The Interesting Case For Anarcho-Capitalism

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Posted: Jun 19, 2020 12:13 PM
The Interesting Case For Anarcho-Capitalism

Source: National Archives via AP

Libertarians believe in limited government for both moral reasons (government coercion is bad) and utilitarian reasons (nations with small government enjoy much higher levels of prosperity than countries with bigger governments).

But if small government is good, would no government be even better? That’s the core argument of so-called anarcho-capitalists or voluntaryists.

To understand this approach, let’s start with the video from Learn Liberty, featuring Professor Bryan Caplan of George Mason University.

And here’s a video from Reason featuring David Friedman.


You won’t be surprised to learn that I was very happy to hear him embrace jurisdictional competition toward the end of the interview (and I also agree with him that this is a reason to be skeptical about the European Union’s pro-centralization mindset).

But let’s stick with the main topic. Is anarcho-capitalism a good idea?

Defenders of the idea frequently make the point that it’s got to be better than what we have now.

Which is the message of this sarcastic meme.

But let’s take a more serious look at the topic.

At the risk of oversimplifying, there are three big questions that always get asked about how a society could exist with no government:

  • What to do about pollution?
  • What to do about crime?
  • And what to do about national defense?

David Friedman’s Machinery of Freedom is the classic tome on anarcho-capitalism.

First published in 1973, here’s what he says about pollution.

The pollution problem exists because certain things, such as the air or the ocean, are not property. Anyone who wishes to use them as garbage dumps is free to do so. If the pollution were done to something that belonged to someone, the owner would permit it only if the pollutor were willing to pay him more than the damage done. …The ideal solution is to convert unowned resources into property. One could, for instance, adopt the principle that people living along a river have a property right in the river itself and that anyone who lowers the value of the river to them by polluting it, without first getting their consent, is liable to suit. …Some things, such as air, are extraordinarily difficult to deal with in this way. …The simplest solution to such a paradox is to permit parties injured by air pollution to sue for damages—presumably in class actions, by many victims against many pollutors. I would not be able to shut down your blast furnace merely by proving that a sufficiently sensitive instrument could occasionally detect sulfur dioxide in my air. But, if the concentration were high enough to be offensive, I could sue you for the damage done. At present, pollution is ‘controlled’ by governments. … Who gets away with it depends not on real costs but on politics. If pollutors must pay for their pollution, however avoidable or unavoidable, we will rapidly find out which ones can or cannot stop polluting.

Here’s how Friedman argues that crime would be handled (by the way, there’s a 2015 book by Ed Stringham, Private Governance: Creating Order in Economic and Social Life, that takes a very rigorous look at the history and prevalence of private law).

Protection from coercion is an economic good. It is presently sold in a variety of forms—Brinks guards, locks, burglar alarms. As the effectiveness of government police declines, these market substitutes for the police, like market substitutes for the courts, become more popular. Suppose, then, that at some future time there are no government police, but instead private protection agencies. These agencies sell the service of protecting their clients against crime. Perhaps they also guarantee performance by insuring their clients against losses resulting from criminal acts. …In practice, once anarcho-capitalist institutions were well established, protection agencies would anticipate such difficulties and arrange contracts in advance. …In such a society law is produced on the market. A court supports itself by charging for the service of arbitrating disputes. Its success depends on its reputation for honesty, reliability, and promptness and on the desirability to potential customers of the particular set of laws it judges by. The immediate customers are protection agencies. But the protection agency is itself selling a product to its customers. …The most serious objection to free-market law is that plaintiff and defendant may not be able to agree on a common court. Obviously, a murderer would prefer a lenient judge. If the court were actually chosen by the disputants after the crime occurred, this might be an insuperable difficulty. Under the arrangements I have described, the court is chosen in advance by the protection agencies. There would hardly be enough murderers at any one time to support their own protective agency, one with a policy of patronizing courts that did not regard murder as a crime.

Though even Friedman is uncertain how national defense could be privatized.

National defense has traditionally been regarded, even by believers in a severely limited state, as a fundamental function of government. … the usual solution is to use government force— taxation—to make those benefited (and others) pay… national defense—defense against nations—must defend areas of national size, whether or not they contain nations. It is thus a public good, and one with a very large public. …The cost of a minimal national defense is only about $20 billion to $40 billion a year. The value to those protected is several hundred billion dollars a year. National defense is thus a public good worth about ten times what it costs; this may make it easier, although not easy, to devise some noncoercive way of financing it. … a national defense agency might raise enough money to finance national defense without taxation. Obviously, a system that depends on local agencies evolved for a different purpose or a ramshackle system financed by charity, passport sales, and threats to Hawaiian insurance companies is economically very imperfect. So is a system financed by coercion and run by government. …What will I do if, when all other functions of our government have been abolished, I conclude that there is no effective way to defend against aggressive foreign governments save by national defense financed by taxes—financed, in other words, by money taken by force from the taxpayers? In such a situation I would not try to abolish that last vestige of government. I do not like paying taxes, but I would rather pay them to Washington than to Moscow—the rates are lower. I would still regard the government as a criminal organization, but one which was, by a freak of fate, temporarily useful.

For what it’s worth, anarcho-capitalism may be moving from theory to reality.

At least in small doses.

I’ve previously written about Liberland, a tiny would-be independent entity on some unclaimed land between Serbia and Croatia.

There’s also the idea of libertarian-themed floating communities that would be independent of any government.

The U.K.-based Daily Mail wrote about the idea back in 2017.

Stunning concept images for the world’s first first floating nation have been released as part of a project bankrolled by PayPal founder Peter Thiel. The plans will see the seabound city-state, complete with a handful of hotels, homes, offices, restaurants and more, built in the Pacific Ocean off the island of Tahiti… The scheme is the creation of the nonprofit Seasteading Institute, which hopes to ‘liberate humanity from politicians’. The radical plans could see the creation of an independent nation that will float in international waters and operate within its own laws. …the fantasy looks to be coming closer to reality with companies, academics and architects from the Seasteading Institute working on a prototype… Joe Quirk, president of the Seasteading Institute, said he wants to see ‘thousands’ of rogue floating cities by 2050, each of them ‘offering different ways of governance’. …’We can create a huge diversity of governments for a huge diversity of people.’ …The Institute claims it will ‘give people the freedom to choose the government they want instead of being stuck with the government they get’. If inhabitants disagree with the city’s government, they could paddle their colony to another city, forcing governments to work to attract citizens.

It’s worth noting, though, that a seasteading community was supposed to start this year, and that deadline apparently won’t be met.

Doesn’t mean it can’t happen, or that it won’t happen, but we’re still waiting to see if it actually happens and how well it will work.

There’s also the idea of anarcho-capitalism in small pieces.

Such as private police, as happened in Sharpstown, Texas.

One thing that holds many Libertarians back from converting to free-market anarchism is the idea of the police force. Many libertarians believe that one of the few functions that the government should have is the provision of police within society. …One town, though, did privatize the police… Sharpstown, Texas, is not an actual town, but rather a community. They purchase services from S.E.A.L. Security Services, LLC, a completely private firm that provides policing services. The results have been quite astounding. Their director of operations, James Alexander, gave a rundown of the success of the firm… In the 20 months leading up to February of 2015, S.E.A.L. successfully brought crime down 61%. Alexander’s numbers have been disputed, though, by Jim Bingham, president of the Sharpstown civic association. He claims that Alexander’s numbers are unbacked, and says instead that crime (particularly burglaries) went down about 32% over two years. …The people who work for the firm are private individuals being privately funded. They are subject to the same rules and regulation that go for regular people, meaning that they cannot murder or steal. Public police, on the other hand, are able to cite “stress” as an excuse for murdering unarmed black men and steal astronomical amounts of money from citizens in DUI checkpoints and through civil asset forfeiture.

This is a very appealing idea, especially given the serious problems we’re seeing with government-operated police departments.

Recognizing that taxation is coercive doesn’t make someone an anarcho-capitalist.

My two cents is that taxation is coercive, but I’m nonetheless a traditional limited-government libertarian. I’d like to believe that that the anarcho-capitalists are correct, but I haven’t been convinced.

That being said, I believe in a big tent. As far as I’m concerned, let’s all agree to get rid of the 90 percent of government that we all recognize is counterproductive. Once we get to that stage, then we can squabble over how much of the rest to eliminate.

P.S. Though the said reality is that we’ll almost surely instead spend the rest of our lives fighting to keep government from grabbing ever-more control over the economy and its output.

P.P.S. If you want to see where you rank, there are several online tests and quizzes.

For what it’s worth, the Political Sextant Quiz says I am close to being an anarcho-capitalist, though my closest match is minarchism.

And if you’re willing to answer 64 questions, I very much recommend Bryan Caplan’s Libertarian Purity Test. The good news is that I got a 94. The bad news is that the top score (which definitely would qualify someone as an anarcho-capitalist) is 160.

P.P.P.S. If you enjoyed the Hitler parody above (and it’s always a good idea to mock genocidal socialists), here are other examples.