Because they both show how practicing anti-statism is a collective action problem: rational self-interest prevents a market solution.
Hi Neoclassical,
Would you mind responding to my point?
Why would you want me to read about that?
What is a collective action problem? Is it anything that can’t be achieved successfully by one person acting alone?
I have read the article and it shows a market solution to the problem. Entrepreneurs developed a novel way to organize the “firm” (if you want to call it that) via contract to facilitate mutiny.
edit: By the way, rational self-interest is not the issue in this case. The issue is that sailors were unable to gather enough information to actually determine what was in their rational self-interest. It’s a problem of imperfect information.
Is that the answer to my question? (I am asking that because it seems like it is, but it is logged as a reply to somebody else.)
Where, if any one person could control everybody else for the time it takes to do the action, and then lose control of them right when the action ends, the result would be better for everybody involved than if they all just controlled themselves.
The fact that cartels are good for everybody involved, but that they are unstable because the individual incentive always is to cheat on the cartel, is a good example of a collective action problem, albeit a pretty good problem to have in my opinion.
I. Ryan, yes, it is. From an anarcho-capitalist perspective, I believe Lichbach’s book is packed with valuable insights about why we are still waiting for an outbreak of libertarian action; if you just want a quick sketch about why I think private defenses haven’t risen against State hegemony, then I think Leeson’s article is sufficient.
Grayson Lilburne, I believe that if Adam Smith’s invisible hand (rational self-interest leading to socially optimal consequences) is prevented by individual self-interest itself, then there is market failure.
That is, there are several collective action problems (Leeson has investigated two) that prevent individual decision-makers from forming a market for defense against government coercion; as of right now, it is in our self-interest (individually) to not form private defense agencies in a counter-economic fashion.
I see Lilburne’s point about the creation of a State not arising from market activities (people coming together for productive purposes), and the point that someone else made about “market failure” not being merely the failure of the market to perfectly solve every problem that is thrown at it, but rather “market failure” being a negative/destructive consequence of market functioning itself.
However, there may be an example of market failure in the market’s facilitation of the growth of government. The market’s blessing of increasing living standards allows society to shoulder an increasingly larger Leviathan, and anesthetizes people to the need to end government and its programs.
(Vichy reminded me of a similar but less related point made by Hoppe–that liberal states pose more of an external threat, because the liberal domestic policies create more wealth for the State to loot.)
The second point was mine, too. Hey man don’t deprive me of my “point” points! 
Oops, sorry! Also, I have no idea why on earth the “I” in my last post links to an LRC article. LOL!
Oh, and to contradict myself a little bit, the other point I wanted to make was that ultimately, as the market takes humans farther and farther away from mere subsistence, and frees up more time for individuals to educate themselves, people might come to understand how stupid government is and withdraw their support from it, meaning that the market’s facilitation of the growth of government may only be a “temporary/eventually-self-correcting” instance of “market failure.”
Creating a government that will achieve ends X, Y and Z is a public goods problem so, yes, it can be called a “market failure” if it is supposed that markets ought to produce ends X, Y and Z but do not.
Someone commented that government is the result of a failure of people to realize the importance of freedom until it is too late. I disagree with these sort of theories because if we applied the same reasoning to other areas of human endeavor, we would have to conclude that markets simply don’t exist. Governments exist because people want them to. Understanding why people would want to be coercively expropriated by a government is another problem altogether.
Clayton -
Keep in mind that there can be no objective standard for “social optimality”. People do plenty of things that they wouldn’t do if they were following a pure profit-maximizing strategy. Charitable giving is just one well-known example. It stands to reason, then, that people do things that involve materialistic sacrifices because they derive non-materialistic benefits that they consider to be greater (i.e. “worth it”). Sometimes the latter can involve concepts of duty, honor, patriotism, etc. To put it another way: if people believe that obeying the government is “the right thing to do”, they will at least tend to do so.
With that said, how can the existence and/or growth of government constitute a market failure when the vast majority of market actors believe in government?
My point is that market forces may be a major contributory factor in why people continue to believe in government.
Can you explain how that could be the case? Or did you already do so earlier in this thread?
This question is a bit of a riddle. It helps if you define every term. Let’s say market is the voluntary exchange between individuals, and failure is the failed attempt at doing what you wanted to do. So any group of engaged individuals (more than one) that have ever failed at doing something they mutually wanted to do, by voluntary means, can be interpreted as market failure. But let’s be more specific and say it needs to be a large number of people, or even a majority of people in any arbitrary, but relatively isolated market block.
Okay, is the “existance of government” one such thing? Well, first of wall, for it to be true, you’d have to be assuming people did not want a government, and I wouldn’t be so sure of that. Surely market-anarchists don’t, but the vast majority of people, while reluctant and conforming, don’t seem to care that much. So it can’t be said to be a failure.
Two, it can’t be said to be voluntary; it wasn’t something people mutually agreed on establishing. It’s just the way it’s “always” been. People are coerced into paying taxes and following laws, so it’s not like a malinvestment on their part, they just prefered respecting it than going to jail or being fined.
So I think the question is loaded and the correct answer is: it is as much of an example of market failure as me punching you in the eye. Not something that’s come out of voluntary interactions, nor something that is undebatably undersirable for most.
A more concise and answearable question would be, do market anarchists fail for not being able to defend themselves against the state? Which the answer would be yes, but I don’t see any implication coming from that other than statists are real pricks and outnumber anarchists by a lot… for now.