Monday, April 24, 2006

Market anarchy and arbitration

The main evil of government is that it puts everyone in a situation of social warfare. As a monopoly, government can only implement one value system, and people fight each other over which value system should control this or that arae of society. This is extremely evil. The main strength of market anarchy is the fact that it allows people with different value systems to co-exist in the same society, and to live the way they desire without impinging on each other's happiness.

Therefore, perhaps the most interesting issue in market anarchy, and the issue that illustrates its moral superiority the best, is how to arbitrate between different codes of law offered by different organizations.

With government, the resolution is simple : democracy. Both sides must spend their energy and resources convincing people that their way is the best way, and whichever side wins the most votes, gets to impose its value system on everyone else. This is the basic reason why democratic governments breed social warfare. And this is why democracy is a superior process in ensuring the legitimacy of government, as it diverts people's attention from its wrongdoings, and turns it into hatred toward each other. Then government comes in and twists the choice of the people for its own advantage.

In a market anarchy, people would join one of many Protection Agencies (PAs), which would offer services ranging from insurance against future crime, to emergency call-ins, to armed patrols and investigations. And there's no reason why you would have to provide for your security at all times - malls and busy streets would have incentives to provide for it too (as malls do now). After all, public police does not provide a great service to begin with, and yet people seem pretty satisfied with it. Imagine what a free market could do !

When drawing contracts together, people might also join what Stefan Molyneux calls DROs - Dispute Resolution Organizations. DROs would pass judgments regarding contract breaches and things of that nature - a trade court of sorts.

By replacing the evil and inefficient monopoly of government, PAs and DROs represent nothing less than political freedom. They represent the extension of the individual's value system in society.

But what happens if there is friction between these organizations ? First of all, I think such friction would be the exception rather than the rule. Even though most people differ in value systems, I also think that most people have a basic agreement on what is right and what is wrong. We all think murder is bad, theft is not a great idea, rape is depraved, we shouldn't go around and bash people on the head with bottles, etc.

Still, there will always be friction, because people will always have different value systems. So what do we do ? That's where arbitration comes in.

Let's first look at an extreme example, the kind of example that a communist or nazi or some other unsavory character, who only thinks in terms of criminality, might use to argue against anarchy. Suppose a murderer joins an PA that does not prohibit murder (because he does not want to be prosecuted for his crimes, of course). This murderer then kills someone who is a member of an PA which prohibits murder. What happens ?

Well, there are two problems here. The first is, those two PAs would have to arbitrate their differences, or at least be members of an arbitration organization which sets out guidelines for these cases. And it is highly unlikely that an EA would be part of any arrangement which permits murder against its customers - because it would quickly lose all ita customers. So arbitration in such cases would always be to the favour of the anti-murder PA.

Furthermore, given that people within the pro-murder PA could kill each other with impunity, membership to that PA would be extremely undesirable. Murderers would now be identifiable, and every such person would become a marked man. So there is no interest in working this way !

Would there be armed conflict between these two PAs ? Would it degenerate into civil war ? That is rather unlikely, since armed conflict is always more costly than arbitration. And a PA which engaged in warfare against another would run the risk of being judged as a rogue organization in turn. There would only be interest in the EAs to band together if they had general support from their customers to fight against a rogue organization which itself perpetrates crimes.

This is an extreme example, but the principles here apply to all friction :

1. In the case of two customers of the same EA conflicting, the code they have both chosen applies.
2. In the case of customers of different EAs, the relevant DRO (if drawn between two specific PAs) or arbitration would apply.

In practice, I imagine that this process would be as simple as a policeman asking to see your PA card or looking you up. He would be trained to know what to do depending on which PA you belong to. If you are wrongly detained, then arbitration would no doubt compensate you for your trouble, because such errors would reflect badly on its services.

What about friction that goes beyond a certain territory ? It couldn't be called "international", if only because there would be no more nations, but there is no doubt that people can travel far beyond the jurisdiction of one or the other agency. So you would get into issues of extradition. There are also issues which go beyond the scope of individual agencies, such as epidemics, natural disasters, or space travel. This "World League" would be financed by PAs and DROs, and its role would be to deal with issues that can only be dealt with by world cooperation.


Anonymous said...

who watches the PA's?

Aaron Kinney said...

Hi Anon!

Thanks for the question.

Well, the PA's would be watched by whoever wants to. I imagine that there would be multiple PA watching agencies and/or groups. From grassroots user-created groups to professional consultants and analyists.

For example, there could be communities on the internet created by PA clients who could rate PAs based on their experience. There would also be auditing companies whose job is to inspect the PA internal procedures and would report those results in a quarterly magazine or something, similar to Consumer Reports today. Also, insurance companies and consumer protection activist groups would be giving PA recommendations based on their experiences and their investigations.

So, essentially, the PAs would be watched by the market itself. Because the PAs cannot garuntee their customer base, and they have to honestly compete, it will be within their interest to act responsibly. Additionally, there would be a small market created for the watching and auditing of PAs and reporting those results.

I hope that helps answer your question :)