TGIF: A Market for Law?

Great part of that order which reigns among mankind is not the effect of government. It has its origin in the principles of society and the natural constitution of man. It existed prior to government, and would exist if the formality of government was abolished.

--Thomas Paine, Rights of Man, 1792

Sometimes an idea that at first sounds nuts isn't really nuts at all. Case in point: the market-anarchist principle that people should be free to buy the law and protection they want in the market.

Even a subscriber to Murray Rothbard's anarcho-capitalism might raise an eyebrow because Rothbard formulated a libertarian law code that he expected would be carried out in a market-anarchist society. In contrast, the market-for-law market anarchist doesn't see things that way. How would a single code even be implemented? It's not as if libertarians agree on everything. Think of intellectual property, abortion, defamation, and more.

David Friedman, a veteran anarcho-capitalist, explicitly favors a market in law, not just in police and arbitration (that is, court) services. Here's how Friedman describes it in The Machinery of Freedom (chapter 29; free pdf here):

In such an anarchist society, who would make the laws? On what basis would the private arbitrator decide what acts were criminal and what their punishments should be? The answer is that systems of law would be produced for profit on the open market, just as books and bras are produced today. There could be competition among different brands of law just as there is competition among different brands of cars.

In such a society there might be many courts and even many legal systems. Each pair of rights enforcement agencies agree in advance on which court they will use in case of conflict. Thus the laws under which a particular case is decided are determined implicitly by advance agreement between the agencies whose customers are involved. In principle, there could be a different court and a different set of laws for every pair of agencies. In practice, many agencies would probably find it convenient to patronize the same courts, and many courts might find it convenient to adopt identical, or nearly identical, systems of law in order to simplify matters for their customers.

As Friedman sees things, individuals would not directly choose among the competing arbitration firms. They would choose defense firms according to the services offered. Those firms would typically have contracted with others about which arbitration firms they would use if their clients were in a conflict. (Insurance companies already do this.) Customers of course would know about this and would choose defensive firms partly on that basis. The defense firms and arbitrators want to attract customers. These are profit-seekers, remember. Also remember that individuals are customers here, not taxpayers or subjects -- an important distinction.

The incentives to submit to and abide by binding arbitration without state-backing would be strong. A defense firm or a customer known for ignoring adverse rulings would have problems doing business in the future. This is the "discipline of constant dealings," Friedman writes. Its powerful influence cannot be ignored. Even now, it plays out everywhere. It is not mainly due to the state that people generally keep their contracts and even less formal promises. The government did not make eBay or the credit card a success. Rating systems are powerful. What Friedman has in mind is essentially an enlargement of the function of the ubiquitous contract, which creates obligations -- law, really -- for the parties, with binding arbitration by a specified agency in any dispute. (If the government didn't have the power to overturn arbitrators' rulings, this private alternative to courts would be even bigger than it is now.)

Wouldn't the defense firms simply fight when their clients had a conflict? That's what many people expect. But why expect it? Friedman reminds us that violence is costly in many ways, even for the winners. Understandably, it's not the business way of thinking. For one thing, a firm would have to pay its employees a steep hazard premium, raising its costs above those of competitors willing to negotiate.

Is this a perfect arrangement? No, but what other earthy arrangement could be perfect when it consists of fallible people all the way down? (See last week's TGIF, "Limited Government's Bait and Switch.") Governments have hardly been a guarantee of individual liberty. Think about the United States!

It's not impossible that everyone in an area who intends to commit murder or theft will patronize a defense firm that protects rights violators. But how likely is that to succeed? Most people don't plan on murdering or stealing and would buy protection against the few that might. (The streets, etc., would be private, remember.) Even would-be criminals don't want to be killed or stolen from. But what about states that commit murder, even mass murder, and theft, as they often have? What's the recourse?

Further, the objection that defensive firms might get together and become a new state also falls short. If people get used to seeing themselves as customers, they won't want to be turned back into taxpayers and subjects. Ideology matters. Friedman writes in chapter 36:

Anarchist institutions cannot guarantee that protectors will never become rulers, but they decrease the power that protectors have separately or together and they put at the head of rights enforcement agencies men who are less likely than politicians to regard theft as a congenial profession.

Some will object that law and the protection of rights and freedom should not be matters for bargaining. But what's the alternative? Who could seriously deny that all political systems entail bargaining? This is true even of a constitutionally limited government conceived by explicit champions of individual freedom. The Constitutional Convention in 1787 featured bargaining. So did the earlier deliberations over the Declaration of Independence and the Articles of Confederation. Even small groups rarely are of one mind. But we're not talking about small groups.

Obviously, bargaining goes on every day: between legislators, between legislators and constituents, and between the legislative and executive branches. It goes on among Supreme Court justices. Political campaigns are a form of bargaining. 

Where there are people and scarce resources, there is disagreement and therefore bargaining. It's the human condition. Better that people negotiate and enter defense contracts they choose than submit to a state monopoly: in politics, unlike the market, bargaining has victims, namely, the mass of people who had no real say. In the market, individuals make the deals that best fit their circumstances.

So a market for law isn't so crazy after all. It sounds great. Remember, market incentives and political incentives are entirely different. In the market, individuals choose knowing that what they choose is what they will get and that the costs and benefits will fall mostly on themselves. So they tend to make reasonably informed decisions.

In the political "market," individuals get one impotent vote each, which means that the candidate (policy set) they "choose" is not necessarily what they will get and that even if they get what they want, each voter knows he will experience only a tiny part of the total benefits and costs. The rest will fall on a large group of other people. Under those circumstances, few people have any incentive to choose in an informed way.

Finally, we may wonder whether the market would tend to produce pro-liberty laws. After all, maybe lots of people will want something else, like alcohol prohibition. Again, we can't have guarantees, no matter the system. But liberty has something in its favor: a pro-freedom asymmetry. Namely, people would probably be willing to pay more to protect their private lives from busybodies than others would be willing to pay to run other people's lives. The prohibitionists would have to foot the whole bill all by themselves. There would be no taxpayers.

Friedman gets the last word (chapter 31): "People who want to control other people’s lives are rarely eager to pay for the privilege; they usually expect to be paid for the services they provide for their victims.... For that reason the laws of an anarcho-capitalist society should be heavily biased toward freedom."

Also see:
John Hasnas, "Toward an Empirical Theory of Natural Rights."

Edward P. Stringham, ed., Anarchy and the Law: The Political Economy of Choice (an anthology that contains a debate on market anarchism's practicality and stability).

TGIF: Limited Government's Bait and Switch

In a fundamental respect, libertarian minarchism (minimal, or limited, government) and market anarchism (or anarcho-capitalism) have something important in common: neither can guarantee individual rights.

But there's a big difference: unlike market anarchism, minarchism appears to offer a guarantee, which allegedly makes it preferable to market anarchism. Actually, it's a false guarantee, a bait-and-switch. So it's not preferable to market anarchism, at least on those grounds.

However, what market anarchism can do is show how everyday incentives will tend to protect liberty (and already do now). Minarchism can't credibly say the same thing because constitutionally limited representative democracy is riddled with well-known perverse political incentives. That makes market anarchism the better bet.

It's instructive to watch the recent Soho Forum debate on the proposition "Anarcho-capitalism would definitely be a complete disaster for humanity." Yaron Brook, chairman of the Ayn Rand Institute, took the affirmative, and Bryan Caplan, libertarian professor of economics at George Mason University, took the negative. I think Caplan demolished Brook's case, which isn't exclusive to Ayn Rand Objectivists. This was a debate between two people starting from similar premises in favor of individual freedom, rational self-interest, and competition.

While what follows may not convince anyone to advocate market anarchism, it should eliminate a big argument against it.

Most limited-government advocates think that only a monopoly government can produce the objective law and fair and peaceful adjudication/enforcement that human beings need to flourish. The problem, as indicated, is that minarchism is all talk. It can't deliver.

Remember the old joke in which a tourist asks a grumpy local how to get somewhere? The local responds, "You can't get there from here." That's the problem. Brook's theory of constitutionally limited government promises to get us to a place we cannot go because it doesn't exist. Why not? As Dr. Seuss might say, because it's people all the way down. Limited-government advocates ignore this obvious fact.

Contrary to its fans, limited government is conceptually impossible. It, not anarchism, is a "floating abstraction." If this standard argument for limited government disappears, what's left?

Any advocate of liberty who knows even a little U.S. political history should see the problem for minarchism. In freedom-loving quarters, the American constitutional system wins kudos  -- the obvious serious contradictions such as slavery excepted. But what about the government's horrendous expansion since 1789? Isn't that a hint that something did not quite work?

Some Americans began complaining about the bigness of the national government at the turn of the 19th century! And let's not forget that the first constitution, the Articles of Confederation, denied the national quasi-government the power to tax and regulate trade. Within a few years, that changed. Wasn't that a bad omen?

Anarcho-libertarian abolitionist and businessman Lysander Spooner's 1870 "The Constitution of No Authority" concluded, "But whether the Constitution really be one thing, or another, this much is certain -- that it has either authorized such a government as we have had, or has been powerless to prevent it. In either case it is unfit to exist.”

The Constitution has not guaranteed freedom. Brook himself called today's U.S. government a "gang." So what could have been different, minarchists? A nation full of perfect Objectivists? Good luck with that.

The Soho Forum debate, which I highly recommend, could have been over early when Caplan identified the impossible guarantee. Brook responded that his ideal government would "strive" to make that guarantee. Caplan pointed out that a striven-for guarantee is not a guarantee.

Undeterred, Brook resorted to the catechism "A proper government is the means by which we place retaliatory use of force under objective control and objectively defined laws ... for the purpose of protecting rights."

Caplan called this mere "tautological." You can define the term proper government as an objective and reliable rights-protector. But in the real world, how do you get there from anywhere? It sounds Platonic. It's more like a version of the ontological argument.

Brook also said that the banishment of force from society "doesn't just happen. That's not something you negotiate. That is just something that is." (My emphasis.)

"Just is"? What does that mean? How does it materialize -- immaculate conception? And how would it be maintained? Is the state an infallible Objectivist Mr. Spock? Or Gort, the robot in The Day the Earth Stood Still? (The original movie costarred Patricia Neal, who ironically also played heroine Dominique Francon in the film version of Rand's The Fountainhead.)

Remember, it's people all the way down -- from inception of the government to maintenance. People are fallible. They disagree. They change their minds. They ask for free stuff from politicians. Some will even be corrupt and dishonest when they run for office. And, as Public Choice shows, the ones in government are prone to bias in favor of their careers. No one can reasonably hope to keep a government limited, nonaggressive, and efficient -- a square circle indeed. Is a New Man required? (See my take on someone who long grappled with this question, Anthony de Jasy.)

Pro-market economist Harold Demsetz warned against the "Nirvana fallacy": positing an unachievable "ideal" as an alternative to anything that can be achieved. That's what we have here in limited government. If it isn't on the actual menu, we must determine the best actual alternative.

Caplan repeatedly challenged Brook with this basic objection, but Brook bobbed and weaved. (See the exchange starting here.) He seems not to have read anything but Rand's 1960s essay on the need for government, predicting routine widespread violence under market anarchism. But she was answered many times. Brook casually dismissed the voluminous market-anarchist historical, economic, and ethical scholarship as a mere intellectual exercise.

It was good to hear that Book supports free immigration. Among its many virtues, it would be a potential escape from tyranny. But why shouldn't people be free to "migrate" from one rights-protecting institution to another without changing location? Brook says a location (undefined) must have one law. But Western Europe doesn't have one law. Yet he agreed with Caplan that, unlike in previous eras, a war between, say, France and Germany or Norway and Sweden is unthinkable and will very likely remain so.

Caplan noted that what keeps the big governments in those countries from fighting (which would be made possible by taxation and conscription) is people's general expectation of peaceful dispute resolution. That would apply even more to accountable, reputable, and competitive businesses selling security to free customers.

War isn't impossible in Western Europe and elsewhere, just unlikely in our more pacific era. (See Steven Pinker's The Better Angels of Our Nature: Why Violence Has Declined.) Yes, Russia and Ukraine are at war. But how many of the almost 200 countries in our anarchist world without a super-government would rather fight costly wars even for the winner than settle disputes diplomatically? (For an analogy, think of what two auto insurance companies routinely do when each has a client in a conflict. The companies already have contracts to deal with each other peacefully. They couldn't afford a Randian war of all against all.)

Well, why does market anarchism, unlike minarchism, inspire reasonable confidence about the chances of protecting liberty? That's a topic for another day, but suffice it to say that, as Caplan argues, rational self-interest, free competition, the need for a good reputation, and today's general expectation of peaceful conflict resolution provide our best chance. This doesn't mean pushing the "anarchist button," which doesn't exist anyway. It means showing people that major alternatives to the state already exist, including arbitration and private security firms.

It is said that freedom isn't free. Protection of freedom certainly isn't free. But we need not be forced to pay monopoly prices for inferior services and even rights violations in order to enjoy our freedom.

More reading

Roderick Long, "Market Anarchism as Constitutionalism."
Sheldon Richman, "The Constitution of Anarchy," in America's Counter-Revolution: The Constitution Revisited.
David D. Friedman, The Machinery of Freedom: A Guide to Radical Capitalism, 3d ed.

Flunk the State!

Knowledgeable people (Bill Gates among them) had warned for years that governments were ill-prepared for serious pandemics. The US government was not just ill-prepared; it also maintained regulatory obstacles — in the name of public health — to others who were willing and able to act.

I’d say the case for statelessness looks better all the time.

TGIF: Is Secession by Referendum Libertarian?

I have concerns about secession by referendum. Individual secession, of course, is no problem; that’s simply libertarianism. Before I get into my reasons, let me stipulate that smaller political jurisdictions are on net preferable to larger ones if for no other reason than the lower cost of exit. That in itself may constrain government impositions. Competition is good, and a race to reduce oppression would obviously be laudable by libertarian standards. But governments of any kind may find ways to collude with one another to minimize the effects of competition. Governments today cooperate with one another to catch tax evaders.

Read TGIF at The Libertarian Institute.

TGIF (The Goal Is Freedom) appears on Fridays. Sheldon Richman, author of America's Counter-Revolution: The Constitution Revisited, keeps the blog Free Association and is executive editor of The Libertarian Institute. He is also a senior fellow and chair of the trustees of the Center for a Stateless Society and a contributing editor at Antiwar.com. Become a Free Association patron today!

TGIF: Libertarianism Without the Magic

 I had the pleasure of appearing before the Amherst Political Union (Amherst College) this week to discuss the election of Donald Trump as president and the future of liberty. What perhaps pleased me even more was meeting with a group of young libertarians eager to explore the nature and implications of natural-law free-market anarchism. The students were prepared with many questions about how various hypothetical situations would be addressed in a stateless society. In other words, the students really made me work for my honorarium. It was invigorating, not to mention encouraging.

Read the rest at The Libertarian Institute.

TGIF (The Goal Is Freedom) appears on Fridays. Sheldon Richman, author of America's Counter-Revolution: The Constitution Revisited, keeps the blog Free Association and is executive editor of The Libertarian Institute. He is also a senior fellow and chair of the trustees of the Center for a Stateless Society and a contributing editor at Antiwar.com. Become a Free Association patron today!

Interview on Anarchism

On my visit to Amherst College to speak at the Amherst Political Union, Tommy Raskin interviewed me about anarchism. Here’s the short video.
 

The Campaign Needs a Radical, But Sanders Isn't It

We could use a radical in the presidential race -- someone who really challenges the status quo -- but Bernie Sanders isn't it. Sanders of course calls himself a democratic socialist, but that tell us almost nothing. One gets the impression the socialist label was pinned on him and after resisting it, decided socialist sounded romantic and embraced it.

Nevertheless, whether you like socialism or not, Sanders's is not a socialist: he calls neither for nationalizing the means of production nor for replacing the market economy with central planning. Yet that is what socialism came to mean in the mid-20th century. Democratic socialism meant that socialism would be achieved through the ballot box.

It is worth noting that in late 19th- and early 20th-century America, socialism was an umbrella term that was also used by radical free-market, or individualist, anarchists like Benjamin R. Tucker and Francis Dashwood Tandy, who called his 1896 book Voluntary Socialism. A socialist then was anyone who objected that workers were cheated out of their full reward and that prices of goods were fixed above the cost of production; in contrast to state socialists, free-market socialists attributed these evils to "capitalism," by which they meant the system of government privileges for well-connected owners of capital.

What Sanders favors is an expanded welfare/regulatory state, i.e., more of what we have. When asked about socialism, he praises Medicare. Medicare, however, is not socialism, nor would single-payer for all be socialism. Under state-socialized medicine, government would own and operate the hospitals, and doctors and nurses would be government employees -- like the post office without competition. Under single-payer, government would pay the bills for private-sector medical care and impose controls that powerful interests would inevitably manipulate to their advantage. Sound familiar?

The welfare state was established by western ruling classes to tamp down discontent among the powerless that had the potential to turn revolutionary. The father of the modern welfare state, Otto von Bismarck, intended government-administered social insurance to keep the Prussian working class loyal to the regime and out of the Marxist and liberal (libertarian) camps. In England workers initially resisted the welfare state because it was seen as a move by the aristocracy to co-opt the labor movement, which sought to redress its grievances directly.

Sometimes Sanders says that being a socialist means merely that he's neither a Democrat or a Republican. That's not terribly informative. At other times he says it signifies concern about gross income disparities, the high cost of college, and the lack of access to medical care. Again, this doesn't tell us much since radical libertarians share those concerns. What's matters are the solutions. Two people can look at the same social problem and argue over whether the best approach is more government, less government, or no government at all. Sanders's preference, more government, would mean expanded bureaucratic control and special-interest "capture," i.e., more of what already ails us.

In 1986, Sanders said, "All that socialism means to me, to be very frank with you, is democracy with a small 'd.' I believe in democracy, and by democracy I mean that, to as great an extent as possible, human beings have the right to control their own lives." Considering that Sanders's program would empower bureaucrats rather than people, one could consistently endorse Sanders's objective while opposing his proposals. (See my "Free-Market Socialism.")

He also said, "What being a socialist means is … that you hold out … a vision of society where poverty is absolutely unnecessary, where international relations are not based on greed … but on cooperation … where human beings can own the means of production and work together rather than having to work as semi-slaves to other people who can hire and fire."

Again, these are objectives that any radical free-market libertarian could embrace. Where Sanders goes wrong is in aiming to empower bureaucrats and politicians.

Sanders cannot or will not see that expanding the welfare/regulatory bureaucracy would not help those outside the ruling elite. Beefing up the state won't liberate us. Despite his intentions, Sanders is an unwitting defender of the status quo.

Where is the radical who will make the case for individual liberation and purely voluntary social cooperation through freed markets?

Sheldon Richman keeps the blog Free Association and is a senior fellow and chair of the trustees of the Center for a Stateless Society. Become a patron today!

Happy Anarchy Day

Stop compromising
Embrace the logic of 1776

Individualist Market Anarchism

How Much for that Freedom in the Window?

Okay, freedom -- more precisely, the maintenance thereof -- isn't free. But must we pay a monopoly price?

Roderick Long on Anarchism and Objective Law

I enthusiastically recommend Roderick T. Long's "Why Objective Law Requires Anarchy," which responds to one of the most common libertarian (and Objectivist) challenges to market anarchism. Here are a few highlights intended to entice:

. . . I see anarchism as the logical conclusion of the checks-and-balances approach. The point of checks and balances is to put a brake on the tendency of political institutions to aggrandize power by arranging it so that a power grab by one part of the system will trigger opposition by other parts of the system. This was the idea behind the U. S. Constitution, with its federalism and division of powers. Unfortunately, it failed, as the supposedly antagonistic parts learned the benefits of working together to oppress the people. From an anarchist perspective, the problem with the minarchist version of checks and balances is that it does not go far enough; the opposing parts are too few in number, and too closely linked together in a single overarching institution.

I once opposed anarchism precisely because I was so convinced (largely as a result of reading Isabel Paterson’s The God of the Machine) of the importance of constitutional structure. I assumed (as Paterson had) that there is no constitutional structure under anarchy. But it now seems to me that precisely the opposite is true: the competitive market provides a much more sophisticated and complex constitutional structure than any state monopoly. . . . 

The fundamental question is this: under which system—market competition or government monopoly—is abuse of power more likely?

But the problem is not one of evil motivations alone. Even a state run by saints would face an informational problem. Just as the most well-intentioned central planner would be unable to make objective decisions about economic production, consumption, and distribution, because the information generated by the spontaneous market order would be inaccessible to him, so without the competitive, evolutionary process through which law originated and developed before the state, a centralized legislature would be unable to make objective decisions about which legal rules and procedures work best.

Splitting Hairs

If you teach people that government is indispensable to security, don't be surprised if they also believe that government is indispensable to social security. Good luck trying to explain the difference. (Calling the latter, but not the former, socialism does not work.)

Block Says Yes to Capitalism

My old friend Walter Block (we've known each other about 40 years) has written a rebuttal of my views on the value, or lack thereof, of the word capitalism to free-market radicals. As if to make my case, Block writes:

If U.S. Presidents such as George Bush (41st or 43rd), Dwight D. Eisenhower, Gerald Ford, Herbert Hoover, Richard Nixon and Ronald Reagan are widely considered capitalist supporters, and they are, then I, along with Libertarians Against Capitalism [my Facebook group], want no part of this moniker.

Then after naming a slew of conservatives and neoconservatives who use the word capitalism in ways he does not like, Block says:

If they support capitalism, and they are widely seen to do so, then I, too, along with called Libertarians Against Capitalism, oppose it. For the "capitalism" of these people includes as a central tenet war, militarism and imperialism. They may call it "American Greatness," but what it amounts to is the U.S. tossing its military weight all around the world, in a totally unjustified manner.

So, "Reading the above, one might infer that I am as good a candidate as any other libertarian to join Libertarians Against Capitalism."

Alas, "Not so, not so."

My main reason is not etymological but rather linguistic. I readily admit that "capitalism" has a bad press, and its historical use is none too salutary either. But, the enemies of libertarianism are always trying to take words away from us. ...Some have recently [!] had the audacity to try to take away the word "libertarian." I refer, here, to Noam Chomsky, who has the temerity to characterize himself as a libertarian.

Whoa! Block needs to read some history. If anything, we took it from them (to make up for the loss of liberal) ! Libertarian was used by left-wing Spanish anarchists during the 1930s civil war; they were no friends of private property and free trade. Going back further, the word was used by anarcho-socialists after the fall of the Paris Commune in 1871 because the word anarchist could land them in a heap of trouble. I doubt Block would regard those libertarians as comrades. The French word Libertaire appears to be the origin of our word libertarian, and it seems to have had nothing to do with what Block wants to call capitalism. Quite the opposite.

Even if you can find an earlier free-market advocate who used the word (can you?), there is no case that Chomsky's use of it constitutes a case of "attempted theft," as Block charges.

But let that pass.

"So, I beseech Sheldon Richman and the other members of Libertarians Against Capitalism to disband their group," Block concludes, "and, instead, work with the rest of us to save as many words as we can for our own use."

Sorry, can't do it, old friend. It's not worth the candle. The word was tainted from the start -- free-market radicals used it disparagingly -- and it has never lost its taint, despite the efforts of Mises and Rand. It creates confusion not clarity. We have perfectly good words for what we want: the free market and laissez faire, voluntarism and market anarchism.

We don't need the poisonous word capitalism.