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Book Review: The Economics and Ethics of Private Property: Studies in Political Economy and Philosophy by Hans-Hermann Hoppe

NOVEMBER 01, 1994 by N. STEPHAN KINSELLA

Boston/Dordrecht/London: Kluwer Academic Publishers • 1993 • 265 pages • $59.95

In 1989, Professor Hans-Hermann Hoppe published A Theory of Socialism and Capitalism: Economics, Politics, and Ethics (Boston/Dordrecht/London: Kluwer Academic Publishers, 1989), arguably the most important book of the decade, if only for the revolutionary “argumentation ethic” defense of individual rights presented in Chapter 7, “The Ethical Justification of Capitalism and Why Socialism is Morally Indefensible.” Hoppe continues to produce a significant assortment of articles elaborating on his argumentation ethic and the epistemology that underlies it, as well as on his impressive economic writings.

His new book, The Economics and Ethics of Private Property, is a collection of many of these related writings published up until 1992.

Because the chapters in the book were published separately as independent articles, there is some overlap between them, and thus some redundancy. A few times the text of several paragraphs in one article is reproduced verbatim in another article.

In the “Appendix: Four Critical Replies” section, Hoppe’s responses to various criticisms, published in Liberty and the Austrian Economics Newsletter, are reprinted. However, the initial criticisms themselves (by David Osterfeld, Leland Yeager, David Gordon, Tibor Machan, David Conway, Loren Lomasky, et al.) to which Hoppe is responding are not published. This is unfortunate, because these criticisms are interesting and enlightening, and also make Hoppe’s response to them more comprehensible.

The book is divided into two parts, “Economics” and “Philosophy.” Because the second part contains Hoppe’s most important ideas—his defense of individual rights—I will discuss his philosophical views first.

Philosophy: Argumentation Ethic

Hoppe’s ingenious “argumentation ethic” theory states, briefly, that all truths, including ethics and normative statements, must be able to be arrived at through the process of argumentation. This is undeniable, as one would have to contradict oneself in using argument to deny this. Therefore, whatever facts or norms anyone must presuppose while engaging in argumentation cannot be contradicted by any proposed fact or norms. (pp. 180-181)

Several things are implied in argumentation whose validity cannot be disputed. One is, for example, the universalization principle, as formulated in the Golden Rule of ethics or in the Kantian Categorical Imperative, which states “that only those norms can be justified that can be formulated as general principles which without exception are valid for everyone.” (p. 182) Another one of the things presupposed by anyone engaging in argumentation (or, indeed, any discourse at all, even with oneself) is the right of self-ownership of all listeners and even potential listeners: for otherwise the listener would not be able to freely consider and accept or reject the proposed argument, which is undeniably a goal of argumentation. (p. 183)

The concomitant right to homestead private property is also presupposed by anyone engaging in argumentation: since the use of natural resources—i.e., property rights in land, food, water, etc.—is absolutely necessary for any listener to survive and be able to participate in an argument, and since homesteading unowned property is the only objective, conflict-free way to assign property rights, all arguers must also presuppose the validity of the homesteading of unowned property, the Lockean “mixing of labor” with scarce resources, for otherwise argumentation could not occur. (pp. 184-186) And of course the right to self-ownership plus the right to homestead justify the non-aggression principle and are the bases of laissez-faire capitalism.

Professor Hoppe’s discovery of such a rock-solid defense of individual rights is a profoundly important achievement. So many of Hoppe’s insights deserve further exploration and development, that one welcomes future writing by Hoppe and others building upon his work.

In the September 1988 issue of Liberty, Hoppe presented his argumentation ethic in an article entitled “The Ultimate Justification of the Private Property Ethic.” A symposium discussing this article appeared in the November 1988 issue of Liberty, con-raining the critical comments of ten libertarian commentators.

Amazingly, almost all of these libertarian commentators were unimpressed by, if not downright hostile to, Hoppe’s argument. Only Murray Rothbard gave Hoppe’s thesis wholehearted endorsement and recognized its validity and significance. Why Hoppe’s ideas, which are such an important advance in political and libertarian thought, have failed to cause more excitement or gain more adherents than they have is baffling. But the best solution to this is the publica-tion of further elaborations and defenses, which is what Hoppe’s newest book is.

Economics

Part One, on economics, contains five interesting and insightful chapters. In the first, Hoppe shows that the distinction between “private” and “public” goods is completely illusory, thereby removing any justification for state monopolization of the production of security, long held to be a “public” good.

In Chapter 2, “The Economics and Sociology of Taxation,” Hoppe shows that taxation, by decreasing the marginal utility of producing wealth, leads to a shift away from the production of wealth, and towards consumption and leisure. Therefore taxation is a means for the destruction of property and wealth-formation. (pp. 28-29) Additionally, because of time preference—the fact that people prefer present goods over future goods—the decrease in the marginal utility of producing wealth leads to a shortening of the structure of production, and thus fewer valuable future assets are produced. (10. 34)

After showing that taxes reduce the standard of living of consumers, Hoppe discusses the sociological reasons why there is taxation, and ever more of it. Basically, there is taxation because a majority of the population either actively or passively support such governmental policies, and they do so because of the lack of (complete, principled) acceptance of a private property ethic, and because of government propaganda and methods such as democracy and welfare that amount to vote-buying.

His discussion of banking and the international economic order is the most provocative chapter in Part One. Here Hoppe explores how and why the state monopolizes money and banking, and shows the danger of the ever-approaching international monetary order. Here he explains why “[t]he monopolization of money and banking is the ultimate pillar on which the modern state rests.” (p. 70)

Chapter 4 reinterprets the Marxist theory of history from an Austrian economics perspective. Hoppe points out that Marx’s theory of exploitation is flawed because, in maintaining that there is exploitation when a capitalist retains a surplus profit after paying a laborer, it does not take into account nor “understand the phenomenon of time preferences as a universal category of human action.” (p. 97) The final chapter contains an illuminating discussion of the Austrian theories of employment, money, and interest, and demolishes Keynes’s “new” theory with this intellectual ammunition.

Conclusion

The Economics and Ethics of Private Property contains cutting-edge economic theories and breakthroughs in epistemology and individual rights theories. As Hoppe points out, in the long run, immoral government policies depend upon the tacit support of the majority of the population. The only way to win more recognition and enforcement of our individual rights is to educate our fellow men of the truth and wisdom of freedom. The publication of works like Hoppe’s, with an uncompromising, hardcore—and, more importantly, correct—defense of liberty, certainly advances this cause. []

Mr. Kinsella practices computer and software patent law with Schnader, Harrison, Segal & Lewis in Philadelphia. A more in-depth review of this book may be found at 25 St. Mary’s Law Journal 1419 (1994).

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November 1994

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