anarcho-capitalism

Friedman on Anarchy and Conservatism

Friedman is David D. Friedman, proprietor of Ideas and author of (among many things) The Machinery of Freedom, which is mainly a sustained argument for anarcho-capitalism. As Friedman explains in the preface,

[t]he first edition of this book was written a little over forty years ago, the second about twenty years later. In this third edition, as in the second, I have chosen to leave the original material for the most part unchanged; references in parts I-III are to the world c. 1970, in part IV to the world c. 1988….

What I have added in this edition, aside from minor stylistic changes … is in parts V and VI. Part V contains later, I hope deeper, thoughts on my earlier ideas, part VI new material.

Friedman’s attachment to anarcho-capitalism has held for almost 50 years. That’s a remarkable record of intellectual consistency. Whether it signifies the soundness of anarcho-capitalism or merely world-class stubbornness is another matter. (In the past 50 years, my own views have evolved from collegiate “liberalism” to limited-government libertarianism to Burkean conservatism.)

Before I go further, I will say that I admire and agree with Friedman’s lucid treatment of free markets and their advantages vis-à-vis government regulations and government-provided services. But I disagree with Friedman’s view that private entities can replace government when it comes to criminal justice. I also disagree with Friedman’s characterization of conservatives as stubbornly opposed to change.

I must note, also, that Friedman’s main style of argumentation in The Machinery of Freedom is to pile assertion upon assumption, and to do so at such length and in such temperate language that the unwary or receptive reader may be lulled into agreement. The Machinery of Freedom is a long book (378 pages in paperback), so I will only offer a few examples of Friedman’s style — examples that I consider representative. The first example is drawn from chapter 29, “Police, Courts, and Laws — on the Market,” in which Friedman argues for private protection and adjudication agencies. He begins reasonably enough:

How, without government, could we settle the disputes that are now settled in courts of law? How could we protect ourselves from criminals?

Consider first the easiest case, the resolution of disputes involving contracts between well-established firms. A large fraction of such disputes are now settled not by government courts but by private arbitration of the sort described in Chapter 18. The firms, when they draw up a contract, specify a procedure for arbitrating any dispute that may arise. Thus they avoid the expense and delay of the courts.

The arbitrator has no police force. His function is to render decisions, not to enforce them. Currently, arbitrated decisions are usually enforceable in the government courts, but that is a recent development; historically, enforcement came from a firm’s desire to maintain its reputation. After refusing to accept an arbitrator’s judgment, it is hard to persuade anyone else to sign a contract that specifies arbitration; no one wants to play a game of ‘heads you win, tails I lose’.

Arbitration arrangements are already widespread. As the courts continue to deteriorate, arbitration will continue to grow. But it only provides for the resolution of disputes over pre-existing contracts. Arbitration, by itself, provides no solution for the man whose car is dented by a careless driver, still less for the victim of theft; in both cases the plaintiff and defendant, having different interests and no prior agreement, are unlikely to find a mutually satisfactory arbitrator. Indeed, the defendant has no reason to accept any arbitration at all; he can only lose—which brings us to the problem of preventing coercion.

Friedman then explains market-based solutions to the problem of preventing coercion. What follows, until I signal a new topic, are excerpts of his discussion with my commentary (underlined in brackets):

Protection from coercion is an economic good. It is presently sold in a variety of forms—Brinks guards, locks, burglar alarms. As the effectiveness of government police declines [this seems to be an assumption disguised as a fact-based assertion], these market substitutes for the police, like market substitutes for the courts, become more popular [or they could become more popular as supplements to government policing, which is limited by the amount that governments are able to extract from taxpayers].

Suppose, then, that at some future time there are no government police but instead private right enforcement agencies. [Realistically, there would be no government police — or unregulated private police — only if government itself were to disappear. I view that as an impossible event.] These agencies sell the service of protecting their clients against crime. Perhaps they also guarantee performance by insuring their clients against losses resulting from criminal acts. [How would private agencies differentiate themselves from gangsters who sell “protection”? This is an issue of trust that seldom arises with government police (or only among a small fraction of the populace), and an important reason for the retention of government police.]….

[Private agencies] would be selling a service to their customers and would have a strong incentive to provide as high a quality of service as possible at the lowest possible cost. It is reasonable to suppose that the quality of service would be higher and the cost lower than with the present governmental protective system. [Whether the cost would be lower depends to some extent on the scale of private agencies relative to the government ones they would replace. It’s premature to make assertions about quality of service before addressing the problem of inter-agency conflict.]

Inevitably, conflicts would arise between one agency and another. How might they be resolved?

I come home one night and find my television set missing. I immediately call my agency, Tannahelp Inc., to report the theft. They send an agent. He checks the automatic camera which Tannahelp, as part of their service, installed in my living room and discovers a picture of one Joe Bock lugging the television set out the door. [The security camera is a nice touch, but it strongly suggests that Tannahelp is providing a supplemental service, not merely supplanting government police. A lot of people can’t afford supplemental police services. Who do they turn to if there are no government police?] The Tannahelp agent contacts Joe, informs him that Tannahelp has reason to believe he is in possession of my television set, and suggests he return it, along with an extra ten dollars to pay for Tannahelp’s time and trouble in locating Joe. Joe replies that he has never seen my television set in his life and tells the Tannahelp agent to go to hell.

The agent points out that until Tannahelp is convinced there has been a mistake, he must proceed on the assumption that the television set is my property. Six Tannahelp employees, all large and energetic, will be at Joe’s door next morning to collect the set. Joe, in response, informs the agent that he also has a rights enforcement agency, Dawn Defense, and that his contract with them undoubtedly requires them to protect him if six goons try to break into his house and steal his television set.

The stage seems set for a nice little war between Tannahelp and Dawn Defense. It is precisely such a possibility that has led some libertarians who are not anarchists, most notably Ayn Rand, to reject the possibility of competing free-market rights enforcement agencies.

But wars are very expensive and Tannahelp and Dawn Defense are both profit-making corporations, more interested in saving money than face. I think the rest of the story would be less violent than Miss Rand supposed. [Maybe, maybe not. It’s just as likely that the most successful agency, and the eventual monopolist in a geopolitical area, will be the one that’s most aggressive, and which can afford to be aggressive because it numbers wealthy people among its clientele.]

The Tannahelp agent calls up his opposite number at Dawn Defense. ‘We’ve got a problem. . . .’ After explaining the situation, he points out that if Tannahelp sends six men and Dawn eight, there will be a fight. Someone might even get hurt. Whoever wins, by the time the conflict is over it will be expensive for both sides. They might even have to start paying their employees higher wages to make up for the risk. Then both firms will be forced to raise their rates. If they do, Murbard Ltd., an aggressive new firm which has been trying to get established in the area, will undercut their prices and steal their customers. [How convenient.] There must be a better solution.

The man from Tannahelp suggests that the better solution is arbitration. They will take the dispute over my television set to a reputable local arbitration firm. If the arbitrator decides that Joe is innocent, Tannahelp agrees to pay Joe and Dawn Defense an indemnity to make up for their time and trouble. If he is found guilty, Dawn Defense will accept the verdict; since the television set is not Joe’s, they have no obligation to protect him when the men from Tannahelp come to seize it. [An aggresssive agency of the kind that I posit above is also likely to have a monopoly on arbitration services — either overtly or through sub rosa relationships.]

What I have described is a very makeshift arrangement. In practice, once anarcho-capitalist institutions were well established [but how do we get from here to there?], agencies would anticipate such difficulties and arrange contracts in advance, before specific conflicts occurred, specifying the arbitrator who would settle them.

In such an anarchist society, who would make the laws? On what basis would the private arbitrator decide what acts were criminal and what their punishments should be? The answer is that systems of law would be produced for profit on the open market, just as books and bras are produced today. There could be competition among different brands of law just as there is competition among different brands of cars.

In such a society there might be many courts and even many legal systems. Each pair of protection agencies agree in advance on which court they will use in case of conflict. Thus the laws under which a particular case is decided are determined implicitly by advance agreement between the agencies whose customers are involved. In principle, there could be a different court and a different set of laws for every pair of agencies. In practice, many agencies would probably find it convenient to patronize the same courts, and many courts might find it convenient to adopt identical, or nearly identical, systems of law in order to simplify matters for their customers. Before labeling a society in which different people are under different laws chaotic and unjust, remember that in our society the law under which you are judged depends on the country, state, and even city in which you happen to be. Under the arrangements I am describing, it depends instead on your agency and the agency of the person you accuse of a crime or who accuses you of a crime. In such a society law is produced on the market. A court supports itself by charging for the service of arbitrating disputes. Its success depends on its reputation for honesty, reliability, and promptness and on the desirability to potential customers of the particular set of laws it judges by. [No, its success depends on selling its services to the highest bidders, who will be willing to pay for partial “justice” — as opposed to the impartial kind that criminal courts in the U.S. usually dispense.]….

Several objections may be raised to … free-market courts. The first is that they would sell justice by deciding in favor of the highest bidder. That would be suicidal; unless they maintained a reputation for honesty, they would have no customers— unlike our present judges. [This assertion conveniently disregards the strong possibility of a monopoly acquired through force and bribery. The stakes are such that war-like competition for the top-dog position, as costly as it is, can’t be ruled out. See, for example, the history of the Chicago Outfit and rivals in the days when government police were relatively ineffective.]….

Until he is actually accused of a crime, everyone wants laws that protect him from crime and let him interact peacefully and productively with others. Even criminals. Not many murderers would wish to live under laws that permitted them to kill— and be killed. [Everyone? Surely not. There are large numbers of persons, especially among the least rational and most dangerous segment of the populace, who simply don’t think like economists. And even among rational persons of means, there are many who believe that they have the wherewithal to defend themselves while getting away with murder and other anti-social acts.]

I turn now to chapter 63, “The Conservative Mistake.” This is less an apology for anarchy than it is a defense of open borders and an indictment of those who resist change. I take it up because it further illustrates Friedman’s penchant for making broad, unsupported, and (sometimes) off-target assertions — in this case about conservatism.

Critics of free immigration worry that immigrants might change the country, make it more socialist, more crime ridden, more like the places they are coming from, but offer no strong reason to expect those particular effects. Leaving the place where you grew up to move somewhere very different is, after all, evidence that you prefer the latter. [But “you” prefer the latter for particular reasons. Among those reasons is the knowledge that the new country offers a rather cushy “safety net” relative to that of the old country.] As I pointed out in one exchange, the Volokh brothers, associated with the popular libertarian/conservative legal blog the Volokh Conspiracy, are immigrants from the ex-Soviet Union. While Eugene and Sasha Volokh are slightly more socialist than I am, they are much less socialist than most of their fellow academics, not entirely surprising given that they have experienced socialism at first hand. [They are also unrepresentative of the vast numbers of immigrants who pour into the country from the south, and whose presence predictably results in higher taxes and lower wages for the many citizens who don’t reap the benefits of immigration.]

The same assumption, that change is presumptively bad, appears in arguments over global warming. [That change, in the form of unfettered immigration, will impose costs on citizens is a reasonable position for many citizens to take. Friedman glibly lumps opposition to that kind of change with the religious fervor which accompanies opposition to and fears of global warming, genetically modified foods, and fracking. The opening sentence spoils this otherwise trenchant paragraph.] It seems likely that the average temperature of the globe will go up by several degrees C over the next hundred years due mostly to increased carbon dioxide in the atmosphere. If I had to guess, my guess would be that the net effect of the change will be positive, for at least two reasons. The first is that human habitability is limited mostly by cold, not heat— the equator is populated, the poles are not. The second is that, for well understood reasons, global warming can be expected to increase temperatures more in cold places and at cold times than in warm. Combine those two and one might guess that a somewhat warmer world would be, on the whole, more suited to humans, not less. Yet most people discussing the issue take it for granted that the change is bad, indeed catastrophically bad. A similar pattern holds for a variety of other issues, from fracking to cloning to GMO foods.

I call it a mistake, but perhaps that is unfair. We know that the present is at least tolerable, since we are at present tolerating it. [Who is “we”? And what does it mean to “tolerate” something. I can “tolerate” a toothache, but for only as long as it takes to have the tooth treated or extracted.] A change might make things better, might make them worse, so why chance it? That sounds like a plausible argument, but it contains a hidden assumption— that stasis is an option, that if we do not have more immigration our cultural and political circumstances will remain the same, that without anthropogenic CO2, climate will stay what it currently is. [In the case of immigration, Friedman again resorts to an inappropriate collective view. There are many citizens whose lives are made worse because of immigration, even as there are many citizens who benefit from the availability of low-wage labor in yard maintenance, child care, and fast-food service.]

Both are demonstrably false. Over my lifetime the cultural and political institutions of the U.S. have changed for reasons that had little to do with immigration. [Immigration, however, imposes changes over and above those that would occur through the evolution of social norms in a more homogeneous polity.] Over the past million years, the climate of the earth has changed radically time after time for reasons that had nothing to do with anthropogenic CO2. A rise in sea level of a foot or two would create problems in some parts of the world, but not problems comparable to the effect of half a mile of ice over the present locations of Chicago and London.

The left wing version of the conservative mistake comes with its own pseudoscientific slogan, ‘the precautionary principle.’ It is the rule that no decision should be made unless one can be confident that it will not have substantial bad effects, that the lack of a reason to expect it have such effects is not enough. It sounds plausible, merely a matter of playing safe, but a moment’s thought should convince you that it is not merely wrong, it is internally incoherent. The decision to permit nuclear power could have substantial bad effects. The decision not to permit nuclear power could also have substantial bad effects. If one takes the precautionary principle seriously, one is obligated to neither permit nor forbid nuclear power and similarly with many other choices, including acting or not acting to prevent global warming.

Continuing with that example, I have long argued, only partly in jest, that the precautionary principle is a major source of global warming. Nuclear power is the one source of power that does not produce CO2 and can be expanded more or less without limit. A major factor restricting the growth of nuclear power has been the precautionary principle, even if not always under that name— hostility to permitting reactors to be built as long as there is any chance that anything could go wrong. That example demonstrates my more general point: Stasis is not an option. The world is going to change whether or not we permit nuclear power and there is no a priori reason to expect the changes if we permit it to be worse than those if we do not.

I am not arguing that there is never a good reason to fear change; sometimes a change can be reasonably predicted to have bad consequences. I am arguing that much opposition to change, across a wide range of different topics and disputes, is based on the mistaken assumption that if only that particular change is prevented, the next year, the next decade, the next century, will be more or less the same as the present. [Not so. Principled conservatives — and there are still a lot of us — understand and accept the beneficial role of evolutionary change, unforced by government policy.]

That is very unlikely. [No kidding!]

It’s not that I disagree with Friedman’s disdain for government, which is far, far more intrusive than is economically and socially healthy. But Friedman, whose high intelligence is beyond doubt, puts that intelligence to bad use in his biased argument for an unattainable nirvana and mistaken characterization of conservatism.

Bounded Liberty: A Thought Experiment

Imagine an anarcho-capitalist enclave in which membership and all interpersonal transactions are voluntary. (Assume, for the sake of simplicity, that the enclave is populated only by sane adults.) Disputes that cannot be resolved by the parties are resolved through arbitration, to which all members of the enclave subscribe as a condition of membership. As a further condition of membership, contractual obligations and adherence to the decisions of arbitrators are enforced by a  private agent, which is appointed for the sole purpose of such enforcement by the unanimous consent of the members of the enclave. In the alternative, individuals or groups of individuals would hire their own private agents to negotiate disputes. (That the agent or agents might assume state-like power or act like warlords are possibilities too realistic to be admitted by anarcho-capitalists.)

The libertarian spirit which reigns in this Anarcho-topia implies, among other things, absolute freedom of speech. There wouldn’t be laws against aggressive speech — slander, libel, harassment, and threats, for example. In fact, there wouldn’t be laws against (or about) anything because laws arbitrarily constrain the voluntary actions of consenting parties. In the absence of laws, aggrieved parties would seek relief and/or restitution through arbitration. At the direction of an arbitrator, an offending party would be expected to grant relief and/or restitution voluntarily. Failure to do so would be grounds for action by the enforcement agency, which has every person’s prior consent to act. Arbitration and enforcement would yield precedents, of course, but precedents would be informational rather than binding.

Now, suppose that a persuasive orator — one who commits no slander, harasses no one, and threatens no one — is able to convince a majority of the enclave’s denizens that the older members of the enclave should be supported by the younger members, all of whom must “contribute” to the support of the elders, like it or not. It’s true that the orator is proposing a course of action that is tantamount to aggression. But it’s entirely possible that an arbitrator would allow speech that isn’t directly aggressive, on the ground that to do so might set a dangerous, anti-libertarian precedent.

Suppose further that the majority forthwith hires a powerful agent — one even more powerful than the one designated as the enforcer of arbitration decisions — to force everyone to “contribute” to the support of elders. (Such an outcome, which effectively destroys liberty in Anarcho-topia, is roughly parallel to the demise of America’s relatively libertarian economic order because of the anti-constitutional regulatory and welfare schemes that have been enacted since the onset of the Progressive Era.)

Perhaps, in hindsight,  Anarcho-topians should have adopted and enforced a restraint on liberty for the sake of preserving it. The restraint might have been that no one could advocate or conspire in the coercion of the populace for any purpose other than the defense of Anarcho-topians.

Why an exception for defense? Imagine the long-term consequences for the enclave if it were to dither as a marauding band approached, or if too few members of the society were to volunteer the resources needed to defeat the marauding band. What’s the good of a commitment to liberty if it leads to the demise of liberty?

Here, then, is the paradox for libertarians: Some aspects of liberty must be circumscribed in order to preserve most aspects of liberty. As always, the question is where to draw the line.

Related reading: As I was polishing this post, which is a remake of “A Paradox for Libertarians” (2005), I happened upon “Libertarianism and Asteroid Defense,” by Ilya Somin at The Volokh Conspiracy. Somin’s post hits the same theme: the foolishness of rights-absolutism.

Related posts:
On Liberty
Parsing Political Philosophy
First Principles
The State of the Union: 2010
The Shape of Things to Come
I Want My Country Back

The Constitution: Original Meaning, Corruption, and Restoration
A Conversation with Uncle Sam
Does the Power to Tax Give Congress Unlimited Power?
Does Congress Have the Power to Regulate Inactivity?
Is the Constitution True?
Is the Constitution True? An Addendum

The Indivisibility of Economic and Social Liberty
Law and Liberty
The Devolution of American Politics from Wisdom to Opportunism
Tocqueville’s Prescience
Line-Drawing and Liberty
The Divine Right of the Majority

Cato’s Usual Casuistry on Matters of War and Peace
The Media, the Left, and War
Torture
The “Predator War” and Self-Defense
The National Psyche and Foreign Wars
Delusions of Preparedness
Inside-Outside
A Moralist’s Moral Blindness
The Folly of Pacifism

Economic Growth since WWII
The Price of Government
The Commandeered Economy
The Price of Government Redux
The Mega-Depression
The Real Burden of Government
Toward a Risk-Free Economy
The Rahn Curve at Work
The Illusion of Prosperity and Stability
Estimating the Rahn Curve: Or, How Government Inhibits Economic Growth