Three Outcomes of Anarcho-Capitalism
Jason Kuznicki on Mar 28th 2007
An echo of one of the most interesting conversations I had last week.
Anarcho-capitalism: Competing private defense agencies, none with exclusive geographic jurisdiction. All agencies (improbably) agree that individuals have the right to resort to competing agencies. None of them (still more improbably) attempt to enforce exclusive geographic jurisdiction, a measure that would vastly decrease the costs of doing business.
Under this system, Peter says Paul stole his wallet. Peter goes to his defense agency and demands Paul’s arrest. Paul is arrested, and his defense agency understandably takes an interest in the case. Three outcomes may result.
1. Warfare. This is a prima facie bad outcome, and a Pareto suboptimal outcome when compared to any successful administration of justice today. While involuntary taxation is certainly a problem in libertarian philosophy, this problem counts for nothing when compared to involuntary loss of life.
Many thoughtful critiques of anarcho-capitalism have begun and ended on precisely this point. The two weaknesses of critiques in this vein are a) that the administration of justice today arguably contains many abuses that anarcho-capitalism would end, meaning that a system with the occasional highly limited war might not be a Pareto suboptimality when compared to the total administration of justice in each system, and b) that the defense agencies of Peter and Paul might not actually go to war, which brings us to….
2. Negotiated agreement. This is a prima facie good outcome, as negotiated agreements eliminate or minimize the initiation of force in society. They lead to an unexpected outcome, however, as libertarian theorists have noted since at least Robert Nozick’s Anarchy, State, and Utopia: A longstanding and generalized agreement between defense agencies about what to do with a given class of problems is not simply an agreement. It’s a law, or possibly a treaty. Forge enough of these links, one after another, formally or informally, and you no longer have competing defense agencies at all. Sooner or later, you have a federation of local governments with a common law heritage among them.
Allow each side in a dispute to hire a sort of mini-defense agency, limited strictly to the peaceful, orderly presentation of facts before a third and disinterested party, and you have the adversarial court system — likewise a product of the common law. This is also a prima facie good outcome, as the common law has been one of the great world-historical traditions favoring individual liberty.
All of this raises the question of whether anarcho-capitalism is worth the trouble at all, since — on paper at least — the United States already is a federation of states with a common law heritage among them. What we need is not to start over from the anarcho-capitalist origin, but simply to pare down the size and scope of the government.
There is, however, a third possible outcome to anarcho-capitalism, and I think it explains why we have both common law and statutory law, as well as a written constitution with checks on the power of every branch of government. That outcome is….
3. Negotiated corruption. Peter and Paul can’t agree, and their defense agencies don’t want a war. The agencies collaborate, and they approach the litigants with the following proposition: “We will decide the outcome of your case based on whoever will pay us the largest economic benefit, be it in money, goods, services, status, or other considerations. No, no… We don’t actually care about justice. We’re the strongest defense agencies around, and together, no third agency is going to stop us. Particularly not when you’re in our jail to begin with. Offer us a bribe, and we will decide your case.”
This is an obviously bad outcome, since it disregards all considerations of justice in favor of the naked self-interest of the defense agencies’ stockholders. Yet it seems that negotiated corruption would often be the outcome of pure anarcho-capitalism, stripped of checks and balances, judicial review, constitutionalism, and the rule of law.
Whereas something like the common law tradition might well grow up out of competing power centers and institutions (and it probably did in real life), these institutions still need some component to ensure impartial review and to watch for abuses of this type. Within the rules of a constitutional order, where formal, written or traditional safeguards prevent the narrow interests of the defense agencies from leading to warfare or bribeocracy, we get something closer to outcome #2: The constitutional order as the framework on which the decentralized common law can grow.
And an obligatory picture, which I found at In The Agora.
Clearly, this cop is an anarcho-capitalist who is working for a private defense agency.
Filed in The Bureau
“Many thoughtful critiques of anarcho-capitalism have begun and ended on precisely this point.”
Actually, any critique that began AND ended on this point would be, by definition, not thoughtful, as they ignore the reality of international relations today. Why don’t we just invade Canada when we have a trade dispute with them? Why don’t we just invade Mexico when we have a dispute between citizens? Why isn’t every country constantly in a state of war with every other country? Perhaps people ARE more rational than the doofuses who make this argument think they are?
“All of this raises the question of whether anarcho-capitalism is worth the trouble at all, since — on paper at least — the United States already is a federation of states with a common law heritage among them. What we need is not to start over from the anarcho-capitalist origin, but simply to pare down the size and scope of the government.”
Which actually is a thoughtful critique if made by someone who has only made a superficial reading of the literature on AC. A deeper reading would reveal the answer quite quickly - AnCaps argue that where we are today is the inevitable result of territorial monopolies (”statist thinking”). Once you grant legitimacy to “political” means (violations of the NAP), more and more reasons for their use will always be found. After all, politicians spend their whole lifes seeking the power that comes from office. Any rational person must admit that it is strange to expect them to voluntarily choose strategies that will lessen that power. Paper can’t restrain politicians, especially when they can offer free lunches. Only other actors can. See also public choice economics.
“Yet it seems that negotiated corruption would often be the outcome of pure anarcho-capitalism, stripped of checks and balances, judicial review, constitutionalism, and the rule of law. ”
Nice opinion, but hardly “true.” But even granting that, is it much worse than the current situation? Our government, as it currently exists looks an awful lot like the situation you describe: just replace your competing defense agencies with “Democrats” and “Republicans”.
The difference in fact, would be that the defense agencies couldn’t convince people that what they were doing was justified, or proper. Unlike the current system where obeying the state, no matter what it says, is often believed to be necessary and proper. Under a state, people are told that they must allow their rights to be violated for their own good. Not so in an AnCap system - people will recognize crooks for what they are, even if they are in no position to resist them.
Perhaps you’re right, and we’re all Hobbesian brutes, capable only of satisfying our immediate wants with no consideration of long term consequences. But if so, you certainly have chosen a strange political orientation; if your premise is true, you should be genuflecting to the nearest dictator to keep us all in line “for our own good”, no matter what it takes to do so. Which of course leads to the contradiction implicit in any statist thinking - if all humans are Hobbesian brutes, where are you going to get the angel or alien capable of thinking only of the common good that is necessary for creating the utopia you dream of?
All of which, I’ll add, shouldn’t be taken as arguing that there aren’t valid, thoughtful critiques of AnCaptopias. Just that those listed aren’t among them.
For example, AnCaptopians tend to ignore the cultural side of things and, in the process, leave their conceptual moorings (subjective value, etc.) In doing so, they fail to recognize that some specific cultural value disputes will have a tendency to drive very serious conflict, that will inevitably result in some form of city states, just as it did in antiquity. It’s not the economics that drive this, it’s culture:
To choose a hopefully not offensive hypo, imagine a town of bible banging fundamentalists. In their midst is a couple of homosexual nudist/exhibitionists homeowners. Can you smell the conflict already? Problem is, under AnCapitopia, the exhibitionists can do what they want on their property, no matter how much it offends their neighbors. The neighbors will likely not be too happy and perhaps form a “defense agency” of local proportions that will be used to essentially evict the exhibitionists. Now the exhibitionists are relying on big city Metropolitan defense agency, which decides that it will really just be cheaper to buy out their client than to go to “war” in east podunk with these determined villagers (Metropolitan will likely have internalized the lessons about 4G warfare that our current state willfully ignores). The exhbitionists, will eventually come to the same decision, and will accept the buyout to move somewhere more tolerant. Voila! City state in East Podunk, albeit most likely a minimalist theocracy of some sort, not some general purpose state like we have today, and not some centralized warfare/welfare state monster.
It’s unlikely to spread (only attractive to those who strongly value its specifc culture), and is less likely (compared to current states) to expand its powers over current citizens because the locals are culturally uniform to begin with (stable states tend to exist in this milieu). This cultural uniformity helps innoculate against unequal application of the law.
Will the villagers tend to resort to murder with their local DA in this scenario? Unlikely, given the cultural standpoint, as well as the market incentives that result from such actions - Metropolitan will then be on the hook for the life insurance part of their contract, and therefore have an increased incentive to identify and hold the murderer accountable. In fact, there may be an overarching agreement between large numbers of DAs regarding murderers - the preventative effect of catching and detaining them (a detained murderer can’t be out attacking other DAs clients!) will lead to pooled resource efforts in this area.
Perhaps they (Metropolitan) ill still determine that paying out is cheaper than prosecuting, but then they will have to live with that decision not only financially, but reputationally. In actuality, the local DA is likely to understand the best strategy is to threaten action, then come to terms with Metropolitan for the buy-out, if it even gets as far as all this (and this whole hypo would be a rare instance, and likely only in small, insular communities, as opposed to large, metropolitan ones). The local community members don’t want to be seen as total pariahs among the region - they’ll suffer consequences in that scenario. Reputation will mean MUCH more in an anarchic society.
And that’s not even getting into the critiques that center around the debates about what constitutes valid realty ownership. In fact, the most valid critiques of AnCap focus on the “capitalist” side, not the “anarcho-” side. Most (not all) coherent concepts of what constitutes morally valid ownership of land require some belief in a higher being capable of formulating a “natural law”. If you claim not to believe in such, you’re going to have some problems with much AnCapitopian thinking.
Yes, some good points among a few straw men as well. For example:
“Under this system, Peter says Paul stole his wallet. Peter goes to his defense agency and demands Paul’s arrest. Paul is arrested, and his defense agency understandably takes an interest in the case. Three outcomes may result.”
What about the outcomes of Peters complaint? If the defense agency does not want to risk it’s credibility and resources on what it regards as frivolous claims by Peter, it won’t arrest anyone, and a whole new set of options arise.
“A longstanding and generalized agreement between defense agencies about what to do with a given class of problems is not simply an agreement. It’s a law, or possibly a treaty. Forge enough of these links, one after another, formally or informally, and you no longer have competing defense agencies at all. Sooner or later, you have a federation of local governments with a common law heritage among them.”
I don’t see this at all. Standardization in judicial and evidentiary procedures makes defense agencies no more of a “government” than fast food companies who all offer a burger, fries and a soft drink as their “combo”.
In your example of “negotiated corruption”:
““We will decide the outcome of your case based on whoever will pay us the largest economic benefit, be it in money, goods, services, status, or other considerations. No, no… We don’t actually care about justice. We’re the strongest defense agencies around, and together, no third agency is going to stop us. Particularly not when you’re in our jail to begin with. Offer us a bribe, and we will decide your case.”
And how much credibility would such a “decision” have to third parties? What are the litigants buying here, a ruling (which, to have any value, has to at least appear to be a justified claim) or just simple enforcement? I think both would be costly, and it would be cheaper to go the legit way, by submitting the claim to an independant arbitration firm agreed upon either by the parties directly or through their agents.
Tim
A few replies to the replies:
any critique that began AND ended on [the point that anarcho-capitalism encourages warfare] would be, by definition, not thoughtful, as they ignore the reality of international relations today. Why don’t we just invade Canada when we have a trade dispute with them? Why don’t we just invade Mexico when we have a dispute between citizens? Why isn’t every country constantly in a state of war with every other country? Perhaps people ARE more rational than the doofuses who make this argument think they are?
Why don’t we invade Canada when we have a trade dispute? Because the citizens wouldn’t stand for it. Democratic governments are more peaceful than dictatorships, which can and will go to war for whatever most benefits the dictator personally. As war seldom benefits the majority of people in society, democracies are generally (though not always) disinclined to war.
So yes, the people are generally rational, and they are not doofuses. Individuals, though, don’t typically work for the benefit of other individuals when they become dictators. They work for the benefit of themselves.
So what would you do as the manager of a private defense agency, if a client of yours were imprisoned by another PDA? Your stockholders want results, your clients are nervous, and no other power is ever going to punish you if you start a successful war. Yet war might not be the most just outcome here; almost certainly, negotiated agreement would be better.
Negotiated agreement, meanwhile, leads to the elaboration of an increasingly shared legal tradition, and to the gradual lessening of geographic exclusivity. No, this is not merely a question of McDonalds and Burger King becoming similar. The treaties and other forms of agreement being discussed here involve extradition, reciprocal recognition of clients’ rights, dispute mediation, and so forth. They promise not merely a similarity of services, but a reciprocal exchange of a type not seen among competitors in the same industry.
Unlike with fast food, there may be consequences, including war, if one of the agencies later changes its menu. Note that these penalties do not arise if Burger King stops offering combo meals.
Indeed, it strikes me that what anarcho-capitalism really means is not the abolition of government, but simply the abolition of geographic exclusivity in government. Yet geographic exclusivity would arise once again anyway, whether through collaboration or through economies of scale, and whether the governments formed in this way were good or evil ones. It therefore seems best to me to work for good government rather than to jettison the system of limited powers, checks and balances, and individual rights that make government of any type tolerable in the first place.
What is gained in geographic exclusivity and interlocking systems of only partial authority? I think my outcomes 1) and 3) become far less likely, and 2) becomes far more likely, at least under a regime of strong but not wholly exclusive power — a federalism. I further think that virtually nothing is lost in adopting geographic exclusivity: You still have the right to rebel against the government, which cannot be taken from you by any power whatsoever. Like all rights connected with the pursuit of happiness, there is no right to succeed at the acquisition of your aim — You may still try your rebellion, and I may still try to stop you (or not). Nothing has been lost. Revolt, if you wish. If you act justly, I will join you.
politicians spend their whole lifes seeking the power that comes from office. Any rational person must admit that it is strange to expect them to voluntarily choose strategies that will lessen that power.
Agreed, yet I fail to see how anarcho-capitalism will do anything about this that other systems do not already do. On the contrary, PDAs would not even have a paper restraint, and they could turn to outright plunder of non-clients if they wished. The fact that many states do this in the real world is all the proof I need of my assertion.
[JTK:] “Yet it seems that negotiated corruption would often be the outcome of pure anarcho-capitalism, stripped of checks and balances, judicial review, constitutionalism, and the rule of law. ”
Nice opinion, but hardly “true.” But even granting that, is it much worse than the current situation? Our government, as it currently exists looks an awful lot like the situation you describe: just replace your competing defense agencies with “Democrats” and “Republicans”.
Of course my speculation is only an opinion, yes. As is yours, since we are discussing a construct that either has never existed or at the very least has never existed in the modern world.
Yes, there is plenty of corruption in the current government. Yet I am hopeful that, at least within some types of government, the means exist to correct it. It seems here that you demand perfection of government, and, because you have only your imagination to compare it against, government predictably — though unfairly — fails.
I am well aware that in many types of government, the means to redress corruption do not exist, and that even in our own they have been sorely strained. I just don’t see that allowing people to buy and sell whatever type of force they liked would do anything to help the situation. I think it would make things far worse. (Indeed, allowing people to buy initiative force may be capitalist in the narrow sense, but it is hardly libertarian.)
Under an anarcho-capitalism, some people — maybe even most of them — could well “recognize the crooks for who they are,” as you write, yet this would not stop the buyers from buying, or the sellers from selling their services. The only thing that can do this is a general and pre-existing agreement that most types of government force are actually forbidden and that only a small number are allowed — and then a power that will enforce that agreement.
“Because the citizens wouldn’t stand for it.”
And you think the DA’s shareholders would? For an immoral case? I’m not sure where you see the distinction between “citizen” and “shareholder”, making A moral and B totally immoral. In fact, it is through socialist cost spreading that A usually ends up being more immoral than B.
“So what would you do as the manager of a private defense agency, if a client of yours were imprisoned by another PDA? Your stockholders want results, your clients are nervous, and no other power is ever going to punish you if you start a successful war. Yet war might not be the most just outcome here; almost certainly, negotiated agreement would be better. ”
All of which arguments apply equally, if not moreso, to states. If I were the manager of a PDA, I would evaluate whether the client had violated any of the rules contained within his policy, much like any insurance company today does. If he did, nothing more is necessary, other than perhaps providing the litigation defense contained as a term in the policy.
My stockholders want results, namely, efficient protection of their rights. They’ll realize that starting wars to defend a client who has violated someone else’s rights will increase the cost of protecting their legitimate rights.
“What is gained in geographic exclusivity and interlocking systems of only partial authority? I think my outcomes 1) and 3) become far less likely, and 2) becomes far more likely, at least under a regime of strong but not wholly exclusive power — a federalism.”
I’d say that empirically, your thoughts have very little to no support. Just to take the example at hand, you do realize that the U.S. federal government was originally intended to have even fewer powers than a traditional minarchy. And yet today, it is leviathan. It has no restraints. The executive is trammeling any shred of constitutional limitation, as is the legislature, as is the judiciary. When you rely on one institution - in this case, the federal government, to police itself, the results are always, inevitably the same. Even if you somehow split the powers in the institution, there is more than enough incentive for cross-corruption. And since you have eliminated the option that makes markets superior to politics - “exit” - you are left with the lackluster power of “voice”. And again, if you don’t know why “voice” is so useless, check out the public choice economists.
“On the contrary, PDAs would not even have a paper restraint, and they could turn to outright plunder of non-clients if they wished.”
No, PDAs would have something much better, in most (admittedly, not in all cases - I’m not a utopian) cases - competing market providers of service. Also, you ignore the costs side of this ledger. Continuously engaging in war and having to pay for it yourself is an economically self-defeating strategy - as most nations have figured out, and therefore, one would assume, most people who vote the leaders of those nations into power.
“The fact that many states do this in the real world is all the proof I need of my assertion.”
And I of mine.
“Of course my speculation is only an opinion, yes. As is yours, since we are discussing a construct that either has never existed or at the very least has never existed in the modern world. ”
I assume that by the qualification in the last clause you realize that the first clause is untrue? I’ll counter with the assertion that the centralized minarchy you dream of has never existed in history, especially not in the modern world.
“It seems here that you demand perfection of government, and, because you have only your imagination to compare it against, government predictably — though unfairly — fails.”
And here, I was going to write the equal and opposite of you. You demand perfection from anarchy, and yet are very willing to forgive and forget about states. (Note that you use the term government improperly - I don’t advocate the abolition of government, just the abolition of states, i.e. entities that claim the moral legitimacy of a monopoly of violence within a given territory)
“yet this would not stop the buyers from buying, or the sellers from selling their services”
Let me ask you this - would YOU buy such services? How about sell them? Would you willingly do business with someone who did? Why would you enter into a contract with such a lawless person?
“and then a power that will enforce that agreement. ”
And what power will enforce that agreement on that power? Or are you back to positing the existence of angels and aliens again?
“Indeed, it strikes me that what anarcho-capitalism really means is not the abolition of government, but simply the abolition of geographic exclusivity in government. Yet geographic exclusivity would arise once again anyway, whether through collaboration or through economies of scale, and whether the governments formed in this way were good or evil ones. It therefore seems best to me to work for good government rather than to jettison the system of limited powers, checks and balances, and individual rights that make government of any type tolerable in the first place. ”
Wouldn’t you consider “geographic exclusivity” a fundamental characteristic of government? If collaboration occurs between justice agencies (to maximize profits by offering continuity of service to clients), it’s not “smaller scale governments”, but a complex network of private networks. By this standard we could call cooperation between firms “government” Justice agencies are not the only types of firms whose actions can impact the freedom and rights of others.
Do you have examples of governments without “geographic exclusivity”? Sounds to me like a square without four sides…
Tim
Quick correction: “a complex network of private networks” should have been “private agreements”. Sorry. Other errors I’m sure, but hopefully the main point is there.
Also, I don’t mean to imply that any institution with geographic exclusivity is a government. But I don’t see how a government can be a government without this characteristic, imposed coercively…
Tim
And you think the [private defense agency's] shareholders would [want to engage in war]?
Of course they would. They would tend to be precisely like the hangers-on of any dictatorship or criminal regime nowadays. Who buys stock in Disney? People who like cartoons and/or people who think that they can make money from them. Who buys stock in Procter & Gamble? People who like soap and toothpaste and/or people who think that they can make money from them. Who buys stock in the agents of force? Welllll…
The citizens would undoubtedly feel otherwise, but the shareholders would tend to seek profit, and thus they would face the temptation of warfare, even if shareholding itself were not a filter inclining stockholders to violence.
Much of the rest of the discussion seems to turn on whether a hypothetical construct would be better or worse than a construct that we already have. The two salient distinctions between the new construct and present-day liberal democracy are as follows: First, the construct would not be geographically exclusive (whether this makes it definitionally not a government is beside the point; operationally, it would share the essential characteristics). Second, the construct would be freed of any meaningful pledge to respect inalienable individual rights.
The first difference inclines the construct toward being more warlike. The second means that its agents need not so much as feel guilty afterward. How either is an improvement is beyond me, and still less can I overcome the objection of prudence, which demands that we not try an untested method until all else has failed. The United States has its problems, and many of them disgust me, but the time for revolution has not arrived.
“Second, the construct would be freed of any meaningful pledge to respect inalienable individual rights.”
Actually, the existing construct is freed of such, the PDAs? Maybe, maybe not. That’s the difference between us. You think obviously bad is better than the chance to be better. I don’t.
What about the oath to respect the Constitution is meaningful? When Clinton, Bush, etc. repeatedly fail to live up to that pledge, to what have they been held to account? What is meaningful in that respect?
How about a promise to obey a condition in a contract? Backed by the ability to go to another provider if you continously prove that you don’t honor your pledge? That’s meaningful. Holding your nose, covering your rear, and voting for one of the two anointed candidates in any federal election today? meh. If that’s the definition of ‘meaningful’, we really are in Wonderland, talking with the twins.