Public vs Private vs Individual Ownership of Government: A Survey of Dangerous Ideas in Three parts. (Part II)

Click here to read Part I

PART II: Monarchy

The 20th century was a bad time for Monarchies and Monarchs. One of the myriad results of the “War to end all Wars” was the dissolution of many European monarchies, and the establishment of more democratic forms of governance.

“From the viewpoint of economic theory, the end of WWI can be identified as the point in time at which private government ownership was completely replaced by public government ownership, and whence a systematic tendency toward increased exploitation — government growth — and rising degrees of social time preference — present-orientedness — can be expected to take off. Indeed, this has been the grand, underlying theme of post-WWI Western history: from 1918 onward practically all indicators:

1. of governmental exploitation and
2. of rising time preferences have exhibited a systematic upward tendency.” . –Dr Hans Herman Hoppe

Traditionally (in contrast with democracy) Monarchy have been the sole owner of state assets and debts. Debt was also considered hereditary meaning that the monarch’s heir was responsible for paying the debts of his predecessor. This coupled with the fact that the monarch was appointed for life allowed to act in ways that are familiar to economists. The monarch could take a long-term view of profit and loss and therefore would not have to exploit resources immediately for fear of losing the opportunity to do so in four years. The monarch also personally owned state assets and therefore had a vested interest in keeping the assets in good condition to pass them on to his successor.

Monarchies tend to be dynasties, and therefore have a long-term focus, Guillen noted. “If you focus on the long run, you are bound to be more protective of property rights,” he said. “You’re more likely to put term limits on politicians that want to abuse [their powers].” Here, he said Queen Elizabeth of the U.K. has exercised her constitutional role admirably in keeping the country’s prime ministers in check, whenever they seemed to overextend their reach.
Also, monarchies bring in “a psychological mechanism,” said Guillen. “If you’re the prime minister and you know there is a higher authority, although it may be a purely formal one and a pure figurehead like a king or queen, you are a little bit more subdued. If there’s nobody else higher or above you, then psychologically you are more prone to abuse your position,” he said.
“Don’t assume that monarchies are backward and that they don’t deliver good results economically — that’s not true,” Monarchies are also “much better than republics at navigating periods of uncertainty” such as the one triggered by Britain’s imminent exit from the European Union, Guillen said, citing research by other scholars on the subject. “Somehow, the institution of the monarchy [in the U.K.] provides a measure of stability” (Why Monarchies Rule When It Comes to Standard of Living).

This gives us some insight as to the mindset of monopoly exploitation of state resources vis a vis private ownership of government vs public ownership. Resources are still utilized to profit individuals; however, one form incentivizes longer-term stewardship vs outright consumption. Two very different economic models of profitability.

Now let us think about what would happen if the individual had the ability to act as his or her government with a constituency of one. A government that can truly be thought of as a government based upon the consent of the governed. What would the economic outlook of this Anarchistic government be, and how would it manifest? We will follow up in the third article of this series with an economic look at Anarchy, or individual ownership of governance.

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