"The Competition of Crooks" -- Hans Hoppe Explains How Democracy REALLY Works

TheGodThatFailed.org
Jun. 09, 2012

[Professor Hans Hermann Hoppe is Interviewed by MisesInfo on his new book, "The Competition of Crooks," which explains the true nature democracy.]

First of all, Mr. Hoppe, thank you for taking the time to give us this interview. You have written in your new book, Der Wettbewerb der Gauner (“The Competition of Crooks”), that “We don’t need a European super state, which the European Union is seeking to establish … but rather a Europe and world consisting of hundreds or even thousands of tiny Liechtensteins and Singapores.” Such a trend is not apparent at the moment, rather the opposite. Do things first have to get even worse – politically and economically – , before they get better again?

Unfortunately, I’m afraid so. Before that we’ll probably have to experience national bankruptcy spreading through Portugal, Spain, Italy and ultimately on to Germany. Only then, I fear, will it become clear to everyone what many people already suspect now: that the EU is nothing but a gigantic machinery of income and wealth redistribution, from Germany and the Netherlands to Greece, Spain, Portugal, and so on. But that’s not all. It will also become clear that the same insanity, the same mess, exists even within each individual country: redistribution from Bavaria and Baden-Württemberg to Bremen and Berlin, from Little Town A to Little Village B, from one company or industry to another, from Smith to Jones and so on – and always following the same perverse pattern: redistribution from the more productive countries, regions, places, companies and individuals to those that are less productive or not productive at all. Bankruptcy will bring all of this to light in a dramatic fashion.

And perhaps then, finally, will come the realization that democracy – in whose name all these dirty tricks have been done – is nothing more than an especially insidious form of communism, and that the politicians who have wrought this immoral and economic madness and who have thereby enriched themselves personally (never, of course, being liable for the damages they have caused!), are nothing more than a despicable bunch of communist crooks.

Recently we published an excerpt on www.misesinfo.org from von Mises’ book Bureaucracy, which states: “Representative democracy cannot subsist if a great part of the voters are on the government payroll.” You, too, echo these points, almost 70 years later. When will von Mises’ insights finally bear fruit?

I go even further in my views than Mises. I maintain, and have tried to provide evidence of this in many different ways in my writings, that it is democracy which is causally responsible for the fatal conditions afflicting us now. The number of productive people is constantly decreasing, and the number of people parasitically consuming the income and wealth of this dwindling number of productive people is increasing steadily. This can’t work in the long run.

That the whole democratic house of cards has not yet completely collapsed speaks volumes about the still tremendous creative power of capitalism, even in the face of ever-increasing governmental strangulation. And this fact also allows us to conjecture about what economic ‘miracles’ would be possible if we had unimpeded capitalism liberated from such parasitism.

If, and when, this insight finally bears fruit will depend upon the class consciousness of the population. There is a Marxist myth, eagerly promoted by the state, of an irreconcilable clash of interests between employers (capitalists) and employees (workers), or between the rich and the poor. As long as this myth prevails in public opinion, nothing at all will change and disaster is inevitable.

A fundamental change can only occur if, instead of this, the correct realization becomes generally accepted that the only antagonistic conflict of interest in society is the one between tax-payers, i.e. the exploited, and tax-consumers, i.e. the exploiters.: In other words, between the class of people on the one hand who earn their income and assets by producing something that is bought voluntarily and valued accordingly by others; and the class of those on the other hand who produce nothing considered to be of value, but who live instead by living off and enriching themselves from the incomes and assets of other, productive people, forcibly taken via taxation – that is to say all government employees and all recipients of government “welfare assistance”, subsidies and monopolistic privileges.

Only when the producer class clearly recognises this, and publicly speaks out; when the producers are finally confident to take the moral high ground and reject the insolent admonitions from the political class as moral and economic effrontery, and aggressively expose and denounce the political class for the gang of parasites it is, may it be possible to beat back and ultimately eliminate these parasites.

You indirectly criticize people for “only caring about their daily lives”, and “not thinking about philosophical matters.” But are you not asking too much here? In a constantly worsening economic, and particularly monetary, environment, are most people not busy enough trying to earn a living and make ends meet, without worrying about philosophy?

My statement was not intended as a criticism of “John Doe”, but as a simple statement of fact. I think it is completely normal that most people never concern themselves with philosophical questions. Only a few people are ever interested in such questions, and even fewer people have the intellectual capacity to actually clarify or even solve these problems.

On the contrary, my comments were intended to systematically encourage John Doe. To tell him, and this is coming from an intellectual, an insider so to speak, that his popular prejudice against intellectuals – that as a rule they are worthless gasbags and smartasses – is quite right. That there are far too many intellectuals, because the state pays for and subsidises them via taxes taken from rest of us. That this colors and distorts the object and result of their thinking – towards statism. That it is he, the average consumer, who has to pay for the whole wasteful nonsense, and that therefore he has every reason to cry out and be indignant.

Your book’s thesis is that the government is a monopolist of ultimate justice and law enforcement and that every monopoly is always bad from the perspective of the consumer – in this case the citizen. Your alternative solution is a private law society. How can a “layman” understand what this entails?

The basic idea is quite simple. Abolish monopoly and encourage competition.

Currently, it is the case that in the event of a conflict between a citizen and the state, it is always the state (or a state-employed judge) that decides who is in the right. If the state decides, for example, that I owe it more taxes and it forbids me to allow people to smoke in the restaurant I own, and I do not agree with either of these pronouncements, then what can I do about it? I can only go to a state court of law, staffed by judges who themselves are paid from taxes to enforce government regulations. And what will these judges in all probability decide? That all of this is legal, of course! In this way, government-staged robbery, assault, manslaughter, murder, war is “legally” sanctioned. Just try and charge Messrs. Bush or Obama, or our own Angela Merkel for aiding and abetting murder and mayhem in Iraq or Afghanistan. Such a lawsuit would probably never even be taken on by the courts, and the outcome would in any case be clear from the outset, even if it were accepted: acquittal!

In a private law society, if we had such a conflict, we would instead approach arbitrators who are independent of both parties, and who are competing with other arbitrators for voluntarily paying customers. We would not use an inherently biased judge working for and paid directly by the state, who is therefore partisan, but rather a neutral third party, to adjudicate the normal human legal conflicts arising between existing and recognized property rights and private contract law.

Such a third party will want to earn and keep its reputation as a neutral impartial judge, in order to avoid being ousted- for lack of clients – from the mediation market. The judgment, in this case, will be predictable and clear: My income from my work is my property (not the state’s) and the restaurant is my property (not the state’s). Therefore, any government-imposed tax upon me or use restrictions upon my property (such as a smoking ban) would therefore be judged unlawful, as robbery and expropriation. And of course, Bush, Obama, Merkel (and many more) would be declared guilty of aiding and abetting murder and manslaughter (among countless other offenses).

That’s precisely why there’s a state judicial monopoly. Because under a competitive and non-monopolistic legal system it would immediately be apparent, in the words of St. Augustine, that the state is nothing but a “great band of robbers,” a mafia, only a much larger, more overwhelming and dangerous one.

Would the State have any responsibilities at all in your model?

Indirectly, I’ve already answered that question. What tasks would you like to hand to a band of robbers? They should all resign! And they should return all the property they’ve robbed – the entire so-called public property – to its rightful owners, i.e. the tax payers should be reimbursed, according to the amount of their tax payments!

The trouble is these bandits never even think of resigning! And they never think of compensating their victims either: the huge number of people robbed, dispossessed, killed and murdered by them – not even a scrap!

And that will not change – unless public opinion generates immense pressure. And that brings me back to the subject of class consciousness. Our only hope for this desired resignation and compensation to come about is that the victims (as well as an increasing number of innocent and harmless state collaborators) recognise the state for what it is, a band of robbers, and treat them accordingly.

Robbers who are recognised and treated as such cannot last long.

To conclude, let us talk about money – government-enforced money to be precise –, the medium people are permanently dealing with, and with which even “John Doe”, in your words, now realizes something is wrong. Please explain to him why – I’m quoting you: “there’s absolutely no reason in any case why the state should have anything at all to do with the production of money.”

Because the state is a monopoly and monopolies are always harmful for the consumer (whereas, conversely, they are always useful for the monopolist). This also applies to money and the government’s money monopoly.

Only the state-approved central bank may produce money, and the money is correspondingly bad. Instead of having gold and silver as in former times, we have at present nothing other than paper money all over the world (dollars, euros, yen, etc.). That’s great for the monopolist. He can print money effectively free of charge and buy expensive goods with it such as houses and cars. A veritable magic wand! Who wouldn’t want such a wand? However, for everyone else, it’s not fantastic at all. More paper money doesn’t make a society richer overall. It’s just more paper. But every new piece of printed paper reduces the purchasing power of all the other previously-existing paper bills. And every newly printed bill causes a redistribution of social wealth. The money printers enrich themselves and their share of society’s wealth increases. They now own houses and cars that they previously did not own. And equally, this money printing reduces the wealth of everyone else, who now own correspondingly fewer houses and cars.

I’m confident that John Doe is able to realize that these machinations, taking place every day on an almost unimaginable scale, are nothing more than a gigantic case of fraudulent theft.

But the truth is, we don’t hear anything about this fraud from our pretentious, unintelligible and arrogant so-called economic and financial experts on radio, television, and other mainstream media. This is either because they are being paid to consciously withhold or obscure the facts against their better judgment,; or because they were so dumbed down during their time at university, that they are in fact incapable of recognising even the simplest facts and relationships.

What would happen if the government’s money monopoly were abolished and we were all allowed to make perfect copies of the state’s paper money (in the same way anyone is at present allowed to produce perfect copies of apples, pears, grains of wheat, nails, houses, computers, and so on)? What would happen is this: paper money would immediately be produced in such quantities that the value (purchasing power) of a paper bill would fall overnight to the bare physical value of the paper itself! With such bills only being worth the paper they’re printed on, they would be unfit for use as a general means of payment. Paper money would disappear as money, and the state would lose its magic wand at a stroke. (This is precisely why the government insists so jealously on its monopoly of printing money!)But this doesn’t mean that money would no longer exist. Rather, in a competitive environment, a better kind of money would be produced. Why? Because there’ll always be a demand for means of exchange.

Why do people hold money? Why aren’t all their assets invested in the form of consumer goods and capital goods? Why is there usually a portion of their assets held simply as money (which is neither consumed nor used for other production purposes, but just held as money, in order to perhaps exchange it later for something else)? Answer: Because there is uncertainty in our world. Because things happen and human needs then arise, which neither reserves of consumer and capital goods, nor insurance provisions, can prepare us for, or stop from happening. The only way to be prepared for such unpredictable, yet constantly recurring surprises, and the ensuing needs, is to set up a reserve of means of exchange. A reserve of goods which are distinguished by their exceptional marketability. And which can be directly and immediately exchanged at any time for the widest possible range of any consumer or producer goods.

From a historical point of view, these goods were gold and silver, because they best fulfilled the function of a means of exchange to provide “uncertainty insurance”. Gold and silver had emerged as the goods with the highest marketability. They were the most easily salable and most widely accepted of all goods. And so money was therefore either gold or silver.

If the government paper money monopoly should ever disappear, gold and silver would most likely recover their former roles as money (and paper would simply play the role in the new monetary system that it always used to have: namely to act as title deeds, or exchange certificates, for gold and silver).

Thank you, Mr. Hoppe.

The above interview was conducted via e-mail. The questions were asked by Andreas Marquart, misesinfo.

(The original interview in German can be found here.)