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Saint Mary's Law Journal
1994
Book Review
*1419 THE UNDENIABLE MORALITY OF CAPITALISM
N. Stephan Kinsella [FNa]
[www.stephankinsella.com]
Review Essay of:
The Economics and Ethics of Private Property: Studies in Political Economy and
Philosophy by Hans-Hermann Hoppe (Kluwer Academic Publishers 1993)
Copyright © 1994 St. Mary's University of San Antonio; N. Stephan Kinsella
(Cite as: 25 St. Mary's L.J. 1419)
(Minor changes have been made by the author to correct errors due to typically incompetent law
review editing.)
I. Introduction ....................................................... 1420
II. Criticisms ......................................................... 1421
III. Individual Rights .................................................. 1423
A. The Reception of Hoppe's Ideas .................................. 1423
B. Argumentation Ethic ............................................. 1424
C. Estoppel and Directions for Further Inquiry ..................... 1426
D. Remaining Questions—Rights of Fetuses, Babies, and Defective Humans ...... 1429
E. Hoppe, Rothbard, Rand, and Classical Natural Rights Theory ...... 1430
F. Hoppe's Value-Free (?) Ethics ................................... 1432
G. Hoppe's Conception of 'Rights' .................................. 1432
H. Habermas's and Apel's 'Discourse Ethics' and Gewirth's and Pilon's 'Principle of Generic
Consistency' ....................... 1433
IV. Epistemology ....................................................... 1435
A. The Application of Praxeology to Epistemology and Ethics ........ 1435
B. Hoppe and Kant Versus Rand ...................................... 1437
C. A Priori Truths ................................................. 1439
V. Economics .......................................................... 1440
A. Public Goods Theory and the Production of Security .............. 1440
B. The Economics and Sociology of Taxation ......................... 1441
C. Banking, Nation States, and International Politics .............. 1444
D. Marxism Reformed by Praxeology .................................. 1445
E. Mises Versus Keynes ............................................. 1447
VI. Conclusion ......................................................... 1447
*1420 I. Introduction
If Professor Hans-Hermann Hoppe's books and articles would come already-underlined and
highlighted, it would save readers a lot of time. Or at least each book should come with a free pen
attached. For when I follow my usual habit of underlining, circling, checking, starring, or
highlighting important insights in the books I read, I find that my copies of Hoppe's books start to
look as if a two-year-old with a crayon had gotten hold of them.
In 1989 Hoppe published A Theory of Socialism and Capitalism, [FN1] arguably the most
important book of the decade, if only for the revolutionary 'argumentation ethic' defense of individual
rights presented in Chapter 7, 'The Ethical Justification of Capitalism and Why Socialism Is Morally
Indefensible.' Over the past few years, Hoppe has produced a significant assortment of articles
elaborating on his argumentation ethic and the epistemology that underlies it, as well as on his
impressive economic writings. His new book, The Economics and Ethics of Private Property,
[FN2]is a collection of almost all of these related writings (not counting a large number of writings
published previously in German). This may *1421 come as a disappointment to some, who, like me,
were expecting a new treatise, building upon the prior one. The book is significant, nonetheless, for
its drawing together of material previously published in such varied sources as Liberty magazine,
the Journal of Libertarian Studies, the Review of Austrian Economics, Ratio, and others, and for,
especially, its content.
II. Criticisms
A few criticisms of the book can be made. The book, which is a collection of previously
published articles, is nowhere described as such, which may lead some potential buyers to expect
a new treatise or at least all-new material. An introduction or subtitle should have alerted the reader
to the fact that the book consists of reprinted articles. (Much of Chapter 8, 'From the Economics of
Laissez-Faire to the Ethics of Libertarianism,' previously published in Man, Economy, and Liberty:
Essays in Honor of Murray N. Rothbard, [FN3] also appeared in Chapter 7 of A Theory of Socialism
and Capitalism.) Besides a threadbare preface, the book contains no introduction or foreword
explaining the history of Hoppe's ideas or publications; there is nothing explaining the reception of
Hoppe's 1989 book by libertarian or other scholars, nor anything putting the significance of the ideas
in context.
Page 253, at the end of the book just before the Name Index and entitled only 'References,'
contains a poorly edited list of articles and book chapters. These are not really 'references,' but
actually the first places in which the chapters in The Economics and Ethics of Private Property were
published.
Because the chapters in the book were published separately as independent articles, there is
some overlap between them, and thus some redundancy. A few times the text of several paragraphs
in one article is reproduced verbatim in another article. For example, three nearly identical
discussions of the ways of acquiring wealth appear in Chapters 2, [FN4] 3, [FN5] and 4, [FN6] and
multiple presentations of *1422 Hoppe's argumentation ethic appear in Chapters 8, [FN7] 9,
[FN8]10, [FN9] 11, [FN10] and in all four Parts of the Appendix. [FN11] Perhaps Hoppe feels that
hitting readers over the head with the same argument will eventually convince them. Perhaps he is
correct, for the arguments do grow on the reader.
There are a couple of things that should have been included in the volume. One is an
important article of Hoppe's often cited by Hoppe himself, 'In Defense of Extreme Rationalism,'
published in the Review of Austrian Economics. [FN12] Additionally, in the 'Appendix: Four Critical
Replies' section, Hoppe's responses to various criticisms, published in Liberty and the Austrian
Economics Newsletter, are reprinted. However, the initial criticisms themselves (by David Osterfeld,
Leland Yeager, David Gordon, Tibor Machan, David Conway, Loren Lomasky, and others) to which
Hoppe is responding are not published. [FN13] This is unfortunate, because these criticisms are
interesting and enlightening, and also make Hoppe's response to them more comprehensible.
Many of Hoppe's citations are to articles and books published in theGerman language; it
would have been helpful for an English-language translation of each article and book title to have
accompanied the citation, as well a citation to an English translation of the work cited, when
available. Many U.S. readers will not know what 'Moralbewusstsein und communikatives HÄndeln'
('moral *1423 consciousness and communicative action') [FN14] means and therefore will not even
know what this book by JÜrgen Habermas is about. [FN15] Referring to page numbers in the
German original of a work does not help the reader locate the same text even if he does find an
English translation.
Additionally, although Hoppe is an excruciatingly analytical and logical thinker, he does not
always break his articles up into subsections with numbered topic headings, with an accompanying
table of contents, which would be an aid to any reader, making the structure of the thoughts
presented in the article easier to see.
III. Individual Rights
A. The Reception of Hoppe's Ideas
Despite these minor shortcomings, the book is nevertheless fascinating, stimulating,
provocative, and ground-breaking. In the September 1988 issue of Liberty, Hoppe published 'The
Ultimate Justification of the Private Property Ethic.' This article gave rise to a symposium,
*1424'Breakthrough or Buncombe?', published in the November 1988 issue of Liberty, containing
the critical comments of ten commentators, including Murray Rothbard, Tibor Machan, David
Friedman, Leland Yeager, David Gordon, David Ramsay Steele, and others. [FN16]
Amazingly, almost all of these libertarian commentators were unimpressed by, if not
downright hostile to, Hoppe's argument. Only Professor Murray N. Rothbard gave Hoppe's thesis
wholehearted endorsement and recognized its validity and significance:
In a dazzling breakthrough for political philosophy in general and for libertarianism in particular,
he has managed to transcend the famous is/ought, fact/value dichotomy that has plagued philosophy
since the days of the scholastics, and that had brought modern libertarianism into a tiresome
deadlock. Not only that: Hans Hoppe has managed to establish the case for
anarcho-capitalist-Lockean rights in an unprecedentedly hard-core manner, one that makes my own
natural law/natural rights position seem almost wimpy in comparison. [FN17]
(Is Rothbard admitting his natural rights theory is deficient? Or can an argument be (almost) 'wimpy'
and yet still convincingly justify a normative theory?)
Why Hoppe's ideas, which are such an important advance in political and libertarian thought,
have failed to cause more excitement or gain more adherents than they have is baffling, but the best
solution to this is the publication of further elaborations and defenses contained in Hoppe's newest
book. The book is divided into two parts, 'Economics' and 'Philosophy.' Because Part Two:
Philosophy, contains Hoppe's most important ideas—his defense of individual rights—I will discuss
this part first. The six chapters (Chapter 6 through 11) in Part Two plus the 'Four Critical Replies'
in the Appendix present Hoppe's argumentation ethic and its underlying epistemology—often
repeatedly and redundantly, because the chapters were first published as independent papers and little
editing, except in Chapter 6, has been done to integrate them or to delete redundancies.
*1425 B. Argumentation Ethic
Hoppe's astounding 'argumentation ethics' theory, briefly stated, starts by noting that all
truths, including ethics and normative statements, must be discoverable through the process of
argumentation. This 'a priori of communication and argumentation' is undeniable, as one would have
to contradict oneself in using argument to deny this. [FN18] Therefore, whatever facts or norms are
postulated while engaging in argumentation cannot be contradicted by any proposed fact or
norms.[FN19] 'In analyzing any actual norm proposal reason's task is merely confined to analyzing
whether or not it is logically consistent with the very ethics which the proponent must presuppose
as valid insofar as he is able to make his proposal at all.' [FN20]
In argumentation, the validity of certain implications cannot be disputed. For example, the
universalization principle, as formulated in the Golden Rule of ethics or in the Kantian Categorical
Imperative, states
that only those norms can be justified that can be formulated as general principles which without
exception are valid for everyone. Indeed, as it is implied in argumentation that everyone who can
understand an argument must in principle be able to be convinced by it simply because of its
argumentative force, the universalization principle of ethics can now be understood and explained
in the wider a priori of communication and argumentation. [FN21]
In other words, anyone who argues accepts the validity of the universalization principle implicitly.
“The universalization principle only provides one with a purely formal criterion for morality.
. . . However, there are other positive norms implied in argumentation apart from” this
principle.[FN22] First Hoppe points out three interrelated facts: 'First, that argumentation is not only
a cognitive but a practical affair. Second, that argumentation, as a form of action, implies the use of
the scarce *1426 resource of one's body. And third, that argumentation is a conflict-free way of
interacting.' [FN23]
Therefore, anyone engaging in argumentation (or, indeed, any discourse at all, even with
oneself) must accept the presupposed right of self- ownership of all listeners and even potential
listeners: for otherwise the listener would not be able to consider freely and accept or reject the
proposed argument, which is undeniably a goal of argumentation. 'It is only as long as there is at least
an implicit recognition of each individual's property right in his or her own body that argumentation
can take place.' [FN24] The libertarian nonaggression principle—'nobody has the right to uninvitedly
aggress against the body of any other person and thus delimit or restrict anyone's control over his
own body'—is implied in the concept of argumentative justification, because justifying
meansjustifying without having to rely on coercion.
The concomitant right to homestead private property is also presupposed by anyone engaging
in argumentation: since the use of natural resources, i.e., property rights in land, food, water, etc.,
is absolutely necessary for any listener to survive and be able to participate in an argument, and since
homesteading unowned property is the only objective and conflict-free way to assign property rights,
all arguers must also presuppose the validity of the homesteading of unowned property, the Lockean
'mixing of labor' with scarce resources, for otherwise argumentation could not occur. [FN25] And,
of course, the right to self-ownership plus the right to homestead are the bases of laissez-faire
capitalism.
C. Estoppel and Directions for Further Inquiry
Professor Hoppe's discovery of such a rock-solid defense of individual rights is a profoundly
important achievement. Because so many of Hoppe's insights deserve further exploration and
development, one welcomes future writing by Hoppe and by others building upon his work.
*1427 For example, in my own article ' Estoppel: A New Justification for Individual
Rights,'[FN26] I draw on Hoppe's work—especially his application of the principle of
universalizability to the activity of argumentation—in making another argumentation-based or
discourse-based defense of individual rights. Hoppe's main argument is that any person who argues
must accept certain principles that must be implicitly acknowledged by any person engaged in the
activity of arguing; and that any arguer presupposes the rights of self-ownership and homesteading.
In my estoppel theory I argue that the existence of rights can be demonstrated by looking at the
consistency of the arguments made by a rights violator at the moment when he is about to be
punished for the rights violation.
Since what is important about rights is that they are (legitimately) enforceable, if an alleged
rights-violator is unable to meaningfully object to his punishment or, indeed, if he implicitly consents
to his punishment, then this is enough to justify the existence of the rights claimed. And it is indeed
true that if A initiates violence against B, A is estopped, or prevented, from complaining (i.e.,
objecting or withholding consent) if B retaliates or punishes A. For A has admitted the validity of
aggression, and it would be inconsistent for him to object to his own punishment, which is, after all,
'only' aggression.
By the same token, however, laws that attempt to enforce 'positive' rights (such as the right
to food or a job) or to prohibit nonaggressive behavior (such as expression, prostitution, the use of
drugs, or the offer to pay someone less than minimum wage) are not legitimate. For here the state,
in enforcing such laws against nonaggressors, is itself an aggressor. [FN27] If the imprisoned,
nonaggressive *1428 'criminal' asserts his right to be freed and his concomitant right to use force
against the aggressor-state to escape, the state cannot deny this asserted right nor the legitimacy of
the prisoner's (proposed) use of force against the state, since the state, by being an aggressor, is
estopped from denying the legitimacy of the use of force. Since the prisoner has a right to be freed,
of course the state has no contrary 'right' to imprison him. By this same logic, an aggressive criminal
has a right to not be disproportionately punished. For example, someone who steals an ink pen may
not be executed as punishment. [FN28]
*1429 It is hoped that others will also build upon or critique Hoppe's work. Murray Rothbard
stated in the Liberty symposium that 'a future research program for Hoppe and other libertarian
philosophers would be (a) to see how far axiomatics can be extended into other spheres of ethics,
or (b) to see if and how this axiomatic could be integrated into the standard natural law
approach.'[FN29] Also of interest would be a systematic cataloguing of just what is a priori
axiomatic knowledge. [FN30]
Another tantalizing idea deserving further exploration is Hoppe's discussion of free will:
[O]ne must regard one's knowledge and actions as uncaused. One might hold this conception of
'freedom' to be an illusion, and from the point of view of a 'scientist' with cognitive powers
substantially superior to any human intelligence, from the point of view of God, for example, such
a description may well be correct—but we are not God, and even if freedom is illusory from His
standpoint, for we [sic] human beings it is a necessary illusion.[FN31]
D. Remaining Questions—Rights of Fetuses, Babies, and Defective Humans
Hoppe establishes the foundation for individual rights, but takes it no further. One almost
salivates at the prospect of Hoppe writing more on this, answering the questions of exactly how to
apply the rights of self-ownership and homesteading to the hard cases, such as fetuses, babies,
children, and retarded people (who, after all, cannot argue). Hoppe deals only suggestively or
obliquely with this problem: the question of what is just or unjust 'does not arise vis-'a-vis a stone
or fish, because they are incapable of engaging in such exchanges and of producing validity-claiming
propositions.' [FN32]
*1430 What about fetuses, or even babies? Another related statement of Hoppe's fails to
answer this question: 'Obviously, we could have conflicts regarding the use of scarce resources with,
let us say, an elephant or a mosquito, and yet we would not consider it possible to resolve these
conflicts by means of proposing property norms. The avoidance of possible conflicts, in such cases,
is merely a technological, not an ethical, problem. For it to turn into an ethical problem, it is also
necessary that the conflicting actors be capable, in principle, of argumentation.' [FN33] Is a baby 'in
principle' capable of argumentation? Hoppe's view on this is unfortunately unrevealed.
E. Hoppe, Rothbard, Rand, and Classical Natural Rights Theory
Hoppe never commits himself as to whether he believes other defenders of natural
rights—such as Rothbard, [FN34] whom Hoppe obviously admires greatly—are correct in their
support of natural law and natural rights. He remains noncommittal, stating:
Agreeing with Rothbard on the possibility of a rational ethic and, more specifically, on the fact that
only a libertarian ethic can indeed be morally justified, I want to propose here a different,
non-natural-rights approach to establishing these two related claims. It has been a common quarrel
with the natural rights position, even by sympathetic readers, that the concept of human nature is far
'too diffuse and varied to provide a determinate set of contents of natural law.' [FN35]
Does Hoppe agree that natural law is hogwash? Is he a 'sympathetic reader '? One gets the
impression that he agrees with this criticism of natural law. If so, however, it is unclear how
Rothbard, aligning himself with the natural law or natural rights tradition of philosophy, in 'The
Ethics of Liberty presents the full case [that] *1431 the libertarian property norms' are the rules that
'can be discerned by means of reason as grounded in the very nature of man.' [FN36]
Hoppe even attempts to define his own theory as being, really, a new type of natural rights
theory:
Nor, then, do I claim that it is impossible to interpret my approach as falling in a 'rightly conceived'
natural rights tradition after all. . . . What is claimed, though, is that the following approach is clearly
out of line with what the natural rights approach has actually come to be, and that it owes nothing
to this tradition as it stands. . . . Of course, then, since the capability of argumentation is an essential
part of human nature—one could not even say anything about the latter without the former—it could
also be argued that norms which cannot be defended effectively in the course of argumentation are
also incompatible with human nature. [FN37]
Yet, Hoppe states:
[T]his defense of private property is essentially also Rothbard's. In spite of his formal allegiance to
the natural rights tradition Rothbard, in what I consider his most crucial argument in defense of a
private property ethic, not only chooses essentially the same starting point—argumentation—but also
gives a justification by means of a priori reasoning almost identical to the one just developed. To
prove the point I can do no better than simply quote: 'Now, any person participating in any sort of
discussion, including one on values, is, by virtue of so participating, alive and affirming life. For if
he were really opposed to life he would have no business continuing to be alive. Hence, the supposed
opponent of life is really affirming it in the very process of discussion, and hence the preservation
and furtherance of one's life takes on the stature of an incontestable axiom.' [FN38]
*1432 F. Hoppe's Value-Free (?) Ethics
In addition to Hoppe's seeming unwillingness to criticize wholeheartedly the natural rights
tradition, he is also curiously reluctant to admit the ethical aspects of his argumentation ethic:
Here the praxeological proof of libertarianism has the advantage of offering a completely value-free
justification of private property. It remains entirely in the realm of is-statements, and nowhere tries
to derive an ought from an is. The structure of the argument is this: (a) justification is propositional
justification—a priori true is-statement; (b) argumentation presupposes property in one's body and
the homesteading principle—a priori true is- statement; and (c) then, no deviation from this ethic can
be argumentatively justified—a priori true is-statement. [FN39]
Now I do not see how this is a 'completely value-free justification of private property.' Private
property means rights in private property; and 'rights' is indeed a normative, value-laden concept.
Of course, in a trivial sense, any statement such as ' A should do X' is an is-statement, because one
is implicitly stating that 'it is the case that A should do X.' But this is still really an ought-statement,
as is step (b) above, in making a statement about property rights. I do not see, however, why Hoppe
is reluctant to admit this, as this is not a defect of his argument, but is in fact why it is so
powerful—because it does justify the subset of ethics concerning rights.
G. Hoppe's Conception of 'Rights'
Unfortunately, Hoppe never clearly defines what he means by 'rights,' which leads to some
slight confusion in the presentation *1433 of aspects of his argument. [FN40] Primarily, he uses the
word in a normative, ethical sense. He occasionally, however, seems to mean 'power,' which is
value-neutral and non-normative: '[I]f no one had the right to acquire and control anything except
his own body . . . then we would all cease to exist . . . .' [FN41] It is true that we would all cease to
exist if we had no power or ability to acquire and control things; however, a 'right' is not logically
necessary for this power to be exercised. For example, Crusoe alone on his desert island has no rights
because rights are relevant only socially, as they concern relationships between individuals. Yet
Crusoe, if he has the power to build a hut and gather fruit, can actually survive.
Certainly we have the ability to affect the world, otherwise we would not continue to
exist—and this may explain why, according to Hoppe's theory, we must have the right to exercise
this ability. But the problem with switching to the power-sense of 'rights' in a justification of
normative-rights is that one may end up justifying the former and not the latter, or neither. And
certainly it would be both useless and futile to try to prove that we all have the actual ability and
power to control our bodies and to homestead; the very existence of the Internal Revenue Service
disproves this contention immediately. Hoppe's inconsistent use of 'rights' is not fatal to his
argument, but clarification of this step in his argument and a precise definition of 'rights' would be
welcome.[FN42]
H. Habermas's and Apel's 'Discourse Ethics' and Gewirth's and Pilon's 'Principle of Generic
Consistency'
Much of Hoppe's argumentation ethics draws on the 'discourse ethics' theories of JÜrgen
Habermas and Karl-Otto Apel. [FN43] *1434 Hoppe's argumentation ethic also bears some
similarities to Alan Gewirth's 'dialectically necessary method.' [FN44] Applying this method and the
principle of universalizability, Gewirth derives the precept 'act in accord with the generic rights of
your recipients as well as of yourself,' which he calls the 'Principle of Generic Consistency'
(PGC).[FN45] Gewirth holds that his theory shows that individuals have rights to 'freedom and
well-being,' which in turn justify a welfare state. [FN46]
Hoppe criticizes Gewirth's 'dialectically necessary method' because it is based on action in
general as opposed to the specific communicative subcategory of action. [FN47] It is interesting to
note that Gewirth's former student, Roger Pilon, believes Gewirth's PGC is correct, important, and
pathbreaking, but that Gewirth himself has applied his own theories incorrectly in an attempt to
justify the welfare state. [FN48] The libertarian Pilon believes he can reform his own teacher's work
in order to justify a libertarian state. [FN49] Similarly, Hoppe believes his former teacher Habermas's
discourse- ethics theories, while correct at core, are applied incorrectly by Habermas to yield a
socialistic ethic; Hoppe feels that Habermas's theories, if correctly applied (as Hoppe himself does),
yield the libertarian non-aggression norm.
Hoppe states:
Apel and Habermas are essentially silent on the all-decisive question of what ethical prescription
actually follows from the recognition of the 'a priori of argumentation.' However, there are remarks
indicating that they both seem to believe some sort of participatory social democracy to be implied
in this a priori. [My [i.e., Hoppe's]*1435 argumentation ethic] explains why hardly anything could
be farther from the truth. [FN50]
Although Habermas and Apel agree that argumentation implies that certain intersubjectively
meaningful norms exist, [FN51] they would not agree with the next step taken by Hoppe. Hoppe next
recognizes that argumentation, as a form of action, requires exclusive control of the scarce resources
in one's body; this implies that 'as long as there is any argumentation, there is a mutual recognition
of each other's property right in his own body.' [FN52] 'That Habermas and Apel are unable to take
this step is, I submit, due to the fact that they, too, suffer, as do many other philosophers, from a
complete ignorance of economics, and a corresponding blindness towards the fact of scarcity.'[FN53]
Presumably, just as Hoppe criticizes Gewirth's welfare- state-justifying theory, not only because of
its results but also because of its action-based method, he would also find fault in Pilon's
neo-Gewirthian theory and methods, despite Pilon's libertarian (i.e., correct) conclusions.
IV. Epistemology
A. The Application of Praxeology to Epistemology and Ethics
Hoppe's epistemology is basically an extension of Ludwig von Mises's praxeology, which
Mises had previously applied only to economics. [FN54] Mises inquired into the logical status of
typical economic propositions such as the law of marginal utility. Mises showed that both
empiricism and historicism are self-contradictory doctrines and justified the claims of rationalist
philosophy by demonstrating the existence of a priori synthetic propositions. [FN55]
In the Kantian and Misesian framework, analytic truths like 'all bachelors are unmarried' are
true, but circular or tautological. Synthetic truths, like 'all bachelors are unfulfilled' (if that were
true), say something substantial about bachelors that is not already part of the definition of bachelors.
We may know a synthetic truth through experience, or empirically (or, a posteriori). But these
*1436truths are not necessarily true, and might have been false if experience had been different.
According to empiricism, synthetic truths can be known only through experience. [FN56] A
synthetic a priori proposition is significant because it is necessarily true yet is not a tautology, thus
yielding certain unchallengeable real knowledge about the world. [FN57]
Mises shows that the propositions of economics are indeed knowledge that is not derived
from observation and yet is constrained by objective laws. In the science of praxeology, the general
theory of human action, the 'axiom of action' (i.e., the proposition that humans act, that they display
intentional behavior), qualifies as a priori synthetic knowledge because (a) the 'axiom is not derived
from observation—there are only bodily movements to be observed but no such thing as
actions—but stems instead from reflective understanding'; and (b) this understanding is of a
self-evident proposition, 'for its truth cannot be denied, since the denial would itself have to be
categorized as an action.' [FN58] Mises shows that all of the 'categories which we know to be the
very heart of economics—values, ends, means, choice, preference, cost, profit and loss—are implied
in the axiom of action.' [FN59]
Hoppe's achievement is to explain how praxeology also provides the foundation for
epistemology and ethics (the argumentation ethic has already been discussed above). To the a priori
axiom of action, Hoppe adds a second a priori axiom, the 'a priori of argumentation.' This axiom
states that humans are capable of argumentation and hence know the meaning of truth and validity.
As in the case of the action axiom, this knowledge is not derived from observation: there is only
verbal behavior to be observed and prior reflective cognition is required in order to interpret such
behavior as meaningful arguments. And the validity of the axiom, like that of the action axiom, is
indisputable. It is impossible to deny that one can argue, as the very denial would itself be an
argument.
. . . .
*1437 Recognizing, as we have just done, that knowledge claims are raised and decided upon in the
course of argumentation and that this is undeniably so, one can now reconstruct the task of
epistemology more precisely as that of formulating those propositions which are argumentatively
indisputable in that their truth is already implied in the very fact of making one's argument and so
cannot be denied argumentatively; and to delineate the range of such a priori knowledge from the
realm of propositions whose validity cannot be established in this way but require additional,
contingent information for their validation, or that cannot be validated at all and so are mere
metaphysical statements in the pejorative sense of the term metaphysical. [FN60]
B. Hoppe and Kant Versus Rand
Hoppe offers a stunning justification and interpretation of Kant's controversial statement that
“[so] far it has been assumed that our knowledge had to conform to reality,' instead it should be
assumed 'that observational reality should conform to our mind.'' [FN61]
According to rationalist philosophy, a priori true propositions had their foundation in the operation
of principles of thinking which one could not possibly conceive of as operating otherwise; they were
grounded in categories of an active mind. Now, as empiricists were only too eager to point out, the
obvious critique of such a position is, that if this were indeed the case, it could not be explained why
such mental categories should fit reality. Rather, one would be forced to accept the absurd idealistic
assumption that reality would have to be conceived of as a creation of the mind, in order to claim
that a priori knowledge could incorporate any information about the structure of reality. [FN62]
The empiricists' critique seemed to be justified by statements such as that of Kant above.
However, writes Hoppe:
recognizing knowledge as being structurally constrained by its role in the framework of action
categories provides the solution to such a complaint. For as soon as this is realized, all idealistic
suggestions of rationalist philosophy disappear, and an epistemology claiming that a *1438 priori
true propositions exist becomes a realistic epistemology instead. Understood as constrained by action
categories, the seemingly unbridgeable gulf between the mental on the one hand and the real, outside
physical world on the other is bridged. So constrained, a priori knowledge must be as much a mental
thing as a reflection of the structure of reality, since it is only through actions that the mind comes
into contact with reality, so to speak. Acting is a cognitively guided adjustment of a physical body
in physical reality. And thus, there can be no doubt that a priori knowledge, conceived of as an
insight into the structural constraints imposed on knowledge qua knowledge of actors, must indeed
correspond to the nature of things. The realistic character of such knowledge would manifest itself
not only in the fact that one could not think it to be otherwise, but in the fact that one could not undo
its truth. [FN63]
In Hoppe's pamphlet Praxeology and Economic Science [FN64] (PES), which contains a discussion
similar to the one in Chapter 6 of his book, he makes it clear that he does not think that Kant himself
meant that reality is created by the mind. [FN65] Indeed, Kant had hinted at the solution presented
in Hoppe's interpretation above. Hoppe writes, 'He thought mathematics, for instance, had to be
grounded in our knowledge of the meaning of repetition, of repetitive operations. And he also
realized, if only somewhat vaguely, that the principle of causality is implied in our understanding
of what it is and means to act.' [FN66]
As for the Objectivist or Randian denunciation of Kant for this statement that observational
reality should conform to the mind, Hoppe states:
Among some followers of Austrianism, the Kant interpretation of Ayn Rand (see, for instance, her
Introduction to Objectivist Epistemology [1979]; or For the New Intellectual [1961]) enjoys great
popularity. Her interpretation, replete with sweeping denunciatory pronouncements, however, is
characterized by a complete absence of any interpretive documentation whatsoever. On Rand's
arrogant ignorance regarding Kant, see B. Goldberg, “Ayn Rand's ‘For the New Intellectual,’” New
Individualist Rev., vol. 1, no. 3 (1961). [FN67]
*1439 C. A Priori Truths
Hoppe then ferrets out various truths that are implied in the very fact of arguing. The laws
of logic, such as junctors ('and,' 'or,' 'if-then,' 'not '), quantors ('there is,' 'all,' 'some'), and the laws of
identity and contradiction,
are a priori true propositions about reality and not mere verbal stipulations regarding the
transformation rules of arbitrarily chosen signs, as empiricist- formalists would have it. They are as
much laws of thinking as of reality, because they are laws that have their ultimate foundation in
action and could not be undone by any actor. In each and every action, an actor identifies some
specific situation and categorizes it in one way rather than another in order to be able to make a
choice. [FN68]
Hoppe goes on to show that arithmetic is an a priori and yet empirical discipline, and 'is
rooted in our understanding of repetition—the repetition of action.' [FN69] He even demonstrates
the irrelevance of GÖdel's Incompleteness theorem. [FN70] Euclidean geometry is a priori and yet
incorporates empirical knowledge about space, 'because it is not only the very precondition for any
empirical spatial description, it is also the precondition for any active orientation in
space.'[FN71]Einstein's non-Euclidean theories even presuppose the validity of Euclidean geometry:
' A fter all, the lenses of the *1440 telescopes which one uses to confirm Einstein's theory regarding
the non-Euclidean structure of physical space must themselves be constructed according to Euclidean
principles.' [FN72]
Hoppe also demonstrates the a prioristic character of causality and
teleology.[FN73]Significantly, Hoppe shows that 'everything which is not an action must necessarily
be categorized causally'; and, 'in contrast, everything that is an action must be categorized
teleogically.' [FN74]Also, because the causality principle is a necessary presupposition even of the
Heisenberg Uncertainty Principle in physics, there is a 'fundamental misconception involved in
interpreting the Heisenberg principle as invalidating the causality principle.' [FN75]
V. Economics
A. Public Goods Theory and the Production of Security
Part One: Economics contains five interesting and insightful chapters. In Chapter 1, 'Fallacies
of the Public Goods Theory and the Production of Security,' Hoppe shows that the distinction
between 'private' and 'public' goods is completely illusory:
A clear-cut dichotomy between private and public goods does not exist. . . . All goods are more or
less private or public and can—and constantly do—change with respect to their degree of
privateness/publicness as people's values and evaluations change, and as changes occur in the
composition of the population. In order to recognize that they never fall, once and for all, into either
one or the other category, one must only recall what makes something a good. For something to be
a good it must be recognized and treated as scarce *1441 by someone. Something is not a good as
such, that is to say; goods are goods only in the eyes of the beholder. Nothing is a good unless at
least one person subjectively evaluates it as such. But then, when goods are never
goods-as-such—when no physico-chemical analysis can identify something as an economic
good—there is clearly no fixed, objective criterion for classifying goods as either private or public.
They can never be private or public goods as such. Their private or public character depends on how
few or how many people consider them to be goods, with the degree to which they are private or
public changing as these evaluations change and ranging from one to infinity. [FN76]
Hoppe then applies this analysis to the production of security, commonly held to be a public
good. Because the production of security is no more a 'public good' than goods and services such as
cheese, houses, or insurance, there is no special economic reason that prevents markets from
producing security, and thus no justification to require remedial state action, such as state
monopolization of police and defense.
B. The Economics and Sociology of Taxation
In Chapter 2, 'The Economics and Sociology of Taxation,' Hoppe argues that only three ways
exist of acquiring or increasing wealth: through homesteading, producing, or contracting. Since
taxation implies a reduction of income a person can expect to receive from these three activities, the
opportunity cost for using one's time and body to perform these activities is raised by taxation. Thus
the marginal utility of producing wealth is decreased, and the marginal utility of consumption and
leisure is increased, leading to a shift away from the production of wealth, and towards consumption
and leisure. Therefore taxation is a means for the destruction of property and wealth-
formation.[FN77]
To the objection that taxation makes people actually work harder in order to earn the same
income as before taxation, Hoppe replies that even if increased taxation causes an
increase in workaholism, it is still the case that the income of value- productive individuals has
fallen. For even if they produce the same output as previously, they can only do so if they expend
more labor *1442 now than before. And since any additional labor expenditure implies foregone
leisure or consumption (leisure or consumption which they otherwise could have enjoyed along with
the same output of valuable assets), their overall standard of living must be lower now. [FN78]
Hoppe also explains 'why the assumption that taxation can possibly leave the productive
output of valuable assets unaffected and exclusively cripple consumption is fatally flawed.'
[FN79]This is because time preference—people's preference of present goods over future
goods—combines with the increased marginal utility of leisure and consumption and the decreased
marginal utility of production. Because people have an increased preference for consumption (in the
present), and a relatively decreased preference for production (in the future), the length of the
structure of production is shortened, and thus fewer valuable future assets are produced. 'Every act
of taxation necessarily exerts a push away from more highly capitalized, and hence more productive
production processes, and into the direction of a hand-to-mouth existence.' [FN80]
After showing that taxes reduce the standard of living of consumers, Hoppe discusses the
sociological reasons for taxation, and ever more of it. This discussion is fascinating and insightful,
but it comes down to the fact that there is taxation because the government can get away with it; the
government can get away with it because a majority of the population either actively or passively
supports such governmental policies; and the majority supports government because of the lack of
(complete, principled) acceptance of a private property ethic.
Government propaganda plays a role in influencing public opinion. Hoppe asks how the
government could change public opinion from true ideas (i.e., the historical support in the United
States for freedom and private property) to wrong ideas. He points out:
It would seem that such a change towards falsehood requires the systematic introduction of
exogenous forces: A true ideology is capable ofsupporting itself merely by virtue of being true. A
false one needs reinforcement by outside influences with a clear-cut, tangible impact *1443 on
people in order to be capable of generating and supporting a climate of intellectual corruption.
[FN81]
(Objectivists who would criticize Hoppe because many of his ideas were influenced by Kant should
note Hoppe's radical lack of epistemological and moral skepticism evident in this statement.)
Thus the government effectively buys support from the populace through a system of transfer
payments, grants of privilege, and governmental provision of certain goods, e.g., education, which
makes the populace increasingly dependent on the continuation of state rule. By adopting democracy,
the state 'opens every government position to everyone and grants equal and universal rights of
participation and competition in the making of state-policy.' [FN82] Thus people gradually lose sight
of the immorality of the exploitation and expropriation in which they participate, and are lured 'into
accepting the view that such acts are legitimate as long as one is guaranteed a say over them . . .
.'[FN83]
[W]hen everyone is potentially a minister, no one is concerned to cut down an office to which he
aspires one day himself, or to put sand in a machine which he means to use himself when his turn
comes. *1444 Hence it is that there is in the political circles of a modern society a wide complicity
in the extension of power. [FN84]
Hoppe concludes that everything depends on a change in public opinion. Although this may
appear hopeless, 'ideas have changed in the past and can change again in the future . . . and the idea
of private property has certainly one attraction: it, and only it, is a true reflection of man's nature as
a rational being.' [FN85]
C. Banking, Nation States, and International Politics
Chapter 3, 'Banking, Nation States, and International Politics: A Sociological Reconstruction
of the Present Economic Order,' is the best and most important chapter in Part One. Here Hoppe
explores how and why the state monopolizes money and banking and shows the danger of the
ever-approaching international monetary order. [FN86] Similarly to the discussion in Chapter 2, this
chapter argues that the state arises despite its inefficiencies and immorality and therefore depends
upon public support, either active or passive. To create legitimacy in the minds of the public, the
state engages in propaganda:
Much time and effort is spent persuading the public that things are not really as they appear:
Exploitation is really freedom; taxes are really voluntary here one is reminded of President Clinton's
labeling of taxes as 'contributions'; . . . no one is ruled by anyone but we all rule ourselves; . . .
etc.[FN87]
Additionally, to garner public support, the state also engages in redistribution: it takes
individuals' wealth, which individuals tend to resist, but redistributes some of it to individuals in
order to corrupt them into assuming state-supportive roles. Because the state rests upon coercion,
it must of course monopolize the police, defense, and courts. [FN88] In order to be able to exploit
regularly the population, the state must also control traffic and communications, so it monopolizes
these also. The state monopolizes the field of education to eliminate ideological competition. The
state also *1445 adopts a democratic system that opens up potential government jobs and votes to
all, giving the people a legal stake in the state in order to reduceresistance to state power. [FN89]
But '[t]he monopolization of money and banking is the ultimate pillar on which the modern
state rests.' [FN90] Thus the state monopolizes the minting of gold (to shift psychologically the
emphasis from gold in universal terms like ounces to terms of fiat labels like 'dollars'); passes legal
tender laws; monopolizes the banking system; nationalizes gold; and finally cuts the last tie to gold
by declaring paper notes irredeemable in gold.
But because there is still competition among states, which limits governments' abilities to
inflate their currencies, governments have an incentive to expand their territories and to expand the
territory in which each government's currency is in place. Historically, the tendency has been towards
a one-world government, with a one-world paper currency, with the United States at the helm, and
with no remaining limit on inflation of the money supply except hyperinflation and a collapse of the
economy. This tendency is likely to continue unless public opinion,
the only constraint on government growth[,] undergoes a substantial change and the public begins
to understand the lessons explained in this [chapter]: that economic rationality as well as justice and
morality demand a worldwide gold standard and free, 100% reserve banking as well as free markets
worldwide; and that world government, a world central bank and a world paper currency—contrary
to the deceptive impression of representing universal values—actually means the universalization
and intensification of exploitation, counterfeiting-fraud, and economic destruction. [FN91]
D. Marxism Reformed by Praxeology
Chapter 4, 'Marxist and Austrian Class Analysis,' is an interesting chapter that reinterprets
the Marxist theory of history from an Austrian economics perspective. Hoppe argues that the
hard-core tenets of the Marxist theory of history are essentially correct, but are derived in Marxism
from a false starting point; and that the *1446 Mises-Rothbard brand of Austrianism can give a
different justification for the validity of these theses.
The five hard-core Marxist beliefs are: (1) The history of mankind is the history of class
struggles; (2) the ruling class is unified by its common interest in upholding its exploitative position
and maximizing its exploitatively appropriated surplus product; (3) class rule manifests itself
primarily in specific arrangements regarding the relations of production (i.e., the assignment of
property rights); (4) internally, the process of competition within the ruling class generates a
tendency toward increasing concentration and centralization; and (5) finally, with the centralization
and expansion of exploitative rule gradually approaching its ultimate limit of world domination,
class rule will increasingly become incompatible with the further development and improveme | 
