Neoreactionary Book Club

Jonathan Rauch: “Political Realism”

Political Realism: How Hacks, Machines, Big Money, and Back-Room Deals Can Strengthen American Democracy
By Jonathan Rauch


I read this after AnomalyUK mentioned it on Twitter. I was skeptical because of the two-part title, what Neal Stephenson called “one of those American books where once you’ve heard the title you don’t even need to read it”. But it was short and free (probably why AnomalyUK read it).

And it does start badly, writing in a silly tone as if its audience were idiots (“political home truths”). It’s published by the Brookings Institution. Rauch also redefines “political realism”, seemingly unaware that the term is already used to describe the views of Bernard Williams and Raymond Geuss.

Rauch’s argument is that movements in America to make politics less “corrupt” have been a bad thing on balance, because they reduce the effectiveness of the government. He argues that the definition of political corruption has expanded: “what began as a necessary rebalancing acquired its own momentum and ideology and created an imbalance of its own, pushing relentlessly to extirpate corruption and defining corruption ever more broadly… And today it defines corruption very broadly indeed.”

Corruption is defined in modern parlance as anything which is not democratic. (Rauch doesn’t spell this out.) Money in politics is corrupt because some people have more of it than others, so not everyone’s “voice” is counted equally. Secrecy in politics is corrupt because it prevents voters from being informed about what’s going on. (I prefer Moldbug’s definition: “Corruption is any human action that is not what it appears to be.” More on that later.)


Rauch advocates “machine politics” (basically, party politics with less democracy) as being better at governing than democratic, transparent politics where ordinary people have more power and machine politicians have less. Political machines act like companies; without them there would just be individuals. Parties have longevity, so they have long-term incentives. “They have to win not just once but again and again, which gives them quite a bit of accountability to their stakeholders”. “By trading on the present value of future political returns, they can conduct transactions across spans of time–something very hard, frequently impossible, for activists and freelancers to do.” This is a good insight.

“Ideological solidarity is a brittle glue, and reliance on it for intraparty cohesion is a sign of a weak party machine, not a strong one.” “Amateurs and single-issue activists have their uses, but without hacks the machine fails, which is why it puts such a premium on people who pay their dues and work their way up the ranks.” Richard Pildes: “broader structural changes, including legal ones, have disarmed party leaders of the tools they previously had used to unify their members around deals that were thought to be in the best interest of the party as a whole.”

Rauch points out that transparency makes certain kinds of politics and political agreements harder, because they look bad even though their results are good on balance. “In full public view, complicated deal-building is hard to do, indeed usually impossible; therefore machines tend to prefer privacy.” “[T]here is a cost to exposing the inner workings of politics to 24-7 public scrutiny”. “[T]he opposite of transparency in politics is not corruption, it is privacy”.

Rauch is good at demonstrating how successive campaign finance laws have just pushed money around and changed political incentive structures, without actually reducing the total amount of money in US politics.


The first major problem with the book is that Rauch doesn’t give much evidence for his case. It may be that machine politics produced better results… or it may not. Where’s the evidence? It is true that votes in legislative committees will have different outcomes depending on whether the way individual legislators voted is recorded or not. But it is not clear which is “better”. “If the machine gets its way, an independent political entrepreneur will have a difficult time influencing the system without paying her dues and going through channels.” Is this rent-seeking supposed to be obviously or inherently a good thing?

“They also act as gatekeepers to power, a function which today’s system of primary elections has weakened—at high cost to leadership in government. Imagine how dramatically the dynamics on Capitol Hill might change if state Republican parties gave Speaker Boehner the power to strike House candidates from the primary ballot: overnight, the party would move dramatically toward parliamentary-style discipline.” Again, it is not obvious that this would be an improvement — it needs to be argued.


The second, more serious problem with the book is that Rauch apparently never quite realises he is arguing against democracy. Early in the book he says that “transactional politics… is the essential work of governing and that government, and thus democracy, won’t work if leaders can’t make deals and make them stick.” Here he is equating good governance with democracy. It is true that government won’t work if politicians can’t make deals and make them stick, and that checks on politicians’ power make this harder. But taking power away from ordinary people, removing checks on politicians and enabling transactional politics, makes the system less democratic, while improving the quality of governance.

“Hence, a mayor successfully gaining sufficient influence over each of these institutions so as to make coherent policy could plausibly be seen not as a violation of democracy, but as a brilliant exercise of leadership so as to advance the interests of the poor as well as the public interest writ large.” Again, Rauch equates good governance in the public interest with democracy, yet they are not the same thing at all. “A mayor successfully gaining sufficient influence over each of these institutions so as to make coherent policy” is “a violation of democracy”, but (in this case) it is for the public interest. (We know from Arrow’s Impossibility Theorem that there is no guarantee that democratic government policy will be coherent.)

Indeed, the very title of the book is contradictory. “How Hacks, Machines, Big Money, and Back-Room Deals Can Strengthen American Democracy”. Replace “Democracy” with “Governance” and it makes sense.

Rauch quotes some people who do seem to realise the disconnect between good governance and democracy.

“Pildes argues for acknowledging a “tragic trade-off” between unmediated popular participation and government’s effective functioning. There may be no perfect balance between the two, but just accepting that more democracy is not always the answer would mark a sea change in American political discourse.”

Thad Williamson, University of Richmond: “To demand high standards of democratic deliberation… is to potentially slow, dampen, or even deny the ability of energetic leadership to play its mobilizing function and enact effective policies in a timely way.” (“The Tangled Relationship of Democracy, Leadership, and Justice in Urban America: A View from Richmond” (2014).)

Jason Grumet, “Bipartisan Policy Center”: “A closer look reveals that many of the reforms we’ve instituted to make government work more effectively—all of them pursued with the best of intentions—have, in practice, had the opposite effect. Through a series of bad assumptions and unintended consequences, we have weakened our government’s capacity to solve problems.” (“City of Rivals: Restoring the Glorious Mess of American Democracy” (2014).

Though, judging by the title of that last one, perhaps not.


Rauch views the purpose of politics as to reach compromises between various interest groups, which supposedly represent the whole of the population. This is a demotist view. By contrast, for neoreactionaries, the purpose of government is to run the country well, and politics is sand in the gears. For neoreactionaries, the residents of the country should be listened to like customers, but their demands for the divvying up of rents should be ignored.

Rauch has a story about the passage of some gay rights legislation in Utah. A compromise was reached between gay activists and Mormons. “Not everyone went away happy. Purists among libertarians, gay rights activists, and social conservatives all found reasons to grumble. But the negotiation and its outcome showed up the purists for what they were: outliers. And it built a consensus strong enough to withstand their vetoes, allowing implicit majority opinion to be heard.” “Implicit majority opinion”? What fiction is this?

For Rauch, an advantage of machine politics is that it causes “moderation”. “[M]odern analysts miss something important when they assume that moderation comes from moderates; often, moderation comes from machines that force politicians to compromise.” “Small donors tend to be polarized and polarizing.” “[A]s our campaign finance system has become more democratized, our politics has become more polarized.”

However, “moderation” is not an ideology advocated by specific people, but simply the contingent result of compromise. Moldbug: “Moderation is not an ideology. It is not an opinion. It is not a thought. It is an absence of thought.” “Moderation” is not much of an argument in favour of machine politics.


Rauch writes that “well-functioning governments rely not merely on formal legal mechanisms but also on informal political structures and intricate systems of incentives. No informal structures and incentives? No governance.” I’ve been thinking about this for a while.

When Rauch says that “the right amount of corruption is greater than zero”, he may be more right than he knows. Instead of just defining “corruption” as anything non-democratic, let us use Moldbug’s definition: “Corruption is any human action that is not what it appears to be.” Here Moldbug is making a moral assertion against informal power, property and relationships. Moldbug advocates formalism: the formalising of informal power, property and relationships.

But Jim points out that some situations cannot be formalised.
Moldbug advocates retiring useless government employees on full pay, to allow them to go off and do something useful — formalising their income stream. But in a democratic system this could not happen; voters would demand the abolition of the payments, and so useless bureaucrats would never agree to it, like Jim’s parasites: “The moment we come out, you will wrap us up in newspaper, and cast us onto the fire.” A private government would not need to formalise the income streams: it could just abolish them. Moldbug advocates formalism as a mechanism for getting from democratic government to private government. But it is hard to see circumstances in which it would happen; it is hard to see circumstances in which it would be the best course of action.

So if certain informal relationships are essential to good governance, and they can’t be formalised, then the right amount of “corruption” is greater than zero.

Neoreactionary research project: under what circumstances can informal arrangements be formalised without changing or destroying them?


I can’t resist quoting Rauch on the evils of tobacco: “Sometimes… the only thing wrong with smoke-filled rooms is the smoke.” Is smoke really so bad?


Available on Kindle.


More at Anomaly UK.


It is not the case that all leftists favour equality because they believe that everything is zero-sum. Some are against the positive-sum because they favour equality.

“Is having a loving family an unfair advantage?”

Gregory Clark: “A Farewell to Alms”

Why did the Industrial Revolution happen when it did, and in England? Gregory Clark attempts to answer this question.

Clark starts by discussing Malthusian economies. Modern, growing economies with rising living standards are historically unusual. For five to seven thousand years, median wages did not change much. The wage of an unskilled labourer was actually lower in 1700AD than it was in 500BC! And agricultural societies had lower standards of living per hour worked than hunter-gatherer societies, in which people could get by with very little work. Yet, over the thousands of years before the industrial revolution, technology did improve. Why didn’t improvements in technology lead to improvements in living standards, as they do now? One thing that comes across from Clark’s book is that modern growth rates not normal. We are used to growth rates of 3% per year (but falling), but the middle ages could see growth rates of 3% per century or less!

The problem was that the gains from technological improvements all went into sustaining larger populations. This is to be expected from standard Darwinian theory: animals will evolve to have as many children as they can support (and no more because this would be a waste of their resources). If technology makes it easier for someone to support more children, they will have more children. The limiting factor was natural resources (before the industrial revolution, this meant farmland). Technology enabled the more efficient use of natural resources, which increased total income, but this enabled population increases which pushed down average wages until natural resources became the limiting factor once again. The Black Death, which killed a third of the population of Europe, caused a big increase in living standards which lasted for a century, until the population increased to previous levels.

People are a negative externality

Clark quashes some naïve libertarian ideas, such as ignoring natural resource constraints, and the belief that more people are always an advantage. Resources are limited, both in the short and long term, and even if there are reserves it may not make economic sense to extract them more rapidly (the Hotelling principle). Land is limited, and more people reduces the amount of per person and increases the price, which can lead to a net reduction in living standards (but an increase in income for rentiers such as landlords and the state). People are a negative externality, since they use up natural resources which could otherwise be used by you, and they must be productive in order to offset this. More people enables specialisation and network effects, up to a point, but beyond that they reduce living standards. (Sophisticated libertarians such as Mises and Hoppe do recognise this. Mises: “The world, or an isolated country from which emigration is impossible, is to be regarded as overpopulated in the absolute sense when the optimum of population – that point beyond which an increase in the number of people would mean not an increase but a decrease in welfare – is exceeded.” (Mises: “Nation, State, and Economy” . New York University Press, 1983. Pg 58.) Hoppe: “An influx of migrants into a given-sized high-wage area will lower nominal wage rates. However, it will not lower real wage rates if the population is below its optimum size.” (Hoppe: “Democracy: The God That Failed”. Transaction Publishers, 2007. Pg 137.) That is, the “optimum” size of a population is that beyond which real income per capita will decrease.)

Another mistaken libertarian idea is an overestimation of the power of good institutions, which Clark refers to as the (Adam) “Smithian” view. In fact, good institutions are necessary but not sufficient for high living standards. Clark points out that England had good institutions for centuries, and can even be argued to have better institutions then than it does now. For example, property rights were more absolute in medieval England than they are now. Yet we are more prosperous now. Protections for innovation such as patents and guilds existed for a long time, yet innovation did not take off.

More is needed than free market institutions to improve living standards. Clark’s thesis is that centuries of good institutions enabled the evolution of a better population, and it was only once the population was intelligent enough that the industrial revolution took off.


So what changed? Why did improvements in technology start leading to improvements in living standards, instead of larger populations? Clark doesn’t answer this adequately, but he provides a wealth of data suggesting the answer was improvements in the stock of population, caused by differential fertility between rich and poor. Clark demonstrates that in medieval England for centuries until the industrial revolution, the rich had more children than the poor. The richer you were, the more surviving children you had (the violent aristocracy excluded, who tended to kill each other off), and the poor did not even have enough children to reproduce themselves. As a result, English society demonstrated downwards social mobility, as the children of the rich had to move down the social scale to take up occupations vacated by the sub-replacement-fertility poor. The surprising result is that downwards social mobility can be a healthy thing for society. The rich bourgeoisie reproduced, spreading their bourgeois values of hard work and thrift.

The population thus improved. Clark points out that returns to saving and acquiring skills were much higher in the past than they are now, yet people did not do so, despite the higher incentives. One explanation is that people were poorer, so they would have less resources spare to invest, despite the attractive returns. The other explanation is the people had a higher rate of time preference. Time preference is partly genetic, and “interest rates fell from astonishingly high rates in the earliest societies to close to low modern levels by 1800.”

Economic growth

Economic growth came partly from saving/capital accumulation but the vast majority came from efficiency improvements.

Why don’t we see any growth per person before the industrial revolution? Why were efficiency improvements absorbed by increased population, so that the limiting factor was always natural resources? The industrial revolution did enable a population explosion in England, as well as an income explosion, but the economy grew faster than the population. Why? There are two possible explanations, and evidence that both played a part. One is that technological advancement was so fast that population growth could not keep up. The other is that the British population somehow limited its growth, without being out-evolved by people who didn’t. Social pressure and/or religion are likely candidates for this. In the same way that Catholicism virtually eliminated cousin marriage, thus increasing the IQ of Europeans, social pressure/religion strongly discouraged having children out of wedlock. This reduced the number of children born to poor people.

Changes to the quality of population seem to be of paramount importance. Today, in poor countries with access to Western technology, such as most of Africa, all efficiency improvements have gone into increased populations; evidence against population growth not being able to keep up with technological improvements. In countries such as Malawi, the birth rate is higher than ever in history, and the people remain as poor as ever. This demonstrates that technological improvements are insufficient to increase living standards. There must be a way to restrict the evolutionary imperative to have as many children as possible. In countries where this does not happen, the people remain poor. Bruce Charlton calls this “selecting for pure fertility”. In a world of technology, where survival is easier than ever before, i.e. the land can support more people, selection pressures for anything other than fertility are weak.

Clark demonstrates another way in which population quality is of paramount importance. He shows that the returns to capital were similar all around the world, at the time of the well-integrated world capital markets of 1870–1914. Therefore, countries such as India were not poor because they did not employ as much capital as rich countries. On the contrary, they did not employ as much capital because they were poor. Entrepreneurs did not deploy marginal capital to India, because it wouldn’t be used as efficiently as in England. “The poorest countries specified slightly faster operating speeds, but this was an insignificant difference compared to the extra labor they employed.” “Poor countries used the same technology as rich ones. They achieved the same levels of output per unit of capital. But in doing so they employed so much more labor per machine that they lost most of the labor cost advantages with which they began.”

Low wage rates were due to poor quality labour and labour habits, not poor quality management. Different capital levels around the world correlated with productivity and income, but capital returns were the same, showing that poor countries had low capital levels because they were unproductive, not that they were unproductive because they had low capital. And they were unproductive because they were inefficient. It was efficiency growth that drove capital accumulation, not the other way round. It had to be that way round,: increasing the amount of capital does not automatically make you use it efficiently.

An aside: Land

Clark makes some errors about land rents. He correctly observes that growth came from efficiency improvements, and the economy grew faster than the population, so resources were not the limiting factor. Therefore, the amount of land per person is now “largely irrelevant, except for a few resource-abundant economies.” Countries like Singapore and Hong Kong are extremely wealthy despite not having much land.

However, Clark errs when he says “land, in the long run, received none of the gains from the Industrial Revolution.” In fact, land prices in productive places like Singapore and Hong Kong are among the highest in the world.

Clark says “the failure of real rents per acre to increase significantly has meant that, as economic output marched upward, the share of land rents in national income has correspondingly declined to insignificance”.

Clark: “One reason why taxes were so light in preindustrial agrarian societies was that the ruling class had a rich source of income without resorting to taxation: land ownership. As figure 7.4 showed for England land rents accounted for about 20 percent of income.”

He acknowledges that “as farmland rents declined, urban rents increased. Indeed in 2000 in England, while an acre of farmland sold for an average of £2,900, an acre of potential building land cost £263,000, and an acre of building land for which permission to build had already been secured was worth £613,000. But as figure 10.3 shows, even in densely populated England, where rents for urban sites may be two or three times the level in most countries at this income level, they are still only about 4 percent of national income.”

I think this paints a very misleading picture. It would be more accurate to say that income taxes were so light because the ruling class received its income from land tax (rent).

It is simply not true that land rents only represent 4% of national income. Most UK householders are owner occupiers. They do not pay rent to anyone else, so their land rents do not show up in GDP figures, but they enjoy the land rent nonetheless. Secondly, the government now spends about half of national income, and receives little of its revenue from land rents. If income taxes were abolished, land rents would capture much of this income.

The point is that land does not actually take part in the production process, like labour or capital, but captures value from it. Land income is a rent, unlike labour or capital income. While you need to occupy some land in order to produce anything, most of the value of land comes from its location value. The non-location element of land value is virtually nothing, as demonstrated by the Earth’s vast low-value locations, such as Siberia.

While farmland rents have plummeted, city rents have risen. Land rents are only depressed at the moment because of other taxes. The total value of all rents (including land rents and income taxes) tracks the size of the economy. Land rents currently represent a small part of total rents, but if artificial rents like income tax were abolished, land rents would rise, total rents remaining a similar size.


This book provides further evidence that dysgenics is a real problem, and should make people think of ways to combat it. Population matters. Humans are not fungible. A high-quality population is better than a low-quality population. This has implications for immigration policy and reproductive policy.

More people means lower living standards unless the extra person is intelligent enough to offset the negative externality of their existence. Therefore, immigration of stupid people should not be allowed. An IQ test for immigrants is a good idea. We should be exporting intelligent people and spreading them over the globe, not importing stupid people to replace our shrinking populations.

The book also gives cause for existential worry. Economic growth per person is extremely unusual, because both rapid technological progress and slower population growth are unusual. Evolutionary imperatives are usually irresistible, so defeating the evolutionary imperative to have more children over the long term is going to be difficult, yet we are currently not doing anything about it.

These aims might seem contradictory, but they are not. A shrinking population might be ceteris paribus a good thing. But increasing the intelligence of the national and worldwide populations is a good thing.

Smart fraction theory is the idea that economic growth is more closely correlated with the IQ of the top portion of the population, i.e. for two countries with the same average IQ, the one with the flatter bell curve will do better, because it will have more geniuses. Invention and innovation depends on creative geniuses, not average people. A small increase in average IQ will cause a bigger increase in the number of geniuses.

The state should pursue a eugenic welfare and tax policy. Taxation should be severely reduced: in practice this means the elimination of income tax and its replacement with land tax.

Welfare could be eliminated or severely reduced, but welfare itself is not directly the problem. If some way could be found to have welfare without increasing the fertility of the poor, such as making sterilisation a condition of receiving welfare, this would be a good thing. It would be humane to provide welfare to already existing humans, but without creating more humans requiring of welfare.

The reason we have such high economic growth rates is genetic. The reason complicated societies are possible is genetic. If states continue to pursue the misguided policies of income tax and welfare, it would be perfectly possible for us to return to growth rates of less than 3% per century, or even for average income to decline substantially. This would be a disaster. Growth rates are already declining in the West, and while some things (e.g. communication) are getting cheaper, other things (cars, food) are getting more expensive for median wage earners. (This suggests to me that the “natural resources as a limiting factor” model lacks descriptive power. A more accurate model would not treat “income” as a homogenous thing. Rather, some sources of income (food) are limited by natural resource constraints, but others (communication) are not, so income in one can increase while income in another decreases.) “Great stagnation” theory holds that invention & innovation rates are declining, and that we in the West may no longer be able to do things that our ancestors were able to do. We no longer build as tall buildings or put people on the moon; perhaps we cannot do so. Researchers such as Charlton and Woodley have some evidence that we are less intelligent than our Victorian/early 20th century forebears, as would be predicted from our dysgenic society. Food for thought…

Available in hardback, paperback or on Kindle.

Sean Gabb: “The Churchill Memorandum”

This thriller is a tremendously fun romp through an alternative history set in 1959 where the Second World War didn’t happen. Hitler died in 1939, and the British Empire has sustained its precarious position through careful diplomacy. Britain is still ruled well by a conservative establishment on a mix of traditional values and liberal enterprise: hard currency and technological innovation; beautiful buildings and statues; zeppelins and heated pavements. The sixties (speculated by AnomalyUK to have really started in the 1950s) never happen.

Guns are legal. So are drugs, and the characters ingest enormous quantities of them throughout the story (alcohol, cannabis, heroin, and several unnamed concoctions); after you read the book, read Bella Gerens’ review for an amusing theory.

In the universe of this book, Churchill was an unsuccessful alcoholic, and our leading man is the world’s “leading Churchill scholar. Then again, bearing in mind Winston Churchill’s current obscurity, it would have been less flattering, though more correct, to describe me as the only Churchill scholar.” So why are all the characters desparate to get their hands on the “Churchill Memorandum”?

The book is a thriller in the style of John Buchan and Bulldog Drummond. “You weren’t expected to blunder about like Richard Hannay on benzedrine!” exclaims one character.

The book is very well written and rollicks along. The most enjoyable thing about it is how the alternative history setting allows the author to make plenty of jokes by casting historical figures in unlikely (or likely) roles. All the villains of the real-world post-war revolution from Roy Jenkins downwards meet their comeuppance. I won’t give much more away, other than to quote how the central villain of the piece is described:

“One thing was certain. Behind that pipe and that carefully-designed mask of aged Edwardian fop, there lurked the world’s most desperate gambler since the car accident in Prague twenty years before. To become Prime Minister, and to stamp his name into all the future history books, there was no limit to the wickedness of Harold Macmillan.”

Available in paperback or on Kindle

Hans-Hermann Hoppe: “Democracy: The God That Failed”

This is a book of two halves. The first half is about the problems of democracy, and the second half argues for anarchism.

The first half is very good. Hoppe explains the concept of time preference, or the degree of future orientation someone has. For each person, one can draw a schedule which describes, for any given level of income, what percentage of their income they will consume and what percentage they will invest. For a given person, the more they earn, the more likely they are to invest a greater percentage of their income. But two different people can have different time preferences: with the same income, one might invest more than the other.

For Hoppe, a reduction in general rates of time preference is identical with civilisation. As people become richer, they can invest more, which makes them richer…

The problem with democracy is that it is inherently socialist. The majority of people vote for redistribution from the rich to themselves. As Hoppe has said elsewhere, “Democracy is a soft variant of communism, and rarely in the history of ideas has it been taken for anything else.”

Democracy is anti-civilisation. The redistribution from richer to poorer that is an inherent feature of all democracies leads to an increase in time preference and short-termism. Rich people have less incentive to invest (and work) because they do not get to keep all their profits, and poor people have less incentive to invest (and work) because they receive money from the rich instead, without having to do anything for it. Hoppe makes the distinction between movements along a time preference curve as your income changes, and a shift in the curve itself. Redistribution actually shifts the curve inwards (bad) because rich and poor alike will invest less for a given level of income.

Monarchy does not suffer from these problems. Under monarchy, redistribution is from the poor to the rich (the King and his family), so is likely to reduce average time preference and increase the total proportion of the economy devoted to future production. The King is richer, so he can invest a greater proportion of his income. He may decide to “leave it invested in the economy” by taxing less. There are only so many productive investments one individual or organisation can find, and leaving other people with capital enables them to find investments that you would not have found yourself. The King would want to avoid the error of the Russian communists who wanted the state to own all the capital instead of the land. Why try to run all the businesses when you can just tax them? Similarly, there is a trade-off between taxing now and taxing more later. (The total rents in any given time period would not be reduced if the King chose not to collect them all. The difference would simply be collected by someone else, just as reducing land taxation does not benefit the tenant, only the landlord.)

The second half of the book, in which Hoppe argues for anarchy over monarchy, is less good. Hoppe is an economist in the Austrian tradition, and relies mostly on deductive arguments. Unfortunately, while some of his deductions in the first half are flawed, some of his deductions in this half are terrible, and obviously so. At one point Hoppe claims that unowned property is not valuable, because nothing is valuable until it has been owned. The fact that something was unowned supposedly demonstrates that nobody valued it. While I agree with Hoppe on the subjectivity of value, it is possible for several people to be aware of something yet unable to appropriate it. Hoppe also claims that people appropriating land do not make anyone worse off, since everyone else demonstrated they did not value the land by not appropriating it. Tell that to people born after the land was appropriated. He also claims that original appropriation of land gains one not just property rights to it, but exclusive property rights. He doesn’t say why this follows.

Hoppe addresses some weak objections to anarchy. However, he does not deal with strong objections to anarchy. Hoppe proposes that insurance companies become private protection agencies, à la David Friedman. Hoppe never adequately explains why they would not become extortion agencies (i.e. states). Hoppe says that they would not because they would lose customers. But this begs the question, because having chosen this path they would not need customers. Nick Szabo defeats Friedman’s (and Hoppe’s) anarcho-capitalism in “The Coase Theorem is false”. Hoppe claims that, under anarcho-capitalism, parties will negotiate to resolve disputes. For example, if person A wants to operate a noisy business, but peace and quiet is worth more to his neighbour B, then B will pay A not to operate the business. However, as Szabo points out, this assumes pre-existing property rights and a way to enforce them. In the absence of a higher authority to prevent it, if A can generate externalities (large costs to B) at little cost to himself, he can extort money out of B.

The major problem with this book is Hoppe’s theoretical shortcoming regarding property and taxation. Hoppe makes an arbitrary distinction between taxation and rent. In reality taxation is just a type of rent. He does not distinguish between different types of rent on grounds of deadweight costs. In Hoppe’s terminology, taxes are bad and rents are OK (except when the rents are collected by the state). In reality, different taxes have different dead-weight costs — income tax is worse than land tax — but the dead-weight costs are the same regardless of who collects the rent. Income tax collected by a private landlord would be just as damaging as income tax collected by the state. Land tax collected by a private landlord is just as (not) damaging as land tax collected by the state.

Hoppe endorses Spencer Heath’s anarchism, towns and cities are owned by single landlords. This solves several collective action problems. However, Hoppe makes a false distinction between “private” landlords and states. Heathian landlords have all the powers of a state. Under Hoppe’s property absolutism they would actually have more powers than many states have today, even if they were bound by contracts. If a private landlord is able to control everything that occurs on his property, he can ban abortion, marijuana, certain styles of dress, certain haircuts, certain religions, certain books… Heathian landlords are states. Hoppe makes the bizarre distinction that “there will be what one might call governance in the city, but there will be no government.” In reality, the landlord that does the governing is the government, whatever you call it.

The problem is that Hoppe treats property as a moral matter. He explicitly eschews the fiction of morality elsewhere, but does not realise that morality is a fiction where property is concerned as well. For Hoppe, the state’s property is illegitimate (immoral). He is misled by names. For example, he thinks that if he “owns” some land in the state of Nevada, subject to a property tax of 50% of the rental value of the land, then he owns the whole property and the state is imposing an immoral tax. In reality, he effectively owns a 50% interest in the land and the state owns a 50% interest. As a matter of fact, the state also has the ability to unilaterally change the tax percentage (it is not a contractual matter). Changes may have effects an economist would consider bad, but they are not immoral.

Taxation by a Heathian landlord is just as voluntary as taxation by a state. It could even be contractual. Immigrants would sign a rental agreement, which would specify a rent, and might specify conditions about what hairstyle they could have, for example. If they wanted a different hairstyle, they could leave. Children born in the territory would be bound by these conditions without signing a contract, just as children in real life who live in a rental apartment with their parents are bound by the rules of the apartment (concerning, say, noise), even though the children did not sign any agreement. Once a child grows up, he will continue to be bound by these rules if he continues living in the same place. If he wants to move to a different house within the territory, he would have to sign an agreement.

Heathian “anarchism” is extremely attractive to neoreactionaries:

“As soon as mature members of society habitually express acceptance or even advocate egalitarian sentiments, whether in the form of democracy (majority rule) or of communism, it becomes essential that other members, and in particular the natural social elites, be prepared to act decisively and, in the case of continued nonconformity, exclude and ultimately expel these members from society. In a covenant concluded among proprietor and community tenants for the purpose of protectingtheir private property, no such thing as a right to free (unlimited) speech exists, not even to unlimited speech on one’s own tenant-property. One may say innumerable things and promote almost any idea under the sun, but naturally no one is permitted to advocate ideas contrary to the very purpose of the covenant of preserving and protecting private property, such as democracy and communism. There can be no tolerance toward democrats and communists in a libertarian social order. They will have to be physically separated and expelled from society.”

Landlords would admit “only those immigrants whose presence adds to a lower crime risk and increased property values and in excluding those whose presence leads to a higher risk and lower property values. That is, rather than eliminating discrimination, insurers would rationalize and perfect its practice… Indeed, in cooperation with one another, insurers would want to expel known criminals not just from their immediate neighborhood but from civiliszation altogether, into the wilderness or open frontier of the Amazon jungle, the Sahara, or the polar regions.” He quotes Spencer Heath MacCallum quoting anthropologist Raymond Firth about the Pacific island of Tikopia: “Inasmuch as all land was owned by the chiefs, an exiled person had no recourse but to canoe out to sea — to suicide or to life as a stranger on other islands. The expression for a person who is exiled translates that such a person ‘has no place on which to stand.'”

As a libertarian, Hoppe is against capital punishment, but it is surely justified in the case of Hakim Benmakhlouf, an Algerian thief who was deported from Britain five times, once returning from Algeria within 24 hours.

The problem with Heathian landlords is the same as with states: how to bind them to their contracts? Hoppe does not address this problem.

Hoppe argues that law should be voluntary. If law is voluntary, property is voluntary. Hoppe thinks property should not be voluntary, but he thinks law should be voluntary. This is a contradiction, Hoppe’s blather about praxeology notwithstanding. While rent may be voluntary, a landlord’s exclusive right to his property is not voluntary. But if law is voluntary, people would not necessarily agree to respect a landlord’s exclusive right to his property.

Law can never be voluntary. It is possible to avoid paying rent to a landlord by moving to a different place, but if all land is owned by landlords then you will pay rent to someone. In this sense, rent is not voluntary. Similarly, it is possible to avoid a legal system by leaving its jurisdiction, but if all land is under some jurisdiction, it is not possible to avoid law. Law is as voluntary as rent, just as rent is as voluntary as tax. Property/tort law is prior to contract law.

Finally, Hoppe has little to say about how to achieve anarcho-capitalism. He advocates secession in all circumstances, right down to the individual. He says “It is difficult to imagine how the central government would dare to invade a territory and crush a group of people who had committed no other sin than trying to mind their own business.” “No propaganda effort, however elaborate, would make the public believe that its attack was anything but an aggression against innocent victims.”

This strikes me as exceedingly naive, and ignorant of history. What need had the Mongols of good public relations?

Available in paperback.


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