The Mirage of Democracy

What is true, just, and beautiful is not determined by popular vote. The masses everywhere are ignorant, short-sighted, motivated by envy, and easy to fool. Democratic politicians must appeal to these masses in order to be elected. Whoever is the best demagogue will win. Almost by necessity, then, democracy will lead to the perversion of truth, justice and beauty.” – Hans-Hermann Hoppe

The author is a second year law undergraduate and enthusiast of the Austrian School of economics. You can follow him on Twitter under @Hazlitt_3. This article is excerpted from a larger work, originally published on austrianpoliticaleconomy.blogspot.com. Read the entire essay here.


The indefeasible law of the inevitability of political rule by a minority elite has profound implications for the theory of democracy. Contrary to the theory of majority rule, societies are always ruled by minorities, that is, by oligarchies. Thus, elite theory renders the underlying logic of democracy nothing more than a sham. For if power is necessarily always vested in the minority ruling elite, it cannot reside in the people. Power cannot be exercised by the people directly or indirectly by their chosen representatives; it can only be exercised by the ruling elite. In short, all political societies, including those styling themselves as democracies, are fundamentally oligarchal.  Democracy, therefore, amounts to little more than a utopian folly. The theory of democracy is simply a particular political formula, a myth, employed to legitimise a particular form of government, viz. the democratic state. It does not correspond to any actual or realisable social reality. 

It is true that representative democracy does not technically purport to involve the exercise of actual power by the people themselves, but popular sovereignty and majority rule remain the underlying principle and, as we have seen, this is nothing more than a myth that throws a veil of confusion over the nature of power and the impossibility of democracy. That said, representative democracy, while oligarchical like any other mode of government, does constitute a unique system whereby the fact of universal suffrage systematically modifies the incentive structure of governance and thereby fundamentally alters the political and economic nature of the state as well as the conduct of its ruling class. Hans Hermann-Hoppe, the great libertarian theorist and Austrian school economist, has poignantly articulated the perverse incentives the ruling class faces under the democratic system:


“Under democracy, the incentive structure is systematically changed. Egalitarian sentiments and envy are given free reign. Everyone, not just the king, is now allowed to participate in the exploitation—via legislation or taxation–of everyone else. Everyone is free to express any confiscatory demands whatsoever. Nothing, no demand, is off limits. In Bastiat’s words, under democracy the State becomes the great fiction by which everyone seeks to live at the expense of everyone else. Every person and his personal property come within reach of and are up for grabs by everyone else.”

Under the democratic system, the egalitarian principle of universal suffrage, combined with free entry into government, implies that every person’s property can be legitimately expropriated by the instruments of legislation and taxation. Expropriation and depredation is not only the logical implication of the democratic system but is heavily encouraged by it, as that is the nature of the democratic incentive structures. Under democracy, the political class does not “own” the country, unlike a traditional king, but only has current use of it; they are merely temporary caretakers. Assuming no more than self-interest on the part of the political class (maximising money and power), democratic rulers tend to engage in large-scale expropriation of private property (taxation) to increase their current income and to permit them to dispense the loot among various special interest groups for whom they must provide benefits in exchange for electoral support. The systematic incentives of the democratic state explain why democracy has engendered the greatest degree of taxation and why it led to the creation of the welfare state– the robbery of the productive members of society for the benefit of the unproductive. 

Despite, the profound scale of the expropriation and plunder under democracy, popular resistance against it is minimal. The reason for this perverse lack of opposition is that the political formula employed under democracy has succeeded in blurring the distinction between the rulers and the ruled. The effect is that public resistance against state power and state encroachments is systematically hampered. As Hoppe notes,

“While exploitation and expropriation before might have appeared plainly oppressive and evil to the public, they seem so much less so, mankind being what it is, once anyone may freely enter the ranks [of the ruling class]. Consequently, exploitation will increase whether openly in the form of higher taxes or discreetly as increased governmental money “creation” (inflation) or legislative regulation.”

The salient question is not whether we ought to organise society on the basis of oligarchy; the power structures of every society will necessarily be dominated by an oligarchy of elites. Rather, the salient question is what socio-political system will tend to produce the highest quality of elites. It has been shown that democracy tends toward expropriation and exploitation by elites (the same, incidentally, is true of socialism). We can therefore dismiss democracy, and a fortiori socialism, as the system supplying the answer to our question. Monarchy (privately owned government) while also tending toward exploitation and expropriation–this is the natural tendency of all states—will, for reasons alluded to above, tend to better protect private property and thus tend to be considerably less exploitative than democracy. The reason for these different tendencies lies in the discrepancies between the incentive structures that exist under democracy and monarchy respectively. It is in the interest of the democratic ruler to rob the taxpayers in order to fund special interests, whereas it is in the interest of the monarch to ensure that the capital value of his kingdom increases over time so that he can one day make a valuable bequest to his heir. 

Monarchy, while preferable to democracy, is an inferior system to what Hoppe has called the “private law society.” There is no space here to elaborate on the theory of the private law society. Suffice it to say that the basic idea of a private law society is that there is no institution possessing monopoly privilege to invade property rights (i.e., there is no state). This is a system of pure private property in which privately competing courts and police undertake the role of law enforcement and protection of private property. Further, it is the only morally defensible legal system because it is the only one that is compatible with natural law and natural justice.

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