"Studyblog" of A Theory of Socialism and Capitalism: Chapters 1 & 2

A Theory of Socialism and Capitalism by Hans Hoppe

Here at The Paleo Blog I am going to try something a bit different. Now that I have my own copy of Dr. Hans-Hermann Hoppe's A Theory of Socialism and Capitalism (ATSC) I will, at least in part and time allowing, "liveblog" it with some notes. These notes will be made into a more "study guide" format. So I'll call these entries "studyblogs." Typing them up will definitely slow my reading, but it is probably better that way so I will (with any luck) absorb more of it.

Currently I have read chapters one, two, and three. The studyblog of chapter three will be posted above in a separate blog entry. I have no timetable of when the next studyblog entries will be posted. But I'll try to post something once a week.

You can "follow along" by buying the book here at the Mises Institute and/or read it on your computer screen by downloading it for free here [pdf].

(This should be implied, but any errors of mine are my own making. I am, after all, just a layman and not a professional economist.)

Chapter 1

• Without the development of a systematic theory, social or political science is nothing but a confusion of random thoughts "equally" defendable by whimsical opinion making by sheer taste.
• (This reminds me of the saying: "There are three kinds of lies: lies, damned lies, and statistics." Someone can try to show that increasing the money supply increases wealth by statistics, but statistics cannot beat logic. Man cannot comprehend a world without the law of identity, the law of non-contradiction, and the law of excluded middle. Did the increase of wealth happen because of the increased supply of money or despite it? In the same way, how can statistics prove or disprove the law of diminishing marginal utility? In a [mostly] similar manner, how can statistics beat the logic of a mathematical theory? One does not have to "test it" and one does not derive pure math from the world.)
• Starting with an absolute and undeniable axiom man can then deduce what it spells out, without the problems of the above. (The axiom of action in praxeology is incontestable. Denying it would be the engagement of action, thus leading to a denial of the original erroneous denial. Likewise, as it will be argued in the book, Hoppe will make a case that argumentation in ethics presumes certain norms in regards to property and aggression.)
  

Chapter 2

Now the fun begins...

• Terms must be defined clearly. They must be understood by all; otherwise the attempt to build a system of thought on top of them will lead to ultimate failure and confusion. This includes "simple" terms, such as property, contract, aggression, capitalism, and socialism. Being so simple man sometimes has trouble defining them in simpler terms or comprehending them accurately.
• A good conceptual analysis of these terms is through a thought experiment to the Garden of Eden.
  

Garden of Eden - An Introduction

In the Garden of Eden everything tangible, other than man's physical body, exists in superabundance.

In such a place the concept of property would not exist. If apples, diamonds, water, fish, etc. exists in superabundance, then the usage of any of these things will have no impact on my present or future supply or on someone else's present or future supply. It thus follows that property rights (i.e., ownership and exclusive control) would not exist. Conflicts cannot arise out of X, if it exists in the Garden of Eden: Man just snaps his finger for X and it appears.

Accordingly a requisite for property is that it must be scarce. This is what differentiates the Garden of Eden from the "Real World." Ours is a world of scarcity. When X is in the Real World, and if it is indeed scarce in the Real World, then it is assigned property rights to rule out potential conflicts over its usage. It is, Hoppe says, "a normative concept: a concept designed to make a conflict-free interaction possible by stipulating mutually binding rules of conduct (norms) regarding scarce resources."

[Sidebar ~ It must not only be scarce, but it must be something controllable and "physical" to the touch. It is a tangible something. If scarcity was the only requisite, then time could be considered "property" but that would obviously be ludicrous. This scarcity requisite, btw, makes intellectual property not "property" at all. Man cannot "own" ideas.]

In the Garden of Eden, however, there is at least one scarce item that must have property rights: man's physical body. There must be property norms to rule out conflicts.

Self-Ownership

• Hoppe will later argue that the "natural" position is the only rationally justifiable one (chapter seven). But until then, the natural position of property norms says that each respected person should own himself.
  
• The naturalness of this position is indicated by, for example, possessive expressions. When we talk, we talk about specific people and imply their ownership of themselves. (E.g., he, she, etc.) And when we talk about actions of specific people. (E.g., Lisa did that, he drove, she ate dinner, etc.)
• Thus, each person owns himself and has control over himself "within the boundaries of [his] surface." Men (women) consequently have every right to make use of their respected body as they see fit.
  

(Newborns and children will be gotten to below.)

Action in the Garden of Eden
(Action which applies just the same for the Real World)

In such a place each man has only one physical body and, let's say that, like in the Real World, it is limited in its lifetime, can be damaged, killed, and so forth. Like stated above, material wealth is not a problem at all. But in the Garden of Eden man can still adopt one lifestyle versus another. He can choose to spend the day (or a hour, minute, etc.) reading a book, drawing, swimming, etc.

• In action man chooses a goal to pursue: A goal which the man has obviously not met; this is why he is acting to get there.
  
• He acts to change his current state into a subjectively higher one of value. (If he was in bliss, he would have no reason to act! Acting would only upset that bliss.)
• Choosing involves preference to do one thing at this moment instead of another. It involves costs: i.e., if I do X it will come at the expense of doing Y.  ("You cannot have your cake and eat it too.")
• All action takes place in time, even in our Garden of Eden. Time is a scarce, limited thing.
• Man using his limited time to pursue the goal of X will cut into Y. Meaning that there will be less time for Y.
• A goal that will take a long time to get implies that there is high cost in waiting for that goal and that the end result of that wait is greater than the cost for the man who is pursuing it. (He could use this time to work for another goal that would reached in a lesser time. This is part of the costs.)
  
• Action implies "property norms" with more than one person. [Say that Adam is joined with Eve.] This is because the action of one person can overlap and cause conflict with another.

Self-Ownership and Contractualism

• Contractualism is based-on and derived from self-ownership and the acknowledgment of such ownership (of property rights). It is this ownership that infers man's right to engage in contractual exchanges with others.
• This means that a man can agree-to or invite another person to do something to his body. (And, of course, to say "no" to someone who wishes to do something to it.)
• Such relations are mutual because each party in a contractual exchange agrees to the exchange. They agree to the exchange because each party expects to benefit from it; otherwise one or both parties would not agree to it.
  
• This does not mean, though, that after an agreed exchange one or both parties might say, in hindsight, it was wrong. The point is that ex ante they thought it would be a positive.
  

Aggression

Aggression is an action done to another without the agreement of that other. (It is uninvited.) For example, raping, beating, killing, stopping someone from doing something they do not personally like, enslaving, etc.

(Note: An invasion can only be done by causing damage or taking command of another's physical integrity of their property. It cannot be an "invasion" on, to quote Hoppe, "the integrity of someone's value system." If that were the case, then no one could act because no one could figure out ex ante if this or that action would hurt someone's, subjective, "value system." Such a task would be impossible. Furthermore it completely violates the property rights system and transforms it into something else, and impossibly so, entirely.)

What Does Aggression Result In?

The attacker, or aggressor, gains in some personal fulfillment, but at the expense of another person (the aggressed----the victim). The victim's fulfillment of happiness has decreased.

(This is unlike voluntary contractualism.)

More on Life (actions) in the Garden of Eden

• Remember: in the Garden of Eden men can still choose different lifestyles. They can do different things with their bodies through time----which is finite and scarce.
• Consumption vs. Investment Decisions:
• ------Consumption Decisions: Lifestyle choices that focus on immediate consumption.
• ------Investment Decisions: Lifestyle choices that only bear fruit in the more distant future. These require "the actor to overcome disutility of waiting." Investment decisions require human capital, i.e., time, patients, effort and things of this nature.
  

Socialism in the Garden of Eden

• With the implementation of socialism, man no longer would have full control over his life. That is to say, aggression (as defined above) has been institutionalized in the Garden of Eden.
• Nonproducers (called this in due to their non-production over bodies that are not their own) would have control over producers.
• The degree and type of control would be far ranging and so, as a result, would the consequences. But we can still deduce from the above the general result.
• These results in the Garden of Eden apply just the same to the Real World of all-around scarcity. [More so, since the Real World has scarcity "outside" of the physical body.]
  

What Would Be The Consequences?

(1) The "Economic" Consequences...

The gratification----the subjective psychic income---a producer can earn from his body will be lowered because the range of choices that he can make will be fewer.  As a result the amount of investment placed in human capital will be lower, since it would "pay" (or, put in another way, bring) less. Since investment-time, which costs in waiting time, would be less valuable as an investment, henceforth man's actions will be more directed towards consumption decisions and opposed to investment decisions.

In a nutshell: Socialism will always, and by necessity, lower income and increase consumption.

"Put drastically," writes Hoppe, "it leads to a tendency to turn philosophers into drunks." (So that explains it! Haha. Just kidding.)

(2) The "Social" Consequences...

A system of socialism that has been institutionalized to the public [e.g., say democracy] will allow for greater numbers of people to pursue their desire by redistribution-socialism, i.e., by using the institution of aggression, at the expense of producers. This will make aggression relatively easier and production more costly. Therefore the institutionalization and acceptance of anti-natural property rights in a society will tend to push men from production to parasitism. It will change men's characters and the social system from producers to nonproducer parasitic-aggressors.

In a nutshell: Socialism will, as I have said before on this blog, turn man into a political animal.

The Real World and Non-Body Private Property

• Ownership cannot be based on just any verbal claim.  There must be an "objective, intersubjectively ascertainable link between the owner and the property owned," writes our author.
• Again, the occupant of one's body is the given man. He is the "first user." (The only direct user!) A man's body is used by him.

As far as property ownership "outside" of one's body in the Real World, this property must be "produced" in the sense that a man transforms nature or "homesteads" it into, let us say, a "product" that the given man subjectively values.

This transformation or homesteading requires the man to in someway indicate a "border" to that thing of nature. To show his ownership. Hence he does not need to transform (or "touch") every thing to make it his property (e.g., every single atom even in the "middle" of this thing, which is impossible). Also, in this transformation it need not be continuous. (I.e., a piece of property does not need to be forever transformed to be owned. It just needs to be homesteaded once sometime in the past.)

After property is developed out of the state of nature and into the hands of a man, it can then be voluntarily exchanged with another (or given as a gift).

As far as newborns: They have been "produced," but they are new "actor-producers." They are owners of their bodies and have the potential to become fully developed adults. Accordingly they have the absolute right not to be aggressed upon. The parents are trustees, but nothing more [i.e., they are not master slave owners!]. Children, in accordance with this, must have the absolute right to runaway and, as Hoppe says, have the right to say "no" when demanded to come back home.

[For more on the subject of homesteading (or children) you can turn to Murray Rothbard's Ethics of Liberty or chapter four (children: chapter seven) of Rothbard's Egalitarianism As a Revolt Against Nature.]