GIOVANNI BIRINDELLI, 30.11.2013
Good evening. I would like to thank all those who gave their contribution to the organization of this conference. In particular, Rivo Cortonesi, Leonardo Facco, Luca Fusari.
As we know, the term “democracy” indicates a situation in which political power does exist and it is held by the “people” (whatever one may mean by this word). Therefore, the question “which democracy?” presupposes that we already answered “yes” to the following question: “does political power have any reason to exist?”
However, the answer to this question cannot be taken for granted. In fact, among those who search for coherence in the defense of liberty, this answer is neither univocal nor simple. It is linked to the debate between minimal state and anarco-capitalism.
In order not to drift away from the theme of this conference, I will suppose an affirmative answer to the above-mentioned question and therefore I will refer to a situation in which political power, and therefore the state and taxes, do exist.
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Once we suppose, but we do not grant, that political power has a reason to exist, it is spontaneous to ask: “who should hold it?”. The term “democracy” gives an answer to this question: an answer which changes arbitrarily according to what we mean by “people”.
The problem is that this question is totally irrelevant, and therefore so is the answer.
The point is not who holds political power, but rather by what this political power, whoever may hold it, is limited. In fact, what constitutes totalitarianism is not the fact that political power is not held by the “people”, but the fact that this political power, whoever may hold it, is unlimited (or, which is the same, is arbitrarily limited).
Let’s leave aside, then, the irrelevant questions and let’s focus on those which we necessarily must answer if our objective is to invert the current trend and start moving towards a form, however imperfect, of liberty. These relevant questions in my opinion are:
1) if we suppose, but do not grant, that political power has a reason to exist, by what should it be limited? and
2) How can it be limited?
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The first question is about theory, the second is about strategy.
On a general level, there exist only two possible answers to the first question. In fact, on the one hand, political power can be limited by the arbitrary will of those who hold it: Hitler, Stalin, that thick group of parasites who keep warm the seats of our parliaments or the citizens themselves. On the other hand, political power, whoever may hold it, can be limited by the Law, which is independent of the will of anyone, and in particular of the “people”.
In fact, the Law is the abstract principle; the general rule of individual conduct which applies to everyone (including of course the state) in the same way. Just like the rules of language, the Law is a spontaneous order. In particular, it is the result of a spontaneous evolutionary process of cultural selection of successful uses and conventions: no-one arbitrarily decided that robbery or counterfeiting are illegitimate actions and, precisely because of this, no-one can arbitrarily decide that these actions are legitimate, even though a violent power can use its force to make them legal. In other words, as Hayek puts it, it is not the Law that derives from authority but, on the contrary, it is authority that derives from Law, “not in the sense that the law appoints authority, but in the sense that authority commands obedience because (and so long as) it enforces a law presumed to exist independently of it”
The “law” in inverted commas (or fiat “law”), on the contrary, are those particular measures, those arbitrary decisions of authority which the Law has grown precisely to limit.
Therefore, to recap, if we suppose, but do not grant, that political power has a reason to exist, it is possible to have only two political orders: on the one hand, that in which it is authority which derives from Law, that is which “orbits” it like in an heliocentric system it is the Earth which orbits the Sun. On the other hand, it is possible to have a political order in which it is fiat “law” which derives from authority, that is which “orbits” it like in a geocentric system it is the Sun which orbits the Earth.
In the first system (the imperfectly free society), political power is as contained as possible and it is in any case limited by the Law in the sense that the functions of the state are limited to the defense of the Law and by the Law. In the second system (totalitarianism), political power, whoever holds it, is limited by fiat “law”, that is by its own decisions: in other words, it is unlimited.
I mentioned “political orders” but, more in general, I should have mentioned ideological orders. In fact, many political concepts (let us think of equality before the law or of certainty of the law, for example) have an opposite meaning according to weather by the term “law” one means Law in the original sense (the abstract principle which is a limit to political power) or, rather, fiat “law” (the instrument of political power).
One of those concepts which assume an opposite meaning according to what one means by law, is precisely that of democracy.
It is all too common, even among many defenders of freedom, to use the term “democracy” without further qualifications, as if there existed only one kind of democracy. In fact, there are two kinds of democracy, and I’m not referring to direct and indirect democracy: those are different variations of the same kind of democracy.
In fact, on the one hand, there is “democracy” based on fiat “law”: this is totalitarian “democracy”, that which we have today in the West. On the other hand, there is what I will simply call democracy and which is based on the Law intended as abstract principle.
Totalitarian “democracy” consists of majority rule. Now, since in “democracy” intended in this way the only limit to a group decision is the existence of a majority in its favour (sometimes of a qualified majority), this implies that there is no non-arbitrary limit to the political power of this majority and therefore that this political system is by definition totalitarian. In other words, the fact that today we can choose the colour of our shirt is the sign of the fact that those who hold political power are uninterested in the colour of our shirts: if tomorrow, for whatever reason, a majority legally imposed a particular colour for shirts, that decision would be “democratic” and those who would not acknowledge the right of the majority to make that decision would be “antidemocratic”. If democracy was this, that is if it was what it is today in the West, then being “democratic” would necessarily mean to be enemies of freedom.
Democracy, however, is not this: it is not the tyranny of the majority; it is not the absence of non-arbitrary limits to political power. On the contrary, it is simply one of the many possible political systems which are based on the rule of Law intended as limit to political power (a system with many flaws and a few advantages). In fact, in a democracy, rules are not made by a majority. Like those of language, rules exist independently of the will of any majority. The job of the majority is exclusively that of organizing the sole function of the state which is compatible with the rule of Law: that is, the organization of the defense of the latter. However, in organizing this defense, majority cannot violate the Law except for what is strictly necessary to defend it (taxes are a form of theft, a violation of the Law: that is why, while referring to a situation of non-arbitrarily defined minimal state, I speak of an imperfectly free society).
Therefore, first of all, in a democracy a majority cannot decide to finance a museum; but it can decide, in case and under certain conditions, to finance a court of justice. Secondly, even for the financing of that court, in a democracy the majority cannot recur (and even less it can systematically recur) to proportional taxation and, least of all, to progressive taxation, just to give an example. In fact, these are violations of the equality before the Law.
In other words, in an imperfectly free society (and therefore also in a democracy) political power (that is the power to decide the financing of that court of justice) must be separated from (and subjected to) legislative power (that is the power to discover and defend, via a coherent study and research activity, the Law and the equality before it which is something opposite to legal inequality: on the grounds of equality before the Law, there is no difference between progressive taxation and racial laws). In all totalitarian regimes (and therefore also and especially in the totalitarian “democracies” in which we live) these two powers (political and legislative) are confused with each other and added one to the other. Actually, often the latter power is suppressed, leaving a situation which Hayek described as “lawless government”, a situation whose most evident and visible exterior sign is the hyperinflation of fiat “laws”.
In a nutshell, in a totalitarian “democracy” a decision id “democratic” if it is made by the majority. In a democracy, on the contrary, a majority decision is democratic if it is limited to the organization of the defense of the Law intended as abstract principle and if it is limited by it.
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Now, the theoretical clarification of the antithesis between totalitarian “democracy” and democracy helps. However, it does not solve the problem posed by the second question: how to limit political power? How to produce a transition from a political system in which it is the “law” that derives from authority to one in which it is authority that derives from Law? What is the best strategy to start the Copernican revolution in politics?
In 1983 Murray Rothbard wrote that “the elaboration of a systematic theory of liberty has been rare enough, but exposition of a theory of strategy for liberty has been virtually nonexistent”. Not much has changed since then: the strategic problem of how to produce a transition from a totalitarian political system to a free society has received even less attention than the theoretical problem of the definition of the objective.
Last year, during the second edition of this conference, I presented the basic outline of a strategic proposal of mine for such transition. I called it: The Private Supply of Legislation.
Before closing this speech, I would like to briefly illustrate a strategic characteristic of this proposal which creates an analogy with Bitcoin and which, in my opinion, constitutes one of its strengths (there is no need to know or remember that proposal: the point I want to make is general).
Bitcoin was not born replacing fiat money. It will replace it, sooner than we think. Or perhaps other crypto-currencies will replace it; maybe even crypto-currencies which will be based on physical gold, to whose return they could therefore pave the way. But Bitcoin was not born replacing fiat money; rather, placing itself side by side with it. Such placing itself side by side with it (that is, such implementation of a private project without asking anyone for permission) produced the poisoning of fiat money, which has just started and which in time will produce its death. The poison is not the fact that Bitcoin is a money which is morally superior to fiat money; the poison is the people’s convenience to use and hold Bitcoin: a money which cannot be inflated arbitrarily by the state, that is by so-called “independent” central banks. My proposal has this in common with Bitcoin, or rather with a crypto-currency which is based on physical gold: it does not aim to replace fiat “law” with Law from above: if it aimed at this, it would be utopian. On the contrary, it aims at placing the Law side by side with fiat “law” so as to poison it. It aims at doing this privately, without asking anyone for permission. The poison is not morality but a structure of incentives, which is the essence of the proposal. Thanks to this structure of incentives, people will be able to individually contribute to restore the Law: not out of their sense of morality, but rather out of practical self-interest. Non-fiat money and the Law are both non-arbitrary limits to political power; they are both spontaneous orders: it is possible that what is working for the restoration of the former may give some useful clues on what could work also for the restoration of the latter.
The best and safest way to continue along the road to serfdom is to make the turnabout dependent on the far-sightedness of politicians and, perhaps, on the preliminary diffusion of the culture of liberty among the masses, that is among those individuals (let us think of the current intellectual élite) whose thinking is incapable of escaping the cage in which it was locked by modern state. On the contrary, a structure of incentives does not require those who take advantage of it to be far-sighted nor to have a culture of liberty. It does not require them to be outside of that mental cage. It simply requires them to do what they can do best: their own interest. And by being free to do their own interest, they can gradually acquire a culture of liberty without realizing it.
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In conclusion, for those who support it, totalitarian “democracy” is an end in itself: fiat “law” is the instrument of that end, the pillar on which it rests. On the contrary, democracy is a means (one of the many), not an end: the end is that of the rule of Law intended as abstract principle and therefore liberty. The greatest problem we are facing today is no longer theoretical, but strategic: it is that of finding a peaceful and viable way to change reference system, that is to go from a political system in which it is the Law that orbits authority to one in which it is authority that orbits the Law, that is that derives from it. I believe that, for the solution of this strategic problem, political theory has a great deal to learn from Bitcoin.
To the extent that their power is limited by the will of any majority, politicians are the enemy to destroy with our ideas. However, they are only the expression of the problem, not its cause. The cause of the problem is legal positivism, that is what I called fiat “law”: without uprooting this, there can be no Law, no liberty, no capitalism, no prosperity. Thank you.