THESIS on Anarcho-capitalism
Pathways towards a Stateless World Society
Introduction
The central premise of this essay is that the current economic stagnation of the most advanced arenas of words society can only be overcome, and a new phase of economic flourishing be initiated via a libertarian revolution that shakes off the constraining state interference that is choking off much of the technology-fuelled development and prosperity potential of world civilisation. The system of increasingly interventionist states has become a historical fetter on the further development of the productive forces, to use a pertinent Marxian concept. World society’s mode of material reproduction has dramatically shifted in recent decades due to the advance of computation and telecommunication which in turn transformed forms of economic organisation and work. These relatively recent historical conditions invite and indeed necessitate a radical liberalisation as a pre-condition for the full exploitation of the technological and economic potentials of world civilisation.
The transformation has been described and analysed in terms of the transformation from Fordism based on mechanical mass production to Post-fordism based on computationally empowered flexible specialisation and computationally empowered forms of communication. The technologies of Fordism were rigid without agile adaptivity and without the ability to quickly absorb and utilize innovations. In contrast, the new numerically controlled systems like robotic fabrication, 3D printing as well as the massive new field of software-as-a-service (SaaS) are capable of absorbing unlimited numbers of innovations. This in turn dynamizes business and business organisation and pulls workers away from assembly lines into R&D, marketing, finance etc. All work becomes innovative and project-like rather than routine. These transformations were not only leaving communism behind as obsolete shell to be broken and thrown off, but also brought the semi-socialist economies of Europe to the brink, leading to a rather sharp political transformation in Britain and slower but also serious adaptations elsewhere in Europe. However, these political adaptations were insufficient. As stagnation has once more set in, especially since 2008, the project of liberalisation is becoming increasingly urgent again. The upshot of this is that this technological revolution must be followed by a political revolution to unleash its potential. This revolution must be a libertarian revolution.
These technological transformations and the historical political challenges and opportunities these imply will be only referenced here as important premise rather than being further elaborated and discussed.
This emphasis on the economic benefits of a libertarian revolution, with a special emphasis on historically unique opportunities now, is not meant to overshadow or exclude the timeless, deep, visceral preference for maximal individual liberty as a value in itself everybody cherishes as a condition for a fulfilled life. However, since our sense of free flourishing requires two freedoms, namely material and social freedom, libertarian philosophy cannot afford to neglect that the two conditions or types of freedom interact differently in different technological eras with different material conditions of reproduction and development. Moral principles too cannot be set absolute outside of historical conditions.
These themes that distinguish the position of the author from the anarcho-capitalism of Murray Rothbard and his followers are not further pursuit in this essay. However, they are noted here as a marker of differentiation because in what follows anarcho-capitalism is projected as historical goal, its feasibility is argued for, and potential viable pathways towards its realisation are explored.
The Plausibility of Anarcho-capitalism
Anarcho-capitalism is a political philosophy and project that drives the arguments of laissez-faire economics to their logical conclusion and therefore advocates for the elimination of the state in favour of individual sovereignty, private property, and unfettered markets. The central claim of anarcho-capitalism is thus that the state - with its ability to coercively constrain or direct social life including economic interactions - must be rolled back and eventually altogether substituted by wholly voluntary interactions.
The roll back of the state via the privatisation of current state functions to a minimal guarantor of law and order is the classical liberal or ‘minarchist’ position that is held by the majority of libertarians. The further programme of projecting the competitive market provision of all state functions, including the provision and updating of legal codes, law enforcement, courts and defence, is the distinctive proposition of the anarcho-capitalist position: A society that operates without collectively binding decisions, without state coercion. The position of anarcho-capitalism has also been referred to as anarcho-libertarianism, libertarian anarchism, individual anarchism or property anarchism. Anarcho-capitalism is indeed a form of anarchism in that it rejects the state as a coercive institution unilaterally claiming and enforcing subjection to its rule. However, it is to be distinguished sharply from all left-wing forms of anarchism like anarcho-communism or anarcho-syndicalism.
This essay concurs with the anarcho-capitalist proposition of a total roll back of state coercion as a viable project. However, in its concluding chapter this essay puts forward a further proposition that marks out the author’s position as a distinct variant of anarcho-capitalism emphasising the crucial role of discourses in addition to markets as societal steering institutions. However, this distinction is only introduced at the end of this essay, so that the main body of the essay puts forward arguments for anarcho-capitalism in general. The emphasis on the current historical technological phase as stirring force that urges towards liberalisation, strategically placed at the very beginning of this essay, is also a moment that distinguishes the author’s position from most other anarcho-capitalists. However, this distinction too is not affecting the relevance of the main body of the essay which is trying to articulate the essential arguments about the feasibility of a stateless world society and should find resonance with all followers of anarcho-capitalism.
The theory and political project of anarcho-capitalism envisages a process of political transformation that leads to a state-less society, ultimately a state-less world society, a social world without states. An important part of theorizing this project is to think through feasible pathways, steps and stages towards the long-term goal and prospect.
This probably seems a very remote and far-fetched prospect given current political reality and mainstream political consciousness. Yet, historical dynamics, crisis-fuelled and steered by determined activism, can get under way that make the improbable suddenly possible and probable. Margaret Thatcher’s neo-liberal revolution in Britain was a precursor of what might happen. Thatcher, inspired by the work of F.A. Hayek, started to roll back the state by initiating a wave of privatization and deregulation. Thatcher’s election victory with a radical libertarian-inspired project was possible due to the crisis ridden sinking of the UK economy and an increasingly desperate demos during the preceding decade. After the worst excesses and failures of leftist interventionism had been reversed, the damage repaired, and growth restored, the revolution stalled, and the statist paralysis gradually returned. The next crisis-fuelled opportunity will arrive soon enough, and then, wherever the break-through happens, the revolution must be more swift and decisive, showing early promising results and leaving less chance to backsliding.
This paper is trying to make plausible that the coercive ordering of social life via states could be overcome and be substituted by a spontaneous social ordering without coercion. This might happen within current democracies through a discourse-led political activism that gradually convinces the demos, including parts of its elites, to risk more degrees of freedom. Such a political activism includes the build-up of political parties aiming at electoral success. On the basis of initial, successful steps of liberalisation, society can be enticed to proceed further and further in the roll back of the state and in the substitution of its functions by non-coercive actors and voluntary institutions. The most important task is to commence this turn of political direction away from the current tendency to increase state interference in the economy thereby loading up the state with ever more unmanageable responsibilities. The libertarian hypothesis is that once this increasingly paralysing current process can be reversed and a process of liberalisation is under way, the prosperity gains that will be unlocked in each step will spurn the process on further. The prospect of such a process might be termed - borrowing a phrase from Karl Marx - ‘the withering away of the state’, albeit not under communism but under capitalism. Political parties will gradually transform into think tanks or advocacy groups and political leaders will transform from decision makers to proselytizing discourse leaders.
Another pathway towards the same goal would be the attempt to form and grow new societies from the ground up on the basis of libertarian principles, instead of the attempt to reform and transform existing societies. We can also imagine a mixed pathway that via special zones of liberalisation established as experimental vehicles for economic development within existing states that can be expected to flourish, attract newcomers and become examples to be emulated, leading to the generalisation of its political innovations within the larger country and beyond. In what follows these three pathways will be described, analysed and discussed further, in relation to various aspects of radical liberalisation that might seem problematic and in relation to obstacles that must be overcome.
Comprehensive Deregulation and Privatization
The key to overcoming the state is the substitution of the state services and functions by private provisions of these services within competitive markets. Many formerly exclusive state services like broadcasting, utility infra-structures, transport infra-structures, education and healthcare are already partially provided by private providers, others, like currency, urban planning, law & order including police, courts and prisons, as well as defence, are mostly still seen as necessary state monopolies. However, private security firms are already commonplace, and so are private arbitration courts.
Many steps towards this radical libertarian project can be achieved within the framework of states, including states constituted as parliamentary democracies, by way of gradually reducing state functions via deregulation and privatization.
In advanced economies the state controls often up to 50% of GDP and moreover burdens 100% of GDP production with questionable regulations that stifle the free flow of entrepreneurship and market exchanges, lowering productivity and slowing down innovation. The protections state regulations impose can be much more effectively delivered by market competition or voluntary industry self-regulation whereby rules do not require enforcement via compulsory powers in order to be effective. Government and parliaments are certainly massively overburdened by the task of optimally allocating 40% or 50% of GDP, even more so by the task of regulation. In either case incentives through direct existential feedback are missing and ideological rhetoric, if not outright demagogy, guide the parliamentary work more than the kind of direct feedback market participants are continuously exposed to.
The state can and should altogether withdraw from domains like currency issuance, infra-structure provision, urban planning, housing, education, healthcare, social security, welfare etc., gradually allowing private businesses or voluntary civil society associations to take over these domains. This way a classical-liberal ‘night watchman’ state can emerge, as minarchism proposes.
Free Markets for the Provision of Law and Order
The process of privatization could go further, and substitute even the provision of law & order which according to minarchists can only be provided by the state. However, experience shows that the provision of legal dispute resolution is already increasingly shifting to private arbitration services in the world of business. Eventually all business courts could be private, organised either as for-profit businesses or sponsored by business associations. The argument that the state is here always presupposed as necessary, final backstop is being refuted by pertinent historical experiences like the non-state functioning of the merchant law, the Law Merchant or Lex mercatoria, operating and providing a stable legal framework for international trade without states for many centuries, at least from the 13th Century well into the 18th Century, in Western Europe. Another striking piece of historical evidence is the emergence and flourishing of privately regulated and arbitrated stock markets in Holland and England without the slightest state involvement via legislation or courts. The state was not willing to enforce the contacts and deals made at these stock-markets. The only punishment and disciplining mechanism and deterrent at the disposal of these self-regulating stock-markets vis-a-vis rule breakers was their exclusion of from future business and the tarring of their reputation. However, these mechanisms have been highly effective in insuring rule compliance without any ability to resort to physical enforcement.
Civil courts for non-business matters could also be private, again for profit or sponsored by NGOs. The question of privatizing criminal law, criminal courts and physical punishments like imprisonment is a much thornier issue. To begin to see that not only commercial law or civil law but all law can be developed and adjudicated without a central power, in a decentralised manner in societies without a state-monopoly of justice, the historical cases of such societies in both medieval Ireland and medieval Iceland might be studied. The scope of this essay only allows of some hints here. The law was customary law that evolved slowly, first in oral then also within a written tradition preserved among a group of jurists without any central legislators. Parties in dispute called on the jurists to advise on the law and, if necessary, the parties also called on these jurists as arbitrators or judges. Dispute settlements of crimes and injuries focussed on compensation rather than retribution and punishment. Compensation could also come in the form of future labour services. This focus on compensation for the victims of crimes and injustices was generally the case throughout Europe before kings (via the kings’ courts) started to usurp the deliverance of justice and the compensations.
With respect to this whole complex - which is at the very centre of the definitory idea of the state as holding the monopoly of violence, including criminal persecution and punishment, within a given territory - the anticipation is two-fold: first, again, crimes would have to be brought to justice via compensation rather than punishment. More importantly, it is plausible to expect that violent crime, and more generally the need for physical punishments like imprisonment, will dramatically recede and eventually disappear altogether after the welfare system has been wound down. This can be expected because the increases in violence witnessed in recent decades coincides with the introduction and expansion of the welfare state. Violent crime and incarceration is concentrated nearly exclusively within welfare dependent underclass milieux, while in the mainstream or middle class segment of society interactions have mellowed and all forms of violence have virtually disappeared. While in society at large the slightest gesture towards physical hostility is taboo, the legal definition of domestic abuse has expanded beyond the realm of physical attack, and at work a dismissive look or frank email can be interpreted as bullying or micro-aggression, the parallel society in the welfare dependent ghetto has descended irredeemably into a drug-fuelled gangland marked by regression to an archaic social structures with a savagery that had for centuries been unknown and unthinkable in the cities of the advanced nations. These tragic milieux are then further brutalized by a state police force and state prison system. If in the US 28.5% of all black men will be incarcerated during their lifetime, we can imagine what the percentage in the welfare dependent underclass might be. This extreme and tragic bifurcation can and must be wholly attributed to the failed and seemingly irreversible experiment of state welfare.
The explanation is this: State welfare provisions incentivise and subsidize unproductive, even counter-productive, milieux and lives, certainly lives lived far below their potential. The unconditionally guaranteed provision of a livelihood invites drug and alcohol abuse and becomes all too easily the basis for using the plentiful time and energy for topping up incomes via petty crime, drug dealing etc. Therefore, the plausible hypothesis is put forward here that violent crime and the need for incarceration will disappear together with the welfare state. Where some level of violent crimes to property and persons persists, the solution is not punishment but thoroughgoing prevention via strong protection measures.
That government provided policing is now seen as a necessity of societal order is due to the general historical myopia. Publicly funded police forces are a relatively recent phenomenon, common only since the second half of the 19th century. Napoleon started in France in the early 1800s, followed by the establishment of the Metropolitan Police in London in 1829. In the USA, the first municipal police services were founded in Boston in 1838 and New York City in 1845. State police forces in the US were established much later, with the Pennsylvania State Police being the first in 1905. In 1908 the federal ‘Bureau of Investigation’ followed, initially only tasked with investigating a relatively narrow set of crimes, like bankruptcy fraud, and antitrust violations. In Britain, and probably elsewhere, it was private detectives and prosecution agencies that did track down criminals before public police forces took this on.
All or most members of society will subscribe to one or another of a number of competing legal protection agencies that support and represent their subscribers in legal disputes or when they become victims of crime to secure some redress. With respect to property crimes like burglary protection agencies would not only protect but would naturally – in contrast to state protection - operate like insurance agencies and compensate the victims of such crimes for the agency’s failure to protect them, adding further to the incentive towards more effective safeguarding. The services of legal dispute insurance, crime victim insurance and physical security/protection might be bundled, at last the last two provisions would naturally go together. One thing should be certain: a private policing service could not afford to indulge in abuse of power, harassment, overarch and brutality of the kind which seems to be ineradicable in state police forces and prison guards. The owners of shopping malls or private shopping streets would instantly fire any policing firm who’s staff would not act in the most polite and considerate manner, as servants of the public rather than their bosses entitled to deference. Where a need arises to intervene to maintain public order the most circumspect and inconspicuous handling of such incidents would be expected. Excessive force is taboo.
Here is another consideration that recommends private over state policing: State police are burdened with the impossible task of enforcing all legislated laws (springing from the fancies of parliamentarians). Their inevitable rationing of their enforcement efforts will be arbitrary, led by convenience or personal preferences (perhaps bracketed by administrative policing policies). In contrast private police rationing follows the customers preferences expressed though their willingness to pay.
How would conflicts or legal disputes between insured parties be settled? If both conflict parties are insured by the same insurance company the dispute will be heard and decided by the insurer according to its system of laws and procedures. If the two parties belong to different legal insurance agency the two agencies will have to agree on third party private mediation or arbitration. Decisions by the arbitrator will be binding unless, as might be the case in high stakes cases the possibility of an appeal process has been agreed in advance or is generally regarded as appropriate. Again, appeals courts will be private and selected jointly by the conflict parties or their agencies. There would be no state imposed hierarchy of courts and no imposed supreme court as are now common in most states as seen as necessary ingredient of a legal order. However, these supreme courts with their judges appointed for life and with their monopoly powers expose the legal order to the imposition of legal activism, personal views and reversals based on new appointments.
A non-state legal order, like common law tradition, would be polycentric - like a discourse – which makes it agile and adaptive when it has to due to rapid societal transformations, but also resilient against arbitrary swings due to its stable and slowly evolving nature with strong tendencies of convergence. It would be market-chosen law rather than politically chosen law. This makes the law much more predictable than politically controlled law, just like market developments are easier to predict when intervening political decisions do not have to be reckoned with.
Non-compliance of one of the agencies is highly improbable given the business disruption this would cause. Even in the absence of enforcement by physical force, non-compliance of one of the conflict parties due to the loss of reputation that comes with defying the courts. Further, the insurer would terminate the provision of legal protection and the delinquent would be unprotected, and would find it hard to find other providers before his record is cleared. Higher premiums after such an incident will surely be imposed. No blanket data protection laws would be prevent firms to share data unless contractually agreed in specific service contracts (where data sharing exclusions can be expected to imply higher service prices.) This means that delinquency could impact many aspects of the perpetrator’s life, like access to banking, utilities, internet access etc. Protection agencies could strike up deals with banks, utilities and internet providers to arrange for means of non-physical but very effective punishment to bring delinquents to task. There could also be agreements that would allow arbitration courts to cease financial assets to cover court costs and imposed compensation payments. Free banking and payment services might be offered to everybody who is willing to sign up to such a possibility of asset seizure. Those who want to be immune to such seizures will have to pay more for their banking services. Posting bonds or granting such seizure rights might become a prior condition placed upon entering certain deals or upon being admitted into certain high value environments.
These speculations are meant to sketch out how a libertarian legal system might function effectively without any central monopolistic state agencies and without any means of physical incarceration. A market with competing voluntary social credit systems might emerge incentivising and managing contract compliance across society. Is this a utopia or dystopia? First of all such voluntary systems will only take off at scale if there is sufficient buy-in. Secondly, all judgement is comparative. To appraise the relative attractiveness of such a society we should compare it to a society with endemic police overreach, even police brutality, and a dehumanising systems of incarceration. Of course, one presupposition of the comprehensive effectiveness of such wholly voluntary, contractual and non-violent forms of social control and discipline is that middle class patterns of economic self-reliance prevail universally, i.e. that the welfare-sponsored parallel societies or underclass milieux have been relegated to the dustbin of history.
Could private protection agencies become Mafia-style predatory protection rackets or morph into a state-like authority claiming a monopoly of violence? This would not only be highly improbable, but practically impossible due to the presumed existence of multiple competing agencies. The competing agencies would surely resist any attempt at usurpation or forced monopolisation. Also, an attempt at authoritarian take-over would be wholly out of character for a customer-centred and service-oriented business. That an organisational culture and staff could shift orientation in this way seems unthinkable. Historical evidence shows that monopolization or even cartelisation of an industry cannot succeed without a supportive state apparatus.
The work of legislation can be taken over by the radical expansion of free contracting as well as by the competitive provision of systems of law via private providers like for-profit arbitration firms. Businesses operating across borders can now already agree and choose a jurisdiction and place of arbitration with their contractual partners. For instance, the UK legal system is open for business world-wide, from anywhere. All that is required to bring a case in front of a UK civil court is that the parties to the contract had agreed to UK jurisdiction.
Private courts, just like state courts now, will also be sources of new law and the continuous evolution of law. These institutional sources of law will be guided by sophisticated, research-based expert discourses.
The Withering of the Welfare State
This envisaged withdrawal from welfare is difficult to credibly commit to within democracies with a four-year election cycle because the project of terminating welfare will have to be phased across several election cycles. The prospect that the planned withdrawal of welfare could be reversed at the next election might blunt the adaptive efforts and preparations of the welfare recipients towards self-reliance. Such inability to make the required credible long-term political commitments - a typical problem of democracies - poses a serious difficulty and might compromise or thwart the success of the withdrawal effort. Both government and opposition would need to buy into this project.
That a decent society is more than possible without state welfare is feasible and that civil society can organise its welfare privately and voluntarily has been demonstrated by the flourishing world of mutual aid societies during the 19th century and early 20th century up to the usurpation of the welfare sector by the welfare state. Private welfare provision in England was nearly comprehensive via the eco-system of varies mutual aid societies, also referred to as friendly societies, benefit societies, or benevolent societies. Such societies were based on religious, political, or trade affiliations, organised locally but some also nationally, for purposes of insurance, pensions and savings. They were operating self-sufficiently, without subsidies, and able to more effectively control benefit fraud or free riding.
The state’s withdrawal from social security and welfare would open the way for private insurance companies, and perhaps even for the re-emergence of mutual aid societies. Such private solutions are much more cost-effective and avoid the degrading and incapacitating dependency that is everywhere the effect of the welfare state. Any remainder of an inherently (rather than welfare-induced) vulnerability can be taken on by private charities. It is worth noting that in the UK the per centage of income given to charity was higher during the 19th Century than now despite the much lower real income levels then. The larger part these private charitable commitments were also crowded out by state welfare. However, private charities can operate in much more targeted and effective ways, while also demonstrating concern for results via the application of tough love, by making support conditional on constructive cooperation and effort of those being helped, in contrast to the state system of entitlements. Charities can continuously adapt their targets and policies much more rapidly and nuanced then the state bureaucracies relying on legislation. Charities also face more immediate incentives as they compete and collect from the voluntary giving of the public rather than drawing on compulsively extracted tax streams.
State welfare is eroding spontanous solidarity, family ties, social responsibilities and commitments etc. thereby undermining all private social bonds, especially in the affected milieux, leading to increased anonymity, loneliness, exclusion. Further, society is bifurcating into an economically active part and an economically inactive part, with a different sense of reality, diverging cultures, and learning curves.
The escape from the trap and poison of state welfare is crucial in its own right for the health of society, with or without state, and is of course a necessary step in moving towards a libertarian and finally stateless society. However, this escape can only happen via a long period of phasing out in order to give the victims of welfare dependency, at least those below a certain age threshold, enough time to transition into self-sufficiency. The same applies to the general phasing out of state pension schemes and state health provision. A first step, over and above the usual attempts to tighten means testing, incapacity testing, penalties for refusing job offers etc., would be to announce a full stop, perhaps with a not-too-distant deadline, to any new entry into the welfare system, as well as a phasing out of welfare provision to anybody below a certain age with a more generous deadline.
Special Economic and Political Zones
A first prior stage to this withering away of whole states might be via special economic zones, or more radically, via nearly autonomous, and for all practical purposes sovereign libertarian zones with the power to suspend and substitute the laws, courts and police of the state within which they are embedded. The state’s tax collection on the basis of reported incomes or transactions also ceases in these zones. Instead resident firms or residents will pay a service fee to the zone’s owners as regulated in a service contract. This contract is an explicit, real social contract in contrast to the fiction of a social contract put forward by political theory with respect to states.
The first example of this kind of zone exists in Honduras, on the basis of its so called ZEDE law. ZEDE stands for ‘Zone for Employment and Economic Development’. The law was launched in 2013, entered the Honduran constitution, and was later confirmed by the Honduran supreme court. Several libertarian political entrepreneurs have started to establish such zones, able to compete with each other and with the original Honduras jurisdiction. The motivation of the Honduran governments supporting this scheme has been the hope to stimulate business and to attract foreign investment to their country where corruption and insecurity persist, and where per capita income remains extremely low. The zones do not have to sit within a single contiguous piece of land but can comprise non-contiguous areas scattered across Honduras. Any new firm opening business in Honduras can choose one of the competing ZEDEs as its place of business and jurisdiction. The idea of geographically scattered jurisdiction has been a historical fact in Europe for centuries. Dynasties accumulated dis-contiguous realms via heritage, marriage, and conquest. It is also easily imaginable that a ZEDE jurisdiction, itself a for profit enterprise providing law and order, branches out beyond Honduras if spaces that would allow this open up elsewhere.
One of the new zones, ‘Honduras Prospera’, is trying to attract innovative, mobile entrepreneurs from around the world who feel stifled in their home jurisdictions. Prospera’s system of law is based on the open source legal system Ulex initiated by the libertarian legal scholar and entrepreneur Tom W. Bell and his Institute for Decentralized Governance. Bell, in turn, has been built its default set of substantive rules on the American Law Institute's restatements of the Common Law, and other compatible sources like the Uniform Law Institute's ‘Uniform Business Organizations Code’, all representing international standard best practice. Ulex encourages the editing and elaboration of its common law bundle, work which is ongoing in Prospera. A number of US based judges are being retained to serve on Prosperas own court if disputes arise that need to be settled.
Prospera imposes only the basic common law framework and allows local businesses otherwise to self-regulate relations via free contracting. Firms who would rather operate within a more determinate regulatory framework, perhaps because they intend to export goods or services into the world where one or another regulatory framing might be required or seen as comforting, can self-determine this framework. Propsera allows any business operating from within the zone to self-select under which established regulatory regime, from any country of choice, the business wants to operate.
Ventures like Honduras Prospera are looking for further similar opportunities in different countries. Such jurisdictions can become trusted brands and spread their governance services across the globe, without the need for a contiguous territory. One of the initiating investors behind Honduras Prospera, Titus Gebel, speaks about a new global market for living together.
The economic success of such ‘special political zones’ and their consequent proliferation across various states can be one pathway towards an eventually global libertarianism, if these states give these zones the quasi-sovereignty they need to approximate minarchist or even anarcho-capitalist conditions. The exploration of new, untested degrees of freedom within circumscribed special economic zones has also been the chosen development path of Deng’s China in the 1990s, with striking success. The economic liberalisation was then expanded across all of China. To be sure, the degree of liberalisation was well below the level aspired to by libertarians, and the process of liberalisation was eventually halted and to some extent reversed (just like the Thatcher liberalisation that had inspired Deng was eventually halted and reversed in Britain). The strategy of special economic zones as vehicles of development and experimentation did continue, for instance in Dubai, as well as in India. China has also exported this strategy to Africa. This strategy also has plausibility with respect to the advancement of the liberaltarian revolution.
Secessions and Break-ups
Another, complementary pathway towards libertarianism is the process of secession and the break-up of large states into several or many small states. Small scale states usually have a small state in the sense that they usurp a smaller percentage of GDP and in the sense that the scope of their intervention with the economy is smaller than in large scale states. This is effect results from the much larger relative weight of the import-export sector as part of the small state’s economy. This means that small economies are much more exposed to the competitive pressures that press onto the economy from outside. The attempt to impose strongly invasive regulations that inevitable compromise the competitiveness of the firms subjected to these regulations will backfire much more strongly within small highly export-dependent economies. Similarly, the imposition of high import tariffs or import restrictions will impact such economies much more severely. The resurgence of economic globalisation since the 1980s in general has curbed the scope for political intervention. A widely discussed fact that the political classes, especially left-leaning parties, everywhere lament. Globalisation and liberalisation go hand in hand. Blocks like the EU are a counter measure. The potential future break-up of the EU would therefore also be a factor that would favour liberalisation and weaken statism. The same applies to the break-up of large states. Such break-ups happened in the past: The Soviet Union broke into many parts, some rather small like the three Baltic Republics, Armenia, Georgia etc. The same happened to the former Yugoslavia. Spain might break up. Both the Basque country and Catalonia certainly strive towards this. Italy is also a candidate for secessionist break-up, as well as Belgium and the UK. Large states with regional development gaps often fail to close these gaps for decades. The North-South divide in Italy is a case in point. Break-up would benefit both parts. Germany is currently not a candidate for break-up as nobody makes such a proposal. However, the 16 states united within the Federal Republic of Germany represent historically meaningful fault-lines for a break-up that is not hard to imagine. The process of dissolution might start with one secession, the success of which then inspires others. The same applies to the 10 provinces and three territories of Canada, and the 50 states of the USA.
Small countries as the examples of Hong Kong, Singapore and Switzerland shows, are economically rather liberal, with low tax take and high economic performance. Singapore has an annual per capita income of $99,000 and a tax-to-GDP ratio of only 12%, Hong Kong’s per capita income is $71,000 with a tax-to-GDP ratio of 20%, and Switzerland’s per capita income is $93,000 with a tax-to-GDP ratio of 27%, while Germany’s and France’s tax ratio’s are 40% and 46% respectively, with per capita incomes of $65,000 and $56,000. All these countries are comparable as being amongst the most advanced economies of the world for decades. The trend that correlates small states, with both a small tax burden and high incomes is clear.
Many small states within a region give entrepreneurs/employers operating within the region many more options with respect to choosing a political environment and legal jurisdiction for their enterprise. The same applies to employees. All market participants are empowered vis-à-vis the states their operate within. There is less lock-in and its easier and less costly to switch jurisdiction by voting with one’s feet. The desire to switch might not just be induced by adverse political developments in the state of residence but by positively inviting changes in neighbouring states. (Switching costs will be much further reduced if multiple jurisdictions will overlap and be available in most or all location within the libertarian system envisaged here.) The ease of switching will disempower the states’ monopolistic interventionism and this reduced power then also implies that there is less to capture by special interests group who want to secure privileges and state protection from competition. On the positive side, ease of switching due to proximity of alternative jurisdictions will inspire intra-state political competition with respect to ease of doing business, taxation and service efficiency. This intensified competition between myriad small states can be expected to push all states to adopt ever more liberal, eventually libertarian, regimes.
Here is another point that appeals to libertarians who’s fundamental principle is the ‘non-aggression principle’: Small states rely more on cross border cooperation and are usually less bellicose, not least due to their lack of capability to threaten or use military aggression.
Borders and Mobility
State borders have traditionally been, and in many instances continue to be, barriers to trade in goods/services, capital flows and labour mobility. The most fundamental principle of economic theory suggests that these infringements, by preventing potential gains of trade (in a general sense that include goods, services, investments and employment), imply a comparative reduction in total social production/utility, and thus an impoverishment of world society. If one takes up the perspective of the global economic common weal, as this treatise does, then import/export restrictions (tariffs, quotas etc.), capital controls, and immigration restrictions (work visa requirements) are to be rejected as barriers to global economic progress. Open borders used to be the norm throughout human history, until the 20th century when the strong, big, power-hungry, nearly totalitarian states we are currently ruled by first emerged. Ever since these states increased their grip on the economy, society, and everybody’s individual life in an ever more pervasive/invasive manner. In 1913 the USA first imposed an income tax. In the same year the Federal Reserve (US central bank) was instituted. The first federal US welfare legislation, the Social Security Act, was introduced in 1935 by F.D.R., although by the 1920s many states had established various public relief programmes. Throughout the 19th Century the USA had open borders with respect to immigration. The fist restrictions were introduced in 1917 in connection with the 1st World War, and then tightened in the Immigration Act of 1924. It is clear that open borders are incompatible with general public welfare entitlements. The welfare state implies the restriction of immigration, or where these restrictions are difficult to enforce, the build-up of unsustainable stresses on state services and welfare provisions, including social housing, free schooling etc. This is becoming increasingly clear in Europe in recent years, both with respect to free movement inside the EU, as well as with respect to immigration into the welfare system from Africa and the Middle East. State welfare is a significant pull factor for immigration of questionable economic value, i.e. attracting people who would not find it easy to find self-sustaining work, and even where work could be found, work restrictions for ‘refugees’ or the attractiveness of free provision over work, adds further to the economically inactive population the welfare state already produces with respect to the indigenous population. These effects put severe popular pressure upon the governments of today’s advanced economies to attempt to control immigration. In contrast, in the 19th Century the USA absorbed massive immigration waves from both Europe and Asia without similar problems or backlash.
A libertarian society without any welfare provision, and without any provision of free services like education, health, or housing, could open its borders to all would-be immigrants without any of the problems that plague all current advanced economies condemned to try (in vain) to control immigration.
The current system of states severely undermines global labour mobility. This is not only lamentable due its negative impact on global economic growth but also cuts into everybody’s opportunities for free personal development. The current state system with its priority on tax collection is also a fetter on the productive exploitation of remote cross border work, imposing tax penalties, red tape and costs by requiring firms to formally open subsidiaries everywhere potential remote workers might be located. All of this would fall away in a stateless world economy.
Some sceptical questions might be raised: Would mass labour immigration not inevitably lead to a lowering of wages of the incumbent population? Not at all. Also, this was not the effect to mass immigration into the USA in the 19th Century. Quite the opposite. A libertarian economy is marked by ease of doing business, ease of opening new enterprises to rapidly absorb the incoming new labour. Also, existing enterprises would expand as the incoming workers are earning income and instantly become paying customers. There would not be the usual planning restriction preventing construction of new workplaces, houses, and other facilities. The boom would benefit rather than depress the incumbent population who will naturally be able to use their home advantage and be swept into positions of relative leadership as foremen, managers etc. Many of them, moreover, will have the opportunity transform from employees to entrepreneurs.
What if there is initially only a single, relatively small fast prospering, libertarian island? Will this island not be overrun, fill up with slums? First of all, if such a first break through is so conspicuously successful and attractive, imitators will spring up soon enough to ease the pressure. Further, in a libertarian society, all land is privately owned and managed, including all public parks, squares, streets, as well as fields, forests and lakes. It is those private landowners we should be able to rely on to prevent or clear any unwanted slums or encampments. We expect libertarian societies to institute robust and enforceable property rights everywhere, in contrast to the rights of squatters we find e.g. in the UK. Perhaps these landowners tolerate some temporary accommodation, where this is not disruptive, perhaps charging some land rent, or perhaps deciding to build and let cheap but more appropriate accommodation. If too many newcomers pour in and find no place to stay at all, they can be expected to leave, as sleeping rough might remain the only option, until even this would no longer be tolerated anywhere. Charities might spring up to ease the pressure. In any event, we should expect the voluntary influx and voluntary absorption to be self-balancing, so as to clear the market (as long as the state does not intervene and block the self-regulating mechanism of the market by setting perverse incentives, by giving unconditionally to some what they take by force from others, thereby allowing imbalances and stresses to accumulate).
This libertarian principle of open borders for immigration can also be understood as the substitution of external, collective borders by myriads of internal micro-borders that are the property boundaries, controlled individually by each landowner, lease holder or managing host of any public space, building or individual venue. Of course, various owners, lease holders or venue host might form associations to pool their efforts, or outsource their control function to specialist firms, in accordance with their desired access and social control policies.
It should be evident that this substitution of hard external borders via mostly invisible, discretionary internal borders can be expected in its end result to be much more open and welcoming than the current advanced economies, and able to absorb many more newcomers who are able and willing to contribute to, and participate in, the prosperity engine we can expect such libertarian societies to be.
However, the emergence of such a maximal degree of openness must go hand in hand with the gradual build-up of the political, economic, societal, cultural and technological conditions that allow a fully fledged libertarianism to take off and flourish. The gradual, step by step work of rolling back the state and building up markets, businesses and private civil society capacities, guided by respectively informed and informing discourses, will allow for a step by step easing of entry and settlement restrictions and the step by step dissolution of external borders and controls.
Defence against External Organized Aggression
The state is a compulsory monopolist of defence within a definite territory. What can we propose or expect with respect to the market substitution of the traditional monopoly state function of territorial defence.
Let’s first consider the scenario of a stateless world society. If what we mean by war is inter-state war then, by definition, there could be no war in a fully stateless scenario. This is no mere tautology, as it is difficult to see the units or entities that would wage war, in contrast to the case of a generalized minarchism where war remains a possibility.
To be sure, in the transition stage minarchist states might be bullied and attacked by bigger states, bigger in both scale and in its government’s scope. Would anarcho-capitalist enclaves or geographically dispersed anarcho-capitalist jurisdictions be equally vulnerable to being attacked or blackmailed with the threat of military force? Could external state aggression thwart the persistence or proliferation of islands of discourse-led capitalism, within states or amongst states?
This possibility cannot be altogether excluded, although the risk of attack posed to a cluster of independent businesses without central address or decision making organ would be much smaller than the risks states face, because of the inherent peacefulness of such a cluster. Such a non-state cluster of businesses and residents would never be a military threat to its neighbours or any indeed to any state. This in turn would make it hard for an aggressor state to explain this aggression to the world and indeed to its own population. After all, such an attack would be costly and various forms of retaliation, including military retaliation, could not be excluded and would burden the home population of the aggressor. However, the possibility of aggression cannot be excluded. Such an attack could find support in the aggressor state’s population as well as in other states impacted in a similar way, if the economy of the attacker state suffers from losing out in competition with the stateless enclave/cluster, and if other measures like tariffs, boycotts and sanctions remain ineffective. Beyond the rather challenging economic competition libertarian laissez-faire economies deliver to the remaining state-managed economies, they pose an uncomfortable ideological challenge or threat to the political class of the various states. One might indeed talk about a confrontation of incompatible political systems. This would have similarities to the confrontation of two irreconcilable political systems during the Cold war.
Indeed, projects like Honduras Prospera receive an ideologically very hostile reception in the established media of the Western democracies. Bias and misinformation, as well as defamation and vilification via terms like neo-colonialism is happening and can be expected to welcome all libertarian political challenges and projects. There is a serious risk that insipient projects like Prospera are defamed, bullied, attacked and indeed thwarted or blocked before they can deliver the proof of their superiority as prosperity engines. In fact the most recent government in Honduras - a left oriented party – did run its successful election campaign with fear mongering about the ZEDE process and with the promise to curb the ZEDE projects. Indeed, the ZEDE law was repealed “so that Honduras can recover its sovereignty”. The United Nations Office of the High Commission for Human Rights in Honduras applauded the cancellation of the zones. However, while no new zones will be permitted, existing ZEDE projects - there are there such projects - continue for now, albeit with the prospect of more supervision and a negotiated reigning in of their degree of autonomy. The investments made under the ZEDE framework are protected by international law and are subject to a treaty. Founder and CEO of Prospera, Erick Brimmen, has therefore launched a law suit against the Honduran government with a massive claim for damages. This experience, although yet unresolved, shows how embattled libertarian efforts are and can expect to be in the future. To be sure, a tiny aspiring start-up like Honduras Prospera cannot even begin to think of armed resistance or military defence if it eventually faces closure. However, this might become an option after such a zone has grown beyond one million people, claiming a right to self-determination and secession. Especially after a successful secession, perhaps a peaceful secession, residents and businesses in such a zone would most probably feel the need for some military protection to see their way of life and economic freedoms defended against potential external threats.
Therefore, while within a stateless world society there would be no wars and therefore no armies, during the transition period where stateless zones either operate within states or amongst armed states the enclave’s economic actors with their properties and operations would have to build up or contract some defence capacity to deter and defend against potential aggressor states.
How could the required military defence capability arising from such a vulnerability be financed via voluntary, private business exchanges? That a private for-profit army could be built up is no doubt. Moreover, we should expect such an army be much more efficient than any state army, just like private business is more efficient than services owned and managed by the state, especially if operated on a monopoly basis and financed by taxes. We should also expect the economic productivity that must everywhere underly military capabilities would be superior in laissez faire jurisdictions. One might expect that the defence agencies will often be branches, subsidiaries of the protection agencies discussed above, as there are obvious synergies in terms of relevant data, intelligence capacities etc. As with the internal protection agencies, one might expect the fee for defence cover to effectively be an insurance premium, as war damage compensation would be demanded and could be best supplied by such an agency. No such compensation is guaranteed by any state authorities, although some compensation might sometimes be given if seen to be politically effective.
Further, private delivery of defence via competing and potentially cooperating defence agencies has some significant specific efficiency advantages over state managed defence: Different industries and businesses, namely strategic industries and facilities will be at a higher risk of being a target in case of a military attack or war, so they would need to receive more defensive cover and pay more than other clients of the defence agency. The same applies to sites close to the border versus sites far from the border. Depending on the perceived risk of an attack, strategic industries and facilities as well as border sites will be burdened by these extra costs or higher defence contributions. These costs of defence will be feeding into the land costs of the affected sites (similar to the way flood risk and the attendant insurance premiums feeds into land costs in vulnerable coastal regions) and into the product/service prices of strategic industries and facilities (similar to the way production safety and anti-pollution measures feed into the prices of industrial products). The incentive of all industries and facilities to be efficiently defended, and cost-effectively so. The incentive of the defence agencies is to make and allocate the required defence investments (but not over-defend unnecessarily) to where they are most effective relative to the risk- and value-profile of their client base. Defence spending in such a society therefore will be highly tailored and continuously adapted to the risk of attack and the value of the defended assets. This is in stark contrast to state produced defence, where there is no economic appraisal, pricing and accounting method at all that would allow for rational economizing in defence. The state is here necessarily groping in the dark, with neither mechanism, nor with any real incentive, to rationally tailor defence spending to defence needs. Some states might be heavily overspending due to a heavily lobbying industrial-military complex, while others might be recklessly underfunding their defence capabilities, thereby exposing its citizens’ valuable assets to unreasonably high risks of destruction. That there is no rational process or criterion that guide current defence spending even of the most sophisticated states is shown by the arbitrariness of the US demand that NATO states must spend 2% of their GDP on defence. How this figure is arrived at is unclear, and that everybody should pay an equal percentage, irrespective of the different risks of each state to become a target, makes no rational sense, especially since in the case of independent states the risk of being attacked also largely depends on the state’s own behaviour, i.e. weather it acts provocatively vis a vis potential aggressors. This is a serious case of moral hazard, when allies are covered with a flat rate premium irrespective of their risk profile and behaviour. All these reflections show how irrational and non-economical state provided defence is, in comparison to the economic rationality of private defence.
However, there is a challenge against the private provision of defence that must be considered and answered. The argument proceeds from the idea that defence is an inherently ‘public good’. The concept of a public versus private good is a concept of mainstream economics engaged with so called market failures. The idea is that some goods, due to inherent characteristics, cannot be provided by markets because such goods are marked by non-excludability and non-rivalrousness. Such goods are termed ‘public goods’ because the assumption is that governments must step in to provide them because of market failure, i.e. because markets fail to provide them in insufficient quantity, or might even fail to provide them at all. A good is classified as non-excludable if it is impossible or very difficult and costly to exclude non-payers from its benefits. This then implies that everyone waits for others to pay for the service in order to then to free-ride on this provision. The result is that the good is not produced at all because everybody waits for everybody else, or in insufficient quantities because of the widespread free-riding that holds back resources for the goods production. The solution is then state provision via compulsory payment (as is e.g. the case with respect to financing state broadcasters like the BBC) or from taxes as is the case, among many other things, with streets, public spaces, policing, prisons, and defence. The second condition that leads to the classification of a good as public good, non-rivalrousness, means that a good can be enjoyed simultaneously by many or all people whereby, once the good is produced, its enjoyment by additional people engenders no additional costs. Again, broadcasting can serve as an example. Once a TV show has been produced and is being broadcast, its consumption is non-rivalrous because all can watch it simultaneously without infringing on each other consumption. The market is said to fail here because, even if non-payers could be excluded (for instance by means of encoding and the sale of decoders), this would be economically inefficient as possible costless utility would be wasted. Therefore, it is better to give away the service for free which in turn requires the state to provide it and finance it via taxes.
Defence, so the challenge goes, is a public good - marked by both non-excludability and non-rivalrousness - that can only be provided by the state and financed by taxes. While there are arguments that question the tenability of the public goods concept in general, this paper will only argue the case of defence, showing how it can indeed be expected to be provided privately, and efficiently.
Lets first tackle the question of non-excludability. The idea is that a military defence- and retaliation capability once provided would protect all people and properties equally within a given territory. This is obviously not true with investments in bunkers where non-payers could be excluded. Further, it is non-problematic to exclude non-paying properties from being covered by a threat of retaliation. Air defence as well as anti-missile shields can be focussed on some versus other locations. The same applies to ground troop deployments. To be sure, the grain of such differentiations will often be coarser than the grain of individual properties. Therefore some degree of positive spillover of protection to free-riding non-payers can probably not be avoided. But there should be no doubt that such residual positive externalities and spill-overs will prevent the provision of defence altogether or stunt it severely by starving it of its required resources. Positive spillovers are a ubiquitous phenomenon in economies: For example, when a high-profile popular brand sets up shop within a street, all land or property owners close by will gain a windfall. The inability of the investor to capture all the gains of his/her investment - he/she cannot charge for this spilled-over benefit - does not discourage the investment in such cases. Similarly, some level of spill-over can be tolerated without discouraging or undermining the feasibility of the defence provision. Similarly, US defence spending and its global policing operations are not being discouraged by the spill-over to free-rider states like Germany who’s economy lives off massive global exports and foreign direct investments but spends very little on defence and for most of the 20th Century refrained from participating in any military interventions. (This point is here just made for the sake of argument and should not imply that the intended benefits of US military interventions were actually delivered. The opposite is the case.)
The argument of the statist about the expected market failure with respect to private defence is an example of the so called ‘nirwana fallacy’ where any theoretical or observed imperfection in market processes becomes an argument for its rejection and substitution by means of state provision, while the imperfections and problems of state provision and the possibility of state failure are not considered as part of the argument. Sound argument must here always be comparative, comparing too empirical realities, instead of measuring against a theoretical ideal.
Here are some further realistic speculations about how a defence might be financed on a voluntary market basis that further shows the superiority of markets over states: For those citizens or businesses with the most extensive and most valuable fixed assets defence is most important and most valuable. These are the potential clients with the highest degree of lock-in with respect to their location. It is these businesses, and this might include large and wealthy residential condominiums, will be keen to allocate a certain part of their revenue for defence. These will be the first and most eager customers of defence agencies, thereby initiating a basic defence coverage within the libertarian territory, albeit as much as possible confined and tailored to their specific needs. Again, spill-over and free-riding cannot be altogether eliminated but this would not deter these customers. They would not want to remain exposed. They would rather want their assets to be insured and defended. On the other end of the spectrum of potential clients of the defence agencies we would find cosmopolitan, footloose knowledge-workers, without any fixed property, i.e. without any lock-in, who can easily move on at the first sign of looming trouble, without thereby bearing any serious loss. We can expect that such people will not voluntarily choose to buy or pay for defence services as it has hardly any value to them, and this is fair enough. In contrast the state forces all to contribute equally to defence costs via the indiscriminately applied tax burden irrespective of the highly differential benefit received through this defence expenditure.
Non-rivalrousness is the second supposed characteristic of defence with respect to which supposedly any attempt at private for-profit provision would lead to market failure. To recap, the general argument from non-rivalrousness proceeds as follows: A product or service is non-rivalrous, if consumption by one person does not prevent consumption by others. The market for a non-rivalrous good provided privately tends to be inefficient due to the mismatch between the marginal cost of providing the good (often very low once the good is produced) and the marginal benefit to society (potentially very high if everyone can consume it without additional cost). The ideal scenario economically is to provide the good freely to maximize welfare, but this isn't achievable in a private market scenario because firms cannot cover their costs this way. Therefore, the state is supposed to use part of its tax revenue to provide the good free of charge for consumers on the basis of taxation. The prima facie case for defence as non-rivalrous is that everybody living in a territory can simultaneously enjoy the provided military protection without thereby taking away anybody else’s protection. This would also imply that additional beneficiaries, additional people or properties to be protected would not impose any additional defence costs. This in turn would mean, that to exclude anybody from this non-rivalrous protection service would be inefficient. However, the claim that defence is non-rivalrous is just as questionable as the claim, discussed above, that defence is a non-excludable service. If a battalion of tanks is concentrating on defending one industrial estate, settlement or town it cannot simultaneously concentrate on defending another site. Also, it does matter how much property is there to be defended. A sparsely settled territory with very few potential targets is much easier to defend than a territory densely packed with potential targets, people and precious properties. Each new precious property that needs to be defended would add some further costs to the overall defence effort. This extra marginal cost becomes much more evident and undeniable when the service of defence is bundled with insurance against war damage. With respect to damage insurance the increase in costs would track the increase in benefit one to one. The demand for insurance would arise naturally and so would the bundling with defence. Indeed, insurance might be the primary or even sole product of protection agencies who would naturally make the commensurate investments in defence capabilities to manage the risk of insurance claims. That some aspects of defence cover might indeed be non-rivalrous, for instance when a defence agency chooses to set up a military bases defending strategic entry points into a larger territory in order to defend a subset of clients/properties in the territory, or the deterrence effect of a certain military defence capability intended to defend the paying clients. These benefits, once provided, would to some extent benefit all people and properties within a territory without adding additional costs. However, since these components and aspects of the defence provision are also those where exclusion is hard and won’t be achieved or attempted, the supposed inefficiency of denying costless protection benefits does not arise.
The conclusion of this discussion is therefore that the claim that a private market in defence must fail due to non-excludability and non-rivalrousness should be rejected as false, or inconclusive.
What is, in contrast, certain is that aggression will emanate from states, never from stateless clusters/networks of businesses, and neither from private defence/insurance agencies contracted to protect and insure (some or all of) the businesses operating within these clusters. In stark contrast to private defence agencies, state governments – the ruling political class – can shift all the costs of warfare onto their subjects via conscription, taxation and money printing. This isolation from the costs of their decisions lowers the inhibitory threshold for bellicose action. The incentives structures channelling the conduct of private defence agencies leads them in the opposite direction. These agencies would never ititiate warfare and the risk of retaliation against them or their clients. Quite the opposite, in any case of dispute with a state, or vis-a-vis another defence agency with a different client base, private defence agencies would always be economically motivated to resolve disputes through negotiation, arbitration, or other peaceful means.
Once the most advanced arenas and parts of world society have shaken off the paralysing shackles that modern state machineries had become and start to dominate global economic life the remaining states will have become moribund, anachronistic remnants of a violent past, destined to eventually disappear altogether. At this stage there will be no more wars, arms races and standing armies.
Might big, globally operating protection agencies, or coalitions of such agencies, get into armed conflict with each other over markets or over major disputes between their respective clients? This is not conceivable, because the protection agencies we can expect to compete in a stateless society do no longer maintain standing armies, and their security staff’s employment contracts do not include the duty to serve as soldiers in a war. Therefore, any agency’s plan to attack a competing agency would face immediate and severe internal resistance thwarting any such plan.
The protection agencies discussed above would often be multinational corporations operating across jurisdictional borders. Conflicts, on all scalar levels, will be settled via negotiated agreements or legal procedures, realizing the Kant/Habermas vision of perpetual peace in a law-based global order, albeit based on markets and discourses rather than nested levels of democracy.
Markets and Discourses: Politics after the Libertarian Revolution
Libertarianism seems to call for a society of private market exchanges with a diminished scope for politics, while libertarianism’s most radical expression, anarcho-capitalism, even implies, seemingly, that politics will disappears altogether. The slogan ‘Markets and Discourses’ challenges this aspiration for an ‘apolitical’ society and instead insists that political life, understood properly, will, for good reasons, very much intensify rather than vane after the libertarian revolution. This intensification is due to the proliferation of innovations and parallel options in all the ‘political’ areas of societal development like the introduction of cutting edge technology, employment relations, policing, environmentally sustainable energy provision, and the provision of law and forms of legal dispute resolution. There will be so much more to debate, evaluate and proselytize about. This should be good news for all of us libertarians who are passionate about politics and the common weal: the success of the libertarian political project does not imply that political discourse ceases and that we’ll have to retire from political life and thereafter care for our back gardens rather than for humanity’s world historical progress. This essay thus anticipates and paints a positive picture about a much needed and much energized political life after the libertarian revolution, a revolution that will have to be, to borrow a phrase from Leon Trotsky, a permanent revolution.
Thus, while current versions of anarcho-capitalism emphasize markets as the sole mechanism/institution to coordinate individual lives and to establish society, the concluding point of this essay is that modern society needs both markets and discourses, not just markets. This thesis is also supported by historical empirical evidence: The historical importance of science and theoretical discourses for the emergence and continuous advancement of modern capitalist societies. This reliance on globally shared and accessible discourses is ever increasing and bound to increase further into the future as the life of society increases in technological and organisational sophistication.
Discourses are not markets and operate rather differently. (The metaphor of a 'marketplace of ideas' does not imply that discourses are markets.) Discourses, unlike markets aim for consensus. Arguments are not a matter of mere personal preference but a matter of evidence-based theory. Propositions about economic best practice are operating with arguments based on evidence and logic. These are not questions of mere preference or choice.
This does not mean that economic actors cannot choose to make uninformed individual choices. This freedom is not in question. However, if actors want to claim that their choices are beneficial (for themselves or for society at large) they have to argue within discourses rather than exchanging in markets. These are very different types of interaction, each with its distinct rules of engagement and criteria of success.
Many market participants never bother to join discourses. However, this is rather limiting and potentially self-injuring. Many products and services are too complex and obscure in their effectiveness to allow for fail-safe intuitive choices. That is why discourses, including scientific discourses, are often required to establish their functioning or lack of functioning, the possibilities and conditions of their beneficial or detrimental effects.
There is a crucial social difference between market exchanges and discursive 'exchanges'. The former are expected to be legitimately self-interested. The latter are meant to be serving the common interest in truth/knowledge. In the terms of Juergen Habermas’ fundamental distinction of action types, they are 'communicative' rather than 'instrumental' or ‘strategic’ (inter)actions.
Again, the concluding thesis of this essay maintains that the future libertarian society cannot be a society of pure market exchanges but must be a society that is constituted via both markets and discourses. However, with a view to a free society it is important to note that both markets and discourses are wholly voluntary, open, repression-free, non-coercive institutions. A society based on markets and discourses as mechanisms of societal integration is an inherently free society. To distinguish this theory from current versions of anarcho-capitalism, this treatise puts forward and promotes the term ‘discourse-led capitalism’, or abbreviated ‘discourse-capitalism’, to emphasize the increasing importance of discourses for contemporary society with its increasingly sophisticated economic life. The conditions of the unconstrained, rational, productive flourishing of market processes are distinct from the conditions of the unconstrained, rational, productive flourishing of discourses. In fact, discourses are crucial to steer the institutional development of market processes, while well-functioning special markets are required to materially underpin and reproduce the flourishing of discourses without distortions or special interest capture.
Thus the future progress of human civilisation within a stateless world society will be ordered via markets and steered via discourses.
End.