First of all that I was a fan of Mises, so in below argument I always tend to support the free market argument. However, a friend of mine told me that, if we reduce the government to a very small institution (or completely), how do business operates in Energy Industry?
For example: If there are an US oil company that wants to do an exploitation in one of, let’s say, Iraq’s soil, how would the Iraq benefited from its exploitation done by the US oil company? Originally, the oil company have to pay tax and some kind of royalty (Which I disagree with). But if we take out government of the equation, what kind of system that will work in both parties, the oil company AND the Iraqi people? Or is it just the US oil company taking all Iraq’s oil?
Please help me on this, I have trouble for answering my friend’s question!
It would occur similarly to how it happens now. A firm would contact the property owner in Iraq, and negotiate a lease (presumably) to retrieve oil. Or someone in Iraq would add the machinery to the land he owns, and he would pump the oil and sell it to the American firm.
There is NOTHING the government does, that cannot be done by the people EXCEPT steal and murder on a mass scale. That is the only thing the government can do which private individuals cannot.
So any argument for government seems to me, to be trying to create complication where none is required.
Hope this helps you.
How will the shoe market survive? Or how will any [insert name here] corporation survive? Your friend is arguing on the premise that government is somehow necessary for cardio vascular functioning.
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Is this US oil corporation dealing with the Iraqi government? Or has it been abolished.
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If it is dealing with the government, then governments already deal with multi-national corporations so there is nothing really tricky about striking a deal.
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If the oil company is dealing without a government, the the company can naturally bargin with the landowners of the area they want to explore in an effort to compensate them for allowing them to explore or can buy the property from the land owners.
Sounding like a broken record, the government does not “need” to be involved in these actions.
If there is a tax on the firm from Iraq (they have a government and the firm’s home base is an anarchist society) then the firm pays the tax and moves on with it’s business in accordance with the law in Iraq.
If there is no government in Iraq either, then the firm deals directly with the owner of the property the firm wishes to use to extract oil, and then goes on with the business intended.
Wow, thanks for the answers liberty student, Anarchist Cain, Harry Felker..!
So government is not required after all, eh? But what if the corporation uses coercion to take the landowner’s oil (Or at least making a win-lose deal)? Is some kind of government required, or the landowner need another company to protect the landowner’s oil?
Most property theft and violence is commited by government.
It’s unlikely the corporation would use coercion, because it would be expensive, and no one would want to insure a company that starts violence. But even if they did, it is likely the landowner would either negotiate before it came to violence, or hire someone to defend his property if he can not strike a deal he can live with.
If you live in the United States the coercive power of government (especially regarding property rights) is not only obvious, but is always a lose-lose deal…
This enters into the what if area, and there are too many factors, the land owner can hire a company to protect his interests, or he could be an old man with a plattoon of adult male decendants (traditional muslims do not allow women to fight) to defend his property…
Thanks both of you!
I agree that it would be expensive, but what if the corporation thinks that the profit will cover the expenses? with the assumption of the landowner do not have the resources to hire someone to protect his property and do not have a platoon of adult males?
My apology if I use ‘what if’ too much. IMHO the ‘what if’ approach lets us to view a problem with different scenarios of outcome:
- What if both parties do not meet their win-win solution? Will they go to arbitration? If so, what kind of arbitration?
- What if the landowner is disadvantaged (with the assumption that I explain in the 1st paragraph)?
- What if both parties want to go to court? Whose court? Government’s?
From what I know, that’s what contracts (Which I believe it will play a crucial role in a free society) is based upon, a lot of ‘what if’: What if someone does not meet expectation? What if the equipment breaks? Etc..
Thank you, and I hope that you guys don’t get tired from all the newbies questions! 
it is good form to ask questions on which you need help, but also include your best attempts at answering them yourself, acknowledging perhaps that you arent satisfied with some parts of your own answers. This will help people help you, and help you help yourself. rugged individualism and all that.
This is assuming a contract is in place?
If a contract is in place then arbitration may be necessary if one or the other wants out of it, neutral third party arbitration, of course, is the best option…
Then the landowner will have to strike a deal or not, knowing that the resource is useless without the help of some company…
What are the circumstances of this, does the land owner feel slighted? the company? The court that should handle this should be on the part of the slighted party, if they cannot decide who is slighted that should go to arbitration…
So it seems that arbitration is the free market’s way to solve disputes? That makes sense.. So maybe we don’t even need government courts in the first place!
Thank you so much guys for the answers, I think I had a better preparation for debating my friend now..
This is another approach, but in a free market, contracts define all terms of interaction. Contracts are voluntary, and thus, we will have a lot of voluntary associations, and always looking for more. Under these sorts of conditions, it is likely that my insurer, directly or indirectly (degrees of separation) may already have normalized contractual relations with the person I am doing business with, or who is being aggressive with me, or whatever. Or their insurance firm. Or the insurance firm of their landlord.
The government limits a lot of opportunities for relationships, internationally, domestically, sexually, commercially, etc. They have to maintain their monopoly, and the way they do it is to serve special interests who prop up their power. Typically special interests lobby to stop free relationships from happening because limiting relationships increases their social or commercial power.
In a free market, the only limit on relationships would be that they must be voluntary, so right off the bat, theoretically, you can have no aggressive or exploitative relationships institutionalized. But there will be LOTS of relationships defined by contract. I’m guessing way more than we have now.
I hope that last part makes sense. I can clarify if it does not.
@liberty students:
I fully agree that government does limit opportunities.. and not only that, they never innovate to improve things.. (wait, but what about the internet, is it really the Department of Defense who really created it?)..
Your argument make a lot of sense, thank you But I will gladly hear it if you want to explain in more detail..
I have some other questions to ask, but because it is unrelated to this particular topic, maybe I should start another thread..
If you have a few minutes to read…