Positive Liberty

This month’s edition of Cato Unbound discusses anarcho-capitalism. Here is a passage from Peter Leeson’s lead essay that I found particularly interesting:

Imagine you go to a restaurant and order a $30 filet mignon. When your food arrives you take a bite and realize the restaurant has served you a $10 flank steak instead. The restaurant has defrauded you. You could take the owner to court; but then you realize that the simple time cost this will entail is not worth what you will recover even if you win. Although in principle government exists to adjudicate this matter, in practice it does not.

Your dining experience is a little slice of anarchy. Knowing this, restaurant owners should perpetually serve $10 flank steaks to customers who order filet mignon. Of course restaurants don’t do this. And the reason they don’t is because they realize that if they do, you’ll stop eating there and tell everyone you know to boycott the restaurant as well…

Reputation-based mechanisms of self governance have a major hitch, however. They require the restaurant owner to not have the power to take your money from you against your will. If, for instance, you announce your boycott of the fraudulent restaurant, but the owner is sufficiently stronger than you and can use the threat of violence to extract “future business,” your threat of boycott is useless. Reputation breaks down.

Below the fold: More thoughts about government, anarchy, and various states in between.

One of the most fascinating presentations I saw at the recent Cato University came from Marcus Cole, who spoke on voluntary governance structures. These included the Japanese clearinghouse guillotine (a part of the larger universe of financial self-regulation), the adjudication structures of New York diamond bourse, and the grazing liability practices of Shasta County, California. In each of them, practices emerged that usually make government regulation unnecessary. In each of them, the punishment meted out is simply disapproval by the members of a fairly closed community, on whom all individual participants depend:

What [Robert] Ellickson discovered about Shasta County was that interactions between neighbors, with regard to straying cattle and many other things, were controlled not by law but by a system of norms, a private law code having no connection to courts, legislatures, or any other agency of state power. When a rancher was informed that one of his animals was trespassing, he was expected to apologize, retrieve the animal, and take reasonable precautions to keep it from happening again. If significant damage had been done, the rancher was expected to make up for the damage–in one case by helping replant a damaged plot of tomatoes.

The system was self enforcing. If a rancher consistently let his animals stray, or failed to offer to make up for significant damages, the victim would respond by initiating true negative gossip–spreading the word that that particular rancher was not behaving in a proper neighborly way. If that failed to work, straying animals could be transported far from the victim’s (and owner’s) property–imposing significant costs on the owner who had to retrieve them. In extreme cases trespassing animals might even be deliberately injured. The one thing good neighbors did not do, even under severe provocation, was go to court.

Straying cattle were not the only thing to which legal rules were irrelevant. California has quite detailed laws specifying under what circumstance one of two adjoining landowners can build a fence and charge part of the cost to his neighbor. Landowner’s in Shasta county build fences, and their neighbors sometimes end up paying for them. But what fences get built and who pays for how much of the cost are unaffected by what ought to be the relevant law.

Similar situations obtain in cases of financial self-regulation and diamond trading. In each system there are formal codes of conduct, inquiries, judgments, and punishments. Yet in each of them, there is little or no state involvement: There is virtually no oversight of Japan’s clearinghouse guillotine; the diamond bourse polices itself in part owing to the highly specialized knowledge required of its judges; and the laws of the state of California in fact flatly contradict the grazing practices of Shasta County.

A similar system, and one I have experienced firsthand, arises in stamp, coin, and rare book collecting collecting, where it is common to send merchandise “on approval:” A customer orders an item, the merchant sends it, and the customer only pays if he is satisfied with the condition of the item. If not, he sends it back.

If the item is not as described, the customer returns it and tells other buyers about the merchant, whose business suffers. If the customer keeps the item without paying, the merchant tells other merchants, who also form a fairly insulated and mutually dependent community. The thieving customer soon finds he cannot buy rare coins at any price, and the dishonest merchant is driven out of business. Booklets are published keeping track of the reputations of buyers and sellers. Only rarely are there any complaints that the system cannot handle, and only then will the government be called in.

Indeed, it is a serious mistake to equate “regulated” with “governed.” Many institutions are barely governed at all, because their private regulations already work so well in so many cases. The question then arises what exactly the difference might be between a radically consensual government, one that uses only voluntary forms of punishment, and a well-functioning voluntarist anarchy. Not much, perhaps, apart from the magic of tribalism, and the presence of bullets.

It’s worth considering, then, that to be “governed” may not be a condition that arises at all points or all moments of life. Being governed could simply be a set of discrete events orchestrated by people with bullets, who rely to varying degrees on the magic of authority to avoid (or justify) using them. The rest of the time, we are on our own. In an anarchy of sorts.

We might even take this insight one step further and reconceptualize government as follows: Normatively, government is what we are sadly forced to do when our default state of anarchy fails to achieve justice.

There are two implications of this definition, as I see it: First, the presumption must always fall on government to justify itself, and to prove that any particular policy, any particular act of governing, would introduce into the ambient anarchy some beneficial element. This radically re-orients many public policy debates, perhaps to the point where it is not a useful suggestion. So I will offer another.

My second suggestion is that it is far from obvious that we must at every point in our technological and social development have a governmental solution to a given problem or set of problems. In various areas, we might eventually figure out how to eliminate or greatly reduce the initiation of force or fraud without government, where previously we knew of no other choice but to reach for the bullets and the magic rattle of tribalism. If we have succeeded in finding more voluntary ways, then in these cases the event called government should not be held.

There are also varying degrees of strength with which one may believe all of this.

A strong form holds that we already have all the technological and social tools we need to create an anarchic society that functions as well or better than our current, governed one.

A moderate form holds that anarchy may not be the solution to all of our problems right now, but — if we are clever and enterprising enough — it could be a solution to more and more of our problems in the future, leading one day to a time when pure anarchy is indeed possible. Such a state may or may not be distinguishable from what we today would call “purely consensual government.”

And, finally, a weak form of this idea might hold that it is only because we have government as a fallback that any of these voluntary structures are possible. Without government as a last resort, they would all unravel. This view is not necessarily unlibertarian, provided we understand government’s real task accordingly: It should exist to allow individual and communal self-regulation to the greatest possible extent.

Personally, I vacillate between the second and the third.

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