Monopoly as the Linchpin to the Libertarian Case

Economics Political Theory
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Occam’s Razor provides that the simplest solution to a problem should be adopted unless there is compelling reason for additional complexity. Corollary to the Razor is that a case should be made in the simplest terms possible, barring a compelling reason to complicate it.

Thinking about what constitutes the case for libertarianism, I’ve noticed (and noted elsewhere) that posters here and many of the linked articles eventually end up talking about monopoly. Although it’s often mentioned only in passing, it seems to me most central to the argument.

After all, the state is simply a monopoly on certain services, enforced by the legitimacy the people grant it by believing in it and trusting it. If we can demonstrate that enforced monopolies are always worse than free market competition, no matter what the service, we have won the argument to end them all. The answer is undeniable, and no one - no matter their political agenda - can truly remain certain that the state monopoly should exist.

Now people already believe that monopolies in business are bad, so they understand the principle: you don’t want one provider or else there is no competition to keep them in line. From there it’s just a hop, skip, and a jump to anarcho-capitalism.

If monopoly is the linchpin to the argument, it seems prudent to anticipate and rebut as strongly as possible every conceivable objection to the elimination of an enforced monopoly. Here are some objections:

  • “Monopoly is required to ensure consistency, so everyone knows what they’re getting and is treated equally (security, public order)”

  • “Defense must be a monopoly in order to maximize the country’s defense resources and ensure no internal disputes when threatened from abroad.”

  • “Blah blah blah…market failure.”

Any others? Remember, from the perspective of the average person who knows nothing of Austrian economics or libertarianism.

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I agree. Another term for anarchy is simply “a society without monopoly.”

I would further argue that the root of government is not just monopoly, but in particular the monopoly on courts and police. Only when the government has this monopoly can it establish other monopolies, e.g. on education, money, roads, etc. (Stranger makes the same argument here.)

To see why this is true, just imagine if someone without a monopoly on courts and police tried to establish a monopoly on, say, money. As soon as they tried to prohibit competing currencies, they would immediately be recognized as a criminal and be taken to court, where they would have to pay restitution or be ostracized from society. Their monopolization project would be over as soon as it began. Thus, without a monopoly on courts and police, it is impossible to establish any further monopolies.

As Hoppe writes: Our “ultimate goal… is the demonopolization of protection and justice. Protection, security, defense, law, order, and arbitration in conflicts can and must be supplied competitively”. Hence, “the root of all evil is compulsory monopolization of justice”.

I like to look at it this way:

The fatal flaw in minarchism is that it contains within itself the seed of Leviathan. Because the government maintains a monopoly on courts and police (the root), it retains the power to establish all of the secondary monopolies (the branches). And motivated by self-interest, the government has the incentive to do so. Hence, the idea of a “limited government” is truly chimerical.

Roderick Long talks about this in his “Market Anarchism as Constitutionalism.” He argues that “the market creates uniformity when customers need it, and diversity when they need that instead.” For example, there are no triangular credit cards.

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This is exactly how I always explain it to Republicans. I say, “Would you like a state monopoly on food, medicine, housing, and communication?” Of course the answer is no. Then I say, “Then why support one for law, courts, and police…or money or transportation?” Whatever argument they then raise, I instantly apply to the first group.

For instance, “If the state didn’t provide police, there would be no police!” I retort, “Well, the state doesn’t provide food. How do we have food?” This line of reasoning basically breaks down to “well its different for police”. Why? And down the rabbit hole we go.

“without the state to prevent the breakdown of law and order, criminals would attempt to use violence to enslave and rob people.” I retort that when you remove the pre-existing labels that already connotate morality, the same statement becomes an absurdity - “without some people using violence to prevent others from stopping them, some people would attempt to use violence to prevent others from stopping them.” The state is literally a means to prevent its own ends - a complete contradiction.

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Nice! I mentioned this to my neocon friend who is super into politics and history, and he said, “A society without a single (monopoly) defense provider would be ripe for conquer by a belligerent state military force. Also, when you’re talking about competition in other areas that is fine, but the nature of competition in defense is warlordism. Not price wars, but real armed conflict. You can’t compare a free market in goods and (non-violent) services to a ‘free market’ in violence. In the end, he who has the guns makes the rules.”

Stuck again[:S]

I’m going to read that article right now, but superficially I can see a possible objection to that. There is no great incentive to have triangular credit cards, but there is great incentive for some groups to have different laws applied to them (and everyone they interact with).

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I often find the argument against monopoly the most effective for persuading statists, especially if it’s the first you ever raise. It works best when you draw it out by giving an example of a good normally produced by the free market and ask them rhetorically what would happen to the quality and price of the product produced if the producer was a monopolist insulated from competition, and then ask why there needs to be a sole producer of security (which technically isn’t correct, but is generally understood as the core role of gov). This is effective because it directs the audience toward critically thinking about cause and effect relationships instead of what they believe to be true. As soon as you ask them why the organization producing security needs to exclude it’s competitors, you will usually get a ‘deer caught in the headlight’ look, and they don’t know how to answer. So I certainly think that this is the simplest, easiest, and most effective argument for Libertarianism.

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This is precisely the tack Molinari takes in “The Production of Security.” And that’s what makes the article so powerful and compelling.

Right. In the Hoppe article I cited above, he seems to use the terms “protection,” “security,” and “defense” to refer to, broadly, the realm of security (police); and the terms “law and order,” “arbitration,” and “justice” to refer to, broadly, the realm of justice (courts). He says that “a monopoly of protection is the root of all evil,” but also that “the root of all evil is compulsory monopolization of justice”. Clearly, he regards these terms as interchangeable.

Now, justice and security are not, strictly speaking, the essence of the State. The State does not have a monopoly on either of these industries. There are private arbitrators, private conflict mediators, private laws and customs, all of which can be labeled “justice.” Likewise, there are private bodyguards, security companies, burglar alarms, all of which can be labeled “security.”

Weber’s definition of the State as “a monopoly on the legitimate use of violence” is also lacking. People use violence in self-defense, fighting sports, etc. and the State recognizes this as legitimate. (I suppose Weber’s definition could be correct if we changed it to “initiatory violence.”)

I think the definition that best captures the fundamental essence of the State is: the State is a territorial monopolist of ultimate jurisdiction. So even though there is some private justice, the State can ultimately overrule it; and even though there is some private security, the State can ultimately overpower it. The State is the ultimate decisionmaker in a given territory.

Final thoughts:

  • Is justice more fundamental than security, or vice versa? Or are they inextricably linked?
  • John Hasnas, in “Reflections on the Minimal State,” argues that “it is a misnomer to refer to a state that is limited to the monopolistic provision of rule-making, adjudicative, and enforcement services as the minimal state” and that “we need to revise our basic definition of the state.” What does he prove?
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Regarding the bolded sections, I think we should ask the very basic question of what would happen if, say, an insurance company somehow did gain a monopoly on justice and security and decided to take on Statehood by forcing everyone to use its services. It needn’t necessarily ban other small-time security and adjudication providers: it is no longer competing for profits, so it no longer has that reason to eliminate competitors. It gets paid either way, through taxes.

The nature of a monopoly in, for instance, energy would be to have 100% market share - because having only 99% market share would be less profitable. But in security and adjudication, a monopolist no longer needs to have 100%, because there is not necessarily any additional profit in it (because it doesn’t have to earn, it can now just take). It only needs to be a monopolist of ultimate jurisdiction to bring about its desired ends.

In other words, the practical nature of a monopoly on justice and security may well be to exercise its power only as the ultimate decider. For whatever reasons, it’s apparently more efficient or practical this way. So although “monopoly on security and justice” does not technically equal “TMUJ,” they are the same in practice. Or put another way, in what sense can we say that a group is not “monopolizing security and justice” if they are the ultimate authorities and enforcers, and they get paid either way? Still another way to look at it is, “monopoly” only has meaning in a market setting, but once security and justice are monopolized, the market for those services ceases to be a market at all, so “monopoly” doesn’t have the same meaning anymore: technically it’s now a TMUJ.

Semantics tend to obscure things, so I think it’s important to retain the simpler and more elucidating “monopoly” view, even while acknowledging the State as a TMUJ when complete technical rigor is required. As in, "We want to avoid a monopoly on security and adjudication because such a monopoly would become a TMUJ. "

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The defense argument is the one that keeps me from believing anarcho-capitalism is the way to go. I see a fundamental difference in the way goods and asset markets work and the way security, rule of law and national defense works.

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a difference that you cant describe or explain to anyone. let alone yourself.

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Can you provide some justification for why the production of security, rule of law, ect. are differerent from the production of other goods and services, and how these markets ‘work’ differently?

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I’ve tried, but it’s difficult to point to without an anarchistic region to look at. I just know that the self optimizing forces that run markets are not the set of incentives that govern force. The police don’t exist to help you out. They exist to punish people who break the laws. This is the same concept with armies. They exist to punish not reward. Also, profit and loss are not the metrics of success with force, so you can’t really compare the success of a corporation with the success of the military.

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I think, as well, the semantics are confusing with regard to this issue. Personally, when making the argument, I prefer to go with the crude approximation ‘monopoly on security’ because it avoids confusion. Technically, ‘monopoly on arbitration’ is the defining characteristic of the state. Even if they let private individuals choose their own arbitration in some or most cases, so long as they have the power to step in and overturn the decisions, they have a monopoly. In such a case they are just provisionally granting some of the state’s ‘agency’ to private individuals.

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Because when I buy a house, I need to know that what I’m buying is going to be protected by force. I shouldn’t have to pay for individual protection. It should be supplied to me and everyone else in order for myself and everyone else to feel confident that if I buy that house or if they buy their house, it’s not going to be taken from me leaving me with no recourse and that the same goes for others.

Now you guys say you’ll have courts. But there will be no way to enforce the decisions of those courts. So they’ll hand out rulings and then nothing will happen. I mean…if I don’t like one ruling, I just go somewhere else until someone agrees with me. And precedent goes right out the window because every single court can just make up their own. I mean…this is one of myriad problems I’ve not seen adequately addressed by anarchists.

So basically, by getting rid of your monopoly on force, you also get rid of the promise of protection of private property. Because property isn’t property if you can’t protect it.

Perhaps I’m not personally qualified to discuss this because it is such an emotional issue for me so my mind gets compromised by my emotion, but I know for a fact that I will NEVER EVER EVER advocated total anarchy the way you guys do. There needs to be centralized force for me to be on board.

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Ok, well, the power to arbitrate comes from the understanding that the decisions reached by the arbiter will be honored by force. If courts can no longer assure that their rulings will be honored, no one will honor the courts anymore.

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You already are paying for it: taxes. The question is, would you like that protection service to be operated by an enforced monopoly or free competition?

If you’re emotional and you suspect your mind is compromised on an issue, that’s about the best warning your mind can possibly give you that you would benefit from a thoughtful and open-minded reconsideration of your views in that area.

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Maybe you should stop thinking in terms of geographic regions and start looking at the internal structure of certain organizations, such as states themselves. There are your empirical examples of anarchy at work. After all, politicians don’t go around murdering, robbing, raping, and maiming each other, and surprise surprise, there’s no supra-government above them to prevent them from doing so.

Of course not. What do they exist for?

Nope. They exist to enforce the state’s policies. It’s right in the name.

Once again, right in the name.

How do you know? Do you have a theory of how a military works? Or markets?

We do. Under free market conditions, profits and losses are measures of an entrepreneur’s success or failure at satisfying consumers. Now armies can be private. In the past there are many examples of this. The captain of an army can engage in campaigns, pay his soldiers and take plunder. He can have profits and losses, just as a private entrepreneur. With contemporary public ownership of armies, the costs are spread over the public, and monetary rewards for military campaigns cannot be reaped directly. However, it is still possible for politicians and special interest groups to gain form war in the form of kick-backs, lucrative contracts and causing a shift in the supply of certain commodities, or also from better public opinion, reputation and so on. I just don’t see how the causal forces governing human action are different in the market than in the military.

In the market, when two parties make an voluntary exchange, both benefit in the ex ante sense. Otherwise they wouldn’t make the exchange.

Under conditions of force, when two parties make an exchange, the forceful party benefits, and the forced party is made worse off. Otherwise force would not be used or required, respectively.

That’s the difference between the incentives that run markets and that govern force.

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As per usual, this discussion has ignited my emotional fuses, gonna take a break and get something to eat and probably nap…lol…I’ll be back later.

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I will just say that you guys are very good at criticizing something that keeps you safe enough to chat on your computers and complain about how unfair the whole system is. Meanwhile, not a one of you has made any attempt to try out your own little system. You want everyone to just agree with you and make a shift that they don’t think is in their interest.

If you want me to agree with you, you need to explain to me why this current system doesn’t work for me. Because I think it does. And if it doesn’t work for you…I don’t really care. What I care about is me. I’m perfectly content with having a centralized system of force. Until I’m not, I’ll never agree with you guys. I honestly don’t think anyone else will either. This is why there are no anarchist regions: no one really wants them.

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And how are police actions therefore not helpful?

Punish for the rewarding of whom?

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I’m perplexed. Obviously, you can’t be refering to the State. The systematic thieves and murderers don’t do much work keeping me safe. However, neither I nor anyone else here has ever criticized our firearms. You sir are an enigma.

There’s a funny thing about people who try to create a system that rejects taxation and statism. The people who collect taxes tend to throw them in jail. See Schiff, Irwin. So with people like you likely to throw me in jail for practicing my beliefs I am in fact less likely to try them out. Shocker.

What is this really saying? Read: I don’t really care about the murder, theft and pillaging of the American Empire. Read: I don’t really care about those unjustly imprisoned in the totalitarian drug war. Read: I don’t really care about the murder of thousands who don’t look like me.

Unless of course it happens to stop “working” (whatever that means)

If you don’t care about murder, theft and coercion and you admit the State is that when you call it “a centralized system of force” then what can we really argue morally? Nothing really. If you don’t believe it’s in your self-interest to end a coercive tumor on society grounded in murder and theft than there aren’t any arguments on that front. If you like your chains, if you like exploitation and theft, if you like evil and you believe that this evil somehow “works for” you then what else can I say?