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Polycentric Law, a.k.a. Anarcho-Capitalism as No Big Deal

June 23, 2010

I’ve been reading through this wonderful collection of anarcho-capitalist articles (HT:  Brad Taylor), and thinking that we need to get people to realize that polycentric law, or anarcho-capitalism, is just no big deal and we should get over it already.

One of my favorites is this common sense article on Market Chosen Law by Edward Stringham.  Stringham points out that universities, condominium associations, and shopping malls all act to some extent as private governments on a local basis already.   Stringham points out the extent to which universities customize their private legal systems to suit the needs and tastes of their clients, needs and tastes which may differ from those of the external legal system.  A personal example:  When I was attending Harvard in 1980, one of my dorm mates was a drug dealer, selling mostly cocaine and marijuana, a fact which the Harvard administration was fully aware of.  In keeping with their implicit understanding of their local sovereign powers, they asked him not to sell drugs late in the evening, because the foot traffic going to and from the dorm room would disturb other students who were trying to sleep.  In essence they established informal regulatory boundaries for his business while respecting his right to sell “illegal” drugs on campus.  His Harvard admissions essay had explained how he had smuggled drugs across international boundaries.  While his brazenness, both in writing his admissions essay on his experience as a drug smuggler and then conducting open business operations on campus under the watchful, regulatory eye of the administration brought a few smiles, no one was overly shocked by the situation.

To take a different example, this spring, after the second student death by heroin overdose in two years, Reed College was threatened by federal authorities with a potential loss of federal funding if they did not control drug use.  What is most striking, in terms of the de facto legal autonomy of universities, is that the Reed community felt outraged that outsiders were trying to influence their culture and policies.  From a summary of an interview with the Reed Dean of Students on the issue, responding to external criticism for the heroin deaths:

“What we really have at Reed is very clearly a reputation for a permissive stance on drug use, and our policies and implementation are not substantially different from a lot of other colleges that don’t have that reputation,” he said. Further, a big part of the campus reaction comes from a tradition that “our student culture values autonomy and culture in a very intense way,” he said.

As a result, “many of the students who are most vociferous in their declarations about not having heavy-handed enforcement at Reed College don’t use drugs. They just don’t want people telling them what to do,”

Universities, where most professors regard anarcho-capitalism as beyond the pale of legitimate discourse, act largely as private governments whenever it suits their interest to do so.  Their customers, often upper middle class kids who enjoy ingesting drugs, demand a legal system in which they have the freedom to do drugs, and the university legal system provides that environment.

Stringham also points out that the international commercial arbitration system acts as a de facto international governance association without the geographical monopoly on coercion which we normally associate with “governments.”

To jump to the issue which most frightens people when they hear the term “anarcho-capitalism,”, it is worth remembering that we already live in an anarcho-statist world in which (happily) there is no formal monopoly on force for governing the world’s 200 or so nation-states.  And, yes, sometimes we do see violence between nations.  Would we see more violence if the cartel responsible for global poverty allowed for the entrepreneurial creation of new sovereign entities?  It is not at all obvious that we would.  Would we see more violence if there were a thousand nations rather than 200?  Seems unlikely, though if someone would like to argue that we would I’d love to see that argument.  Would we see more violence if some of the sovereign entities were for profit rather than the existing motley collection of dictatorships, democracies, family regimes, etc.?  Again, I’d love to see the argument that we would, not in some imaginary “what if the whole world was run by mafia-like protection agencies” but rather given the existing nation-state system.

Why exactly would a new for profit sovereign entity initiate violence?  Why would investors invest in such a sovereign entity as compared to a non-aggressive for profit sovereign entity?  Which is the better business model given present global realities?  Right now it would be tough enough to get the global system to allow an openly for profit sovereign entity to come into existence.  While there are plenty of gangs in the Congo and elsewhere that are “for profit” in the sense of plunderers of natural resources, there is no chance that any of those will be recognized as sovereign entities.  The existing highly conservative global system for recognizing sovereignty would only recognize a for profit sovereign entity if it were more benign than most existing nation states.  The big profit opportunities available to entrepreneurs of effective government would all involve integration into the global commercial system.  The big multinational corporations are not going to allow an aggressive for profit sovereign entity participate in the international arbitration system and the other various networks and organizations for which they control access – such a move would unnecessarily (further) damage the brand of global business.

Anarcho-Capitalism – Get Over It!  It’s already here.  As Caplan and Stringham argue in this brilliant paper, private arbitration itself provides a path to anarcho-capitalist paradise if only governments would allow people to make voluntary agreements:

For arbitration to live up to its full potential, however, government has to stop holding it back.  Public courts should, as a matter of policy, respect contracts that specify final and binding arbitration.  Legislatures should abolish laws that hamper ostracism, boycott, and other non-violent private enforcement methods.  These small changes would make private courts much more attractive than they already are – and go a long way towards putting the public courts out of business.

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7 Comments leave one →
  1. June 24, 2010 1:31 pm

    Sovereign entities soon to turn into hollow states.

  2. June 24, 2010 2:54 pm

    This made me think of Hasnas’ “The Obviousness of Anarchy” (http://mises.org/journals/scholar/hasnas.pdf)

    There is no question that in our day to day lives we essentially live in an anarchic world. Unfortunately, most people can’t get over the mental hurdle that having a government safety net is not only unnecessary but also highly destructive.

  3. Zamfir permalink
    June 29, 2010 2:06 pm

    But isn’t the other side of this that an ‘anarchic’ world order might actually look a lot like the current one?

  4. Matt permalink
    November 25, 2012 1:24 pm

    “Why exactly would a new for profit sovereign entity initiate violence?”

    Because it wants the resources that another for-profit entity enjoys, thinks “hell to personal liberty” and follows its self-serving profit motive just as many corporations do today.

    OR, two entities discover an un-owned resource and cannot reach a conclusion of demands. Court agencies may decide that the resource shall be owned by one of the entities and instigate privately funded violence against the other [for not acknowledging the decision] – inducing a defensive military posture by the entity which believes it is wrongly accused.

    • shivank permalink
      July 1, 2014 5:03 pm

      War is costly. Unlike the “State,”. a private company has to pay for the costs of violence from its own pockets. So the question: will anarcho-capitalism be more violent than our current world has to be answered in the negative.

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