Vol 1% 3 Austrian Economics Newsletter The Justice of Economic Efficiency by Hans-Hermann Hoppe ‘The central problem of political economy is how to organize society so as to promote the production of wealth. ‘The central problem of political philosophy is how to arrange society 50 as to make it a just social order. ‘The first question is a question regarding matters of yhat meansareappropriateforachievinga specific. this case: wealth ‘The second question falls outside the realm of the so- called positivesciences. Itasks whether or not thegoalwhich political economy assumes to be given can be justified as a goal, and whether or not, then, the mesns which political economy recommends can be regarded as efficient means for ust ends. Inthe following I will present an a priori justification for ‘the thesis that those means recommended by political econ- omy are indeed efficient means for just ends, 1 will bogin by describing the means recommended by political economy and explain systematically all the produc- tion of wealth attained by edopting them is greater than that produced by choosing any other means. Since my mein task is to demonstrate the justice of these means of producing wealth, my description and explanation af economic effi- ciency will be extremely brief, Political economy begins by recognizing scarcity. It is only because we do notlive nthe Garden of Eden thet weare concerned ebout theproblem of economicefficiency. Accord- {ng to politieal economy, the most efficient means of at least, alleviating, if not overcoming, scarcity {g the institution of private property. The rules underlying this institution have ‘been correctly identified for the most part by John Locke. They areas follows: Every person owns his own body as well as all scarce goods which he puts to use with the help of his, body before anyone else does. This ownership implies the rightto employ these searce goods however oneseesfit solong as in so doing one does not aggress against anyone else's property, Le, so long as one does not uninvitedly change the physical integrity of another's property or delimits another's control overt without his consent, In particular, oncea good has first been appropriated or homesteaded by raixing on labor withit-this being Locke's phrase~then ownership in| uy :20 only be acquired by means of a contractual transfer of property tie from a previous to a later awner. ‘The reasons this institution leads tothe greatest possible production of wealth is straightforward: Any deviation from Professor Hans-Hermann Hoppe this set of rules implies, by definition, a redistribution of property titles, and hence of income, away from user-produc- ers and contractors of goods and onto non-user producers and non-contractors, As a consequence, any such deviation implies that there will be relatively less original appropria- tion of resources whose scarcity is realized, there will be less production of new goods, less maintenance of existing goods, and less mautually beneficial contracting and trading. And thisnaturally implies lower standard oflivingin termsofex- changeable goods and serviees. Further, the provision that only the first user (not a later one) of a good acquires ownership assures that productive efforts will be as high as possibleatall times. And the provision thatonly the physical integrity of property (not property values) be protected guar- antees thet every owner will undertake the greatest possible value-productive efforts, i. efforts to promote favorable changesin property values and also to prevent or counter any (Continued on page 2) Ethical Foundation of Public Policy .. Mises Institute's Fifth Anniversary .. Southern Economic Association Fertig Center Seminar ‘Menger’s Personal Papers .unfavorable changes in property values (as they might result. from another person’s actionsteganding his property). Thus, any deviation from these rules also imy value productive efforts at all times. Now on to my main task of demonstrating that the institution of private property asjust characterized isjust. In fact, that only this institution is just and thet any deviation ‘from it is not only economically inefficient but unethical as well, First, however, let me clarify en essential similarity between the problem facing political economy and that facing political philosophy--a similarity that politial philosophers in their widespread ignorance of economics generally over- look anly to wind up in endless ad hoceries, The recognition ofsearcity isnot only the starting point for political economy; it is the starting point of political philosophy as well. Obvi- oudly, ifthere were a superabundatice of goods, no economic problem whatsoever could exist, And with asuperabundanee of goods such that my present use of them would neither reduce my own future supply, nor the present or future supply ofthem forany other person, ethical problems of right or wrong, just or unjust, would not emerge either, since no conflict over the use of such goods could possibly arise. Only insofar as goods are searce, then, are economics and ethics required. And in the same way, just as the answer to the problem of political economy must be formulated in terms of rules constraining the possible uses of resources qua scarce resourees, political philosophy, too, must answerin terms of property tights, In order to avoid inoscapable conflicts, it must formulate a set of rules assigning rights of exclusive control oversearce goods. (Note, by the way, that evenin the Garden of Eden, a person's body, the space occupied by that body, and timewould still bescarce and tothatextent political economy and philosophy would still have some-however snited-task to fulfil.) Now to the actual proof of the thesis that out of the infinitely conceivable ways of assigning rights of exclusive ownership to people, only the previously described rules of private property are actually justifiable, I will present my argument in a step-by-step fashion: (1) First, while scarcity is a necessary condition for the emergence of the problem of political philosophy, it is not sufficient. For obviously, we could have conflicts regarding the use of scarce resources with, let us say, an elephant or @ ‘mosquito, and yet we would not consider itpossible toresolve these conflicts by means of proposing property norms. The avoidance of possible confiets, in such cases, is merely a technologicel, not an ethicel problem: For it to turn into an ethical problem, itis alsonecessaty that the conflicting actors be capable, in principle, of argumentation. In fact, this is undeniably sobecause weare also engaged in argumentation here. Denying that political philosophy presupposes argu- ‘mentation is contradictory, as the very denial would itself be an argument. Only with argumentation does the idea of ‘validity and truth--and by no means only the idea of truth in ethical matters but of truth in general--emerge, Only within argumentation are truth claims of any kind made; and it only in the course of an argumentation that truth claims are Aecided upon. And this proposition, it turns out, is itself ‘undeniably true: onecannot argue that onecannotargue;and ‘one cannot dispute knowing what it means to make a truth claim withoutimplicitly claiming atleast the very negation of this proposition to be true. My very first step in the following chain of reasoning, then, has been ealled “the a priori of argumentation” by such philosophers as Juergen Habermas and KO, Apel (2) In the same way as it is undeniably true that ethics requires argumentation, itis also undeniably trae that any argument requires an arguing person. Arguing does nat consist of free-floating propositions, It is an activity. Butif aside from whatever is said in its course, argumentation is | also a practical affair, and if argumentation is the presup- position of truth-claiming and possibly true propositions, ‘thenitfollowsthatintersubjectively meaningful norms must exist--namely thosewhich make an actionan argumentation- ‘which must havea special cognitive status in that they are the practical preconditions of truth. And once more, priori, so that anyone, likean emmpinicist-positivist-emotiv- ist, who denied the possibility of a rational ethics and who declared the acceptance or rejection of norms an arbitrary affair, would invariably get caught in a practical contradic- tion, For, contrary towhat he would say, he wouldin fact have topresuppose thenorms which underlay any argumentation ‘whatsoever as valid simply in order to say anything at all. (8) With this step Ilose, once and forall, the company of philosophers like Habermas and Apel? And yet, as will ‘become clear immediately, itis directly implied in the previ- ‘ous step. That Habermas and Apel are unable to take this step, I submit, is due to the fact that they, too, suffer, as do many other philosophers, ftom a complete ignorance of economies, anda cotresponding blindness towards the facto, scarcity. Thestepis simply this: To recognize that argumen- gg | tation is a form of aetion and does not consist of free-floating sounds, implies the recognition ofthefactthatanyargumen- |; tation whatsoever requires thata person must have exclusive control over the scarce resouree of his body. Aslongas there is argumentation, there is a mutual recognition of each other's property right in his own body. It is this recognition ofeach other's exclusive control over one’s own body, presup- posed by any argumentation, which explains the unique feature of verbal communication that, while one may dis- agree about what has been said, itis still possibte to agree at easton the fact that there is such disagreement. Andagain, such a property right in one’s own body must be said to be justified a priori: for anyone who would try to justify any norm whatsoever would already have to presuppose an exclusive rightto control over his body as- valid normsimply in order to say “I propose such and such.” And any person ‘whowould try to dispute the property rightin hisbody would become caught up in. practical contradiction, since arguing in this way would already implicitly have to accopt the very norm whieh he was disputing. He would not even open his mouth ifhe were right. (@ Tho final argument extends the ides of private prop- ertyasjustified, and justified aprior, from the very prototype ofasearce good, je. person's hoy, toother goods. Itconsists oftwoparts, Iwill irstdemonstrate that argumentation, a argumentative justification of anything, presupposes not only the right toexclusively control one’s body but the right to control other searce goods as well, For if no one hed theright to control anything excopt his own body, then we would all cease to exist and the problem of justifying norms--as well asallother human probloms~simply would not exist. Wedo notliveon airalone, and hence, simply by virtueof the fact of being alive, property rights to other things must be presup- Ae posed to be valid, too. No ono who is alive could argue otherwise, ‘The second part ofthe argumont demonstrates that only the Lockean idea of establishing property claims through homesteadingis a just principle of property acquisition. The roof employs a simple argumentum a contrario: Ha person id not acquite the right of exclusive control over other, nature-given goods by his own work, that i, if other people, who had not previously used such goods, had the right to dispute the homesteader's ownership claim, then this would only be possible if one would acquire property titles not through labor, ie, by establishing some objective link be- ‘tween a particular person and a particular scarce resource, ‘butsimply by means of verbal declaration. Yetthis solution- apart from the obvious fact that it would not even qualify as ‘a solution in a purely technical sense in that it would not provide a basis for deciding between rivaling declarative laitas~is incompatible with tho already justified ownership ‘ofa person over his body, For if onecould indood appropriate property by decree, this would imply that it would also be possible for oneto simply declate another person's body tobe one’s own. Yet, as we have already seen, to say that property is acquired not through homesteading action but through declaration involves a practieal contradiction: nobody could sayand declare anything, unless his rightto use his body was already assumed to be valid simply because of the very fact that regardless of what he seid, it was he, and nobody else, ‘who had homesteaded it as his instrument of saying any: thing. ‘With this, my a priori justification of the institution of private property is essentially complete. Only two supple- mentary arguments may be needed in order to pointout why and where all other ethical proposals, let me call them socialist, turn out to be argumentatively indefensible, (Q) According to the private property ethies, searve re- sources that are under the exclusive control of their owners aredefined in physical terms, and, muatis mutandis, aggres- sion is also defined as an invasion of the physical integrity of another person's property. Asindicated, the economic effect of this provision is that of maximizing value productive efforts, A popular deviation from thisis the idea of defining aggression as an invasion of the value or psychic integrity of another person’s property instead. ‘This idea underlies, for instance, John Rawls’ difference principle” thatallinequali- ties have to be expected to be to everyone’sadvantageregard- Jess of how such inequalities have come abouts! and also Robert Nozick’s claim that a “dominant protection agency” hhasthe right to outlaw competitors regardless of their actual ‘actions, and his related claim that’ “non-productive ex changes” in which one party would be better off ifthe other ‘one did not: exist: may be outlawed, again regardless of sae jether or not such exchange involved any physical aggres- sion. Such proposalsare absurd aswell as indefensible, While every person can have control over whether or not his actions cause the physical integrity of something to change, control over whether or not one's actions affect the value of someone's property to change rests with other people and theiz evaluations, One would have to interrogate and come toan agreement with the entire world population to make suze that one’s planned actions would nat change another person’sevaluations regerdinghis property, Everyonewould ‘be long dead before this was even accomplished. Moreover, ‘the idea that property value should be protectod is argumen- tatively indefensible: For even in order to argue, it must be presupposed thatactions must beallowed prior toany actual agreement, becauseif they were not, oneeonld noteven argue so, Yet if one can, then this is only possible because of objective borders ofproperty, ie. borders which every perso can recognize assuch onhis own, withouthavingtoagree first with anyone else with respect to one's system of values and evaluations, Rawls and Nozick could not even open their mouths fitwere otherwise, The very fact, then, thatthey do ‘open them proves what they say is wrong. 2) The second popular deviation, equally absurd and indefensible, is this: Instead of recognizing the vital impor- tance of the prior later distinetion in deciding between con- ficting property claims--as the private property ethies do, thereby, as indicated, assuring value produetive afforts to be as highas possible at all times--the claim is made, in essences, ‘that priority is irrelovant and that late-comers have rights to ownership just as first comers, Again, Rawls with his betiet in therights offuture genorations,justsavingsratesandsuch things, may be cited as an example, However, iflate-comers indeed had legitimate ownership claims to things, then liter- ally no one would be allowed to do anything with anything as ‘one Would have to have all ofthe later-eomers’ consent prior to ever doing what one wanted to do, Neither we, our forefathers, nor our progeny could, do or will survive if one ‘wore to follow this rule. Yet in order for any person--past, present, or future--to argue anything it must evidently be possibletosurvivethen and now. And in order todojustthis- -andeven people behinda Rawlsian “veil ofignorance” would have to be able to survive~-property rights cannot be con- ceived of as being timeless and non-specific regarding the number of people concerned, Rather, they must necessarily bethought of as originating through acting at specificpoints intime for specific acting individuals. Otherwise, itwould be impossible for anyone to first say anything at.a definite point in time and for someone else to be able to reply. Simply saying, then, that the prior-Jater distinction can be ignored, implies a contradiction, as one's being able to say so must presuppose one’s existence as an independent decision- making unit at a given point in time, Hence, I conclude that any socialist ethic is « complete failure, Only the institution of private property, which also assures the greatest possible production of wealth, ean be argumentatively justified, because itis the very precondition of argumentation, Notes 1)K.0. Apel, “Dias Apriori der Kommunikeationsgemeinschaft und ie Grundlagen der Ethik," in: the same, Transformation der Phlosphi VoL Fret /M.197Ssheren Habermas Moral Dewusstsein und Kommunikatives Handeln, t/M. 1988.