Capitalism, Socialism and Democracy

Hilton Root discusses democracy, free markets and the tensions of supercapitalism.

Comments

[John V]

I do plan on reading further but I'm sorry, Dr. Boettke, this passage at the beginning struck me as being a little inaccurate if not somewhat glib and misleading:

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"During the 19th century, most Western elites viewed rule by the people as inclined to demagogy and hence an enemy of economic liberty, private property, religious and political rights. The fusion that transformed individual freedom and popular sovereignty from being perceived as opposites into being hailed as complements explains the extraordinary surge of democracy during the last quarter of the 20th century."

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I never saw monarchy as a defender of economic freedom in any way....other than maybe the King's freedom to do as he pleased. And as for protecting property, well, they may have been the case but it always struck as a little misleading since everythinh technically belonged to the King and doled out to the nobles.

Don't you find that intro to be a little bit of a shaky premise?

[Bogdan Enache]

John,

The quote above is exactly right regarding the perception of democracy in the 19th century. As a matter of historical fact, the only people advocating democracy back then were socialists or Jacobite radicals inspired by Jean Jacques Roussseau's political philosophy and the second phase of the French Revolution. In fact, democracy had a bad reputation for the most part of Western history. Aristotle and Platon's political philosophies for example are a reaction against democracy and the first modern thinker who writes something positive about democracy is Spinoza, late in the 17th century.

One must understand that democracy had a socialist, even proto-totalitarian sense for Rousseau and the Jacobites. They understood it as a political system that will bring real equality (not just formal equality under the law) between individuals through the collectivisation of property and subject all people to a common general will. Consequently, you should not be surprised if the 19th century liberals were against this. As a practical policy, thy supported poll taxes in order to stop the masses from taking power and acting against the law by oppressing the more affluent minority and so on. The 19th century classical liberals' ideal form of government was the representative governement understood as a minimal government designed to uphold, equaly and for everyone, the principles of the rule of law. It didn't matter for most of them if the regime was monarchical or republican as long as it acted within the limits of the rule of law (however, they agreed that some sort of control by the people of its representatives exercising the government power was necessary, though this did not necessarily required a democratic procedure). Benjamin Constant, one of the greatests 19th century liberals, made great efforts to explain the the liberals' goal is not to extend political power to everyone, in other words to politicize society; their goal is to limit it so that individuals could be free in their private business and society can prosper. Another great political thinker from the same period, Tocqueville, today sometimes read as an admirer of what he considered democracy in America of his time, actually was very critical, as a liberal, of the "inevitable tendency" towards ever increasing equality, beyond the strict equality before the law, i.e. equality in behaviour, equality in opinion and so on that democracy will bring about. Moreover, during the 1848 revolutions in Europe when at the beginning the radical and the classical liberals stood united against conservatives, Tocqueville made it clear in a famous speech that (approximate quote) while for liberals democracy means equality in freedom, for the socialists democracy means equality in slavery. Finally, John Stuart Mill's defense of minorities in "On Liberty" is also connected with the common fear among 19th century liberals of the servitude that the equalizing tendencies of democracy will bring about, in politics, business, intellectual life and so on. However, Mill is also the first classical liberal who argued in the last part of his life (when he became more sympathetic to the socialist cause) for universal suffrage and even said that a socialist society with no private property would function as efficiently if not more efficiently than a liberal one...

There's a lot to be said on this subject, but I hope that from the short remarks above you will understand that the classical liberals' rejection of democracy in the 19th century was real and well argued on liberal principles as best understood in the historical conditions of that time.

Regarding monarchy and the protection of property rights, your view is again not supported by history. According to roman law, old German feudal law and the christian canon law, the monarch was NOT the owner of the country and of its people, but its guardian. He could not confiscate property as he pleased, tough there were monarch who did that of course. The monarch was, in theory at least, held responsible before the Law, the council of nobles (who were his equals, before the absolutist monarchical regimes) and the Christian faith - usually as interpreted by the leaders of the Church. On the other hand, the modern 19th century monarchies, like the Habsburg monarchy (to say nothing of the constitutional monarchies that most liberals back then advocated for) were based on the principle of defending the rule of law, thus the monarch was the first public servant (and I think now I'm quoting from something the Austria-Hungarian emperor Franz Joseph once said). This was not just "theory", but reality and as evidence the 19th century European "bourgeois classes" supported these monarchical regimes.

Things are more complicated once we take a step back in history and the history of ideas. The simple opposition between monarchies (bad) and democracy (good) doesn't hold tough the relevance of this sort of debate today is almost none because even constitutional monarchies today are de facto representative democracies.

Two books, written by a 20th century classical liberal French economists and political thinker are especially interesting with regard to this themes : Bertrand de Jouvenel "On Power" and "On Sovereignty".

[TGGP]

I reviewed de Jouvenel's "On Power" at http://entitledtoanopinion.wordpress.com/2007/09/16/just-finished-bertrand-de-jouvenels-on-power/ and discussed why I am not a Hobbesian at http://entitledtoanopinion.wordpress.com/2007/10/11/hey-just-why-am-i-not-a-hobbesian/
Erik von Kuehneldt-Leddihn and Hans Herman Hoppe have also tried to argue that monarchy meshes better with liberty than democracy.

[Rafe Champion]

Taking up Bogdan's point, the fusion of freedom with popular sovereignty is likely to prove fatal for freedom. It helps to understand that all theories of sovereignty are paradoxical and the answer is to accept the popular vote a way of peacefully changing the leadership (as Mises wrote), not a knock-down solution to the problem, and to opt for the minimal state with a range of checks and balances. http://www.the-rathouse.com/OpenSocietyOnLIne/Chapter-7-Leadership.html

[TGGP]

To play the devil's advocate Rafe, what if democracy is incompatible with a minimal state (many of the Founders thought so) and encourages the use of violence when it comes to changes in leadership (look at Kenya)?

[Rafe Champion]

Following Mises and Popper, I define democracy as a system where the leadership can be changed by non-violent means. This is a minimal requirement and it leaves open just about every issue that needs to be addressed but at least it opens up the issues instead of pretending that some major problem is solved by defining the "true nature of democracy" or finding a final and definitive answer to the quetion "who should rule?". I have the impression that the founders were alert to the problem of factions well in advance of public choice theory. Following Hutt I am aware of the vote-buying motive and the problems that it created as the franchise widened last century (for example special privileges for trade unions).

What we call democracy or democratic capitalism in the affluent and relatively free states of the west is a kind of miracle and a fragile one which is constantly at risk, especially from economic illitaracy that is shared by radicals and the kind of conservatives that Hayek targetted in his essay 'Why I am not a conservative'.

Sadly people thought that it was the practice of voting that delivered the miracle and that is supposed to be the long and short of democracy (defined as majority rule). Of course the miracle came from other sources and there is a race against time to spread the undestanding of those other sources before the bipartisan process of undoing the miracle has done too much damage.

[TGGP]

Defining democracy as having some positive aspect leads to "No true Scotsman" talk. In 19th century America political parties often had paramilitary street-gangs, as was also the case in interwar Europe.
Some posts from Mencius Moldbug you might be interested in:
http://unqualified-reservations.blogspot.com/2007/07/democracy-as-adaptive-fiction.html
http://unqualified-reservations.blogspot.com/2007/12/why-i-am-not-libertarian.html

[Rafe Champion]

Thanks TGGP! What argument do you or Mencius have with the principles of the minimum state, rule of law, moral framework etc along with a mechanism to peacefully turn over the leadership at intervals, as suggested by Mises and Popper?

What is the point of the reference to paramilitary street gangs?

[TGGP]

What argument do you or Mencius have with the principles of the minimum state, rule of law, moral framework etc along with a mechanism to peacefully turn over the leadership at intervals, as suggested by Mises and Popper?
You should talk to Mencius if you really want his opinion, but I'll try to explain (though I do not share all his opinions). It is silly to expect a state to restrain itself, it must have reason to. You can write a constitution, but the state will flagrantly violate it as there is no authority above it (that's sovereignty for you) and it has reason to do so. Mencius claims that "minimal government is anti-propertarian":
http://unqualified-reservations.blogspot.com/2007/05/limited-government-as-antipropertarian.html
Rule of law is indeed good, but it will only happen if the state believes it has an interest in obeying its own law, which is frequently not the case in democracy (or more generally in what Mencius calls "demotism").
As Bruce Bueno de Mesquita can tell you, government is always at its most unstable when power is being transferred. Mancur Olson helps to explain why stable government is a good thing: it encourages a lower time preference on the part of the government (it wants its subjects to create more wealth for it to leech off of down the line) and there is less squabbling over who will control the government and seize those rents. Mencius tries to explain why an immortal, invulnerable ruthless and greedy alien dictator wouldn't be so bad here:
http://unqualified-reservations.blogspot.com/2007/05/magic-of-symmetric-sovereignty.html

A mechanism to determine who will be in power does not ensure that the transition will be peaceful. Just look at Kenya or Columbia during "La Violencia".

What is the point of the reference to paramilitary street gangs?
Mencius' point is that they are endemic to real democracy, though in a modern "managed democracy" of the type endorsed by Lippman in "Public Opinion" and best exemplified by the E.U certain positions are marginalized enough so that only the paramilitary street gangs favored by "The Polygon" will persist.

Mencius is a big fan of Mises, and is especially fond of favorably contrasting the Austro-Hungarian empire which he lived in to the "demotisms" that replaced it. I don't know if he's ever read any Popper (I haven't either), but I've gotten into epistemological arguments with him where I took the more Popperian position and he argued for praxeology or "reservationism":
http://unqualified-reservations.blogspot.com/2007/08/reservationist-epistemology.html