This provocative title assumes (1) the separation of powers, (2) that the executive king is only third among equals, and (3) local government, so that we’re dealing with the king of a city.

Hoppe supplies the first part of the argument, to quote from my book,

Hoppe (2002) has identified the transition from monarchy to democracy as a step towards decivilization (i.e., a process of regressing into savagery), in particular, because

  1. the monarch owns and is interested in preserving both the capital value of his “property” and its current income stream, while a democratic ruler owns only the latter and therefore, has an incentive to devalue long-term prosperity;
  2. the various positions of enforcers are in a democracy open to all, resulting in a competition of who can devalue that long-term prosperity more.

But there is a second part which he seems to have missed, and that is in order to succeed at staying rich and increasing his wealth, the king must exercise personal control over every aspect of the executive branch.

If the government becomes “big,” and the bureaucracy grows like cancer, the king will lose this control. The bureaucrats will become unaccountable to him. This will prevent the king from effective oversight and from conducting calculations of profits and capital gains.

The king then represents the final barrier protecting laissez-faire. The limitations of a single human being, the Hayekian “knowledge problem” ensure that the king would not want to turn into a despot socialist central planner or even an arch-interventionist, even if both the legislature and judges foolishly ordered him to do that.

The more power the abstract executive branch is given, the less powerful the concrete king becomes, until he loses all control over his “business,” the city, to Byzantine bureaucratic politics. This presents a potent incentive to the king to keep the government small.


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