"[There is a] strong correlation between market freedom and lower government corruption -- not terribly surprising, since the effect of increasing regulatory power is to shift 'cheating' from the private to the public sphere." ~ Julian Sanchez
The Great Divorce
As readers of this web journal know, I have long defended the anarchist version of libertarianism against its minarchist critics. Tibor Machan, however, has recently argued (in 'Anarchism and Minarchism: A Rapprochement,' Journal des 'conomistes et des 'tudes Humaines 12, no. 4 (December 2002), pp. 569-588) that the opposition between anarchism and minarchism represents a false dichotomy. Dr. Machan maintains that both 'the individualist anarchists and the so-called minarchists ' those who support a properly limited government ' are right and their differences are only apparent.' In this post I assess Dr. Machan's arguments. Dr. Machan's strategy is to argue that while government does indeed represent a monopoly, just as anarchists claim, it does not represent the sort of monopoly that anarchists justly complain of, and so the general libertarian critique of monopolies does not apply to government. I have some difficulty determining exactly what sort of monopoly Dr. Machan takes government to be, however. His remarks appears susceptible of three different interpretations. These are:
a) Government's monopoly rests not on coercion but on consumer preferences. (Call this view Market-Based Monopoly.) b) Government's monopoly rests neither on coercion nor on consumer preferences, but on facts of nature outside of anyone's control. (Call this view Nature-Based Monopoly.) c) Government's monopoly does indeed rest on coercion, but the coercion is justified. (Call this view Justice-Based Monopoly.)
Dr. Machan suggests Market-Based Monopoly when he writes as though government is merely a de facto monopoly, existing not by force but by 'overwhelming customer support.' (He here draws an analogy with Microsoft, claiming that 'Microsoft's dominance in the software industry is not coercive.' I think this is an unfortunate analogy, since by my lights Microsoft's dominance does stem in large part from governmental injustice; see Fran'ois-Ren' Rideau's analysis in Government and Microsoft: A Libertarian View on Monopolies. But that's an issue for another day.) Of course if government were that sort of monopoly, no free-market anarchist would have any objection to it. Suppose a single protection agency permitted competitors to enter the field, but any who tried to do so immediately failed because customers voluntarily continued to support the one protection agency. That would be just fine with the anarchists; under Austrian economic theory, competition exists so long as rivals are permitted to enter the market, whether or not they do so. On the Market-Based Monopoly reading, Dr. Machan favours a protection agency that permits competitors (and so he counts as an anarchist), but he predicts and/or advocates lack of customer interest in such competitors (and so he counts as a minarchist). If that's his reconciliation of minarchism with anarchism, then I grant that his solution successfully reconciles the two positions ' though I would disagree with the prediction and/or advocacy of no-actual-competitors, and so Dr. Machan's solution would not be one I could personally endorse. But things are a bit more complicated. For Dr. Machan does not consistently appear to maintain that government's monopoly will rest on consumer preferences. Sometimes his words suggest the Nature-Based Monopoly Interpretation instead, as when he notes that 'it is impossible that during a flight from LA to NY one could enjoy the benefits of both competent service and instant change of the service provider.' Here the idea is that while airline passengers are en route their airline enjoys a temporary monopoly, not because its customers are too contented to switch, but because there is no feasible way of switching. Presumably if there were a feasible way of switching airlines in midflight, then the airline would have no right to hold its customers captive. Here too the anarchist can agree with Dr. Machan that the situation as described involves no violation of libertarian rights. It is not any decision on the airline's part, but rather the impossibility of midair competition, that limits the customers' options. I note, however, that interpreting government as a Nature-Based Monopoly is incompatible with interpreting it as a Market-Based Monopoly. If governmental monopoly is the only possible legal system, then government does not owe its monopoly to consumer preferences ' just as the absence of perpetual-motion machines (real ones, not just purported ones) is not due to a lack of consumer interest. While on the one hand Dr. Machan draws an analogy between government and monopolies that do not rest on coercion (the cases we've just been considering), on the other hand he also draws an analogy betweeen government and monopolies that rest on legitimate coercion ' Justice-Based Monopoly. For example, Machan notes:
A privately owned apartment house is a de facto monopoly in the same way as any particular ownership constitutes such a monopoly, especially to someone else who wants just that item but cannot have it since it is now owned by another.
Now since there are limits to how many people can physically occupy the same dwelling, a private residence is in part a Nature-Based Monopoly. But only in part. Most buildings can hold more people than they actually hold; a gang of armed thugs could in principle burst their way in Dr. Machan's home and take up residence there. But he would be justified in using coercive measures to eject these trespassers, because he has a right to defend his monopolistic control over his private property. Coercive monopoly is always justified when what someone is 'monopolising' is her own property. This analogy will not work to defend governmental monopoly, however, since it makes no sense to talk of government legitimately owning the market for protection services. If protection services are legitimate, anyone can legitimately offer them, since all human beings have equal rights; one cannot own a market in legitimate services without owning other people's labour. But Dr. Machan offers other reasons for thinking that governmental monopoly rests on justified coercion. He suggests, for example, that it
would be ethical to establish government instead of leaving the task of rights-protection to individuals and businesses that lack the training to protect rights properly, that is, via due process, without violating rights in the process of this protection.
In other words, the idea seems to be that competing protection agencies are likely to violate rights in the course of offering their protection, and so government is justified in prohibiting them. This is essentially Robert Nozick's argument against anarchy. But forbidding an enterprise to operate because it might violate rights seems to run afoul of the principle 'innocent until proven guilty.' (Anarchists argue not merely that governments are likely to violate rights ' though they do make this argument inter alia, for familiar informational and incentival reasons ' but rather that governments, understood as coercive monopolies, are essentially rights-violating.) While it is unclear which of the three views on monopoly ' Market-Based, Nature-Based, or Justice-Based ' Dr. Machan means to defend, all three rest on the claim that jurisdictional competition within the same territory is not feasible. If we read 'not feasible' as 'impossible' we get the Nature-Based interpretation; if we read 'not feasible' as 'possible, bur so undesirable as to scare away customers,' we get the Market-Based interpretation; if we read 'not feasible' as 'possible, but so undesirable as to be unjust,' we get the Justice-Based interpretation. Dr. Machan seems to be making the Nature-Based feasibility claim in the following passage:
One might put the question another way: Could there be legal service provisions without countries? Could legal service provisions overlap, be delivered to citizens without their having to move and even divided into various parts where some agency offers police service, another prisons, and yet another adjudication?
But of course we know historically that the answer to that question is yes. Surely the existence, and therefore a fortiori the possibility, of competing jurisdictions within the same territory is an established historical fact. (See Tom Bell's bibliographic essay Polycentric Law, as well as the various links on the Molinari Institute's anarchist resources page.) It's hard to know what to make, then, of Dr. Machan's claim that govenrment is 'a pre-market institution . . . required for the maintenance, elaboration and protection of individual, including private property, rights.' In any case, apart from the historical counter-evidence, there is a conceptual error involved in the claim 'that market institutions, such as corporations, partnerships, private businesses and even plain, ordinary one shot trade, presuppose a background of some kind of law-enforcement, including protection of property rights and the integrity of contracts.' I've analysed that conceptual error in detail in my debate with Robert Bidinotto (see here, here, and here), so I won't repeat those arguments now. But I think this conceptual error is the most important mistake that opponents of anarchism make, so I urge anyone interested in this issue to consult the links I just gave. Dr. Machan argues that free-market anarchism is impracticable because
the type of service being provided involves a long term commitment to having one's rights protected and innumerable activities conducted within the framework of such protection, something that requires on-going mutual access to courts, police services, and so on. This answer disputes the viability, at least until the availability of transporter type machines familiar from Star Track [sic], of crisscrossing jurisdictions in criminal law, that is, the predominantly Swiss-cheese conception of governments. It is arguable that such a way of providing legal services runs the serious risk of generating in principle irresolvable legal conflicts. For example, a criminal could run off to a more favorable competing court after being convicted by one. Such a prospect would defeat the very point of law, namely, the resolution of a dispute.
Dr. Machan is aware, of course, that there is a standard anarchist answer to this worry: namely, that market incentives would lead competing agencies to set up mutual agreements as to how to handle such cases. To this he responds:
Even if in time the various courts would see the utility of adhering to common standards, at any given time they may well not do so, and this would be an obstacle to justice that is supposed to be swift and efficient for individual citizens.
Certainly competing agencies might not provide adequate justice at all times. But likewise a governmental monopoly, even one that was designed to be a minarchy, might not provide adequate justice at all times. The question then becomes: which one is more likely to go wrong ' a justice system that is subject to the discipline of market incentives, or one that is insulated from them? If anything we know about economics is right, the answer is surely the latter. Dr. Machan is skeptical about the reliability of inter-agency agreements because he is unimpressed by the success of international law:
Different countries hold different standards of justice and reciprocity is often resisted. ' And these are only the more visible cases. Thousands of others where international cooperation in criminal adjudication is absent understandably go unnoticed. Those, I think, may be deemed failures of the enterprise of law or at least the model of law as a sort of competitive enterprise.
The point Dr. Machan neglects here, however, is that the examples he points to are failures of successful cooperation between territorial monopolies. If you're a citizen of Ruritania and you don't like the way your nation handles international agreements, you can't switch to a different service provider without physically relocating, which is rarely worth the effort. Hence the government of Ruritania enjoys an effective monopoly, and does its job ' including international arbitration ' about as well as one would expect a monopoly to do anything. The example I would point to is the contrast between the way the private Law Merchant system handled international disputes and the way government courts during the same period handled such disputes. Part of the motivation for forming the Law Merchant in the first place was precisely the fact that the governments of different nations had inadequate incentives to standardise and reconcile their legal practices, so the market had to step in. Dr. Machan complains that anarchists 'attempt to reduce all politics to economics' ' but surely economics, as a universally valid science of human action, is applicable to the actions of government if it is applicable anywhere. The informational and incentival defects of monopoly do not suddenly vanish when the monopoly concerns legal services. Dr. Machan does not discuss the information problem that monopolies face. (And note that the information problem applies whether or not the monopoly was achieved legitimately.) As for the incentive problem, Dr. Machan offers the following brief comment:
I dispute that this [= abuse of power] is a necessary feature of public service in any type of political order. It is, of course, typical behavior of public servants in what economists call a 'rent seeking' welfare state. However, in a free, libertarian government such servants may well carry out their oath of office to defend the constitution because the constitution does not sanction special interest legislation and regulation.
In other words, Dr. Machan's solution to the incentive problem, apparently, is to write prohibitions on 'special interest legislation and regulation' into the government's constitution. In light of the history of the United States, this seems optimistic. Who's going to be in charge of interpreting those constitutional requirements, if not the 'public servants' themselves? The way to prevent abuse of power is not to insert more paper prohibitions, but to have a legal system of checks and balances that gives the providers of legal services an incentive to restrain one another's ambition; and as I've argued in my debate with Bidinotto, anarchy is the logical conclusion of the checks-and-balances approach. I'm not convinced, then, by Dr. Machan's arguments for the undesirability of an anarchist legal system. Suppose, however, that he turns out to be right, and such a system is indeed undesirable. My question then would be: what kind of undesirability is it? Is it so undesirable as to be unjust? that is, does Dr. Machan think the government should prohibit any attempt to offer legal services comeptitive with its own within the same geographical territory? If he does, he is a minarchist; if he doesn't, he is an anarchist. There is no 'rapprochement': tertium non datur. Let me close with a few brief remarks about terminology. The terms 'state' and 'government' are used with a variety of meanings; sometimes these terms are treated as synonymous, sometimes not. In Europe the term 'government' is often used to mean what Americans call 'administration,' namely, not the state apparatus as such, but rather the particular political faction currently in charge of that apparatus. In other contexts 'government' does mean the state apparatus, while 'state' means a society with such an apparatus. In both cases, however, while government and state are distinct they go together, and both maintain their territorial monopolies by force. And most libertarians, whether they are anarchists or minarchists, use the terms 'government' and 'state' either synonymously or at least in such a way that government and state are two inseparable sides of one and the same coercively monopolistic phenomenon. Admittedly some libertarian theorists, such as Albert J. Nock, have tried to make 'government' the virtue term and 'state' the vice term; and Gustave de Molinari, for example, uses 'government' in such a way as not to imply monopoly. Such usage is uncommon, however. My own preference has been to lump 'government' and 'state' together as terms implying coercive monopoly, and to use 'law' as the term that doesn't imply coercive monopoly. In the end I don't think too much hangs on these terminological issues, but I mention them because Dr. Machan has definite terminological preferences. He dislikes the term 'state' because 'usually it means a society conceived as an organic whole.' This may have been true once but I don't think it's true any longer; my impression is that most political theorists now use 'state' in the Weberian sense, as a territorial monopolist of force, or at least as a territorial monopolist of the authorisation of force. As Dr. Machan points out, this standard definition does not explicitly specify whether the monopoly is coercive or merely de facto; but I think coercive monopoly is what's generally meant. Dr. Machan distinguishes between a state, which he takes to be 'a human community of a certain type,' and a government, which he takes to be 'an institution within such a community.' So far this might sound as though nothing counts as a government unless it occurs in a state, but this seems not to be Dr. Machan's position, since he advocates government but seems reluctant to advocate the state. He initially defines government as 'a legal service institution the actions or policies of which are backed by allegedly justified physical force and its threat.' Now if that is his definition, then government, so defined, is something to which anarchists have no objection. This definition makes no reference to monopoly, however. But Dr. Machan goes on to claim that 'government is only a monopoly, not a coercive monopoly.' I'm not sure whether he means to define government as monopolistic, though not coercively so; or whether he instead wants to leave any reference to monopoly out of the definition of government, but to argue that in practice any successful legal service provider will have to be a (non-coercive) monopoly. I am left, then, with the following questions about Dr. Machan's article:
What is his precise definition of 'state'?
What is his precise definition of 'government'?
Does he think the competitive provision of legal services wihin a single territory is impossible?
or possible but unjust?
or possible and just but otherwise undesirable?
Does he think his ideal minarchic government should or should not attempt to ban any attempt to compete with it (within the same territory)?