Two versions of anarcho-capitalism: David Friedman vs. Murray Rothbard

Economics Political Theory
21

It is my view that human culture is too sensitive to what might seem to be small details for us to be able to reliably predict what the overall character of society will be under specific counter-factual conditions such as market competition in law and security. The net character of a society is, in my view, a lot like a money price in a heavily traded good or commodity - there are innumerable facts that went into the price of oats on your corner grocery store’s shelf.

I don’t think that human nature is particularly libertarian if by libertarian we mean having something like the preference for social order shared by those on this forum. Of course, neither is it Euro-statist.

I am extremely skeptical of any view of society that begins with an envisioned “outcome” and then proceeds to construct a path to bring about this outcome. I’m not saying we can’t arrive at meaningful criticism of the present social order - the Abolitionists were right as were the classical liberals, as far as they went. Nor am I saying that we can’t work out strategies to bring about change in society. But what I am saying is that it is easy to be immodest in one’s vision and goals and thereby be misled into choosing ineffective or even counter-productive strategies in the attempt to solve social problems that have been correctly identified as problems.

Clayton -

22

I would say the vast majority of people recognize the golden rule as a pretty decent standard. And as I’ve said before, the NAP is just a legal realization of the golden rule. The problem is that the vast majority of people who accept the golden rule don’t understand its logical implications. You have talked about this before when you talk about eliminating the statist double standard (iirc you are not against all double standards).

I would not say that human nature is libertarian or conservative or liberal or socialist or anything political. What is universal among all humans is that we want to satisfy our wants and needs. The distinction is made between people who want to do this with social cooperation and those who do not. Libertarian anarchists are just people who recognize that the state is in the latter category.

23

As I see it, the main practical difference between Rothbard’s description of a working anarcho-capitalist society and Friedman’s is the existence in Rothbard’s of “the basic Law Code”

This basic Law Code is absent in Friedman’s description. In Friedman’s description, not just the concrete form but also the basic principles of law “grow by a market invisible-hand process”. By making the assumption that there is an underlying Code agreed upon by all “reasonable” courts, Rothbard does not discuss what happens when courts disagree on the fundamental principles of law. There are just “reasonable courts” and “outlaw courts” in Rothbard’s world. Friedman takes this extra step and discusses how courts with disagreements about principles might interact, and explains the invisible-hand process that Rothbard missed.

24

“I think this seems to be pretty clear polycentric law - property owners decide what law is used in their property.”

You are mistaken. It is polycentric law, but it isn’t whose property events occur on that determine the law.

If you read all of part III of the book, which is where I describe the system, you will see that the legal rules which apply to a dispute are those agreed to in advance between the rights enforcement agencies of the two parties disputing.

25

No, the “basic law code” is the NAP. That’s essentially it. What’s the alternative? A conflict arises, and two parties go to a 3rd party (judge) to resolve the dispute.. and the judge constantly and openly goes with the initiator / aggressor as being in the right. Outlaw judge / court. Maybe there would be a group of individuals who have a “fight club” of sorts. But then even so, if they’ve agreed to abide by the rules of the covenant then it wouldn’t be an initation. Anyway beyond that it is retarded, and not really worthy of discussion outside of what Rothbard has written elsewhere in regards to it.

It’s disingenuous to say he “missed it”.

An “agreement” is NOT a contract, as per Rothbard’s own writings on property-transfer title theory. So the charachterisation / blowing it up that everyone must come to some strict adherance / formally accept it in some capacity is errorenous. Everyone on the market when they exchange, validate via demonstrated preference an “agreement” to abide by the NAP in that instance.

When you however, see for example.. two parties A and B making an agreement (Hit man contract) to initiate aggression against C, that isn’t an “agreement” to abide by the NAP. These individuals are thus “outlaws” and “rogue” in that sense.

The “basic law code” is really just an overt acceptance of what is already present.

“Ethics - the validity of the principle of self-ownership and original appropriation - is demonstrably not dependent and contingent upon agreement or contract; and the universality claim connected with Rothbard’s libertarianism is not affected in the slightest by the circumstance that moral discussants may or may not always come to an agreement or contract. Ethics is the logical-praxeological presupposition - in Kantian terminology: die Bedingung der Moeglichkeit - rather than the result of agreement or contract. The principles of self-ownership and original appropriation make agreement and contract - including that of not agreeing and contracting - possible. Set in motion and stimulated by the universal experience of conflict, moral discussion and argument can discover, reconstruct, explicate, and formulate the principles of self-ownership and original appropriation, but their validity in no way depends on whether or not this is the case, and if so whether or not these formulations then find universal assent.”

  • Hoppe, Intro to TEOL.

Similiary:

“To maintain that no such thing as a rational ethic exists does not imply “tolerance” and “pluralism,” as champions of positivism such as Milton Friedman falsely claim, and moral absolutism does not imply “intolerance” and “dictatorship.” To the contrary, without absolute values “tolerance” and “pluralism” are just other arbitrary ideologies, and there is no reason to accept them rather than any others such as cannibalism and slavery. Only if absolute values, such as a human right of self-ownership exist, that is, only if “pluralism” or “tolerance” are not merely among a multitude of tolerable values, can pluralism and tolerance in fact be safeguarded.”

  1. “The Western State as a Paradigm: Learning from History.” in Paul Gottfried, ed., Politics and Regimes: Religion & Public Life, Vol. 30, Edison, NJ: Transaction Publishers; www.hanshoppe.com/wpcontent/uploads/publications/hoppe_western-state-paradigm-1997.pdf
26

That’s just it; that’s the point I’m making. Rothbard is assuming that most people already agree with the NAP and then discusses how courts interact within this NAP-loving society. Whereas Friedman is making a weaker assumption: just that there is no government, no monopolist of law, no agency of legitimized coercion. He doesn’t assume that people further agree with all the implications of the NAP, which enables him to discus the interraction between a court that bans heroin and one that doesn’t. This is what I am saying Rothbard missed by making the assumption he did about NAP; conflicts between courts in his world were always under the umbrella of the NAP, the basic Law Code, and any court that would ban heroin, clearly a NAP violation, was simply branded an outlaw court and considered not worth worrying about.

The Rothbard quote is quite clear that there is something in his system that does NOT emerge from a market invisible-hand process, i.e. the basic Law Code. So how does it emerge? For Rothbard, the answer seems to be that there is simply philosophical agreement about it by all reasonable people, and so he starts his analysis of a free society already assuming this underlying philosophical agreement. It’s not an unreasonable starting point, but I think you can go back further and ask what process might give rise to widespread adoption of the NAP, other than a philosophical agreement about it.

27

In that system, are the disputing parties free to choose any rights enforcement agency or to enforce their rights themselves?

28

I don’t think David Friedman approaches the question from a rights point-of-view. He’s doing “comparative institutional analysis” - if you have system A, you get outcome X, if you have system B, you get outcome Y.

Clayton -

29

Like I implied earlier (in a post that seems to have gotten buried), I think it’s important to come to an agreed-upon definition of “law”. I don’t see how such a definition has already been agreed upon. For example, in Dr. Friedman’s depiction of “prohibitions against heroin use”, does that mean “people are not allowed to use heroin on my property”, or does it mean “people who use heroin are not allowed on my property”, or does it mean “it’s permitted to imprison, maim, and/or kill people who use heroin”, or does it mean something else entirely?

30

Aren’t precedents customs?

31

Not necessarily. Once a judge makes a decision, it becomes precedent, and all other judges are supposed to follow this decision. But that doesn’t make it a custom. Once a precedent is set and has been followed for a while, one could make the argument that it has become custom, but something doesn’t happen once and become custom.

The difference between the two, and I could be mistaken, is how long it takes something to be considered law. It common law, it only takes one decision, whereas in customary law it would take a lot longer to be considered law, as it needs to be a custom first. I suppose a better way of stating it: Customs become law in customary law, and precedents become custom in common law.

Does that make sense?

32

The Machinery of Freedom is webbed on my site, if you want to find out what the system I am proposing actually is.

And where is your site?

33

I think that Rothbard and Friedman are basically discussing different things.

Rothbard is discussing morality and what the law should look like according to his view of morality, based on his definition that anything that furthers people’s basic natural inclinations, including survival and cooperation, is moral. As pointed out, he does not discuss what the situation would be in a poly-centrist legal society where many parties had different views of morality, only how conflicts would be solved in a society where everybody held his views.

Friedman is not discussing morality at all. He discussed what poly-centrist legal society would look like. As far as I understand, he doesn’t have a view of objective morality, nor does he think we can arrive at one. I don’t think he is a moral nihilist or subjectivist, but more of an intuitionist.

I think there is a third view which neither of them holds, and that is what seems to me a version of contractarianism: it describes what morality and/or law ought to be if their goal is for people to cooperate with each other. This view describes what law ought to be if the goal of the law is to reduce conflict.

My problem with Rothbard’s view is that it assumes human nature to be something specific, and derives from it what human goals should be. But every human’s nature (and, therefore, goals) is different. Furthermore, it doesn’t justify why following human nature should be the greatest ought.

My problem with the contractarian view (or what I described as contractarian) is basically the same — it assumes that all people desire the same from the law: peaceful resolution of conflicts. But maybe people want to live in a society where there is a certain degree of violence, but there is protection of what they consider to be moral? For instance, a libertarian fundamentalist Christian has to decide what he cares about more: the fact of the government’s aggression or that people are prevented from committing sodomy. There is no good objective reason why he should abhor the former more.

My problem with Dr. Friedman’s (and contractarian, to some extent) approach is that it doesn’t explain what our preferences ought to be. I.e., why should I prefer the free society? For greater utility? For greater freedom? Is it implied that my intuitive morality should place freedom as the top preference? Why?

The same is with NAP: before one defines aggression, one must define property and, most importantly, justify his definition. Both Rothbard’s and Hoppe’s defense for their view of property seems to me to have holes and question begging. Dr. Friedman doesn’t have any coherent definition of property (but then, he doesn’t care about NAP).

Contractarian approach seems to me to be the most straightforward in that it suggests that we ought to define property in such a way as to minimize conflict (which suggests homesteading and self-ownership), but, again, it’s not clear why people ought to place conflict minimization as the priority in what they expect from law and property definition. (Some may want artists rewarded for their work more than to avoid conflict. I want to make sure that children are protected from abuse before they become adults, but that I also get to eat animals. I am yet to see a coherent, contradiction-free explanation of how our definition of property should protect children but allow us to use animals to our hearts’ content.)

So, overall, Dr. Friedman’s theory seems to be the most coherent, but then it simply avoids the question of what we should consider as property or as moral today. E.g., if I lose my phone and someone finds it, ought he return it to me? Rothbard may have a clear answer to the question for everyone. But Dr. Friedman would presumably say: “Today, do what your intuition tells you. In the future, probably the same, unless the original owner discovers that you kept the phone, in which case your protection agencies will figure it out between themselves.” But also, because there is no moral justification of one legal view over another, Dr. Friedman’s legal universe is basically a nuanced version of “might makes right”, with the addendum: “if it’s economically feasible for it to do so”. That may be a good description of how things will be, but not a good description of how things ought to be, unless one is a utilitarian.

34

I also wonder whom Robert Murphy “agrees to”: Friedman or Rothbard. His view on law in stateless society seems to be in common with Friedman.

35

“In polycentric law, the property owners decide what set of laws is used in their lands”

That is not my view. If you believe it is, perhaps you can quote where I proposed it. The main source for my views is my book The Machinery of Freedom–you can download it as a pdf from my web page for free.

I agree that my view of law is different from Rothbard’s, but in order to criticize it you must first read it in order to discover what it is.

36

“For example, in Dr. Friedman’s depiction of “prohibitions against heroin use”, does that mean “people are not allowed to use heroin on my property”, or does it mean “people who use heroin are not allowed on my property”, or does it mean “it’s permitted to imprison, maim, and/or kill people who use heroin”, or does it mean something else entirely?”

It means that the rights enforcement agency employed by the person who wants to use heroin has agreed with the rights enforcement agency employed by the person who wants to ban heroin that the use of heroin is a criminal (or possibly) civil offence, hence that force can be used to prevent it.

I don’t know where various of you are getting this “on my property” business, since that has nothing to do with what I wrote. I’m not imagining an anarcho-capitalist society as a patchwork of tiny sovereign states but as a network of pairwise agreements.

I apologize, by the way, for sometimes answering the same post twice. I come across something discussing my ideas via google and answer it again before realizing that I’ve answered it before.

Someone asked where my site is. It isn’t hard to find. www.daviddfriedman.com.

37

Active link: www.daviddfriedman.com

Clayton -

38

I think the major mistake both Friedman and Rothbard incur is that they downplay the costs of creating the whole framework of contracts that would be necessary in order to achieve their visions of anarchism.

The reason why (political) violence exists is that it is an economic resource. Sometimes it is cheaper for one of the parts involved in a bargain to resort to violent methods than to seek a contract-based solution. All costs considered, included any reputation loss and ethical issues. And when that’s the case, there will be aggression.

I’m not saying they ignore this fact. They both discuss it when they introduce the problem of social order. But they both rush to their conclusions that a contract based society is more ethical (Rothbard) or efficient (Friedman), and therefore the way of the future, and start to describe what they see as the ideal version of it.

The problem is that their notions of ethics and efficiency when applied to society as a whole are nonsensical. None of them seem to fully realize that insofar as contractual costs are higher than ammunition costs within certain contexts, political violence will be used as means to achieve ends by those who are able to mobilize enough of it.

Because what govern the decisions people take are the real world technological and institutional environments they are embedded in, and the concrete costs these frameworks impose on their decisions. A good book on this subject is Knowledge and Decisions, by Thomas Sowell, a scholar whose economics is more grounded on reality than ideals.

Friedman and Rothbard may look dissimilar in the surface of their language, but they are actually very similar in their thought process, and very close to other popular fantasyland social scientists that existed in the past.

39

I think the major mistake both Friedman and Rothbard incur is that they downplay the costs of creating the whole framework of contracts that would be necessary in order to achieve their visions of anarchism.

The reason why (political) violence exists is that it is an economic resource. Sometimes it is cheaper for one of the parts involved in a bargain to resort to violent methods than to seek a contract-based solution. All costs considered, included any reputation loss and ethical issues. And when that’s the case, there will be aggression.

I’m not saying they ignore this fact. They both discuss it when they introduce the problem of social order. But they both rush to their conclusions that a contract based society is more ethical (Rothbard) or efficient (Friedman), and therefore the way of the future, and start to describe what they see as the ideal version of it.

The problem is that their notions of ethics and efficiency when applied to society as a whole are nonsensical. None of them seem to fully realize that insofar as contractual costs are higher than ammunition costs within certain contexts, political violence will be used as means to achieve ends by those who are able to mobilize enough of it.

Because what govern the decisions people take are the real world technological and institutional environments they are embedded in, and the concrete costs these frameworks impose on their decisions. A good book on this subject is Knowledge and Decisions, by Thomas Sowell, a scholar whose economics is more grounded on reality than ideals.

Friedman and Rothbard may look dissimilar in the surface of their language, but they are actually very similar in their thought process, and very close to other popular fantasyland social scientists that existed in the past.

This is an excellent point. In other words, a failure to pursue a serious “economics” of the social order as distinct from an economic analysis of market transactions. This suggestion was made by Lionel Robbins who was influenced by Mises:

“There is an important sense in which the subject-matter of political science can be conceived to come within the scope of our definition of the economic. Systems of government, property relationships, and the like, can be conceived as the result of choice. It is desirable that this conception should be further explored on lines analogous to better known analysis.” (An Essay on the Nature & Significance of Economic Science)

This quote is taken from the second edition, published in 1935. I’m not sure whether it appeared in the first edition of 1932. The clear suggestion is to treat the choices people make regarding social relations by the same analytical method we use to treat the choices they make in market transactions.

As late as 1962, Mises was aware that while there existed an elaborated body of formal analysis that applied to market phenomena, the same type of analysis had yet to be applied to political phenomena.

“Economics or catallactics, the only branch of the theoretical sciences of human action that has up to now been elaborated…”

“It would be preposterous to assert apodictically that science will never succeed in developing a praxeological aprioristic doctrine of political organization that would place a theoretical science by the side of the purely historical discipline of political science. All we can say today is that no living man knows how such a science could be constructed.”

(both passages from The Ultimate Foundation of Economic Science, 1962)

Thus, it was clear to Mises that what was lacking was an economic (i.e., a praxeological) approach to political and interpersonal social relationships, that would extend the kind of analysis that up to then, had only been applied to market phenomena.

40

I believe the reason for this epistemological problem with political science lies in accounting.

Purely economic exchanges are somewhat easy to measure and assess with objectivity. It usually boils down to “somebody gave away A in exchange for B (and, of course, his counterpart gave away B in exchange for A)”

So the science of economics can readily identify many patterns on the data that can be collected through such observations. Say, for instance, the law of diminishing returns or the dynamical relationships between supply and demand. These and many other market patterns are percetible and explainable because we can observe and measure many of the variables involved in their occurence, like prices, costs, stocks, production and transaction volumes and so on. Of course many strategical variables remain concealed and introduce uncertainty, but still much of the action takes place on the open field, therefore allowing for a class of general forecasts which bear some similarities to the predictions of natural sciences (sometimes these similarites are greately overrated, though).

Political bargains are harder to quantify. They are most of the time implicit bargains that do not take place, because one of the “traders” doesn’t want to play chicken and get hurt. But nonetheless his behavior is shaped by the likely outcome he perceives from such a situation taking place.

The chief use of power is the (partial) canceling out of other, potentially threatening, sources of power. This cancelling might take place by domination or destruction, which would allow for objective measures with hard data, but most of the time it takes place by insinuation and demonstration and readiness and other forms of non-transactions hard to evaluate.

This kind of situation is very hard to measure since there is little direct data to be observed. Most of the action is not happening. Most of it consists of self-defeating profecies. Anticipation is the name of the game.

Of course the political strategies can be inferred from reveled decisions taken and not taken by each player, but such analysis cannot be carry on too far without getting too complex.

And you cannot generally engage in large scale political accounting because most of the consequential information is private.

And without objective accounting procedures it is difficult to agree on what’s really going on, much less on what are the scientific reasons and explanations for what we’re not even sure to be happening.

That’s why political science is a much more vague and “unscientific” than economics.

The "economics" of social and political relations.