Nightcap (again)

(Ooops, lol. I hope all of NOL‘s American readers had a good Memorial Day, and that everybody else had a good Monday. The Glasner piece is an excellent discussion of the Austrian School of Economics.)

  1. An Austrian (School) tragedy David Glasner, Uneasy Money

Nightcap

  1. An Austrian (School) tragedy David Glasner, Uneasy Money

The Private Production of Defense

Lucas’ post reminded me of a piece that I wrote for his website ThinkIR, in 2013. Most of it I re-used in my book Degrees of Freedom (2015). Of course it is also a piece on its own, that readers of NoL may find of interest. Thanks Lucas!

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It is fun to think about the almost unthinkable. Therefore this contribution is about the idea that no state is needed to provide military security against foreign attack. In modern times the idea goes back to at least the French-Belgian economist Gustave de Molinari and his 1849 pamphlet The Production of Security. The most prominent current defender of this idea is the German economist Hans-Herman Hoppe, a leading anarcho-capitalist thinker, in his essay The Private Production of Defense (also see The Myth of National Defense, which was edited by Hoppe).

Hoppe rightly notices (p.1) that the legitimacy of the modern state is strongly related to the belief in collective security. Following Rothbard in The Ethics of Liberty, he argues that states will always expand, due to the governmental monopoly to tax its inhabitants. This also applies to governments that only have the limited task of protection against aggression and administrating and justice. The only proper solution is therefore to abolish the state altogether, in order to ensure true liberty and individual justice. Consequently, this also means that the provision of security needs to be privatized, as Hoppe does not expect the world to turn into a peaceful utopia (pp. 1- 5).

So how would this work? Basically, to regard the production of security as an insurance, where the expenditures for defense are to be paid by premiums paid by individuals (pp.5-8). The insured people can choose from competing insurance firms, just like in other parts of the insurance market. This is not as improbable at it may seem at first sight. Importantly, insurance companies are already used to deal with risk and other real world dangers. There are already many private security companies in existence, also at the battlefield. The cost of defense in relation to other parts of the insurance market appears large, but do not discount the idea beforehand. For example: Dutch defense expenditure in 2013 is around 7 billion Euro, less than 1% of GDP, while annual turnover of the two largest insurers is around 20 billion. Of course Hoppe would point out that the 7 billion in current defense expenditures needs to be returned to the taxpayers, hence widening the premium base. Presumably, this would work the same in other countries with smaller economies and/or smaller financial sectors (but see the remarks below).

A world without states, but with private security insurance is less war prone, Hoppe argues (p.11-12). Insurers will have an interest in keeping costs down, and will therefore only make unprovoked attacks insurable. People who provoke, or have known to provoke violence in the past, will be excluded from the insurance. After a while, the number of uninsured people will be small. They will face big defense insurance companies if they violate somebody’s property, making this unlikely to happen often, in contrast to interstate war. Yet in my view here Hoppe relies too much on his stated view on human nature: man as rational animal.

A related main defect of the essay is its focus on the role of insurers and their (economic) incentives. This is fine, but the argument quickly loses any of the convincing power it has when Hoppe turns to an analysis of international war. Or more precise, a violent conflict between a free territory, defended by one or more insurance companies, and a state, financed by compulsory taxation. He simply asserts (p. 14) that the state would be in a disadvantage because it is less efficient and that its leaders would lose their legitimacy, because they necessarily fail to convince the population of the justification of an attack on the inherently peaceful free territory.

Yet if an attack would still happen, Hoppe continues, the state-led army of specialists would not only face the defense force of the insurance company (or several insurers and re-insurers cooperating), but also an armed population (p.15). Without much analysis he simply asserts the companies will always be more efficient and also capable to counter all attacks by any state, perform counter-operations in the state territory and be able to kill its leaders, while making sure to minimize any collateral damage. All because they have to justify their insurance fees.

That is as far as Hoppe goes in his argument. He offers no further analysis or other scenario’s, no additional arguments, does not provide any international political analysis, none whatsoever. Only the fact that the insurance companies are private suffices for Hoppe as they must be more efficient and thus able to overcome all possible attack. That is too simplistic, as just three examples illuminate.

Hoppe overlooks some important geopolitical aspects. Take size of territory and population for instance. How likely is it really that a small free territory, say the size of Luxembourg, or The Netherlands for that matter, would be able to raise enough insurance premiums to enable a good defense structure to counter attacks by much larger states? There is a difference between collecting enough money to match current defense expenditures and ensuring defense against all possible attacks, especially given the anarcho-capitalist dislike of international alliances such as NATO.

Apparently Hoppe thinks all necessary technology is either invented by the research and development people of the insurance company, or freely available at the market. This is improbable as far as the state-side of the argument concerns, given today’s relative secrecy in military procurement. Also, the cooperation between insurance companies may fail in this respect. If one company has a superior weapon system, it will be a ground for competition with the other insurer(s). The superiority of one company may quickly make it a monopolist. It may become a threat to its insured, just like states may be threats to their taxpayers. Once the armed forces of the private insurer are in full operation it only takes a powerful CEO with his or her own agenda to turn things sour. Just the fact of private financing does not make much difference.

Also, does economic efficiency always trump state inefficiency? The history of warfare is full of examples where the supposedly superior army loses unexpectedly. So if the state deals a decisive blow it effectively robs the remains of the insurance company, and it’s successors, of its premium paying clients.

To conclude, for liberty loving people the prospect of stateless private security may be tantalizing. However, the quality of the argument as presented by Hoppe thus far is poor and unconvincing. His theoretical arguments largely stem from economics and overlook other relevant facts and arguments, including those from IR. Hoppe’s private production of defense remains a fairy tale.


Links:
Molinari:
http://mises.org/document/2716/The-Production-of-Security

Hoppe:
http://mises.org/document/1221/The-Private-Production-of-Defense

http://mises.org/document/1092/Myth-of-National-Defense-The-Essays-on-the-Theory-and-History-of-Security-Production

Rothbard:
http://mises.org/document/1179/The-Ethics-of-Liberty

Entangling alliances, Donald Trump, and a new libertarian alternative

Some say that Donald Trump’s transactionalism in the realm of geopolitics has gotten out of hand. Tridivesh has actually been saying this for awhile now. Jacques is not pleased with the president’s decision to withdraw American troops from Syria. Of the other Notewriters, only Andre has spoken up for Trump’s withdrawal from Syria.

There are libertarians and leftists who have applauded Trump’s move, but for the most part people are dissatisfied with the way the president of the United States conducts foreign policy. There’s no logic. There’s no strategy. And the incentives don’t quite line up, either: is Trump out for the republic or himself?

This is unfair. Trump’s transactionalism comes with more press, but Obama and the guy before him were transactionalist presidents, too. Just think about Syria to begin with. Getting involved in the butchery there had no logic to it and actually went against the strategy of Obama’s “Pivot to Asia.” Still, Obama mired the republic in another brutal regional scuffle. GWB did the same thing in Iraq, too. Osama bin Laden was hiding out in Afghanistan, so Bush invaded Iraq, a country that had nothing to do with 9/11. Makes sense, right?

Maybe we’re looking at this all wrong. Maybe we should be looking at the incentives and trade-offs available to the executive branch of the American government instead of single individuals.

My contribution to reassessing American foreign policy is to look at the role that formal alliances play in chaining down the executive branch in the American system. Libertarians loathe both alliances and the executive branch, but what if one is useful for off-setting the other? Which one would you rather have? (Trade-offs are more realistic than utopias, my fellow libertarians.)

There are two general types of alliances in the world: formal and informal. Alliances have been with us since the dawn of time, too. Think of the alliances our Stone Age ancestors made, one individual at a time. Elected politicians make alliances and call them political parties. Dictators make alliances and call them bargains. You get the picture. The United States has traditionally made use of informal alliances, so Trump’s abandonment of the Kurds in Syria is really a continuation of American foreign policy and not an aberration as some hawks claim.

In fact, prior to World War II, the United States had signed just one official alliance with another polity: the Treaty of Alliance with France that lasted from 1778-80. So from the start of the Revolutionary War (which was really a secession from the British Empire rather than an actual revolution) in 1776 to America’s entrance into World War II in late 1941, the United States had joined only one alliance, and it was a short-lived alliance that would make or break the existence of the republic. (During World War I, the United States was an “affiliated partner” rather than an official ally.)

This doesn’t mean that the United States was isolationist, or non-interventionist, during this time frame. In fact, it highlights well the fact that the United States has a long history of entering into alliances of convenience, and a short history of building and then leading stable coalitions of military partners around the world. Alliances have shaped the destiny of the republic since its founding. And, more importantly, these alliances of convenience have their intellectual roots in George Washington’s foreign policy. Washington’s foreign policy even has its own name: the Washington Doctrine of Unstable Alliances. According to Washington and other elites of the founding era, the United States should freely enter into, and exit, alliances as necessary (Jefferson was a big fan of this Doctrine, too). This stands in stark contrast to the idea that the United States only soiled its virginal unilateralism once, when it was in dire peril and needed a helping hand from France to fend off an evil empire.

Washingtonian alliances throughout American history

Aside from fighting alongside the Oneida and Tuscarora during its secession from the British Empire, the United States forged alliances with Sweden, in 1801 to fight the Barbary states, and with the Choctaw, Cherokee, and some of the Creek during the ill-fated War of 1812. In fact, one of the reasons the United States got pummeled in the War of 1812 was the lack of Native allies relative to the British, who had secured alliances with at least 10 Native American polities.

The American push westward saw a plethora of shifting alliances with Native peoples, all of which tilted in eventual favor of the United States (and to the detriment of their allies).

The American foray into imperialism in the late 19th century saw alliances with several factions in Cuba and the Philippines that were more interested in extirpating Spain than thinking through an alliance with an expansion-minded United States.

In 1832 the United States entered into a Washingtonian alliance with the Dutch in order to crush some Barbary-esque states along the Sumatran coast. The alliance led to the eventual, brutal conquest of Aceh by the Dutch and a long-lasting mutual friendship between the Americans and the Dutch.

From 1886-94 the United States and its ally in the South Pacific, the Mata’afa clan of Samoa, fought Germany and its Samoan allies for control over the Samoan islands. The Boxer Rebellion in China saw the United States ally with six European states (including Austria-Hungary) and Japan, and affiliate with three more European states and several Qing dynasty governors who refused to follow their emperor’s orders.

NATO’s continued importance

Clearly, the United States has followed its first president’s foreign policy doctrine for centuries. Washington warned that his doctrine was not to be an eternal guideline, though. Indeed, the most-cited case study of the Washington Doctrine of Unstable Alliances is not the American experience in the 19th century, but the Nazi-Soviet one of the 20th, when the Germans turned on the Soviets as soon as it became expedient to do so.

The establishment of NATO has forced the United States to become reciprocal in its alliances with other countries. The republic can no longer take, take, and take some more without giving something in return. This situation of mutually beneficial exchange has tempered not only the United States but everybody else in the world, too (especially in the industrialized part of the world; the part with the deadliest weapons). Free riding will most likely continue to be a problem within NATO. The United States will continue to pay more than its share to keep the alliance afloat. And that’s perfectly okay considering most of the alternatives: imperialism (far more expensive than free riding allies), ethnic cleansing, or oscillating blocs of states looking out for their own interests in a power vacuum, like the situation Europe found itself in during the bloody 20th century.

The forgotten alternative

Unstable alliances lead to an unstable world. The rise of NATO has been a boon to the world, despite its costs. If libertarians want to be taken seriously in the realm of foreign affairs, they would do well to shake off the Rothbardian shackles of isolationism/non-interventionism and embrace Madisonian federalism with a Christensenian twist. The 13 North American colonies that broke away from the British Empire were sovereign states when they banded together. The 29 members of NATO are sovereign states, too, and there’s no reason to believe that Madison’s federal blueprint can’t band them together as well.

If libertarians are comfortable embracing non-interventionism as a foreign policy doctrine, even though it has never been tried and even though it’s based on a shoddy interpretation of history, there’s no reason why they can’t instead embrace federation as their go-to alternative. Federation at least has history on its side, and it’s also got the obscure appeal that libertarians so love to ooze at public gatherings. Will 2020 be the year that libertarians shift from non-interventionism to federation?

Financial History to the Rescue: On Bitcoiners’ Many Troubles

This article is part of a series on bitcoin (and bitcoiners’) arguments about money and particularly financial history. See also:

(2): ‘Rothbard’s First Impressions on Free Banking in Scotland Were Correct’, Joakim Book, AIER (2019-08-18)
(3): ‘The Harder Money Wins Out’, Joakim Book, NotesOnLiberty (2019-08-19)
(4): ‘Bitcoin’s Fixed Money Supply Is a Weakness’, Joakim Book, AIER (2019-08-28)

It is unfair to expect technologically savvy bitcoiners to also be apt and well-read monetary economists. By no means do the skills and experiences of either have to overlap. Through the rise of Bitcoin with its explicit central banking challenge and attempt to become a worldwide currency, the subject matter of the two groups has unexpectedly clashed. All arguments that support or attack bitcoin is a head-first dive into monetary economics – sometimes exhuming centuries-long disputes among monetary economists and often blatantly distorts and overlooks money and banking arrangements of the past.

We can’t have that, can we.

One of the most delightful events in the libertarian world is the monthly Soho Forum debate run by Gene Epstein. Yesterday’s splendid showdown between Profs. George Selgin and Saifedean Ammous on the suitability of Bitcoin as a Medium of Exchange is bound to get some serious traction once the recording is on available only – look out for that!

A great debate for anyone interesting in monetary system and monetary economics more generally, this was probably the best and most entertaining of many Soho Forum debates I’ve watched. It’s a good format that forces speakers to engage and respond to one another’s arguments, which makes a two-hour conversation on something as technical and intricate as Bitcoin’s monetary role an absolute delight; even those of us deep into this nerdy rabbit hole can learn a lot and walk away with a trove of inspiration.

Channeling that inspiration into long-form, multi-part reviews of the relevant financial and monetary history is exactly what I’m going to do!

One question I often get regarding my research interests (banks, money and financial markets in the past) is the mildly offensive but absolutely correct question to ask: who the f— cares?! Bitcoin and the question of monetary regimes are perfect examples that make financial history relevant: the rise of crypto questions the fundamentals of monetary systems, systems that very rarely change. Naturally, the financial historian has an edge here, having a lot more nuanced knowledge about past monetary and financial arrangements and their operations. History becomes our (only) laboratory, to which the financial historian typically has a lot to contribute.

Moreso than other topics, fundamental questions of monetary regimes are explicitly pitted against other possible regimes – by their nature comparative and always informed by historical experience. It takes about two-and-a-half sentences before debates over money invoke some reference to financial and monetary history – as they should, since they illustrate how some (aspect of) a different monetary regime worked. Frustratingly enough, there’s a good chance that the speaker has mindboggingly little idea of what s/he’s talking about!

That’s where I like to come in. To a roomful of aspiring monetary economists at Cato’s Alternative Money University in July this year, Randall Wright‘s response to why he does monetary economics at all (“to debunk all this B-S!”) generalizes pretty well.

I’m gonna use this post to review some of the mistakes Saifedean made yesterday – and use it going forward as an updated collection of future posts on the topic, especially as I go through Saif’s promising book, The Bitcoin Standard: The Decentralized Alternative to Central Banking. The aim here is to respectfully clarify the parts of the Bitcoin arguments where I’d like to think that I have a comparative advantage – financial and monetary history – and to better develop my understanding of the monetary theory involved.

Here are some points that came up yesterday:

  • The Monetary Progression of ‘Harder Money’: the brilliance of the past is that almost any account, no matter how persuasive and compelling, is bound to run into inconvenient historical facts. The world is more nuanced than can be reasonably captured by pithy generalization (yes, I realize the irony here). In a piece attacking this bitcoiner’s creation myth earlier this year, I wrote:

This progressively upward story is pretty compelling: better money overtake worse money until one major player unfairly took over gold – the then-best money – replacing it with something inferior that the Davids of the crypto world now intents to reverse. […] Too bad that it’s not true. Virtually every step of this monetary account is mistaken.

  • The Lender-of-Last-Resort role privately provided: Many Austrians and opponents to fractional reserve banking routinely believe that banks holding less-than-100% reserve against their deposits must have a government backing them, providing emergency liquidity when such banks are inevitably run upon. This is completely false. I can point to many different historical instances that privately accounted for such risks, from private clearinghouses to insurance, to the option-clause debate in Scottish Free Banking and contingent/unlimited liability institutions.
  • …which leads us to Scottish Free Banking. There’s a famous quip by Rothbard (“Rothbard’s Law“) that describes the tendency for economists to specialize in the fields they’re worst at: Henry George specialized in land, where his writing is appalling; Milton Friedman on Money, where he’s awful etc. I usually say that the same thing applies for Rothbard whenever he writes on Financial History. Very bad. And yes, I will go through his article ‘Myth of Free Banking in Scotland’
  • Saif made a distinction yesterday between the “Medium of Exchange” and the “Payment Mechanism” involved that struck me as misleading, and I didn’t get a chance to finish my reasoning with him in person – so I’ll flush it out in a piece later on. Happily for all you Free Banking fans, it involves note-issuing Scottish banks and the bigger questions of redeemability and outside/inside money.

Some additional housekeeping from yesterday:

  • Saif: “There was no real estate bubble on the Gold Standard”.
    • Yes, Selgin said, the Florida 1920s housing bubble leading up to the Great Depression. No, Saif correctly objected, that wasn’t a real gold standard, but a central bank-planned Gold Exchange Standard.
      Ok, fine – I’d agree with Saif here. How about the 1893 Australian banking crisis? Classical Gold Standard, no central bank, but a property boom and bubble-like collapse nonetheless.
    • A response might be “but fractional reserve banking!” but a) that’s a topic I’ll delve into much more, and b) this is started to sound like a No True Scotsman fallacy…
  • Saif: “Central banks hold gold – they don’t trust each other enough to hold currency”
    • Saif probably misspoke here, since he couldn’t possibly believe this; looking at any central bank’s balance sheet would instantly dispell such beliefs. Central banks generally hold no more than 5-8% of their assets in gold, and often a lot more than that in foreign currency-denominated asset. The ECB holds about equal parts (7-8% of assets) in gold and foreign currency. I routinely follow the weekly changes in the Riksbank’s balance sheet and even after a more extreme QE programe than the Fed’s (as % of GDP), it holds more FX than it does SEK-denominated assets (and no more than 5% in gold). The Bank of England technically doesn’t actually have any gold at all on its balance sheet, but holds gold in storage at its vaults (on behalf of other countries and the UK Treasury).

Bear with me over the next few months, as I make my way through Saif’s book and engage with these thrilling debates. Feel free to interrupt/comment on Twitter at any point if you think I’ve made a factual/empirical error, error in reasoning or in relevance to Bitcoin.

And yes, keep in mind that this is a respectful inquiry into fascinating topics with people who agree on like 92% of everything. Feel free to call me out for unnecessarily snarky and offensive thing as we go along – and welcome to the party!

Nightcap

  1. Murray Rothbard on reparations for slavery Jeff Deist, Power & Market
  2. Outstanding analysis of Israeli politics Michael Koplow, Ottomans & Zionists
  3. My book was arrested but I am free” Victor Sebestyen, New Statesman
  4. Breakfast has resisted globalization, until now Josie Delap, 1843

From the Comments: who is the conservative or libertarian equivalent of Nancy MacLean?

Rick posed a great question about Nancy MacLean awhile back. I haven’t been neglecting it. I’ve been thinking about it. Here it is:

Question for those more abreast than me: do conservatives or libertarians have an equivalent of Nancy MacLean? All sides have irresponsible pseudo-scholars, but how often do the various camps launch one of them to undue prominence instead of just ignoring them?

Michelangelo suggests Murray Rothbard as one example, and I had that thought as well, but that’s almost too obvious, and he’s been dead for a long time now.

Libertarians today are pretty firmly divided by the cosmos and paleos, so undue prominence is hard to get. When was the last time you saw Jason Brennan or Bryan Caplan praising the work of Justin Raimondo or Lew Rockwell?

With that being said, I think libertarians nowadays tend to launch intellectual fads into undue prominence, rather than scholars. Stuff like Open Borders or signaling or my personal favorite, non-intervention in foreign policy, tend to hold a prominence in libertarian circles that I find ridiculous. If you don’t believe me, find your nearest Cato Institute scholar on Twitter and ask him (yes, him) if his pet policy project has any potential flaws in it…

Nightcap

  1. South America’s other ‘Easter Island’ Christopher Baker, BBC
  2. The narrative of homophobia in Africa Nsubuga Ssemugooma, Africa is a Country
  3. Young Murray Rothbard: an autobiography Murray Rothbard, Mises Institute
  4. Rebuilding a fragile political order Nathaniel Peters, Law & Liberty

Nightcap

  1. Fear for the future of classical liberalism John McGinnis, Law & Liberty
  2. Dying, Death, and Wisdom in an Age of Denial Mary McDonough, Commonweal
  3. Troll epistemology Jonathan Rauch, National Affairs
  4. Murray Rothbard was right Justin Raimondo, Antiwar.com

A preliminary argument against moral blameworthiness

For a while now I’ve advocated not an absence of morality, but an absence of moral blameworthiness. Here’s a first, brief attempt to jot down the basic idea.

There’s two arguments. First let’s consider the epistemic conditions that must hold to make a moral judgment. For any enunciator of a moral judgment, e.g. “this murder, being unprovoked, was wrong,” the speaker must have knowledge of specific details of the case — who committed the crime? was there malice aforethought? — and also moral knowledge, knowledge with normative validity. To judge something as moral or immoral, then, requires information of one kind which is open to forensic methods and of another kind which is … highly contested as to its epistemic foundations. Obvious thus far. Now, this is the situation of the bystander judging retroactively. The perpetrator of the immoral act is in an even worse predicament. Most people would agree, as a basic axiom of juvenile jurisprudence, that a person must have “knowledge of right and wrong” in order to be morally blameworthy. This allows us to discriminate between mentally competent adults, on the one hand, and children or mentally challenged individuals on the other. However, like we have said, this domain of right and wrong is highly contested by highly intelligent people, enough to cast skepticism into all but the most stubborn, and so most people, acting according to their ethics, understand themselves to be acting uncertainly. And, unlike the bystander judging retroactively, the perpetrator is on a time crunch, and must make snap decisions without the luxury of an analysis of the objective conditions — who, what, how, why — or a literature review of the subjective conditions, the theories.

So, to sum up, moral blameworthiness requires knowledge of right and wrong. This knowledge is highly contested (and widely considered to be emotional rather than rational); thus, people must act, but must act under highly uncertain information. Without an agreed-upon rubric moral action is more or less guessed. The doer is in a more uncertain situation than the judger so his judgment is likely to be less justified, more forgivably wrong.

Okay, but now as a friend has pointed out, where morality is highly contested is on the margins, and not the fundamentals. There is a lot of agreement that unprovoked murder is wrong, this does not seem highly contested (though certainly there is disagreement provided the forensic circumstances). So, can we not hold a murderer morally accountable?

Here, in response to that, is the second argument, which is much more fundamental and probably exposes me to some logical consequences I don’t want to accept. With action, there is something we could call a “regression to non-autonomy.” Traditional perspectives on morality and punishment emphasized the individual making a choice to commit an offense. This choice reflected bad moral character. More recently, the social sciences have impacted the way we think about choices: people are shaped by their environments, and often they do not choose these environments. Get the picture? But, it is even worse than that. We could say that the murderer chose to pull the trigger; but, he did not choose to be the sort of person who in that situation would pull the trigger. That person was a product of their environment and their genes. Aren’t they also a product of “themselves”? Yes, but they did not choose to be themselves; they simply are. And, even when someone “chooses to be a better person,” this choice logically presupposes the ability to choose to become a better person, which, again, is an ability bestowed upon some and not upon others and is never of our own choosing. Thus if we go back far enough we find autonomy, or a self-creative element, is not at root in our behavior and choices. And non-autonomous action cannot be considered morally blameworthy.

This is my argument (I do not claim originality; many people have said similar things). The murderer is doing something immoral, but finding them worthy of blame seems, to me, almost if not always out of the question. This ends up being hard to accept psychologically: I want to find history’s greatest villains morally culpable. I cannot, though. Instead of any sort of retributivist punishment — found, now, to be psychologically satisfying but morally confused — we are left only with punishment policy that seeks to deter or isolate offenders, the category of “moral blameworthiness” found to be lacking.

I invite criticisms of the arguments as sketched out here — preferrably, ones that don’t require us to get into what actually is moral or the status of free will.

Catalonia: a philosophical case for Secession

Yesterday, the Catalan government has overwelmingly voted for independence from Spain and to establish an independent republic. 70 were in favour, 10 were against, and 2 votes were blank. Unfortunately, it was rejected by the central governments of Spain and many other countries. Nonetheless, the Catalan case may inspire the other independence movements in Europe.

In this post I’d like to provide a philosophical case for the ethical right of secession based on a libertarian perspective of self-ownership. My argument is exclusively theoretical, although a discussion on how secession could be achieved practically would be interesting as well. I may save that for a post in the future.

Below, you can find a map of other places in Europe with strong secessionist movements:

Structure of my argument

My argument is deductive and runs as follows:

  1. People have the right of self-ownership in accordance with the non-aggression principle, and based on the natural rights philosophy put forward by the political philosopher Murray Rothbard;
  2. If people have the right of self-ownership, they also have the right of voluntary association, voluntary formation of communities, and the right to choose their own leaders;
  3. Sometimes the state that the individual belongs to, violates the rights of the individual to the extent that the individual does not feel associated with it anymore;
  4. Under such circumstances the individual may perceive the state as an unacceptable aggressor, and he is justified to revolt by separating himself from the state. He can form communal associations to secede as a new political unit;
  5. There is no limit to secession. Provinces have the right to secede from a state, a district from the province, a town from the district, a neighbourhood from the town, a household from the neighbourhood, and an individual from the household.

The right of self-ownership and property rights

In For a New Liberty (1973), Murray Rothbard deduces natural law from the essential nature of human beings. He writes that it is in man’s nature to use his mind in order to select values, ends and the means to attain these ends so that he can “act purposively to maintain himself and advance his life”. He furthermore contends that it is absolutely “antihuman” to interfere violently with a man’s “learning and choices” as “it violates the natural law of man’s needs”. Therefore, man’s nature should be protected through his right of self-ownership. This right asserts that man has the absolute right to “own” his body and “to control that body free of coercive interferences”. This right includes the practice of such essential activities as thinking, learning, valuing, and choosing ends and means without any coercion, since such activities are necessary for the enhancement of man’s life.

From this natural right follows the right to do anything with one’s body, including the right to form free associations and communities, and the right not to be violated in one’s self-ownership. Thus, one has the right to associate oneself with the leader of one’s choice, but not the right to impose a leader unto someone else. Likewise, people should be free to join and to leave communities voluntarily.

In addition to the right of free association, people also have property rights. Rothbardian property rights are directly derived from self-ownership rights, and are based on the Lockean homesteading theory. It states that since man owns his person, he owns his labour, and therefore he also owns the fruits thereof. John Locke (1689) has put homesteading theory in the following way:

… every man has a property in his own person. … The labour of his body and the work of his hands, we may say, are properly his. Whatsoever, then, he removes out of the state of nature hath provided and left it in, he hath mixed his labour with it, and joined it to something that is his own, and thereby makes it his property.

Given that man has the right of self-ownership, and that he must employ natural objects for his survival, then the sculptor has the right to own the product he has made through the mixing of his labour. In other words, by producing something with one’s energy through the utilization of unowned nature, one has, as Rothbard calls it, “placed the stamp of his person upon the raw material”. One therefore rightfully owns the product. Any violation of self-ownership and property rights should hence be regarded as an act of aggression.

The state

The state is nonetheless a social institution that has historically interfered most often with people’s self-ownership and property rights. Max Weber has recognized it as an institution with a territorial monopoly of compulsion in his essay ‘Politics as a Vocation’ (1919). Hoppe, in Democracy – the God that failed (2001), asserts that every government will use this monopoly to exploit its citizens in order to increase its wealth and income.

“Hence every government should be expected to have an inherent tendency toward growth”. (Hoppe)

State exploitation happens in the form of expropriation, taxation, and regulation of private property owners. A state at best respects the rights of individual sovereignty and private property, but because its functioning is dependent on the expropriation of its citizens’ wealth there is a natural conflict between the state and its citizens. According to Franz Oppenheimer (1908), the state can impossibly finance itself without its productive citizens. It can only take that what has already been produced, and therefore it can only exist as a result of the “economic means”. However, this confiscation often involves state violence and aggression as nearly no one is willing to give up on his property voluntarily.

Under such circumstances, it is understandable that conflicts may arise between citizens and the state; sometimes resulting in citizens’ feelings of dissociation from their governments.

Secession

Frédérik Bastiat maintains in The Law (1850) that if everyone has the right to “his person, his liberty, and his property”, then

“a number of men have the right to combine together to extend, to organize a common force to provide regularly for this defense.”

Following Bastiat’s reasoning, I believe that citizens who feel dissociated can then revolt and opt for secession as a form of self-defense against state aggression on their self-ownership and property. Any state that does not recognize its citizens’ rights of secession does not sufficiently recognize the sovereignty of its people. Secession is a powerful means of political action to show the people’s discontent with their leaders. If secession would be impermissible, then the people who want to disassociate themselves from the state have the following three options:
(1) continue living under the oppressive state rule;
or (2) revolt against the state;
or (3) emigrate to another state.

By doing (1), the people continue living under perpetual state aggression, and their sovereignty is continually violated.

If the people choose option (2), then there will be severe and costly consequences which can involve war and destruction of private property. In addition, there are also no guarantees that the revolt against the state will be successful. For these two reasons, this option seems to most secessionists to be the least preferable of the three.

The people can alternatively choose (3) and emigrate to another state. This alternative is often used as an argument against secession under the presumption that those who are unhappy within one particular state, should simply emigrate. However, the cost of emigration can be so significantly high that it is unfeasible. One has for example the costs of finding information on the procedure of emigration, becoming accepted by the other state, finding a new workplace etc… The state can also exert barriers of emigration through tedious bureaucratic processes and passport controls, which makes emigration even more unattractive.

Who are morally justified to secede?

Following man’s right of free association, the answer should be: anyone, as long as it happens on a voluntary basis. Even though most secessionist movements are built on a common ethnicity or common cultural heritage, such precepts are not necessary to justify secession. Moreover, secessionists should not be prescribed any form of social organization as they should be free to choose their own form of government. This means that a multitude of social organizations are possible, including those that are currently non-existent. By being epistemologically modest of what governmental form is best, communities are allowed to experiment and find their own form of government. This will eventually add to our understanding of human social organizations.

Lastly, it is important to note that if secession is ethical, ultimately based on the principle of self-ownership, then it follows that the individual has the right to secede as well.

This right cannot be exclusively granted to groups, because only individuals can have ownership of their own bodies. Self-ownership cannot be shared, just like the mind cannot be shared. The mind is an attribute, inherent only to individuals, and collectives only derive their rights from the rights of their individual members. Therefore the right of self-ownership must necessarily imply the right to practice unlimited secession.

As Rothbard would assert, provinces should have the right to secede from a state, a district from the province, a town from the district, a neighbourhood from the town, a household from the neighbourhood, and an individual from the household. This logical consequence is anarchism.

Conclusion

In setting forward a natural rights defense of self-ownership, I have concluded that individuals have the right to free association and property rights. Unfortunately, states sometimes violate these rights to the extent that its people do not want to be associated with their state anymore. Under such circumstances they retain the right to secede. Secession should however not only be limited to communities. Single individuals also bear the right to secede, since only individuals can possess self-ownership, and since groups can only derive their rights from its individual members.

Some thoughts on “Thinking About Libertarian Foreign Policy”

Brandon asked me to leave some thoughts on “Thinking About Libertarian Foreign Policy”, By Matthew Fay, here. Edwin van de Haar already did that in his “Foreign Policy in the Liberal Tradition: The Real Story”, but as I tend to follow a different path from van de Haar, I believe I may have something original to say here. So lets go.

First, unlike Edwin, I’m not going to go in the direction of discussing who is a libertarian, who is a conservative, who is a classical liberal, and so on. For one thing, I think that this kind of discussion is really boring (sorry Edwin, no offense intended, believe me). Other than that, it seems to me that discussing vocabulary is tremendously counterproductive. During the Cold War the US defined itself as a democracy. The USSR defined itself as a democracy as well. Both could meet and discuss who was really democratic, without any real gain. The same can be said about discussions within the socialist bloc: Chinese and Russians could discuss forever who was more Marxist, almost going to war because of that, without any real profit. Personally, I think I lost a lot of time some years ago discussing if Venezuela was democratic or not. And then they ran out of toilet paper. So I care not if communists want to call Venezuela a democratic state or not, the fact is that I don’t think any of them are willing to live without the simple but precious item of capitalist modern life.

With that said, if Matthew Fay wants to call his international relations perspective “libertarian,” so be it. But here are some commentaries from someone who usually calls himself libertarian:

“Libertarians have an uneasy relationship with foreign policy. The state, after all, is the primary actor in international relations.”

I wouldn’t say that. First, I’m a libertarian who studies foreign policy more than anything else. Second, I don’t think that we should say that “The state, after all, is the primary actor in international relations.” That’s simply not a good phrase to use when talking about International Relations. Better to say that the state is very often regarded as the primary actor in International Relations theory, especially by theorists who identify themselves as Realists. Other theorists would say that individuals, or international institutions, or international organizations are as or more important than the states.

“For libertarians, who want the state to do less, not more, this fact can be hard to stomach.”

I identify as a libertarian and I don’t exactly “want the state to do less.” I want the state to do some things and not others. I know that many libertarians (specially people at the Mises Institute, following Murray Rothbard) understand that anarcho-capitalism is the natural and logical conclusion for libertarians. I’m still not convinced. For example, I would like the state to do a lot about prosecuting murders and nothing about what I put in my own body.

“identifying an aggressor is difficult enough in interpersonal relations—let alone in international affairs.”

That’s something that goes at least to Robert Jervis’ 1978 article “Cooperation Under the Security Dilemma,” but I openly disagree. If they are not invading your territory, then they’re not aggressors. They may be potential aggressors, or they may be aggressive, but they’re not aggressors. As an individual, I choose to carry a gun, or even better, to avoid certain neighborhoods. The states should, if possible, avoid certain neighborhoods. If that’s not possible, carry a gun. And definitely keep a gun at home and learn how to use it.

“even when the action of the U.S. government may be superior to that of another government, many libertarians have a difficult time acknowledging that government action is justified. For those reasons, many strict non-interventionist libertarians find themselves openly embracing illiberal governments that they claim are resisting American imperialism and condemning any American criticism of autocrats as a prelude to ‘regime change.’”

First, I don’t think that one can prove that US intervention is superior to anything, ever. It’s basically a broken window fallacy. And I don’t embrace any illiberal government. I just don’t think that it’s the US government’s job to overthrown them. Also, I don’t think any autocratic governments are primarily resisting imperialism.

“Realism is attractive for libertarians because the United States faces no major threats, and therefore does not need to balance either externally or internally.”

Realism in International Relations theory is in general attractive for me because it seems to reflect the reality. Among International Relations theorists, my personal favorites are John Mearsheimer and Stephen Walt. I believe they are very liberal (in the classical sense) at heart but, like me, they are very suspicious of states. By the way, I’m Brazilian and I don’t live in the States, so the second part makes no sense either. There are many libertarians outside the US, by the way, and I think it would be very interesting to check what they think about all this.

“Libertarians, for example, believe that regime change and nation building through the use of military force is unjust and more often than not doomed to failure.”

I don’t think that. The American Revolution and the Puritan Revolution were great examples of regime change and nation building through the use of military force. They worked just fine. I just don’t believe that we can force this on other people.

“But libertarians have also rejected other aspects of America’s post-World War II grand strategy—namely, America’s military alliances and the web of international political and economic institutions they underpin—that have served the causes of peace, free trade, and a more interdependent world. The result of this web of institutions has been a liberal international order that encourages peaceful, commercial relations between states that had previously been rivals. It helps ameliorate security competition and establishes expected patterns of behavior that encourage cooperation instead. This order has not been without its flaws and, as Nexon highlights in another post, serious reforms should be explored. But it has also helped underpin previously unseen levels of peace and prosperity. As Nexon writes, ‘we should not confuse two different questions: ‘which liberal order?’ and ‘whether liberal order?’’”

I’m not sure if “America’s post-World War II grand strategy have served the causes of peace, free trade, and a more interdependent world.” Again, it’s a matter of opportunity cost, or another broken window fallacy. I’m also unsure if “the result of this web of institutions has been a liberal international order that encourages peaceful, commercial relations between states that had previously been rivals.” I have a really strong tendency to say it didn’t. The problem with theorizing in social sciences is that, unlike in natural sciences, you can’t take things to the laboratory and run consecutive tests. That is, by the way, one of the reasons why I reject positivism as a research methodology. I’m not sure if Matthew Fay embraces it, but the fact is that for me we are better with praxeology, or at least some version of methodological individualism. And with that in mind, we can’t be so bold to say that American foreign policy in the post-WWII Era was the main cause of peace and everything else. It just seems to me that without US intervention in WWI there would be no WWII (and no Russian Revolution, at least not a successful one, by the way). The Founding Fathers were right: Europe is a mess. The farthest you get from it, the best.

Porque privatizar (ou desestatizar) o ensino é uma das melhores reformas que se pode fazer

Talvez seja somente uma percepção subjetiva sem maior relevância objetiva, mas a impressão que tenho é que a privatização do ensino é um dos maiores tabus da sociedade brasileira. Até onde eu sei nenhum partido, figura política ou figura pública de destaque está defendendo a privatização total do ensino no Brasil. Segundo as notícias que chegam até mim, o recente anúncio de corte de gastos na educação causa uma de duas reações: indignação ou pesar. Alguns reagem com indignação, e não aceitam que qualquer corte seja feito; outros reagem com pesar, mas consideram que os cortes são necessários. Ditas estas coisas, penso que cabe a mim agir como Walter Block e “defender o indefensável”: o governo (ou o estado – use o vocabulário que lhe convir) não deveria ter qualquer papel na educação. Para isso irei expor brevemente o que é economia, como ela funciona, e o que isso tem a ver com governo, indivíduos e educação. É uma exposição breve, e pode deixar alguns pontos pouco desenvolvidos. Para uma exposição mais profunda deste tema, recomendo o livro Educação: Livre e Obrigatória, de Murray Rothbard.

Economia é a gestão de recursos necessariamente escassos que possuímos. Os recursos são necessariamente escassos porque somos seres humanos finitos, e não deuses. Alguns paradigmas econômicos (notoriamente o marxismo) partem de um pressuposto de abundancia de recursos, mas isto é falso e até mesmo perigoso: até mesmo o homem mais rico do mundo tem somente 24 horas no seu dia. Tem somente um corpo, e não pode estar em dois lugares ao mesmo tempo. Tem energia limitada, e fica cansado. Todos nós possuímos recursos limitados (ainda que alguns possuam mais recursos à sua disposição do que outros). A economia é a arte de melhor gerir estes recursos.

A gestão dos recursos limitados que possuímos é feita através de escolhas. O nome que os economistas dão a isso é “custo de oportunidade”: a não ser que você detenha infinitos recursos, gastar em uma coisa significa não gastar na segunda melhor alternativa. Exemplos: comprar o carro A significa não comprar o carro B; morar na cidade X significa não morar na cidade Y; casar com Z significa não casar com W; e escolher a carreira α significa não escolher a carreira λ. Como disse um antigo professor meu, “a vida é feita de escolhas”.

Considerando que possuímos recursos finitos e precisamos fazer escolhas, qual é mecanismo mais eficiente para tomar decisões? Certamente muitas pessoas gostariam de tomar decisões com base nos seus gostos pessoais. Gostariam de escolher aquilo de que mais gostam. Porém, aquilo de que mais gosto nem sempre está ao meu alcance. Exemplos: ainda que eu goste mais de uma Ferrari do que de um fusquinha, talvez eu precise me contentar com a segunda opção. Ou ainda que eu queira viajar, talvez eu tenha que me contentar em pagar o tratamento para um problema de saúde que acabei de descobrir que tenho. É por coisas assim que a economia ficou conhecida como “ciência triste”. Muitas vezes ela está aí para lembrar que nem sempre podemos ter o que queremos. Dito isto, a melhor forma de tomar decisões é pelos preços: os preços nos dizem se aquilo que desejamos é compatível com os recursos disponíveis.

Os preços são geralmente definidos em termos de dinheiro. Dinheiro é melhor definido por aquilo que faz do que por aquilo que é. Muitas coisas podem ser dinheiro: papel, metais preciosos, cigarros, balas ou dígitos num computador. Mas o que dinheiro faz é servir como uma linguagem: o dinheiro transmite de uma pessoa para outra o valor dos recursos envolvidos numa mercadoria ou num serviço. E valor é algo subjetivo. Contrariando a teoria do valor trabalho, é impossível saber de forma objetiva qual é o preço de uma determinada mercadoria ou serviço: é necessário que este valor seja definido por relações de oferta e procura. E é de incontáveis relações de oferta e procura que os preços são feitos. Em outras palavras, os preços nos transmitem de forma simples algo que jamais poderia ser calculado por uma pessoa: uma infinidade de relações de oferta e procura, escolhas e preferências, dentro da economia. Como disse Friedrich Hayek, “a economia somos nós”.

E assim chegamos à educação. Como eu disse acima, escolher a carreira α significa não escolher a carreira λ. Como essa decisão é feita? Certamente que muitas pessoas escolhem sua carreira com base em aptidões que percebem em si mesmas, ou em considerações sobre o que poderá ser uma atividade profissional mais prazerosa. Porém, este é um luxo que não está disponível para todos: muitas pessoas precisam escolher uma carreira com base no que pode dar mais retorno financeiro com menor investimento e menor risco. Posso escolher uma carreira que promete um grande retorno financeiro, mas com grande risco de não conseguir emprego num mercado de trabalho altamente competitivo, ou com um investimento de recursos (em tempo em dinheiro) que não posso arcar. A vida é feita de escolhas, e essas escolhas muitas vezes envolvem riscos. Escolher uma carreira é dizer não (ao menos temporariamente) para todas as outras. Algumas pessoas tem a chance de arriscar mais. Outras não têm o mesmo luxo. Considerações como relação candidato/vaga, salário médio, nível de empregabilidade e outras são semelhantes aos preços, e podem ser bons parâmetros ao se decidir por uma carreira. Mas com o governo criando vagas em universidades, determinando regras de acesso ao mercado de trabalho e adotando outras medidas, os preços não refletem a real relação de oferta e procura. Em outras palavras, a linguagem é distorcida, e as decisões não são as melhores, nem para os indivíduos, e nem para a sociedade.

Compreendo que pensar assim possa soar extremamente cínico, e pode ser um banho de água fria, especialmente para os mais jovens ou mais sonhadores. Muitas pessoas preferem tomar decisões considerando seus gostos pessoais, sua vocação, seu desejo de ajudar o próximo ou outras considerações. Não estou desmerecendo nenhuma destas considerações. Estou apenas dizendo que somos seres humanos limitados que vivem num mundo de recursos limitados. Precisamos fazer o melhor uso possível destes recursos. Embora os recursos sejam limitados, nossa criatividade para aproveitá-los não demonstra um limite óbvio. O uso criativo e sustentável dos recursos necessita de uma bússola, um guia. O sistema de preços é o melhor guia que possuímos. Sem propriedade privada não há formação de preços, e sem formação de preços o cálculo econômico é impossível. Por esta razão os gastos com educação não param de aumentar e a qualidade dos resultados não para de cair: o melhor juiz para determinar como os recursos serão empregados é o individuo fazendo uso de seus próprios recursos. A interferência do governo prejudica ou até desfaz este julgamento.

Em tempo: estou defendendo que o governo precisa sair da educação e deixá-la para a iniciativa individual (até mesmo porque somente indivíduos podem ter iniciativa). Não estou defendendo que educação precisa ser necessariamente paga pelos alunos. Como disse Milton Friedman, “não existe almoço grátis” (mais uma dessas frases que tornam os economistas – especialmente os liberais clássicos e libertários – pessoas pouco populares). Mas quando uma pessoa tem fome e não pode pagar pelo almoço, outra pode fazer isso. O nome disso é caridade, e quero incentivá-la o máximo possível. Caso você se preocupe com os pobres, sugiro que pare de mandar dinheiro para Brasília na forma de impostos, que serão necessariamente mal empregados (segundo tudo que discuti aqui), e procure pessoas que precisam. Com certeza você não terá dificuldade de encontrá-las.

Libertarians and Pragmatists on Democracy Part 4: Why Market Anarchism is more Democratic than Democracy

Note: This is the final part of a series on democracy. It is assumed the reader is familiar with part one, defining democracy, part two, summarizing classical liberal perspectives on democracy, and part three, which analyzes how pragmatists conceive of democracy as a broader philosophy. Here, I will argue that a synthesis of libertarian and pragmatist perspectives on democracy will yield an argument in favor of market anarchy.

The insights of classical liberalism, and particularly modern libertarianism, have shown that democracy is likely to lead to a tyranny of an irrational and ignorant majority and public choice theory has shown how it results in awful policies thanks to a number of collective action issues. However, as pragmatists have argued, democracy’s philosophical aspirations to scientific public deliberation, seeking the consent of the governed, valuing the dignity of every individual, and decentralizing political authority to take advantage of dispersed intelligence are still admirable. However admirable these philosophical aspirations are, real-world democracies completely fail to fulfill them.

The natural question is, if not democracy, what political arrangements can live up to the philosophical goals of Dewey and Hook? I think the answer lies in market anarchism. In what follows, I will show how market anarchism could succeed in realizing the aspirations of philosophical democracy where political democracy has failed.

Before we get started, let’s take into account a few minor housekeeping notes. It is assumed that the reader has at least a cursory knowledge of how market anarchism and polycentric law works. If you are not familiar with these concepts I highly recommend watching this video by David Friedman before continuing. Also, I am in no way arguing that any of the thinkers discussed in this series are “really” anarchists unless they’re obviously so such as Huemer. I will not even claim that any of them “should have been” anarchists (with the exception of Hayek). I am simply arguing that if we take into account the insights of their various perspectives, one could plausibly defend market anarchism.

Market Anarchism, Unlike Democracy, Does Rest on the Voluntary Consent of the Governed

As Michael Huemer convincingly has shown, democracy does not actually “rest upon the freely given consent of the governed” as Sidney Hook claims. The bar tab example illustrates that we would not consider majority rule “consent” in any everyday interaction and there is little reason to think it should be any different in the context of political institutions. By contrast, market anarchism is almost by definition based off of consent. This is the primary reason why many deontological market anarchists, such as Murray Rothbard, are market anarchists in the first place and why they oppose the coercive, non-consensual nature of the state. While democracy’s claim to legitimacy is that the governed vote but they are still forced to follow the (unjustified) authority of a state that has the monopoly on force whether they agree or not to, market anarchism is based off of voluntarily consented to contracts between individuals and defense agencies and contracts between those defense agencies and private, voluntary court systems and arbitrators. Further, the content of the laws is agreed to and law becomes a product one buys in voluntarily agreeing to sign up with a defense company, just as one buys a car, a piece of furniture, or any other good.

It is curious that many pragmatist defenses of democracy sound very similar to what many market anarchists and libertarians write. Not just in Sidney Hook’s definition of a democracy as a government that “rests upon the freely given consent of the governed,” but perhaps most strikingly in John Dewey’s 1939 essay “I Believe.” In this essay, Dewey walked back some of his early Hegelian collectivist lines of his early years:

My contribution to the first series of essays in Living Philosophies put forward the idea of faith in the possibilities of experience at the heart of my own philosophy. In the course of that contribution, I said, “Individuals will always be the center and the consummation of experience, but what the individual actually is in his life-experience depends upon the nature and movement of associated life.” I have not changed my faith in experience nor my belief that individuality is its center and consummation. But there has been a change in emphasis. I should now wish to emphasize more than I formerly did that individuals are the final decisive factors of the nature and movement of associated life.

Indeed, throughout the whole essay he emphasizes “the idea that only the voluntary initiative and voluntary cooperation of individuals can produce social institutions that will protect the liberties necessary for achieving development of genuine individuality.” Throughout the essay, he decries (like many left-anarchists do) “state socialism” just as much as he does “state capitalism.” Dewey’s opposition to capitalism is well-known, but what is less known is his opposition to so-called “public collectivism.” His criticisms here could just as easily have been written by someone like Hayek:

Recent events have shown that state socialism or public collectivism leads to suppression of everything that individuality stands for. It is not too late for us in this country to learn the lesson taught by these two great historic movements [ie., the rise of state capitalism and state socialism]. The way is open for a movement which will provide the fullest opportunity for cooperative voluntary endeavor. In this movement, political activity will have a part, but a subordinate one. It will be confined to providing the conditions, both negative and positive, that favor the voluntary activity of individuals.

It is interesting that, like anarchists who favor direct action, he emphasizes that political activity is subordinate to the political movement he sees as necessary.

Of course, there are still notable differences between Dewey and libertarians, he still defends what he calls “functional socialism” in the socialization of medicine and still berates more than many libertarians would be comfortable with (except, of course, for left-anarchists) inequality caused by state capitalism. His vision of a truly individualist society, even in his later years, was one with localized, experimental democratic institutions and economics controlled by those localized governments in a “functional socialist” fashion (as I mentioned earlier, that economic vision is at odds with Dewey’s epistemological commitments).

However, I would argue that it is more than a mere superficial coincidence that Dewey’s criticisms of state capitalism are almost identical to those of market anarchists who decry “crony capitalism,” that his criticisms of state socialism are very similar to some individualist libertarian criticisms, and his overall rhetoric defending democracy on the grounds of “voluntary cooperation of individuals” sounds remarkably similar to many libertarians. This is because, largely, the philosophical ends Dewey seeks in politics are the same as those sought by libertarians, market anarchists, and classical liberals. However, the institutional means he advocates are very different and fail to meet those ends.

There is, conversely, one potential criticism that Sidney Hook would raise at this point: that market anarchism does not really rest upon the freely-given consent of the governed due to its allowance for economic inequality. Hook argued that income inequality undermines consent in democracy and, as a result, economic organization should be controlled by a democratically elected government. There are two points to be made. First of all, when economic organization is controlled by government in democracies it exacerbates the problem of income inequality. Rent-seeking culture arises in which concentrated interests use, through lobbying power, government force to accumulate and protect their wealth. Indeed, as I mentioned earlier,  there have been empirical studies showing how over-regulation lobbied for by those concentrated benefits have regressive effects. Even fairly anti-free market economists such as Joseph Stiglitz have argued that income inequality is not an inevitable result of market institutions, but a result of bad government policies such as corporate welfare.

Second, it is questionable to what degree income inequality would exist in pure market anarchy. Of course, much of the bad inequality experienced under state capitalism is the result of bad policies, but some if it is also just a result of market’s tendencies to disrupt economic distributions (which, as Mises argued in Liberalism: The Classical Tradition is not a bad thing because it allows for luxury markets which can serve as an experimental market for expensive, new goods that one day become popular consumer goods). Some market anarchists, such as Anna Morgenstern, have argued that the type of mass accumulation of capital under capitalism would be impossible under market anarchism. I am unsure to what extent I agree, and a systemic analysis of the economic roots of inequality is outside of the scope of this post. However, suffice it to say that it is an open, empirical question whether purely free markets would result in problematic levels of inequality, as Hook seems to think, and we have some good reasons to think it would not. At the very least, it is clear that the democratic institutions favored by Hook are not a serious solution to the problem.

Market Anarchism, Unlike Democracy, Relies on a Decentralized Process of Political Decision Making

Dewey argued in “Democracy and Educational Administration” that “it is the democratic faith that [the distribution of knowledge and intelligence] is sufficiently general so that each individual has something to contribute and value of each contribution can be assessed only as it enters into the final pooled intelligence constituted by the contributions of all.” He seems to echo Hayek’s knowledge problem critique of socialism when he argues that the democratic faith is based on the wisdom that “no man or limited set of men is [sic] wise enough or good enough to rule others without their consent[.]” As we have seen, democracies tend towards heavily centralized governments that undermine this faith and fail to take advantage of the dispersed knowledge (in Hayekian terms) among individuals in society.

Market anarchy, on the other hand, by definition takes advantage of this feature of dispersed intelligence. Rather than having law be designed by a centralized legislature, law arises out of voluntary market exchanges between individuals and, like common law, the precedent of judges in private courts. Of course, both Dewey and Hayek embraced democratic institutions (in Hayek’s case, as well as free market economic coordination) to take advantage of decentralized knowledge. However, both Dewey and Hayek, particularly the ladder (Dewey never wrote about market anarchism as it did not exist as a unique perspective until almost a decade after his death), failed to appreciate the extent to which a polycentric legal system does this much better. Peter Stringham and Todd Zywicki have noted this tension in Hayek’s thought in particular, as they put it in an abstract for their excellent paper on the issue:

Should law be provided centrally by the state or by some other means? Even relatively staunch advocates of competition such as Friedrich Hayek believe that the state must provide law centrally. This article asks whether Hayek’s theories about competition and the use of knowledge in society should lead one to support centrally provided law enforcement or competition in law. In writing about economics, Hayek famously described the competitive process of the market as a “discovery process.” In writing about law, Hayek coincidentally referred to the role of the judge under the common law as “discovering” the law in the expectations and conventions of people in a given society. We argue that this consistent usage was more than a mere semantic coincidence — that the two concepts of discovery are remarkably similar in Hayek’s thought and that his idea of economic discovery influenced his later ideas about legal discovery. Moreover, once this conceptual similarity is recognized, certain conclusions logically follow: namely, that just as economic discovery requires the competitive process of the market to provide information and feedback to correct errors, competition in the provision of legal services is essential to the judicial discovery in law. In fact, the English common law, from which Hayek drew his model of legal discovery, was itself a model of polycentric and competing sources of law throughout much of its history. We conclude that for the same reasons that made Hayek a champion of market competition over central planning of the economy, he should have also supported competition in legal services over monopolistic provision by the state — in short, Hayek should have been an anarchist.

There is one possibly fatal objection to this line of reasoning, that is also the most substantial objection to market anarchism as a whole: the possibility that market anarchy, like democracy, will eventually lead to a centralized state that undermines its attempt to take advantage of dispersed knowledge. This argument was initially hinted at by Robert Nozick in Anarchy, State, and Utopia in his argument about the “immaculate conception of the state” but was expanded on most convincingly by Tyler Cowen. Ultimately it is an empirical question whether market anarchy would eventually lead to more centralization, and it is outside the scope of this post to analyze that fascinating question in any satisfactory amount of detail. I will say, however, that Bryan Caplan has given more or less convincing reasons why this may not be the case.

Market Anarchism, Unlike Democracy, Values the Dignity of the Individual

One of the features central to the pragmatist “democratic faith” is the belief that “belief that every individual should be regarded as possessing intrinsic worth or dignity[.]” As I argued, the conflation of democratic governments with the “collective will” of the people undermines this faith as political dissenters and individual thinkers become viewed as opponents to “the people.” Indeed, it seems that the type of “public” and “private” collectivisms that Dewey ridiculed in “I Believe” are a result of democratic institutions run amuck.

Market anarchism, meanwhile, suffers from no such issues. Instead, the intrinsic worth of the individual is respected as their free choices and associations is the main driving mechanism for political organization. There is no violation of free speech and free thought by a deliberative government as such a government does not exist in the first place under anarchy, and thus the intrinsic worth and dignity are not found in the “will of the people” as in democracies, but in the sovereign individual’s choice of which defense provider to contract with.

Market Anarchism, Unlike Anarchy, is Scientific and Deliberative

Contrary to Dewey and Hook’s characterization of democracy as a deliberative, intelligent application of the scientific method to social issues, democracy is instead characterized by polarizing populist pandering and rationally ignorant and irrational voters casting meaningless ballots based cultural associations rather than reasoned consideration of policy issues. Market anarchism, meanwhile, does have the deliberative, scientific nature the pragmatists vainly hope democratic institutions could aspire to. While under democracy the cost of casting an informed vote is very high and the benefits very low resulting in massive amounts of rational ignorance, under market anarchism individuals have every incentive to ensure they are informed about the legal rules they are purchasing, so to speak, by contracting with rights defense agencies. Unlike in democracy where the benefits of casting an informed vote are extremely low because your vote has an infinitely small probability of making a difference, under market anarchy the rights defense agency you chose to contract with has immediate and certain impacts upon your life, thus creating a much larger incentive to cast an informed (metaphorical) vote by choosing to purchase the services of a preferred rights defense agency.

Deliberation about legal policy is far more likely to be more reasoned in market anarchy than in democracy. First, because market anarchism is more radically experimental than political democracy. Freedom of speech and of thought in democracy is often likened to a metaphorical “marketplace of ideas,” but in market anarchy it is a literal marketplace in which the ideas are not chosen just by speculation and public deliberation, but actually experimented with and acted upon in practice. Democracy is only “experimental” in a priori public deliberation about policies, but market anarchy is “experimental” in actually applying those policies and assessing their results a posteriori. Under democracy, once a policy is chosen it becomes difficult to assess counterfactually if another potential policy could have yielded better results, thus it is difficult to ascertain which was the superior policy. It is as if scientists in a lab simply talked about the hypothetical results of various hypothetical experiments and chose theories based on their discussions rather than actually testing the theories by actually running the experiments. Because of the polycentric nature of law under market anarchy, multiple policies are taken on at the same time, making it easier to tell which is more desirable in practice rather than simple theoretical deliberation.

Another reason why political deliberation is more likely to be reasoned in market anarchy than democracy is because of the institutional mechanisms for choosing policy. The main way law is “made” in democracy is through legislation voted on by representatives, who are ultimately accountable to the public through general elections. Often, debate on the floor of legislative bodies is anything but reasoned and deliberative, and clearly discussion about elections quickly devolves into mindless partisan bickering, sensationalist “scandals,” and populist rhetorical flair rather than reasoned discussion about policies. In market anarchy, however, law is “discovered” by private arbitrators and judges who are ultimately accountable to the defense firm’s consumers in the marketplace. It is pretty clear that real-world courtrooms tend to have a more elevated level of dialogue than legislative bodies, to say less of public elections, and I fail to see why this would not be the case under market anarchism.

Further, there wouldn’t be a need for partisan bickering and debates that bring down the level of public discourse in market anarchy, for similar reasons why there isn’t nearly as nasty debates about preferences for consumer goods as there are about politics. To use an analogy, in democracy, if we’re voting on what soda to consume, whoever wins the vote gets a monopoly on their preferred soda; so my preference for Coke could possibly eliminate your ability to enjoy Pepsi; but in a market, if I prefer Coke you still can drink Pepsi, meaning we don’t need to bicker about our consumer preferences. It is similar (though clearly not identical because when we’re talking about law it’s quite a bit more consequential) with legal policies: in democracy, if I prefer one set of legal rules to another which you prefer, we must fight over how to vote because the two are mutually exclusive; but in market anarchy, because law is polycentric and not monolithic, they are not mutually exclusive so we don’t need to fight nearly as hard for it. There’s a good reason why debates among consumers for products they prefer (Coke v. Pepsi, Apple v. Windows, Android v. iPhone) rarely get as nasty as debates in democratic politics, because there is room for disagreement at the end of the day in a market that there is not in politics.

Conclusion

Clearly, democracy is far from the ideal method of political organization. As classical liberals throughout history have shown, despite the fact that it may be possible to other political forms such as oligarchy and monarchy, it has a tendency towards the tyranny of the majority and massive collective action problems. However, the philosophical aspirations of the most ardent defenders of democracy are still extremely valuable, even if their preferred institutions fail to deliver. Market anarchism is a reasonable synthesis of these two insights; it has the potential to live up to the aspirations of pragmatist democrats without the major, systemic problems of real working democracies that undermine those aspirations.

John Dewey once said “democratic institutions are no guarantee for the existence no guarantee for the existence of democratic individuals,” what is needed is a better set of institutions that have a higher probability to cultivate Dewey’s idea of “democratic individuals.” Market anarchism appears to be a viable candidate for such a set of institutions.

From the Comments: Why care about Syrians?

Dr Gibson notes:

I’d say the “big question” makes no sense. Surely some Syrians would be better off under ISIS and some under Assad.

And there’s a bigger question: who the hell cares? Few if any of us Americans have enough information to judge this issue nor should we. We have our own fish to fry. The Washington politicians have done incalculable damage with their ceaseless meddling in the affairs of the Middle East and elsewhere. Let the Syrians and their immediate neighbors sort this out.

I wanted to draw this excellent comment out for two reasons. Reason number one has to do with Dr Gibson’s first paragraph. Questions rarely make sense (which is why you ask people for help), but suppose you asked whether Syrians would be better off under capitalism or socialism. Some Syrians would be better off under socialism than capitalism, but that doesn’t mean it’s just as good as capitalism. Right? One of those systems is better for far more people than the other, and as an individual don’t you have a moral duty to support the more just system in some form or other? These are questions that libertarians, especially libertarians in the United States, should be asking themselves more often than not. There is a disturbing tendency among this faction of libertarians to lean in the direction of nationalist parochialism when it comes to matters outside of our borders. This brings me to reason number two for highlighting Dr Gibson’s (quite excellent) comment: Reminding libertarians and classical liberals that our creed is an international (and a humble) one.

War refugees represent the humblest of our species. The UN estimates that the war has affected nearly 12 million Syrians so far and, of course, that doesn’t include all of the people outside of Syria’s borders who have been affected. Russians, Europeans, North Americans, Syria’s immediate neighbors, and East Africans have all been affected by the ongoing war. How could you not be interested, especially from an individualist point of view?

I think the problem of the American libertarian’s parochialist nationalism stems from Murray Rothbard’s Cold War-era writings. Unlike F.A. Hayek and Ludwig von Mises, who were both big supporters of more international cooperation (but who both saw the glaring flaws in organizations like the UN and what is now the EU), Rothbard’s writings on foreign affairs were heavily influenced by the fact that the world was dominated by two superpowers and that the government he lived under used lies and deceit to counter Moscow’s power plays. Rothbard’s world of bi-polar geopolitics is long gone. It doesn’t exist. It will not exist again in my lifetime. Ours is a world of multipolarity. Yet somehow Rothbard’s writings on foreign affairs (which descended into outright incoherence near the end of his life) still have a profound impact on the American libertarian movement.

Much of my work here at NOL is dedicated to eviscerating this long-expired mindset from the American libertarian movement. Isolationism is nationalist, plain and simple (just pay attention to the rhetoric of libertarians like Justin Raimondo or Doug Bandow if you need more convincing), but Warren’s point about Washington’s meddling in the affairs of other states remains pertinent. So perhaps a different question to ask (even if it doesn’t make sense) is what a more internationalist-minded, in the vein of Hayek and Mises and Adam Smith, US foreign policy would look like. (I’ve been asking this question for a while now.)