The Encyclopedia of Libertarianism

Kleptocracy

Kleptocracy is that form of government by which government officials routinely engage in theft or confiscatory policies. Although in familiar political discussions kleptocracies are taken to be corrupt versions of the range of acceptable variations of government forms, libertarian political science suggests that nearly all governments are, in fact if not in intent, much closer to kleptocracies than one would at first suppose. This conclusion is implied by “public choice” theory developed by James Buchanan and Gordon Tullock in their famous work, The Calculus of Consent. Buchanan, together with Tullock, were the prime movers in developing this area of economics. As a consequence, Buchanan received the Nobel Prize in economic science in 1986.

Public choice theory is predicated on the assumption that everyone pursues his or her own private objectives—sometimes problematically referred to as self-interest—and that when someone enters what is widely called public service, this assumption applies no less there than it does when someone enters the market place. The crucial difference is that in the marketplace, at least in nonmonopolistic enterprises, most of us meet with fairly stringent budgetary constraints— if our goods or services do not sell well, if our creditworthiness dries up, if our stored capital dissipates, we will need to discontinue the pursuit of our objectives and turn to different, profitable pursuits. In the public service, however, these standard constraints do not hold or, if they do, it is to a far lesser degree. Budgets can be increased by a variety of means—increased taxation, the borrowing and printing of money, and so forth—thus making it easy for public servants, so called, to pursue their objectives and follow their agendas, whatever these may be. (I hesitate to call these their private objectives self-interest because in some cases public servants actually pursue objectives that do not appear to be their own, but rather those of other parties, among them the goals of their constituencies. However, although some economists dispute that concerns directed toward other groups are even possible, there seems good reason to believe that in some cases this is likely.)

If we understand public choice theory correctly, it follows that nearly all governmental activities have a significant element of kleptocracy about them. They obtain their funds without the consent of those who generated or rightly own them. Although the term thievery is commonly used in descriptions of kleptocracy, a broader term from a libertarian perspective would be extortion.

There are many who dispute that such characteristics are inherent to government. They often argue that the libertarian idea that individuals have the right to private property and that all wealth in a free and just society should be privately held is misguided. Rather, they maintain, wealth is a social product that belongs to the society as a whole. Although private parties—individuals, companies, and organizations of all kinds—may hold society’s wealth, they do not actually own it. They are permitted to hold it by government, but government has the proper authority to reclaim part of that wealth via taxation. This contention was espoused by Liam Murphy and Thomas Nagel in The Myth of Ownership and Stephen Holmes and Cass Sunstein in The Cost of Rights.

Libertarians dispute this attempted justification for the collective ownership of wealth and instead regard governments that pretend to own society’s wealth as kleptocracies, wherein “the management of public funds is designed to primarily sustain the personal wealth and political power of government officials and their cronies.” Libertarians argue that wealth is created by individuals, sometimes with ease, sometimes with great difficulty, and individuals have the right to hold and trade what they thus rightfully own. The theory of property rights is a fundamental tenet of libertarian thought. Although there is no complete consensus about how property should properly be originally allocated, most embrace Locke’s view that it has its origin in mixing one’s labor with the items found in nature. Libertarians also point to the fact that those who champion the idea that governments are the rightful holders of society’s wealth as returning to the monarchical conception of ownership, wherein the monarch is the ultimate owner of everything in the realm. In this view, subjects merely rent whatever property they use either in their trade or as their residence. It is just this monarchical viewpoint, however, that was challenged during the American Revolution and rejected as a principle of the new nation.

Needless to say, the claim that nearly all governments are kleptocracies is a controversial one, and even some libertarians allow that a government, properly restrained via a well-crafted constitution, could avoid the evils of a kleptocracy. Indeed, many socialists have argued that, inasmuch as private property is a fiction, so only collective ownership of wealth is possible, and this collective ownership must be administered by a group of individuals who appear to be acting in their own interests, but are in fact making use of wealth they are entrusted to manage as they deem proper. If this management follows proper procedures, as specified in, say, a supposedly viable theory, such as democratic socialism, then what libertarians regard as kleptocratic is, in fact, simple ordinary macroeconomic public finance.

Probably the most brazen case of kleptocracy in the traditional sense, where government is in the hands of thieves, is evident in some postcommunist countries. Here there is hardly any pretense at following constitutional edicts or the rule of law. Instead, what is evident is widespread cronyism among those who possess sheer coercive power in light of having been in the employ or a chief in one or another of the enforcement agencies in the former communist regimes. Armed with their coercive power, such individuals can amass wealth that is not theirs (e.g., by nationalizing private enterprises). Sometimes the discovery of vast reserves of natural resources, such as oil, facilitates the kleptocratic nature of governments because they are able to establish monopoly power over such resources and trade them in the global economy as if they legitimately owned them. These states offer nothing more than an extensive system of improper takings by some in a society of the wealth of others without recourse to even the flimsiest of legal rationales.

Originally published .