A Conversation With David Friedman - part 5: Protection Agencies vs Protection Rackets and Defending Against Nations

Conversation with Dr. David Friedman about some of the solutions and potential issues of anarcho-capitalism, as well as possible ways of advancing ideas of free society and turning them into reality.  Part 5: Protection Agencies vs Protection Rackets and Defending Against Nations.

Interview by Jadranko Brkic, Managing Director at Freedom and Prosperity TV: libertarian network of alternative media in Western Balkans.  Hong Kong, May 21st, 2014.

(see video at the bottom of transcript)

Transcript:

Freedom and Prosperity TV:

How well would anarcho-capitalist society work in terms of population scale? Say for example with different population densities. Mainly the possibility of few protection agencies in sparsely populated areas turning into protection rackets.

David Friedman:

Yes. There are really two separate issues. One of them is the size of the population and the other is the density. And I think anarcho-capitalism would work better with large populations, because one of the things you want is a competitive market for rights enforcement. That just as with your case of developers of Hong Kong, if you only have two or three firms that are protecting rights it would be tempting for them to cartelize. To get together and say let's turn ourselves into a government, we can get more money by collecting taxes than by selling services. Whereas if you have a hundred such agencies, and few were to try to do that, their customers just leave them and hire the other ones to protect them. So in that sense, I think it would work better in a larger population.

Now, the question of population density I haven't really thought as much about. But you could certainly imagine a case where there were a hundred rights enforcement agencies, but in practice they were geographical. That if you have a very dispersed population, it might be too-hard for an agency here to protect somebody over there. And then that system might be unstable in the direction you described. And part of the question then would be how mobile the population was. So you would have a situation where in effect one agency dominates a certain region, but if it doesn't do a good job everybody will leave and go somewhere else, then it might be a reasonable functional system in spite of that. But if you had a society where population was dispersed and it was hard to move around, then I think you might very well reinvent local governments, which might be aggressive, rather than have a real competitive anarchist system.

I've never argued that the institutions that I'm in favor of would work under all imaginable circumstances. One of the things that I've discussed in various things that I've written is under what circumstances they would either break down due to external threats because they couldn't protect themselves, or break down to the internal threat of agencies or somebody else turning into governments. So my claim is only that under some reasonably wide range of circumstances it would work, and that where it worked it would be likely to produce a more attractive society than any alternative that I know. That's the as strong a claim as I'm willing to make.

Freedom and Prosperity TV:

Can anarcho-capitalist society prosper next to the collectivist societies of today? In other words, how high of a danger are government based societies to those that are market based anarcho-capitalist?

David Friedman:

That goes back to my question of national defense. And the answer is that there are some government societies which are aggressive and some which aren't aggressive. My guess is, though I'm not sure, that China tolerated Hong Kong as a British possession for a long time, even though it surely would not have been very hard for China to seize Hong Kong even 40 or 50 years ago. And my guess is they did it because they found Hong Kong useful for them. And you could certainly imagine circumstances in which the adjacent states either simply weren't aggressive – not all governments are territorially aggressive, some governments feel it would be hard to rule other people and why bother, or in which they find it useful to have a nearby market society, because they can buy things from them, sell things in it, and corrupt officials could go there and trade their money for something they can use, and things like that. So I think there are going to be circumstances in which that would work. But I've mostly thought about the case you'd have to actually defend yourself. I have a chapter in the 'Machinery of Freedom' which discusses that. I have almost finished with the third edition of 'Machinery of Freedom' and there is a new chapter which discusses that there. And in that chapter I try to sketch out a variety of ways in which you might be able to defend an anarcho-capitalist area by essentially voluntary mechanisms. If you want to know what that is, the drafts of the chapters are all up on my webpage, and you can go read it. It think it is too-long for a brief interview to explain.