I just read a rather painful article in Forbes titled “Sorry Libertarian Anarchists, Capitalism Requires Government“. It was written by a contributor named Harry Binswanger, who ironically enough says he defends laissez-faire capitalism, except for, you know, those things he wants the government to do.
To make matters worse, reading that article lead me to remember a friend linking me to a leftist piece at Center for a Stateless Society titled “Anarcho-”Capitalism” Is Impossible“, where a libtard anarchist named Anna Morganstern said basically the same thing, but favoring some left anarchist economic fantasy world of universally equal outcomes to Harry’s imaginary benevolent rulers. Actually, I shouldn’t call her a libtard. For a leftist, she actually managed to make a coherent, if easily disproven argument, which I’ll need to address in a different article, because I wound up with quite a bit to say about the Forbes piece.
Imagine that though, Forbes and C4SS teaming up against the AnCaps… Now I have a headache, and I cannot sleep.
To Harry’s credit, he made Swiss cheese out of some of the same incoherent “voluntaryist” arguments that I’ve spent a lot of time thwarting. Harry recognizes, as I do, that force is a necessary function of human society. Essentially, all these conversations are about, is when, and how, to use physical violence in plotting the course for human society. Most people who would call themselves anarcho-capitalists are very uncomfortable with this reality, and so they don’t spend very much time thinking about it. They far prefer to spend their time smoking marijuana, and thinking of ways to avoid violence, and we should all thank them for doing that, since violence is almost universally intolerable in polite society. Because of this however, they either deny that force will be necessary, or just have no coherent ideas on how it will be applied in a free society.
I also suspect that Harry, like me, has been spending a great deal of time speaking to people who aren’t anarcho-capitalists at all. A lot of these people are actually left-market-anarchists like Anna. Not capitalists, but rather leftists who are just desperately trying to insert some semblance of coherent economic reasoning into their liberal la la land fantasies about universal equality of outcomes. When somebody attempts to apply rational economics to universal equality, we need not act surprised when they fail, and minarchists like Harry should not declare victory for their justifications of initiatory violence, just because they bested an intellectually weak opponent.
Like most limited government fetishists, Harry has a romantic fairy tale in his mind about the once great American republic. He speaks a lot about a “proper” “limited” government that once existed but has only recently been betrayed by some unnamed force.
The genius of the American system is that it limited government, reining it in by a Constitution, with checks and balances and the provision that no law can be passed unless it is “necessary and proper” to the government’s sole purpose: to protect individual rights–to protect them against their violation by physical force.
Facts be damned, this guy thinks the constitution used to mean something, and even more hysterically, he seems to think it might mean the same thing some time in the future if he just complains about it enough.. I wonder if he’s ever read the Constitution of North Korea, or the Soviet Union, or Mao’s China?
I’d rather make this an economic discussion than a history lesson, as to not bore my regular readers with repetitive historical oversights that we’ve all discussed ad nauseam with the PaulBots, but to make a proper response to any minarchist argument, this is sort of necessary.
Any honest study of history will show that the fable of this free market society with a limited government was all a scam brought on by government schools to convince you that your slave master in fact makes you free. Is it really necessary to remind anyone that the United States began with chattel slavery? The government declared that one class of people owned another class of people, and should the slave class escape from the owning class, the government would, at taxpayer expense, return the chattel slave to the master, by force. Sure, your business could choose to not own slaves, but not only would you be competing against a competitor with a slave army for his workforce, but you would be subsidizing his slave ownership with your taxes (which makes you a slave too, btw). Nobody in their right mind can talk to me about free markets where there is State sanctioned ownership of human beings. If this is your definition of capitalism, sir, then that explains why so many people hate it. This kind of reasoning does more harm to free market economics than donating to the Democratic party.
Before that ended in a civil war, George Washington signed the law authorizing the First Bank of the United States. A private central bank, that, while it did issue money theoretically backed by precious metals, did print paper notes exceeding the amount of precious metals they were backed by. It may have kept inflation to a minimum right up until the first American Civil War, but a central bank with a de facto fiat currency, manipulating markets on the whims of men like Alexander Hamilton, is hardly a free market. To say otherwise is to hand the argument over to Keynes on a silver (or would he prefer paper?) platter.
Before we move on from George Washington, can we officially say the spirit of the first American Revolution was dead upon the suppression of the Whiskey Rebellion?
If slavery and central banking don’t snap you out of this cognitive dissonance, Harry, then perhaps the Alien & Sedition acts, signed by the second president of the United States, John Adams, will. John Adams claimed the power to imprison and deport immigrants who were ”dangerous to the peace and safety of the United States”, and restricted speech that was critical of the federal government, in the name of “National Security”. Sound familiar? Under these acts, numerous journalists were arrested, fined, and imprisoned for criticizing the federal government. Perhaps the most notable of which, was Benjamin Franklin Bache, grandson to the Benjamin Franklin on your hundred dollar bills.
We’re not even 12 years into the nearly 240 year history of this republic yet, and things only get worse from there. So if your fabled “land of the free” begins with slavery, central banking, debt, insurrection, and jailing reporters, only to lead up to a bloody civil war and full on fiat currency, before moving on to the income tax and modern Federal Reserve system, I’m sorry, but you don’t even know what freedom means.
With Puff the Magic Government slain, let us move on to the argument at hand.
Can capitalism exist without a government?
I’d like to think we’re all speaking the same language here, but the more I talk to people, the more I realize that we are not. The symbols we use to form words on paper are the same, the words they form are the same, and they represent the same sounds. This allows us to communicate with each other well enough to order hamburgers at McDonald’s, but when we start talking about economics and politics, people have a really nasty tendency to redefine words to benefit their argument. Two words need clarification of my definition before we move forward, so the minarchists and liberals can properly respond with their baseless criticisms of the painfully obvious realities I’m about to point out.
For the purpose of this discussion, capitalism is defined as private property rights, trade, and contracts. Anybody can do whatever they want with their property. They can stockpile it, give it away, destroy it, whatever they want. They can choose to protect it with force, or they can leave it unguarded, where someone else has no right to, but probably will, take it against the will of the owner.
For the purpose of this discussion, government is defined as the State. An excuse to do harm, a legal fiction entity with the supposed moral and legal right to initiate force against others for the purpose of organizing human society, as the rulers of a given arbitrary geopolitical boundary see fit.
Continuing with Harry, he begins his article as follows…
As it says next to my picture, I defend laissez-faire capitalism. “Anti-government” is the term Leftists use to smear this position. And, amazingly, some calling themselves “libertarians” are indeed anti-government across the board; they argue for what they call “anarcho-capitalism.”
“Free competition works so well for everything else,” these anarchists say, “why not for governmental services, too?”
But that argument comes from an anti-capitalist premise. Like the Marxists, who prate about “exploitation” and “wage slavery,” the anarchists are ignoring the crucial, fundamental, life-and-death difference between trade and force.
Marxists claim that capitalistic acts use force. “Anarcho-capitalists” claim that acts of force can be capitalistic. Though they come at it from different directions, both ignore or evade the fact that producing and exchanging values is the opposite of physical force.
Production is the creation of value, and trade is the voluntary exchange of value for value, to mutual benefit. Force is destruction, or the threat of it. It may be the destruction of a value, as when a hoodlum throws a rock through a store window. Or it may be the destruction of destruction, as when a policeman pulls a gun on that hoodlum and hauls him off to jail. But in either case, it is the opposite of wealth-creation and voluntary trade.
Here’s a fun irony… Harry says anarcho-capitalists are approaching economics from a Marxist perspective, and while I start off praising him for understanding that force is necessary, his mistake is that he’s actually coming at the use of force issue from a pacifist perspective.
Harry here makes the argument that force has no value, and his entire argument hinges on this point. For him, force provides him with nothing. He is a writer, he pays taxes so police can protect him, and while he’s very happy to have that protection, he doesn’t see any economic benefit in it. Instead, he equates it to some unnatural drain on the economy.
Yes, the hoodlum can throw a rock through your window. No, broken windows do not improve economies. Yes, the police can gun the hoodlum down. No, dead hoodlums do not improve economies. For sure, we would all be better off if people didn’t throw rocks and no protection agency of any sort were necessary, and as soon as you find a way to prevent any of this from happening, I’m really interested to hear about it.
In the meantime, hoodlums throw rocks, rapists rape, murderers kill, thieves steal, leftists vote, and police do exactly what to prevent any of it?
If a rock came flying through your window while you were reading this article, the average citizen would likely call 911. Within a few hours, police would arrive and take a report, and the hoodlum would go back to his friends and brag about how he got away with throwing a rock at a statist.
Police are not the reason you still have windows. Most people have no desire to throw rocks, rape, kill, or steal. It’s just plain easier to work for a living. With wages, tax rates, and regulations being what they are, that kinda says a lot about how much people prefer work to crime, that would be all the more true in a free society, and so it’s not because they fear the almighty police state putting them in prison. As a guy who claims to stand up for free market capitalism, Harry, you of all people should understand how reputation and incentives work. If a guy is in the business of sticking up liquor stores, he’s not going to last long in a free society. For one, a free society is going to be an armed society, and he’s probably going to get himself shot pretty quickly, cops or no cops, public or private. He’s also not going to be making many friends or developing many lucrative business relationships. His loneliness, misery, poverty, and early violent death serve as a warning to others, that honest trade is the way to go. The only things preventing this are gun control, fear of prosecution for defensive/retaliatory force, and reverse Jim Crow laws that require businesses to serve and hire people they don’t want to do business with. So in short, far from preventing crime, the State assures us that crime pays.
But of course, those people will exist in any society on some limited basis, State or no State. The more property you have to protect, the greater the incentives to steal it, the greater the need for protection. Since we believe in private property rights, we have this tendency to say that nobody has a “right” to take our property from us without our consent. It is however sort of important for capitalists to do away with this notion that this is somehow sacred and inviolable, because it just plain isn’t. Just like owning a home requires you to do some maintenance, to keep the heat running in the winter to prevent pipes from freezing, fix a leaking roof, if for no other reason, just to avoid loss of value to other natural circumstances, so must one protect one’s property from theft and vandalism to avoid losing value to aggressors.
No, a broken window doesn’t help an economy, but that doesn’t mean the glass man isn’t providing you with a valuable service when he comes to replace your windows. No, frozen pipes do not help the economy, but we’re more than happy to pay to keep the gas on in a vacant house in a winter time to avoid paying someone to replace all our pipes and floorboards. No, leaky roofs do not help the economy, but we’re more than happy to pay the roofer to fix the roof before the leak ruins the carpet. Likewise, rape, murder, and theft do not help an economy, but a protection agency, public or private, that uses force to stop aggressors provides a valuable service, and near any sane person would be happy to pay for that service, if you need proof of that, look no further than the fact that people aren’t killing tax collectors on a daily basis.
Take a look around you at all the violence in the world, then you try to tell me there is no market for violence? You might not like it, I certainly don’t, but that’s nothing more than our own market preference. That and a dollar will get you a cup of coffee in this world. It doesn’t matter if you state your market preference on Forbes or on BlogTalkRadio, the market is the market, and your choices are limited to protecting yourself, hiring someone to protect you, or being victimized by private and public sector aggressors alike.
Use of force is a valuable trade that has been monopolized by the State, and yes, we see that monopoly as a bad thing.
The wielding of force is not a business function. In fact, force is outside the realm of economics. Economics concerns production and trade, not destruction and seizure.
You have no right to call yourself an economist, and say that anything is outside the realm of economics. You have no right to be that wrong. You have property, your property is part of the economy, you want it protected, and whether the government steals your property to protect your property in some sort of Orwellian paradox, or you voluntarily pay someone to protect it, or it is unprotected and some private sector aggressor steals it, there is an exchange of value happening here. That is economics, and the fact that I have to be the one to inform you of this should shame not only you, but everyone you’ve ever learned from.
Ask yourself what it means to have a “competition” in governmental services. It’s a “competition” in wielding force, a “competition” in subjugating others, a “competition” in making people obey commands. That’s not “competition,” it’s violent conflict. On a large scale, it’s war.
The shootout at the O.K. Corral was not a case of “competition.” Actual competition is a peaceful rivalry to gain dollars–dollars paid voluntarily in uncoerced trade.
Harry is uncomfortable with competing institutions of force. That’s understandable of course, there are competing institutions of force right now. We call them nations, and when they compete with each other, thousands of people are brutally murdered in a religious ritual they call “war”.
If Harry is so uncomfortable with the consequences of competing institutions of force, then doing away with nation-states should be step one in mitigating the damage those competitions create. Since he claims to understand “free market” economics, I’d hope Harry would just take some time to really try and apply his understanding of economics to private security firms, without the rose colored glasses a lifetime of state indoctrination has welded to his face.
Let us pretend for a moment that we both live on Gold Street in Ancapistan. (Don’t try to Google map this). We both own our homes, we both have families, and we both have jobs that earn fairly standard incomes. When I go to work, I want my family and property protected, and so I hire Security Agency X because I thought their TV commercial was really cool. You also want your family and property protected when you go to work, so you hire Security Agency Z because the receptionist was hot. These agencies are Coke & Pepsi, no discernible difference between them save for our own market preference, and we are not their only customers. They have the same market based interest to profit as much as possible, competing for customers on price and quality of service like any other company.
You and I have a dispute over widgets. I call my security agency, you call yours, and the competing agencies show up to serve their clients. Do you presume they will immediately open fire on us and one another? I imagine such a business plan would be rather difficult to maintain. Few people would want that job, the few who did would be insane, difficult to control, and expensive. Nobody would insure such an institution or its employees.
Again, he makes the mistake of approaching use of force from a pacifist perspective. As soon as there is the potential for a violent confrontation, he simply panics. He does not think it through. He wants the government to solve his problem, because he cannot imagine dealing with this responsibility on his own.
The goal of the protection agencies is not to kill the other protection agency, the goal is to satisfy the customer in order to profit. If I think you stole my widgets, it makes more sense for my protection agency to reimburse me for the widgets than it does to go to war with your protection agency. It also makes more sense for them to install security cameras and burglar alarms in my home to help prevent the theft in the first place, and if the theft occurs anyway, to have evidence to show your protection agency of your wrongdoing when they arrive.
What insurance company would insure a thief? If you run around stealing widgets, and your security agency has to go to war every time you do, what market incentive is there for them to continue doing so? You better be a damn successful widget thief if you think you’re going to hire an army of men to do battle every time you get caught!
There is your competition between agencies prepared to use force, sir. The competition is to avoid violence until it becomes absolutely necessary, because violence is expensive and hurts the bottom line. This is done through reputation, negotiation, payment, public opinion, and all the other ways people conduct business today, the only thing added to the equation is force of arms if all else fails.
Unlike the government, the market based entity has an incentive not to do violence, because violence is expensive, and it has other tools at its disposal. The State has only one tool, that tool is violence, and since it does not rely upon consent to obtain its revenue, there is little to no incentive to curb costs. Whether or not it has documents and procedures in place is irrelevant. The only reason we care what’s on those documents, show up in their court rooms or pay their taxes is because they threaten us with violence if we do not. This is a rather serious problem even inside of your fabled republic, but when it becomes the most powerful government in the history of mankind and runs around the planet murdering innocent people and caging gun owners and dissidents, the harsh reality of this becomes even more inescapable. Because you want a guarantee that the good guys win, you actually end up making absolutely certain that tyranny and oppression win.
If you hire a company to protect your widget theft racket, and I hire a company to protect my widgets, yes, my protection agency had better be more effective at using force than yours, because you and your men have to die. The good news is, there’s a lot more market demand for protection than there is for aggression, and so the good guys tend to win out in the market for violence, because they will have more customers, and therefore, more access to men and munitions.
Compare this to the State, who’s only tool is force. You cannot fire the State. The State has no competitor within the arbitrary geopolitical boundary it claims jurisdiction over. It has no interest in preventing crime, it does not reimburse you for your losses, it gets paid whether you are happy or not. It gives us all two options, obey, or die.
This is what happens when you try to remove violence from the economy. The violence only gets worse, because economic illiteracy never solves anything.
Economic competition presupposes a free market. A free market cannot exist until after force has been barred. That means objective law, backed up by a government. To say it can be backed up by “competing” force-wielders is circular. There is no competition until there is a free market, and some agency has to protect its condition as a free market by the use of retaliatory force.
If a free market cannot exist until after force has been barred, then how do you suppose to hand the legal authority to initiate force against people to a totally unaccountable monopoly that has done nothing to earn that position in the market? Force is barred by default. Most people tend to understand that, which is why most of us tend to trade and date rather than steal and rape. For those rare occasions that some unstable person decides to break from that widely accepted societal norm any of us are justified in using force to put a stop to it, or hire someone to act as our agent and do it for us.
The anarchist idea of putting law on “the market” cannot be applied even to a baseball game. It would mean that the rules of the game will be defined by whoever wins it.
Actually, the rules of the game would be, and are presently, decided upon by the players before they get to the field. They choose an arbitrator (referee) and they agree to abide by the referee’s rulings. The fans do not hold a vote after each inning to decide which referee makes the best false promises to benefit their team. The government doesn’t step in and redistribute points. The players are not threatened at gun point to follow the rules. It’s a completely voluntary arrangement, and anybody who doesn’t like it is free to walk off the field at any time. It would be a far greater stretch to insert democracy into this equation than to compare it to anarchy.
In terms of current events, anarchism means Lebanon, Somalia, and the Taliban. Nothing could discredit capitalism more than to link “freedom” with such horrors.
Right, because the Taliban was real big on freedom, and slavery and civil war in early America are far better examples of capitalism, thanks Harry. Somalia? Really? Somalia? This conversation is over…