No. Due to its basis in private property, "anarcho"-capitalism implies a class division of society into bosses and workers. Any such division will require a state to maintain it. However, it need not be the same state as exists now. Regarding this point, "anarcho"-capitalism plainly advocates "defence associations" to protect property. For the "anarcho"-capitalist, however, these private companies are not states. For anarchists, they most definitely are.
According to Murray Rothbard ["Society Without A State", in Nomos XIX, Pennock and Chapman, eds., p. 192.], a state must have one or both of the following characteristics:
He makes the same point in The Ethics of Liberty [p. 171].
Instead of this, the "anarcho"-capitalist thinks that people should be able to select their own "defence companies" (which would provide the needed police) and courts from the free market in "defence" which would spring up after the state monopoly has been eliminated. These companies "all. . . would have to abide by the basic law code" ["Society Without A State", p. 206]. Thus a "general libertarian law code" would govern the actions of these companies. This "law code" would prohibit coercive aggression at the very least, although to do so it would have to specify what counted as legitimate property, how said can be owned and what actually constitutes aggression. Thus the law code would be quite extensive.
How is this law code to be actually specified? Would these laws be democratically decided? Would they reflect common usage (i.e. custom)? "supply and demand"? "Natural law"? Given the strong dislike of democracy shown by "anarcho"-capitalists, we think we can safely say that some combination of the last two options would be used. Murray Rothbard argued that judges would "not [be] making the law but finding it on the basis of agreed-upon principles derived either from custom or reason" [Rothbard, Op. Cit., p. 206] while David Friedman argues in The Machinery of Freedom that different defence firms would sell their own laws [p. 116]. It is sometimes acknowledged that non-libertarian laws may be demanded (and supplied) in such a market.
Around this system of "defence companies" is a free market in "arbitrators" and "appeal judges" to administer justice and the "basic law code." Rothbard believes that such a system would see "arbitrators with the best reputation for efficiency and probity. . .[being] chosen by the various parties in the market. . .[and] will come to be given an increasing amount of business." [Rothbard, Op. Cit., p.199] Judges "will prosper on the market in proportion to their reputation for efficiency and impartiality." [Op. Cit., p. 204]
Therefore, like any other company, arbitrators would strive for profits and wealth, with the most successful ones becoming "prosperous." Of course, such wealth would have no impact on the decisions of the judges, and if it did, the population (in theory) are free to select any other judge (although, of course, they would also "strive for profits and wealth" -- which means the choice of character may be somewhat limited! -- and the laws which they were using to guide their judgements would be enforcing capitalist rights).
Whether or not this system would work as desired is discussed in the following sections. We think that it will not. Moreover, we will argue that "anarcho"-capitalist "defence companies" meet not only the criteria of statehood we outlined in section B.2, but also Rothbard's own criteria for the state, quoted above.
As regards the anarchist criterion, it is clear that "defence companies" exist to defend private property; that they are hierarchical (in that they are capitalist companies which defend the power of those who employ them); that they are professional coercive bodies; and that they exercise a monopoly of force over a given area (the area, initially, being the property of the person or company who is employing the "association"). If, as Ayn Rand noted (using a Weberian definition of the state) a government is an institution "that holds the exclusive power to enforce certain rules of conduct in a given geographical area" [Capitalism: The Unknown Ideal, p. 239] then these "defence companies" are the means by which the property owner (who exercises a monopoly to determine the rules governing their property) enforce their rules.
For this (and other reasons), we should call the "anarcho"-capitalist defence firms "private states" -- that is what they are -- and "anarcho"-capitalism "private state" capitalism.
Before discussing these points further, it is necessary to point out a relatively common fallacy of "anarcho"-capitalists. This is the idea that "defence" under the system they advocate means defending people, not territorial areas. This, for some, means that defence companies are not "states." However, as people and their property and possessions do not exist merely in thought but on the Earth, it is obvious that these companies will be administering "justice" over a given area of the planet. It is also obvious, therefore, that these "defence associations" will operate over a (property-owner defined) area of land and enforce the property-owner's laws, rules and regulations. The deeply anti-libertarian, indeed fascistic, aspects of this "arrangement" will be examined in the following sections.
It does not take much imagination to figure out whose interests "prosperous"
arbitrators, judges and defence companies would defend: their own, as well
as those who pay their wages -- which is to say, other members of the rich
elite. As the law exists to defend property, then it (by definition) exists
to defend the power of capitalists against their workers.
Rothbard argues that the "judges" would "not [be] making the law but
finding it on the basis of agreed-upon principles derived either from
custom or reason" [Rothbard, Op. Cit., p. 206]. However, this begs the
question: whose reason? whose customs? Do individuals in different
classes share the same customs? The same ideas of right and wrong? Would
rich and poor desire the same from a "basic law code"? Obviously not. The
rich would only support a code which defended their power over the poor.
Although only "finding" the law, the arbitrators and judges still exert
an influence in the "justice" process, an influence not impartial or
neutral. As the arbitrators themselves would be part of a profession, with
specific companies developing within the market, it does not take a
genius to realise that when "interpreting" the "basic law code," such
companies would hardly act against their own interests as companies. In
addition, if the "justice" system was based on "one dollar, one vote," the
"law" would best defend those with the most "votes" (the question of
market forces will be discussed in section F.6.3). Moreover, even if
"market forces" would ensure that "impartial" judges were dominant, all
judges would be enforcing a very partial law code (namely one that
defended capitalist property rights). Impartiality when enforcing
partial laws hardly makes judgements less unfair.
Thus, due to these three pressures -- the interests of arbitrators/judges,
the influence of money and the nature of the law -- the terms of "free
agreements" under such a law system would be tilted in favour of lenders
over debtors, landlords over tenants, employers over employees, and in
general, the rich over the poor, just as we have today. This is what one
would expect in a system based on "unrestricted" property rights and a
(capitalist) free market. A similar tendency towards the standardisation
of output in an industry in response to influences of wealth can be seen
from the current media system (see section D.3 -- How does wealth
influence the mass media?)
Some "anarcho"-capitalists, however, claim that just as cheaper cars were
developed to meet demand, so cheaper defence associations and "people's
arbitrators" would develop on the market for the working class. In this
way impartiality will be ensured. This argument overlooks a few key points:
Firstly, the general "libertarian" law code would be applicable to all
associations, so they would have to operate within a system determined
by the power of money and of capital. The law code would reflect,
therefore, property not labour and so "socialistic" law codes would
be classed as "outlaw" ones. The options then facing working people
is to select a firm which best enforced the capitalist law in their
favour. And as noted above, the impartial enforcement of a biased law
code will hardly ensure freedom or justice for all.
Secondly, in a race between a Jaguar and a Volkswagen Beetle, who is more
likely to win? The rich would have "the best justice money can buy," as
they do now. Members of the capitalist class would be able to select the
firms with the best lawyers, best private cops and most resources. Those
without the financial clout to purchase quality "justice" would simply be
out of luck - such is the "magic" of the marketplace.
Thirdly, because of the tendency toward concentration, centralisation,
and oligopoly under capitalism (due to increasing capital costs for new
firms entering the market, as discussed in section C.4), a few companies
would soon dominate the market -- with obvious implications for "justice."
Different firms will have different resources. In other words, in a
conflict between a small firm and a larger one, the smaller one is at a
disadvantage in terms of resources. They may not be in a position to fight
the larger company if it rejects arbitration and so may give in simply
because, as the "anarcho"-capitalists so rightly point out, conflict and
violence will push up a company's costs and so they would have to be avoided
by smaller companies. It is ironic that the "anarcho"-capitalist implicitly
assumes that every "defence company" is approximately of the same size, with
the same resources behind it. In real life, this is clearly not the case.
Fourthly, it is very likely that many companies would make subscription to
a specific "defence" firm or court a requirement of employment. Just as today
many (most?) workers have to sign no-union contracts (and face being fired
if they change their minds), it does not take much imagination to see that
the same could apply to "defence" firms and courts. This was/is the case
in company towns (indeed, you can consider unions as a form of "defence"
firm and these companies refused to recognise them). As the labour market
is almost always a buyer's market, it is not enough to argue that workers
can find a new job without this condition. They may not and so have to put
up with this situation. And if (as seems likely) the laws and rules of the
property-owner will take precedence in any conflict, then workers and tenants
will be at a disadvantage no matter how "impartial" the judges.
Ironically, some "anarcho"-capitalists point to current day company/union
negotiations as an example of how different defence firms would work
out their differences peacefully. Sadly for this argument, union rights
under "actually existing capitalism" were created and enforced by the
state in direct opposition to capitalist "freedom of contract." Before
the law was changed, unions were often crushed by force -- the companies
were better armed, had more resources and had the law on their side.
Today, with the "downsizing" of companies we can see what happens to
"peaceful negotiation" and "co-operation" between unions and companies
when it is no longer required (i.e. when the resources of both sides
are unequal). The market power of companies far exceeds those of the
unions and the law, by definition, favours the companies. As an example
of how competing "protection agencies" will work in an "anarcho"-capitalist
society, it is far more insightful than originally intended!
Now let us consider the "basic law code" itself. How the laws in the
"general libertarian law code" would actually be selected is anyone's
guess, although many "anarcho"-capitalists support the myth of "natural
law," and this would suggest an unchangeable law code selected by those
considered as "the voice of nature" (see section F.7. for a discussion of
its authoritarian implications). David Friedman argues that as well as a
market in defence companies, there will also be a market in laws and rights.
However, there will be extensive market pressure to unify these differing
law codes into one standard one (imagine what would happen if ever CD
manufacturer created a unique CD player, or every computer manufacturer
different sized floppy-disk drivers -- little wonder, then, that over
time companies standardise their products). Friedman himself acknowledges
that this process is likely (and uses the example of standard paper sizes
to indicate such a process).
In any event, the laws would not be decided on the basis of "one person, one
vote"; hence, as market forces worked their magic, the "general" law code
would reflect vested interests and so be very hard to change. As rights and
laws would be a commodity like everything else in capitalism, they would soon
reflect the interests of the rich -- particularly if those interpreting the
law are wealthy professionals and companies with vested interests of their
own. Little wonder that the individualist anarchists proposed "trial by jury"
as the only basis for real justice in a free society. For, unlike professional
"arbitrators," juries are ad hoc, made up of ordinary people and do not
reflect power, authority, or the influence of wealth. And by being able
to judge the law as well as a conflict, they can ensure a populist revision
of laws as society progresses.
Thus a system of "defence" on the market will continue to reflect the
influence and power of property owners and wealth and not be subject to
popular control beyond choosing between companies to enforce the capitalist
laws.
The "anarcho" capitalist imagines that there will be police agencies,
"defence associations," courts, and appeals courts all organised on a
free-market basis and available for hire. As David Weick points out,
however, the major problem with such a system would not be the corruption
of "private" courts and police forces (although, as suggested above, this
could indeed be a problem):
"There is something more serious than the 'Mafia danger', and this other
problem concerns the role of such 'defence' institutions in a given social
and economic context.
"[The] context. . . is one of a free-market economy with no restraints
upon accumulation of property. Now, we had an American experience,
roughly from the end of the Civil War to the 1930's, in what were in
effect private courts, private police, indeed private governments. We
had the experience of the (private) Pinkerton police which, by its spies,
by its agents provocateurs, and by methods that included violence and
kidnapping, was one of the most powerful tools of large corporations
and an instrument of oppression of working people. We had the experience
as well of the police forces established to the same end, within
corporations, by numerous companies. . . . (The automobile companies
drew upon additional covert instruments of a private nature, usually
termed vigilante, such as the Black Legion). These were, in effect,
private armies, and were sometimes described as such. The territories
owned by coal companies, which frequently included entire towns and their
environs, the stores the miners were obliged by economic coercion to
patronise, the houses they lived in, were commonly policed by the private
police of the United States Steel Corporation or whatever company owned
the properties. The chief practical function of these police was, of
course, to prevent labour organisation and preserve a certain balance of
'bargaining.'
"These complexes were a law unto themselves, powerful enough to ignore,
when they did not purchase, the governments of various jurisdictions of
the American federal system. This industrial system was, at the time,
often characterised as feudalism. . . ." ["Anarchist Justice", Op. Cit.,
pp. 223-224]
For a description of the weaponry and activities of these private armies,
the economic historian Maurice Dobbs presents an excellent summary in
Studies in Capitalist Development [pp. 353-357]. According to a report on
"Private Police Systems" cited by Dobbs, in a town dominated by Republican
Steel, the "civil liberties and the rights of labour were suppressed by
company police. Union organisers were driven out of town." Company towns
had their own (company-run) money, stores, houses and jails and many
corporations had machine-guns and tear-gas along with the usual shot-guns,
rifles and revolvers. The "usurpation of police powers by privately paid
'guards and 'deputies', often hired from detective agencies, many with
criminal records" was "a general practice in many parts of the country."
The local (state-run) law enforcement agencies turned a blind-eye to what
was going on (after all, the workers had broken their contracts and
so were "criminal aggressors" against the companies) even when union
members and strikers were beaten and killed. The workers own defence
organisations were the only ones willing to help them, and if the workers
seemed to be winning then troops were called in to "restore the peace"
(as happened in the Ludlow strike, when strikers originally cheered
the troops as they thought they would defend their civil rights; needless
to say, they were wrong).
Here we have a society which is claimed by many "anarcho"-capitalists
as one of the closest examples to their "ideal," with limited state
intervention, free reign for property owners, etc. What happened? The
rich reduced the working class to a serf-like existence, capitalist
production undermined independent producers (much to the annoyance of
individualist anarchists at the time), and the result was the emergence
of the corporate America that "anarcho"-capitalists say they oppose.
Are we to expect that "anarcho"-capitalism will be different? That, unlike
before, "defence" firms will intervene on behalf of strikers? Given that
the "general libertarian law code" will be enforcing capitalist property
rights, workers will be in exactly the same situation as they were then.
Support of strikers violating property rights would be a violation of
the "general libertarian law code" and be costly for profit making firms
to do (if not dangerous as they could be "outlawed" by the rest). Thus
"anarcho"-capitalism will extend extensive rights and powers to bosses,
but few if any rights to rebellious workers. And this difference in power
is enshrined within the fundamental institutions of the system.
In evaluating "anarcho"-capitalism's claim to be a form of anarchism,
Peter Marshall notes that "private protection agencies would merely serve
the interests of their paymasters." [Demanding the Impossible, p. 653]
With the increase of private "defence associations" under "really existing
capitalism" today (associations that many "anarcho"-capitalists point to
as examples of their ideas), we see a vindication of Marshall's claim.
There have been many documented experiences of protesters being badly
beaten by private security guards. As far as market theory goes, the
companies are only supplying what the buyer is demanding. The rights of
others are not a factor (yet more "externalities," obviously). Even
if the victims successfully sue the company, the message is clear --
social activism can seriously damage your health. With a reversion
to "a general libertarian law code" enforced by private companies,
this form of "defence" of "absolute" property rights can only increase,
perhaps to the levels previously attained in the heyday of US capitalism,
as described above by Weick.
Unlikely. The rise of corporations within America indicates exactly how a
"general libertarian law code" would reflect the interests of the rich and
powerful. The laws recognising corporations as "legal persons" were not
primarily a product of "the state" but of private lawyers hired by the
rich -- a result with which Rothbard would have no problem. As Howard
Zinn notes:
"the American Bar Association, organised by lawyers accustomed to
serving the wealthy, began a national campaign of education to reverse
the [Supreme] Court decision [that companies could not be considered as
a person]. . . . By 1886. . . the Supreme Court had accepted the argument
that corporations were 'persons' and their money was property protected by
the process clause of the Fourteenth Amendment. . . . The justices of the
Supreme Court were not simply interpreters of the Constitution. They were
men of certain backgrounds, of certain [class] interests." [A People's
History of the United States, p. 255]
Of course it will be argued that the Supreme Court is a monopoly and so
our analysis is flawed. In "anarcho"-capitalism there is no monopoly.
But the corporate laws came about because there was a demand for them.
That demand would still have existed in "anarcho"-capitalism. Now, while
there may be no Supreme Court, Rothbard does maintain that "the basic
Law Code . . .would have to be agreed upon by all the judicial agencies"
but he maintains that this "would imply no unified legal system"! Even
though "[a]ny agencies that transgressed the basic libertarian law
code would be open outlaws" and soon crushed this is not, apparently,
a monopoly. [The Ethics of Liberty, p. 234] So, you either agree to
the law code or you go out of business. And that is not a monopoly!
Therefore, we think, our comments on the Supreme Court decision are
valid.
If all the available defence firms enforce the same laws, then it can
hardly be called "competitive"! And if this is the case (and it is)
"when private wealth is uncontrolled, then a police-judicial complex
enjoying a clientele of wealthy corporations whose motto is self-interest
is hardly an innocuous social force controllable by the possibility of
forming or affiliating with competing 'companies.'" [Weick, Op. Cit.,
p. 225]
This is particularly true if these companies are themselves Big Business
and so have a large impact on the laws they are enforcing. If the law
code recognises and protects capitalist power, property and wealth as
fundamental any attempt to change this is "initiation of force" and
so the power of the rich is written into the system from the start!
(And, we must add, if there is a general libertarian law code to which
all must subscribe, where does that put customer demand? If people demand
a non-libertarian law code, will defence firms refuse to supply it? If so,
will not new firms, looking for profit, spring up that will supply what
is being demanded? And will that not put them in direct conflict with the
existing, pro-general law code ones? And will a market in law codes not
just reflect economic power and wealth? David Friedman, who is for a market
in law codes, argues that "[i]f almost everyone believes strongly that
heroin addiction is so horrible that it should not be permitted anywhere
under any circumstances anarcho-capitalist institutions will produce laws
against heroin. Laws are being produced on the market, and that is what the
market wants." And he adds that "market demands are in dollars, not votes.
The legality of heroin will be determined, not by how many are for or against
but how high a cost each side is willing to bear in order to get its way."
[The Machinery of Freedom, p. 127] And, as the market is less than equal
in terms of income and wealth, such a position will mean that the capitalist
class will have a higher effective demand than the working class, and more
resources to pay for any conflicts that arise. Thus any law codes that
develop will tend to reflect the interests of the wealthy.)
Which brings us nicely on to the next problem regarding market forces.
As well as the obvious influence of economic interests and differences
in wealth, another problem faces the "free market" justice of
"anarcho"-capitalism. This is the "general libertarian law code" itself.
Even if we assume that the system actually works like it should in theory,
the simple fact remains that these "defence companies" are enforcing laws
which explicitly defend capitalist property (and so social relations).
Capitalists own the means of production upon which they hire wage-labourers
to work and this is an inequality established prior to any specific
transaction in the labour market. This inequality reflects itself in
terms of differences in power within (and outside) the company and
in the "law code" of "anarcho"-capitalism which protects that power
against the dispossessed.
In other words, the law code within which the defence companies work
assumes that capitalist property is legitimate and that force can
legitimately be used to defend it. This means that, in effect,
"anarcho"-capitalism is based on a monopoly of law, a monopoly which
explicitly exists to defend the power and capital of the wealthy.
The major difference is that the agencies used to protect that
wealth will be in a weaker position to act independently of their
pay-masters. Unlike the state, the "defence" firm is not remotely
accountable to the general population and cannot be used to equalise
even slightly the power relationships between worker and capitalist.
And, needless to say, it is very likely that the private police forces
will give preferential treatment to their wealthier customers (what
business does not?) and that the law code will reflect the interests of the
wealthier sectors of society (particularly if "prosperous" judges administer
that code) in reality, even if not in theory. Since, in capitalist practice,
"the customer is always right," the best-paying customers will get their
way in "anarcho"-capitalist society.
For example, in chapter 29 of The Machinery of Freedom, David Friedman
presents an example of how a clash of different law codes could be resolved
by a bargaining process (the law in question is the death penalty). This
process would involve one defence firm giving a sum of money to the other
for them accepting the appropriate (anti/pro capital punishment) court.
Friedman claims that "[a]s in any good trade, everyone gains" but this
is obviously not true. Assuming the anti-capital punishment defence firm
pays the pro one to accept an anti-capital punishment court, then, yes,
both defence firms have made money and so are happy, so are the anti-capital
punishment consumers but the pro-death penalty customers have only (perhaps)
received a cut in their bills. Their desire to see criminals hanged (for
whatever reason) has been ignored (if they were not in favour of the
death penalty, they would not have subscribed to that company). Friedman
claims that the deal, by allowing the anti-death penalty firm to cut its
costs, will ensure that it "keep its customers and even get more" but
this is just an assumption. It is just as likely to loose customers to a
defence firm that refuses to compromise (and has the resources to back it
up). Friedman's assumption that lower costs will automatically win over
people's passions is unfounded. As is the assumption that both firms have
equal resources and bargaining power. If the pro-capital punishment firm
demands more than the anti can provide and has larger weaponry and troops,
then the anti defence firm may have to agree to let the pro one have its
way.
So, all in all, it is not clear that "everyone gains" -- there may be a
sizeable percentage of those involved who do not "gain" as their desire for
capital punishment is traded away by those who claimed they would enforce
it.
In other words, a system of competing law codes and privatised rights
does not ensure that all consumers interests are meet. Given unequal
resources within society, it is also clear that the "effective demand"
of the parties involved to see their law codes enforced is drastically
different. The wealthy head of a transnational corporation will have far
more resources available to him to pay for his laws to be enforced than
one of his employees on the assembly line. Moreover, as we argue in sections
F.3.1 and F.10.2, the labour market is usually skewed in favour of capitalists.
This means that workers have to compromise to get work and such compromises
may involve agreeing to join a specific "defence" firm or not join one
at all (just as workers are often forced to sign non-union contracts
today in order to get work). In other words, a privatised law system
is very likely to skew the enforcement of laws in line with the skewing
of income and wealth in society. At the very least, unlike every other
market, the customer is not guaranteed to get exactly what they demand
simply because the product they "consume" is dependent on other within
the same market to ensure its supply. The unique workings of the
law/defence market are such as to deny customer choice (we will
discuss other aspects of this unique market shortly).
Weick sums up by saying "any judicial system is going to exist in the
context of economic institutions. If there are gross inequalities of
power in the economic and social domains, one has to imagine society as
strangely compartmentalised in order to believe that those inequalities
will fail to reflect themselves in the judicial and legal domain, and that
the economically powerful will be unable to manipulate the legal and
judicial system to their advantage. To abstract from such influences of
context, and then consider the merits of an abstract judicial system. . .
is to follow a method that is not likely to take us far. This, by the
way, is a criticism that applies. . .to any theory that relies on a rule
of law to override the tendencies inherent in a given social and economic
system" [Weick, Op. Cit., p. 225] (For a discussion of this problem
as it would surface in attempts to protect the environment under
"anarcho"-capitalism, see sections E.2 and E.3).
There is another reason why "market forces" will not stop abuse by the rich,
or indeed stop the system from turning from private to public statism. This
is due to the nature of the "defence" market (for a similar analysis of
the "defence" market see Tyler Cowen's "Law as a Public Good: The Economics
of Anarchy" in Economics and Philosophy, no. 8 (1992),
pp. 249-267 and
"Rejoinder to David Friedman on the Economics of Anarchy" in Economics
and Philosophy, no. 10 (1994), pp. 329-332). In "anarcho"-capitalist theory
it is assumed that the competing "defence companies" have a vested interest
in peacefully settling differences between themselves by means of arbitration.
In order to be competitive on the market, companies will have to co-operate
via contractual relations otherwise the higher price associated with conflict
will make the company uncompetitive and it will go under. Those companies
that ignore decisions made in arbitration would be outlawed by others,
ostracised and their rulings ignored. By this process, it is argued, a
system of competing "defence" companies will be stable and not turn into
a civil war between agencies with each enforcing the interests of their
clients against others by force.
However, there is a catch. Unlike every other business in competition,
the private state must co-operate with its fellows in order to provide its
services for its customers. They need to be able to agree to courts and
judges, agree to abide by decisions and law codes and so forth. This means
that collusion (where companies in a market agree to work together to
restrict competition and reap the benefits of monopoly) is built into the
system. In other words, the necessary contractual relations between agencies
in the "protection" market require that firms co-operate and, by so doing,
to behave (effectively) as one large firm.
For example, it does not matter to me if Safeway has good relations with
Tesco if I shop there. The goods I buy are independent of the relationships
that exist between competing companies. However, in the case of private
states, this is not the case. If a specific "defence" company has bad
relationships with other companies in the market then it's against my
self-interest to subscribe to it. Why join a private state if its judgements
are ignored by the others and it has to resort to violence to be heard?
This, as well as being potentially dangerous, will also push up the prices
I have to pay. Arbitration is one of the most important services a defence
firm can offer its customers and its market share is based upon being able
to settle interagency disputes without risk of war or uncertainty that the
final outcome will not be accepted by all parties.
Therefore, the market set-up within the "anarcho"-capitalist "defence" market
is such that private states have to co-operate with the others (or go out
of business fast) and this means collusion can take place. In other words,
a system of private states will have to agree to work together in order to
provide the service of "law enforcement" to their customers and the result
of such co-operation is to create a cartel. However, unlike cartels in other
industries, the "defence" cartel will be a stable body simply because its
members have to work with their competitors in order to survive.
Let us look at what would happen after such a cartel is formed in a specific
area and a new "defence company" desired to enter the market. This new
company will have to work with the members of the cartel in order to provide
its services to its customers (note that "anarcho"-capitalists already
assume that they "will have to" subscribe to the same law code). If the
new defence firm tries to under-cut the cartel's monopoly prices, the other
companies would refuse to work with it. Having to face constant conflict or
the possibility of conflict, seeing its decisions being ignored by other
agencies and being uncertain what the results of a dispute would be, few
would patronise the new "defence company." The new company's prices would
go up and so face either folding or joining the cartel. Unlike every other
market, if a "defence company" does not have friendly, co-operative relations
with other firms in the same industry then it will go out of business.
This means that the firms that are co-operating have but to agree not to
deal with new firms which are attempting to undermine the cartel in order
for them to fail. A "cartel busting" firm goes out of business in the same
way an outlaw one does - the higher costs associated with having to solve
all its conflicts by force, not arbitration, increases its production
costs much higher than the competitors and the firm faces insurmountable
difficulties selling its products at a profit (ignoring any drop of
demand due to fears of conflict by actual and potential customers).
Even if we assume that many people will happily join the new firm in spite
of the dangers to protect themselves against the cartel and its taxation
(i.e. monopoly profits), enough will remain members of the cartel (perhaps
they will be fired if they change, perhaps they dislike change and think
the extra money is worth peace, perhaps they fear that by joining the
new company their peace will be disrupted or the outcomes of their problems
with others too unsure to be worth it, perhaps they are shareholders and
want to maintain their income) so that co-operation will still be needed
and conflict unprofitable and dangerous (and as the cartel will have more
resources than the new firm, it could usually hold out longer than the new
firm could). In effect, breaking the cartel may take the form of an
armed revolution -- as it would with any state.
The forces that break up cartels and monopolies in other industries (such as
free entry -- although, of course the "defence" market will be subject to
oligopolistic tendencies as any other and this will create barriers to entry,
see section C.4) do not work here and so new firms have to co-operate or loose
market share and/or profits. This means that "defence companies" will reap
monopoly profits and, more importantly, have a monopoly of force over a given
area.
Hence a monopoly of private states will develop in addition to the existing
monopoly of law and this is a de facto monopoly of force over a given
area (i.e. some kind of public state run by share holders). New companies
attempting to enter the "defence" industry will have to work with the
existing cartel in order to provide the services it offers to its customers.
The cartel is in a dominant position and new entries into the market either
become part of it or fail. This is exactly the position with the state,
with "private agencies" free to operate as long as they work to the state's
guidelines. As with the monopolist "general libertarian law code", if
you do not toe the line, you go out of business fast.
It is also likely that a multitude of cartels would develop, with a given
cartel operating in a given locality. This is because law enforcement
would be localised in given areas as most crime occurs where the criminal
lives. Few criminals would live in New York and commit crimes in Portland.
However, as defence companies have to co-operate to provide their services,
so would the cartels. Few people live all their lives in one area and so
firms from different cartels would come into contact, so forming a
cartel of cartels.
A cartel of cartels may (perhaps) be less powerful than a local cartel, but
it would still be required and for exactly the same reasons a local one
is. Therefore "anarcho"-capitalism would, like "actually existing capitalism,"
be marked by a series of public states covering given areas, co-ordinated by
larger states at higher levels. Such a set up would parallel the United States
in many ways except it would be run directly by wealthy shareholders without
the sham of "democratic" elections. Moreover, as in the USA and other states
there will still be a monopoly of rules and laws (the "general libertarian
law code").
Some "anarcho"-capitalists claim that this will not occur, but that the
co-operation needed to provide the service of law enforcement will somehow
not turn into collusion between companies. However, they are quick to
argue that renegade "agencies" (for example, the so-called "Mafia
problem" or those who reject judgements) will go out of business because
of the higher costs associated with conflict and not arbitration. However,
these higher costs are ensured because the firms in question do not
co-operate with others. If other agencies boycott a firm but co-operate with
all the others, then the boycotted firm will be at the same disadvantage
-- regardless of whether it is a cartel buster or a renegade.
The "anarcho"-capitalist is trying to have it both ways. If the punishment
of non-conforming firms cannot occur, then "anarcho"-capitalism will turn
into a war of all against all or, at the very least, the service of social
peace and law enforcement cannot be provided. If firms cannot deter others
from disrupting the social peace (one service the firm provides) then
"anarcho"-capitalism is not stable and will not remain orderly as agencies
develop which favour the interests of their own customers and enforce their
own law codes at the expense of others. If collusion cannot occur (or is
too costly) then neither can the punishment of non-conforming firms and
"anarcho"-capitalism will prove to be unstable.
So, to sum up, the "defence" market of private states has powerful forces
within it to turn it into a monopoly of force over a given area. From a
privately chosen monopoly of force over a specific (privately owned) area,
the market of private states will turn into a monopoly of force over a
general area. This is due to the need for peaceful relations between
companies, relations which are required for a firm to secure market
share. The unique market forces that exist within this market ensure
collusion and monopoly.
In other words, the system of private states will become a cartel and so a
public state - unaccountable to all but its shareholders, a state of the
wealthy, by the wealthy, for the wealthy. In other words, fascism.
It is clear that "anarcho"-capitalist defence associations meet the
criteria of statehood outlined in section B.2 ("Why are anarchists
against the state"). They defend property and preserve authority
relationships, they practice coercion, and are hierarchical
institutions which govern those under them on behalf of a
"ruling elite," i.e. those who employ both the governing forces
and those they govern. Thus, from an anarchist perspective, these
"defence associations" as most definitely states.
What is interesting, however, is that by their own definitions a very
good case can be made that these "defence associations" as states
in the "anarcho"-capitalist sense too. Capitalist apologists usually
define a "government" (or state) as those who have a monopoly of force
and coercion within a given area. Relative to the rest of the society,
these defence associations would have a monopoly of force and coercion
of a given piece of property; thus, by the "anarcho"-capitalists'
own definition of statehood, these associations would qualify!
If we look at Rothbard's definition of statehood, which requires (a) the
power to tax and/or (b) a "coerced monopoly of the provision of defence
over a given area", "anarcho"-capitalism runs into trouble.
In the first place, the costs of hiring defence associations will be
deducted from the wealth created by those who use, but do not own, the
property of capitalists and landlords. Let not forget that a capitalist
will only employ a worker or rent out land and housing if they make a
profit from so doing. Without the labour of the worker, there would be
nothing to sell and no wages to pay for rent. Thus a company's or
landlord's "defence" firm will be paid from the revenue gathered from
the capitalists power to extract a tribute from those who use, but do
not own, a property. In other words, workers would pay for the agencies
that enforce their employers' authority over them via the wage system
and rent -- taxation in a more insidious form.
In the second, under capitalism most people spend a large part of their
day on other people's property -- that is, they work for capitalists
and/or live in rented accommodation. Hence if property owners select a
"defence association" to protect their factories, farms, rental housing,
etc., their employees and tenants will view it as a "coerced monopoly of
the provision of defence over a given area." For certainly the employees
and tenants will not be able to hire their own defence companies to
expropriate the capitalists and landlords. So, from the standpoint of
the employees and tenants, the owners do have a monopoly of "defence"
over the areas in question. Of course, the "anarcho"-capitalist will
argue that the tenants and workers "consent" to all the rules and
conditions of a contract when they sign it and so the property owner's
monopoly is not "coerced." However, the "consent" argument is so weak
in conditions of inequality as to be useless (see sections F.2.4 and
F.3.1, for example) and, moreover, it can and has been used to justify
the state. In other words, "consent" in and of itself does not ensure
that a given regime is not statist (see section F.2.3 for more on this).
So an argument along these lines is deeply flawed and can be used to
justify regimes which are little better than "industrial feudalism"
(such as company towns, for example -- an institution which
"anarcho"-capitalism has no problem with). Even the "general
libertarian law code,"
could be considered a "monopoly of government over a particular area,"
particularly if ordinary people have no real means of affecting the
law code, either because it is market-driven and so is money-determined,
or because it will be "natural" law and so unchangeable by mere mortals.
In other words, if the state "arrogates to itself a monopoly of
force, of ultimate decision-making power, over a given area territorial area"
[Rothbard, The Ethics of Liberty, p. 170] then its pretty clear that the
property owner shares this power. The owner is, after all, the "ultimate
decision-making power" in their workplace or on their land. If the boss takes
a dislike to you (for example, you do not follow their orders) then you
get fired. If you cannot get a job or rent the land without agreeing
to certain conditions (such as not joining a union or subscribing
to the "defence firm" approved by your employer) then you either
sign the contract or look for something else. Of course Rothbard fails
to note that bosses have this monopoly of power and is instead referring
to "prohibiting the voluntary purchase and sale of defence and judicial
services." [Op. Cit., p. 171] But just as surely as the law of contract
allows the banning of unions from a property, it can just as surely
ban the sale and purchase of defence and judicial services (it could
be argued that market forces will stop this happening, but this is
unlikely as bosses usually have the advantage on the labour market
and workers have to compromise to get a job -- see section F.10.2 on
why this is the case). After all, in the company towns, only company
money was legal tender and company police the only law enforcers.
Therefore, it is obvious that the "anarcho"-capitalist system meets
the Weberian criteria of a monopoly to enforce certain rules in a
given area of land. The "general libertarian law code" is a monopoly
and property owners determine the rules that apply to their property.
Moreover, if the rules that property owners enforce are subject to
rules contained in the monopolistic "general libertarian law code" (for
example, that they cannot ban the sale and purchase of certain products
-- such as defence -- on their own territory) then "anarcho"-capitalism
definitely meets the Weberian definition of the state (as described by
Ayn Rand as an institution "that holds the exclusive power to enforce
certain rules of conduct in a given geographical area" [Capitalism: The
Unknown Ideal, p. 239]) as its "law code" overrides the desires of
property owners to do what they like on their own property.
Therefore, no matter how you look at it, "anarcho"-capitalism and its
"defence" market promotes a "monopoly of ultimate decision making power"
over a "given territorial area". It is obvious that for anarchists, the
"anarcho"-capitalist system is a state system. As, as we note, a reasonable
case can be made for it also being a state in "anarcho"-capitalist theory
as well.
So, in effect, "anarcho"-capitalism has a different sort of state, one
in which bosses hire and fire the policeman. As Peter Sabatini notes [in
Libertarianism: Bogus Anarchy], "[w]ithin Libertarianism, Rothbard
represents a minority perspective that actually argues for the total
elimination of the state. However Rothbard's claim as an anarchist is
quickly voided when it is shown that he only wants an end to the public
state. In its place he allows countless private states, with each person
supplying their own police force, army, and law, or else purchasing these
services from capitalist vendors. . . Rothbard sees nothing at all wrong
with the amassing of wealth, therefore those with more capital will
inevitably have greater coercive force at their disposal, just as
they do now."
Far from wanting to abolish the state, then, "anarcho"-capitalists only
desire to privatise it - to make it solely accountable to capitalist wealth.
Their "companies" perform the same services as the state, for the same
people, in the same manner. However, there is one slight difference.
Property owners would be able to select between competing companies
for their "services." Because such "companies" are employed by the boss,
they would be used to reinforce the totalitarian nature of capitalist firms
by ensuring that the police and the law they enforce are not even slightly
accountable to ordinary people.
Looking beyond the "defence association" to the defence market itself (as
we argued in the last section), this will become a cartel and so become
some kind of public state. The very nature of the private state, its need
to co-operate with others in the same industry, push it towards a
monopoly network of firms and so a monopoly of force over a given
area. Given the assumptions used to defend "anarcho"-capitalism, its
system of private statism will develop into public statism - a state
run by managers accountable only to the share-holding elite.
To quote Peter Marshall again, the "anarcho"-capitalists "claim that
all would benefit from a free exchange on the market, it is by no means
certain; any unfettered market system would most likely sponsor a
reversion to an unequal society with defence associations perpetuating
exploitation and privilege." [Demanding the Impossible, p. 565]
History, and current practice, prove this point.
In short, "anarcho"-capitalists are not anarchists at all, they are just
capitalists who desire to see private states develop -- states which are
strictly accountable to their paymasters without even the sham of
democracy we have today. Hence a far better name for "anarcho"-capitalism
would be "private-state" capitalism. At least that way we get a fairer
idea of what they are trying to sell us. As Bob Black writes in The
Libertarian as Conservative, "To my mind a right-wing anarchist is just a
minarchist who'd abolish the state to his own satisfaction by calling it
something else. . . . They don't denounce what the state does, they just
object to who's doing it."
Such a system would be dangerous simply because of the power it places
in the hands of companies. As Michael Taylor notes, "whether the [protection]
market is competitive or not, it must be remembered that the product
is a peculiar one: when we buy cars or shoes or telephone services we
do not give the firm power based on force, but armed protection agencies,
like the state, make customers (their own and others') vulnerable, and
having given them power we cannot be sure that they will use it only for
our protection." [Community, Anarchy and Liberty, p. 65]
As we argued above, there are many reasons to believe that a "protection"
market will place most of society (bar the wealthy elite) in a "vulnerable"
position. One such reason is the assumptions of the "anarcho"-capitalists
themselves. As they note, capitalism is marked by an extreme division of
labour. Instead of everyone having all the skills they need, these skills
are distributed throughout society and all (so it is claimed) benefit.
This applies equally to the "defence" market. People subscribe to a
"defence firm" because they either cannot or do not want the labour of
having to protect their own property and person. The skills of defence,
therefore, are concentrated in these companies and so these firms will
have an advantage in terms of experience and mental state (they are trained
to fight) as well as, as seems likely, weaponry. This means that most normal
people will be somewhat at a disadvantage if a cartel of defence firms
decides to act coercively. The division of labour society will discourage
the spread of skills required for sustained warfare throughout society
and so, perhaps, ensure that customers remain "vulnerable." The price
of liberty may be eternal vigilance, but are most people willing to
include eternal preparation of war as well? For modern society, the
answer seems to be no, they prefer to let others do that (namely the
state and its armed forces). And, we should note, an armed society may be
a polite one, but its politeness comes from fear, not mutual respect
and so totally phoney and soul destroying.
If we look at inequality within society, this may produce a ghettoisation
effect within "anarcho"-capitalism. As David Friedman notes, conflict
between defence firms is bad for business. Conflict costs money both
in terms of weaponry used and increased ("danger money") wages. For this
reason he thinks that peaceful co-operation will exist between firms.
However, if we look at poor areas with high crime rates then its clear
that such an area will be a dangerous place. In other words, it is very
likely to be high in conflict. But conflict increases costs, and so
prices. Does this mean that those areas which need police most will
also have the highest prices for law enforcement? That is the case
with insurance now, so perhaps we will see whole areas turning into
Hobbesian anarchy simply because the high costs associated with
dangerous areas will make the effective demand for their services
approach zero.
In a system based on "private statism," police and justice would be
determined by "free market" forces. As indicated in section B.4.1,
right-libertarians maintain that one would have few rights on other
peoples' property, and so the owner's will would be the law (possibly
restricted somewhat by a "general libertarian law code", perhaps not
-- see last section). In this situation, those who could not afford
police protection would become victims of roving bandits and rampant
crime, resulting in a society where the wealthy are securely protected
in their bastions by their own armed forces, with a bunch of poor
crowded around them for protection. This would be very similar to
feudal Europe.
The competing police forces would also be attempting to execute the laws
of their sponsors in areas that may not be theirs to begin with, which
would lead to conflicts unless everyone agreed to follow a "general
libertarian law code" (as Rothbard, for one, wants). If there were
competing law codes, the problem of whose "laws" to select and enforce
would arise, with each of the wealthy security sponsors desiring that
their law control all of the land. And, as noted earlier, if there
were one "libertarian law code," this would be a "monopoly of
government" over a given area, and therefore statist.
In addition, it should be noted that the right-libertarian claim that
under their system anarchistic associations would be allowed as long as
they are formed voluntarily just reflects their usual vacuous concept of
freedom. This is because such associations would exist within and be
subject to the "general libertarian law code" of "anarcho"-capitalist
society. These laws would reflect and protect the interests and power of
those with capitalist property, meaning that unless these owners agree,
trying to live an anarchist life would be nearly impossible (its all
fine and well to say that those with property can do what they like, if
you do not have property then experimentation could prove difficult --
not to mention, of course, few areas are completely self-sufficient meaning
that anarchistic associations will be subject to market forces, market
forces which stress and reward the opposite of the values these communes
were set up to create). Thus we must buy the right to be free!
If, as anarchists desire, most people refuse to recognise or defend the
rights of private property and freely associate accordingly to organise
their own lives and ignore their bosses, this would still be classed as
"initiation of force" under "anarcho"-capitalism, and thus repressed.
In other words, like any authoritarian system, the "rules" within
"anarcho"-capitalism do not evolve with society and its changing
concepts (this can be seen from the popularity of "natural law" with
right-libertarians, the authoritarian nature of which is discussed
in section F.7).
Therefore, in "anarcho"-capitalism you are free to follow the (capitalist)
laws and to act within the limits of these laws. It is only within this
context that you can experiment (if you can afford to). If you act outside
these laws, then you will be subject to coercion. The amount of coercion
required to prevent such actions depends on how willing people are to
respect the laws. Hence it is not the case that an "anarcho"-capitalist
society is particularly conducive to social experimentation and free
evolution, as its advocates like to claim. Indeed, the opposite may be the
case, as any capitalist system will have vast differences of wealth and
power within it, thus ensuring that the ability to experiment is limited
to those who can afford it. As Jonathan Wolff points out, the "image of
people freely moving from one utopia to another until they find their
heaven, ignores the thought that certain choices may be irreversible. . .
This thought may lead to speculation about whether a law of evolution
would apply to the plural utopias. Perhaps, in the long run, we may find
the framework regulated by the law of survival of the economically most
fit, and so we would expect to see a development not of diversity but of
homogeneity. Those communities with great market power would eventually
soak up all but the most resistant of those communities around them."
[Robert Nozick: Property, Justice and the Minimal State, p. 135]
And if the initial distribution of resources is similar to that already
existing then the "economically most fit" will be capitalistic (as argued
in section J.5.12, the capitalist market actively selects against
co-operatives even though they are more productive). Given the head
start provided by statism, it seems likely that explicitly capitalist
utopia's would remain the dominant type (particularly as the rights
framework is such as to protect capitalist property rights). Moreover,
we doubt that most "anarcho"-capitalists would embrace the ideology if
it was more than likely that non-capitalist utopias would overcome
the capitalist ones (after all, they are self-proclaimed capitalists).
So, given that "anarcho"-capitalists who follow Murray Rothbard's ideas and
minimal-statist right-libertarians agree that all must follow the basic
"general libertarian law code" which defends capitalist property rights,
we can safely say that the economically "most fit" would be capitalist ones.
Hardly surprising if the law code reflects capitalist ideas of right and
wrong. In addition, as George Reitzer has argued (see The McDonaldization
of Society), capitalism is driven towards standardisation and conformity
by its own logic. This suggests that plurality of communities would soon
be replaced by a series of "communities" which share the same features
of hierarchy and ruling elites. ("Anarcho"-capitalists who follow David
Friedman's ideas consider it possible, perhaps likely, that a free market
in laws will result in one standard law code and so this also applies to
that school as well)
So, in the end, the "anarcho" capitalists argue that in their system you
are free to follow the (capitalist) law and work in the (capitalist)
economy, and if you are lucky, take part in a "commune" as a collective
capitalist. How very generous of them! Of course, any attempt to
change said rules or economy are illegal and would be stopped by private
states.
As well as indicating the falsity of "anarcho"-capitalist claims to
support "experimentation," this discussion has also indicated that
coercion would not be absent from "anarcho"-capitalism. This would be the
case only if everyone voluntarily respected private property rights and
abided by the law (i.e. acted in a capitalist-approved way). As long as
you follow the law, you will be fine -- which is exactly the same as under
public statism. Moreover, if the citizens of a society do not want a
capitalist order, it may require a lot of coercion to impose it. This
can be seen from the experiences of the Italian factory occupations
in 1920 (see section A.5.5), in which workers refused to accept capitalist
property or authority as valid and ignored it. In response to this
change of thought within a large part of society, the capitalists
backed fascism in order to stop the evolutionary process within society.
The socialist economic historian Maurice Dobbs, after reviewing the private
armies in 1920s and 1930s America made much the same point: "When business
policy takes the step of financing and arming a mass political movement
to capture the machinery of government, to outlaw opposing forms of
organisation and suppress hostile opinions we have merely a further and
more logical stage beyond [private armies]" [Op, Cit., p. 357]
(Noted Austrian Economist Ludwig von Mises whose extreme free market
liberal political and economic ideas inspired right-libertarianism in
many ways had this to say about fascism: "It cannot be denied that Fascism
and similar movements aiming at the establishment of dictatorships are full
of the best intentions and that their intervention has, for the moment,
saved European civilisation. The merit that Fascism has thereby won for
itself will live eternally in history." [Liberalism, p. 51])
This example illustrates the fact that capitalism per se is essentially
authoritarian, because it is necessarily based on coercion and hierarchy,
which explains why capitalists have resorted to the most extreme forms of
authoritarianism -- including totalitarian dictatorship -- during crises
that threatened the fundamental rules of the system itself. There is no
reason to think that "anarcho"-capitalism would be any different.
Since "anarcho"-capitalism, with its private states, does not actually
want to get rid of hierarchical forms of authority, the need for one
government to unify the enforcement activities of the various defence
companies becomes apparent. In the end, that is what "anarcho"-capitalism
recognises with its "general libertarian law code" (based either on market
forces or "natural law"). Thus it appears that one government/hierarchy
over a given territory is inevitable under any form of capitalism. That
being the case, it is obvious that a democratic form of statism, with
its checks and balances, is preferable to a dictatorship that imposes
"absolute" property rights and so "absolute" power.
Of course, we do have another option than either private or public
statism. This is anarchism, the end of hierarchical authority and its
replacement by the "natural" authority of communal and workplace
self-management.
F.6.1 What's wrong with this "free market" justice?
F.6.2 What are the social consequences of such a system?
F.6.3 But surely market forces will stop abuses by the rich?
F.6.4 Why are these "defence associations" states?
F.6.5 What other effects would "free market" justice have?