Wednesday, 6 January 2010

Democracy: The God That Failed - On Discrimination

Thinking about discrimination as discussed in Hoppe's work, "Democracy: The God That Failed", I came to the following:

The nature of discrimination (i.e. excluding someone from using one's property, of refusing to do accept an exchange with someone), while of course being a prerogative of private property as argues Hoppe, is different whether the property is a consumption good or a capital good.

For consumption goods, discrimination is essentially a characteristic related to the subjective preferences of the consumer, whether he likes cold tea, and discriminates against hot tea, or he wants to live in a neighborhood with Germans, Catholics, or not.

This is essentially the discrimination that Hoppe is referring to.

But most goods and exchange in an advanced market economy are not consumer goods, but capital goods, or goods of higher order.

As such, the discrimination being performed by the capital good owner is targeted towards its role in contributing to the production of the final the consumer good.

A factory owner, for example, will discriminate against drunk employees in his factory, while discriminating against, say, homosexuals, makes no sense whatsoever

My point is that Hoppe overlooks completely the discrimination in capital good industries (or rather the lack thereof against "Germans, Catholics, homosexuals", or anything not related to the actual production of the final consumer good), which is a powerful forces towards promoting tolerance and peaceful cooperation between people of different cultures, opinions, etc...

Being intolerant of other people has a steep price in a free society, and Hoppe's assessment of the natural order based radical segregation of "counter cultural" individuals is incorrect.

If anything, a free (anarcho-capitalist) society would have a higher division of labor, and a higher work-force integration that exists at the moment.

Monday, 4 January 2010

Democracy: The God That Failed - Review

I just finished reading "Democracy: The God That Failed" by Hans-Hermann Hoppe.

This book is a collection of essays on the theme of democracy, monarchy and the natural order.

I think this is a very important book, and definitely makes the case against democracy. It shows how democracy is worse, all other things equals, than monarchy, and illustrate the de-civilizing super-secular trend tend that democracy has contributed to.

It also argues rightly about the need for delegitimizing the democratic state, and what strategies should be followed to work towards the goal of a creating a free society.

There is many many insightful and important points made in the book (Democracy vs Monarchical Wars is an especially good read), and I encourage everyone that has already strong grounds in economics and political economy to read it in order make sense of the democratic order.

Being a collection of essays, though, there is quite a lot of repetition between them. Even the footnotes are often duplicated, which makes the reading experience quite frustrating.

One essay is also found in another Hoppe's book, The Myth of National Defense (On Government and the Private Production of Defense).

In one way, Hoppe's forecast for an natural order society, following the libertarian principle of self ownership, original appropriation and voluntary exchange, where counter-cultural individuals would have to bear the full cost of their deviant and non-traditional behaviors is incomplete.

Incomplete because his analysis, while underlining strongly the cost of being socially "non traditional", ignores on the other hand the significant cost of intolerance in a free society.

A shop keeper that does not want to sell to a certain group has to forgo their business. A firm that does not hire more productive or cheaper labor on cultural grounds has to suffer the consequences, and potentially be put out of business by a non-discriminatory competitor.

Hoppe insist on the 'forced integration' pressure of government power, but far more common is the 'forced exclusion' by the government. Intolerant individuals typically do not want to accept the loss inherent in having discriminatory policies towards consumers and clients, and have been always looking for the state to impose the same discriminatory policies by force on all firms to avoid having to bear the cost by themselves only.

In the past states used to force discrimination against racial groups (blacks, asians, etc...), now, especially since WWII, social democracies force discrimination against personal behaviors (gamblers, smokers, drug users, home schoolers, alcohol drinkers, etc...) along with the usual discrimination against now politically correct minorities (white mens, muslims, wealthy people, etc...).

Corporations have demonstrated again and again their indifference in the sexual orientation, race, sex, or any criteria in employees which is not related to their productivity.

Firms wants to hire the most productive employees at the lowest wages, regardless of other criteria. They want to sell to the most customers at the highest prices, all things considered equal.

Where people are discriminated is not by firms on the market, where discrimination has a steep cost, but by bureaucrats and politicians, where discrimination is a way to win elections.

As he said, in a free society, there would be just as much discrimination as property owners would desire, but arbitrary discrimination is a costly consumption good, that no competitive firms would afford in a society with a highly developed division of labor.

So Hoppe's prediction on the nature of a state-free world is off the mark, and left economics at the door while speculating on this important aspect of a stateless society.

In conclusion, I would really hope that Dr. Hoppe (or someone else) would re-edit this important book in a coherent order, grouped by subject, without the daunting repetition, and would address also the powerful non discriminatory forces on the market and its consequences on the natural order of a free society.