From: pmetzger@snark.shearson.com (Perry E. Metzger)
Subject: Re: How would free market anarchism work?
Organization: Partnership for an America Free Drug
Date: Wed, 13 Jan 1993 01:57:37 GMT

Sorry that it took me several days to get to this.

cmk@athena.mit.edu (Charles M Kozierok) writes:
>thanks for the *very* detailed explanation. more than i can probably
>process effectively in the amount of time available to me... but
>here goes.

I think I can answer most of your objections.

>In article <1993Jan8.223721.29219@shearson.com> pmetzger@snark.shearson.com (Perry E. Metzger) writes:
>>Well, lets consider. The non-coercion principle says, more or less,
>>that initiating force against persons or their property is wrong. In
>>order to enforce the existance of a monopoly government and prevent
>>people from setting up competitive courts and police forces, won't you
>>have to use force? Assuming these competing organs only use
>>retaliatory force and never initiate force, it would seem that they
>>are acting within their rights, so in order to enforce a state
>>monopoly you would need to prevent people, by violence if necessary,
>>from entering buisnesses like arbitration.
>
>*very* interesting point, maybe a paradox...
>
>to set up a system that protects individual rights, one has to
>violate individual rights... the answer is that if the government
>is responsible for defending rights, then competing police forces
>are the ones who are initiating force, because they have no basis
>in law.

Ah, but remember, to an objectivist, only a good law has force. Ragnar
Danneskjold could feel morally clean going out and being a pirate, for
instance, because of the nature of the laws he was violating and the
nature of his victims. Mere claimed legality is insufficient here. But
I digress. Lets go on.

>>First, lets assume that we abolish the notion of the criminal law.
>>With the abolition of government, there is no longer any sense in
>>refering to something as a crime against the state, as there is no
>>state -- there are only torts against people, for which we must
>>compensate them. This is how most traditional anarchist legal
>>frameworks like the one in Iceland functioned -- in Iceland, for
>>instance, if you killed a man, you owed his family wergeld, literally
>>"man gold". We can argue about whether replacing jail time with
>>restitution makes sense at another time -- for clarity, lets just
>>concentrate on how the market handles this particular form of
>>compensation. Remember, this is just one plausible mechanism I'm
>>walking through -- there are many.
>
>i would have to admit that in most cases jail time is a waste
>of resources which accomplishes nothing. but the problem with
>your suggestion is what you do with willful or insane criminals,
>who aren't rational, don't want to be, and don't care.

Under a system such as the one I am proposing as a straw man, which is
roughly a (very) updated version of the old Icelandic system, we would
assume that those unable or unwilling to pay compensation would end up
outlaws and possibly killed. This would not be a problem for people
without assets but with skills, as they could work off their debts to
their vicims, but might be a problem for sociopaths.

>>Lets say that I patronize security company A, and you patronize
>>company B, and you steal an object from me.
>
>murder would be a better example -- because compensation is much
>more difficult. but fine.

Well, one could argue that this is also an instance where compensation
is in order -- a murder victim would presumably have goals and values,
like the preservation of his family, that were interfered with by his
death, which could be partially sustained by compensation. Also, one's
life insurance company would also have a bone to pick with the
murderer and would want compensation there as well. The Icelanders and
many other northern European people's did very well with a system of
monetary compensation for such acts -- thats where the very term
"wergeld", or "man-gold", comes from. However, lets drop this for the
moment.

>>I then go to company A and complain that my object has been stolen.
>>They go out, and lets assume that after some investigation they
>>determine that you apparently are in possession of the object.
>
>"they're not getting into my house, no sir. who the hell are
>they? i've never heard of them. probably a bunch of criminals
>just *calling* themselves a security company. yeah. Joe told
>me about those ones."

This is a problem right now -- no rational criminal would allow
someone into their house under the current system, either, if he could
help it. The answer, in either system, is that if you need a warrant
you go in front of a judge and argue that you need it. Presumably, in
a privately produced legal system like the one I'm mentioning the
proceedures for disputes between security companies would be handled
by intercorporate pre-arrangement.

>>You, of
>>course, patronize company B, and if company A's people just came in
>>and forceably extracted compensation from you you would likely call in
>>company B's people to protect you.
>
>never mind compensation -- they're not getting into my house to look.

Ah, but we've disposed of that question.

>>This is the difficulty Ayn Rand
>>couldn't see further than. Anyway, getting on with the example,
>>company A will now call up company B and inform them that there is a
>>potential conflict arising here. In all likelyhood, if this happens
>>with any degree of regularity, and it doubtless would, the companies
>>would have made an agreement between each other on how to deal with
>>such matters.
>
>so to answer my own question, *my* company would ask to search my house.
>i'd fire them. i was accused falsely!

Ah, but then you would be in considerable trouble, wouldn't you? You'd
have no protection organization, and a large group of armed men
(company A) would now be able to search your premises with impunity,
and your actions in firing a company you had a long standing
relationship with when they acted against your interests mid-dispute
would likely mean no one would even raise a whisper about this.

>>Lets assume there is an agreement, and that it is that
>>representatives of company A will present evidence for the crime in
>>front of an arbitrator selected by representatives of both company A
>>and company B, and that you (the criminal) will have a chance to
>>defend yourself in this proceeding.
>
>if company B even *tries* to search my house, they're fired. end
>of problem. i'll hire someone more interested in serving my needs.

Ah, but who would be willing to pick up such a client? Obviously a
renegade security organization, which would be unlikely to survive in
such a system -- they would get into wars with companies very often,
and would likely just get destroyed in the end. The odds that any
normal company would take a client who had just fired his last company
because they were following pre-arranged conflict resolution methods
is very low. 

>who are these arbitrators? how do we know they can be trusted?

They are picked by mutual agreement of both sides. This follows a time
honored tradition -- arbitration, including binding arbitration, is
practiced even today by this method. The Law Merchant was constructed
in courts that followed such methods.

>who is *their* security company?

Doesn't matter, but for conflict of interest reasons they should
likely use a third company.

>>If you don't cough up the
>>money, presumably company B has preagreed that in case of an
>>adjudication against you that you refuse to comply with they will no
>>longer defend you against force, and company A will then extract the
>>money for me.
>
>this puts me at the mercy of this company for *any reason*.
>how does that protect my right to life, freedom and property?

Right now, if you refuse to obey a court order, you are at the mercy
of the government. This is no different in any regard. If you dislike
this system, the exact same argument may be made against any kind of
government as well. You can't very well argue that you are willing to
accept that a mystically endowed government court could sentence you
to jail time (during which you could be gang sodomized for all the
government cares) but would be unwilling to be compelled by a private
arbitrator of your own choosing to pay damages.

>i don't like that -- it is no better than totalitarianism.
>what if they just say "pay ten times what you did before or
>we'll let company X come after you"?

Presumably, they won't if they are following established methods and
commonly understood rules of practice. If they are not following those
customary methods, you can likely find another company to protect you.

>how do you deal with bad people getting in control of these companies?
>and before you say "that's how it is with the government now", i don't
>believe that. i think one can still get a *reasonably* fair trial.

Try that in a South American country, or in Africa. Don't confuse the
US for the whole world. Governments are often run by evil and corrupt
dictators -- look all around the world for examples. The bulk of the
people in the world have never seen or heard of the concept of "fair
trial". Try to get one of those things in China, for example. The
difficulty dissidents in such countries have is testimony to the
inherent difficulty in overthrowing a dictator.

However, here is a natural check on bad security companies that
governments do not have -- evil security companies do not possess a
monopoly on the use of force -- there are many other armed
competitors. If they do not follow established custom, its likely that
they will find themselves with their clients fleeing to other
companies, which will then fight the evil company. There is no such
natural check under a monopoly system.

>and the government is not banging down my door.

>i see *much* more room for abuse with private companies.
>in fact, it sounds a lot like those protection rackets.

Well, go down to Kenya and tell me if Daniel arap Moi isn't, in fact,
running a protection racket of sorts. You are confusing your nice cosy
home in the US, an aberant country which has had a stable and
reasonably fair government longer than any other in the world, with
99% of the globe. Well, most of the world has abuses that you couldn't
even dream of. Did you know that there is now evidence of government
sponsored cannibalism in southern China during the cultural
revolution?

I feel that a good, stable customary legal system is far more likely
to provide long term stability and checks on evil than a government
is. The evidence around the world is that governments are astoundingly
bad at stopping mass evil, and in fact are generally the largest
perpetrators of it -- no criminal gang could compare to Josef Stalin
or Adolf Hitler in number of victims.

Assuming you are an objectivist, you likely have reasonble confidence
in the checks and balances provided by a free market. All the sort of
system I propose is one in which the market is extended to the
policing and trial functions of government.

>this sounds fine as long as everyone gets along. you really think
>that companies won't get into situations where they don't agree?

Of course they will. No system is perfect -- a perfect system cannot
be constructed. I'm merely arguing that the rare battles that will
occur in such a system produce nothing near the casualties the
government based system we live under suffers from.

>i really don't think this makes as much sense as i did a few
>paragraphs ago. try to defend a worst-case scenario. to me
>it ends up in complete chaos. and people are generally *not* very
>good at getting along.

Try defending the worst case scenario under government, my friend. You
end up with death and destruction on scales you've never seen before.
Tell me that you think things could get any worse than Idi Amin or
Adolf Hitler's governments.


>>It turns out that people very rapidly standardize on agreed social and
>>legal norms in a society. The developement of the Lex Mercatoria in
>>the medieval merchant courts produced a standard for how merchants
>>were expected to behave, even though no central authority existed. For
>>many centuries, judges of all sorts have looked to prior decisions and
>>to custom to guide them when deciding on matters that are not
>>codified. this is the so-called common law, which is another example
>>of customary law at work.
>
>i don't like this much. it just sounds like you are stating
>examples of two cases where people did agree, not providing any
>reasons why that should always happen.

Well, I can give you a good reason from economics -- standardization
tends to make things cheaper and easier to manage. Trade requires that
things like weights and measures be standard. However, as you can tell
from usenet, which operates on standards set by no government
authority, its possible for things like weights and measures and
technical standards to be developed extragovernmentally. As Roberts
Rules and the Lex Mercatoria show, its also possible for legal
proceedures to be standardized outside the system.

Another thing I might note is Axelrod's work on cooperation, in which
he showed that the best strategies in iterated prisoners dilemas
performed in massive computer simulations were strategies that
cooperated but punished defection. Your assumption in guessing that
people would do bad things and not agree to common legal systems is
the opposite -- that in an iterated prisoners dilema people would tend
to defect, which is not what the evidence shows.

Lastly, I could ask you this question: what are the checks and
balances under a governmental system? They seem to be fairly weak
worldwide. Even France has nearly had two coup d'etat since the second
world war, and thats not even counting the disturbances in 1968.

>>Presumably, common reference works, the common law, and custom will
>>form a fairly commonly understood legal base in a system such as the
>>one I am refering to. 
>
>i don't want my life protected by "custom".

You mean it isn't so protected now? Virtually all of our court
proceedure is customary law, my friend. Indeed, virtually the entire
framework of your life is managed by custom. When you agree to go to
work for an employer, and no contract is signed, what, pray tell, do
you think sets the norms that form the implicit contract between you
and your employer? The whole of the common law is customary law. Most
of the unwritten contracts you engage in are customary law. 

However, don't believe me. Go off and read Bruce Benson's book "The
Enterprise of Law". Its a thorough and scholarly walk through the
entire question of privately produced legal systems and customary law.
He traces the entire question very carefully, including both good
theoretical arguments and extensive evidence, both contemporary and
historical. Its truly a masterwork.

>>Companies COULD try to force people to accept strange new legal codes
>>that required them to, say, kill all the homosexuals that they met,
>>but its unlikely that they would get customers or that other companies
>>would treat them as "legitimate" and form cross agreements for
>>settling disputes with such companies.
>
>not so. it is quite likely that they could do this without losing
>any customers. persecution of the minority is a popular sport on
>this planet. and you also ignore the brainwashing potential of companies
>this big and powerful.

Persecution is something people only do when its costless. If people
are willing to pay enough of a cost, they can't be stopped from
persecuting, so its not even worth discussing that question.

The real issue is, if the minority group is sufficiently well
protected, and you have to personally pay the cost, including the risk
of being killed, of persecuting them, would there still be
persecution? I doubt it. Blue noses survive largely because they can
get others, via government authority, to take the risks for them. If
they had to put their own lives on the line to stop people from
necking in the park I think they would think twice.


>>3) What do you do if company A says playing your radio too loud is all
>>   right and company B holds it to be a tort?
>>
>>There are several ways such disputes will be settled. In all
>>likelyhood, the majority of them will be settled by custom -- i.e.,
>>most adjudicators will hold one way or another and after a while it
>>will have the force of law.
>
>but on what basis is this law created? just the whim of these
>companies and arbitrators. frankly, i'd rather have the government
>in power -- at least i know what i'm dealing with, and i get a vote.

Well, first, I'd like to note that right now common law is created by
the "whim" of judges and by the rule of Starre Decis. What I'm
proposing is hardly different.

You argue that you at least "get a say" in government, but I'd argue
you don't. You have one tiny vote among millions. In a system like the
one I propose, you would get to pick your own company based on their
reputation, the quality of the protection they offer their clients,
their track record, etc, and you could also likely gain other says,
like the capacity to choose arbitrators in disputes. This seems to me
to give you far more personal choice and power than you have in a
democracy.

>>I'll point out, however, as an intriguing
>>aside, that market forces can also be used to settle such questions.
>>Some hold that it could be possible for you to be insulated from the
>>question by having your company pretend to you that you are living
>>under the code that you choose. If you play your radio too loud, they
>>will have to pay heavy damages to your neighbors, which will result in
>>your having to pay them heavy premiums (a disincentive), but that
>>other than absorbing such costs you might otherwise be able to
>>"pretend" that you lived in any legal code you chose. Some legal codes
>>might be prohibitively expensive, with others being less expensive --
>>this would lead to a natural evolutionary pressure towards people
>>picking codes that caused minimum practical interference with their
>>neighbors.
>
>this sounds a little too optimistic to me.
>what if the companies can't agree on what's too loud?

Its unlikely that this would happen. A failure of that sort would lead
to war -- and its unlikely that anyone would want to do that over a
radio playing dispute. Prehaps crazy teenagers, but not cold headed
company executives with lots to lose. I suspect that what would end up
happening is that if the companies had trouble settling the dispute
they would agree to binding arbitration and settle things that way.

>>4) What happens if you can't afford a security company?
>
>better -- what happens if all the security companies don't like you?

What happens right now if the government hates you? At least under the
system I propose, there are several hundred organizations that all
have to hate you. If you are a sociopath and become an effective
outlaw, its entirely possible you deserve to die. Some people do, you
know -- I don't think that many people would agree to protect a
Jeffery Dahlmer after his conviction in court, for example.

>>There are many possibilities. You can join a co-op, in which you would
>>have to exchange part time labor and the like as part of the company
>>in exchange for protection.
>
>these companies have to "co-operate", right?
>there is *nothing* preventing them from setting their rates as high
>as they want, or extorting their members. they could just form a cartel.

I thought you were an objectivist. Cartels and similar constructions
are rather rare, indeed, unheard of beasts, largely the invention of
muckrakers and government expansionists in the late 19th century. We
can discuss them seperately if you like -- they are another issue
entirely. I was assuming that everyone agreed and accepted that the
market works. If you don't agree that the free market works well and
aren't an objectivist then it becomes hard to justify this system --
it depends on the market functioning.


>>5) What happens if you are very rich and decide to flout the law.
>>
>>Ah, as it turns out, the rich have far more to lose than the poor and
>>have a far greater incentive to follow it. Here is one possible
[...]
>i am more concerned about Gates being the abusee than the abuser.
>people don't like the rich. so there would be a "market incentive"
>for a security company which advertises "we screw the rich".
>etc., etc.

Ah, but Gates has more money, thus partially negating that effect --
he is in and of himself a big market.

In any case, though, if most of the populace doesn't agree to the
system this sort of thing can't work, period. This is a universal
problem for anyone proposing any new political system. Most people
like what we have now, and were the government overthrown tomorrow a
new one would be in place within days. We have to assume in thinking
of such a system that the bulk of the populace understands how it
works and mostly is willing to live with it -- otherwise, all bets are
off.

>this is not holding much water for me. too many holes. too many
>special cases. too many optimistic assumptions. i know you are just
>starting, but even after looking at your explanations, all i see
>is *chaos* when i think about this system in operation.

Thats also what socialists looking at the free market see in their
minds -- so many people all delivering and selling food, why, its
chaos! And how can you assure that supermarkets will work anyway
without a central plan and a government to manage them...

>also -- we haven't talked about the police. having ten police
>forces roaming around armed to the teeth is pretty scary too.
>if they don't co-operate enough to nullify the competitive
>nature you want, then the aren't co-operating enough to
>prevent chaos. even accidents would be a big problem.
>i think it would take about 1 week before a major war broke out.

They will cooperate on certain points, standardizing much of legal
proceedure the way that VCR manufacturers standardized on VHS and beta
went down the tubes. They will compete in other ways, for customers,
likely on the basis of their effectiveness and cost. Given that
systems roughly like this have operated in the past (like in medieval
Iceland), and have lasted for centuries, I'd say that you may be
overly pessimistic.

In any case, these arguments are complicated and I have no illusions
that anyone unused to them would adopt them overnight. I'm more than
willing to answer questions in as much detail as people want to hear.

--
Perry Metzger		pmetzger@shearson.com
--
Laissez faire, laissez passer. Le monde va de lui meme.