Analytical Anarchism

I’ve been remiss in not plugging this excellent collection of writing on the positive analysis of anarchism created by Michael Wiebe. There’s a list of published papers and books, and some working papers (including one by Eric and I).

Here’s how Michael introduces the site:

The purpose of Analytical Anarchism is to create an open forum for the academic community to promote and discuss research in analytical anarchism.

What is analytical anarchism? As the subtitle says, it is the positive political economy of anarchism, or simply, anarchism from the economic point of view. Anarchism here simply means the absence of government. Peter Boettke divides anarchist thought into three categories:

1. Utopian — following in the tradition of William Godwin’s An Enquiry Concerning Political Justice (1793).
2. Revolutionary — following in the tradition of Mikhail Bakunin and the First International, 1864-76.
3. Analytical — in the tradition of Murray Rothbard’s For a New Liberty (1973) and David Friedman’s The Machinery of Freedom (1973).

The analytical anarchism research program has developed out of this last tradition, and is currently being pursued by economists such as Pete Leeson, Ed Stringham, and Chris Coyne.

Why anarchy? Research in anarchism has a fundamental theoretical importance for understanding the mystery of cooperation among strangers, which forms the basis of modern social order. Understanding anarchy also has a critical practical importance for transition economies, Third World development, and post-war reconstruction. Economic analysis of these problems cannot assume a functioning state.

For an introduction to the subject, see Boettke’s “Anarchism as a Progressive Research Program in Political Economy.”

Scholars and students working in this field are invited to submit working papers and posts discussing the literature, general issues, potential research topics, etc.

Getting it Said

Kevin Carson at C4SS:

In my opinion the best way to change the laws, in practical terms, is through counter-institution building and through counter-economic activity outside the state’s control:  in other words, to render the laws so irrelevant and unenforceable, by our efforts outside the state, that even the state must make concessions to reality.

Yes.

It seems to me that statism will ultimately end, not as the result of any sudden and dramatic failure, but as the cumulative effect of a long series of little things.  The costs of enculturing individuals to the state’s view of the world, and of dissuading a large enough majority of people from disobeying when they’re pretty sure they’re not being watched, will result in a death of a thousand cuts.  More and more of the state’s activities, from the perspective of those running things, will just cost more (in terms not only of money but of just plain mental aggravation) than they’re worth.  IOW, the decay of ideological hegemony and the decreased feasibility of enforcement will do to the state what file-sharing is doing to the RIAA.

Yes!

The most cost-effective “political” effort is simply making people understand that they don’t need anyone’s permission to be free.  Start telling them right now that the law is unenforceable, and disseminating knowledge as widely as possible on the most effective ways of breaking it.  Publicize examples of ways we can live our lives the way we want, with institutions of our own making, under the radar of the state’s enforcement apparatus:   local currency systems, free clinics, ways to protect squatter communities from harrassment, and so on.  Educational efforts to undermine the state’s moral legitimacy, educational campaigns to demonstrate the unenforceability of the law, and efforts to develop and circulate means of circumventing state control, are all things best done on a stigmergic basis.

A thousand times “Yes!”

Democraphobia Goes Mainstream (Sort of)

This op-ed from Tapu Misa contains an odd mix of democraphobia (yay!) and statophilia (boo!). First the good:

The catalyst for the march was the Government daring to ignore the result of the recent ambiguously worded citizens-initiated referendum on the child discipline law.

Which means the Government is clearly undemocratic. “The people are the boss and the Government has to listen to them,” said Craig.

Well, yes and no.

The trouble with the might-is-right, majority rules brand of democracy has always been painfully obvious for those of us accustomed to occupying minority perches.

As Benjamin Franklin put it: “Democracy is two wolves and a lamb voting on what to have for lunch.” In a straight-out numbers game, the lamb always loses.

I couldn’t agree more. She goes on, however, to defend a utopian version of representative democracy:

But representative democracy, as advanced by 18th century British MP Edmund Burke, promotes a higher ideal built on notions of the common good.

Burke felt MPs weren’t just delegates, elected to do their constituents’ every bidding. While “their wishes ought to have great weight”, he argued that an MP’s “unbiased opinion, his mature judgment, his enlightened conscience” ought not to be sacrificed in the process.

“Your representative owes you, not his industry only, but his judgment; and he betrays, instead of serving you, if he sacrifices it to your opinion.”

True to his convictions, Burke backed several unpopular causes during his time in Parliament, knowing that it would probably cost him his seat (which it did), but determined to show “that one man at least had dared to resist the desires of his constituents when his judgment assured him they were wrong”.

He was right. Sometimes, the people can get it badly wrong.

Yes, they can. But so can those representatives they elect to lead. Afterall, they are elected by those same people who sometimes get it badly wrong. Representative democracy does have the capacity to mitigate the effects of moral panics and other short-term fluctuations in preferences. It does this by introducing some inefficiency into the transmission of preferences into policy, however, rather than by electing noble leaders.

There’s simply no justification for the assumption that politicians will be better than the rest of us. Sometimes politicians will make better decisions than the majority; sometimes worse. Representative democracy is still two wolves and a lamb voting on what to have for lunch, but with some slack in decision-making that may occasionally save the lamb when the wolves have only a fleeting craving.

As Crampton has argued, government implies a trade-off between the costs of populist democracy and self-serving politicians. When we give politicians more power in an attempt to reduce the mob-rule nature of democracy, we enable them to take advantage of the rest of us. As long as we have government, we can only ever strike a balance between these problems, never avoid both (unless we can elect wise and benevolent philosopher kings, of course, which seems to be the preferred option of many).

Still, it’s nice to see something other than democratic cheerleading from the MSM. I particularly like Misa’s conclusion:

As the philosopher and writer Ayn Rand observed, “Individual rights are not subject to a public vote; a majority has no right to vote away the rights of a minority; the political function of rights is precisely to protect minorities from oppression by the majority (and the smallest minority on earth is the individual).”

I find her proposed solution (and Rand’s, for that matter) hopelessly utopian, however. As long as we have government, there’s no way to navigate between the problems of mob rule and arbitrary power and have an acceptable degree of freedom.

Sounds like a good reason not to have government to me.

Private Policing I Find Disturbing

Some residents of New Brighton, Christchurch are sick of the police failing to control crime and have taken to patrolling the streets. I would be all for that were these guys not a bunch of white supremacists.

A “white pride” group, Right Wing Resistance (RWR), claims to be patrolling New Brighton streets that “the police and the system has all but given up on”.

The group, linked to North Island-based white power activist Kyle Chapman, says Christchurch is the centre of a “white pride” revival.

Films of their initiation ceremonies were listed on an internet site for “white nationalists” called WNTube.

A message board used by the group, Stormfront.org, said the group was performing “crimewatch patrols” aimed at “cutting down on homie [American rap-style] vandalism and muggings that have become common on the east side of CHCH”.

“The police and the system in general has all but given up on the poor areas and it is left to us to sort this out now,” it said. (…)

Locals were getting very upset with youths, particularly Polynesian youths, standing over people and vandalising.” (…)

If a European youth was found vandalising property: “We’d probably say `Hey, what are you doing? That’s not really the white way’.” (…)

New Brighton Residents Association member George Aorangi Stanley said “boot boys” had been spotted “hanging around looking menacing”.

“I don’t know if you’d consider it patrolling. I just consider them as contributing to the tension.”

The group had correctly tapped into local concern about crime and safety, she said. “It’s the main topic of conversation at the [Residents Association] meetings.”

Aorangi Stanley said the association had discussed doing their own patrols – a “reclaim the night” action – to increase safety.

This is the kind of thing Eric Crampton and I worry about in our paper on meddlesome preferences in anarchy, recently discussed here and here. (New Brighton, by the way, is Eric’s neck of the woods – I wonder if he has noticed anything?) Without government to provide public or quasi-public goods like policing, private clubs will step in to fill the gap. Of course, not all private clubs are created equal and those most able to overcome collective action problems will become more common in anarchy (or, as we see here, dysfunctional government). Further, small groups with intense preferences will have more power relative to large groups with weak preferences in anarchy compared to democracy.

The economics of religion pioneered by Larry Iannaccone, another of the amazingly interesting economists at GMU, suggests that clubs which require costly signals of commitment to the group – often including the internalization of wacky beliefs and efforts to make oneself stigmatized by the outside world –  will be more successful. Iannaccone is interested in sects, but his logic also applies to secular gangs like skinheads. Costly signalling means that we can’t rely on the standard incentive arguments against bigotry being expressed through markets. Beating up Polynesian kids is costly, but if it works to signal one’s commitment to the group, the costliness is a feature rather than a bug. On average, then, high-commitment clubs will instill preferences which favour the violation of others’ rights more than low-commitment clubs. Since these small groups with intense have more say in anarchy (where willingness to pay largely determines outcomes)  than democracy (where the raw numbers supporting some policy largely determines outcomes) , anarchy produces the situation it is least able to handle. So, by the way, does democracy.

Now, if the skinheads in New Brighton really are making the streets safer (which I doubt), the benefits will be enjoyed by residents regardless of whether they join or not. The fact that the group can get a bunch of guys to produce a public good (even if it’s intimidation of Polynesian kids) indicates that they’ll also be pretty good at producing a whole lot of club goods only enjoyed by members. If the role of government decreases, then, the skinheads will attract more members and we should expect more racist violence in New Brighton.

I still favour anarchy, but I do think this is something to worry about. Fortunately, it’s also something that reasonable people can work towards avoiding. The community association conducting its own patrols will reduce the leverage the skinheads can get in the community. More generally, efforts to create non-bigoted groups to voluntarily produce public goods will fill the void sects emerge to fill.

Illiberal Anarchy

John Humphreys critiques the paper Eric Crampton and I are writing on the effect of meddlesome preferences in market anarchy. His argument is that we’re talking about outcomes we don’t like but aren’t really unlibertarian, and that we overestimate the sway crazy bigots could exert under real anarchy.

Eric responds here. See also the comments on John’s post. I have nothing to add here.

Exit, Voice, and Liberty

There’s been some interesting, and heated, debate in the libertarian blogosphere about the importance of democracy to freedom. Will Wilkinson suggests that since charter cities (and presumably seasteads) are undemocratic, they might allow rulers of authoritarian regimes to reap the benefits of high economic growth without giving their subjects “real freedom.” I think Will’s point that charter cities may allow illiberal regimes to create market-facilitating institutions and increase economic freedom (most often good for dictators) while ignoring civil liberties (most often bad for dictators) is important.

Will seems to think that an important aspect of freedom is democracy, though, and that’s what has caused the debate. Arnold Kling argues that real freedom is exit, not voice. Charter cities and seasteading aim to make exit easier and thus remove the need for democratic voice:

The exercise of voice, including the right to vote, is not the ultimate expression of freedom. Rather, it is the last refuge of those who suffer under a monopoly. If we take it as given that the political jurisdiction where I reside is a monopoly, then perhaps I will have more influence over that monopoly if I have a right to vote and a right to organize opposition than if I do not.

The idea of charter cities (or seasteading) will be a success to the extent that it creates a viable exit option vis-a-vis government. … In fact, if we had real competitive government, then we would be no more interested in elections and speaking out to government officials than we are in holding elections and town-hall meetings at the supermarket.

Will Chamberlain and Patri Friedman expand upon Arnold’s argument at A Thousand Nations; Wilkinson responds to Arnold here. All of these posts, including the comments, are well worth reading. I’m with Arnold and the other competitive government types and I have little to add to their joint efforts.

As a side note to the debate, though, I think Wilkinson is right to suggest that exit, narrowly conceived, is not enough to produce real freedom. Seasteading aims to do more than simply make exit easier; it’s about producing the technology to lower barriers to entry in the governance market.

Most people are free to exit their jurisdictions (county, state, country) and move to another (albeit at a fairly large cost). What they are not free to do, though, is to start their own country. This is why Will’s second-guessing of Arnold’s commitment to exit as freedom on the basis that he hasn’t left his county are so off-base. A major reason for jurisdictional exit’s failure to do much to enhance freedom today is the poor selection of products in the governance market. Even with zero relocation costs, I only have the choice among some really bad autocracies and a fairly homogenous set of liberal democracies. It’s not simply freedom of movement (exit, narrowly conceived) which enhances freedom, but meaningful choice.

The only way I can see of getting meaningful choice of government is to lower the barriers to entry.  When there are literally a thousand forms of government from which to choose – and the possibility of creating your own if none are quite right – you’re surely orders of magnitude freer than you are today, even with freedom of movement and the cost of relocation remaining constant.

You think voice is important for liberty? Fine! Go somewhere with voice. I disagree, and strongly suspect that the bloated and liberty-restricting governments (relative to my standard of what a government should be, not to any actually existing governments) that we see today are pretty much an inevitable outcome of democratic decision-making. The only places to which I can currently relocate in order to get away from democracy, though, are even worse.

I don’t much care for voting and would prefer to live under a government run like an insurance firm. I think even voluntary governments run democratically will be subject to the problems of expressive voting and rational irrationality (see my somewhat related arguments here and here), and will therefore fail to satisfy people’s true preferences. If I’m right, we won’t see too many democratic seasteads survive too long: people will voice their prejudices and then exit once they realise they have to pay the cost.

The beautiful thing about competitive government is that we don’t need to argue about who’s right. I could be wrong, and maybe voting will prove to be an important part of freedom. I just don’t see, though, how one can maintain that voice is just as fundamental as exit (defined widely as freedom of movement combined with low barriers to entry in the market for governance). If you start with only the capacity for exit, you can move somewhere which gives you voice. If you begin only with the capacity for voice, there’s no obvious way to get the capacity for exit. This asymmetry is crucial: exit can give you any other freedom, including voice. Competitive government isn’t about securing any particular freedom, but giving people the freedom to choose whether or not they want other freedoms. Exit, thus conceived, is the most fundamental freedom.

Hobbesian Government

In Federalist 51, James Madison puts the problems of the tyranny of the majority and the rent-seeking in an interesting way:

In a society under the forms of which the stronger faction can readily unite and oppress the weaker, anarchy may as truly be said to reign as in a state of nature, where the weaker individual is not secured against the violence of the stronger; and as, in the latter state, even the stronger individuals are prompted, by the uncertainty of their condition, to submit to a government which may protect the weak as well as themselves; so, in the former state, will the more powerful factions or parties be gradnally induced, by a like motive, to wish for a government which will protect all parties, the weaker as well as the more powerful.

By anarchy, of course, Madison means Hobbesian anarchy. Unrestrained government, like the Hobbesian state of nature, traps everyone in an n-person prisoner’s dilemma. If everyone can expect to be a victim of factionalized politics (i.e. the tyranny of majority or well-organized interest groups) some of the time, everyone would prefer to live in a world in which the machinery of the state could not be used for plunder. When it comes to playing the actual political game, however, every player’s dominant strategy is to prey upon others when part of the winning coalition and everybody winds up worse off.

Alfred Cuzán makes a similar but distinct point when he argues that we can never really get out of anarchy. He sees the state as subjecting relations among citizens to the control of a third party, but relations within government remain anarchic (i.e. bilateral, without external control). I prefer Madison’s way of looking at things: the state is never completely external to men, and can be used as an instrument of factional predation. It’s a different set of rules in which people relate to one another rather than an organization per se. People can be trapped in the Hobbesian war of all against all with or without the state.

Some see the constitution as a way of escaping the disorder of Hobbesian government. My current view on this is that constitutions can somewhat mitigate, but never come close to eliminating, the expression of factional violence through the state. Government will always be a war of all against all, with lobbyists replacing guns. The best we can hope for from government is the avoidance of total war.

Customer-Owned Protection Agencies

I suggested yesterday that protection agencies which credibly commit to not joining any nascent cartel are likely to attract more customers than those which don’t, potentially nullifying Cowen and Sutter’s critique of market anarchism. One obvious possibility is customer ownership of protection agencies. Cowen makes this suggestion in the final paragraph of his 1992 paper:

In the above scenarios, the network becomes a government because network shareholders are able to exploit successfully conflicts between network profit maximization and the interests of network consumers. If consumers are sufficiently far-sighted, they may prefer dealing with agencies that precommit to never becoming collusive or coercive. Consumers may attempt to control the network by owning the member firms; under this scenario, the protection agencies would become mutuals or cooperatives. Protection agencies could then be bound by democratic procedures, according to consumer vote. Collusion could not occur unless approved by agency customers (shareholders).

He expands a little in a footnote:

In mutuals, the corporation’s customers are also its owners. A mutual life insurance company, for instance, is owned by its policyholders, who serve as residual claimants. If the company makes money, the profits are refunded in the form of lower premiums; conversely, losses imply higher premiums. (Not all of the mutual’s profits are rebated to customers, however, as managers retain perks for themselves.) In so far as mutual shareholders succeed in controlling their company, their dual roles as owners and customers diminish conflicts of interest. Policies that deliberately defraud customers, for instance, would not be approved by mutual shareholders. Shareholders of traditional corporations, in contrast, will maximize profits at the expense of consumer interests, when possible. Cooperatives and nonprofit organizations are other possible organization forms for protection agencies. Although these forms differ from mutuals with respect to many details, they also eschew direct profit-maximization and allow managers to maximize the flow of perks, although subject to different institutional constraints.

Customer ownership of protection agencies is probably the simplest and most effective way of avoiding a despotic cartel emerging from libertarian anarchy. The problem with such arrangements, though, is that they introduce many of the same problems which currently plague democratic politics.

Customer-shareholders need some way of making sure management acts in their best interests. The most obvious way of doing this, as Cowen suggests, is to have shareholders periodically vote for the CEO, or directly vote whenever particularly important decisions arise. As in any firm, this won’t entirely prevent managers from exploiting their position, but it will place fairly tight limits on the extent of corruption.

Whenever a moderately large group of people vote to decide some course of action, no individual is faced with a genuine choice of which path to take. They can express their preference, but, except in the case of an otherwise tied election, the outcome will be unrelated to their choice. This means that nobody has an incentive to think carefully about their decision, and have every incentive to vote expressively and indulge their irrational biases. This has been well-documented with respect to ordinary democratic politics, but is relevant to any large-group voting situation.

This doesn’t seem to be particularly important in ordinary shareholder voting (though as far as I know, nobody has looked into it and I can imagine it having some effect), presumably because voting rights are allocating by the share rather than the person – giving those with the most at stake the most say – and because the activities of corporations don’t tap into expressive preferences or cognitive biases to the same extent as democratic politics.

Unfortunately, collective choice within customer-owned protection agencies more closely resembles political than shareholder voting in this respect. While customers with more expensive premiums may be given extra votes, the inequality of voting power will be nowhere near that of an ordinary corporation. Further, law enforcement and the definition of rights seem like areas in which expressive preferences are likely to dominate.

Expressive shareholders will not only make protection agencies run inefficiently, they will also be more likely to violate the rights of others and engage in destructive conflict. People are more bigoted and bloodthirsty when freed of cost considerations. These are problems we live with under democratic rule today, however, and it’s hard to see why they would get worse under anarchy. While anarchy with customer-owned protection agencies will be far from perfect, it should be considerably better than centralized government.

Protection agencies will initially behave like lots of little governments, with all the inefficiency and bigotry we see in politics today. The crucial difference, though, is the option of exit. A thousand nations will bloom and efficient protection agencies – those managing to minimize the harm of foolish voters and corrupt managers – will gain more customers than inefficient ones. This could result in many small agencies which give each customer a significant voice, or agencies with supermajority rules and other limits on strict majoritarianism. Of course, the potential for innovation will be lower than in a market with entrepreneurs making profit-seeking decisions. People will flock to efficient agencies, but agencies’ decision rules will be unresponsive to consumer demand.

There may be ways for an ordinary shareholder firm to credibly commit to avoid a cartel, and the market would provide every incentive entrepreneurial discovery. I can’t think of any entirely plausible way, but that doesn’t mean one doesn’t exist. We might see a customer-ownership equilibrium eventually give way to a shareholder equilibrium once commitment mechanisms are devised.

I do have some niggling concerns over collective action problems (one shareholder-only firm would be more efficient than its competitors, would have no peers with which to form a cartel, and would therefore be attractive to customers when all other firms are customer-owned), but it seems that customer-owned anarchy would be preferable to the status quo, and would improve over time.

This is why I am now a tentative anarchist.

Protection Agency Cartels and Organizational Innovation

Every liberal worthy of the label is a philosophical anarchist. The presumption of liberty – i.e. the notion that everything is permissible unless shown otherwise, with the burden of proof resting with those who would restrict liberty – means that we should only resort to politics after all peaceful means of solving social conflict have been exhausted. Force will always be required to stop bad people raping and killing, but I think it’s an open question whether force against the innocent (taxation) is required to fund protection against the guilty.

Market anarchists such as the Tannehills and David Friedman have argued that it is not. They imagine private protection agencies and courts voluntarily competing for customers on the open market. The current monopoly on violence would be replaced by many firms filling diverse market niches and being forced to respond to customer needs. As in any other market, they say, competition will do a far better job of satisfying customer preferences than a coercive monopoly.

If these arguments are correct, it’s pretty hard to see how anyone valuing individual preferences above all else could support government. Anarchy won’t be utopia, but it will make people far freer than they are under government.

Many anarchists will claim that since markets work better than government for every good they’ve been tried, we must conclude that they’ll also work well for policing and court services. While there’s definitely some merit in this argument, I think we need to be very careful when comparing the market for organized violence with other markets.

Tyler Cowen and Dan Sutter have had me convinced for some time that orderly anarchy is unstable and would result in something very similar to a highly predatory government. To avoid perpetual war, competing protection agencies will need some way of resolving disputes when customers of different agencies come into conflict.

Suppose Alice is a customer of Agency A and Bob is a customer of Agency B. Since agencies compete partially on the basis of offering different rules tailored to customer preferences, some things viewed as a crime by Agency A will be deemed permissible by Agency B. What happens when Alice demands compensation for some action Bob has performed which she has paid Agency A to protect her against? In a world without interagency arbitration, Agency A will punish Bob. Bob will demand that Agency B protect him from this, and the two agencies will go to war. We end up with Hobbesian anarchy.

Of course, this would be very expensive for everyone concerned, and there is a strong incentive to provide for peaceful means of dispute resolution. This is where private arbitration firms come in. To avoid conflict, protection agencies will agree to be bound by the decisions of independent courts whenever conflicts arise.

Arbitration is a natural monopoly, since it’s very important to customers of protection agencies that they be able to resolve disputes with customers of other agencies. This requires considerable cooperation between competing protection agencies, including the ability to exclude or otherwise punish agencies not playing by the rules. The capabilities required of competing firms to cooperate (“cooperative efficacy”) to avoid Hobbesian anarchy – communication, ability to punish defectors, etc – are the very same things required to form a profit-maximizing cartel capable of excluding market entrants and ignoring customer preferences. From the customer’s point of view, it would be hard to distinguish this from an extremely predatory state.

So: if protection agencies can’t cooperate, we end up with chaos. If they can, we end up with a de facto state. Orderly libertarian anarchy is not a stable equilibrium.

Bryan Caplan and Ed Stringham point out that refusing to deal with harmful outlaw agencies (e.g. those allowing murder, or always willing to defend their customer with violence without concern to their guilt or innocence) is a self-enforcing constraint. The arbitration network can declare such agencies rogue, and it is in every other agency’s interest not to deal with them. It will remain profitable, however, to continue dealing with agencies which behave decently but refuse to abide by the rules of the cartel.

It therefore requires more cooperative efficacy to enforce a cartel arrangement than it does to exclude genuinely rogue agencies: there is a zone of stable libertarian anarchy between Hobbesian anarchy and despotic government. Cowen and Sutter admit that such a zone exists, but insist that it is a narrow one. We have no reason to think that this is where we’ll end up and should not wish to experiment with anarchy.

As far as the argument has gone so far, I basically agree with Cowen and Sutter. I don’t think the debate has gone far enough, however. Stringham and Hummel attempt to reply to Cowen and Sutter by arguing that ideology can change the payoffs facing protection agencies: positive material payoffs would be outweighed by negative psychic payoffs of cartelization if only those running protection agencies would internalize the libertarian worldview. That may be so, but I’d feel very uncomfortable if the only barrier between me and a despotic cartel was ideological.

The place the debate needs to go, in my view, is looking at forms of organization other than a simple subscription service protection agencies might take to pre-commit to not cartelizing. Cowen mentions this at the end of his 1992 paper “Law as a Public Good,” (not on the web, but available in Stringham’s excellent volume Anarchy and the Law) but doesn’t go into any detail and the idea has not been pursued by anyone else.

Cartelization is a market failure, and like any market failure provides incentives for its own solution (see Coase on the lighthouse, for example). A firm which can guarantee its customers that it won’t enslave them in the future will receive more custom than one which cannot make such a guarantee. This would generally require forward-looking consumers, but there don’t seem to be any collective action problems to overcome. If we ever get to the situation where the state has withered away, I would bet on people being reasonably far-sighted in their choice of protection agency.

Of course, just because there’s an incentive to provide something doesn’t mean it can actually be provided. Anyone inventing a perpetual motion machine would become very rich. Unfortunately, such a machine seems to be a physical impossibility. I don’t see any reason, however, to suppose that credible commitment to non-cartelization is impossible, and there are some plausible candidates for how it might be achieved.

This post is getting long, so I’ll leave discussion of the particular ways firms might pre-commit for another day (Update: see here). By the way, this detailed overview of public choice theory and anarchism by Powell and Stringham is great stuff for anyone wanting a broad understanding of the literature.

Anarchist Prisons

David Skarbek’s recent paper Self-Governance in San Pedro Prison provides evidence for the possibility of orderly market anarchism and, when combined with past research, against that of orderly non-market anarchism. The abstract:

The inmate-governed community in the Andersonville Civil War prison camp resulted in a state of violence and disorder. Past research argues that self-governance in prisons results in a dominant group comprised of the most violent inmates preying upon other members of the community. This paper examines the inmate-governed San Pedro Prison in Bolivia, and it argues that order within a situation of prison anarchy is possible when inmates can engage in economic exchange and have access to well established markets that they expect to persist.

Looks very interesting. My to-read list is getting out of control.