Back in college, when Bitcoin was brand new, I was still a techno-optimist trotskyite, and I was only just halfway through Human Action for the first time, I had a weird conversation with an upperclassman.

I was arguing about Aristotelianism and its contributions to communism with a classmate when this upperclassman interrupted and began building a case for restoring a Catholic monarchy. Needless to say, I was neither surprised nor impressed… at least at first. Then, he started using the terminology used in Human Action and really got my attention.

At the end of our conversation, I was far from sold on his case for monarchy but I was willing to read the book he offered me off the shelf in the school library: Democracy: The God That Failed. I read the book and it changed my understanding of the world irrevocably. As a matter of fact, I went back and read the first half of Human Action again, and actually understood it. I wasn’t an immediate convert, though; it would be another two years before I dropped real communism in favor of communism light: republican conservatism.

Why all the autobiography in a book review? I wanted people to know the reluctance with which I engaged the ideas in this book and the profound change it had on my philosophical moorings.

In this book, Hans Hermann Hoppe begins by exploring the historio-economic history of the rise of democracy, explores econ 101 as could only be taught by an Austrian economist who studied directly under Rothbard, and proceeds to describe the economics behind democracy, monarchy, and natural order. Of course, he makes the same case all Austrians do: “Value is subjective, so I’m not going to tell you what to value, but I am going to show you the relationships between various causes and effects so that you can act on those values efficaciously. So, if you value human flourishing…”

The primary focus of Hoppe is the nature of economics and the incentives that emerge under different political arrangements, specifically monarchy, democracy, and anarchy. I couldn’t do the work justice without approaching a page count comparable to the book, but I do want to give you a preview of what’s in store.

In the case of anarchy, economic incentives parallel the Darwinian reality of nature and, where many argue that is a flaw of anarchy, it is inescapable no matter what social structure one builds on top of that state of nature. For example, survival of those best conditioned to live in a particular environment is one such reality. The way this plays out in the absence of the state is that those better suited to delay gratification, cooperate with others, and defend private property are more likely to benefit from a division of labor, specialization of skills, and technological advancement than those who are less suited to such activities.

In the absence of criminal or political elements which undermine these activities, there will be a natural selective process by which those who have these abilities amass more wealth, social capital, and mating opportunities than those who do not. On a long enough timeline, this will create evolutionary side-effects but even in the short-run, market forces naturally puts wealth in the hands of those best suited to invest it in a beneficial manner. Hoppe notes that this process is, both a-priori and historically, the origin of monarchies.

Any given region with sufficient selective processes will eventually have the most well-adapted stock in charge of all or nearly all the land or other resources in the region, making the entire region one large landlord/renter arrangement. Given that this individual in-charge acquired this position by way of making wise investments and mutually-advantageous exchanges, there would be no reason to cease doing so at this point; this means that the de-facto king will continue making decisions directed at improving the value of his assets which, in turn, increases the quality of life of his tenants.

This means that those in service of the king do so by way of voluntary employment: knights, soldiers, constables, etc. provide for the security and management of the king’s assets in exchange for what amounts to wages and employee discounts/benefits. If, at any point, a tenant or employee is unable or unwilling to abide by the rules of the landlord, they can emigrate or be exiled.

It is this liberty which is at the heart of all the incentives for a healthy economy in a monarchy. The king, in order to maintain or increase the value of his property, must strive to make it worth the cost of rent for his existing and potential productive tenants to remain and the tenants must make it worth the king’s time to invest in their quality of life. At the point in time the king no longer allows individuals to leave or otherwise undermines their ability to function within the bounds of private property, he invalidates his rightful claim to the property he is leasing to his tenants and becomes something more like a tyrant or warlord.

With that transition, the people are incentivized to undermine the king’s property value while building their own investments. This leads to “black markets”, political graft, treason, and invitations to foreign kings or barbarians to invade. Such a transition is a death knell for that particular region’s economy and culture. By and large, this is the story of the collapse of the British Crown and Empire. Of course, what came next was less than preferable: the rise of democracy.

In much the same way as when a king becomes a criminal, when a democratic social order is imposed on a people, the economic incentives get turned upside-down. Whereas a king owns the kingdom and has both the natural inclination as well as economic incentive to manage it for the sake of long-term gains, a president does not own the state. Instead, a president has near-unlimited access and control over the criminal apparatus of the state designed for expropriation and market manipulation for a limited amount of time. In such a circumstance, a president is incentivized to raise taxes, secure long-term benefits for himself at the expense of future taxpayers and presidents, and to funnel value into the assets he actually owns and that his friends own.

It’s not just the politicians who are corrupted either. Whereas anarchy and de-facto anarchistic monarchy are naturally eugenic, selecting for those most able to cooperate and produce value for others, democracy is a dysgenic process, selecting for those best able to rile the masses into demanding benefits at the expense of those producing the taxed revenue, those best suited to criminal activity, and actually incentivizing all of the behaviors witnessed in the seediest inner-city slums.

The majority of the text is spent on exploring all off the perverse and dysgenic economic incentives which democracy installs over and above, and in direct contradiction to, the natural order. Given that HHH is the economist and I am not and that he spends about 150 pages on the subject, I’ll leave the rest to him. In the meantime, I want to move on to the final portion of his text.

The final portion of the text is focused on where one could be expected to go in a post-democracy world. Barring a wholesale collapse of western civilization a-la the fall of Rome which preceded the rise of free-market monarchies, it is unlikely that the state will find an appropriate method by which to auction off its properties to the people in such a way so as to undo the undue gains of the corporate entities which have grafted themselves onto the political machine. Instead, modern economic technologies such as mutual and voluntary associations and risk-pools (such as HOAs and insurance companies) can simply begin to compete with the political apparatuses and, due to the nature of voluntary markets, outperform the state and put them out of business, so long as they secure their ability to defend against the states’ violence.

This scenario seems to have a fair amount of potential behind it, given HHH’s economic arguments to the efficiency and efficacy of such a transition. While the arguments are very involved and well-argued, the general theme of the argument is that “The state provides for (or at least, doesn’t wholly disallow) various services, such as the roads, education, security, risk pooling, etc. because there is a demand for it, and in the absence of the state, there would still be a demand for what amounts to our current status quo. He explores the economic incentives that would be in place wile fulfilling those market demands in the absence of the states’ direct influence and the social order that is likely to come about as a result of those demands and incentives.

From what I know of Hoppe’s other works, I think that he finds the outcome he presents to be most preferable. While I have a more traditionalist and rugged individualist bias, which I think would be sustainable in a free-market environment, I find his proposed option infinitely preferable to what we have today. Essentially, we would have all the bourgeois amenities such as grocery stores, roads, internets, common currencies, military defenses etc. without any of the current fallout such as poorly-planned roads, wars of foreign aggression, taxation, and perverted markets.

He makes a compelling case for why competitive insurance agencies would actually manage to provide the services that government cannot in a manner consistent with property rights and individual liberties, all economically-based, of course. The first time I read this book, I was very off-put by his apparent love for insurance companies, but the second time around I realized that he’s not talking about your dad’s insurance companies, the ones twisted and maligned by intimate relationships with state violence and regulations, but real risk-mitigation and risk-sharing pools owned and managed by the people best suited to managing such affairs in a competitive market.

His cases for what ought to come next seem fairly abstract, and he has been called out on that abstractedness by many other authors. To which he responded with a supplementary essay titled “What Must be Done”, wherein he outlines, step-by-step, what he believes to be the most direct and moral route from here to there in modern-day-America. Seeing as how this essay is far more controverial than Democracy: The God That Failed , this is an appropriate place to bring up the most controversial parts of the book (as if advocating the case for monarchy over democracy and anarchy over monarchy isn’t counter-cultural enough). There is a quote of his, from the middle of the book which has become quite popular in my circles on facebook:

He also makes the case that a free market will naturally select for what has been the traditional family and lifestyle structure in the West. It’s not too unreasonable to think this, seeing as how that traditional family structure necessarily emerged from the selective pressures extant at the time (pre-feudal Europe) and still seem to have the most economically sound incentive structures built into them, from the a-priori angle. Where it gets controversial is when he argues that insurance companies (in their free-market iteration) will act to mitigate moral hazard rather than promote it and, that mitigation of moral hazard is likely to result in (justified) discrimination against those individuals choosing alternative lifestyles, such as homosexuality, polygamy/andry, extreme drug use, and other things that the cultural “right” views as deviant. This discrimination could be as benign as increased premiums or as intense as a denial of coverage which, in Hoppe’s propertarian conception, would result in physical exile from certain communities. As I’ve covered in my post on LibPar, this does not necessarily mean the end of the homosexual lifestyle or culture, it merely means that communities would have to form around such lifestyle choices and they would have to either be isolationist or able to compete in the marketplace against their more conservative neighbors.

The book is incredibly well-researched and annotated. There are footnotes on every page, some taking up entire pages in their own right. They are drawn from all sorts of references, not just Austrians; Hoppe calls upon historians of every political persuasion, mainstream econometricians, Austrian economists, sociologists, and more. There are a few texts that he referenced enough times that they have been put on my reading list.

TL;DR: Democracy: The God That Failed is one of the books that, if there were a canon of AnCap literature, would be in said canon. When I first read the book, it neither converted me from my communist ways, nor did it convince me to become a Catholic monarchist as was the intent of the guy that told me to read it. In hindsight, though, it was the only way that I could begin to understand what AnCaps on facebook were saying and gave me something to argue against. As is typical, though, a few years later I could recall the things I had argued against, but had changed my position on all of them. I decided to re-read the book and discovered that, on all the key points at least, I agree with HHH. There are some minor side details and some expressed preferences that I hold contrary views on, but I think this book is a Must-Read, right after Human Action.