Monday, January 21, 2013

Review: The Four Horsemen

I just finished watching The Four Horsemen.

From an encouraging beginning, particularly the critique of fiat, fractional reserve, central banking, the desirability of hard currency and the acknowledgement of the merits of Classical Liberalism, I must say I was ultimately disappointed by this film. As with many other documentaries on social and economic issues it does a good job of pointing out the problems, but then offers solutions which are futile at best, destructive at worst. The filmmakers themselves pointed out that many would dismiss their solutions as socialism or even Marxism. Indeed, I think such an argument could be made, but I won't make it myself.

What they are actually proposing is a school of political economy known as Georgism or Geonomics.* The basic idea, as the Wikipedia article I just linked states, is "people own what they create, but that things found in nature, most importantly land, belong equally to all." I would not argue that is Marxist. Indeed, according to the the referenced Wikipedia article, Marx himself dismissed it as little more than a patch on his conception of capitalism. I might say it is a form of soft socialism, but that is not really my critique.

Murray Rothbard addressed Georgism in For A New Liberty. To understand Rothbard's reasoning you have to begin with his argument for self-ownership, i.e., a person's property right in his own body.

The right to self-ownership asserts the absolute right of each man, by virtue of his (or her) being a human being, to "own" his or her own body; that is, to control that body free of coercive interference. Since each individual must think, learn, value, and choose his or her ends and means in order to survive and flourish, the right to self-ownership gives man the right to perform these vital activities without being hampered and restricted by coercive molestation.

Consider, too, the consequences of denying each man the right to own his own person. There are then only two alternatives: either (1) a certain class of people, A, have the right to own another class, B; or (2) everyone has the right to own his own equal quotal share of everyone else. The first alternative implies that while Class A deserves the rights of being human, Class B is in reality subhuman and therefore deserves no such rights. But since they are indeed human beings, the first alternative contradicts itself in denying natural human rights to one set of humans. Moreover, as we shall see, allowing Class A to own Class B means that the former is allowed to exploit, and therefore to live parasitically, at the expense of the latter. But this parasitism itself violates the basic economic requirement for life: production and exchange.

The second alternative, what we might call "participatory communalism" or "communism," holds that every man should have the right to own his equal quotal share of everyone else. If there are two billion people in the world, then everyone has the right to own one two-billionth of every other person. In the first place, we can state that this ideal rests on an absurdity: proclaiming that every man is entitled to own a part of everyone else, yet is not entitled to own himself. Secondly, we can picture the viability of such a world: a world in which no man is free to take any action whatever without prior approval or indeed command by everyone else in society. It should be clear that in that sort of "communist" world, no one would be able to do anything, and the human race would quickly perish. But if a world of zero self-ownership and one hundred percent other ownership spells death for the human race, then any steps in that direction also contravene the natural law of what is best for man and his life on earth.

Finally, however, the participatory communist world cannot be put into practice. For it is physically impossible for everyone to keep continual tabs on everyone else, and thereby to exercise his equal quotal share of partial ownership over every other man. In practice, then, the concept of universal and equal other-ownership is utopian and impossible, and supervision and therefore control and ownership of others necessarily devolves upon a specialized group of people, who thereby become a ruling class. Hence, in practice, any attempt at communist rule will automatically become class rule, and we would be back at our first alternative.1

Starting from that argument, Rothbard then applies the same reasoning to property rights in land. Assuming the Georgist position that one is indeed entitled to retain the fruits of one's own labor

...if the gatherer has the right to own the acorns or berries he picks, or the farmer the right to own his crop of wheat or peaches, who has the right to own the land on which these things have grown? It is at this point that Henry George and his followers, who have gone all the way so far with the libertarians, leave the track and deny the individual's right to own the piece of land itself, the ground on which these activities have taken place. The Georgists argue that, while every man should own the goods which he produces or creates, since Nature or God created the land itself, no individual has the right to assume ownership of that land. Yet, if the land is to be used at all as a resource in any sort of efficient manner, it must be owned or controlled by someone or some group, and we are again faced with our three alternatives: either the land belongs to the first user, the man who first brings it into production; or it belongs to a group of others; or it belongs to the world as a whole, with every individual owning a quotal part of every acre of land. George's option for the last solution hardly solves his moral problem: If the land itself should belong to God or Nature, then why is it more moral for every acre in the world to be owned by the world as a whole, than to concede individual ownership? In practice, again, it is obviously impossible for every person in the world to exercise effective ownership of his four-billionth portion (if the world population is, say, four billion) of every piece of the world's land surface. In practice, of course, a small oligarchy would do the controlling and owning, and not the world as a whole.2

If, as The Four Horsemen purports, the real issue to be addressed is one of social order and social conflict due to scarce resources, it can be demonstrated, using Rothbard's reasoning, that the Georgist approach does not reduce conflict, it actually encourages it. Hans-Hermann Hoppe has made that very argument in The Idea of a Private Law Society. As with the above excerpts from Rothbard, some initial premises must be clarified before his argument can be presented. I have to begin with Hoppe's initial formulation of "the problem of social order" before presenting the reasoning he uses to arrive at a solution. In this case Hoppe begins with classic "Crusoe" economics while adding a little twist in that he assumes Crusoe's Island to be one one which there is no scarcity of material resources.

Suppose the island is the Garden of Eden; all external goods are available in superabundance. They are "free goods," just as the air that we breathe is normally a "free" good. Whatever Crusoe does with these goods, his actions have no repercussions--neither with respect to his own future supply of such goods nor regarding the present or future supply of the same goods for Friday (and vice versa). Hence, it is impossible for there ever to be a conflict between Crusoe and Friday concerning the use of such goods. A conflict is only possible if goods are scarce. Only then will the need arise to formulate rules that make orderly, conflict-free social cooperation possible.

In the Garden of Eden only two scarce goods exist: the physical body of a person and its standing room. Crusoe and Friday each have only one body and can stand only at one place at a time. Hence, even in the Garden of Eden conflicts between Crusoe and Friday can arise: Crusoe and Friday cannot occupy the same standing room simultaneously without coming into physical conflict with each other. Accordingly, even in the Garden of Eden rules of orderly social conduct must exist--rules regarding the proper location and movement of human bodies. Outside the Garden of Eden, in the realm of scarcity, there must be rules that regulate not only the use of personal bodies but also of everything scarce so that all possible conflicts can be ruled out. This is the problem of social order.3

Hoppe states that problem of social order in the special circumstance of Crusoe and Friday in Paradise can be addressed by a single rule: "everyone may place or move his own body wherever he pleases, provided only that no one else is already standing there and occupying the same space."4 For the real world of material scarcity he elaborates four rules. It is here that he expands on Rothbard's argument against collective ownership.

First, every person is the proper owner of his own physical body. Who else, if not Crusoe, should be the owner of Crusoe's body? Otherwise, would it not constitute a case of slavery, and is slavery not unjust as well as uneconomical?

Secondly, every person is the proper owner of all nature-given goods that he has perceived as scarce and put to use by means of his body, before any other person. Indeed, who else, if not the first user, should be their owner? The second or third one? Were this so, however, the first person would not perform his act of original appropriation, and so the second person would become the first, and so on and on. That is, no one would ever be permitted to perform an act of original appropriation and mankind would instantly die out. Alternatively, the first user together with all late-comers become part-owners of the goods in question. Then conflict will not be avoided, however, for what is one to do if the various part-owners have incompatible ideas about what to do with the goods in question? This solution would also be uneconomical because it would reduce the incentive to utilize goods perceived as scarce for the first time.

In the third place, every person who, with the help of his body and his originally appropriated goods, produces new products thereby becomes the proper owner of these products, provided only that in the process of production he does not physically damage the goods owned by another person.

Finally, once a good has been first appropriated or produced, ownership in it can be acquired only by means of a voluntary, contractual transfer of its property title from a previous to a later owner.5

Now, the Marxist, the socialist or the Georgist might argue that private property via original appropriation is just one of many different approaches to social organization, but Hoppe demonstrates that private property is not just a solution, but the only solution to the problem of conflict over scarce resources.

The institution of private property and in particular the establishment of private property by means of original appropriation are frequently referred to as "conventions." However, as should have become clear, this is false. A convention serves a purpose, and it is something to which an alternative exists. For instance, the Latin alphabet serves the purpose of written communication. There exists an alternative to it, the Cyrillic alphabet. That is why it is referred to as a convention. What, however, is the purpose of action-norms? The avoidance of possible conflict! Conflict-generating norms are contrary to the very purpose of norms. However, with regard to the purpose of conflict-avoidance, the two mentioned institutions [private property and original appropriation] are not, just conventional; no alternative to them exists. Only private property makes it possible for all otherwise unavoidable conflicts to be avoided; and only the principle of property acquisition by acts of original appropriation performed by specific individuals at a specific time and location makes it possible for conflicts to be avoided from the beginning of mankind on.6

The idea of collective ownership of natural resources espoused by the Georgists stipulates that no individual can own land, they must pay for the privilege of using it in the form of "ground rent." It may sound good in principle, but how would it work in practice? Who would collect the rent and who would distribute it? Obviously a miner or farmer cannot just send a check for each person's share to everyone in the world. As Rothbard pointed out it would devolve to a group of individuals to administer such a system, effectively putting them in control of the worlds resources--essentially that group would be the owners. The net result would be an oligarchy distributing wealth in the manner of their own choosing. In short, it would be no different than the predatory corporations the film is criticizing.

So, as I said above, the solution offered by The Four Horsemen, while it may appear to offer an equitable and just solution to the problem of social conflict over scarce resources, it would in fact exacerbate conflict by concentrating the control of world's resources. In fact, on close examination, it might be seen as arguing for an elite body with authority over the resources and people of the entire planet, i.e., a world government. Isn't that what the book of Revelation said the four horsemen would precede?

*^ There are other flaws in this film. Notably the references to government regulation of the economy championed by Theodore and Franklin Roosevelt and worker ownership of the means of production. Each of these can and should be addressed, but I am concentrating on Georgism as it is the most egregious of the errors presented. It is also something with which people are least familiar.

1^ For A New Liberty: The Libertarian Manifesto, Nurray N. Rothbard, The Ludwig von Mises Institute, 2006, pp. 33-35.
2^ Ibid. pp. 40-41.
3^, 4^, 5^, 6^ The Idea of a Private Law Society, Hans-Hermann Hoppe,, 2006

Note: I'm pretty sure I've violated the rules of research writing in that the material I've quoted makes up a larger percentage of this essay than my own words, but I'm not writing this to establish myself a an original thinker building on the work of other who came before me. I'm simply trying to present the arguments of those with far greater qualification than I to address the topic at hand.

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