Why Physical Violence is a Useful Basic Concept

            Central to libertarian political philosophy and free-market economics is the distinction between voluntary action and coerced action. This distinction presupposes that the threat of physical violence is an important enough concept to warrant making its presence or absence, when an individual is making a decision, a vital categorization device. In this post, we will examine this presupposition, and will end up supporting its employment.

            

           The central axiom of many branches of social science is that humans engage in action, or act, in order to substitute a less satisfactory state of affairs for a more satisfactory state of affairs, evaluated based on their subjective value scales. This axiom applies to both voluntary and coerced action. Voluntary actions imply that when faced with a choice: do I do a certain thing or not, or do I exchange a certain thing/things for a certain thing/things with another human, if the decision was made in the affirmative it was because the actor estimated that the action would be an effective way of proceeding from a less satisfactory state of affairs to a more satisfactory state of affairs. For example, if we observe someone cutting their nails, we can deduce that they estimated that cutting their nails would be an effective way of proceeding from a (subjectively) less satisfactory state of affairs where their nails were long to a (subjectively) more satisfactory state of affairs where their nails are short. If we observe someone exchanging an orange for another’s watermelon, we can deduce that they estimated that having a watermelon at the cost of having an orange would be an effective way of proceeding from a (subjectively) less satisfactory state of affairs where they had an orange but not a watermelon to a (subjectively) more satisfactory state of affairs where they had a watermelon, even at the price of giving up an orange.

            

           We must change our analysis of the particulars when we are faced with a coerced action. In this case, the coerced actor has two basic choices: do what the coercer tells them to do, or face physical reprisal, which could be as severe as a violent death. This is what Ludwig von Mises calls a “hegemonic bond”, as opposed to a “contractual bond” like the one described above with the exchange between the orange and the watermelon owners. The characteristic feature of a hegemonic bond is that the coerced actor does not determine the particulars of his actions; the coercer does this for him. All the coerced actor decides is: do I do what is commanded, or face physical punishment?

For example, let us return to our one man with an orange and another man with a watermelon. This time, however, the man with the watermelon has a gun, and has no qualms about using it to inflict harm on the man with the orange. Let us assume, this time, that the man with the orange does not want to exchange his orange for a watermelon, thus demonstrating that he values the orange more than the watermelon. But the man with the watermelon will have none of it, he brandishes his gun at the man with the orange and says: “hand over the orange or I’ll shoot you in the head!” The man with the orange, after having rejected the contractual bond of exchange, is now faced with the choice inherent in any hegemonic bond: do what is commanded or face a violent physical reprisal (in this case, death). If the man with the orange decides that he values his life more than his orange and his pride, and hands it over to the thuggish watermelon man, we must still say that he chose to substitute a (subjectively) less satisfactory state of affairs where he was at risk of imminent death, for a (subjectively) more satisfactory state of affairs where his life is preserved at the cost of his orange and his pride. However, it would seem that there is something so primordially different between the contractual exchange described previously and the hegemonic bond described above, that we are justified in treating them as two very different phenomena.

            

           What effect, exactly, did the credible threat of physical violence have on the actions of the coerced man? Firstly, while in the case of the contractual exchange, the man received what he wanted, in the case of the hegemonic bond, the man just avoided what he did not want (death) at a price (the orange and his pride). This distinction is not decisive though, as we can think of a few cases where, even in the absence of the threat of physical violence, a man can be induced to act to just avoid what he does not want at a price. For example, imagine a man who owns a hardware store. One of his customers has bought a drill from him, which the customer is unsatisfied with. The drill had a 90 day warranty, but started to malfunction on the 99^th day of ownership. The customer returns with it to the store and says: “I demand that you replace this drill, at no charge, with a new one. If you do not, I will tell everyone I know and I will post on the Internet that your store sells shoddy merchandise and I will recommend that no one shop here.” Here, we have a case where the hardware store owner is faced with the choice: give in to the customer’s demands and give them a new drill, or face the loss of reputation that the customer’s threatened actions would entail.

            

           What is it that separates this scenario from the hegemonic bond described previously? Leaving aside questions of legitimate property rights (which presupposes that arbitrary physical violence is deemed an illegitimate and vicious way of acquiring property), the main distinction is the level of harm that the reprisals in question could cause to the deciding actor. While potentially damaging, the aggrieved customer’s verbal hate campaign can cause only so much damage to the hardware store owner’s business, and thus the concessions that this threat could extort from the hardware store owner would be fairly circumscribed.

            

            Now though, let us consider a completely unrealistic, but intellectual interesting, hypothetical scenario. Let us assume that a free-market society has been established, and government is confined to protecting property rights and the sanctity of contracts. Imagine that one corporation, the Mammoth Corporation, through outstanding service to the consumers and marvellous business acumen in many different industries, manages to accumulate a massive pile of wealth. It consistently uses this wealth to buy up more and more of the earth’s surface, until eventually it comes to own the entire earth’s service. As soon as it does though, it ceases acting as an efficient, consumer-friendly business firm and starts acting tyrannically. It issues orders to members of the earth’s population, and anyone who disobeys the orders is prevented by the Mammoth Corporation from holding a paid position in the Mammoth Corporation or from buying anything from the Mammoth Corporation. Any company that does business with the Mammoth Corporation (all of them, because Mammoth Corporation owns all the land on earth) is also prevented from hiring or selling goods to these ‘excommunicated’ people who disobeyed Mammoth Corporation orders.

            

           Here we have a case where the directors of the Mammoth Corporation literally have the power of life and death over everyone in the world, without using any threats of physical violence. They essentially have the fearsome powers of a socialist dictatorship, though the method of acquiring those powers was originally through service to the consumers and voluntary purchase of land, where with the socialist dictatorship it is through violent expropriation of property and armed terror. Nevertheless, it would be disingenuous to argue that because of their method of acquiring these powers, the powers are not as bad. The fact is that the Mammoth Corporation, as surely as an armed gang, can threaten their victims with death, and their coerced victims will act with that fact in mind.

            

           Now, of course, this hypothetical situation could never occur in a free-market society. Though there are economies of scale inducing businesses to consolidate, there are also dis-economies of scale (such as more detached management, more bureaucratic structures, less rigorous specialization) which induce businesses not to become too big. Also, completely eliminating a market for an input in a production process by monopolizing it will create an area of the economy where economic calculation cannot operate efficiently due to lack of market prices generated for that input (see Tip #5 in my 'How to Think About Social issues' series for more on economic calculation). This will result in an inefficient and more unprofitable allocation of resources by the monopolizer, which will tend to prevent such monopolization from occurring in a competitive, profit-seeking free-market economy. Empirically, nothing even remotely close to the hypothetical scenario described above has ever occurred or showed signs of occurring. Also, to think that every little usable scrap of land of the entire earth could be purchased from their hundreds of millions of individual owners by one big corporation is incredibly far-fetched.

            

            Note that I deliberately made the Mammoth Corporation a land monopolist for a very good reason. This is because, contrary to the ideas behind antitrust laws, the only way that a market participant can secure a true monopoly is by monopolizing one of the original, raw, production inputs: land (real estate, agricultural land, and natural resources) and labour  Since slavery is not permitted and thus people can’t own any labour but their own, but only rent it, labour cannot be monopolized by a single market participant. This leaves land as the only factor of production that could be monopolized on a free-market. For instance, even if we assume that a large steel company has 100% market share in the steel market, we are still not permitted to say that the company is a real monopolist unless it owns all of the land in the world where iron ore or coal could be extracted. If it does not, it must still serve the consumers efficiently, even with its 100% market share, as if the company became inefficient, competitors could start steel factories of their own using the un-monopolized natural resources that constitute raw inputs for steel-making.  

            

           Despite all this, from hypothetical considerations such as these, some social thinkers have come up with the concept of ‘economic power’. The ownership of private property is seen to give the owner ‘economic power’, which he may use as a weapon by refusing to trade the fruits of that property or give ‘jobs’ to people who he doesn't like. The hypothetical scenario described above is the epitome of ‘economic power’, but, according to the champions of this concept, lesser degrees of ‘economic power’ exist in the real world and can be just as coercive as physical power and the threat of physical violence.

            

           The problem with the idea that physical power and ‘economic power’ exist as problems side by side, coercing people into making all of their choices, is that one cannot combat ‘economic power’ without employing physical violence aggressively  An ‘economic power’ theorist could assert that in the example given earlier about the man with the orange and man with the watermelon with a gun, by refusing to trade with the man with the watermelon, the man with the orange was exercising ‘economic power’ over the man with the watermelon, by withholding his orange ‘monopolistically’. But, the only way to combat the man with the orange’s ‘economic power’, is for the man with the watermelon to establish the hegemonic bond we described above by threatening the man with the orange with physical violence, in order to coerce him into handing over the orange.

            

           Thus, the question, in every instance, is: which is the more worthy of fighting and labelling with the odious term ‘coercion’, ‘economic power’ or physical power, refusal to exchange or employing the threat of physical violence to cajole others to exchange? I maintain that in the vast, vast majority of hypothetical cases, and in all cases that could realistically arise in a free-market society, the threat of physical violence is much more coercive and harmful to its victims than the threat of ‘exercising economic power’ by refusing to exchange. In order to attain the coercive power that any thug with a knife could attain with the threat of physical violence over his chosen victim, a market participant would have to amass such an astronomical amount of wealth and make such an unlikely series of voluntary land purchases to really monopolize the market and amass enough ‘economic power’. Otherwise, the existence of competitors, eager to make a profit by selling goods and employing productive people, would render the threat of any market participant using his ‘economic power’ as a weapon more on par with the magnitude of the threat of the disgruntled hardware store customer than with the magnitude of the threat of anyone capable of inflicting physical injury or death on his victim.

           

            Because of the fact that the coercive magnitude of anyone threatening to inflict physical violence is leaps and bounds above the threat of any realistic exercise of ‘economic power’ or verbal slander power, it is permissible, and indeed necessary for clarity of social thought, to treat the threat of physical violence as a conceptual category of its own, and mostly disregard any other potential forms of ‘coercion’. I would not object if anyone, to prevent abuse of ‘economic power’, proposed putting a law on the statute books prohibiting any individual or organization from owning, say, 30% or more of the earth’s usable land surface, especially because the chances of such an eventuality occurring are negligible at best. In most cases though, the real coercive threat in society is that of physical violence, and thus fighting any negligible amount of influence that ‘economic power’ could have with threats of physical violence does not make sense, if your goal is to reduce coercion’s role in society.

As such, the conceptual validity of treating actions and exchanges not influenced by the threat of physical violence as voluntary, and of treating actions and exchanges influenced by the threat of physical violence as coerced, is sound and necessary for clarity in social thought.