DemocracyThe God That Failed (6 page)

(apart from not being allowed to cause any physical damage to the property of B), then the tendency toward a fall in the rate of time preference will be disturbed, halted, or even reversed.

The violations of property rights—and the effect they have on the process of civilization—can be of two kinds. They can take the form of criminal activities (including negligent behavior), or they can take the form of institutional or governmental interference.

The characteristic mark of criminal invasions of property rights is that such activities are considered illegitimate or unjust not only by the victim, but by property owners in general (and possibly even by the criminal himself). Hence, the victim is considered to be entitled to defend himself if need be by retaliatory force, and he may punish and/or exact compensation from the offender.

The impact of crime is twofold. On the one hand, criminal activity reduces the supply of the goods of the victimized appropriator-producer -exchanger, thereby raising his effective time-preference rate (his timepreference schedule being given). On the other hand, insofar as individuals perceive a risk of future victimization they will accordingly reallocate their resources. They will build walls and fences, install locks and alarm systems, design or buy weapons, and purchase protection and insurance services. The existence of crime thus implies a setback in the process toward a fall in the rate of time preference as far as actual victims are concerned, and it leads to expenditures—by actual
and
potential victims—which would be considered wasteful without the existence of crime.
¹⁰

Therefore, crime or a change in its rate has the same type of effect on time preference as the occurrence or a changed frequency of "natural" disasters. Floods, storms, heat waves, and earthquakes also reduce their victims' supplies of present goods and thus increase their effective timepreference rate. And the perceived risk-change of natural disasters also leads to resource reallocations and expense adjustments—such as the construction of dams, irrigation systems, dikes, shelters, or the purchase of earthquake insurance—which would be unnecessary without these natural risks.

More importantly, however, because actual and potential victims are permitted to defend, protect, and insure themselves against both social disasters such as crime as well as natural ones, the effect of these on time preference is temporary and unsystematic. Actual victims will
save or invest a smaller amount of goods because they are poorer. And the altered risk perceptions among actual and potential victims shape the
direction
of their future actions. But as long as physical protection and defense are permitted, the existence of social or of natural disasters does not imply that the time-preference
degree
of actual or potential victims —their degree of /uh¹²

¹⁰
See also Gordon Tullock, "The Welfare Costs of Tariffs, Monopolies, and Theft,"
Western
Economic
Journal
5 (1967).

Matters fundamentally change and the process of civilization is permanently derailed whenever property-rights violations take the form of government interference, however. The distinctive mark of government violations of private property rights is that contrary to criminal activities they are considered legitimate not only by the government agents who engage in them, but by the general public as well (and in rare instances possibly even by the victim). Hence, in these cases a victim may
not
legitimately defend himself against such violations.
¹³

11
In terms of Figure 1 above: Social and natural disasters alike imply a movement upward and to the left on a given time-preference curve—insofar as actual victims are concerned. But they do not imply a change in a person's character structure, i.e., a shift from a lower to a higher time-preference curve. Such a shift occurs in the presence of government disasters, however.

12
On the evolution and efficiency of systems of competitive law courts and privately provided defense and law enforcement see Gustave de Molinari,
The
Produc
tion
of
Security
(New York: Center for Libertarian Studies, 1977); William C. Wooldridge,
Uncle
Sam
the
Monopoly
Man
(New Rochelle, N.Y.: Arlington House, 1970); Murray N. Rothbard,
ForANew
Liberty
(New York: Macmillan, 1978); Hoppe,
The
Economics
and
Ethics
of
Private
Property;
Morris and Linda Tannehill,
The
Market
for
Liberty
(New York: Laissez Faire Books, 1984); Terry Anderson and P.J. Hill, "The American Experiment in Anarcho-Capitalism: The Not So Wild, Wild West,"
Journal
of
Libertarian
Studies
(1980); Bruce L. Benson, "Guns for Protection, and other Private Sector Responses to the Government's Failure to Control Crime,"
Journal
of
Libertar
ian
Studies
(1986); idem,
The
Enterprise
of
Law:
Justice
Without
the
State
(San Francisco: Pacific Research Institute, 1990); Roger D. McGrath,
Gunfighters,
Highwaymen,
and
Vigilantes:
Violence
on
the
Frontier
(Berkeley: University of California Press, 1984); idem, "Treat Them to a Good Dose of Lead,"
Chronicles
(January 1994).

¹³
On the theory of the state see besides the works cited in footnote 9 above Franz Oppenheimer,
The
State
(New York: Vanguard Press, 1914); idem,
System
der
Soz
iologie,
vol. 2,
Der
Staat
(Stuttgart: Gustav Fischer, 1964); Alexander Rustow,
Free
dom
and
Domination
(Princeton, NJ: Princeton University Press, 1980); Charles Tilly, "War Making and State Making as Organized Crime," in
Bringing
the
State
Back
In,
Peter B. Evans, Dietrich Rueschemeyer, and Theda Skocpol, eds. (Cambridge: Cambridge University Press, 1985); Richard Epstein,
Takings:
Private
Prop
erty
and
the
Power
of
Eminent
Domain
(Cambridge, Mass.: Harvard University Press, 1985).

The imposition of a government tax on property or income violates a property or income producer's rights as much as theft does. In both cases the appropriator-producer's supply of goods is diminished against his will and without his consent. Government money or "liquidity" creation involves no less a fraudulent expropriation of private-property owners than the operations of a criminal counterfeiter gang. Moreover, any government regulation as to what an owner may or may not do with his property—beyond the rule that no one may physically damage the property of others and that all exchange and trade with others must be voluntary and contractual—implies a "taking" of somebody's property on a par with acts of extortion, robbery, or destruction. But taxation, the government's provision of liquidity, and government regulations—unlike their criminal counterparts—are considered legitimate, and the victim of government interference—unlike the victim of a crime—is
not
entitled to physical defense and protection of his property.

Because of their legitimacy, then, government violations of property rights affect individual time preferences systematically differently and much more profoundly than does crime. Like crime, government interference with private-property rights reduces someone's supply of present goods and thus raises his effective time-preference rate. Yet government offenses—unlike crime—simultaneously raise the time-preference
de
gree
of actual and potential victims because they also imply a reduction in the supply of
future
goods (a reduced rate of return on investment). Crime, because it is illegitimate, occurs only intermittently—the robber disappears from the scene with his loot and leaves his victim
alone. Thus, crime can be dealt with by increasing one's demand for protection goods and services (relative to that for nonprotection goods) so as to restore or even increase one's future rate of investment return and make it less likely that the same or a different robber will succeed a second time with the same or a different victim. In contrast, because they are legitimate, governmental property-rights violations are continual. The offender does not disappear into hiding but stays around, and the victim does not "arm" himself but must (at least he is generally expected to) remain defenseless.
¹⁴
Consequently future property-rights violations, rather than becoming less frequent, become institutionalized. The rate,
regularity, and duration of future victimization increases. Instead of by improved protection, the actual and potential victims of government property-rights violations—as demonstrated by their continued defenselessness
vis-a-vis
their offenders—respond by associating a permanently higher risk with all future production and systematically adjusting their expectations concerning the rate of return on all future investment downward.

¹⁴
LysanderSpooner,
No
Treason:
The
Constitution
of
No
Authority
(Larkspur, Colo.: Pine Tree Press, 1966) writes:

Competing with the tendency toward a falling rate of time preference, another opposing tendency comes into operation with the existence of government. By simultaneously reducing the supply of present
and
(expected) future goods, governmental property-rights violations not only raise time-preference rates (with given schedules) but also time-preference schedules. Because appropriator-producers are (and see themselves as) defenseless against future victimization by government agents, their expected rate of return on productive, future-oriented actions is reduced all-around, and accordingly all actual and potential victims become more present-oriented.

As will be explained in the course of the following section, if government property-rights violations take their course and grow extensive
enough, the natural tendency of humanity to build an expanding stock of capital and durable consumer goods and to become increasingly more farsighted and provide for ever-more distant goals may not only come to a standstill, but may be reversed by a tendency toward decivilization: formerly provident providers will be turned into drunks or daydreamers, adults into children, civilized men into barbarians, and producers into criminals.

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 a 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 travelers, 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 out of more money as often as he finds it for his interest or pleasure to do so; and by branding 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, (p. 17)

Government,
Government
Growth,
And
The
Process
Of
Decivilization:
From
Monarchy
To
Democracy

Every government, and that means every agency that engages in continual, institutionalized property-rights violations (expropriations), is by its nature a territorial monopolist. There can be no "free entry" into the business of expropriations; otherwise, soon nothing would be left that could be expropriated, and any form of
institutionalized
expropriation would thus become impossible. Under the assumption of self-interest, every government will use this monopoly of expropriation to its own advantage—in order to maximize its wealth and income. Hence every government should be expected to have an inherent tendency toward growth. And in maximizing its own wealth and income by means of expropriation, every government represents a constant threat to the process of civilization—of falling time preferences and increasingly wider and longer provision—and an expanding source of decivilizing forces.

However, not every government prospers equally and produces decivilizing forces of the same strength. Different forms of government lead to different degrees of decivilization. Nor is every form of government, and every sequence of government forms, equally probable.

Given that all expropriation creates victims and victims cannot be relied upon to cooperate while being victimized, an agency that
institu
tionalizes
expropriation must ha
ve legitimacy. A majority of the nongovernmental public must regard the government's actions as just or at least as fair enough not to be resisted so as to render the victim defenseless.
¹⁵
Yet acquiring legitimacy is not an easy task. For this reason, it is not likely, for instance, that a single world government could initially arise. Instead, all governments must begin territorially small. Nor is it likely, even for as small a population as that of a clan, a tribe, a village, or a town, that a government will initially be democratic, for who would not rather trust a specific known individual—especially in as sensitive a matter as that of a territorial monopoly of expropriation—than an anonymous, democratically elected person? Having to begin small, the original form of government is typically that of
personal
rule: of
private
ownership of the governmental apparatus of compulsion (monarchy).
¹⁶
In every society of any degree of complexity, specific individuals quickly acquire elite status as a result of having diverse talents. Owing to achievements of superior wealth, wisdom, bravery, or a combination thereof, particular individuals command respect, and their opinions and judgments possess natural authority. As an outgrowth of this authority, members of the elite are most likely to succeed in establishing a legitimate territorial monopoly of compulsion, typically via the monopolization of judicial services (courts and legislation) and law enforcement (police).
¹⁷
And because they owe their privileged position to
their personal elitist character and achievements, they will consider themselves and be regarded by their fellows as the monopoly's
personal
owner.
Democratic rule—in which the government apparatus is considered "public" property administered by regularly elected officials who do
not
personally own and are not viewed as owning the government but as its temporary
caretakers
or
trustees
—typically only follows personal rule and private government ownership. Because masses or majorities cannot possibly possess any natural authority (this being a personal, individual trait), democratic governments can acquire legitimacy only unnaturally—most typically through war or revolution. Only in activities such as war and revolution do masses act in concert and do victory and defeat depend on mass effort. And only under exceptional circumstances such as these can mass majorities gain the legitimacy needed to transform government into
public
property.

¹³
On the fundamental importance of favorable public opinion for the exercise of government power see the classic treatment by Etienne de la Boetie,
The
Politics
of
Obedience:
The
Discourse
of
Voluntary
Servitude
(New York: Free Life Editions, 1975), with an introduction by Murray N. Rothbard; see also David Hume, "The First Principles of Government" in
Essays:
Moral,
Political,
and
Literary
(Oxford: Oxford University Press, 1971). Thus, Hume writes:

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 governments, as well as to the most free and popular. The sultan of Egypt, or the emperor of Rome, might drive his harmless subjects, like brute beasts, against their sentiment and inclination. But he must, at least, have led his mamalukes or praetorian bands, like men, by their opinions.
(Essays,
p. 19) See also Mises,
Human
Action,
pp. 863-64.