Critique of Roderick Long's 'Libertarian Anarchism: Responses to Ten Objections'

Libertarian Anarchism: Responses to Ten Objections[1]

Objection 4: Private Protection Agencies Will Battle

Long: “Which is likelier to settle its disputes through violence: a government or a private protection agency? Well, the difference is that private protection agencies have to bear the costs of their own decisions to go to war. Going to war is expensive. If you have a choice between two protection agencies, and one solves its disputes through violence most of the time, and the other one solves its disputes through arbitration most of the time – now, you might think, “I want the one that solves its disputes through violence – that sounds really cool!” But then you look at your monthly premiums. And you think, well, how committed are you to this Viking mentality? Now, you might be so committed to the Viking mentality that you’re willing to pay for it; but still, it is more expensive. A lot of customers are going to say, “I want to go to one that doesn’t charge all this extra amount for the violence.” Whereas, governments – first of all, they’ve got captive customers, they can’t go anywhere else – but since they’re taxing the customers anyway, and so the customer don’t have the option to switch to a different agency. And so, governments can externalize the costs of their going to war much more effectively than private agencies can.” 9-10

Brian: Firstly, a private ‘protection agency’ with a ‘Viking mentality’ would not confine itself to settling disputes. It would seek to loot and plunder those who are not its allies. It is true that war costs a lot, but the spoils of war, especially continuing levies on a conquered population which a victorious war enables, can make those costs worth it. The allies of a successful ‘Viking’ agency may well recoup more in spoils than they must pay for the war effort.

Secondly, ‘customers’ living within the sphere of power of a ‘Viking’ agency would soon become ‘captive customers’, just as they are under government. I can’t imagine that such an agency would stand idly by while its former supporters or conquered population deserts it. It would use coercive force to make sure that they continue paying ‘protection premiums’, which, for all intents and purposes, are now the same as governmental taxes.

Long seems to assume what he is trying to prove: that every private protection/dispute-resolution agency will remain just that, and not use its coercive power to become something more sinister. I think that armed with that kind of coercive power, these agencies would be sorely tempted to become coercive, governmental, territorial monopolists. After a period of anarchy, I think that territorial governments would eventually pop up again, but only after a long period of bloody, disruptive, chaotic wars.

Objection #9: The Masses Will Demand Bad Laws

Long: “If you live in California, you’ve got enough people who are absolutely fanatical about banning smoking, or maybe if you’re in Alabama, and it’s homosexuality instead of smoking they want to ban (neither one would ban the other, I think) – in that case, it might happen that they’re so fanatical about it that they would ban it. But remember that they are going to have to be paying for this. So when you get your monthly premium, you see: well, here’s your basic service – protecting you against aggression; oh, and then here’s also your extended service, and the extra fee for that – peering in your neighbors’ windows to make sure that they’re not – either the tobacco or the homosexuality or whatever it is you’re worried about. Now the really fanatical people will say, “Yes, I’m going to shell out the extra money for this.” (Of course, if they’re that fanatical, they’re probably going to be trouble under monarchy, too.) But if they’re not that fanatical, they’ll say, “Well, if all I have to do is go into a voting booth and vote for these laws restricting other people’s freedom, well, heck, I’d go in, it’s pretty easy to go in and vote for it.” But if they actually have to pay for it – “Gee, I don’t know. Maybe I can reconcile myself to this.” 14

Brian: Why can’t the ‘protection agency’ with the fanatical customers just fine the people that they catch breaking the agency’s laws? Or confiscate their property? That way, the oppressed people would be paying for their own oppression, as often happens under governmental systems. This strategy would make the cost to the fanatics less.

Also, many people genuinely believe that various restrictions on other people’s freedom are greatly beneficial to their society and community as a whole. These people would view paying for a more intrusive ‘protection agency’ as a good investment. It wouldn’t just be crazy fanatics who would be willing to pay for a more intrusive ‘protection agency’.

Finally, as I discussed above, if a ‘protection agency’ were to start getting into the business of restricting unwilling people’s freedom, they would probably have few scruples about captivating their ‘customers’ and forcing them to continue paying for the ‘protection’, regardless of the cost.

Question #4: What will prevent protection companies from becoming a protection racket?

Long: “Well, other protection companies. If it succeeds in doing it, then it’s become a government. But during the time it’s trying to do it, it hasn’t yet become a government, so we assume there are still other agencies around, and it’s in those other agencies’ interest to make sure that this doesn’t happen. Could it become a protection racket? In principle. Could protection agencies evolve into government? Some could. I think probably historically some have. But the question is: is that a likely or inevitable result? I don’t think so because there is a check-and-balance against it. Checks-and-balances can fail in anarchy just like they can fail under constitutions. But there is a check-and-balance against it which is the possibility of calling in other protection agencies or someone starting another protection agency before this thing has yet had a chance to acquire that kind of power.” 18

Brian: Let’s run through a scenario: A protection agency gets a substantial market share in a geographical region due to high quality of service. Let us call them the Bourbon Company. It then decides to become a protection racket, a monopolistic government. To do so, it must use coercive force to turn their substantial regional market share into a 100% regional ‘market share’, by forcing those who hadn’t been customers before to pay them. Seeing this, the non-customers in the region, and a number of customers who aren’t keen on being under monopoly rule, decide to call in other protection agencies to defend them, most likely agencies with their main bases of operation in other geographical regions.   

The Bourbon Company, having gone rogue, levies tribute for their war effort from every person within their area of power. The people opposing the Bourbon Company in the region must band together and hire other protection agencies, probably from abroad, to defend their freedom. These protection agencies are not going to finance a costly war out of their own pockets: the people threatened by the Bourbon Company must have enough money to pay these other agencies, in order to make fighting a war on these people’s behalf profitable for those agencies. In order to stand a chance, the anti-Bourbon coalition would need to include a significant number of rich and influential people from the threatened region, to persuade people to support their cause and to be able to pay the other protection agencies for help.

Here’s the problem though: what if the Bourbon Company promises special political privileges to the rich and influential people in the threatened geographical region in order to secure their support? What if they also co-opt the influential intellectuals and demagogues of the region, whom they could use to persuade the masses to support their coup? If they did these things, then the anti-Bourbon coalition would be sapped of the kind of support that it would need to stand a chance against the Bourbon Company. Outside protection agencies would view getting involved in such a conflict as dangerous and overly costly, with negligible chances of profit. The Bourbon Company would take over the region, and become a monopolistic government. Historically, I think that most newly-formed governments got their start in this or in a similar way, especially the part about co-opting rich and influential people and intellectuals.

If my analysis is correct, than establishing anarchy would be a losing proposition overall. Whatever short-term gains for freedom that might come out of an initially anarchic arrangement would be trumped by the chaos and destruction that the struggles of the protection agencies to become monopolistic governments would bring in their wake. Better to make do with the current governments and try to reform them through popular pressure, than go through that kind of chaos and get the same thing (monopolistic governments) back soon anyway.

                 

  

   

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[1] Roderick T. Long, “Libertarian Anarchism: Responses to Ten Objections”, transcription of an informal talk at the Mises Institute, given during the Mises University, August 6, 2004. 

Critique of Noam Chomsky's 'Profit Over People'

Profit Over People: Neoliberalism and Global Order[1]

Chapter 1: Neoliberalism and Global Order

Chomsky: “There was no need to explain the doctrines of “really existing free market capitalism” to the Reagan administration. They were masters of the art, extolling the glories of the market to the poor while boasting proudly to the business world that Reagan had “granted more import relief to US industry than any of his predecessors in more than half a century” – which is far too modest; they surpassed all predecessors combined, as they “presided over the greatest swing toward protectionism since the 1930s,” Foreign Affairs commented in a review of the decade. Without these and other extreme measures of market interference, it is doubtful that the steel, automotive, machine tool, or semiconductor industries would have survived Japanese competition, or been able to forge ahead in emerging technologies, with broad effects through the economy.” (Varieties of Neoliberal Doctrine)

Brian: I really must object to this conceptual framework. There is no such thing as “really existing free market capitalism”, different from the free market capitalism of economic theory. Free market capitalism is an ideal type, defined as a societal arrangement where coercion through physical violence, theft, fraud, or the threat thereof, is entirely absent. The Reagan administration was an interventionist, war-mongering, crony capitalist regime that claimed to champion free market principles. By criticizing this regime, one is not criticizing free market capitalism.

This tactic comes with particular ill grace from Chomsky, who claims to be a ‘leftist libertarian’, an ‘anarcho-communist/syndicalist’. He would probably vehemently object if I criticized his leftist views by saying that “really existing leftism” consists of the brutal communist regimes which Chomsky himself is critical of. He would probably point out that his version of leftism is very different from the brutal state communist manifestations. I would say the same myself in defense of the ideal concept of free market capitalism.    

As for Chomsky’s implicit praise of protectionist policies, I have recently written a whole post dedicated to the protectionism issue, which can be found here: http://thinkingabouthumansociety.blogspot.ca/2014/01/free-trade-versus-protectionism-six.html

Chomsky: “I am only barely touching on intricate and fascinating issues, which suggest, I think, that leading principles of classical liberalism receive their natural modern expression not in the neoliberal “religion” but in the independent movements of working people and the ideas and practices of the libertarian socialist movements” (Varieties of Neoliberal Doctrine”

Brian: Another attempt to claim classical liberalism for contemporary leftism, let’s see how this one fares… Chomsky obviously realized that it would be too absurd to claim that classical liberalism, which unambiguously opposed state intervention in most areas of social life, was a precursor to leftist statism. So he calls it a precursor to his own oxymoronic political views: libertarian socialism!

Now, how on earth can one be both a libertarian and a socialist? Socialism, fundamentally, stands for public ownership of the means of production, and secondarily, for egalitarianism as a distribution ideal. Libertarianism, fundamentally, stands for private ownership of the means of production, and secondarily, for market meritocracy (reward according to how well one succeeds in serving the consumers) as a distribution ideal. I think that these are useful definitions of the two ideologies that are both clear and unambiguous, as any good definition should be.

If we accept these two definitions, then libertarian socialism is impossible, by definition. Means of production cannot be mostly privately owned and mostly publicly owned at the same time. One’s distribution ideal cannot be market meritocracy if one is in favour of forced redistribution of resources to affect more egalitarian outcomes.

The only way out for libertarian socialism is if we choose to define libertarianism as anarchism. In an anarchist world, it would be theoretically possible for a gang of socialists to take over a region by force. They could then make all inhabitants hand over all their property to the gang, property that would then (supposedly) be administered as ‘communal property’ for the whole society. It is difficult to see why this would be very different from statist socialism though. Essentially, this was what Lenin and his gang of Bolsheviks did in Russia, and the results can hardly be called ‘libertarian’ by any reasonable definition of the term. For the inhabitants of a region who are forced to live under a communist regime, it doesn’t particularly matter whether that regime is called an ‘official State’ or whether it is called an ‘illegitimate bandit gang’, the results of their rule are similar.      

It would also be possible, in an anarchist world, for like-minded socialists to pool their property (recognized as privately owned by them by non-socialists) together and to live in a communal fashion. But actually, this is already possible; there is no need to wait for an anarchist revolution to make this happen. It’s just that it’s not a very popular lifestyle choice, except perhaps among members of the Hippy/New Age subculture and among members of some insular religious communities.

Given all this, I think it is best to stick with the first definition of libertarianism that I provided, as it contributes more to clarity of thought than defining libertarianism as anarchism. Even if we were to define libertarianism as anarchism though, communism imposed on an initially anarchist region by force is certainly not something that any classical liberal thinker would have looked favorably upon.

Chapter 2: Consent without Consent: Regimenting the Public Mind     

Chomsky: “The Madisonian principle, then, is that government must guard the rights of persons generally, but must provide special and additional guarantees for the rights of one class of persons, property owners.”

Brian: This ‘one class of persons’ includes every person who isn’t a corpse. No one can live without holding and consuming material objects (property). Someone whose rights to private property were completely and effectively disregarded would have his food and water snatched from his hands before he could consume any of it. A couple of days of this and that person would become a corpse. Having a right to ‘freedom of speech’, or the ‘right to vote’ in democratic elections, would be little consolation to this doomed person.

Chomsky: “Dulles and Eisenhower expressed their concern over the Communist “ability to get control of mass movements,” an ability that “we have no capacity to duplicate”: “The poor people are the ones they appeal to and they have always wanted to plunder the rich.” In other words, we find it hard to induce people to accept our doctrine that the rich should plunder the poor, a public relations problem that had not yet been solved.”

Brian: What a grim world Chomsky (mistakenly) believes that he lives in! Apparently, the only options are: 1. The poor plunder the rich. 2. The rich plunder the poor. But, there is actually a third option: everyone ceases and desists from trying to plunder anyone else. Chomsky doesn’t recognize this option because, for some reason, he doesn’t believe it is possible for people to get rich by giving others what they want. The only way people can get rich is, in Chomsky world, through plunder of the poor.

This leads to an interesting question: does Chomsky, a pretty well-off man himself, believe that he acquired his wealth by plundering poor people? Or does he think that he’s the exception to the rule? Either way, it would be easier for Chomsky if he just recognized that wealth can indeed be acquired by giving other people what they want, even though it is sometimes acquired through overt or covert plunder.           

Chapter 4: Market Democracy in a Neoliberal Order

Chomsky: “Before the (freer trade) “reforms” were instituted, local (Haitian) rice production supplied virtually all domestic needs, with important linkages to the domestic economy. Thanks to one-sided “liberalization,” it now provides only 50 percent, with the predictable effects on the economy. Haiti must “reform,” eliminating tariffs in accord with the stern principles of economic science – which, by some miracle of logic, exempt US agribusiness; it continues to receive huge public subsidies, increased by the Reagan administration to the point where they provided 40 percent of growers’ gross incomes by 1987. The natural consequences are understood: a 1995 USAID report observes that the “export-driven trade and investment policy” that Washington mandates will “Relentlessly squeeze the domestic rice farmer,” who will be forced to turn to the more rational pursuit of agroexport for the benefit of US investors, in accord with the principles of rational expectations theory.”

Brian: The historical interpretation contained in this paragraph does not make sense. The US, by getting Haiti to knock down its tariffs on agricultural imports, opens Haiti as a market to publicly-subsidized US agricultural producers. Now, presumably these US producers were offering their products at lower prices than the domestic Haitian producers were, hence the take-over of 50 percent of Haiti’s agricultural product market share by the US producers.

Now, according to Chomsky, these lower prices wouldn’t be possible if US agricultural producers didn’t receive such heavy public subsidies. This may well be true, or it may not, as an unhampered US agricultural industry would probably be more productive than it is in its current subsidized and restricted form. In either case though, the people who should be (quite rightly) complaining about these subsidies are the US taxpayers forced to pay for them, not the fortunate customers who are able to buy at lower prices due to the subsidies.

Alas, in Chomsky world, cheap food for residents of poor countries is not a blessing, but a curse. This calamity allegedly resulted in ruin for many Haitian farmers, while forcing others to (horrors!) export their products. In other words, we have a situation where all of the Haitian consumers have access to cheaper food, and where many Haitian farmers can now pursue gains more effectively by exporting their products to foreign markets where the demand is higher. But how about the farmers that were squeezed out by US competition? Well, these were probably the more inefficient farmers, whom the Haitian food consumers only put up with because of the tariff barriers restricting their freedom of choice in the matter.

What can these farmers do when they can no longer farm? Well, if Haiti were a well-governed country rather than the political basket case that it is, the farmers would sell their land to those who had more value-productive uses for it, and then they would go do something else. Perhaps they would go work in the city in an industry where their abilities were valued more highly than they were in the agricultural industry.

The million dollar question is: why couldn’t they do this? Some probably did in fact do this. However, I would imagine that many were prevented from adjusting their affairs appropriately by political turmoil, violence, and corruption, and by the over-reliance of Haiti in general on the gratuitous aid dispensed by western Non-Governmental Organizations (NGOs). This potent brew of economic misery, not the fact that freer trade with the US resulted in cheaper food prices for Haitians, should be getting the blame for Haiti’s woes.   

Chapter 6: “The Ultimate Weapon”

Chomsky: “The most effective way to restrict democracy is to transfer decision making from the public arena to unaccountable institutions: kings and princes, priestly castes, military juntas, party dictatorships, or modern corporations. The decisions reached by the directors of GE affect the general society substantially, but citizens play no role in them, as a matter of principle.”

Brian: Let’s start by clarifying the definition of democracy that Chomsky seems to be using. He seems to think that the ‘democratic public’, presumably through elections or committees or something similar, should have as much decision-making power as possible, in every area of societal life. Thus, a totalitarian state, run based on strict democratic procedures for ruler selection, would seem to be Chomsky’s ‘democratic’ ideal.

With this in mind, let us now move on to Chomsky’s lumping in of “modern corporations” with various authoritarian political institutions. For a libertarian such as myself, this procedure is entirely unjustifiable. Authoritarian (and democratic) political institutions and actors fund and facilitate their activities through physical violence or the threat thereof. On the other hand, free market business corporations fund and facilitate their activities through production, voluntary exchange, and voluntary contractual arrangements. To me, the difference seems pretty obvious and stark.

Given Chomsky’s totalitarian definition of democracy though, lumping together business corporations with authoritarian political institutions actually makes some sense. If ‘the people’, in their collective, ‘democratic’ capacity, are entitled to control all affairs that go on in their country, than any institution that isn’t run by ‘the people’ would be equally guilty of an offense, whether that institution be a political organization, a business organization, or a familial organization. A business corporation seeks to direct production, to hire and fire, to pay dividends or not, to issue debt or not, without waiting for the commands of ‘the people’? Then these ‘unaccountable corporate autocrats’ are guilty of an offense against ‘the people’, who have a right to oversee and control everything. If one doesn’t agree with Chomsky’s totalitarian democratic ideals though, business corporations and autocratic political institutions are completely different things.     

Finally, Chomsky’s totalitarian democratic ideals aside, it is not true that “citizens play no role” in the decisions made by corporate leaders. These citizens are in fact the most important people to business organizations: they are the consumers, the customers who are ‘always right’. They are the ones whose patronage enables corporations to pay the bills, to expand, and to make profit. They are the ones whose displeasure and withdrawal of patronage causes corporations to cease making profit, to contract, and to ultimately be forced into bankruptcy. This ‘role’ as a customer is a far more powerful position than a citizen’s ‘role’ as a democratic elector. The citizen-elector’s ‘role’: to choose, every few years, which incompetent band of distasteful individuals will rule over him. Compared to the customer’s right to patronize or to not patronize a business with his own money, this elector role is a pretty powerless and un-influential position.

    

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[1] Noam Chomsky, Profit Over People: Neoliberalism And Global Order, Epub edition (New York: Seven Stories Press, 1999).

The Tale Of Carl The Bloody

Chapter 1: Religion

“Have a good trip, Father Murray,” the innkeeper said to his departing guest. “Be sure to watch out for Carl The Bloody,” he added.

“Who is that, my son?” Father Murray, a Roman Catholic friar, asked.

“Carl The Bloody is a ruthless robber. He lies in wait behind hills adjoining the road, and then ambushes victims whom he wants to rob. But he doesn’t just rob his victims, he kills them first!” the innkeeper recounted.

“Poor sinner. God have mercy on his soul,” said Father Murray sadly, as he left the inn and started down the road.

Father Murray walked down the road for a few kilometers, before stopping for a rest. As he sat drinking some water, a fierce-looking man emerged on top of a nearby hill.

“It’s not your lucky day today! Prepare to meet death by the hands of Carl The Bloody!” the fierce man bellowed, as he drew his sword from its scabbard.

Father Murray replied calmly: “You must be the poor sinner that the innkeeper told me about. Why do you seek to kill me? Why plot such an ungodly deed?”

“Why? Because I like killing people, and because I like taking their money and their belongings once they’re dead!” answered Carl.

“My son, don’t you know that the Sixth Commandment that God passed down to Moses is: “Thou shalt not kill”, while the Eighth Commandment is: “Thou shalt not steal”?” Father Murray asked.

“I’ve never been too fond of being commanded,” Carl said darkly.

“Poor sinner! If you disobey God’s commands, your immortal soul will be tortured in hellfire for all of eternity. You won’t be too fond of that either, will you?!” Father Murray said dramatically.

“You fool! Your God has no power over me! I worship Sin Iktar, the god of death and banditry! His commandments are: “You shall kill often!” and “You shall steal often!” If I kill and steal enough, I will enjoy all of eternity in the Mead Hall of Immortal Heroes.” Carl explained.

“What nonsense is this? You just made this up to justify your wrongdoing. Repent now and God may still forgive you your sins!” Father Murray said, starting to get nervous.

“Oh Sin Iktar! Grant me the ferocity to butcher this blaspheming infidel!” Carl bellowed, as he charged over and cut Father Murray into pieces.

Chapter 2: Morality

Carl had found a nice hill to camp out behind, peering out at the road every now and then to see if anyone was coming. He hoped that a rich person would come by soon. Carl had a craving for expensive roast duck that he wanted to satisfy that night, and only the best quality would do!

After waiting for an hour, Carl spotted a wealthy-looking man coming down the road on horseback, top hat and all. Barely containing his excitement, Carl rushed out on top of the hill to confront the passerby.

“It’s not your lucky day today! Prepare to meet death by the hands of Carl The Bloody!” Carl shouted.

Lord Stanley, the man with the top hat, stared at Carl with a startled expression on his face. He quickly recomposed himself though.

“Good sir, surely you do not mean what you say,” said Stanley. “Killing me, an innocent man, would be a profoundly immoral act.”

“Morality? There was a priest that I killed the other day talking about God’s commandments and other such nonsense, is that would you mean?” asked Carl.

“Good heavens no! I am talking about real, human morality, not that superstitious stuff!” said Stanley.

“You see,” Stanley carried on. “’The Greatest Happiness For The Greatest Number’ is the ultimate foundational principle of human morality. If you killed me, you would be causing me much more suffering than you would be gaining in happiness for yourself. Your action would render humanity as a whole worse off, thus making it profoundly immoral.”

“Hogwash!” exclaimed Carl. “I prefer the moral principle: ‘The Greatest Happiness For The Greatest Guy’. And guess what? I’m the greatest guy, and killing and robbing you would make me happier, so my action would be an eminently moral one!”

Stanley fidgeted nervously for a few moments, but then recomposed himself again.

“Very well, so you are not a utilitarian, fair enough,” said Stanley. “Then surely you must believe in the Natural Law. You see, killing me would be fundamentally against your nature as a rational being that must live by production and peaceful exchange. You don’t want to go against your nature now do you?”

“Actually, I know for a fact that I am a brutal, rapacious being, and to demonstrate this fact to you, I’m going to shoot your horse in the head with my musket, and then I will proceed to beat you to death with my bare hands. After that, I will take all of your money, and use it to buy myself a nice roast duck for dinner,” said Carl, in an eerily calm manner.

Carl then proceeded to do just as he said he would.

  

Chapter 3: Sympathy

The next day, the first passerby that Carl confronted was a young man, pushing his elderly mother along the road in a wooden wheelchair.

           

“It’s not your lucky day today! Prepare to meet death by the hands of Carl The Bloody!” Carl shouted, as usual.

The young man immediately got down on his knees and begged Carl: “Please sir, if you kill me, my poor old mother will have no one to take care of her. Without anyone getting her food and taking care of her when she’s sick, she will surely die. Please have mercy!”

The young man’s plea brought a flood of memories back to Carl. He remembered when he, as a young man and the only surviving male member of his family, had to take care of his old mother. He remembered the struggles that he had went through to keep his mother safe, only to have her taken from him by a bout of malaria.

But Carl had a reputation to uphold! He had never let a victim go! Carl drew his sword and rushed over to the kneeling young man and his sobbing old mother. Carl lifted his sword to deliver a killing blow but he couldn’t do it. He felt that if he struck this young man, he would somehow be striking himself as well.

“I will let you go,” Carl said as he lowered his sword. “But if you mention this event to anyone, I will find you and kill you. And if you don’t take care of your mother properly, I will find you and kill you.”

“Thank you Sir!” the young man exclaimed in relief. “I will do everything that you say!”

Chapter 4: Retaliation

Lord Hawthorne was riding down the road on the way to his nearby estate. All of a sudden, a fierce-looking man emerged on top of a hill.

 “It’s not your lucky day today! Prepare to meet death by the hands of Carl The Bloody!” Carl shouted.

Hawthorne just laughed.

“What are you laughing at? You dare laugh when death is staring you in the face!?” Carl shouted angrily.

“You want to kill me, bandit?” asked Hawthorne. “You may certainly do so, but don’t expect to keep your own life for long afterwards”.

Now it was Carl’s turn to laugh.

“Ooh, I’m so scared,” taunted Carl. “Is your ghost going to come back and get me?”

“Nothing like that,” replied Hawthorne. “But I should inform you that I am the lord of a nearby estate. I have 1000 armed retainers at my service. I have promised that whoever among them avenges my death (should it be a violent one), will inherit all of my wealth and lands.”

“Why should I believe you?” asked Carl. “How do I know you’re not just making this up to save your hide?”

“I may be,” replied Hawthorne. “But is that a chance you’re willing to take?”

Carl had a gut feeling that Hawthorne was actually telling the truth. Carl disappeared beyond the hill as Hawthorne continued on his way.

Chapter 5: General Rules: Action:

Carl stewed in his anger and misery all night. Two people he had let go, in two straight days! Carl promised himself that the next day, no matter what, he would kill his victim.

Carl got up early in the morning and found a hiding spot. He spotted a wise-looking old man walking towards him on the road. “This is my chance, I won’t let this one go!” thought Carl, as he emerged to confront the old man.

“It’s not your lucky day today! Prepare to meet death by the hands of Carl The Bloody!” Carl shouted.

The old man stared at Carl thoughtfully.

“I would think twice before doing that, young man,” the old man said. “Stop, and imagine living in a world where everyone acted like Carl The Bloody, robbing and killing at will. Production and trade would grind to a halt, and everyone would live in constant fear of death or spoliation. In such a world, all of the good things in life would be no more; they would be replaced only by fear, miserable poverty, and death. That is what would happen if everyone acted like Carl The Bloody.”

“I am really not in the mood for your pedantic ramblings!” growled Carl. “Give me your life!”

With that, Carl drew his sword, rushed towards the old man, and stabbed him to death.

Chapter 6: General Rules: Reaction

Carl didn’t know this, but when he killed the old man, they were not alone. A young man by the name of Roger Grimsby, hiding in the bushes nearby, observed the whole scene. Roger was greatly impressed by Carl’s conduct: a fearless man who took what he wanted, with no hesitation or remorse!

Roger decided that he would be a ‘hero’ just like Carl, better even! He left his home on the family farm, bought a musket and a sword, and set up on a stretch of road 50 kilometers away from where he had observed Carl killing the old man.

“Killing and robbing,” thought Roger. “Will be much more fun, and lucrative, than tedious, back-breaking farm work!”

Inspired by Carl, Roger engaged in ruthless banditry for a whole year, claiming many victims and lots of loot.

After a year’s time, Roger decided that he was ready: he was ready to do what he had set out to do, become a greater killer than his idol, Carl The Bloody!

Roger set out for the area where he had observed Carl killing the old man one year ago: he, Roger Grimsby, was going to kill and rob Carl The Bloody himself!

Roger knew what kind of hills Carl would choose to hide behind. Roger scoured all of the favorable hills that he could find, until he found some large human footprints on the foothills. Roger knew that these fresh footprints were those of Carl The Bloody, and that he must be hiding nearby.

Roger, who had become a skilled tracker over the past year, carefully followed Carl’s tracks. After a while, Roger spotted a large, muscular man lying prone near the top of a hill, peering out over the nearby road.

“I’ve got you now!” thought Roger, as he stealthily crept towards Carl. Once he got close enough, Roger took out his loaded musket and pointed it at Carl.

““It’s not your lucky day today! Prepare to meet death by the hands of Roger The Grim!” Roger shouted.

Carl wheeled around to see a fierce-looking young man pointing a musket at his head.

“Hey! That’s my li…” Carl began, before Roger’s musket ball lodged itself in his heart.

As Carl lay there dying, he remembered something that one of his victims had said: “imagine living in a world where everyone acted like Carl The Bloody”.

Free-Trade Versus Protectionism: Six Principles To Keep In Mind

            The debate between free-trade and protectionism can sometimes get complicated. As with any complicated issue, keeping some basic principles relevant to the issue in mind can help make the issue simpler. I propose the following six principles:

1. More opportunities for a wider international division of labor are better than fewer opportunities:

            

           The division of labor, the phenomena, enabled by free exchange, that allows for the existence of economic specialization to better exploit land, natural resources, and the particular talents, skills, and aptitudes of workers, contributes mightily to our economic prosperity. When taking place within national boundaries, this fact is rarely questioned. When it comes to an international division of labor though, protectionists do not recognize many benefits, whereas free traders do.

            

           If there were no economic benefits to the world’s consumers from a more international division of labor, a free-market would tend not to produce it. In this case, there would be no need for coercive protectionist tariffs. They would be superfluous, trying to prevent something that the free-market wasn’t going to make happen anyway. The fact is that the world’s consumers do benefit from an international division of labor, which is why coercive tariffs are needed in order to stop it.

            

           How does an international division of labor benefit the world’s consumers? The most obvious way is through exchange of natural resources between countries. Different countries have different natural resource make-ups. If residents of a country with a lot of oil deposits are allowed to trade with residents of a country with a lot of copper deposits, the residents of both countries are better off because the resources are moved from the country where they are less valued to the country where they are more valued. The oil producing country can get access to copper, while the copper producing country can get access to oil.

            

           This is by no means the only way that an international division of labor is beneficial though. In an advanced economic system, production often takes place in hubs. Silicon Valley in California is a good example of a production hub, a place where producers of a particular kind of good congregate in order to share knowledge, attract workers, and increase their efficiency. If countries are allowed to trade with one another, the whole world can benefit from each production hub. Under national autarchy, each country would have to try to replicate each relevant hub within their own borders, something which would be wasteful and would result in less efficient hubs overall. In addition, for whatever reason, different countries seem to produce goods in different ways. For example, Japanese cars, American cars, and German cars are all different, and there is a particular ‘national flavour’ for each kind of car. Under free trade, these various ‘national flavours’ are made available to consumers throughout the whole world, who have more choice in product as a result.

            

           Finally, free trade and an international division of labor mean that a much wider market exists for each product than would exist under national autarchy.  More competition means more choice for the consumers, more pressure on each competitor to produce high quality goods efficiently, and a significantly smaller chance of the monopolization of a given product market by a single firm. It is much harder to achieve a monopoly, or even a dominant position, in a world market than it is in an autarchic national market.   

2. More prosperity results if capital and labor are allowed to meet each other freely:

            

           Capital goods (production tools), human labor, and land/natural resources, are the three main classes of factors of production. These factors must be combined in a specific way and in a certain proportion in order for production to take place. The more suitable the combination proportion is to production, the more efficient production becomes, and the more prosperity results.

            

           For example, imagine that a business firm owns a plot of farm land in the US and a plot of farm land in India, each run by a contract farmer. The managers of the firm are trying to decide where to use the new tractor that they just purchased. The American farmer has a tractor, but says that he could use a second one in case of problems with the first one and so that his son can help out in busy periods. The Indian farmer is currently working his land with hand tools, and says that he would be much more productive if he had a tractor to use. We will assume that the two plots of land are of equal size, have equal fertility, and are used to produce the same crop. In this case, it is likely that the firm will decide to send the tractor to their Indian farmer. It will benefit his production more than the second tractor would benefit the American farmer’s production. Fundamentally, this is because the Indian farm has enough labor but would really benefit from more capital, while giving more capital to the American farm would be beneficial to a lesser degree, because a fairly appropriate combination of labor and capital had already been achieved there.

            

           As a general rule, the more capital is invested in a region, the more productive labor done in that region becomes. The more productive labor becomes, the higher real wage rates employers will have to pay in order to secure the scarce labor that they need. Employers need labor to combine their capital with in order to produce value and make money. If the real wage rate offered is too low, the labor will be combined with a more generous employer’s capital to produce value. The more capital exists to compete for scarce labor to be combined with, the higher real wage rates for workers the free market will settle on.

            

            Under conditions of free trade and free international investment, capital is allowed to freely flow to locations where investors expect it can be combined with labor and land/natural resources most productively. A specific production tool (capital good) can only be in one country at a time. Either the tractor is invested in India, thereby contributing to raising Indian real wage rates, or the tractor is invested in America, thereby contributing to raising American real wage rates. Thus, the short-term interests of workers in different parts of the world are tied to these capital flows.

            

           Leftists draw curious conclusions from these facts. On one hand, they profess to be deeply concerned with the well-being and ‘economic development’ of people living in poor countries. On the other hand, whenever an American company decides to invest some of their capital in a poorer country, leftists denounce them for not caring about ‘American industry’ or the ‘American worker’. As I said though, the capital cannot be in two places at once. Either it is raising the real wages of workers located in India or it is raising the real wages of workers located in the US. If leftists really cared about raising the standards of living of poor countries and about economic egalitarianism, they would applaud, not condemn, investment by American companies in poor countries.

            

           Say the protectionist does not really care about the well-being of poor countries or about economic egalitarianism though? What if he is concerned with the negative effects on the real wage rates of American workers that capital flows to poorer countries might have? Here, I must admit that the capital flows will probably result in a short-term drop in American real wages. I say short-term because if free-market, international allocation of capital prevails, capital will tend to be invested in the places with the best labor and land conditions, which will result in production being carried on more efficiently. More efficient production translates to gains for the world’s consumers, who can now buy these products for a lower money price due to their greater supply. The American worker who experiences short-term pain will thus benefit in his capacity as a consumer, and after a while of more efficient international investment and production, he may well benefit as a consumer more than he lost in his capacity as a producer (worker). If protectionism had prevailed instead, the workers in the poorer country, now denied access to the capital that would have came their way under free trade, remain just as poor, without any worldwide consumer benefit being reaped from free international investment.          

3. Correlation does not equal Causation, alleged Counterfactuals do not equal Evidence:

           

           A favoured protectionist mode of argumentation goes something like this: ‘Japan, Taiwan, and South Korea are countries who went from poverty to affluence in the 20^th century. They were only able to do so because their governments engaged in intelligent industrial policy (subsidizing certain industries at the expense of others), and knew when to ‘protect’ their countries against foreign competition so that their industries could develop.’ Here, we have a correlation between rapid economic development and certain protectionist policies being adopted. At the same time though, the governments of these countries did not suppress free market forces during their periods of rapid growth as much as other countries who did not develop as fast did. Here, we have another correlation, this time between rapid economic development and free market forces being given sufficient leeway to operate.

            

           With these facts, the statist protectionist could argue that the development happened despite these free market tendencies, not because of them. On the other hand, the libertarian free trader could argue that the development happened despite the protectionist policies, not because of them. Which interpretation is correct? I see no possibility of answering this question at all decisively through historical fact grubbing alone. Rather, we need to consider the policies under consideration from the perspective of economic theory, and then see which interpretation makes more sense, in the light of what economic theory has to say on the matter. The preceding two principles in this article represent an attempt to do just this, although a lot more could be said on the subject. The point is that without an explanation from the perspective of economic theory, we need not accept the protectionists’ interpretation of economic history.   

4. Other institutional conditions equal, national borders are just lines on a map:

            

           One thing to always keep in mind is that nation states are not relevant units of analysis in economic theory. The reason is fairly obvious: they can vary immensely in size, from a city state such as Singapore to a giant, populous country such as China or the United States. Thus, when evaluating protectionist arguments, we should always keep in mind that there is nothing magical about a ‘country’. And if not, then how far does the protectionist seek to push autarchy? While a protectionist may seek near economic autarchy for the United States, they might think twice if they were making recommendations for Singapore. No protectionist has ever clearly answered the question of what minimum size a country needs to be in order to effectively seek the ‘national economic self-sufficiency’ which protectionists are so fond of.

            

           This consideration also applies when thinking about history. Protectionists claim that in order for a country to develop economically, it must be protected against the competition of countries with established industries until the developing country produces established industries of its own. But now, let us now consider the economic history of the western United States. The eastern United States already had developed manufacturing industries when white people settled the western states, and railroads were soon built to make the transport of these products cheaper. Under the US constitution, interstate tariffs were not allowed, thus trade between the western and the eastern United States was mostly free. If the western United States were a different country than the eastern United States, then according to protectionist theory, the western States shouldn’t have developed economically due to the competition of the already established eastern industries. The fact is that the western states did develop economically though, and they even developed manufacturing industries of their own.

            

            This example is not brought up often in the free trade versus protectionist debate because the western United States and the eastern United States were in fact the same country. But would it have been inconceivable for them to have been two different countries who just signed a long-lasting free-trade agreement with one another? There are many smaller countries in the world than the western United States, countries for which protectionists recommend autarchic policies. If protectionist policies are not necessary for this kind of inter-country regional economic development, then why would they be necessary for countries that are smaller geographically than these regions?

5.  The drive for autarchy leads to war:

            

           Under a regime of free international trade and free international investment, national borders do not matter as much as they do in a protectionist world. This is because under free trade, production is carried on with the world’s consumers in mind, rather than just the one country’s consumers. Under free trade, it probably wouldn’t matter to a consumer in Maine whether he got his timber from a New Brunswick forest or from a Minnesotan forest, even though the former would come from Canada and the latter from the United States. The benefits from the exploitation of land and natural resources are available to the consumers of the world, rather than just to the consumers of the country in which they are located, as is the case under protectionist autarchy.  

            

           In a world of autarchic or near-autarchic nation states, capturing land and natural resources and incorporating them into the nation states through violent conquest becomes beneficial to the consumers in that nation state. After the conquest, they are able to access the benefits from a larger supply of land and natural resources. If some natural resources cannot be found in the vicinity of the nation state, there is pressure for imperial colonies to be established in regions of the world where these resources are located.

            

           This is not just a theoretical description; it is what actually happened in the late nineteenth century as the European nation states/empires started adopting more and more protectionist and expansionist policies, arousing hostilities which contributed to causing the First World War. Protectionist policies were pursued especially vigorously in the 1930s, the period leading up to the Second World War. In turn, one of the Nazis’ avowed goals was to capture more Lebensraum (living space) and natural resources for the benefit of the German people. Would such a goal have been as popular in a world characterized by free trade and free investment? Very unlikely. Thus, free trade is a force that contributes to international peace, while protectionism is a force that contributes to international hostilities.

6. One cannot approach an ideal condition in the real world if one does not try:

            

           Many who sympathize with protectionism reason as follows: ‘free trade sounds great in theory, but in practice, no country will agree to abide by the rules of free trade. The strong countries will pursue protectionist policies if they believe it is in their interest to, while hypocritically forcing weaker countries to open their borders to all imports from the strong country.’ Now, it is true that such a situation is not ideal, although it is not true that two bad policies (stronger countries and weaker countries adopting protectionist policies) make a good policy. But in response to such a situation, we should try to think of a way of bringing the real world closer to the ideal, rather than just giving up by proclaiming free trade to be only good ‘in theory’, but impractical in the real world.

            

           As an example, allow me to present an idea for your consideration:  An international organization known as the World Trade Authority (WTA) is to be established. Under the charter of the WTA, it would specify that there are to be automatic reciprocity arrangements between countries with regards to tariff policies, and that tariffs can only be levied as a uniform percentage of sales cost for all products, no differential rates depending on the product. Thus, if the Hong Kong government decides not to impose tariffs on US products, the US government cannot impose any tariffs on Hong Kong products. If the US government imposes a 10% tariff on Canadian products, the Canadian government cannot impose a tariff higher than 10% on US products (though they may opt for a lower rate if they so choose).

            

          Any tariffs that countries choose to impose are not to be collected by individual countries, but by WTA personnel. Any funds collected will be administered by the WTA, and used to fund basic scientific research, published in the worldwide public domain, or to fund international space exploration missions. All of this will be contained in the charter of the WTA and cannot be changed by WTA officials.

            

           It is the hope that under this arrangement, countries will be much more hesitant to impose tariffs than they are now. Any tariff money collected will not flow into the coffers of the government who imposed it, but into the coffers of an international organization. Any tariff imposed to ‘help’ the country’s domestic producers will end up costing the country’s exporting producers, who must now face higher tariffs abroad as a direct, automatic result of the tariff policy adopted. I believe that a combination of these two factors will make protectionist policies much less popular, and would thus allow the world to approach the free trade ideal in a way that is fair to all countries. I think that this approach would be superior to just internationally mandating free trade for all countries, primarily because it is less heavy handed and violates the sovereignty of individual states less.

            

           Thus, next time you find yourself considering the merits of protectionist arguments and policies versus free trader arguments and policies, I hope that you will keep these six principles in mind. They may not refute the case for protectionism in each and every instance, but I think that they should definitely weaken its appeal overall.