Hoppe - A theory of socialism and capitalism : economics, politics, and ethics

Hans-Hermann Hoppe

Economics, Politics, and Ethics

Hans-Hermann Hoppe

The Ludwig von Mises Institutes Studies in Austrian Economics

Department of Economics University of Nevada, Las Vegas

Kluwer Academic Publishers Boston/Dordrecht/London

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Library of Congress Cataloging-in-Publication Data

Hoppe, Hans-Hermann. A theory of socialism and capitalism: economics, politics, and ethics / by Hans-Hermann Hoppe.

p. cm. Includes index.

2010 by the Ludwig von Mises Institute and published under the Creative Commons Attribution License 3.0.

http://creativecommons.org/licenses/by/3.0/

Ludwig von Mises Institute

518 West Magnolia Avenue

Auburn, Alabama 36832

mises.org

ISBN: 978-1-933550-73-2

Three institutions assisted me while I wrote this treatise. As a Heisenberg Scholar I enjoyed the most generous financial support from the German Science Foundation (DFG) from 1982 through 1986. The present study is the most recent work I completed during this period. Additional support came from the Johns Hopkins University Bologna Center for Advanced International Studies, where I spent the academic year 1984-1985 as a Visiting Professor. The lectures delivered there provided the core of what is presented here. Finally, during the academic year 1985/86, when my research took on its present form and which I spent in New York City, I received the most unbureaucratic and cordial help from the Center for Libertarian Studies.

My deepest gratitude is to my teacher and friend Murray N. Rothbard. To his scholarly and personal example I owe more than I can property express. He read an earlier draft of the study and provided me with invaluable comments. Innumerous discussions with him were a never ending source of inspiration and his enthusiasm was a constant encouragement.

To these people and institutions I owe a sincere thank you.

T he following study on the economics, politics and morals of socialism and capitalism is a systematic treatise on political theory. Interdisciplinary in scope, it will discuss the central problems of political economy and political philosophy: how to organize society so as to promote the production of wealth and eradicate poverty, and how to arrange it so as to make it a just social order.

But in doing this I will also constantly touch upon and illuminate social and political problems in the narrower, more common sense of these terms. In fact, it is one of the major goals of this treatise to develop and explain the conceptual and argumentative tools, economic and moral, needed to analyze and evaluate any kind of empirical social or political system, to understand or appraise any process of social change, and to explain or interpret similarities as well as differences in the social structure of any two or more different societies.

At the end of the treatise it should be clear that only by means of a theory, economic or moral, which is not itself derived from experience but rather starts from a logically incontestable statement (which is something very different from an arbitrarily postulated axiom) and proceeds in a purely deductive way (perhaps using some explicitly introduced empirical and empirically testable assumption, in addition) to results which are themselves logically unassailable (and thus require no empirical testing whatsoever), will it become possible to organize or interpret an otherwise chaotic, overly complex array of unconnected, isolated facts or opinions about social reality to form a true, coherent economic or moral conceptual system. Hopefully it will be demonstrated that without such a theory, political economy and philosophy can be considered nothing other than groping in the dark, producing, at best, arbitrary opinions on what might have caused this or that, or what is better or worse than something else: opinions, that is, whose opposites can generally be defended as easily as the original positions themselves (which is to say that they cannot be defended in any strict sense at all!).

Specifically, a theory of property and property rights will be developed. It will be demonstrated that socialism, by no means an invention of nineteenth century Marxism but much older, must be conceptualized as an institutionalized interference with or aggression against private property and private property claims. Capitalism, on the other hand, is a social system based on the explicit recognition of private property and of nonaggressive, contractual exchanges between private property owners. Implied in this remark, as will become clear in the course of this treatise, is the belief that there must then exist varying types and degrees of socialism and capitalism, i.e., varying degrees to which private property rights are respected or ignored. Societies are not simply capitalist or socialist. Indeed, all existing societies are socialist to some extent. (Even the United States, certainly a society that is relatively more capitalist than most others, is, as will become apparent, amazingly socialist and has gradually become more so over time.)

One goal then, is to demonstrate that the overall degree of socialism, i.e., the overall degree of interference with property rights that exists in a given country, explains its overall wealth. The more socialist a country, the more hampered will be the process of production of new and the upkeep of old, existing wealth, and The fact that the United States is, by and large, richer than Western Europe, and West Germany much richer than East Germany can be explained by their lesser degree of socialism, as can the fact that Switzerland is more prosperous than Austria, or that England, in the nineteenth century the richest country in the world, has now fallen to what is aptly called an underdeveloping country.

But the concern here will not be exclusively with the overall wealth effects, nor with the economic side of the problem alone. For one thing, in analyzing different types of socialism for which there exist real, historical examples (examples which, to be sure, very often are not called socialism, but are given a more appealing name), it is important to explain why, and in what way, every intervention anywhere, big or small, here or there, produces a particular disruptive effect on the social structure which a superficial, theoretically untrained observer, blinded by an immediate positive consequence of a particular intervention, might not perceive. Yet this negative effect nonetheless exists, and with some delay will cause problems at a different place in the social fabric more numerous or severe than the ones originally solved by the initial act of intervening. Thus, for instance, highly visible positive effects of socialist policies such as cheap food prices, low rents, free this and free that, are not just positive things hanging in midair, unconnected to everything else, but rather are phenomena that have to be paid for somehow: by less and lower quality food, by housing shortages, decay and slums, by queuing up and corruption, and, further, by lower living standards, reduced capital-formation, and/or increased capital consumption. And a much less conspicuous but almost always positively mentioned facta greater feeling of solidarity among the people, the greater value attached to things like family, relatives, or friends, which is found to exist between, for instance, the East Germans as compared to their more individualistic, egoistic West/German counterpartsis again not a simple, isolated, unanalyzable fact. Such feelings are the result of a social system of constant shortages and of continually repressed opportunities to improve ones situation by ones own means. In East Germany, in order to accomplish the most simple routine tasks, such as a house repair which in other countries requires no more than a telephone call, you simply must rely more heavily on personal relations (as compared to impersonal business relations); and where someones public life is under constant observation by society, you simply have to go private.