"Embarking on the reading of this monument of libertarian philosophy that is 'Democracy: The God That Failed' (specifically the first chapter), written by Austrian economist Hans-Hermann Hoppe and translated by Stéphane Geyres and Daivy Merlijs, your humble servant takes up the challenge of providing you with a short but faithful transcription. The translation currently covers only the first and eleventh chapters, but we have no doubt that the others will arrive soon. I won't take the risk of boldly announcing that the chapter we're dealing with today is the most important of all, even if the points raised in it suggest that this might be the case.
This first chapter of 'Democracy: The God That Failed' deals with the notion of time preference. For those familiar with Austrian economics, this concept makes sense, and one immediately thinks of economists Friedrich von Hayek and Murray N. Rothbard. The notion of time preference is usually mentioned in the Austrian theory of economic cycles. As a reminder, it is often the interest rate that is widely used and described as the 'price of time' (or time preference, in the case at hand). Even though Hans-Hermann Hoppe doesn't explicitly talk about interest rates, he remains fully and irrevocably in the footsteps of his predecessors.
An Economic Lesson
Here, the concept of time preference is used in a more comprehensive approach: to explain the gradual emergence of a civilizing process. This process of civilization is explained by the lowering of the cost of renouncing the present in order to acquire future goods (hence the importance of interest rates in the Austrian theory of business cycles). More clearly, all individuals have an undeniable preference for the present, and this preference will be further stimulated if the fruits of their labor are confiscated by criminals, who are parasites.
We are thus fully engaged with Böhm-Bawerk's capital theory and the notion of "roundabout methods of production" (i.e., the use of produced but unconsumed quantities to allocate them to the formation of more productive capital, thus allowing for greater quantities to be produced in the long term). The history of capital and the history of civilization are one and the same. The author's argument lies in the terrible assertion that constant and institutionalized violations of private property are a hindrance, or can even completely counterbalance the process of capital formation, and thus of civilization, with a preference for the present that is consequently accentuated.
Hans-Hermann Hoppe makes a distinction between democracy and monarchy, arguing that although both are harmful state systems, they influence time preference rates in radically different ways.
Monarchy is described as a "private property regime," which preserves a lower level of time preference, allowing the civilizing process to proceed with fewer obstacles. Since the kingdom is considered the personal property of the monarch and their family, the ruler is incentivized to avoid policies that would devalue the realm. Monarchs are encouraged to protect private property institutions because they themselves act as private owners. This system creates two distinct classes: the monarch and their agents on one side, and taxpayer-citizens who fund the regime on the other.
Democracy, on the other hand, is characterized as a "public property regime," which severely exacerbates time preference. In democracy, the distinction between rulers and ruled becomes blurred, leading to governance issues akin to a "tragedy of the commons." Democratic leaders are incentivized to exploit national resources rapidly since their tenure is temporary. This results in maximizing short-term gains at the expense of long-term asset value for the country.
Debts and Wars: The Fruits of the State
Hans-Hermann Hoppe then proceeds to make other comparisons of the same nature. Under monarchies, public expenditures rarely exceeded 5% of the gross domestic product, where the public employment rate was around 2%, and where the king could only borrow with difficulty (at prohibitive rates, as he only committed his own fortune and not that of his subjects) or resort to monetary creation. The era of democratic republicanism is quite different: it is characterized by an explosion of public debt and taxes, as well as public expenditures (on average between 45% and 50%), a public employment rate between 15% and 20%, if not more, and the end of the gold standard (and thus unlimited monetary creation).
The final distinction addressed by the author concerns the scope and significance of wars. While dynastic wars did not involve civilian populations and conscription was costly and therefore limited, the era of democratic wars reversed this situation once again. Conscription became mandatory and inexpensive, and with the blurring of lines between rulers and ruled, wars were no longer simply waged to expand territory, but to impose ideological views that involved the entire nation and the country's credit. Wars became total, and nations began to fill with animosity towards their peers, as the official slogan became, "We are the State."
We have concluded this brief summary of the ideas discussed by Hans-Hermann Hoppe in the first chapter of "Democracy: The God That Failed." We hope to have accurately conveyed the author's arguments and to have sparked your interest in further exploring the works of this Austrian philosopher and economist.