"It is possible to determine in terms of money prices the sum of the income or wealth of a number of people. But it is nonsensical to reckon national income or national wealth. If a business calculation values a supply of potatoes at $100, the idea is that it will be possible to sell it or replace it against this sum. But what is the meaning of the items in a statement of a nation's total wealth? What is the meaning of the computation's final result? What must be entered into it and what is to be left outside? Is it correct or not to enclose the 'value' of the country's climate and the people's innate abilities and acquired skill? The businessman can convert his property into money, but a nation cannot."
Ludwig von Mises, Human Action
One of Hoppe's central arguments in DtGtF (I believe; I haven't read it yet) is that the monarch is a better custodian of a nation's wealth than an elected representative. But how is it that a monarch is incentivized at all to grow the wealth of his nation if there is no market for nations? Or does Hoppe resort to some other non-economic motive for a monarch preserving/growing the wealth of a nation?
The Anarch is to the Anarchist what the Monarch is to the Monarchist. -Ernst Jünger
When a man spends his own money to buy something for himself, he is very careful about how much he spends and how he spends it. When a man spends his own money to buy something for someone else, he is still very careful about how much he spends, but somewhat less what he spends it on. When a man spends someone else's money to buy something for himself, he is very careful about what he buys, but doesn't care at all how much he spends. And when a man spends someone else's money on someone else, he doesn’t care how much he spends or what he spends it on. And that's government for you. – Milton Friedman
But how is it that a monarch is incentivized at all to grow the wealth of his nation...
He sees the nation as a cash cow for himself and his kids and grandkids. Thus he won't despoil it for immediate consumption
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It's easy to refute an argument if you first misrepresent it. William Keizer
^
I've always found Hoppe's argument there rather uncompelling. While I like the methodology he uses, in any but a small case I don't think that monarchy can be considered really akin to private ownership in the marketplace exactly because all but the smallest monarchy takes place in the absence of a market.
Also, if I were monarch of the United States then I would have to have one hell of a low time preference to work in favor of long term gains. I mean I have 17 trillion dollars at my disposal if need be. I could (assuming that one forth of the current Federal government budget were my yearly allowance) BUY Egypt, Singapore, and Greece for that money in a single year and still have made more money that year than the richest man in the world today holds in overall wealth. What exactly is my incentive to invest or care about anything when I am that absurdly wealthy? My only incentive MIGHT be not to kill the cash cow. I don't care about making the cow fatter unless I'm one greedy S.O.B
I never really thought the argument was that great as anything other than a way to get a normal person thinking outside the box.
Perhaps it would be best to show how the aspects of monarchy and democracy that "work" are the ones that mimic the market in some way. Either way I don't think one can actually make a logical leap on some "Platonic / Idealistic" version of monarchy contra democracy (or vice versa). And as far as the empiricle cases are concerned, that would seem like a headache and a half to even think about - too many variables and probably impossible to do much of a worthwhile analysis.
Once again, as kind of a "story", it works just to take democracy down a peg or two (a much needed thing in this day and age) but that's all I see in it.
"As in a kaleidoscope, the constellation of forces operating in the system as a whole is ever changing." - Ludwig Lachmann
"When A Man Dies A World Goes Out of Existence" - GLS Shackle
I find it to be a leap in reasoning. We can't assume that a Monarch will follow his rational self-interest as that is an assumption of one's subjectively held ends. We can assume that broadly on the part of entrepeneurs because entrepeneurs who aim otherwise are eliminated by the market process. But what 'historical' or 'political' process is there for leaders who aim at ends other than prosperity and preservation for their nation? Flimsy...
A monarch is first and foremost a warlord. Two cannons are better than one cannon. Two castles than one castle. Two ports than one port. An elevated fort is better than one in a valley. More natural resources are preferable to fewer. And so on.
This is a kind of calculation... it's just not the kind of double-ledger calculation on which you can run a profit-loss competitive market system. The socialist/communist idea of converting the entire business economy into a gigantic centrally-planned double-ledger is nonsensical and that is Mises's point.
Hoppe's point is completely different; he's arguing that monarchy is generally exempt from tragedy-of-the-commons problems in regard to preserving the capital value of the territory(ies) he rules - although this is arguably less the case the more remote the territory and the weaker his control (i.e. colonies). An oligarchy or an electorate (even short of universal suffrage) is constantly having to deal with tragedy-of-the-commons problems as each controlling member in the ruling class has an incentive to try to move more of the capital value of the territory into his own coffers faster than the rest, that is, to plunder the territory faster. This plunder may not be outright confiscation but depletion of the capital value within the territory, causing a breakdown in the time-structure of production. And the more diffuse the electorate - that is, the more widely spread the vote is - the bigger this problem is... so that in the case of universal suffrage, the tragedy-of-the-commons reaches its highest expression. This is contrary to the popular view that universal suffrage is the most desirable and best political system and that it brings peace and economic prosperity.
Clayton -
Jargon:But how is it that a monarch is incentivized at all to grow the wealth of his nation if there is no market for nations?
His incentive is to maximize his income over time, not to increase the market price of his kingdom, since, as you say, there is no market for kingdoms. It's not that the monarch's goal is prosperity for the kingdom per se, but rather pursuing his goal of maximizing his own income over time should have the consequence of greater prosperity for his kingdom over time: i.e. relative what it would be if the rulers had a higher time-preference, as with elected rulers, and chose to more heavily exploit the present at the expense of the future.
We can't assume that a Monarch will follow his rational self-interest as that is an assumption of one's subjectively held ends. We can assume that broadly on the part of entrepeneurs because entrepeneurs who aim otherwise are eliminated by the market process. But what 'historical' or 'political' process is there for leaders who aim at ends other than prosperity and preservation for their nation? Flimsy
But the same is true for elected rulers, so that variable (the luck of the draw in who becomes ruler) can be "netted out," bracketed by the "all else being equal" clause. Hoppe is saying that, all else being equal, a king should have lower time preference than a democratic government. For example, take any given individual with his own desires and abilities: call him Bob. Maybe Bob is competent, maybe not, maybe Bob desires to maximize income, maybe not - doesn't matter. Hoppe's point is that Bob as king will behave differently than a congress full of Bobs.
Though it doesn't matter for Hoppe's argument, since it applies to all governments and "nets out," I would argue that there is something like a selection process in government to weed out the most inept. As Clayton indicated, governments which wreck their host societies tend to either collapse from within or get conquered from without. This is not nearly as strong a selection pressure, so to speak, as market competition, but it's not nothing.
Minarchist: His incentive is to maximize his income over time
His incentive is to maximize his income over time
Oh?
You don't agree? Insofar as the king has any pecuniary motivation at all, it has got to be that he wants to maximize his income, since his asset (the state apparatus which yields him his income) is unsalable, and I don't see how one could doubt that a king would have pecuniary motivation. Even if the king isn't interested in money for personal consumption, he still needs money to do anything else he might like to do: e.g. build monuments to himself or fight a war for the sake of glory. Even if the king's only interest is the pure exercise of power for its own sake (the ultimate aphrodisiac they say), he's not going to have any power to exercise for long unless he maintains his income over time.
Since there is no single world state, but many kingdoms owned in certain sense by kings who can sell them there is something like "markets for nations/states/kingdoms". But we have to consider that after Medieval times kings were not exactly owners of their kingdoms. Hoppe talk about ideal, pure model of patrimonial monarchy and compares in tu pure democracy. But it doesn't mean that his analysis have no value. For example monarch who ruled in Europe in XVII century were closer to condition of "owner" than modern democratic caretaker.
It's also important to see,that growth before industrial revolution was usually blocked not because kings were heads of states,but because of feudal system.