarchy or democracy)—have systematically different effects on social time preference and the attendant process of civilization, and with the transition from personal (monarchical) to democratic (public) rule in particular, contrary to conventional wisdom, the decivilizing forces inherent in any form of government are systematically strengthened.
¹⁸

The defining characteristic of private government ownership and the reason for a personal ruler's relatively lower degree of time preference (as compared to criminals and democratic governments) is that the expropriated resources and the monopoly privilege of future expropriation are individually
owned.
The expropriated resources are added to the ruler's private estate and treated as if they were a part of it, and the
monopoly privilege of future expropriation is attached as a title to this estate and leads to an instant increase in its present value ("capitalization" of monopoly profit). Most importantly, as the private owner of the government estate, the ruler is entitled to pass his possessions on to his personal heir. He may sell, rent, or give away part or all of his privileged estate (and privately pocket the receipts from the sale or rental), and he may personally appoint or dismiss every administrator and employee of his estate.
¹⁹

And on the transition from authority to power, de Jouvenel goes
on to say: Power, however, is something very different from authority. The distinguishing mark of the latter is that it is exercised only over those who voluntarily accept it: if the rulers have authority over only a part of their subjects, they may receive from that part a strength sufficient to subject the others to their power Authority ends where voluntary assent ends. There is in every state a margin of obedience which is won only by the use of force or the threat of force: it is this margin which breaches liberty and demonstrates the failure of authority. Among free peoples it is a very small margin, because there authority is very great, (pp. 32-33)

¹⁸
See on the following also the literature on the "tragedy of the commons," e.g.,
Managing
The
Commons,
Garrett Hardin and John Baden, eds. (San Francisco: W.H. Freeman, 1977). See also Mancur Olson, "Dictatorship, Democracy, and Development,"
American
Political
Science
Review
87, no. 3 (1993).

The institution of private government ownership systematically shapes the incentive structure confronting the ruler and distinctly influences his conduct of government affairs. Assuming no more than self-interest, the ruler tries to maximize his total wealth, i.e., the present value of his estate
and
his current income. He would
not
want to increase current income at the expense of a more than proportional drop in the present value of his assets. Furthermore, because acts of current income acquisition invariably have repercussions on present asset values

¹⁹
According to this characterization of monarchy, present-day "monarchies" such as Great Britain, the Netherlands, Belgium, Sweden, Norway, Denmark, or Spain are clearly monarchies in name only. In fact, they represent examples of what is here and in the following referred to as democracies. The term "monarchy," as here defined, applies instead most appropriately to the form of government that characterized Europe through the end of the eighteenth century: the
ancien
regime
—whence, stimulated by the American and in particular the French Revolution and in a process that was not completed until after the end of World War I, monarchies were gradually transformed into democracies.

Indeed, monarchy and democracy can be conceived of analytically as representing the two endpoints of a continuum, with various possible forms of government located at greater or lesser distances from one or the other extreme. Elective monarchies as they existed for periods of time in Poland, Bohemia, and Hungary, for instance, are obviously less monarchic than are hereditary monarchies. Likewise, "constitutional" monarchies are less monarchic than preconstitutional ones. And "parliamentary" monarchies may well have to be placed closer to a democracy than to a monarchy, or, with universal suffrage, they may be no monarchy at all. On the other hand, while a republican form of government implies by definition that the government apparatus is not privately but publicly owned (by "the people"), and a republic thus possesses an inherent tendency to gravitate toward the adoption of universal suffrage, i.e., democratic republicanism, not all republics are in fact equally close to democracy. For example, an aristocratic "republic" such as that of the Dutch United Provinces before 1673 (when William of Orange was elected hereditary
stadtholder)
may actually have to be classified as a quasi-monarchy rather than a democracy.

On the distinction between monarchy, republic, and democracy an
d their various historical manifestations see Erik von Kuehnelt-Leddihn,
Leftism
Revisited:
From
de
Sadeand
Marx
loHitlerand
Pol
Pot
(Washington, D.C.: Regnery Gateway, 1990).

(reflecting the value of all future expected asset earnings discounted by the rate of time preference), private ownership in and of itself leads to economic calculation and thus promotes farsightedness.

While this is true of private ownership generally, in the special case of private ownership
of
government
it implies a distinct moderation with respect to the ruler's drive to exploit his monopoly privilege of expropriation, for acts of expropriation are by their nature parasitic upon prior acts of production by the nongovernmental public. Where nothing has first been produced, nothing can be expropriated, and where everything has been expropriated, all future production will come to a shrieking halt. Hence, a private owner of government (a king) would avoid taxing his subjects so heavily as to reduce his future earning potential to the extent that the present value of his estate (his kingdom) would actually fall, for instance. Instead, to preserve or even enhance the value of his personal property, he would systematically restrain himself in his taxing policies, for the lower the degree of taxation, the more productive the subject population will be, and the more productive the population, the higher the value of the ruler's parasitic monopoly of expropriation will be. He will use his monopolistic privilege, of course. He will not
not
tax. But as the government's private owner, it is in his interest to draw—parasitically—on a growing, increasingly productive and prosperous nongovernment economy, as this would—always and without any effort on his part—also increase his own wealth and prosperity. Tax rates would thus tend to be low.
²⁰

Further, it is in a personal ruler's interest to use his monopoly of law (courts) and order (police) for the enforcement of the pre-established private property law. With the sole exception of himself (for the nongovernment public and all of its internal dealings, that is), he will want to enforce the principle that all property and income should be acquired productively and/or contractually, and accordingly, he will want to threaten all private rule-transgressions as crimes with punishment. The less
private
crime there is, the more private wealth there will be and the higher will be the value of the
ruler's
monopoly of taxation and expropriation. In
fact, a private ruler will not want to lean exclusively on
tax
revenue to finance his own expenditures. Rather, he will also want to rely on productive activities and allocate part of his estate to the production and provision of "normal" goods and services, with the purpose of earning its owner a "normal" (market)
sales
revenue.
²¹

²⁰
Carlo M. Cipolla,
Before
the
Industrial
Revolution:
European
Society
and
Economy,
1000-1700
(New York: W.W. Norton, 1980), p. 48, concludes: "All in all, one must admit that the portion of income drawn by the public sector most certainly increased from the eleventh century onward all over Europe, but it is difficult to imagine that, apart from particular times and places, the public power ever managed to draw more than 5 to 8 percent of national income." He notes further that this portion was not systematically exceeded until the second half of the nineteenth century. See also the two following notes.

Moreover, private ownership of government implies moderation for yet another systema
tic reason. All priva
te property is by def
inition exclusive pro
perty. He who owns pr
operty is entitled to exclude
everyone else from its use and enjoyment, and he is at liberty to choose with whom, if anyone, he is willing to share in its usage. Typically, a private-property owner will include his family and exclude all others. The property becomes family property with him as the head of the family, and every nonfamily person will be excluded from using family property, except as invited guests or as paid employees or contractors. In the case of government, this exclusive character of private property takes on a special meaning. In this case it implies that everyone but the ruler and his family is excluded from benefiting from nonproductively acquired property and income. Only the ruling family—and to a minor extent its friends, employees, and business partners—shares in the enjoyment of tax revenues and can lead a parasitic life. The position as head of government—and of the government estate—is typically passed on within the ruling family, such that no one outside the king's family can realistically hope to become the next king. While entrance into the ruling family might not be closed entirely, it is highly restrictive. It might be possible to become a family member through marriage. However, the larger the ruling family, the smaller each member's share in the government's total confiscations will be. Hence, marriage typically will be restricted to members of the ruler's extended family. Only in exceptional cases will a member of the ruling family marry a complete "outsider"; even if this occurs, a family member by marriage will not normally become the head of the ruling family.

²¹
On the recognition of the pre-existing private-property law by monarchs see Bertrand de Jouvenel,
Sovereignty,
esp. chaps. 10 and 11.

The attitude of the sovereign toward rights is expressed in the oath of the first French kings: "I will honor and preserve each one of you, and I will maintain for each the law and justice pertaining to him." When the king was called "debtor for justice," it was no empty phrase. If his duty was
suum
cuique
tribuere,
the
suum
was a fixed datum. It was not the case of rendering to each what, in the plenitude of his knowledge, he thought would be best for him, but what belonged to him according to custom. Subjective rights were not held on the precarious tenure of grant but were freehold possessions. The sovereign's right also was a freehold. It was a subjective right as much as the other rights, though of a more elevated dignity, but it could not take the other rights away. (pp. 172-73) de Jouvenel later goes on to say:

The much-cited anecdote of Frederick the Great and the miller of Sans-Souci faithfully represents the ancient state of affairs. The king's rights have incomparably greater scope than those of the miller; but as far as the miller's right goes it is as good as the king's; on his own ground, the miller is entitled to hold off the king. Indeed there was a deep-seated feeling that all positive rights stood or fell together; if the king disregarded the miller's title to his land, so might the king's title to his throne be disregarded. The profound if obscure concept of legitimacy established the solidarity of all rights, (p. 189) And on the funding of kings, de Jouvenel notes that:

State expenditures, as we now call them, were thought of in feudal times as the king's own expenditures, which he incurred by virtue of his station. When he came into his station, he simultaneously came into an "estate" (in the modern sense of the word); i.e., he found himself endowed with property rights ensuring an income adequate to "the king's needs." It is somewhat as if a government of our own times were expected to cover its ordinary expenditures from the proceeds of state-owned industries, (p. 178)

However, it remains worth emphasizing that any monopolization of law and order still implies higher prices and/or lower product quality than those prevailing under competitive conditions, and that even a king will still employ his monopoly of punishment to his own advantage: by shifting increasingly from the principle of restituting and compensating the victim of a rights violation to that of compensating himself, the king. See on this Bruce L. Benson, "The Development of Criminal Law and Its Enforcement,"
Journal
des
Economistes
et
des
Etudes
Humaines
3
(1992).