The Development of the Theory of Monopoly Price: From Carl Menger to Vernon Mund (pdf) by Joseph T. Salerno, September 2003
Fear of Monopoly by Brad Edmonds, March 2001
What’s Wrong with Monopoly (the game)? by Benjamin Powell, February 2004
The Question of the Cable Monopoly by D.W. MacKenzie, August 2003
The Development of the Theory of Monopoly Price: From Carl Menger to Vernon Mund (pdf) by Joseph T. Salerno, September 2003
Monopoly and Competition in Money (pdf) by James Rolph Edwards, 1980
The Political Economy of Monopoly (pdf) by Fritz Machlup, 1952
The Myth of Natural Monopoly by Thomas J. DiLorenzo, May 2011)
, how is than state - a legal monopoly of force in given geographical area, gonna form again in a voluntary, free society and free markets? And how is it desirable?
I predict it would form because of the free rider problem associated with military protection. If I pay for military protection, I also want my neighbor to pay his “fair share” since he is receiving the same protection. Therefore, a central authority must exist to make him pay for this service he otherwise has no incentive to pay.
In ‘easy-movement’ scenarios, this objection is basically null and void.
Suppose that we’re talking a seastead or a spacestead, two scenarios in which movement costs are cheap to the point of near non-existence compared to the cost of moving a domicile on land.
When moving a domicile under easy-movement conditions, it would be a simple thing to band together all the people willing to pay for military protection and exclude those unwilling, resulting in a purge of free-riders, effectively removing their free-rider status entirely. Might as well rename them: open game.
Even if easy-movement weren’t a consideration there are other ways to deal with the free-rider problem that do not require a central authority in the form of ad hoc association and agreement, which could also be implemented on land-based society. This can be done through mutual agreement ahead of time. So, if A wants to move to X city, he must agree up-front to pay for defense-related fees if a condition of war or emergency, or w/e, is declared. This is a rule that everyone in X city agrees to as a condition of buying property or renting there. If they don’t like it, they can leave or move their property. And failure to live up to it would mean something like excommunication from the soceity as a promise breaker, should the society survive the attack.
David Friedman goes over a few structural ways to minimize free riders as well, in the way of agreements which trigger only if a suitably large proportion of the residents agree to abide by the agreement. Thus, you could have people enter into an agreement to donate say $N a month for defense of the city until the danger passes or w/e, but that first payment only kicks in if 90% or 100% (or w/e) of the city agrees to it, at which point they’ll have enough funding to buy mercenaries for defense.
The major problem there is when dangers have become so long-standing that the mercenaries turned on their patrons, often for non-payment, and force entered the picture in that way. But this is a problem that singular city-states of the past faced and if you had allied city-states it would likely be less a problem, for the other allies could come to your rescue with their security forces, etc.
The final downfall of Roman (Byzantium) was through non-payment of the Crusader mercenaries whom first handed power to one prince then sacked the city when they didn’t get paid. And previous to that they’d had a lot of trouble trying to reign in the Venetian sailors after first giving them free-trade status for hundreds of years, making them wealthy, then trying to take it back
It’s desireable because it serves the only function which monopoly is good for: war. If a territory’s entire system of nat’l defense consisted of a handful or perhaps a plethora of self-defense companies, it would be difficult for them to coordinate with each other in times of war. That is assuming that they would even have incentive to coordinate with each other; a state could pay off a company to not fight for the territory. This is not possible with a state military because that military bears sole responsibility for the national territory. Also states invest in weaponry in times of peace - either for preparedness or for imperialism, but it’s all the same. In order that a defense company invested, during peacetime in tanks, airplanes, and submarines it would have to be bizarrely rich and totally disconnected from consumer wants. Those two do not often go together. Consumer satisfaction does not demand airplanes to investigate a home invasion. A company doing that would be basically wasting its money: investing on something which serves no peacetime purpose. Of course companies might start investing in war weapons while war occurs, but would it not then be too late? A coordinated state-military may very well have invaded and asserted its control already, having had total air dominance. War requires a centralized coordination of strategy and resources, so that none of its components can be bribed off, so that cooperation is maximal, so that information and decision-making is fast, and most importantly so that weaponry can unprofitably be acquired before it is needed.
As a minarchist, I dont think the government should have a legal monopoly on force. I.e. I dont think anyone should be allowed to initiate force, and the minarchist government should only intervene(assist the victims of the initiation of force, in their self-defence) when someone initiates force.
Right, I am familiar with this point which is something different from my main point - when once removed monopoly will not form for any significant time in a free market.
Now regarding free-rider problem, I don’t understand quite how is it a problem. Secondly this kind of thinking is somehow territoriality based, which wouldn’t be important in free-market system, right? Agencies wouldn’t protect territory, rather they would protect people and property.
Anenome - has a point also and has it explained very nicely.
I don’t see how is war a reason for having a state, or how does it make desirable. Isn’t absence of war a desirable condition? Don’t we have permanent war nowadays, with a state, especially you in US!? I guess we all know how unprofitable wars are anyways, right? I mean today costs a highly dispersed and profits even more highly concentrated, in a free markets it wouldn’t be so.
Anyways in order not to depart from my main point, If you are interested in nice, concise answers to this objection of yours I would recommend: http://board.freedomainradio.com/blogs/freedomain/archive/2008/11/14/practical-anarchy-the-book.aspx or a forum where solutions are discussed in detail - http://board.freedomainradio.com/forums/242.aspx
Well I think Johnny Doe here is on to something important. My I ask you how is minarchist state not still a monopoly of force, violence!?
I mean, this is main reason for me to be against any kind of state, it is in it’s essence a monopoly of violence, isn’t it? I mean this is not me speaking, it is rather widely excepted definition of state, and precise on if you ask me
Well, that’s a problem then, because the government by virtue of existing stands as a continual aggression against the citizens it rules. Can you, under a government, start a competing jurisdiction over your land and any who join with you? Or will they simply arrest you and impose upon you–they will. Can you demand that the government defend itself in a lawsuit with you in a truly independent court, or does the government demand that any and all suits involving it be decided in its own courts? It does. Thus, it is continual aggression.
The gov stands as continual aggression against the citizens it farms. Will it protect us against itself? It cannot.
Of course war is terrible and undesireable. But that doesn’t mean that we as people don’t have to deal with it. Sometimes people just invade. Like Americans, Russians, Brits, etc. You’re acting as though, if it were up to me, I’d be a warmonger minarchist. I wouldn’t. I’m just making the point that minarchy provides for nat’l defense in a way that anarchism can not.
Think on this: if anarchism is such a good answer to statism, does that not make it enemy #1 of all states which seek to preserve their legitimacy?
It’s nice, but ultimately a desperate and unsuccessful attempt. The author clearly acknowledges the crux of the issue in the beginning of the article: Volungrazia would be to the nation-states as France was to the Monarchies and as Communist Russia was to the nation-states: a fledgling territory whose success would sap the legitimacy from the foundations of the governing paradigms, thus a gigantic bullseye. He goes on then, after admitting that volunteer efforts aren’t always reliable, to assume the volunteeristic spirit of the people of Volungrazia, law agencies in particular!
But if it is true that Volungrazia is public enemy #1 of the democratic peoples of Earth, why ought we to assume that the executives of law agencies will be educated, strong of character and pure of heart? States and their business extensions already control the wealth of the world. Is it unreasonable to assume that said extensions will not try to graft themselves onto the legal structures of Volungrazia? They would have no reason not to.
As Napoleonic France and Trotsky-Leninist Russia had the means to impose enormous costs, absolute law (or something like it) and raise a standing army with officiality, Volungrazia has nonesuch options. It relies on the good-heartedness, devotion to statelessness and foresight not only of the common stateless man but also the stateless business elite! And as stateless societies will have no sort of economic protectionism that might incentivize businesses to take on a nationalistic character, why should the stateless business elite have any allegiance to Volungrazia, when states will doubtless offer them a cozy package for their cooperation?
It’s Vietnam all over again. Except with 1st worlders living in a developed division of labor, with no global allies to think of, and bullseye of any state and its military which seeks to preserve itself.
In order that a defense company invested, during peacetime in tanks, airplanes, and submarines it would have to be bizarrely rich and totally disconnected from consumer wants. Those two do not often go together. Consumer satisfaction does not demand airplanes to investigate a home invasion. A company doing that would be basically wasting its money: investing on something which serves no peacetime purpose.
I own guns in peacetime because they serve a purpose in my eyes. They provide security. They make a home invasion or an attack on the street more survivable. I will patronize a defense company that has tanks and jets before I will patronize a company that does not have the best weaponry around.
This is doubly true for those who live in Key West or Alaska where they are much closer to likely invasion points.
And what happens if there is a dispute between defense companies with wildly different capabilities? The company that only has small arms will not be able to compete favorably with the company that has armored cars. The company that only has armored cars cannot compete with the company that has tanks. The company that only has tanks cannot compete with the company that has attack helicopters. And so on. The market will dictate that defense companies compete on both price and capability. We cannot possibly know ahead of time where that balance lies.
An no, I am not assuming war will always rage, but occasional conflicts will arise, as they do today.
But it doesn’t until it does. You don’t need such things during peacetime. Fighter planes, missile defense technology and weapons research are all wildly expensive. Would you really expect someone, faced with the two peacetime options of paying a subscription to cops and paying a subscription to cops, weapons researchers, fighter pilot producers and pilots, to pay for the latter? And why should they when maybe some rich person will pay for the latter and the air force / army would fight the invading forces regardless of what they paid?
No one pays for defense agencies to quarrel with each other. That isn’t their purpose as advertised. That all costs money and employees. What kind of mercenary will stick around, fighting for a corporation with dwindling revenue.
Anyways, not that I think that your scenario is plausible given the nature of spontaneous order and market outcomes, but how is this a defense at all for statelessness? You’re essentially imposing the “Wouldn’t warlords take over?” accusation on yourself.
But it doesn’t until it does. You don’t need such things during peacetime.
Then I guess I don’t need heath insurance until I am sick…
Would you really expect someone, faced with the two peacetime options of paying a subscription to cops and paying a subscription to cops, weapons researchers, fighter pilot producers and pilots, to pay for the latter? And why should they when maybe some rich person will pay for the latter and the air force / army would fight the invading forces regardless of what they paid?
Possibly. Value is subjective after all.
But, this is probably the wrong argument to make. I think Murphy’s Chaos Theory has a better argument.
The framework described in the first section avoids these apparent difficulties. In a free society, it is not the average person, but rather the insurance companies, that would purchase defense services. Every dollar in damage caused by foreign aggression would be fully compensated, and thus insurers would seek to protect their customers’ property as if it were their own. Because of economies of scale, coverage for large geographical regions would likely be handled through a few dominant firms, ensuring standardized pricing and a coordinated defense.
So you can either purchase invasion insurance (along with other insurance) and fund defense services indirectly, or you can forgo invasion insurance and take the risk that your house, your business or your airport gets blown up without coverage.
As for free riders:
But make no mistake, military defense would be adequately funded, for the simple reason that shareholders of rich companies are anything but reckless when it comes to money. Because of their size, the biggest companies couldn’t ignore the effect of their own behavior on military preparedness. Furthermore, certain types of property—airports, bridges, highways, power plants, and of course, military equipment—would be far likelier targets of foreign attack, and their owners would thus constitute an even smaller group to benefit disproportionately from defense expenditures. This heterogeneity would weaken further the “spillover” character of defense services, making an efficient arrangement all the easier to achieve. Those companies that ended up paying the most might perceive the arrangement as unfair, but there would nevertheless always be an arrangement. The highest contributors might even advertise this fact, much as large corporations make ostentatious donations to charity in order to curry goodwill.
No one pays for defense agencies to quarrel with each other. That isn’t their purpose as advertised. That all costs money and employees. What kind of mercenary will stick around, fighting for a corporation with dwindling revenue.
Are you saying that conflicts will never take place between defense companies? That seems unlikely.
Anyways, not that I think that your scenario is plausible given the nature of spontaneous order and market outcomes, but how is this a defense at all for statelessness? You’re essentially imposing the “Wouldn’t warlords take over?” accusation on yourself.
You must not have seen my last sentence:
And no, I am not assuming war will always rage, but occasional conflicts will arise, as they do today.
False comparison. The medical industry must produce certain goods to treat illnesses because some people get cancer and some don’t. It’s not an on/off switch of everyone having cancer and everyone not having cancer. This, however, is the case in war.
Maybe I can sell a turd sandwich for $800.
“There is always a solution to every human problem–neat, plausible, and wrong.” - H.L. Mencken
Insurance companies will have to start buying all of these defense goods on the premise that people will subscribe to them. Likely it would only be a few companies given the enormous cost of providing defense. But why should person A pay for the insurance when person B is paying for it? Either way the insurance companies will act as a nat’l defense and fight off the aggressor?
And the centralization of control over nat’l defense in Volungrazia lends itself to nation-states striking deals with one of the few companies. Just one ‘agreement’ would injure the stateless defense badly. Insurance companies, being a plurality of bodies funding nat’l defense do not burden themselves with the total responsibility for the defense of the territory, only some of it. Therefore, one of them can skip out and leave the others holding the bag. This is not possible when only one agency is responsible for defense.
And before you call me paranoid about insurance companies being bribed, recall that during the communist revolution, every democratic state sent forces to Russia during WWI to try and quell the Red Army. Why exactly should this not apply to Volungrazia?
The latter being a risk for both oneself and one’s neighbor, as the defense force is that much weaker.
Assuming that these large companies have any allegiance whatsoever to the territory they are situated in. This would not be a protectionist economy. It would be a global economy. Thus it is subject to the buying and selling of shares by shareholders who live in democracies, many of which are extensions of those governing bodies.
Just as unlikely as businesses sell their products above the market price. It happens sure, but the higgling of the market produces a stable outcome (draining funds of the aggressors).
I read it but your rationale beforehand contradicts it.
