Anarcho-Capitalism

The main objection to anarchy consists in the claim that

in the absence of government (i.e. in a “state of
nature”), the quality of life will be intolerably bad.

Anarchists of all kinds reject this empirical claim.

This slide show examines a particular type of anarchism,
namely, Anarcho-Capitalism (“ancap” for short).
Anarcho-capitalism is sometimes known as “right-wing
anarchism” or “libertarianism.”
(Note, though, that anarcho-capitalism is an extreme
form of libertarianism; less extreme forms of
libertarians accept the existence of a very minimal
state. Thus, these less extreme libertarians are not
anarchists.)
Anarcho-capitalism is distinct from socialist anarchism
and communist anarchism (both of which are types of
“left-wing anarchism”).
Anarcho-capitalists like Murray Rothbard believe in a
“voluntary society.”
They claim that in their system, only aggressors
(i.e. only rights-violators) are subject to coercion. If
you are not an aggressor, you will not be coerced to do
anything, ever.
For example, anarcho-capitalists reject all taxation as a
form of illegitimate coercion against peaceful people.
They reject the idea of a single legal system
(legislature, police, courts).
In their eyes, a single legal system is a coercive, and
therefore an illegitimate, monopoly.
Imagine an entrepreneur, say, who wishes to form a
private company offering judicial services or police
services.
“My dream is to be founder and CEO of a company
that I will call Prudential Judicial Services, Inc.,” says
our entrepreneur. “I will run a tight ship and deliver
judgments efficiently and effectively.”
In our society, this would-be entrepreneur will be
forcibly prevented by the state from starting such a
company.
The state does not allow competitors in its domain of
police operations and legal operations.
Anarcho-capitalists: This entrepreneur is not a
rights-violator. And yet she is being aggressed
against (i. e. she is being stopped in her
entrepreneurial actions by coercive interference
from the state).
That is wrongful aggression, say anarcho-capitalists.
What is more, consumers are wrongly and forcibly
denied the option of getting their judicial services
from this entrepreneur.
In our society, if (say) you get sued, then you are
forced to use the one-and-only judicial service in our
society, i.e. the court system.
Instead, anarcho-capitalists envision a world of
competing firms offering judicial and police services.
Just as there are now competing firms selling cars,
groceries, electronics, etc., in our society, in an ancap
society there will also be competing firms selling police
services and judicial services.
Entrepreneurs will be free to start such firms, and
consumers will have a free choice between such firms.
Competition between firms will ensure that firms
deliver their services efficiently, in cost-effective ways
that satisfy those who use the firms.
At least, so claim anarcho-capitalists like Rothbard!
A criticism of anarcho-capitalist justice:
•A private security / judicial firm is hired by a customer to
represent his or her interests. So, the firms are NOT
impartial. (Instead: “The customer is always right.”)
A firm’s interest does not ultimately lie in doing justice,
but rather lies in satisfying its customers and thereby
generating profits for its owners and shareholders.
Customers are satisfied to the extent that they get what
they want – and what they want will often NOT be
identical with a truly just outcome.
Thus, firms will have strong financial incentives to
frequently depart from genuinely just outcomes.
In other words, private security / justice firms will not
offer the sort of impartial adjudication needed to avoid
the harms of individual vigilante justice identified by
John Locke in his Second Treatise of Government.
For example, suppose that Jack and Jill get in a dispute.
A tree from Jack’s yard was blown down, smashing Jill’s
fence. Jill says Jack has to pay for the fence. Jack says it
was an act of nature, so he is not to blame and thus, he
owes Jill no payment.
Suppose that Jack subscribes to Acme Justice Inc.; Jill
subscribes to Equitas Services LLC.
Acme will have financial incentive to get the result that
Jack wants. By contrast, Equitas will have financial
incentive to get the result that Jill wants. Each firm
wants a satisfied customer, after all.
Thus, the problems of partiality that characterize
vigilante justice will reappear at the level of the firms.
As such, the existence of private security / justice firms
does not eliminate these problems, and may even
intensify them. Violence between firms is a possibility.
Possible reply by an anarcho-capitalist:
In an impasse (such as the one just described between
Acme and Equitas), firms will be reluctant to use
violence against other firms. After all, violence is costly
and will cut into each firm’s profits.
Instead, firms will find it more cost-effective to submit
to an outside arbitration agency that exists to settle
disputes between firms.
So, a non-violent, impartial judgment accepted by all
parties will occur after all in anarcho-capitalism.
Possible counter-replies against the anarcho-capitalist:
Main criticism = the anarcho-capitalist takes a wildly
optimistic view of things:
1.For starters, a business-minded arbitration agency
will be attentive to the relative financial clout of the
judicial agencies that are using its services.
For instance, suppose that judicial agency Acme
represents a larger share than Equitas does of the
annual revenue of Handshake, Inc. (an arbitration
agency). Then there will significant financial incentive
for Handshake, Inc. to side with Acme.
Thus, the partiality problem arises yet again.
A possible anarcho-capitalist rebuttal:
Giving in to these financial incentives will hurt
Handshake, Inc.’s reputation for integrity, which will be
bad for an arbitration agency’s business in the long
run.
Critic’s reply:
Handshake will hire arbiters who are good at crafting
plausible-sounding rationales to justify the most
profitable course of action, and thereby give the
appearance of integrity.
Handshake will also hire good PR agents to burnish its
reputation (by using ad campaigns, etc.).
Another counter-reply against the anarcho-capitalist’s
claim that “violence is bad for business”:
2. A wealthy individual may be willing to pay a
premium for security / justice firms that serve his/her
interests “by any means necessary.”
(Imagine a firm’s advertising pitch: “Sign on with us,
and we will NEVER compromise your interests, EVER!”)
If there are a significant number of such wealthy
individuals willing to pay such a premium, then
violence may well be profitable for a firm, with
warlordism and/or organized crime the result.
3. Also, violence might pay if one security firm can
use violence to destroy a rival firm.

4. Even if warlordism does not arise, what is to stop

security cartels from forming, and charging
exorbitant prices for basic protection?
• The basic problem, summarized:
Anarcho-capitalism would be a case of rule by private
corporations, who are in the final analysis
accountable only to their owners and their
shareholders.

That is to say, the ruling private corporations are

NOT accountable to the public at large.
• Another fundamental objection:

Many philosophers (e. g. John Locke) argue that the

purpose of law is to provide authoritative
settlement of disputes.

It is unclear how multiple and competing private

court companies could provide the finality that is
characteristic of authoritative settlement.

Thus, if Locke is right, “law” made by various

competing private judicial companies would be
ineffective law.
For instance, there will be private adjudication firms
well known to offer adjudication rules that are more
favorable, say, to property owners than to renters.
Other private adjudication firms, seeking to tap into a
niche market, will offer rules more favorable to
renters.
Predictably, property owners will have incentive
subscribe to the former sort of adjudication firm;
renters will have incentive to subscribe to the latter
sort.
So there will be confusion as to what your “rights” are
as property owner or as a renter. There will only be
your-rights-according-to-firm-X, and your-rights-
according-to-firm-Y, and so on.
In short, in anarcho-capitalism there is a destabilizing
lack of finality.
Note that the existence of private higher-level
arbitration firms, which offer services for settling
disputes between lower-level adjudication firms, won’t
dispel this confusion and lack-of-finality.
After all, there will be a market of competing higher-
level arbitration firms, each with somewhat different
rules and procedures for arbitrating disputes.
So, there will be no finality at this higher-level then,
either.
To understand this problem of a lack-of-finality,
consider Locke’s understanding of law as an impartial
umpire to settle citizens’ disputes.
Analogy: Imagine that there were competing private
umpire services in baseball, so that the Yankees and
Red Sox bring their own private umpires to a game
between them.

That would simply push disputes up a level rather

than resolving them.
Yet another fundamental criticism of ancap:
•Anarcho-capitalism would be horrible for the poor.
The poor would be unable to afford police services,
legal services, health services, etc.
The poor would have less mobility: in an ancap
society, there is no public transportation, and there are
no public roads (all roads charge tolls or subscription
fees for their use).
Children of poor parents would go uneducated (since
there are no public schools).
In short, many people in an ancap society will be
subject to an unfair inequality of opportunity.
An anarcho-capitalist reply: Private charities will help
the poor. The wealthy in an ancap society, after all,
will have much more disposable income to donate to
charities, since there are NO taxes.

Counter-replies by critics of anarcho-capitalists:

•Requiring the poor to depend on private charity for
their security makes them… insecure.
Counter-replies by critics, cont’d:

•Also, private charity will not likely be given in

sufficient amounts to eliminate unfairness / misery.

Instead, it is more realistic to suppose that the

well-off will self-segregate into gated communities,
leaving large slums in which violence is rampant.
Since the residents in the slums are poor and since
crime rates are high, no police firm can make a profit
offering affordable security services. So, there will be
no police in these areas.

Leading very separate lives from the non-rich, the rich

will likely have little sympathy for the plight of those in
poor areas.

Why think, then, that in an ancap society the rich will

shower the poor with charitable donations, so that the
poor can afford even basic security, health care,
education, etc.?
Another criticism of anarcho-capitalism:
•Its lack of gun control of any kind will lead to a “Wild
West” culture in which people walk around with
automatic weapons.

Paranoia and “me and my kind” thinking will replace

fellow-feeling and a sense of community.
And remember, in ancap you will be free to buy not
only guns, but also grenade launchers, explosives, etc.!
A final criticism:
•Would an ancap society really be a freer society than
our current one?
The poor would have less security and less
opportunity in ancap than they now have.
Even the middle class would lack important
protections. No workplace safety laws, no overtime
laws, complete freedom for bosses to fire at will.
Arguably, this creates the potential for economic
forms of coercion.

(Boss: “Mow my lawn this weekend or you lose your

job!”)
Another way to put this same final criticism =
Anarcho-capitalists focus exclusively on the dangers of
government power (i. e. the dangers of government
agents having power over individuals).
But anarcho-capitalists are blind to the existence of
economic power (economic agents having power over
individuals).
Both forms of power (government and economic
power) can constrain freedom, though.
The goal of critics of ancap = use democracy to make
government power accountable to the people, and
then use reasonable government regulations to
prevent private abuses of economic power.
If successful, then in fact there is more freedom in a
society under democratic government than in an ancap
society.
And so far, the democratic experiment has been
reasonably successful.
Should we really take the steep risks inherent in
dismantling all of our institutions of democratic
government, merely in the hope that untested ancap
social arrangements will fare better?
A summary of major criticisms of anarcho-capitalism:
•Privately supplied, competing judicial services will lack
impartiality and finality, and hence, will be deficient.
•Some private security agencies will likely fight each
other with violence. Those that don’t fight may collude
to form cartels and charge extortionate rates.
•Ancap is blind to forms of economic-power-over-others
which are inimical to freedom.
•Many non-rich people in an ancap society will lead
insecure lives and lack a fair level of opportunity.
•A critical mass of highly weaponized citizens will create
mistrust / paranoia, at odds with the value of
community.
In short, I find ancap to be a very flawed doctrine. (But if
you think otherwise, I’d be interested in hearing your
responses to the criticisms described in this set of slides!)
For purposes of our course on the philosophy of law, the
key points I want you to take away from our look at
ancap are these.
Our look at ancap shows that to be well-ordered, a
society must offer dispute adjudication that is…
•Impartial
and
•Authoritative (i.e. possessing “finality”)
Thus, our investigation of ancap reveals that an
important purpose of law (and of legal institutions
generally) is to offer adjudicative judgments that are
impartial and final.
To be sure, perfect impartiality and finality are
impossible ideals.
But this investigation suggests that impartiality and
finality are important yardsticks we can use to measure
the health and effectiveness of a given country’s legal
system.