The problem with self-enforcing agreements is that they do not scale up. One of the findings from Elinor Ostrom’s extensive case studies is that self-enforcing arrangements to manage the “commons” work well only when the geographic scope of the activity is clearly delimited and membership is fixed. It is easy to understand why. Cooperation under “anarchy” is based on reciprocity, which in turn requires observability. I need to be able to observe whether you are behaving according to the rules, and if not, I have to be able to sanction you. When the size of the in-group becomes large and mobility allows opportunistic behavior to go unpunished, it becomes difficult to maintain cooperation. Imagine that the pirates numbered in the millions and they could easily jump ship to join competing groups mid-voyage; would the arrangements Leeson describes have been sustainable?
Read his whole essay. Also read the opposing views of Bruce L. Benson, who writes,
When a strong coercive power can limit exit, economic success requires that property rights be recognized and supported by that power — that is the essence of a protection racket. Thus, state recognition of property rights is required to achieve the most efficient use of resources, but only because the state is the primary threat to those rights.
Back in the real world, Ben Casnocha writes,
If your personal economic situation is improving you’re more tolerant of infractions on your social or political freedoms.
…When I’ve talked to 30 year-old or younger Russian or Chinese people, they say that they prefer stability and a fatter wallet than all the “freedoms” that America and Europe celebrates. After all, they say, history shows that the freedoms will come in time — but first people need to live above the poverty line.
The problem with anarchy is that it is a public good. Individual liberty requires collective action.
I think that Rodrik nails it when he says that non-coercive solutions to public-goods problems do not scale.
One challenge to our view is that international business arrangements exist that are not overseen by an international government. The arrangements can be quite complex and involve trade among strangers.
It is possible that international business is an existence proof for self-governance. However, my guess is that international business is based primarily on two types of institutions. One type is the internal government-backed legal infrastructure of the countries involved. Thus, a foreign firm that trades with a U.S. firm can enjoy some protection under U.S. law. I suspect that it costs less to engage in trade with countries that have reliable rule of law than with countries that lack reliable rule of law.
The other type of institution that undergirds international trade is one based on personal interaction–repeated transactions, reputations, and so on. I think that the costs of the personal mechanisms are what make it more expensive for Virginians to import goods from Africa than from California.
READER COMMENTS
James
Aug 10 2007 at 12:30pm
Arnold,
I think you and Rodrik are both absolutely right to point out that problems would exist under anarchy. But you both seem to ignore that the existence of a problem under anarchy is only telling against anarchy if that problem would be absent or less severe under a government.
To cite but one example, Rodrik writes and you quote, “I need to be able to observe whether you are behaving according to the rules, and if not, I have to be able to sanction you.” If this is a problem for dealing with others in anarchy, it’s at least as much a problem for dealing with the state right here and now. Does anyone really believe that only private actors, but not governments, are hard to observe and sanction?
Also, it’s not terribly persuasive to argue against anarchy by selectively making reference to some of the best governments in a long and varied history. Leeson is gutsy enough to take up the burden of proof and look at Somalia, commonly thought of as an example of why anarchy is so horrible. Based on empirical evidence, even in Somalia, anarchy is preferable to state. Why is there no statist willing to take up a symmetrical burden, that is, to claim that even their worst cases (Stalin, Hitler, Mao, Pol Pot, etc.) are preferable to anarchy?
paul
Aug 10 2007 at 12:37pm
what about the fact that states (countries) themselves exist in anarchy (defined as no super government). That’s a pretty grand scale.
Paul
Matt
Aug 10 2007 at 1:21pm
If anarchy demands observability of others, then planning horizons must be very short. This I think is the key, for as we began to plan over multiple generations the necessity of delegating authority to specialized agents led to the state.
The leaders of the clans would delegate some authority to a proto-state if their own estate was guaranteed to be inheritable. This gave clan leaders the ability to plan multi-generationally. Along with this came ancestor worship, for the progeny could claim rights by claiming the body of the clan leader.
Steve Sailer
Aug 10 2007 at 3:58pm
To work, anarchy needs xenophobia. For example, if you tried to move to New England and get into lobster fishing, you’d find that your traps kept getting broken. How come? Because the locals have a traditional allocation of lobster rights to prevent overfishing.
Similarly, consider the much denounced Texas shrimp fishermen who attacked Vietnamese refugee shrimpers who arrived in the late 1970s. Well, the Texans had a well worked-out set of customs to prevent overfishing, which the Vietnamese were violating.
Alex J.
Aug 10 2007 at 4:59pm
That’s not xenophobia. That’s property rights.
Steve Sailer
Aug 12 2007 at 10:04pm
Uh, hate to break the news to you at this late date, but there is a bit of a problem with the concept of property rights in fish in the Atlantic Ocean.
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