Anarcho-Capitalism

1. Anarcho-Capitalism

2. The main objection to anarchy consists in the claim that in the absence of government (i.e., in a “state of nature”), the quality of life will be intolerably bad.

3. Famously, for instance, the philosopher Thomas Hobbes claimed that life in the state of nature would be “solitary, poor, nasty, brutish, and short.” The state of nature would, he claimed, quickly degenerate into a “war of all against all.” Thomas Hobbes (1588-1679)

4. John Locke has a more optimistic view of the state of nature than does Hobbes. For instance, Locke believes that an objective moral law, knowable to human reason, governs the state of nature. The moral law defines people’s moral rights. Moreover, according to Locke, most people are reasonable and thus are motivated to follow this moral law and respect each others’ rights in the state of nature. John Locke (1632-1704)

5. However, not all people are motivated to follow the moral law, and thus the moral law must be enforced. In the absence of a state, though, all enforcement is vigilante enforcement.

6. Locke argues that vigilante enforcement is prone to some serious “inconveniences,” including • Overpunishment: vigilante punishers are often too passionate and thus punish too harshly. • Bias: people tend to be biased in their own favor. Thus each party in a dispute can all too easily think that he himself is innocent and the other is blameworthy; each seeks to punish the other accordingly.

7. These problems arise because there is no impartial adjudicatorof disputes. Thus, says Locke, we should create a state to serve the role of final and impartial adjudicator (much like we have umpires, say, in a game of softball or baseball). The dispute between Lockeans and anarcho-capitalists is over whether state-supplied justice is really superior to privately-supplied justice.

8. Anarcho-capitalists like David Friedman believe in a “voluntary society.” They claim that in their system, only aggressors (i.e. rights-violators) are subject to coercion. Anarcho-capitalists reject all taxation as a form of illegitimate coercion against peaceful people.

9. They reject the idea of a single legal system (legislature, police, courts). In their eyes, a single legal system is a coercive, and therefore illegitimate, monopoly.

10. Imagine an entrepreneur, say, who wishes to form a private company offering judicial services or police services. “My dream is to be founder and CEO of a company I will call Prudential Judicial Services, Inc.,” says our entrepreneur. “I will run a tight ship and deliver judgments efficiently and effectively.”

11. In our society, this would-be entrepreneur will be forcibly prevented by the state from starting such a company. The state does not allow competitors in its domain of police operations and legal operations.

12. Anarcho-capitalists: This entrepreneur is not a rights-violator. And yet he is being aggressed against (stopped in his actions by coercive interference from the state). That is wrongful aggression, say anarcho-capitalists. What is more, consumers are wrongly and forcibly denied the option of getting their judicial services from this entrepreneur.

13. Instead, anarcho-capitalists envision a world of competing firms. Just as there are now competing firms selling cars, groceries, electronics, etc., in an ancap society there will be competing firms selling police services and judicial services too. Entrepreneurs will be free to start such firms, and consumers will have a free choice between such firms.

14. A criticism of anarcho-capitalist justice: • A private security / judicial firm is hired by an person to represent his or her interests. So the firms are NOT impartial. (“The customer is always right.”) • A firm’s interest does not ultimately lie in doing justice, but rather lies in satisfying its customers and thereby generating profits for its owners and shareholders. • Customers are satisfied to the extent that they get what they want – and what they want will often not be identical with a truly just outcome. • Thus, firms will often have financial incentives to depart from genuinely just outcomes.

15. In other words, private security / justice firms will not offer the sort of impartial adjudication needed to avoid the harms of individual vigilante justice identified by Locke. For example, suppose Jack and Jill get in a dispute. A tree from Jack’s yard was blown down, smashing Jill’s fence. Jill says Jack has to pay for the fence. Jack says it was an act of nature, so he is not to blame and thus, he owes Jill nothing.

16. Suppose that Jack subscribes to Acme Justice Inc.; Jill subscribes to Equitas Services. Acme will have financial incentive to get the result the Jack wants; Equitas will have financial incentive to get the result that Jill wants. Each firm wants a satisfied customer, after all. Thus, the problems of partiality that characterize vigilante justice will reappear at the level of the firms. Thus, the existence of private security / justice firms does not eliminate these problems, and may even intensify them. Violence between firms is a possibility.

17. Possible reply by an anarcho-capitalist: In such an impasse, firms will be reluctant to use violence against other firms. Violence is costly and will cut into profits. Instead, firms will find it more cost-effective to submit to an outside arbitration agency that exists to settle disputes between firms. So a non-violent, impartial judgment will occur after all.

18. Possible counter-replies against the anarcho-capitalist: Main idea = this takes a wildly optimistic view of things: For starters, a business-minded arbitration agency will be attentive to the relative financial clout of the judicial agencies that are using its services. For instance, suppose that judicial agency Acme represents a larger share than Equitas does of the annual revenue of Handshake, Inc. (an arbitration agency). Then there will significant financial incentive for Handshake, Inc. to side with Acme. Thus, the partiality problem arises again.

19. A possible anarcho-capitalist rebuttal: Giving in to these financial incentives will hurt Handshake, Inc.’s reputation for integrity, which will be bad for an arbitration agency’s business. Critic’s reply: Handshake will hire arbiters who are good at crafting plausible-sounding rationales to justify the most profitable course of action, and thereby give the appearance of integrity. Handshake will also hire good PR agents to burnish its reputation with ad campaigns, etc.

20. Another counter-reply against the anarcho-capitalist’s claim that “violence is bad for business”: 2. A wealthy individual may be willing to pay a premium for security / justice firms that serve his interests “by any means necessary.” (Imagine a firm’s advertising pitch: “Sign on with us, and we will NEVER compromise your interests, EVER!”) If there are a significant number of such wealthy individuals, then violence may well be profitable for a firm, with warlordism and/or organized crime the result.

21. Also, violence might pay if one security firm can use violence to destroy a rival firm. • Even if warlordism does not arise, what is to stop security cartels from forming, and charging exorbitant prices for basic protection?

22. The basic problem = anarcho-capitalism would be a case of rule by private corporations, who are in the final analysis accountable only to their owners and their shareholders. They are NOT accountable to the public at large.

23. Another fundamental objection: Many philosophers (e.g. John Locke) argue that the purpose of law is to provide authoritative settlement of disputes. It is unclear how multiple and competing private court companies could provide the finality that is characteristic of authoritative settlement.Thus, if Locke is right, “law” made by competing private judicial companies would be ineffective law.

24. Consider again Locke’s understanding of law as an impartial umpire to settle citizen’s disputes. • Analogy: Imagine that there were competing umpires in baseball, so that the Yankees and Red Sox bring their own umpires to a game between them. • That would simply push disputes up a level rather than resolving them.

25. Yet another fundamental criticism: • Anarcho-capitalism would be horrible for the poor. • The poor would be unable to afford police services, legal services, health services, etc. • The poor would have less mobility: in an ancap society, there is no public transportation, and there are no public roads (all roads charge tolls or subscription fees for their use). • Children of poor parents would go uneducated (there are no public schools). • In short, many will be subject to an unfair inequality of opportunity

26. An anarcho-capitalist reply: Private charity will help the poor. The wealthy will have more disposable income to donate, since there are no taxes. • Counter-replies: • Requiring the poor to depend on private charity for their security makes them… insecure.

27. Counter-replies cont’d: • Also, private charity will not likely be given in sufficient amounts. It is more realistic to suppose that the well-off will self-segregate into gated communities, leaving large slums in which violence is rampant.

28. Since the residents in the slums are poor and since crime rates are high, no police firm can make a profit offering affordable security services. So there will be no police in these areas.Leading very separate lives from the non-rich, the rich will likely have little sympathy for the plight of those in poor areas. Why think, then, that the rich will shower the poor with charitable donations, so that the poor can afford security, health care, education, etc.?

29. Another criticism of anarcho-capitalism: • Its lack of gun control of any kind will lead to a “Wild West” culture in which people walk around with automatic weapons. Paranoia and “me and my kind” thinking will replace fellow-feeling and community. And remember, in anarchy you will be free to buy not only guns, but also grenade launchers, explosives, etc.!

30. A final criticism: • Would an ancap society really be a freer society than our current one? • The poor would have less security and less opportunity in ancap than they now have. • Even the middle class would lack important protections. No workplace safety laws, no overtime laws, complete freedom for bosses to fire at will. Arguably, this creates the potential for economic forms of coercion. (Boss: “Mow my lawn this weekend or you lose your job!”)

31. Another way to put this same final criticism = Anarcho-capitalists focus exclusively on the dangers of government power (government agents having power over individuals). But, they are blind to the existence of economic power (economic agents having power over individuals). Both forms of power can constrain freedom, though. The goal of critics of ancap = use democracy to make government power accountable to the people, and then use reasonable laws to prevent abuses of economic power. If successful, there is more freedom than in ancap.

32. A summary of major criticisms of anarcho-capitalism: • Privately supplied, competing judicial services will lack impartiality and finality, and hence be deficient. • Some private security agencies will likely fight each other. Those that don’t fight may collude to form cartels. • Ancap is blind to forms of economic-power-over-others which are inimical to freedom. • Many non-rich people will lead insecure lives and lack a fair level of opportunity. • A critical mass of highly weaponized citizens will create mistrust / paranoia, at odds with community.