The Case of Anarchy, Case Closed: a comment on a talk by David Friedman.

“All human beings are born free and equal in dignity and rights”. At least as long as David Friedman’s dreams do not come true. In the anarcho-capitalist society he proposed in today’s talk rights are goods and services traded on markets. The rights you are born with are then those your parents are paying for. I invite you to think about the destiny of your dignity, if you are born in such a society without solvent and generous parents. It gives me the creeps just as David Friedman has done, when he indirectly preached against the first article of the Universal Declaration of Human Rights.

It was not only the lack of morality. It was also the lack of consistency. He may dream of a world without a government, but the system he sketched was not such. Publicly elected governments were just substituted by private ones individually selected on hypothetical markets. As if it was not bizarre enough that one has to purchase their basic rights just like one has to choose amongst hopefully affordable insurances, Friedman does not even hesitate to sketch the so-called law enforcement companies like organizations we know from Mafia films – sending strong men to protect their clients and punish their adversaries. We now know pretty well how ruling by private clans work out, from organized crime as well as from feudalism. We know that the “freedom of choice” often did not work out that well for those who tried to use it. We know about the economics of scale, network effects and corresponding concentration of power in cartels and monarchies. So, while I still have no clue how an anarcho-capitalist system should achieve a stable outcome in a world of externalities and asymmetric information, we can at least imagine the lack of liberty in a society where rights are distributed as unequally as property.

Money and bloodline already has enough influence on legislation, jurisdiction and execution. To me, giving up my one-vote-per-head democracy in favour of Friedman’s anarcho-capitalism seems just like the final resignation in favour of a sort of legitimised corruption. I cannot deny that governmental failure is obvious and the average voter knows too little about the true incentives, intentions and efforts of the politicians elected and electable. The transaction costs in favour of a well-informed decision, though, would not necessarily decrease only because the provider of law would be a private company instead of a public party. After all I am thankful for Friedman’s talk, which seems to be science fiction rather than scientific. Not only did he give insights into the theoretical and empirical shortcomings of libertarian thought, but he also encouraged me to stick to Winston Churchill’s quote: “democracy is the worst form of government, except for all the others.”

7 thoughts on “The Case of Anarchy, Case Closed: a comment on a talk by David Friedman.

  1. David Friedman can defend himself better than I can, but a few comments in response:

    You, I, and David surely agree that people have rights, among them the right to live freely according to their own plans and ideas. The question is how do you protect those rights most effectively. Which kinds of institutions are most likely to guarantee the freedom and dignity of people? I agree that the anarcho-capitalist system proposed by David cannot guarantee that rights won’t be violated. But neither can any other system of governance, including our modern liberal democracies! Democracies will only protect fundamental rights as long as the majority of the people are willing to protect them.

    Similarly, internal stability is a problem for all systems, not just David’s. Look at the historical record, and you will find that liberal democracies are very unstable. The constitution of the First Austrian Republic was designed by one of the greatest legal scholars at the time, and it lasted only a decade before it degenerated into a fascist regime. The same is true for the Weimar Republic. For a more recent example, take Turkey under Erdogan. Or Venezuela under Maduro. The most stable liberal democracies in history that I can think of are Switzerland and the USA. And even there, people were not all free and treated with equal dignity for a long time.

    You misrepresent David’s idea of rights enforcement agencies. As he explained in the talk, the violent solution to conflict between agencies (like the Mafia wars) will probably not occur, because it’s usually much cheaper for the agencies to have disputes settled by an arbitrator (a private court). One cannot rule out that agencies will declare war to each other every now and then, just as one cannot rule out that governments declare war to each other every now and then.

    Your right to vote is pretty useless in a country of millions of people. In the anarcho-capitalist system, you have a much more useful right to choose who protects your rights and under what kind of law your disputes will be settled. It is true that rich people will get better protection of their rights than poor people. But poor people get pretty bad protection under our government systems as well (compare the Upper Eastside of Manhattan to the South Side of Chicago).

    It is usually wise to stick to Churchill, but I think it’s worthwhile to take David’s vision seriously and think through the advantages and disadvantages of such a system even if it looks “bizarre” to you. After all, constitutional democracy seemed bizarre to most people before it was tried for the first time on a large scale in 1776 in a remote place of the world – and now it’s the norm.

    • @maxgoedl:

      Your (and Professor Friedman’s) description of parliamentary democracy is quite abstract. The truth, however, is always concrete (Hegel). Within a parliamentary democracy we do not observe a constant referendum that is held over every right (referendums are in fact rare exceptions), but a complex interplay between the constitution, the rules of parliamentarism, lobbyism, resistance etc…. Some economists may say that it does not pay off to vote, but in reality most people still vote because the utility of voting is probably much larger than just the effect one vote may have. But even if we assume that abstract notion of a democracy with a population of 1 million people where everybody has exactly the 1 millionth of the political power, anarcho-capitalism will enhance the political power of the rich (who can buy their own legal system, their own police etc.) at the expense of the poor.

      The stability of a system does usually not depend on its legal rules (otherwise the Second Austrian Republic would have already collapsed as the federal president basically has the same rights that were legally sufficient to implement a dictatorship in 1933), but rather on social dynamics that are intertwined with the form of government, but certainly not limited to it. In the final analysis the existence of a political system depends on the violence the rulers, their allies and their enemies are able and willing to use to protect a system or overthrow it. This question is totally ignored by Prof. Friedman which ultimately leads to the belief that nobody would hurt anybody out of fear of losing fighters. Real world experience (including from countries with very weak central governments like Afghanistan) tells us otherwise. Courts are only relevant in a modern society because the state commands policemen and military personell wih guns, assault rifles, tanks and so on – more capacity for violence than any gang in the country – to enforce the decisions of the judges. It is fair to believe that parliamentary democracy will not be the end of history – but are we willing to exchange it for Prof. Friedmans dystopian vision of anarcho-capitalism?

      • “the existence of a political system depends on the violence the rulers, their allies and their enemies are able and willing to use to protect a system or overthrow it. This question is totally ignored by Prof. Friedman which ultimately leads to the belief that nobody would hurt anybody out of fear of losing fighters.”

        That’s a strange statement, given that David spent a considerable time in the talk, and has written extensively (see for instance the chapter on The Stability Problem in Machinery of Freedom), on exactly the issue of who faces what incentives to use violence. You may disagree with his analysis after you have read. But to say he ignores it is just not true.

      • @maxgoedl:

        Again: In the talk as well as in his book Friedman tries to convince us that the use of violence is a disadvantage. It is a disadvantage if you have less capacity for violence at your disposal than your enemy. Therefore it is always a disadvantage in nowadays societies because there is a government that always has more firepower at its disposal than any other criminal organisation for example. But this is not true under anarcho-capitalism!

        D. D. Friedman tries to design an anarchist society (!) like a social planner would do and it’s really strange to assume that he could be right while every other social planner caring for much smaller problems must be wrong

      • “It is a disadvantage if you have less capacity for violence at your disposal than your enemy.”
        I don’t think that’s accurate. History provides numerous examples that the party with the larger military power can sometimes lose a battle (e.g. the Battle of Agincourt or the Siege of Malta). And even if the larger power wins (it normally does), it may suffer severe casualties. Anticipating these losses, it can be in the interest of even the largest military power to negotiate a peace with weaker enemies. The point is: violence is expensive even for the strongest party. Therefore it is reasonable to expect, as David Friedman does, that competitive rights protection agencies will find cheaper and more peaceful ways to settle disputes.

        I wouldn’t characterize him as “designing” an AnCap society. He outlines a set of private institutions for the creation, enforcement and adjudication of laws and tries to show how such a system could arise from gradually rolling back the modern state in a piecemeal fashion, see “How to Sell the State is Small Pieces” in his book. His system might emerge spontaneously from this process or not. As mentioned in the lecture, and described in his new book (“Legal Systems Very Different From Ours”), some of the private institutions he envisions have existed in historical societies (e.g. medieval Iceland, pre-colonial Somaliland, 18th century England) and some continue to exist today (e.g. private courts of arbitration), but it’s true that a purely AnCap society has never existed before, probably will never exist. Even so, I believe that thinking about a hypothetical AnCap society we might learn something about how we could improve our existing systems of government to make society freer, more prosperous and less unjust. There are lots of interesting ideas along these lines in the “Machinery”.

  2. Pingback: On David D. Friedman’s view about climate change | christophzwick

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