Conventional Radicals for Capitalism

 Posted by on 25 March 2003 at 6:53 am  Uncategorized
Mar 252003

In discussing anarchism, Jimmy Wales said this on Atlantis today:

Keep in mind, here, that I agree 100% with the Objectivist politics. In terms of my own political and philosophical views, I’m a very dull sort of ordinary Objectivist with no fancy frills like determinism or anarchy or anything of the sort. :-) As radicals for capitalism go, I’m very conventional.


More seriously, later in the post Jimmy wrote:

In Ayn Rand’s “The Nature of Government”, _Virtue of Selfishness_, she offers a “reduction” of the concept of government, asking “Do men need such an institution — and why?”

1. If we read that essay carefully, taking full note of the wider context of the concepts of Objectivism, we can pull out and analyze _just_ those aspects of her discussion of government that would have direct bearing on the question of whether (and to what degree) the institution of “organized force” must be a monopoly.

My own belief is that Ayn Rand did not treat this question with as much detail as it can be treated today, because much anarchocapitalist theory was unknown to her at that time. (Because it hadn’t yet been developed!)

2. After we’ve done that, we can consider the question “Does the maintenance of such a monopoly necessarily involve rights violations?” I think the answer is that it does not, that Childs argument on that point fails, but I think that the question *is* a compelling question that deserves a detailed answer.

I agree with Jimmy that the government-as-coercive-monopoly argument isn’t very compelling. (Basically, it’s an extremely rationalistic argument.) I’m far more intrigued by the challenge to minarchy posed by David Friedman’s public good argument, as it indicates that pressure to expand government power is inherent in institution of government itself. I discussed this problem in an 1997 OWL essay on anarchism:

In Chapter 39 of Machinery of Freedom, David Friedman makes an interesting argument as to why minarchy produces worse laws than anarchy and therefore it is in the nature of governments to expand in size and power. If I understand him correctly, he argues that in a minarchy, good law is a public good, while in anarcho-capitalism, bad law is a public good.

A particular good is a “public good” if (1) one person’s consumption of the good does not interfere with another’s (non-rivalry) and (2) it is very difficult, if not impossible, to produce the good for some people but not others (non-exclusion). Because of these limitations, public goods will be underproduced in the marketplace, even when the value exceeds the production costs. For example, national defense is a public good, because my enjoyment of our system of national defense does not impinge upon my neighbors’ enjoyment of it and because we cannot create a system of national defense in which I receive the benefits, but my neighbors do not.

Under a system of limited government, good (rights-respecting) laws have both the features of public goods. Imagine that a new, simpler tax code has been instituted. My taking advantage of the new tax code does not prevent or inhibit anyone else from doing exactly the same thing. Additionally, I can take advantage of the tax code even if I did nothing to promote it or even voted against it. The new tax laws apply to everyone in the jurisdiction. On the other hand, bad law is often a private good. Particular individuals can benefit greatly from special interest legislation to give subsidies to, for example, only sugar growers.

As a result, as David Friedman notes, “any attempt to improve the society as a whole is caught in the … public good trap. Anything I do to make America freer will benefit everyone; the small part of the benefit that is going to me is rarely sufficient to justify my doing very much.” (I>Machinery of Freedom, 157)

In a anarcho-capitalist system, on the other hand, good law is a private good, while bad law is a public good. Friedman writes, “Good law is still expensive — I must spend time and money determining which protection agency will best serve me — but having decided what I want, I get what I pay for. The benefit of my wise purchase goes to me, so I have an incentive to purchase wisely. It is now the person who wishes to reintroduce government who is caught in the public good problem. He cannot abolish anarchy and reintroduce government for himself alone; he must do it for everyone or for no one.” (Machinery of Freedom, 158)

This public good-private good analysis both shows why our government (despite an amazing constitution) has grown into a leviathan over the past 200 years and indicates that anarcho-capitalism is likely to be far more stable a system.

Because the apparent instability of minarchy over time is of great concern to me, I am very interested to hear the minarchist response to these criticisms. Is Friedman’s analysis of the issues here correct? Is it possible to compensate for the public good effects in minarchy through economic incentives? (In other words, I’m uninterested in appeals to how moral people will act in the hypothetical minarchy. I don’t hold much stock in the moral fiber of individuals when promises of unearned money and the trappings of power beckon.)

Although I’m not nearly as sympathetic to anarchism as I was when I wrote that essay, I still think that addressing this public good problem is critical to the case for limited government.

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