Monday, August 18, 2014

An Anarchic Possibility for the Modern World

This is a topic which I have purposely avoided writing about in any detail for quite some time; only due to recent feedback here, it seems it best that I clarify my views.

The topic is my vision of a possible framework for an anarcho-capitalist society in the modern world.  By possible, I mean to suggest “one of many possible models”; I also mean to suggest “may not be adopted in any way shape or form.” 

“Why”, you wonder, “has bionic avoided elaborating on this?”  I’ll tell you: first, it seems rather presumptuous for anyone to suggest they know the way on this topic – how might billions of people choose to live in a world where the non-aggression principle and respect for private property are held dear?  Second, even as much as I have thought about this, I don’t have all the answers and cannot provide all of the details – I am not ashamed to admit I would make a poor central planner.  Third: the dreaded transition – how to get there from here.  These issues leave any post on this topic open for the countless objections for which I do not or cannot have an answer.

With that out of the way…I have written about anarchic – or at least vastly decentralized – societies that have existed in our past.  Two such examples include the highland people of Southeast Asia and much of the European Middle Ages (here and here).  These examples are found, obviously, in a much simpler time and place – not in anything resembling a complex division-of-labor society.  In other words, while the “laws” might have been friendlier to my anarchic way of thinking, the successful application within a more complex society and global economy is, at minimum, in question.

What is the problem looking for a solution?  It is the problem for which today’s centralized state is justified (albeit, being a monopoly, it has vastly exceeded these bounds), as follows:

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness [I would say “property”].--That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed….

In my libertarian world, this would be a statement for the necessity of “governance,” not government as it is known today.  I translate this statement as follows: governance is established to provide for my safety and security in cases where it is beyond my ability to do so as an individual.  In addition to this, many today consider government (as the term is commonly used) indispensable in providing certain so-called public goods (by this, I do not meet government owned; I lack a better term to describe streets, etc.).

To achieve these ends within my proposed framework, the fundamental requirement should be obvious but I will state it anyway: the institutional arrangements must respect the non-aggression principle and be, therefore, both voluntary and respectful of the inherently necessary property rights associated with this.  Beyond this, it will be helpful to my case if the institutional arrangements offer some demonstration of success in our modern, division-of-labor world – it will not be enough to demonstrate that anarchic (or, at least liberal) institutions worked when individuals were able to hide their crop underground, or when commercial relationships extended no further than the boundaries of one’s fiefdom.

With this, I offer the following two institutions – both prevalent in modern society, and arguably both either already resolving or are structured to resolve the two issues identified above: safety and security, and so-called public goods. 


The market today offers insurance for a long list of risks – in other words, for a long list of events that might compromise safety and security: life insurance, medical insurance, property insurance, auto insurance, liability insurance, disability insurance, unemployment insurance.  The list goes on and on.

An individual can easily establish a comprehensive insurance program that blankets him in the warmth of financial security should an unexpected calamity impact his life.  I am hard pressed to imagine a risk – by type (e.g. physical harm) with certain exceptions (e.g. war) – that even today is not covered; and if there is a missing piece, it is easy for me to imagine that market demand will determine the availability in the absence of a government nanny.  (I will come later to this issue of war and insurance.)

So much for the financial security – what about the actual physical security?  What about prevention?  What about investigation?  It seems to me that the insurance company would be the institution most interested in properly providing such services – today all offered for “free” by the state (under labels such as police, law enforcement, etc.), a form of subsidy to the industry.

Consider the economic model: a customer buys auto insurance from one of several competing, for-profit, insurance companies.  His car is stolen.  The insurance company pays a reimbursement to the policy holder in accordance with the policy.  Would a non-state-subsidized insurer stop here?  Not make any effort to recover the car?  Not take any preventive measures to make the car easier to find if stolen?  Nothing?

Of course not – successful prevention and recovery fall to the bottom line of the insurance company; the more efficient the company is at these services the more competitively it can price its product and/or the more profitable the company will be.

Further, the more proficient an insurance company is at dispute resolution (for example, in accidents involving two clients of two different insurance companies), the more profitable and / or cost competitive the provider will be.  There seems little reason that such skills cannot be employed even on an international stage.

Without trying to answer every question raised about other acts of aggression against person or loss of property – assault, murder, fire, etc. – in principle, the same concepts apply.  And, just as today, two neighbors would not be compelled by force to join the same insurance company as customers, nor would they be forced to have the same coverage; further, one is free to change insurance companies whenever he deems the service or price isn’t satisfactory.   I will add: they would not even be forced to have coverage in any area where they felt the risk did not justify the cost.

But what of war?  Here, I will avoid the issue of transition and merely suggest: in a world of profit and loss and bankruptcy, how many paying customers will voluntarily fund the trillions of dollars necessary to fund an overseas aggression?  How many customers would check the box for the “nuke Japan” or “carpet-bomb Dresden” rider?

I will deal with one objection now – what if some wealthy individuals decide war is profitable, and choose to fund it?  I suggest that utopia is not an option – this happens every day today, funded by the initiation of force by states around the world.  Whatever the result in my more anarchic model, funds provided voluntarily will always be less than funds provided by force; if you don’t believe me, I will ask how many people you know that would have personally spent the $50,000 or more per person necessary to fund only the Iraq wars since Bush I?

Home Owners Associations

Local infrastructure – streets and sidewalks, water and power distribution, etc.: aren’t these all handled by home owners associations (HOAs) today, for those who live in a community so structured?  Aren’t such services provided by hotels and amusement parks for their customers and on their grounds?

Fred Foldvary has written much about this concept; it is somewhat surprising to me that this hasn’t been latched onto more by Austrians / libertarians.  Perhaps it is because he builds on the work of Henry George, a somewhat mixed free-market economist that seems to go off the rails when it comes to property: he suggests land should all be owned by the government and all public funding supported by a single land tax; perhaps it is because occasionally Foldvary slips into describing a role for government in his model.

I find no reason that this must be so, that the government must be involved in any way; it is not difficult to imagine purely private sector models built around similar principles – as mentioned, these exist today.

Does not a property owner prefer that the value of his property is maximized?  Might this be influenced by how well the surroundings are maintained, the relative safety of the neighborhood or community, the lighting and convenience of the roads and sidewalks?  Is it not conceivable that for-profit property management firms would contract to provide such services?

It is not only conceivable, it is a reality: all of this already happens, every single day, in thousands of communities and locations worldwide.

What of people who choose not to live in such properties?  I suggest they can avoid this situation by not buying a property so encumbered.  If there is enough market demand for such go-it-alone properties, the market will provide the supply.  Conversely, most real estate comes with restrictions/conditions in some form or another today (easements for sidewalks or other access is one common easement); control, use, and disposition of property is often conditional – by contract. 

What have I missed?

Through these two institutions (insurance and home owners associations) – even today providing much of the necessary services – I suspect virtually all of what people have come to expect from government (legitimately or not) can be secured in the market.  In case I am missing something, technology today offers a solution:

Crowdfunding is the practice of funding a project or venture by raising monetary contributions from a large number of people, typically via the Internet.

Have a bright idea?  See if enough people agree with you.


What if someone doesn’t want to buy / pay for any of these services?  Don’t.  No one need be compelled to buy insurance of any sort – of course, if calamity befalls them, they should also not expect much in the way of support – to compel support requires a previously arranged contractual agreement.  As to home owners associations, if you want a property without streets or utilities provided, one is certainly free to go-it-alone. 

That such a situation might result in some free riders is also no concern to me – again, this is not utopia; we live today in a world of free riders.  I will suggest that the market will likely be able to limit this to a handful of physical infrastructure issues, whereas today’s welfare state offers a free ride for many insurance-related events as well.


I see as one possibility of a structure for a libertarian / anarchic world this combination provided by insurance and homeowners associations.  Both institutions exist and function successfully today, in our complex division-of-labor economy.  There is little to suggest that these institutions cannot be expanded to provide more of what might be demanded in the market as replacement for government-provided activity (I dare not call much of it “service”).

There is no stretch here – no superhuman agency, no change in the nature of man; there is no necessity of compulsion – individuals can choose to participate or not.

OK, send the bullets; I will do my best to respond.


  1. I applaud you opening the conversation, and nicely done. There is another angle to the insurance that I have heard discussed by Robert Murphy. This is the idea that there may be certain private property, whether controlled by a HOA or perhaps even private roads/highways that may require that YOU be bonded (insured) against any damage that you might cause to others. You discussed being insured against damage inflicted upon yourself. It is an interesting thought that others might require you to be insured against damage you might cause them or others before you are permitted access to certain private property. It is like liability coverage, I suppose. I imagine it could have a place in such a world. More interesting to me at a "meta level" is the acknowledgement of all the creative solutions that could be brought forth by a truly free society to solve problems - solutions that we can not yet even imagine. Your humble approach is well noted. Central planners stifle creative solutions that otherwise would be allowed to compete. We have no idea what solutions might win in a truly free market. Chances are good that we have never heard of many of the solutions that might come forth.

    1. gpond

      Thank you for this addition to the dialogue. It is an idea with good applicability.

  2. Bionic - I think you've covered most everything. I must say that in all the conversations that I've had with people in my attempt to bring them to an understanding of liberty, and how an anarchic world would be world's better than the nanny-state we have now, there is usually one last straw-man standing: What about those who fall through the cracks? So, I would add one institution to your two (Insurance and HOA governance): The Church and Charitable Organizations (C&CO for simplicity). The role of which has been so neutered by the nanny state over centuries that it has become an afterthought in this whole discussion, but is a critical 3rd leg in my opinion. When you combine the onerous regulation of C&CO's with a populace who has already been robbed of 50% of its hard-earned income, it is no small wonder that the role of C&CO's has become negligible. There's just no incentive. In an anarchic world, C&CO's would rise to their mandate/commission once again - to take care of those who are down and out; made poor choices not to buy insurance, were mentally incapable, had a string of bad luck, etc, etc.

    1. Terry

      I am certain such organizations would again take their place in a more libertarian society; I just find it very difficult to point to as a working model that could be expanded (because, as you write, the state has overtaken this function).

      Perhaps a look back at 19th century society could do; if I recall correctly, Tocqueville wrote of witnessing precisely of such a society.

    2. A recent article went into detail about the mutual-help societies of the 19th century that took care of widows and orphans of members.

      Two observations:

      (1) The "fringe" (i.e. non-conformist) Christian missionary movement I was formerly actively enganged with was first on the scene after Hurrican Andrew in Miami in 1992 (or 1993?). Buses loaded to the roof (and on top of roofs) immediately jammed up the roads leading into New Orleans after Hurricane Katrina, but the "authorities" stopped them.

      (2) Hospitals began as clinics for the sick and poor in the first few centuries after Christ (like with St. Francis).

      (3) Monks and other Christian orders (not always Rome-bound, many were independent and even persecuted) likewise did charity work that eventually became orphanages. This also grew out of the habit of Christian couples who regularly went to the bridges and "baby ponds" were mothers threw unwanted babies and waited to catch them to raise them.

      (4) The Salvation Army, the Red Cross, the multiplicity of Hospitals with names like Baptist, St. Francis, and so on show pretty much where the whole idea came from of taking care of those who "fall through the cracks". Maybe Ayn Rand's disdain for charity work has an association there, considering her hate for the God of the Garden (in the mouth of John Galt).

      "Give to him that asketh of thee.." The storyteller of the Good Samaritan changed the world that way.

      But now, adoption is pushed aside in favor of "a different approach", Pregnancy Crisis Centers are the target of vituperation, euthanasia is pushing aside "Do no harm", Mother Theresa is vilified in public by some, and welfare incentives have left way too many children fatherless.

  3. Excellent treatment of a complex concept in a brief format, well done. I can only add, and you touched on it, that I'm typically bombarded with "But how do we get from here to there?" The transition from existing state tyranny to a voluntary society can not be planned, either; however, it can be prepared for. I believe that for society to achieve conditions that allow for true individual liberty, then liberty must be generally understood and the expectation of mutual respect a common courtesy. These conditions can only come about through thoughtful and purposeful tradition (re)building. Coercive systems that grow out of libertarian traditions are obviously counterproductive (see history of USA) and will eventually undermine their base of support. Therefore, we need only to wait for the implosion of the United State as it destroys itself from within. However, while waiting, we must also spread the ideas of liberty to as many people as we can. Keep up the good work doing what you're doing, BM.

    1. Mark, thank you for the kind comments, and I agree with your suggestion completely.

  4. I am an insurance professional in both personal and commercial lines and have actually thought along the same lines as your article. The insurance industry provides the best means of protecting property and person available and it is mostly done on a voluntary basis and is the most efficient because the providers are there to compete with other providers and need to make a profit to stay in business. Because of this, they can discriminate against an applicant who shows a propensity toward carelessness or morale hazard by either outright declining their application or just charging them more to offset the probability and cost of loss to them to have an insured like this on their books. This will and does incentivize people to be more careful and responsible not only with other person's property and bodies, but also toward themselves. For example, I used to smoke cigars but when I saw my Life Insurance premium double, I made the choice to stop smoking instead of paying the higher premium. I also think that the problem of pollution could be mitigated of companies, for example, would be given, somehow, title to rivers or bodies of water adjacent to their factories, for example. This could be an incentive to them to keep their value by taking measure to keep them clean. Just a thought.

    1. The idea of the cost of insurance as a motivator toward healthier living is a valuable addition to this - instead of government coming out with bans on large soft drinks or "just say no," once again, the market can provide better incentive via non-coercive means.

      It also helps to isolate the cost of poor lifestyle choices.

  5. No, I would not like to see HOAs as a prevailing way of governance, even at the local level. Having lived in the communities structured as HOAs for years, I can certify first hand that HOAs, in little scale, reproduce the same problems as any representative democracy in large scale. Directors on HOA Boards are inherently corrupt receiving kickbacks from contractors and imposing inflated prices and unneeded services on residents (the same concentrated benefits (of directors and contractors) and dispersed losses (of ordinary members) etc.) When the control over a HOA Board shifts from the private Developer to the “members” (but in reality the HOA directors), the HOA maintenance fees are usually going up and the Board becomes more intrusive (busybodies on the Board bulling the residents) etc.
    Fred Foldvary says about two advantages of HOAs compared to a local government: explicit contract signed by the member, and that all members of HOA are equal. Though the former is true, the latter is not: usually the directors on HOA Boards are deliberately volunteers what makes them in the most states immune of any responsibility for wrongdoing and violating the HOA docs, etc.

    Why did you focus on HOAs so much? Foldvary himself gave the great examples of the proprietary communities, namely the (condominium) Reston Association in Virginia, residential association of about 7000 in Weston, the village of 500 in Delaware where all land is owned by a private trust, the private neighborhoods of Saint Louis, etc. They are so rare (though successful existing for centuries) because today they are illegal except only in a few counties where they still exist today – it is impossible to create similar communities elsewhere because of the legal obstacles and regulations. In addition, despite entrepreneurs provide “collective goods” in these neighborhoods of St. Louis, for example, the residents will pay the same taxes to the local government. Had proprietary communities (what I would prefer) competed with HOAs and local governments in a freer society in other places, they would probably have replaced the most of them...

    1. Compared to the prevalence of HOAs, a few thousand people living in proprietary communities doesn't show up in the rounding. The point of the post was to build on already functioning, real-world institutions - ones that a significant portion of the population already either has direct experience with or otherwise has familiarity. .

      Without agreeing or disagreeing with your characterization of HOA governance, I am willing to bet no HOA has bombed another country nor charged fees to initiate SWAT raids against its homeowners.

      There is no utopia.

  6. With regard to bombing other countries by HOAs your analogy is not quite correct because local governments do not bomb other countries as well (they are not about defense). However, if you extend the authority of the local HOAs outside local areas (through more and more wider association of associations etc.) and endow them with governing security and defense, you will probably end up with the same bombing and SWAT raids. Because, despite off all differences, HOAs and political institutions are similar in the core: both are collective denoting rulers by the majority who then impose some “services” and collect mandatory fees as a territorial monopoly (of course, now the territory of each HOAs is small so you can much easier “vote by your feet”, not only by ballots …)
    Unlike HOAs, insurance schemes work as a set of exterritorial jurisdictions allowing to opting out individually (“voting by your money”) not changing your place of residence – and this is a huge difference.

    Will HOAs still be better than local governments at the local level? Sure, because only property owners vote there (like in the early America or when in Shanghai – what is actually property qualification) plus explicit contract with each member, plus a different structure of fees not related to the income of the owner, etc. However, the proprietary communities (where I would prefer to live) are better than HOAs. And I would prefer them to compete at the local level…

    With regard to proportions - yes, in long-term residence communities HOAs are prevailing, not proprietary communities (the government do not like a real competition). However, as for short-term residence (hotels etc.) where no such legal obstacles – the proprietary schemes are prevailing to deal with common areas/ goods (lobbies and elevators in hotels etc.) there...

    1. Alex, you are completely changing the context from your first post, to which my reply was addressed, as follows:

      “No, I would not like to see HOAs as a prevailing way of governance, even at the local level. Having lived in the communities structured as HOAs for years, I can certify first hand that HOAs, in little scale, reproduce the same problems as any representative democracy in large scale.”

      There is no experience, in any way shape and form, which an HOA can compare to government, even at the local level. Those police in Ferguson don’t work for an HOA.

      In your second post, you then rebut your own first statement, as follows:

      “Will HOAs still be better than local governments at the local level? Sure…”

      In any case, as I suggest one is free to avoid the HOA altogether, it seems all possibilities are available. Therefore other options as raised by Foldvary can be explored.

      Why do you wish to so adamantly object to the HOA, a form which millions of people today have voluntarily accepted?

    2. In pursuit of my last comment to explain, once again, my skepticism for HOAs and that it is not just my whim. In my personal experience (which is in line with the experience of all the people I know) every time when the community is managed by “selfless volunteers [on the HOA Boards] working for the good of the community” it finally costs all of us, ordinary residents, much more than if it is managed by “a greedy for-profit company or owner”. In this sense, I see HOAs as a government-light in miniature with the similar problem of a caretaker against a real owner etc.
      No, with all things being equal, and the presence of relatively free competitive market in this niche I would rather deal with a “capitalist pig” following his self-interest…

    3. Alex, you point out something that- despite having written it elsewhere - I failed to mention in this post: it is rather easy for me to envision a for-profit model, with communities regularly putting the contract up for bids / proposals to competitive, for-profit, management companies.

      This may not resolve all issues, but this was never my intention.

      Thank you for reminding me to offer this clarification.

  7. No, I do not contradict myself.
    HOAs better/ worse: compared to what?
    To proprietary communities, private “exterritorial jurisdictions” using insurance schemes - definitely worse.
    To government (especially in local communities and municipalities) - better.
    That was the point that I tried to convey, based both on my (and the others dealing with HOAs) experience and praxeo (logical) arguments. I am sorry if my arguments were confusing... English is not my first language.

    And No, I do not adamantly object to the HOA in terms that the others are free to make this choice but me, personally, would prefer a proprietary community to this collective option – I do not see (for myself) HOA as a real private-property-private-law-society alternative. Unfortunately, today I do not have a real choice because government almost nowhere allows proprietary communities to compete with HOAs…

  8. There is a high level problem for you snarcho cspitalists, the split between Mises and Rothbsrd on absolutism vs relativism. In Rockwell's newest book is the "demand" thst all will follow the non agression principle, as childlike as Rockwell describes it. Setting aside Rockwell's definition, Rothbsrd had a heavy issue with Mises over yhe obedience to any standard as Mises stated that no one has any right to tell someone how to live, whivh prompted Rothbard's rejoiner that Mises wss wrong and wss a relatividt.
    So how does an snsrcho csp funcyion in a Mises world of no absolute values ? what of sny NAP or other moral commands issued by Rockwell Rothbard? and without them doesnt the anarcho cap world become as Hobbes described the state of nature?

  9. Why do nominally freedom-seeking humans have so little freedom? I’ve often wondered about this. The answer may be in;
    Free people have the power to adversely affect power. Thus they must be coopted (nobility) or marginalized (serfdom, slavery) for the benefit of those in power. Anarchy as in the Arab spring leads to a deadly power free for all. I think Burke said something similar when defending the need for monarchy despite its recognized inequalities

    Tom O

  10. No demand is necessary. Those who do not abide by the Zero Aggression Principle (ZAP), are initiators.

    Initiation allows counter force of what ever scale is necessary.

    It wouldn't take long before it became obvious that initiation is NOT a healthy action.

    Especially since in such a society, everyone who wishes to be would be armed, and well trained in the use of those arms.

    Some of L. Neil Smiths books deal with this.