Arnold Kling  

Why Peaceful Anarchy Fails

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Bryan writes,


As economic growth progressed, of course, the market for defense services got bigger, making room for more and more firms. The problem, however, is that if you've got government in an area, it has the power and the incentive to prevent new entry by competing defense firms. Thus, if market conditions initially favor monopoly, monopoly can easily endure due to "lock-in," or "path-dependence."

He is trying to explain why we do not observe peaceful anarchy, that is peaceful societies with private provision of public goods, including security. He takes the view that government is overly stable.

The conventional view, which I share, is that peaceful anarchy is insufficiently stable. It gives way to warlordism. Warlordism means a situation in which there is no rule of law. A warlord rules by rewarding his friends and punishing his enemies.

In my view, it only takes one warlord to break up a peaceful anarchy. Once one warlord becomes successful, then it is easy for a second warlord to recruit followers, because people either envy or fear the followers of the first warlord. This process continues until everyone is driven to follow warlords.

To break a warlord equilibrium, you need government. That is the Hobbesian solution--a Leviathan that is capable of suppressing the "war of all against all."

Government is flawed, because it creates opportunities for rent-seeking. But I will take my chances on the ability of checks, balances, and corruption-fighting institutions to limit rent-seeking. I would not want to risk a descent into warlordism.


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COMMENTS (15 to date)
Zac writes:

This argument has been repeated ad nauseum and sufficiently struck down by anarcho-capitalists as motivated by economic ignorance. In your co-bloggers own words, this argument grossly underestimates the degree of competition likely to prevail in the defense industry, war is likely to be very unprofitable and dangerous, and economic theory and economic history show that collusion is quite difficult to maintain.

There is no reason to believe that overly aggressive, warlike groups would prevail and private defense firms would fail. Observe the world for a moment. Is that what you see?

Tyler Cowen gives a far more sophisticated argument (than simply assuming warlordism will prevail) that collusion would prevail in "Law as a Public Good: the Economics of Anarchy" where he argues that defense firms are a network industry. Without going into further detail, I'll say that I believe this argument has also been sufficiently rebutted.

Its discouraging that so many freedom-minded people like yourself simply dismiss stateless solutions. Checks, balances, and "corruption fighting" are nothing but rhetoric - the simple reason we haven't succumbed to authoritarianism already is that people, luckily, don't seem to want it. But we've seen in the 20th century how easy it is to fall into an idea trap.

Food for thought: there are far worse abuses of the state than simply "creating opportunities for rent-seeking."

Arnold Kling writes:

So, the anarcho-capitalists have proved that the Mafia cannot exist?

That reminds me of the joke about the biologist who proves that no animal could have a neck longer than one foot. All you have to do is show him a giraffe.

Zac -- I'm sympathetic to anarcho-capitalism. However, why can't I buy ancap-style protection services now? What would the U.S. look like with ancap-style protection agencies dominant?

Arnold -- At the national level, it seems we have relatively peaceful anarchy, in the sense that there is no over-arching government. (The ineffectual U.N. notwithstanding.) At any given time, most states are not at war with each other despite a wide variety of government styles (monarchy, democratic republics, communist dictatorships). And some very tiny states exist (e.g. Monaco, Lichtenstein, New Zealand).

What's your theory for why small states aren't subsumed by larger states? Why don't we need a super-Leviathan to suppress the "war of all against all" at the nation-state level?

Tim writes:

Zac writes:

There is no reason to believe that overly aggressive, warlike groups would prevail and private defense firms would fail. Observe the world for a moment. Is that what you see?

Zac, unless I'm missing the sarcasm (which doesn't seem likely given the rest of your post), that is exactly what I see. For a dyed-in-the-wool AC, "the state" falls squarely within the definition of an "overly aggressive, warlike group." But that aside, one need merely look at any of the modern "stateless" regions in the world to see that the overly aggresive groups usually prevail over the more defense minded groups (e.g., Somalia). I certainly don't see even groups like "Executive Solutions Inc." managing to stave off aggresive groups over the long term.

This may be a function of the fact that offense has historically been a better strategy than defense over any long-term protracted struggle. However, IMHO modern technology doesn't change that equation. If anything, modern technology seems to be making it easier to wage asymetrical warfare. Maybe surveillance technology will turn that tide, but I wouldn't pin great hopes on it. And even then, the question for the AC becomes whether you want to live under that kind of surveillance regime, which is something that seems pretty contrary to the preference system of most ACs.

Zac writes:

By observing our surroundings, I am referring to existing private defense firms (rent-a-cops, bodyguards) and also existing states (not all are equally authoritarian, abusive, and cruel - many are actually okay; just suboptimal).

Not that it's a great example, but I'd rather take my chances with the Mafia at any stage in history than to live in Maoist China.

As to what the world would like look with ancap-style protection services; that's an empirical question we're woefully unable to answer, but predicting what it might be like is the subject of a number of notable volumes and part of an excellent FAQ by Bryan.

Tim writes:

I certainly don't see even groups like "Executive Solutions Inc." managing to stave off aggresive groups over the long term... This may be a function of the fact that offense has historically been a better strategy than defense over any long-term protracted struggle.

In the absence of victim disarmament, it seems to me that beligerence would be too costly and dangerous for defense firms. Are pirates and thieves the most succesful among society?

The very rich would support peaceful trade with all, not domination. The "stateless" societies in which you speak are not anarcho-capitalist, they are the remnants of failed states; there is an important distinction.

I think the view among libertarians that an anarchist state would quickly degenerate into violent feudalism is typically a case of anti-market bias (a common ailment). It assumes successful profit-driven defense firms will be violent and heavy-handed, and quickly dominate and disarm their customers and engage on a quest of military imperialism that destroys society. To me, this seems like a business strategy destined to fail.

James writes:

Arnold says "To break a warlord equilibrium, you need government."

For this to be meaningful, you need to have some positive definition of government that distinguishes it from a monopoly warlord regime. In truth, no government ever just springs up in the midst of many warlords and shuts the warlords down. One warlord shuts down the others and becomes a government.

But here's the best:

First, "A warlord rules by rewarding his friends and punishing his enemies."

Then, "Government is flawed, because it creates opportunities for rent-seeking."

As if there is a difference.

podraza writes:

Where does the Mafia get its money? I am under the impression that most of their income comes indirectly through the state anyway. Namely by running black markets for prohibited goods.

Absent these prohibitions, could the Mafia make enough money to operate?

Jim Glass writes:
"Observe the world for a moment. Is that what you see?"
I see Mafiosi families running things in all parts of the world throughout all history. Rome (not to mention more modern Sicily) was run by "families" and force. What were the medieval lords with their fiefdoms?

Of course there are powerful economic incentives towards Mafiosi-type behavior, which makes it so common throughout history.

As one small example, a soldier in Iraq recently told the story of two competing local gasoline suppliers. Now, they could have competed via price, advertising, quality of service, etc., but that's quite laborious. It was much more economically efficient for one to just pick up an RPG and shoot it into the other's supply truck.

"Boom!", instant reduced supply, increased demand, higher prices! With very little work. What's more rational and profitable? Of course, the other guy (if he survives) must respond in kind, with the help of his business associates and family (there's a reason why clans exist).

All extremely rational and efficient economically, at the individual level. At the collective level it's not, of course, since all those booms destroy the total wealth of the population -- but behavior is driven by incentives at the individual level, not the collective level. Which is why such behavior has been endemic thru history.

As to ...

"Checks, balances, and "corruption fighting" are nothing but rhetoric"
... there have been a few cases of families and interest groups squaring off and checking themselves, agreeing to compete via behavior that increased the pie rather than killing each other. Those groups have created wealth and evolved towards modern-style governments (warlorld --> king --> constitutional monarch --> representative gov't) but as a pct of all societies they've been a small minority.

While the developed peaceful anarchy has been as common as the unicorn and flying pig.

The "economics" of that presumes highly developed markets, and societal standards of developed market behavior, as a precondition -- so competive "order preservation" firms could come into existance to begin with (before markets are hijacked by guys with cheap RPGs reacting to powerful individual incentives). I'm all for it in principle, but the world hasn't seen those conditions yet.

But who knows, with continuing economic/social development, and privatization and economic rationalization of military services, perhaps the military side of the state will wither away someday.

Arnold Kling writes:

I get the sense that the AC'ers don't believe that there is any such thing as a rule of law. You either have private-sector security forces or a super-warlord.

I don't think that of the U.S. government as a super-warlord. I think of it as a necessarily imperfect attempt to implement a rule of law.

The fact that there is rent-seeking is not the same thing as rule by a warlord. Rule by a warlord means that there is *only* rent-seeking. There is no legal system per se--the warlord makes the rules.

I see a meaningful difference between rule of law and warlordism. In fact, historically, it's one of the most important differences ever. It's why our society works and why others fail.

James writes:

Arnold is comparing a theoretical perfectly profit maximizing warlord with real governments that are only partially accomodating to rent seekers. If a warlord is sufficiently bureaucratic and inefficient in accepting bribes from rent seekers, there is no difference between his regime and a government.

Brent Buckner writes:

Per Larry Niven, "Anarchy isn't stable. It comes apart too easily." (see his short story "Cloak of Anarchy" )

Robert writes:

I have difficulty discerning whether there is any practical difference betweeen a 'private defense firm' and a warlord, besides one behaving well and the other behaving poorly (extracting rent).

In particular, defense, like fire protection, seems to gravitate towards natural monopoly: defending all of the houses in a town is not much more difficult than defending a randomly-sampled half of the houses in the town. And once a private firm has achieved a local defense monopoly, why should they not exercise monopoly power (i.e., act like a warlord).

James writes:

Just because one means to an end is a natural monopoly doesn't mean that the end is a natural monopoly in itself. Fire departments are a natural monopoly means to the end of fire protection. Smoke detectors, ceiling sprinklers, safer construction methods and fire extinguishers are not.

Similarly, while roaming patrol cars are (with some caveats) a natural monopoly means to the end of physical security, burglar bars, guard dogs and shotguns are not natural monopolies although they work toward the same end.

Saiyed writes:

Power corrupts, one warlord replaces the other, fighting corruption and all is empty rhetoric, its fighting opposing warlords, the disease is in the hearts, its a moral malady, its only when an individual rises above himself that he can rule the people well, Mahatma Gandhi is a case in point.
But when would a 'we' truly replace a 'me'.

jon writes:

it would not be considered peacefull anarchy if there were warlords.
Anarchy can also mean the fall of government (which most people consider chaos).I find it does not mean chaos because smart anarchists believe in peace not chaos.
In conclusion, anarchy will not prevail because the anarchists would form their own society or government free of warlords.

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