[This was first published in The Thought (January-February 2005). I have corrected some typos in this version and added a few passages to make this flow better.]
I’ve been arguing the free market anarchist position in one form or another now for several years. Last year, in an online forum, a critic of anarchism asked me for a short explanation of free market anarchism. Providing this in a brief email forced me to boil down a lot of ideas to what I believed were essential to the position. Here follows an expanded version of that email explanation.
Let’s start by defining some terms. Anarchy is the absence of government. By “government” is meant a single agency that enforces social rules, particularly what is called “law.” Naturally, this can cover many things, just as government can. If someone says a society has a government, this doesn’t tell us whether the government is limited or unlimited, democratic or oligarchic or autocratic, or the character of its laws. To give but one example, Spain and the US both had governments during the Spanish-American War, but they were quite different in character. The same is true of anarchy. The absence of government could mean something like a civil war, such as we see in Somalia today, or it could mean a fairly peaceful society, such as that of the American Old West or Iceland circa 1000 CE.
Anarchism is the view that some form anarchy would be a better way of organizing society – that things would be better without a government at least in some circumstances. This does not mean that any form of anarchy – any absence of government is better than any government. The worst form of anarchy might be far worse than the best form of government – whether one compares theoretical cases or historical ones. The anarchist need not posit that all anarchies are better than any government. Nor is anarchism flawed if there indeed is some government that is better than some anarchy.
The absence of government, as noted above, can take many forms, some tried and some hypothesized. Just as there are many forms of anarchy, there are many forms of anarchism. Each particular variant of the latter posits some particular kind of anarchy that is better than government – either in general or as one is likely to find. E.g., free market anarchism posits that legal authority should be competitive. Anarcho-socialism, on the other hand, mainly focuses on dispensing with private property. (I won’t go into anarcho-socialism in any detail.)
Minarchism is minimal government. While there are many different flavors of minarchism, the general idea is to strictly limit government to only what is seen as legitimate role. The legitimate role for minarchism is to have the government act only to respond to the initiation of force and perhaps to settle disputes. Usually, this boils down to government protecting only individual negative rights, such as the right to life, liberty, property, and the pursuit of happiness in the classical liberal sense of those rights. (I use “individual negative rights” to distinguish them from collective rights – rights supposed to belong to groups, such as ethnic groups, nations, classes, gender-based groups, or what have you – and from positive rights – rights supposed to guarantee something, such as rights to a job, education, medical treatment, food, housing, etc.)
Statism is any social or political system that concentrates power in the hands of governments at the expense of individual negative rights or freedoms. Statism per se is different from minarchism – at least in theory. (Some anarchists would argue that a having a government at all violates individual rights and freedoms because to remain a government it must not allow competitors to operate inside its territory. Some minarchists would argue that there’s no right to choose between competing governments.)
Why worry about anarchy and government? There is one major problem of living in society: how to get along with other people. As long as no disputes arise, there is no problem, but when they do arise – as they have in all known societies – there needs to be a means of resolving them. So what happens when people can't coordinate their actions? E.g., if Stan does something that negatively impacts Eileen, such as, to use an example from Ellickson (1994), let's his sheep graze on Eileen's wheat field.
One generally accepted solution to this problem is to define property rights between such parties. This way, each party can be sure, to some extent, of what is expected of her or him (or them) and can reduce social conflict. (I'm not claiming here that this is a planned outcome, but more that it's a spontaneous order that evolves based on human actions not human design. Put another way, societies that are able to resolve such conflicts and increase social coordination tend to be more successful and flourish. Hence, relatively free societies. Those that can’t resolve such conflicts in a mostly peaceful fashion and otherwise increase social cooperation have to rely on other policies to continue to exist or grow. Hence, statism and imperialism.)
Defining property rights alone is not enough. They can provide a framework within which to resolve disputes, but they don’t enforce themselves. So how should property rights be enforced? (Many minarchists claim that property rights exist independent of government, so no government is needed define them ab initio. Most natural rights theorists, such as John Locke and Ayn Rand, believe much the same. Rights precede government.) The problem is not so hard if one postulates that the people involved have the incentive and information to do so. However, in the real world, not only might incentives be otherwise (after all, in any real society some people steal, assault, rape, and kill), there's still an information problem. On the latter, in any given case, it might be hard to define a concrete right to property and hard to define when a violation of such a right happens or what should be done in such a case; e.g., if Stan walks across Eileen's lawn today, should she be able to shoot him two years later when she finds out about it?
By the way, this example is not a strike against anarchism, but a general problem with enforcing rights or any social rule. Arbitrary laws and punishments exist under government. There is no guarantee that even the best minarchy won't have such, given the potential for errors and corruption. A question to ask here is: What type of system is more likely to have these kinds of outcomes? A related question is: What type of system is more likely to correct them when they do happen?
These problems, however, are regularly overcome, again, by spontaneous orders. In a free market, people have an incentive to overcome the information problem to further social coordination mainly out of self-interest and through the ability of market actors to use dispersed and even tacit information. (Hayek 1980)
This does not mean every last member of society will perceive the incentives or once perceiving them not forego short-term gains over long-term ones. In fact, in markets, this happens all the time. Aside from sheer ignorance (not knowing what you don’t know: not knowing even the scope of your ignorance; see Kirzner 1992), people sometimes misjudge and incentives don't impact each individual the same way. However, the costs of such mistakes are visited locally and mostly on those making the choices.
Despite these shortcomings, markets do fairly well in the provisioning all sorts of goods and services. (It is more accurate to say that individuals interacting through markets do fairly well in the provisioning all sorts of goods and services. Alternatives to markets are, likewise, ways of people interacting through some alternate system.) The alternative to markets is to have some form of central control over such provision. Most minarchists accept markets in general, but still believe there are certain activities that markets either can't do well or can't do at all. For minarchists, the main one of these is the provision of rights enforcement services. They argue for having central control over such services, usually configured for a given geographical area. This would mean that, in the area of rights enforcement (for now, let’s bundle security as well as dispute resolution into this function), there must be a centrally planned and controlled order – in short, a government. Hence the debate over anarchism (or polycentric legal orders) and government (or monocentric legal orders).
I believe that one can be objective here by asking a few questions that won't prejudice the issue. For example: would a polycentric or a monocentric legal order work better at rights enforcement? (It could be that the answer to these questions is neither – that both work equally well, as good or as bad.) Which type of order is more stable? Do different types of cultures fit better into one type of order or the other? How do such orders evolve over time? Are there historical examples of either worth considering? Can either be applied to today’s world? How do we get to either from current social arrangements? (It might be that there is no easy path to either or that one is much easier to accomplish than the other, so we should take the easier path.)
I would add to the above that minarchism is not just any monocentric legal order, but a certain type. Obviously, neither type of legal order mentioned above has to be rights respecting. One can imagine a polycentric one that is probably many a minarchist’s view of anarchism: civil war or the international system of today. In the latter case, there is no international government, so the legal order is polycentric, but not the type most anarchists would applaud. (Waltz 1979) Note that this condition is not completely lawless as even between nation states spontaneous orders can arise – as well as planned ones such as treaties, agreements, alliances, and international institutions.
Likewise, monocentric legal orders need not be rights respecting. All known nation states within their own borders are monocentric legal orders and all of them have violated rights on a greater or lesser scale and not just by accident.
An auxiliary question, one related to the one about social evolution above, is: Is one type of legal order more likely to change into a worse form even if it starts out near its optimum? More concretely: would a minarchy be more likely over time to evolve into statism? Would a good form of anarchy be more likely to evolve into lawlessness? This also goes for evolution to something else entirely. After all, one can imagine a quite limited government having a civil war and that leading to lawlessness. One can also conceive of an anarchic society evolving into a statist one. In fact, at this time in history, some form of statism seems to be the end state of all socio-political evolution.
Where I stand here should be quite clear: I believe free market anarchism is more effective and efficient at rights enforcement than minarchism or any form of government. I also believe polycentric legal orders are more stable in the long run, while monocentric ones tend toward less stability. In fact, from the historical record, they tend to undergo revolutionary changes after periods of stasis leading until pressure builds (discontent rises) for the next revolutionary change. This has been the history of nation states. This tendency exists because monocentric legal systems are less efficient at solving the information problem – for the same reason central planning in other areas fails relative to free markets – and also because the incentives are decoupled or only loosely coupled with costs. Thus, even if saints peopled governments, they would still have the information problem to contend. They are not, so they also have the incentive problem.
(The difference between polycentric and monocentric legal systems can be put in terms of a the difference between exit and voice systems. (Lieberman 1989) In an exit system, one can select between providers for a good or service. In a voice system, one can't select between such providers, but one can have in a say – a voice – in how a good or service is provided. These are, respectively, incarnate in free markets and governments. In a free market, one usually selects between providers. That's the main form of feedback between providers and consumers. In a government, one cannot make such selection (save by emigrating), though often one has some voice in the government – whether through elections, polls, lobbying, or other means. Which system responds better to the people it services?)
Anarchic societies, likewise, are not peopled by saints, but by having competition in rights enforcement, the knowledge problem is, while not completely solved, much more manageable because there will be a free market in law. The incentive problem, again while not completely solved, is mostly solved because costs and incentives are aligned with costs. The ability to select between different providers of law means that such providers have to compete to better their product or lose clients to other purveyors – at least, at the margin.
This is a mostly political-economic justification for anarchism and more Hayekian than Rothbardian. (Not that Hayek was an anarchist, but I rely on his view of the market here instead of Rothbard's view of natural rights.) This is not to say Rothbard’s rights basis for anarchy is wrong. I believe it complements the Hayekian social order basis. One would expect this if natural rights derive from human nature. One would expect them to be consistent with human economic and social nature as well as with psychology and the rest of human nature. The two are compatible. Or, as Hegel would put it, the True is the Whole. Each perspective is part of that Whole.
Examples of this type of anarchy have existed in the past, such as the Law Merchants (Benson 1990), Early Iceland (Friedman 1989; Long 2002), Celtic Ireland (Rothbard 1973), the Kapauku Papuans (Benson 1990), and the American Old West (Benson 1990). There are many others and there are also borderline cases, such as the British Colonies in North America. George H. Smith pointed out that a competitive condition existed between the British government and colonial governments and this checked each other’s powers before the War of Independence. While no anarchy per se, it was an instance of not having a monopoly government in one geographic area.
Law also preceded government. As Roderick Long points out, "for the overwhelming preponderance of historical and anthropological evidence verifies that law is far older than the state. Until recently, states were the exception, not the norm, in human society; and stateless societies have enjoyed quite sophisticated and long-lasting legal codes." (Long 1998) In other words, societies had laws long before they had governments. The first evidence of governments seems to date back maybe five or six thousand years. Even then, such governments were small and most of mankind still lived without any government. So, it’s safe to say that humanity has lived for most of its history – maybe one hundred to three hundred thousand years or even more – without government.
What of minarchism? No government has yet been a full-fledged minarchy. Some constitutional states in the West may have come close, but only for a very short space of time. The limited governments of the United States, Britain, and other nations have violated individual rights as a matter of routine. It's also notable that even the most limited constitutional state has grown outside its limits very quickly. The problem with using constitutional and other legal limits – at least in the way it's been done – is that such checks on power rely on the government to police itself. The problem always turns on who guards the guardians. (This, and again the knowledge problem that exists for any monopoly.)
Perhaps newer methods of limiting power would work, such as sortition (adding a random factor into elections to prevent influence-peddling; this could be having several rounds of voting for an office where the last round is decided by random selection; see Knag 1998) and the use of supermajorities for key decisions (e.g., increasing spending, engaging in military operations). Yet these all seem like cosmetic solutions as the incentives to increase power and the overall structures remain in place. As long as government stays a monopoly and some people want power, there will be a tendency for the latter to use the former for their ends. New and better limits might make that difficult, but the obstacles will probably never be so great that no one will think the race isn’t worth the candle.
Now, this is a critique of limiting government. It’s not an argument for anarchy, though by showing some of the problems inherent in even the best form of government, it might be found that anarchism, in some form, is as least as appealing if not more so. Also, inherent in systematic thinking is that often many questions are answered at once – the solution to one problem is related to others. The answer of how anarchism works is, to some extent, a challenge to any form of government. This naturally leads, if anarchism is possible, people to question government. After all, if anarchism can do anything minarchism can do, maybe minarchism isn't necessary. A free and open market in political discourse might lead to more people selecting anarchism over minarchism.
Works Cited:
Bruce L. Benson. 1990. The Enterprise of Law: Justice Without the State. Pacific Research Institute for Public Policy: San Francisco.
Robert C. Ellickson. 1994. Order Without Law: How Neighbors Settle Disputes. Harvard University Press: Cambridge, Massachusetts.
David Friedman. 1989 [1973]. The Machinery of Freedom: A Guide to Radical Capitalism. Open Court: Las Salle, Illinois.
Freidrich Hayek. 1980 [1948]. "The Use of Knowledge in Society" in Individualism and Economic Order. University of Chicago Press: Chicago.
Hans-Hermann Hoppe. 2001. Democracy – The God That Failed: The Economics and Politics of Monarchy, Democracy, and Natural Order. Transaction: New Brunswick, New Jersey.
Israel Kirzner. 1992. The Meaning of Market Process: Essays in the Development of Modern Austrian Economics. Routledge: New York.
Sigmund Knag. 1998. "Let's Toss for It: A Surprising Curb on Political Greed" in Independent Review, Vol. 3 No. 2, Autumn 1998.
Myron Lieberman. 1989. Privatization and Educational Choice. Saint Martin’s Press: New York.
Roderick T. Long. 1998. "Why Objective Law Requires Anarchy" in Autumn 1998 Formulations, and available online at http://libertariannation.org/a/f61l1.html
Roderick T. Long. 2002. “Privatization, Viking Style: Model or Misfortune?” in LewRockwell.com June 6, 2002 issue.
Murray N. Rothbard. 1973. For a New Liberty: The Libertarian Manifesto. Macmillian: New York.
George H. Smith. 1991. "Justice Entrepreneurship in a Free Market" in Atheism, Ayn Rand, and Other Heresies. Prometheus Books: Buffalo, New York.
Kenneth M. Waltz. 1979. Theory of International Politics. McGraw-Hill: New York.