The economic fallacies of Black Friday: 2015 Edition

Today, shoppers across America will participate in the largest shopping day of the year: Black Friday. The National Retail Federation is estimating that 135.8 million customers will be shopping on Black Friday weekend, down from the 2014 estimate of 140.1 million customers. The actual result from 2014 was 133.7 million shoppers. A similar adjustment to the predicted value for 2015 would mean an actual number of shoppers close to 129.6 million.

The NRF estimates that total sales for the holiday season will be $630.5 billion, up from $608.0 billion in 2014. This would be an annual increase of 3.7 percent. This year, the NRF also estimates that retailers will hire between 700,000 and 750,000 seasonal employees, compared with the actual 714,000 they hired during the 2014 holiday season. On the surface, this may appear to be a marvelous celebration of free market capitalism. But let us look deeper through the lenses of the broken window fallacy and the idea of malinvestment.

To view holiday shopping as a boost to the economy ignores the fact that people could either be spending that money in other ways or saving it. In other words, such an approach is an example of the broken window fallacy because it focuses only on what is seen and ignores opportunity costs. If people would save their money rather than spending it on various holiday gifts, then this money would be invested in one thing or another. As Henry Hazlitt explains in Chapter 23 of Economics in One Lesson, saving is really just another form of spending, and one that has a greater tendency to allocate resources where they are most needed.

Per capita spending is predicted to be $805.65 in 2015, marginally higher than the actual $802.45 in 2014. The above problems get even worse if people use credit cards to spend money that they do not currently have. With a current credit card interest rate of 15.71 percent and a minimum payment of 4.0 percent, a debt of $805.65 would take almost five years to pay off and would cost $1,097.40. This is almost $300 wasted on interest payments that could have been kept in one’s accounts or put toward a productive purpose. Multiply this by the number of shoppers predicted, and the result is that as much as $39.6 billion could be spent on interest payments.

When people purchase unwanted gifts and/or buy gifts with money they do not currently have, their choices encourage malinvestments. A malinvestment is an investment in a line of production that is mistaken in terms of the real demands of the economy, which leads to wasted capital and economic losses. The holiday shopping season contains a subset of shopping which creates systematic and widespread mistakes in investment and production. Although the effect is not as severe as what occurs during an Austrian business cycle bust and is both caused and resolved in fundamentally different ways, there is a noticeable hangover effect on the economy. A look at the average monthly returns on the Standard and Poor’s 500 shows that while the worst month for investments is September, the next three worst months for investing are February, May, and March. (April would likely be bad as well if not for income tax returns providing an artificial economic boost.) An economic downturn occurs in the historical average following the holiday season, but as this has become an expected annual occurrence, many analysts simply do not look for an explanation of these results, as they are perceived to be natural. Even so, this appears to be a small-scale business cycle that repeats annually.

With these arguments in mind, would we all be better off if we just canceled the holiday shopping season? It is an open question, but the Austrian School of economics suggests that we could have a better economy if the burst of economic activity in late November and December were spread throughout the year and people did not spend money they do not have on items they do not need.

The Pragmatic Libertarian Case Against Open Borders

The attacks in Paris and Beirut have resulted in increased focus on immigration in general and the Syrian refugee situation in particular. Many libertarians have weighed in on the situation, mostly on the side of open borders, or at least on the side of admitting the refugees. Let us look at the other side of the issue and make a case against open borders and for excluding the refugees, at least under current circumstances.

The Way It Should Be

In a stateless society founded upon libertarian principles, immigration controls would be a matter of respect for private property rights, freedom of association, and non-aggression. If there were some unowned land available, then immigrants would be free to come in and mix their labor with the unowned land to establish private property for themselves. If all territory in an area is already occupied, then immigration would be on an invite-only basis in that area. Someone in the area would have to sponsor an immigrant, which would entail inviting the immigrant to one’s property and figuring out the immigrant’s living and working situation. Depending on the agreements that one has with one’s neighbors, there could also be some vicarious liability involved with inviting an immigrant who then commits crimes against people and/or property.

The only situation that requires further explanation is that of immigrants or refugees who are going to a place where they are welcome but must pass through territory where they are unwelcome in order to get there. In this case, the right to life must be weighed against the right to property. The right to life is clearly superior to the right to property, as the exercise of property rights requires one to be alive, and that which is dependent cannot overrule that upon which it is dependent. This result means that immigrants may travel through territory where they are unwelcome if it is impossible for them to get to the destination where they are welcome without traveling through territory where they are unwelcome. This right of emergency easement is subject to some restrictions which can easily be deduced from the above:

  1. While in the property of those who do not welcome them, they must not threaten in any way the ability of the property owner to stay alive, as their rights to life cannot overrule the property owner’s right to life.
  2. The immigrants must show as much respect as possible for private property by moving as fast as possible through territory where they are unwelcome and using no more resources from the property than they must in order to stay alive.

This standard allows maximum respect for private property while forbidding the use of private property rights to assist in killing innocent people, such as could happen without this standard if persecuted refugees were corralled between oppressors who seek to exterminate them and property owners who will not let them pass through their lands to reach safety on the other side.

The Way It Is

Unfortunately, the immigration policies of nation-states do not remotely resemble this standard. States overrule the desires of property owners through their monopoly on initiatory force and attempt, with varying degrees of success, to exercise exclusive control over who may enter and/or remain within a geographical area. For the state to usurp the control that private property owners should have over immigration and association is a travesty. That the state usurps control over protecting private property from invaders and then allows in inferior and/or dangerous rabble in a desperate effort to solve the economic problems that states inherently create is even worse.

Nation-states also steal from their subjects via taxation, currency debasement, and eminent domain. These ill-gotten goods are used not only to finance bureaucratic largess, but also to create massive social welfare programs and common spaces, each of which creates perverse incentives with respect to immigration. Minimum wage and child labor laws create further distortions of market signals which lead to unnatural immigration patterns.

With democratic forms of governance, voting creates even more problems. Immigrants from cultures which value theocracy over separation of church and state, socialism over capitalism, misogyny over basic rights for women, etc. will eventually use the power of the ballot box to inflict their inferior ideas upon everyone else, especially if they are allowed in at such a rate that assimilation into the prevailing culture cannot occur. Whereas voting was once limited to those who owned property and thus had skin in the game, now anyone who has reached the age of majority may vote in most Western democracies, and there are efforts to push the age limit even lower while making it easier for people to register to vote. This makes it more likely than ever that immigrants will adversely affect the prevailing culture.

The foreign policies of Western nations in general and the United States in particular have created refugee problems. Actions produce reactions, and interference in the internal affairs of other nations is no exception. When one group in a conflict is given funding, training, and supplies by an external nation-state, there is no guarantee that the effort and resources will stay on target. A group which fights for Western interests at the moment can become anti-Western later. A group can join another group with different objectives. A more powerful group can slaughter the pro-Western group and commandeer their weapons and other resources. All of these possibilities can result in enemies who have American military hardware. When Western nations conduct drone strikes and other bombings that kill civilians and destroy property owned by innocent people, it creates resentment and anger that motivate people to become terrorists in order to seek justice or vengeance in the only way they can. There is also the fact that the rational self-interest of those who wield state power is to prolong the War on Terrorism as much as possible, the body count on both sides be damned.

Nearly all developed nations currently have anti-discrimination laws which forbid discrimination on the basis of race, religion, national origin, and many other characteristics. This means that if a government fails to respect the wishes and property rights of its citizens and invites in a number of people from countries that said government is bombing, then the citizenry cannot even refuse to associate with these people.

In the politically correct environment of contemporary Western nations, the results will be more identity politics, tension and violence between different racial and cultural groups, higher taxes, less valuable currency, lower wages, higher national debt, and more criminal activity. But as all of these negative outcomes lead people to ask the state to solve these problems and few people can figure out that the state is to blame and we cannot solve our problems by using the same thinking that created them, the state has every reason to create this situation.

From Here To There (Or Not)

The very presence of the state is sufficient proof that the libertarian approach described in the first section will not be used. Initiatory force is the means of the state, and when all they have is a hammer, everything looks like a nail. In the presence of the state, the immigration problem is thus a matter of forced segregation (in the form of immigration controls and/or closed borders) or forced integration (in the form of open border and anti-discrimination policies). Those who wish to use a libertarian approach (or any other third option, for that matter) to immigration must therefore seek the abolition of the state, but very few libertarians are willing to even talk about what is necessary to bring this about within our lifetimes, let alone take action in that direction. In fact, there is almost a perfect overlap between libertarians who have come out in favor of importing Syrian refugees and libertarians who will denounce anyone who argues in favor of the use of defensive force against the state.

The Lesser Evil

Because a libertarian approach to immigration is not a choice that the state offers and libertarians are largely unwilling to do what would be necessary to make this choice available, we are left with attempting to choose the best of two bad options and making a pragmatic case for which option is the lesser of two evils. Again, the only options that states afford us are forced segregation (in the form of immigration controls and/or closed borders) or forced integration (in the form of open border and anti-discrimination policies). Let us explore the case that immigration controls are a better option than open borders within the current context.

This is really no more complicated than examining the logical conclusions of combining an open border policy with the current nature of statism. In a free market, wages in a particular region would reflect the market demand for workers in that region. Workers would respond by migrating to different areas to meet the demand for their services. In a statist society, this does not work so well. The combination of welfare programs, minimum wage laws, child labor laws, and other such distortions of market signals drive artificial waves of immigration which would not otherwise occur. Like a breaker switch stuck in the ‘on’ position, the market signals are forcibly prevented from conveying that enough migrants have come to a particular region. It is also unreasonable to assume that governments which are so incompetent at everything else would somehow be excellent arbiters for deciding which immigrants are best suited to enter the country. The overload of immigrants, some of whom we may expect to be of poor quality, means that some will not find work and thus will either turn to government welfare programs or criminal activity (but I repeat myself). This creates costs which are paid through taxation and/or currency debasement. This eventually becomes unsustainable and leads to a collapse of the system.

At first glance, this may appear desirable or even necessary. After all, it is essentially impossible to eliminate welfare programs through political means, so it stands to reason that those who wish to eliminate them must use anti-political means, such as overloading them until they collapse. The problem with this technique is that it is likely to head in an anti-libertarian direction, as its original proponents realized. People who have learned to depend on government handouts for their survival are not suddenly going to become anarcho-capitalists when the welfare state fails; rather, they will demand with the threat of massive social unrest that the state solve their problems. The state will be all too happy to pretend to do this by implementing anything from a basic income guarantee to full communism, both of which are not steps toward liberty, fake libertarians notwithstanding.

The choice at present is to allow this chain of events or to stop it. Of course, stopping this chain of events with government policy presents its own set of problems. The Cold War taught us that governments build walls not to keep people out, but to keep them in. Welfare statism is unsustainable even without immigrants overloading it, and closed borders will be used to restrain the rich and keep them paying into the system as well as to keep out the poor from other nations who would collapse the system faster. And contrary to some closed-border libertarians, the point should not be to get the state to act like a private property owner would, as this is impossible on two counts. The very presence of a state makes private property impossible, and it is impossible to know precisely how private property owners would behave toward immigrants in a counterfactual world which currently has no states. Restrictions on immigration are only a stopgap method for dealing with an imminent problem which must not go unaddressed and is not going to be solved by the correct answer anytime soon.

Ten observations on the Paris attacks

On Nov. 13, at least eight terrorists affiliated with the Islamic State attacked several locations in Paris, killing 129 people and injuring 352 others. Seven of the terrorists were killed during the attacks. Ten observations on this incident follow.

1. Who dies matters more to the media than how many die. The day before the Paris attacks, a similar event was perpetrated in Beirut, killing 43 and injuring 239. The media coverage of this event was disproportionately less than that of the Paris attacks, even though Lebanon had also gone ten months without a terrorist attack just as France had.

2. Immigration policy is partly to blame. In a community founded on libertarian principles, immigration would be on an invite-only basis, regardless of who the immigrants are. Someone would have to sponsor an immigrant, have lodging set up for them, have employment set up for them unless the immigrant is wealthy enough to live without working or the immigrant is fleeing an immediate danger, and perhaps have some vicarious liability should the immigrant turn out to be a criminal. Unfortunately, the immigration policies of nation-states do not remotely resemble this standard. They overrule the desires of property owners through their monopoly on initiatory force and exercise exclusive control over who may enter and/or remain within a geographical area. This is bad enough, but to violently monopolize a service and then fail to provide it is even worse. Had France and other European nations refused to allow the terrorists to enter or remain inside their territory or allowed private property owners to impose the same, then the Paris attacks could not have happened.

3. Anti-discrimination laws are partly to blame. Like most Western nations, France violates the private property rights and freedom of association of its citizens by enforcing laws against discrimination. In France, there is an “independent administrative authority” which “has the right to judge all discrimination, direct or indirect, that is prohibited by law or an international agreement to which France is a signatory.” With this sort of interference, the French people are disallowed from asserting their individual preferences and working out their biases in action. This not only deprives them of recourse against an invasion of immigrants that they do not want and that their government forces upon them, but will contribute to the backlash that is sure to follow an event like the Paris attacks.

4. Gun control is partly to blame. France’s gun control laws are not quite as oppressive as those of some other countries, but carrying a firearm in public essentially requires one to be a government agent or a criminal (but I repeat myself). This meant that the only people who had guns in Paris during the attacks were the terrorists and the police, and when seconds mattered, the police were hours away. Gun control did nothing to prevent the Paris attacks, nor will it do anything to stop the next attack. It will only disarm the victims and keep them from defending themselves. The politicians prefer it this way, of course; a well-armed populace has little need for the state to protect them and is much harder for the state to victimize.

5. The attacks were an example of blowback. Syria was a colony of France from 1923 to 1946. France has also been a participant in the War on Terror since it began in 2001. More recently, France has intervened in the Syrian Civil War, providing air support for the Kurds and providing training, funding, and non-lethal military aid to rebels opposed to both Bashar al-Assad and Islamic State. This intervention is known to have motivated at least one of the terrorists in Paris, who shouted, “This is for Syria!” The Islamic State claim of responsibility for the attacks says in part,

Let France and all nations following its path know that they will continue to be at the top of the target list for the Islamic State and that the scent of death will not leave their nostrils as long as they partake in the crusader campaign, as long as they dare to curse our Prophet (blessings and peace be upon him), and as long as they boast about their war against Islam in France and their strikes against Muslims in the lands of the Caliphate with their jets, which were of no avail to them in the filthy streets and alleys of Paris. Indeed, this is just the beginning. It is also a warning for any who wish to take heed.

6. The terrorists have blood on their hands, but so does the French government. The French government let the terrorists in and failed to expel them, banned discrimination against them, disarmed the French people so they could not defend themselves, and conducted an interventionist foreign policy that motivated terrorists to retaliate. While the ultimate responsibility for evil acts falls upon those who commit the acts, there is a vicarious responsibility upon the French government for taking actions which made the attacks possible and likely.

7. A backlash is likely to follow. Marine Le Pen, the leader of the far-right Front National party, has seized upon the opportunity presented by the Paris attacks to push for a more nationalist, anti-immigrant, and anti-Islamic policy. Her vice president and close adviser, Florian Philippot, and her niece Marion Maréchal-Le Pen have also spoken out to link immigration with Islamism and terrorism. An anti-immigrant protest organized by far-right groups in Germany has occurred since the Paris attacks, and a more anti-immigrant government is taking office in Poland. Like most emotional outbursts, the backlash is likely to be against anyone who appears to be similar to Islamic terrorists, which will cause problems for peaceful Muslims.

8. The state will never let a good crisis go to waste. Since the Paris attacks, the French government has ramped up police state measures, such as the first nighttime curfews and border closures since 1944; curtailment of free assembly, freedom from search and seizure, and the right to keep and bear arms; and the ability of government agents to act without judicial oversight. To exert such control over the domestic population is the dream of many who wield state power, but only in a crisis can they get the people to accept it with applause.

9. Nation-states do not learn from the mistakes of other nation-states. French President Francois Hollande has said that “France is at war,” that “France will be merciless,” and that “Terrorism will not destroy France, because France will destroy it.“ This is highly reminiscent of then-President George W. Bush’s statements following the September 11 attacks, and it appears that France may make the same mistakes that America made after 9/11. This should not be a surprise, of course. Nation-states do not learn from the mistakes of other nation-states because they do not have to. When a group of people face no competition in the provision of military defense services and may force a population to pay for said services, there is no incentive to improve quality of service or be economically reasonable about it.

10. Terrorism cannot be solved by more terrorism. Merriam-Webster defines terrorism as “the use of violent acts to frighten the people in an area as a way of trying to achieve a political goal.” Oxford defines terrorism as “the use of violence and intimidation in the pursuit of political aims.” A government is a group of people who exercise a monopoly on the initiation of force within a geographical area. In other words, a government uses violence and intimidation to keep its population obedient and manage external threats to its operation. This leads to an important truth that few wish to speak: every government is a terrorist organization. For decades, Western nations have attempted to defeat Islamic terrorism with more terrorism in the form of military interventions, to build Western democracies among populations whose cultures are incompatible with such an apparatus, and to arm one faction against another even though such weapons frequently fall into the hands of the most evil and destructive groups. What Western leaders fail to realize is that in the irrational game of Middle East politics, the only winning moves are to withdraw from the game or to knock over the board. For the sake of avoiding unimaginable destruction and needless genocide, let us demand that they choose the former.

Youliy Ninov’s Case Against Anarcho-Capitalism

On Nov. 7, Youliy Ninov published an article called “A Free Market Alternative to Anarcho-Capitalism” in which he argues that paying for protection of private property contradicts the concept of private property, and thus an alternative system to the organization of the police, courts, and prisons proposed by anarcho-capitalists which functions according to free market principles is needed. In this rebuttal, I will show on a point-by-point basis that he has made a significantly faulty case. Some correct parts and some repetitive faults of Ninov’s work will be omitted for the sake of brevity.

1.1 Ethical Problems of Anarcho-Capitalism

In anarcho-capitalism private property owners are clients of a protection services market. In addition, in most cases they pay directly or indirectly for the services they obtain (Tannehill 1970), (Rothbard 1973).

They might be, or they might take up arms and provide security for themselves on an individual or cooperative basis, or someone might create a multitude of robots that indiscriminately enforce a libertarian code of ethics. If one of the latter two options occurs, then Ninov’s case becomes much harder (if not impossible) to make. I will grant for the sake of argument that private property owners are clients of a protection services market.

Firstly, people do not pay for the police, courts and army because they are eager to use their services, but because unless they do it, their quality of life would deteriorate. Basically, one is forced to pay for these services because the alternative is to suffer losses in the form of stolen property, physical damage (mugging, killing), etc.

People do not pay for food and drink because they are eager to consume them (although they may be eager to consume the particular foods and drinks they buy); they do so because their survival depends on it. Basically, one is forced to spend money on food and drink because the alternative is to suffer losses in the form of undernourishment-related ailments and eventually death.

Unless one takes preemptive action, it is guaranteed that physical aggression would be used on him.

It is not guaranteed, but human nature being what it is, it is likely.

The threat of initiated physical aggression is what makes people pay for protection services. However, the anarcho-capitalist solution for countering crime stipulates that private property owners generally pay for crime prevention. In that it proposes a solution in which people yield to the threat of initiated violence and pay to avoid it.

Again, they may not pay for protection services as there are other options. Rather than yield to the threat of initiated violence and pay to avoid it, people may take up arms and act to exterminate the perpetrators of the threat.

However, according to Ayn Rand, markets in which one party acts under initiated violence or the threat thereof are not free. From this point of view, anarcho-capitalism offers a non-free market solution.

By this definition, there is no such thing as a free market unless no one ever violates the non-aggression principle. This is possible in theory but is unlikely to ever be the case in practice.

Secondly, anarcho-capitalism accepts the supremacy of private property. So, according to this view, if one buys/obtains something by free market means (that is, without the initiation of physical force), then this item is his and his only. However, this leads to another problem. In anarcho-capitalism, people generally pay in order to ensure the continued possession of their property, since they are the clients. This raises the legitimate question: Is any item really yours if you need to pay in order to ensure that it remains in your possession? The latter suggests that the simple act of buying something does not guarantee full possession, which in turn leads to the conclusion that private property rights are contingent upon constantly and incessantly paying for what you possess. In short, if one stops paying for one’s possessions, one’s rights over them disappear. The latter contradicts the initial assumption that once one obtains something by using free market means, it becomes his. In fact, it is never entirely his.

Ninov shows confusion between theory and practice. In theory, if one obtains property without initiating the use of force, then one has a right to exclusive control over that property. But just as a communist society will contain some non-communists and a democratic society will contain some non-democrats, it is reasonable to assume that an anarcho-capitalist society will contain some non-anarcho-capitalists. In other words, there may exist in practice some people who disagree with libertarian property standards and act upon that disagreement. If these people are not deterred by the threat of or stopped by the use of defensive force, then they will violate private property rights. One’s rights over such property do not disappear in theory, but are interfered with in practice.

Thirdly, when freedom is obtained through the purchase of a service, as in anarcho-capitalism, the following problem occurs: one gets only as much freedom as one is able or willing to pay for. This is an inevitable consequence of the way the free market works. In a free market, one obtains from a service/goods just as much as one has paid for. Since freedom would be the result of a market transaction, then one would get exactly as much as one has given.

Freedom is not obtained through the purchase of a service; it is defended in this manner if the purchaser chooses to outsource this problem rather than handle it oneself.

The aftermath is that there would be no common standard for freedom, i.e. there would be ‘equal’ and ‘more equal’ people. In particular, those with more money would be ‘more equal’ than others.

If this is true, then it proves too much because the only way to have everyone be equal is to have idealized communism.

Taking the above into consideration, we can say that in anarcho-capitalism people will not be equal with respect to their fundamental rights.

Again, there is a difference between theory and practice. Everyone has the same fundamental rights of self-ownership, freedom from aggression, freedom of association, homesteading, etc. in theory. In practice, however, some people will prove to be more capable than others and will thusly acquire property rights over a greater amount of resources than others.

1.2. Ethical Solutions

The only way to avoid the above ethical issues is to offer a system in which one is not the client and does not pay for private property protection.

As shown above, there are no ethical issues to resolve, but let us examine Ninov’s proposal anyway.

However, if we release private property owners from the obligation to pay for the protection of their own property, who then would pay for the police, courts and prisons? The answer to this question is quite clear from an ethical point of view: the one who has caused the problem, the one who has initiated physical force, i.e. the criminals themselves.

Considering the above, an ethically clean solution for the police organization for instance would be that the criminals themselves pay for the operation of the police. In effect, we would have the police be funded from and by the very act of fighting crime. Thus, when a crime is committed, the police would have the right to catch the criminal and let him pay for its services, for the effort expended in the criminal’s apprehension. This would guarantee that private property owners would not pay for property protection. In such a way a new type of market is formed, one in which the police is on one side and the other side (the client) are the criminals themselves.

In theory, this should be done. In practice, however, this can be difficult. It is important to remember that criminals are irrational actors by definition. After all, initiatory force is the tool of a man without answers. Those who resort to committing acts of aggression generally do so out of desperation. In many cases, the criminals are unlikely to have the skills and work ethic necessary to make restitution. Providing them with said skills and work ethic can be more costly than the potential benefit in some cases. A criminal might also refuse to make restitution and simply go on committing more acts of aggression, in which case a criminal may need to be killed to protect civilization. If this is the case, then making the criminal pay cannot work. It is also quite strange to think of criminals as the clients of police, as a client relationship is generally non-hostile, whereas security personnel and criminals can be mortal enemies. Finally, if Ninov’s police were somehow financed completely through restitution fees, then non-criminals would have no direct means to financially influence them. Bad performance would have to be dealt with either through ostracism of the offending officers and/or companies or through defensive violence against the police force.

In the anarcho-capitalist civil law market of judiciary/arbitration services the private property owners are the clients who pay for these services directly or indirectly (to an insurance company) at first. They are either compensated for their expenses by the opposite side when it has lost the law-suit or the insurance company covers their court fees, respectively (Tannehill 1970), (Barnett 1998). In criminal proceedings, the clients of the court are the defense or insurance companies involved. When they win the case, they would also be compensated for their expenses (Tannehill 1970), (Friedman 1979). It is evident that the private property owners pay for the work of the court in all cases, be it directly or indirectly, through having paid the defense/insurance companies beforehand. The possibility that they may be compensated for their expenses does not change the fact that they pay for judiciary/arbitration services, even if for a limited amount of time. In contrast, in the suggested system the private property owners do not pay at all, i.e. no money leaves their pockets or bank accounts at any time. Those who pay for judicial services are the criminals/law-breakers.

An interesting consequence of the suggested system is that one gets his freedom ‘for free’, so to speak. In anarcho-capitalism, one obtains freedom through paying for a service, but in the suggested system the ones who use police and court services are the criminals themselves, not the private property owners. In effect, freedom is a byproduct of ‘servicing’ the criminals. It is the result of a market transaction to which private property owners are not a party. One gets his freedom even without asking for it, which is exactly what the definition of a basic human right is, a right which is yours just by virtue of your existence.

There is nothing wrong with making the criminals pay for judicial services, but as explained above, this will not always work. The anarcho-capitalist system would also try to do this, contrary to Ninov’s description.

2. Economic Considerations

Paying for private property protection makes perfect sense when there is no way to avoid it, because people would be worse off without it, but not so much when the alternative not to pay exists. The latter is what the suggested system offers.

From an economic standpoint, the suggested system would amount to a transfer of economic resources from counter-productive hands into productive ones. The system would punish the people who subvert society without burdening the productive part of the population by forcing it to pay for prisons, for instance.

This cannot be offered in all cases, and anarcho-capitalist proposals offer this as well.

3.1. Prerequisites

A necessary and sufficient condition for the suggested system to function is the existence of a pre-established, monopolistic body of law governing a certain land area, whose sole intent is to ensure the protection of private property.

The standard anarcho-capitalist proposal with respect to the organization of the law system is the polycentric law, namely when several law systems exist in parallel in the same geographical area (Barnett 1998), (Friedman 1979). In order to prove that polycentric law is better than its monopolistic counterpart, authors typically draw a comparison with the existing, contemporary structure of the law, i.e. the monopolistic law imposed by the state through the initiation of force. From this comparison they derive the conclusion that the polycentric system would be superior to the existing one. What seems to have been neglected is the fact that monopolistic systems can exist even without the state or in general without force being initiated.

This has not been neglected. For example, the non-aggression principle is an example of a legal standard that libertarianism advocates as a monopolistic law.

However, private property owners may decide that they prefer monopolistic laws and there is nothing to be done about it if the initiation of force is banned. Similarly, there is nothing which can or should prevent private property owners from joining their lands with those of other owners who share their views with respect to what laws they wish implemented on their property. However, a common set of laws over a given land area forms a jurisdiction.

From an economic perspective, it is beneficial for private property owners who share the same views in regard to laws to join their lands, because the latter increases the size of the market they jointly control. Economies of scale could be achieved in this way. In other words, the market forces would stimulate private property owners with similar views to create jurisdictions of their own (societies/communities) with laws corresponding to their wishes.

Non-owners who wish to live in such a jurisdiction would have the option to either live there and accept the laws, whatever they are, or leave the jurisdiction. The latter would lead to the creation of homogeneous societies, because only the people who agree (or at least accept/tolerate) the imposed laws would remain in the particular jurisdiction.

This need not be the case. There could be multiple jurisdictions of this type that overlap, thereby creating a sort of polycentric legal system out of a patchwork of monopolistic legal systems.

3.2.1. Organization of the police and its consequences

The proposed system allows for the existence of many competing police forces, as in anarcho-capitalism. However, since in our case the police would have different clients (the criminals themselves), some differences in the way the police forces operate would emerge.

The criminals cannot always be the clients of the police, as shown above.

The most notable one would be the lack of conflict between private police organizations which is inherent in anarcho-capitalism. In anarcho-capitalism, two police forces could have opposing interests if the client of one of them commits a crime against the client of the other, and this could potentially lead to an aggressive confrontation between the two police forces, i.e. the well-known problem of the competing police agencies (Rand 1964, ch.14).

This is not much of a problem, as the rational self-interest of everyone involved is to avoid such a confrontation. If they fight and kill each other, then they raise their operating costs and lose market share to other police agencies. They also cause damage to innocent bystanders and their property, for which they must make restitution. Even if there is no such battle, simple non-cooperation between the two agencies can lead to lapses in insurance of transactions between other people protected by the two agencies. Such economic problems can also create an opening for other agencies to acquire their customers.

Moreover, the police under anarcho-capitalism would very frequently find itself cornered in a situation of conflict of interest. This would happen when one of its clients perpetrates a crime against another of its clients. The problem is that the police would have to arrest a person from whom it obtains money for protection (Nozick 1974).

This problem can be easily solved through contracts with other police agencies. For example, if both suspect and victim use Fabrikam Defense Solutions, the terms of their protection policy may stipulate that Woodgrove Security will be brought in to avoid a conflict of interest, and vice versa. In any event, the agency must be careful to avoid public perception of harming its own clients because this would encourage customers to go elsewhere.

Under the suggested system, such problems among the competing police forces would not exist, because the interests of their clients (the criminals) cannot clash the way they do under anarcho-capitalism. The reason is that the offenders do not have the right to choose who will serve them and how. They can be served by any police force which manages to capture them.

The structure of this branch of the economy would be the same as the ones in the rest of the economy. This would ensure that the conflicts between the different police forces and the way these conflicts are resolved would be the same as everywhere else. In particular, if conflicts arise, for instance if two police organizations argue with each other over who has captured a particular criminal first, then these conflicts would have to be resolved in court. If a police company refuses to go to court and to accept the court’s decision, then it itself becomes a law-breaker. The reason is that there are laws which specify explicitly what behaviors are allowed and what are not.

This can also be true in anarcho-capitalism, depending on the relationships between customers and police forces as well as relationships between police forces.

As a comparison: in the standard anarcho-capitalist system there are no compulsory laws valid for everybody; therefore, a defense company which does whatever it wishes is not necessarily a law-breaker.

This is false. A prohibition against aggression toward people and their property is a compulsory law valid for everyone in an anarcho-capitalist society.

In the suggested system if a police company commits a crime, it would be opposed by the whole of society, since this society is a homogeneous one. Moreover, it would represent a valuable asset to capture legally for all the competing police companies. Under such circumstances, an aberrant police company would not be able to withstand the pressure of all of its competitors and society as a whole, for the simple reason that in order to function it requires society’s approval/support.

This can also be true in anarcho-capitalism.

Such a situation cannot occur under anarcho-capitalism, because there a police company is not necessarily opposed by the whole society.

This is false. The whole society is not required to stop a rogue police company; in fact, a rather small minority could do so.

Even if a police company is a market monopoly or the dominant force, it would not be able to break the laws with impunity. Such a situation cannot happen in a homogeneous society.

If no one is willing to resist such a police company, then it will be able to break the laws with impunity.

The contemporary police force can be given as an example. It functions in a society where the vast majority of people supports its way of operation and organization. The police is an absolute monopoly but it dares not overtake the power of the state or oppose/reject the decisions of the courts.

This shows incredible naïveté and ignorance of history. In a stateless society, the police and the military are one and the same, as both functions are performed partly by private defense agencies and partly by their customers. There are many cases of a government’s enforcers performing a coup d’état in order to overtake the power of the state or oppose/reject the decisions of the courts.

Because of the suggested structure of this branch of the economy, it would be impracticable to try bribing the police. The reason is that firstly, the police is not a monopoly, and secondly, all police forces are interested in capturing all criminals. In effect, one would need to bribe all police forces and probably a large portion of the general population to avoid being arrested for a committed crime. This would make bribery impracticable.

This can also be true in anarcho-capitalism.

Since conflicts between the police forces would be resolved in court, the police companies would not be forced to cooperate with each other in order to resolve them. The latter shows that the suggested police organization is not a network industry. From this point of view, the criticism in (Cowen 1992) that the police in anarcho-capitalism is a network industry and this by itself may lead to collusion between the police forces does not apply to the suggested system.

Police forces in anarcho-capitalism are incentivized to handle matters in the same way, so if Cowen’s criticism applies to anarcho-capitalism, then it applies to Ninov’s proposal as well.

3.2.2. Motivation of police

In anarcho-capitalism, the police is motivated to do its job well, but its motivation is determined not by the level of criminal activity but by the subjective perceptions of its clients about it. So, the police would be more concerned with ensuring that the subjective needs of its clients are satisfied than with objectively persecuting criminals. It would be more important how its actions are perceived by the society than how much work it has actually done. In other words, because the police serves private property owners, it would try to satisfy their interests and this would make it efficient from a market point of view, yet this not the same as being efficient in fighting crime.

This is a self-correcting disparity. The subjective perceptions of private property owners about crime will align with objectively persecuting criminals if there are no factors to prevent this, such as a statist lapdog media that spreads fear to propagandize for government police and military forces.

The problem is that the general population would be able to influence how the police does its job, which is wrong because the general population is not an expert in capturing criminals. It just lacks the necessary skills and experience.

Private property owners are the people who are ultimately served by the police even if Ninov’s idea of the police serving criminals is taken seriously, so they should have some say in how they do their jobs. Ninov also assumes that the goal is to capture rather than kill criminals, which is not always the case.

An apt analogy would be for the general population to try instructing a surgeon on how to perform a brain surgery. Let us illustrate this general problem with an example. Since how much money the police would get would be dependent on the number of private property owners who subscribe to its services and on their willingness to pay more or less, the police would make sure to persecute more vigorously those criminals/cases that have achieved a wider social response in the media. The case of the capture of a notorious criminal, for instance, would bring much more money to their coffers than that of an unknown gangster who has committed similar crimes. Objectively, however, the two cases are identical and should be treated in the same way, which would not happen, unfortunately. Again: in anarcho-capitalism, the motivation of the police forces would be extremely subjective, which would mean: not as effective as we would wish.

This is impossible to know because one would have to know how the media would report on crimes in the absence of the state.

Let us now try to evaluate the motivation of the police in the suggested system. The motivation of the police would derive directly from the crime itself, without any intermediary. No preference would be given to conspicuous/important cases unless the general population is willing to pay for them additionally. The only parameter which would be of importance would be the type of crime, big or small, because this would have a direct impact on the money to be obtained from it.

This is also true of anarcho-capitalism.

The police would try to be as efficient as possible and would not let the rest of the population dictate how it does its job, just as any free-market company would do.

Free market companies are dictated to by the rest of the population by means of which businesses people choose to support and what feedback they give about the goods and services they receive.

As an example: If there is a public gathering, the police in the suggested system would do its best to assess the number of policemen necessary to guarantee the safety of the crowd and deploy just the number needed. In anarcho-capitalism, the number of policemen sent to safeguard the same gathering would likely be much higher than necessary since it would be of an extreme importance that the police presence be noticed by the public and appreciated. In effect, the suggested police organization would adjust objectively to the actual crime protection needs of the society, not to its perceived crime protection needs, as in anarcho-capitalism. This would guarantee efficiency, which is what every market-based company strives to achieve.

These numbers are going to be equal over time, as perceptions naturally align to reality if nothing gets in the way of this process. In both cases, police face public pressure to provide security without wasting resources and would like to be noticed and appreciated.

Since the police would be motivated by the income it obtains from the criminals, it would be constantly on the lookout for new crimes. It would try to anticipate them, predict them and be where it is necessary in order to capture the criminal.

People who are motivated by income are likely to seek more income. Without the constraint of having to please property owners in order to maintain funding, this police force is likely to become abusive and have to be stopped by other police forces.

For instance, if there are parts of the city where more crimes happen, then there would be more police presence there. The simple reason is that there would be more work for the police to do there and consequently more money to be earned. Thus, the preventive function of the police would be preserved in the suggested system. What is more, the motivation to prevent would be stronger than the one in anarcho-capitalism. In anarcho-capitalism, the police forces are mainly interested that their own clients are not hurt by criminals, not that non-clients are not hurt. Therefore, criminals who commit crimes outside the region of control of the particular police force would not be of immediate interest to the defense company. In the suggested system, all police forces are interested in capturing all criminals independent of where or against whom they commit crimes. In this sense the interests of all police forces are the same. In anarcho-capitalism this is not the case.

By this reasoning, a fire department that serves only a certain group of customers should not care if there is a massive wildfire burning just over the horizon. In reality, an anarcho-capitalist police force is more efficient if it is proactive, stopping known criminals before they are able to endanger its customers rather than waiting until said criminals enter the immediate area.

3.3. Laws

Laws based on retribution as a form of punishment and as a right to which the victim is entitled (Rothbard 1998) are not compatible with the principle of non-initiation of violence, because retribution on a personal level cannot be applied according to some objective criterion.

This is thoroughly false. The non-aggression principle is a logical principle, and is therefore subject to logic in the form of rationality and consistency. A person who commits a crime cannot legitimately object to a taste of one’s own medicine, as moral hypocrisy cannot be rationally and consistently advanced in argument. (Such an argument may still be valid and may still be made by a person who is not a hypocrite, however.) Retribution on a personal level may be applied by the objective criterion of lex talionis.

Such kind of retribution means, in effect, that people would take justice in their own hands and would be sued and punished afterwards if they have not performed it properly. The real problem, however, is that if one makes a mistake, for instance uses retribution excessively or even punishes the wrong person, this would mean that society approves of violence initiation. In effect, no attempt to stop the initiation of violence would be made, but responsibility would be taken afterwards. Being wrongly punished, however, is of little consolation to the injured party after the fact.

The society only approves of violence initiation if it does nothing to punish the people who use vigilante methods wrongly or stop those who would. Ninov constructs a false dichotomy between individual vigilantism and law courts; there could be a system of law courts which allows retributive justice.

As an example: The wife of a particular man has been murdered. Believing to know who the perpetrator is, her husband kills the suspect (performs retribution), who later turns out to have been innocent. The husband was not able to objectively assess the situation because he was grieving at the time and looking for somebody to punish in order to alleviate his suffering. However, an innocent man has been killed, and this has been allowed, since it has not been discouraged beforehand.

This is another false dichotomy. Just because one has not discouraged an action does not mean that one has allowed it; one may not have been involved in the situation at all.

Another problem with retribution as a victim’s right is that it cannot guarantee an end to the circle of violence.

No system can guarantee an end to violence.

Laws based on retribution as a right vested in the particular community seem to be compatible with the principle of non-initiation of violence. Since they are applied by the community, it would also be possible to put an end to the initiated violence. It can be argued, however, that such laws would be ineffective from an economic point of view. Retribution in general represents a destruction of the resources available to the particular economy which could otherwise have been used to productive ends. As an example: killing a convicted murderer does not help the economic development in general, because he will not be able to contribute to the division of labor with his work. Letting him work in jail while serving his sentence there would, however, achieve that end. In addition, it should be noted that killing someone as a punishment for murder could prevent him from paying restitution to his victim’s family/relatives.

Letting a murderer live may not help economic development or bring a weregild sort of restitution to the victim’s family, as the murderer may simply refuse to work or even refuse to be taken into custody alive.

3.4. Court and Legal Services

In the suggested system, the private property owners are not the clients and do not pay for court and legal services at all.

The private property owners will end up paying in any case where the criminals are unable or unwilling to pay.

3.4.1. Legal services

Not paying for legal services can be accomplished by organizing the market for legal services in such a way that each crime has a market price.

Crime always has a market price.

In particular, the suggested system could function in the following way: the criminal/alleged law-breaker is one of the parties to the lawsuit. If he loses the case, he is required to pay a market-driven price to the other party. The latter makes profiting from crime possible.

A system in which profiting from crime is possible is a bad system.

But when crime is a profitable option, private property owners need not pay for the capture/prosecution of the criminal. When the potential for profit is available, there would always be companies/people willing to take part. So, the opposing party in the lawsuit would be the police or law companies or even simply private individuals seeking profit. They would strive to win the particular case in order to obtain the associated market-driven price. The latter guarantees that the victim of a crime or simply a private individual seeking justice need not pay for the lawsuit personally. This would be done by the police/attorney at their own expense. In case they win the lawsuit, they would expect a monetary compensation which would exceed their expenses.

This can also be true of anarcho-capitalism.

As can be seen, in the proposed case the victim/private individual seeking justice is not a client at all and in general is not a part of the market transaction.

The transaction would not occur in the first place without a victim in need of being compensated, so this is false.

That is why he would never pay for getting justice.

How does Ninov know?

The defendant (a suspected criminal or simply a private property owner) would also be able to get a lawyer to defend himself in court free of charge. The latter would happen because the incentive of profit would serve the defendant as well. In case of an acquittal, the claimant would have to compensate the attorney of the defendant for his expenses. In case the defendant loses the lawsuit, he would have to pay his attorney for the effort expended in defending him. In addition, the convicted person would have to pay the claimant the market price for the particular crime. As can be seen, the defendant would pay only if proven guilty.

Ninov says that the defendant can get a lawyer free of charge, and then that the lawyer must be paid. Which is it?

Since the prosecuting lawyers would pay for court services and possibly for the expenses of the other party if they lose the case, this would guarantee a responsible handling of all cases. Lawyers would try to estimate if the case they are about to undertake has enough supportive evidence to be won in court.

The number and specialization of lawyers would be determined by the demand of the market itself. When there is more money to be made by suing potential criminals/law-breakers, more lawyers would tend to enter the profession. Similarly, if the level of crime/law-breaking was low, there would be relatively fewer lawyers on the market, because the amount of money to be made would be lower.

This is also true of anarcho-capitalism.

3.4.2. Court services

In the context of the suggested system, if both parties cannot agree upon a judge or if the defending side flatly refuses to choose one, then the laws governing the particular jurisdiction would have to offer a solution. There may be multiple solutions to this problem and any one of them may be chosen, as long as the case reaches the court, so that justice can be served. For instance, the judge to hear this case may be chosen at random from a list of prospective judges. The qualifications, number, etc. of these judges may be regulated by the laws or left open. Or a single, well-known judge may be chosen. The number of possible correct solutions is unlimited.

The laws could simply allow a dispute to go unresolved. Admittedly, there are some disputes which must be resolved, but others may be able to be put aside and forgotten.

In the proposed system, the manner in which judges are paid would be irrelevant. They may be paid by both sides (attorneys) equally or just by the losing party (‘the loser pays’ rule). It is up to the market to decide on this. In any case, the judge would be equally dependent on both parties, which would guarantee impartiality.

The manner in which judges are paid is of the utmost importance, as money is known to be quite effective in tipping the scales of justice. If only the loser pays, then the judge is not equally dependent on both parties.

In anarcho-capitalism, the private property owners are the clients of the court services. The latter may be a problem in a murder case, when the murdered person has not left instructions in his will on how to handle this particular situation and has no relatives to demand justice or his relatives are simply not interested in prosecuting. Such a problem could never arise in the suggested system of organization, since the right to pursue justice belongs to the society/community, as is in fact the situation nowadays. There would always be companies/individuals willing to pursue justice for a profit.

This is not a problem for anarcho-capitalism. The non-aggression principle is tempered by logical and moral consistency, such that a murder cannot claim a right to life because the murderer has demonstrated by deed a rejection of the right to life. A proven murderer may therefore be killed without violating the non-aggression principle, and the members of a society/community would be wise to do this, as past behavior is a strong predictor of future behavior. We need not worry much about mistakes in this sort of vigilantism, as killing someone other than a proven murderer in such a pursuit makes the vigilante a proven murderer.

3.4.3. Formation of market prices for different types of offenses

The court would be responsible for ruling on the remuneration of the claimant for its services if the defendant is convicted. For this reason, the judges would have to balance between the interest of the police/lawyers and those of the convicted. If a judge does not pay the police/lawyers enough to compensate for their expenses and generate some profit, he would never be chosen by them. At the same time, if the judge makes the criminal pay too much, he would never be chosen by the particular criminal.

Ninov says earlier, “The…offenders do not have the right to choose who will serve them and how. They can be served by any police force which manages to capture them,” and describes the relationship between police and criminals as a client relationship. Now he says that criminals are in a position to choose which judge to use, and that the police’s interests are to be weighed against the interests of criminals. Which is it?

In effect, the judges would be an active party to the price formation process. They would have a vested interest (a monetary one) that all types of offenses defined in the criminal code are prosecuted and therefore, they would strive to raise the specific prices of the offenses so that the police/lawyers are motivated to catch and sue the perpetrators against the particular rule of law.

This may not be true if there is an offense which cannot be prosecuted in such a way as to be profitable.

3.5. Prison System

A typical anarcho-capitalist proposal on how the prison system could be organized is the following: When and if a person is convicted of a crime, he is sent to a private jail by the defense/insurance company which has successfully prosecuted him in court. In jail, he would have the opportunity to work, in particular to choose between different types of jobs offered at the particular place. By working, the prisoner would be able to pay for his prison expenses and pay restitution to the private property owners affected by the crimes he has committed. It should be noted that the prisoner would support himself, i.e. he would pay for his stay in jail and thus he would not be a burden on society. In this arrangement, however, the prisoner is definitely not a client, because it is not he who chooses which jail to serve his sentence in. In comparison, in the suggested system the prisoner is both the client and the one who pays for his stay in jail.

3.5.1. Problems and solutions

The anarcho-capitalist proposal leads to several problems. They stem from the fact that since the prisoner is not the client, a prison is chosen for him, i.e. the prisoner has no way to influence the behavior of the prison system.

There is no reason why an anarcho-capitalist system could not give a convict a choice of where to serve a prison term. Even so, the loss of liberty involved with being in prison is a deterrent against the commission of crimes. The prisoner is estopped from complaining about this loss of control because the prisoner became such by taking control away from an innocent person. Even without a choice of prisons, the prisoner may still be able to influence the behavior of the prison system by means of striking, organizing fellow prisoners, and/or rioting.

The first consequence of the above is that prisoners would typically be treated as dependents, not as clients, similarly to the present situation, and therefore they would sometimes be mistreated.

This can happen in any type of prison. If the prisoners are working to support themselves and are not a drain on the prison system, then there is no reason to treat them as dependents.

It is suggested that, since in anarcho-capitalism prison guards would be kept more stringently responsible for the brutalities that may occur, this would solve the problem. If the latter actually occurs, it might improve the situation as compared to the current prison conditions, but it could not by itself generate a sustained interest in the prisoner’s well-being, as is usual for the clients of all other branches of the economy. Even if the prisoner works in jail and his particular employer is interested in his well-being, this would have no significant effect on the prison system. The reason is that the interests of the prison system and those of the employers allowed to function there may not coincide. The prison system would try to satisfy the interests of its clients, namely the defense/insurance companies, not those of the inmates. In short, since the prisoners are not clients, the prison institutions would have no vested interest in resolving the above problem by themselves.

The interests of the prison system and those of the inmates may not coincide. The prison system could be trying to rehabilitate criminals, while the inmates could be trying to escape and commit more crimes. The ultimate clients of the prison system are the private property owners who hire the defense/insurance companies.

From another point of view, the primary purpose of imprisonment is to punish the criminal for his wrongdoings by limiting his access to/separating him from society. Punishing the criminal by subjecting him to bad living conditions has never been the original intent of the law, but this is what happens in reality because the prison system nowadays has no motivation to offer adequate and acceptable living conditions. Again, there are no market-induced incentives for this to happen because the prisoner cannot choose the prison and thus influence the conditions offered there. He is not the client. Similarly, in anarcho-capitalism, the choice of what the conditions in a prison would be is left to the organizations that have sent the prisoner to jail. The problem again is that the interests of these organizations and those of the prisoners do not coincide. The defense/insurance companies would be mainly interested in minimizing their expenses, whereas the prisoners would clamor for improvements in their living conditions.

The prisoner can still influence the prison conditions without being able to choose the prison, as discussed above. The result of prisoners clamoring for improvements in their living conditions can be an additional cost to the defense/insurance companies in the form of damage from prison riots. Exposes on horrific prison conditions can hurt a company’s reputation, and prisoners who are subjected to overly harsh conditions could sue the prison system or commit crimes against it, both of which could raise expenses more than improving the conditions would.

In particular, as clients the prisoners would be able to choose in which prison to go and pay for their stay there in any way they can, i .e. they can pay for their stay in jail with personal funds and/or work while in jail. This option would significantly change the relationship between prisons and inmates. In effect, the prisoners would become cherished clients to be taken good care of, because they would be the ones to pay for their stay.

This can also be true of anarcho-capitalism. However, one might think that a competent court would stipulate that any personal funds which are available to cushion one’s stay in jail should instead be used for the payment of restitution.

Prison brutality would be virtually non-existent since prisons would be highly motivated not to allow them. In addition, since the system would be market-based, the quality and quantity of its services would be defined by the market, which by itself guarantees constant improvement and updating of the living conditions and, in general, continuous development.

This is also true of anarcho-capitalism.

3.5.2. Functioning of the prison system

Working while in jail would be common and ordinary. Still, if a criminal has the funds to support himself in jail by paying for his stay there without working, then this would be allowed. The prisoner would enjoy as much luxury/goods/services as he is able or willing to buy, as long as these are not forbidden under the conditions of his sentence. Working in jail would usually be necessary for the prisoners to support themselves.

What is the point of keeping someone in jail if there is no need for the person to be forced to work in order to make restitution and the person is not a danger to others?

Prisoners would be able to choose prisons matching their financial situation or earning power. Still, it is very likely that some of the prisoners would refuse to work despite being unable/unwilling to support themselves while in jail. Those would most likely be transferred to minimum-amenities jails. Hopefully, when they see the big difference between the lifestyle the working inmates would be able to afford and their personal situation, they would be incentivized to start working. Such minimum-amenities jails would have to be supported by either the prison system itself or by charity organizations, private companies, etc., i.e. without burdening society. It would be in the prison system’s best interest to support minimum-amenities jails for which prisoners do not pay and consequently receive the bare minimum of services necessary for their survival. Experiencing the difference between what one gets without working and the privileges extended to the productive inmates would be a very good, market-based incentive to start working and be transferred to a better-quality jail. Criminals too dangerous to be allowed to work and people unable to work will have to rely on the public for support while in jail.

There is no need to have such a safety net. If a criminal chooses not to work to make restitution for a wrong and support oneself while in jail despite being able to do so, then there is nothing immoral about withholding even the basic necessities of life. At some point, the criminal will either choose to survive and make restitution or die of hunger and thirst. Both outcomes are acceptable by libertarian standards.

4. Conclusions

A new system of social organization has been offered. This system conforms fully to Ayn Rand’s idea of non-initiation of violence. However, the proposed system differs significantly from the anarcho-capitalist social organization. Here the people who always pay for crime protection are the ones who have caused the problem in the first place, i.e. the criminals themselves. In this way society would be able to achieve a quicker economic development, since the productive part of the population would not be burdened with expenses for the police, courts and prisons and the convicted criminals themselves would be converted from counterproductive to productive ones. The proposed system ensures the freedom of its citizens for free, since they never pay for law-enforcement. Freedom in this case corresponds exactly to the definition of a basic human right, namely a right which is yours just by virtue of your existence.

Not always, as the criminals may be unable or unwilling to do so.

New, market-based structures of the police, courts and prisons have been offered. The police/law-companies would be allowed to finance themselves directly from the criminals. The courts would be able to finance themselves directly from the police/law companies, thus avoiding the necessity of state or private property owner support.

This is also true of anarcho-capitalism.

The prisons would be funded and chosen by their customers, i.e. the prisoners themselves. The latter would ensure that the prisons function in full compliance with the principles of the free market.

This can also be true of anarcho-capitalism.

To conclude, Ninov’s proposal is not nearly as different from anarcho-capitalist proposals as he claims, his description of anarcho-capitalism is faulty, and the differences between his proposal and anarcho-capitalism mostly result in needless confusion and difficulty. Anarcho-capitalist theories for the organization of the police, courts, and prisons still stand strong.

Matt Zwolinski’s Case Against Libertarianism

On April 8, 2013, Matt Zwolinski published an article called “Six Reasons Libertarians Should Reject the Non-Aggression Principle” in which he argues that the non-aggression principle is not suitable as a universal moral code. In this rebuttal, I will show on a point-by-point basis that he has made an erroneous case, committed numerous logical fallacies, and actually made a case against libertarianism.

Many libertarians believe that the whole of their political philosophy can be summed up in a single, simple principle. This principle—the “non-aggression principle” or “non-aggression axiom” (hereafter “NAP”)—holds that aggression against the person or property of others is always wrong, where aggression is defined narrowly in terms of the use or threat of physical violence.

Many, but not all libertarians believe this. Some libertarians regard the non-aggression principle as a logical consequence of self-ownership, and allow logical consistency, moral consistency, and other direct logical consequences of self-ownership (such as the homesteading principle) to temper the non-aggression principle. This is the view which will be defended here, and an example of this tempering may be found here.

From this principle, many libertarians believe, the rest of libertarianism can be deduced as a matter of mere logic. What is the proper libertarian stance on minimum wage laws? Aggression, and therefore wrong. What about anti-discrimination laws? Aggression, and therefore wrong. Public schools? Same answer. Public roads? Same answer.

It is not from the non-aggression principle, but from self-ownership that the rest of libertarian theory may be deduced from logic. Zwolinski writes as though rationalism, logical consistency, and apriorism are contemptuous things, and this is important for understanding the worldview of people like him.

The libertarian armed with the NAP has little need for the close study of history, sociology, or empirical economics.

A priori theory stands above such experience, forming the hard boundaries within which human events occur, but it cannot account for the subjectivity of human action and preference. Thus, the libertarian armed with self-ownership and its corollaries must still study history and sociology in order to learn from past mistakes and estimate how an idea might play out in practice. Economics, on the other hand, is not properly understood as an empirical discipline because the scientific method cannot be used in a field where controlled experiments cannot be performed and cannot be applied to unquantifiable variables (e.g. personal preferences).

With a little logic and a lot of faith in this basic axiom of morality, virtually any political problem can be neatly solved from the armchair.

Self-ownership and its corollaries are not a matter of faith, but of proof. Self-ownership is the right to exclusive control over one’s physical body. To argue that self-ownership is invalid, one must exercise exclusive control over one’s physical body in an act of communication. The content of such an argument is in opposition to the act of communicating the argument, so it is false by performative contradiction. By the three laws of thought, self-ownership must be true if any argument against it must be false. Self-ownership is thus an axiom, and the non-aggression principle is a theorem that results from respecting each person’s self-ownership in interactions between people. Not all political problems may be neatly solved from the armchair by extrapolating from this point, but most can.

On its face, the NAP’s prohibition of aggression falls nicely in line with common sense. After all, who doesn’t think it’s wrong to steal someone else’s property, to club some innocent person over the head, or to force others to labor for one’s own private benefit? And if it’s wrong for us to do these things as individuals, why would it be any less wrong for us to do it as a group – as a club, a gang, or…a state?

A great many people throughout history have thought it acceptable to engage in such behaviors. This, along with the erroneous belief that the problems of theft, assault, and slavery (among others) may be solved by limiting them to agents of the state and calling them taxation, war, and conscription, is what led people to create states.

But the NAP’s plausibility is superficial. It is, of course, common sense to think that aggression is a bad thing. But it is far from common sense to think that its badness is absolute, such that the wrongness of aggression always trumps any other possible consideration of justice or political morality. There is a vast difference between a strong but defeasible presumption against the justice of aggression, and an absolute, universal prohibition. As Bryan Caplan has said, if you can’t think of counterexamples to the latter, you’re not trying hard enough. But I’m here to help.

It is not the case that the non-aggression trumps any other possible consideration of justice or political morality, but these considerations must be limited to logical consistency, moral consistency, and other direct logical consequences of self-ownership, as discussed above. Caplan’s example of breathing on someone amounting to a violation of self-ownership is rather silly, as there is no context for the situation. Whose property are the two people on? Did the person consent to being breathed on? Was the content of the exhalation capable of damaging the person in some way? Without answers to these questions (and perhaps others), the example is unilluminating.

In the remainder of this essay, I want to present six reasons why libertarians should reject the NAP. None of them are original to me. Each is logically independent of the others. Taken together, I think, they make a fairly overwhelming case.

1. Prohibits All Pollution – As I noted in my last post, Rothbard himself recognized that industrial pollution violates the NAP and must therefore be prohibited. But Rothbard did not draw the full implications of his principle. Not just industrial pollution, but personal pollution produced by driving, burning wood in one’s fireplace, smoking, etc., runs afoul of NAP. The NAP implies that all of these activities must be prohibited, no matter how beneficial they may be in other respects, and no matter how essential they are to daily life in the modern industrialized world. And this is deeply implausible.

The non-aggression principle does not prohibit all pollution. Burning wood in one’s fireplace (or burning coal in a power plant to provide electricity) can be necessary for survival to prevent hypothermia, cook food, sanitize drinking water, etc. The exercise of property rights to prevent pollution from such an activity will result in deaths. A right to property cannot supersede a right to life because exercising a right to property requires one to be exercising a right to life, and that which is dependent cannot overrule that upon which it is dependent. Pollutants from non-essential conveniences (such as modern transportation) or vices (such as smoking) are harder to defend, as there is no imperiled life to weigh against property rights. Rothbard recognized that technology has developed to produce pollution because governments have interfered with private property rights in this area, and a society where this was prohibited would have developed in a more environmentally friendly manner from the outset. Zwolinski assumes that the modern industrialized world must be as it is in this sense. As always, historical determinism is there for those who lack courage and imagination.

2. Prohibits Small Harms for Large Benefits – The NAP prohibits all pollution because its prohibition on aggression is absolute.

This has been addressed above.

No amount of aggression, no matter how small, is morally permissible. And no amount of offsetting benefits can change this fact. But suppose, to borrow a thought from Hume, that I could prevent the destruction of the whole world by lightly scratching your finger? Or, to take a perhaps more plausible example, suppose that by imposing a very, very small tax on billionaires, I could provide life-saving vaccination for tens of thousands of desperately poor children? Even if we grant that taxation is aggression, and that aggression is generally wrong, is it really so obvious that the relatively minor aggression involved in these examples is wrong, given the tremendous benefit it produces?

Yes, it is obvious that such aggressions are wrong because morality of an action cannot depend on its consequences. Disproving consequentialism requires two steps. First, we must prove that determinism is false. Determinism is the philosophical position that for every event, including human action, there exist conditions that could cause no other event. This implies that it is not possible to persuade others of one’s philosophical position, as strict determination of our actions (and therefore, our philosophical positions) would mean they were completely necessitated by past events beyond our present control, and therefore not alterable by argumentation. But the effort to persuade others of one’s philosophical position is a condition of rational argumentation. Thus, to argue for determinism is to try to convince someone that it is impossible to convince them of anything, which is a performative contradiction. Therefore, determinism must be false.

With determinism refuted, two people who find themselves in identical situations and who take identical actions may experience different results, as the future is not directly knowable by extrapolating from the past. Regardless of one’s criteria for distinguishing good consequences from evil consequences, the situations may play out with good consequences in one situation and with evil consequences in the other situation. Thus, the same action taken under the same circumstances can be both good and evil. This is a contradiction, therefore consequentialism is false.

The only way around this argument is to claim that determinism is compatible with trying to change one’s mind, in that an arguer could be determined to try to persuade someone of something and the listener could be determined to accept it. But this leaves a person with no will to make choices, and thus no moral agency. The resulting moral nihilism would also defeat consequentialism, but moral nihilism is also false by performative contradiction because the act of argumentation implies that behavioral norms exist.

3. All-or-Nothing Attitude Toward Risk – The NAP clearly implies that it’s wrong for me to shoot you in the head. But, to borrow an example from David Friedman, what if I merely run the risk of shooting you by putting one bullet in a six-shot revolver, spinning the cylinder, aiming it at your head, and squeezing the trigger? What if it is not one bullet but five?

Performing a credible threat against someone counts as initiating the use of force, so aiming loaded firearms at people and pulling the trigger counts as an NAP violation and may be defended against by any amount of force necessary to end the threat.

Of course, almost everything we do imposes some risk of harm on innocent persons. We run this risk when we drive on the highway (what if we suffer a heart attack, or become distracted), or when we fly airplanes over populated areas. Most of us think that some of these risks are justifiable, while others are not, and that the difference between them has something to do with the size and likelihood of the risked harm, the importance of the risky activity, and the availability and cost of less risky activities. But considerations like this carry zero weight in the NAP’s absolute prohibition on aggression. That principle seems compatible with only two possible rules: either all risks are permissible (because they are not really aggression until they actually result in a harm), or none are (because they are). And neither of these seems sensible.

When people drive cars on the highway, they are implicitly consenting to be in a situation where there is a risk of being in a crash. The case of flying airplanes over populated areas depends on which was there first, the airplanes or the populated areas. If private property owners are in place, airplanes start flying overhead, and they do not consent to the risk of a crash (or even the pollution), then the airplanes should find another path. If the airport is already operating and private property is established afterward, then the property owners have implicitly consented to the risk which is present from the outset. In general, people will enter into contracts, create insurance methods, and establish private property rights for the purpose of dealing with risk in a way that avoids aggression.

4. No Prohibition of Fraud – Libertarians usually say that violence may legitimately be used to prevent either force or fraud. But according to NAP, the only legitimate use of force is to prevent or punish the initiatory use of physical violence by others. And fraud is not physical violence. If I tell you that the painting you want to buy is a genuine Renoir, and it’s not, I have not physically aggressed against you. But if you buy it, find out it’s a fake, and then send the police (or your protective agency) over to my house to get your money back, then you are aggressing against me. So not only does a prohibition on fraud not follow from the NAP, it is not even compatible with it, since the use of force to prohibit fraud itself constitutes the initiation of physical violence.

Many libertarians define aggression as the initiation of the use of force or fraud against a person or their property, in which case this criticism is nonsensical. Zwolinski’s narrower view leaves no room to use force to reclaim stolen property, stop a person who hires hit-men to kill innocent people, or generally stop any violation of life, liberty, or property where responsibility is obfuscated. This confusion is all too common, and it is a major reason for disputes within libertarian circles.

5. Parasitic on a Theory of Property – Even if the NAP is correct, it cannot serve as a fundamental principle of libertarian ethics, because its meaning and normative force are entirely parasitic on an underlying theory of property. Suppose A is walking across an empty field, when B jumps out of the bushes and clubs A on the head. It certainly looks like B is aggressing against A in this case. But on the libertarian view, whether this is so depends entirely on the relevant property rights – specifically, who owns the field. If it’s B’s field, and A was crossing it without B’s consent, then A was the one who was actually aggressing against B. Thus, “aggression,” on the libertarian view, doesn’t really mean physical violence at all. It means “violation of property rights.” But if this is true, then the NAP’s focus on “aggression” and “violence” is at best superfluous, and at worst misleading. It is the enforcement of property rights, not the prohibition of aggression, that is fundamental to libertarianism.

Against those who use self-ownership as the fundamental principle, this is a straw man fallacy. That Zwolinski has used his column at Bleeding Heart Libertarians to share this view makes this all the more mystifying. Zwolinski correctly realizes that NAP is close to the fundamental libertarian principle but is not it, but fails to grasp its relationship to property rights. The NAP and property rights are both logical corollaries of self-ownership, which is the fundamental principle. As private property is an extension of self-ownership through the mixing of one’s labor with previously unowned natural resources, trespassing on another person’s property is an act of aggression which may be defended against by any amount of force necessary to end the threat. That said, the amount of force in this particular example may be excessive, as asking the person to leave may be sufficient. Even so, more information about the situation would be needed to judge the case, as explained here.

6. What About the Children??? – It’s one thing to say that aggression against others is wrong. It’s quite another to say that it’s the only thing that’s wrong – or the only wrong that is properly subject to prevention or rectification by force. But taken to its consistent extreme, as Murray Rothbard took it, the NAP implies that there is nothing wrong with allowing your three year-old son to starve to death, so long as you do not forcibly prevent him from obtaining food on his own. Or, at least, it implies that it would be wrong for others to, say, trespass on your property in order to give the child you’re deliberately starving a piece of bread. This, I think, is a fairly devastating reductio of the view that positive duties may never be coercively enforced. That it was Rothbard himself who presented the reductio, without, apparently, realizing the absurdity into which he had walked, rather boggles the mind.

Again, this is a straw man fallacy against those who use self-ownership as the fundamental principle and the non-aggression principle as a corollary. That said, Rothbard was wrong about parenting. He viewed parenting as a type of limited ownership claim when it is actually a sort of regency over a child’s affairs until the child is no longer helpless and is capable of taking over the responsibilities of self-ownership. This mistake led him to believe that parents have no positive obligations to infants under their care. When a legal guardian of a child accepts this status, that person implicitly accepts the positive obligations that come with it. One of these obligations is to sustain the life of the child, as refusing to do so defeats the purpose of the guardianship. Just as a ship captain who has agreed to ferry passengers across the ocean may not dump them overboard into the deep while claiming that there are no positive duties to the passengers, the guardian of a child may not abandon the child to starve. Both cases amount to murder.

There’s more to be said about each of these, of course. Libertarians haven’t written much about the issue of pollution. But they have been aware of the problem about fraud at least since James Child published his justly famous article in Ethics on the subject in 1994, and both Bryan Caplan and Stephan Kinsella have tried (unsatisfactorily, to my mind) to address it. Similarly, Roderick Long has some characteristically thoughtful and intelligent things to say about the issue of children and positive rights.

Zwolinski seems to be unaware of Stefan Molyneux’s proposal for dealing with pollution, among other issues. Fraud and positive rights concerning children have been addressed above.

Libertarians are ingenious folk. And I have no doubt that, given sufficient time, they can think up a host of ways to tweak, tinker, and contextualize the NAP in a way that makes some progress in dealing with the problems I have raised in this essay.

They already have, and Zwolinski seems to be entirely unaware of this.

But there comes a point where adding another layer of epicycles to one’s theory seems no longer to be the best way to proceed. There comes a point where what you need is not another refinement to the definition of “aggression” but a radical paradigm shift in which we put aside the idea that non-aggression is the sole, immovable center of the moral universe. Libertarianism needs its own Copernican Revolution.

Zwolinski repeats the straw man fallacy that non-aggression rather than self-ownership is the center of the moral universe. As George Smith points out, in order to have a paradigm shift, there must be a competing paradigm. Zwolinski’s view is that liberty should be regarded as a defeasible presumption, and this is not a revolutionary position. It was held by many of the classical liberals of the eighteenth and nineteenth centuries. If anything, Zwolinski is playing the part of Ptolemy, against whose ideas the Copernican Revolution triumphed. The Copernican Revolution, then, would be to view libertarian ethics as being a priori true and inflexible, although centered on self-ownership rather than non-aggression.

To conclude, none of Zwolinski’s six examples pass muster. In each of them, he either puts forward an erroneous case (1, 2, 3) or knocks over a straw man (4, 5, 6). But the idea that the non-aggression principle should be rejected, as the title of Zwolinski’s article suggests, is tantamount to rejecting libertarianism itself, as doing so permits all initiations of the use of force and subsequent escalations thereof, with the end result being authoritarianism or complete chaos, perhaps both.