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. 

Insurance

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.

Voluntary

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.

Conclusion

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.