Controversy  

Does Freedom Mean Anarchy?

by Charles Murray, David Friedman, David Boaz, and R.W. Bradford

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From the invention of "anarchism" in the 17th century, the word has almost always been employed as a pejorative. As a political theory, it has usually been befriended by a tiny minority of political cranks. It has, however, been popular with some libertarians.

Many, if not most, libertarians believe that it is always wrong to initiate the use of force. This leads them toward anarchism: after all, how can you have a government that does not initiate force, if only to collect taxes to finance its activities and to enforce its claim to exclusive jurisdiction? Some who advocate the non-initiation imperative, such as Ayn Rand, have tried to fudge the issue, by concocting arguments to the effect that government coercion is somehow not coercive or that government can somehow exist without coercion. But many who advocate the non-initiation imperative, most notably Murray Rothbard, have surrendered to the ineluctable logic that leads to anarchism.

Many other — perhaps, indeed, most — advocates of the non-initiation imperative see the logic of the anarchist conclusion but are troubled by the practicality of anarchism. Wouldn't a society without government lead to armed conflict among its citizens? How could it defend them against external enemies? And why, if anarchism is such a good and practical way to organize society, has human history seen so few social organizations that even approach anarchy?

Libertarians whose thinking is not rooted in the non-initiation imperative are bound to be interested in this argument. Some of them argue that a society without government is perfectly plausible and is preferable to the minimal government approach, while others argue that there is an indispensable core of social functions that can be performed only by a coercive government, and that the task of political and legal thinkers is to minimize the coerciveness of the state.

At the Liberty Editors' Conference in Las Vegas on May 15, two panels were held to take up this controversy. The first considered the question of the plausibility of anarchism, the second the question of its morality.

The participants were: Charles Murray, author of "What It Means to Be a Libertarian"; David Boaz, author of "Libertarianism: A Primer"; David Friedman, a leading proponent of the practicality of anarchism and author of "The Machinery of Freedom"; and R.W. Bradford, editor of Liberty. Stephen Cox moderated both panels.

What follows is a lightly edited transcript of the first of the two panels.

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Moderator: Charles Murray, what do you have to say about the plausibility of anarchy? About its practicality?

Charles Murray: There are philosophical questions that are not to be addressed in any particularly useful way, except at the margins, by scientific findings. Questions like the nature of self-ownership and natural rights, I would classify as this type. We can argue about these and we can decide who has the better and more persuasive arguments, but our arguments will not be basically empirical.

In deciding what kind of government or lack of government you want, one factor is human nature. As I am defining that term, human nature is susceptible to a more empirical examination. It is not one that is subject to a definitive empirical investigation (but I will say parenthetically, it is going to get that way over the course of the next century, maybe even over the course of the next 20 or 30 years, as we understand in greater and greater detail and specificity how human beings are wired and how they aren't wired). It is with regard to these issues of the nature of human nature that I will confine my remarks. I think that the facts about human nature point away from anarchism and towards limited government as the appropriate way to run human affairs.

I want to make two main points. The first goes back to the 18th century and a line of thinking exemplified by Adam Smith. Other thinkers were a part of this tradition, but Adam Smith said it best in "The Theory of Moral Sentiments." Anybody in this room who wants to talk about anarchism and limited government has to read that book. It is a wonderful book. You don't have to read it cover to cover — it's sort of like my books in that way. You can dip into various parts of it and skip long sections that deal with 18th century Scotland and England. It is an absolutely brilliant book.

The point I want to emphasize from Adam Smith's argument is this: he came at the end of a time when people were asking whether human beings have a moral sense — and I would say the argument that human beings have inherently a moral sense needs to be an essential part of any anarchist argument. Adam Smith offered what is to me an utterly persuasive answer — persuasive in terms of 20th and 21st century psychology. He said, well, maybe we do have a moral sense and maybe we don't, but one thing that human beings do have (and you can look within yourselves to see whether you agree with this statement), is an innate desire for the approval of their fellow human beings, their approbation, and you can rely upon that instinctive desire for approbation from other human beings to get away with very limited government. There are lots of things that human beings will do, if given the right setup, that will lead them to behave in cooperative ways. However, you do need to have that right setup, because approbation can as easily be sought in a band of pirates, by the code of ethics of pirates. Or, as we know from street gangs in the United States, kids who go into street gangs deeply want approbation. They are being Smithian, but in ways that lead to very destructive human behaviors. And I think that having the right setup, which in the case of my own views is the restraint of force by the use of government, is appropriate.

The second aspect that I'll speak briefly on has to do with the bell curve and the question of IQ. Fifty percent of the population is below average in intelligence. [Laughter.] I love making these provocative statements. There is a real problem here because also about 20% of the population is below 90 in IQ. There are relationships between social behavior and IQ. I have no brief whatsoever for the professoriate — I agree with William F. Buckley when he said that he would rather be ruled by the first 3,000 people in the Boston phone book than by the faculty of Harvard University — but the professoriate does tend to be fairly peaceful in terms of actual use of weapons as opposed to other kinds of things. Meanwhile, there are problems of increased use of violence at a lower level of IQ. Ed Crane of the Cato Institute gave me a wonderful quote, which we used in "The Bell Curve." Out of my deep friendship for Ed, I did not cite him as the source of it because Ed doesn't like "The Bell Curve." It goes like this: everyone has a moral compass, but some are more susceptible to magnetic storms than others. I think that captures it exactly right. The equal human dignity of people everywhere within the normal range of functioning is unquestionable. Some are more susceptible to magnetic storms and so what you want is a government of simple rules — simple yes or no; this is right, this is wrong; this we will enforce, this we will not — that deals with the basic crimes. That's all you need, but you do need at least that much. The bell curve and IQ is a genuine problem in trying to do away with any form of government at all. I'll stop there.

Moderator: Thank you. David Friedman?

David Friedman: Unlike Charles, I try to write books all of which are worth reading. [Laughter.] Usually the argument on anarchy vs. minarchy consists mostly of people trying to argue that an anarchist system can't work and other people arguing that it can work. I'd like to take the other side and discuss why limited government is obviously a utopian scheme that cannot possibly work.

To begin with, the supporters of institutions that are supposed to give us governments that respect and protect rights regard all of history as experimental error — we have after all done the experiment a couple of times — and they believe that if only this time we got it right, if only we wrote the right constitution, or somehow tweaked the system, we could actually get a government which was given a monopoly of the ability to use force on other people and, of course, only use it to protect people's rights. Some of them believe you can do this with the right constitution. I was discussing this with my wife on the phone last night and she said, "Yes, the minarchists have a touching faith in constitutions." And I thought H.L. Mencken put it much better, as he put most things, when he said, "In nothing did the founders of this country so demonstrate their essential naivete than in attempting to constrain government from all of its favorite abuses, and entrusting the enforcement of these protections to judges; that is to say, men who had been lawyers; that is to say, men professionally trained in finding plausible excuses for dishonest and dishonorable acts." [Laughter, applause.]

The other variant of minarchism is the one held by those who don't think you can do it by writing the constitution right, and think you can do it by only having the right philosophy for the society. This is a view I especially identify with followers of Ayn Rand, a woman whom I greatly admire and frequently disagree with. I spent a number of years as a very active participant on a Usenet news group, where a bunch of the participants are hard-core Objectivists, some of them going all the way back to more or less the beginning of the movement, and one of the striking things was the amount of disagreement on that list. I can point you at intelligent and thoughtful people who consider themselves Objectivists, who believe that they accept the basics of Rand's philosophy, and essentially believe that you are morally obliged to obey the laws of the War on Drugs. I know one such person; he's one of the people on that list I have more respect for, because he at least follows through the logic of his position, which is a sort of a version of a social contract theory. He thinks there shouldn't be a War on Drugs, of course, but that once there is, you are obliged to obey. And there were other people with a wide range of other views — so judging just by my empirical observation starting with a reasonably commonly held philosophy, one whose founder thought it was the solution to the problem of government abuses, you can generate all of the arguments necessary, if you want, to make Mencken's plausible excuses for dishonest and dishonorable acts. To put it differently, the fundamental mistake in the view of the people who believe you can have a long-term, stable, rights-respecting government, is that they think the evidence is all a mistake — that there is no consistent reason why governments behave the way they do, it just happens because sometimes they have the wrong constitution and sometimes the wrong philosophy.

But government behavior is not an accident. If you give people a monopoly over the use of force, like any other sensible people, they will use it in a way that best achieves their ends, and that will very rarely involve protecting individual rights. There is a whole branch of economics called public choice theory which attempts to explain the behavior of governments. And it's not a finished job — there's lots of stuff we can't understand. For instance, I'm a little puzzled that they don't take 99% of our income but rather satisfy themselves with 30 or 40% — well 99% is too high, we'd die, so 94%. But it turns out that if you think through the logic of political systems, including democratic ones, the use of government to transfer money from poorly organized interest groups to well-organized interest groups and in the process take a cut is a predictable outcome. And if you had an Objectivist government and waited a few years for people to think up plausible excuses, it would happen there too. That's a prediction made with some confidence.The idea that the way you restrain people's desire to use force is to give it all to one person was famously argued by Hobbes, and I didn't realize there were that many Hobbesians left in the building.

Finally, observe that the whole minarchist position depends on the idea that though the government can't do a competent job of building automobiles or delivering the mail or producing food, somehow it can design a legal system. This is not the world's easiest problem, I can assure you.

In my view there really is only one solution to government behaving the way government behaves, and that's not to have one. [Applause.] I've spent some time and effort, and I can't do it in a ten-minute introduction, but I address it in "The Machinery of Freedom" — and there are a couple of articles that fill in the gaps that are on my web page, "Anarchy and Efficient Law" is one of them, and "Law as a Private Good" another. I think one can make a pretty convincing argument that if you have a market for law, market forces will not work exactly the same as the ones that work for automobile manufacturing, but they will tend to give you that set of legal rules that maximizes the welfare of people living under the rules. And it doesn't depend on those people knowing what rules do that. You don't have to be an automobile engineer for the market to make good cars for you, and you don't have to be a moral philosopher for the market to make good laws for you. That's the essential point that I think people miss about the whole idea of polylegal systems, market generated law, and so forth.

Now, if I were a utilitarian, as many people mistakenly think I am, I could stop now and say, "All right, the law will maximize human happiness with a few exceptions that I've noted in my footnotes." But since I'm a libertarian and I think liberty works, I think that on the whole, and again no doubt with a few exceptions, if people are free to run their own lives they will generally be happier than if they're not. And I therefore think that the law which, in the jargon of my trade, is economically efficient, or more loosely speaking, maximizes human happiness, is going to be pretty close to the law that libertarians want. And therefore, if you want a free society, ultimately the way to do it is to set up institutions in which the generation of law is a market process, where people have some degree of choice — you can't have perfect choice because the law that applies when you do something to me still applies whichever side of us we look at it from — but you can have a lot of choices and you can have market institutions that then generate law and will give you a tendency to generate the right ones.

Moderator: Thank you, David. Now, David Boaz.

David Boaz: David makes a good point. Maybe I have to change my mind. [Laughter.]

I do think it is difficult to defend against the argument that governments always exceed the powers that you give them even with the U.S. Constitution, which is about as good a constitution as you can write. We can look back on it and say, we should have included this, and we should have included that; but part of the problem is that they did include many of those things, and so you hear people say, "Well, let's add a constitutional amendment that says 'And we mean it.'" [Laughter.] I don't think that means the Constitution has been irrelevant. I think the Constitution has maintained a largely free society for a long time and that is an accomplishment. The question is whether there would be something that would maintain a freer society for longer.

At the Cato Institute I spend my days making consequentialist arguments for the negative effects of rent control, the positive effects of Social Security privatization, and so on; but the reason I'm there, the reason I'm a libertarian, the reason I work at Cato, the reason I wrote a book, the reason I've devoted my life to this, is a commitment at a much more fundamental level. I didn't study each of these issues and finally come to a conclusion about what works; at some point I think I discovered that at least in political philosophy I pretty much agreed with Ayn Rand, who summarized things that a lot of people believe.

The difference I had with Rand was that she made a tremendous effort to build a philosophical system that only in its final points came to a political philosophy; she believed that it was important to get the metaphysics, the epistemology, the ethics right before you could talk about politics. And this of course was her big disagreement with libertarians: that libertarians believed you could be a Christian, a Jew, a Muslim, a hedonist, an Objectivist, and still arrive at libertarian political conclusions, and, I think, still believe in a rights-based libertarianism.

So, although I've read Rand's arguments, and I've read Christian libertarian arguments, and I've read at least some of Kant, I go back to the way Jefferson put it in the Declaration of Independence: I hold these truths to be self-evident — it's just wrong to initiate force against people who have not initiated force themselves. And there are implications to be worked out about that, but that's really why I'm in this business, because it seems wrong to me to use force against peaceful people. The nonaggression axiom is a formal way of describing that.

What I want is a system that will minimize the initiation of force against peaceful individuals, and to me that means a government that protects us from the initiation of force by parties outside the United States (or whatever country we're in), one that protects against and punishes those who would initiate force within that society, which means some sort of police system, some sort of court system, which it seems to me are categorically different from other goods and services that I want provided. I don't see any reason that because I think government should protect against the initiation of force, it should also provide roads or schools or any of those other services that are sometimes called public goods.

Now, I think if you listen to the arguments that Charles was making, you could say that what you come to is the conclusion that we want to live in a law-governed society. We want to live in a society in which people's desires to initiate coercion against others are governed, are restrained, that there are systems in place to discourage and to punish those kinds of antisocial behavior. The question is whether that necessarily means you need a government, if we define a government as a monopoly on force. We definitely want to live in a society governed by law, but law doesn't have to mean a single monopoly provider, and indeed one of the most profound observations about why we're free in the West is because for so many years we didn't have a single monopoly provider: we had church law, mercantile law, the king's law, the manorial law, the feudal law, all these different kinds of law. Even in a less mobile society, people were able sometimes to choose among them, and that's one of the ways that we got the good law that we generally did get. So making the case for why that law needs to be provided by government is more difficult. I think Rand did a reasonably good job of explaining why the provision of law is different from the provision of other services, but the important thing is that we end up in a society where antisocial behavior, defined specifically as using force against other people, is restrained and punished. I believe that a limited constitutional government is the best approximation that we will get, but it's certainly true that there aren't many historical cases where that's worked well.

Moderator: Thank you, David. I can see that this is a topic on which we want to get a lot of audience participation, and I think we will get it. We're running a little bit long but we have one panelist yet to present, Bill Bradford.

R. W. Bradford: David asked me earlier whether I was an anarchist or not, and the only response I could give was that at Libertarian Party picnics, I always played on the anarchists' softball team. [Laughter.] I got into a long discussion of this with Murray Rothbard once. He asked me how I would describe my political philosophy and I said, "Well, it's ultimately statist." And he asked me to describe what it was, and after a long discussion he told me that he thought my position was more or less tantamount to his own. Murray, of course, considered himself to be an anarchist.

The first issue we must address is what do we mean by government. When I use the term, I use a slight variation of the classic Weberian definition: government is that man or combination of men that are capable of enforcing law within a certain geographical area.

The reason that I have such an ambivalent — I prefer to say, subtle — position is that it seems to me to be impossible to dispense with some core of government and still have a peaceful society. What I mean by that is, whether we have people actively engaged in coercion to enforce rules within a society, we still have people who are capable of doing so if so inclined. When you are in a situation where someone is capable of forcing you to do something, the fact that, for the moment, he chooses not to do so or that he shouldn't do so, doesn't make you substantially freer. So I concluded that government is ultimately not dispensable because as long as we have a substantial number of people peacefully interacting, we're going to have a combination of people who can impose their will.

My response to the question of what government should do is what convinced Murray Rothbard that I was virtually an anarchist. I think that everything a conventional government does can be privatized, except for one: a supreme court, that is, a court that has jurisdiction over competing private courts. If we don't have one, and David and I are in a lawsuit, and I win in my court and he wins in his, and each of our courts goes out and hires private armies to enforce its decision and the private armies fight it out — what we are engaged in is civil war, not civil society.

So I could be accurately described as an advocate of limited government, but not in the usual sense in which governments are limited by constitutions or by judges. I think the only thing that ultimately limits the government's power is public sentiment. That's sort of bad news for some libertarians, those who think that we can just get the right laws in place, and then we'll have a libertarian society. Unfortunately, if the public doesn't support those laws, they won't do much good.

The reason I say that I don't think judges are involved — incidentally, the Constitution doesn't give the federal courts the right to declare laws unconstitutional, they arrogated that right for themselves 20 years later. As I recall, George Washington believed that it was the president's job. And he was the first president of the United States, and the president of the Constitutional Convention. He believed that was the function of the presidential veto at the federal level, that his job was to veto laws that he thought were unconstitutional. He also thought that Congress should pay attention to the Constitution and not pass laws that were unconstitutional. The notion that the courts were a part of this process is foreign to the Constitution itself. I admit this makes me probably the strictest constructionist there is. If you read the Constitution, you can't find any place in it that says the courts are in this position.

I want briefly to make the case for the proposition that this issue is not as important as it seems. What we're talking about here is end-state libertarianism. We're talking about where the evolution of a free society eventually ends. All libertarians share a certain vision, but we have a wide variety of ideas about how to implement our vision, about how liberty can progress.

It seems to me that it's extremely difficult to envision the advanced state of an incipient process. I'm reminded of the experience of Charles Babbage, an early 19th century British eccentric, who more or less envisioned the computer. The technology didn't exist. Not only wasn't the chip invented, let alone the transistor, let alone the electronic vacuum tube, and electricity was a mysterious little toy at the time, more or less. Babbage envisioned computers being run, as I recall, by a giant network of pipes with valves, and we would be turning valves in different patterns in order to see what the outcome would be. Now there are a lot of engineering problems with this, but it's theoretically plausible. But today, if we look back at Babbage, it's easy to see him as a fool rather thanas a visionary. If you start looking at diagrams of how you do this with pipes, it's hard to make more than the most ludicrously simple computer.

I suspect that liberty is in that same stage of development today, and that if and when society progresses toward liberty, the end state is going to be a lot easier to see. Envisioning the way the institutions are actually going to develop and what the final form of society is going to be will be a lot easier at that point than it is now.

Moderator: Thank you. Now ordinarily I would ask everyone on the panel to go around one more time, but I really want to get audience participation. I'm sure that the members of the panel are clever enough to work in any of their rebuttals in response. [Laughter.] So the first person who raised his hand is you:

Audience Member: I would much rather have a free-enterprise-competing, profit-seeking insurance company take my freedom than a coercive, non-proprietary socialistic government steal my money in order to protect my property and freedom. Give someone a gun to protect your property, and they can always turn on you. I think that a for-profit insurance company would be less inclined to shoot its customers.

Moderator: Thank you. Who would like to respond? Charles?

Murray: You're right, I'm going to work in my rebuttal immediately and ignore the question altogether. [Laughter.] No, I actually am responding to your question. None of the other three panelists talked about the question, "Given the way human beings are, is this plausible?" I would go to David Friedman first with that. You have to tell me why it is that what you're saying is consistent with what we know about the wiring and nature of human beings. The questioner is saying that if you had this profit-seeking insurance company that could protect your property, and given a lot of other assumptions, you would rather have the insurance company than a government? That's a little bit like the joke about the people stuck at the bottom of the hole. You all know it? Where you have a priest who says, "Let us pray," and somebody else who says something else, and a third person who says, "I'm an economist; first, we assume a ladder." [Laughter.] And that, I think, is the problem of all the assumptions you made — you're assuming a ladder. Any argument about anarchism must be realistic about the nature of human beings. That's a topic I would like to see discussed more.

Friedman: We live in a real world; you can observe it. There have been a lot of state-run societies. There have not been any stateless societies in a modern advanced developed system, and that is some evidence that it's difficult to make that work. But if the arguments that people like you are making are as strong as you make them sound, there would be none! And you know the anthropology books are full of stateless societies: the Comanche Indians, for example, had nothing you could recognize as a government. They didn't kill each other very often; oddly enough, they were militarily very effective. Here you've got this bunch of primitives, enormously outnumbered, who stopped the settlement of Texas for 20 years because they were so good at fighting people. That's sort of an extreme case.

Moderator: I'm not sure whose side that comes down on. [Laughter.]

Friedman: But it's a striking observation. The real point I'm making is that one can give a long list of known societies which succeeded in maintaining the enforcement of social rules within them without anything that most of us would recognize as a government. I can't give you a list of anything very much like modern-day America, which is why when I tried to sketch out institutions, I was trying to think what would such institutions look like in a modern society. But it's not hard to find examples of other ones, and if the arguments against anarchy were really as strong as you're trying to make them sound there wouldn't be any, and we know there are.

Audience Member: I'm afraid that if legitimacy is not accepted by the mass of society, the whole thing will fall apart. Isn't that what it comes down to, legitimacy?

Moderator: David Boaz?

Boaz: Legitimacy is a fuzzy concept. I remember seeing a New Yorker cartoon. A physicist had covered the blackboard with equations that are obviously incomprehensible to us and probably didn't mean anything anyway since it was in a cartoon, and at the bottom it says "And then a miracle happens," and then x equals whatever. I sometimes think that libertarian legal theory sometimes involves that. I've heard people whose constitutional legal theory I respect talk about, we start from private rights, we start from the inherent right of self-defense and of acquiring property; we come together and do this, and then a miracle happens and there's a legitimate constitution. Well, you didn't get unanimous consent. I think we can all assume that you would never get unanimous consent for anything. So what creates the legitimacy? Randy Barnett has a new book trying to argue what creates legitimacy for the Constitution; other people have offered different answers. The fact is that most people in the world regard their governments as legitimate, even the ones as bad as Saddam Hussein's. My impression is, most people sort of grudgingly go along with "That's the government." The ones that are as good as American constitutional government command pretty much unanimous consent, even though we would say they really shouldn't. In a philosophical sense, I think that legitimacy is a serious problem; as a practical matter, I'm not sure that it is.

Moderator: David Friedman.

Friedman: My response requires more time than we have. I ran into this problem when I was about 15. For a while, I followed the policy of obeying all laws on the grounds that though I couldn't see any reason why I was obliged to obey laws, society would fall apart if people didn't, so there had to be a good reason. I eventually noticed that all of my friends thought I was nuts for obeying all the laws. I was the only person I knew who acted that way, and I concluded that in the real world society doesn't depend on people believing that right and wrong are established by acts of Congress, it depends on a legal system which is enough in conformity with peoples' beliefs, and the parts that aren't are enforced strongly enough so that people obey them.

My own view of the issue is that the only moral legitimacy laws have comes from their being just. That is, murder is wrong not because Congress says so, or not because my rights-enforcement agency agrees that it is, but because it's wrong. What a stable legal system comes out of, ultimately — and I would say this is true under minarchy and under anarchy — is that it's ultimately a peace treaty. That is to say, we recognize that I have views about what's right and wrong, and so do you, and fighting with each other is an expensive and unpleasant activity, so at some point I say, "Well then, here is a compromise which as a practical matter I'm willing to accept. I believe that some of the laws you're enforcing on me are wrong, and if I could easily get away with breaking them I would, but as a practical matter I'm not going to try to."

I think the nearest thing to making any sense out of the social contract is the peace treaty, and it's not clear to me that peace treaties have any moral force at all, but they help explain why you've got an orderly structure out there. And when I think about my anarcho-capitalist society, it's tempting to say, "Well, the laws are morally binding because I've agreed to them, because I contracted with this agency, which agreed with your agency as to what the laws between us would be," but the only reason I contracted with it was that I knew I couldn't get what I really thought I had a right to, because I didn't have adequate force to protect the rights I believed I had. So even in the anarcho-capitalist system, the voluntary agreements are made in the shadow of the threat of force if you don't make voluntary agreements, and it's even more true of the state. So I think that moral legitimacy only comes from being morally just, not from any political process, and the practical assent that prevents you from shooting each other comes from your having agreed on workable compromises between what you and I think is just.

Audience Member: Randal Holcombe has argued that there could never be anarchy, there will be a state, because the protection of society business tends toward monopoly. We've got these societies that have all these instruments of force sitting around most of the time. I hope they have an interest, it's in their self-interest to expand their business, they're going to use that stuff, and ultimately you're going to have one, and it's called a government. And by at least having classical-liberal limited government, you have a chance of constraining them.

Friedman: It ultimately depends on the economies of scale in that business, that once you have an equilibrium, given the nature of the equilibrium, firms that try to expand by saying "You always have to agree with me or I'll bite you" are going to lose, unless they start out with a large majority. Say you've got 100 agencies enforcing rights. Ninety-nine of them are following the starting rule (I'm describing equilibrium, not telling you how to get there), which is: we've got to agree with each other on private courts that will settle disputes between us and we'll abide by those agreements. We want to keep the reputation for abiding.

And one of them says, "No, I'm always right and I'll shoot you if you disagree." That one agency is settling 100% of its disputes by violence. Every other agency is settling 1% of its disputes by violence. The result is that the one agency has enormously higher costs and delivers a much lower-quality product, because the ability to know that you'll win the case when you're in the right is more valuable than the ability to know you'll win the case if it happens that your agency wins the war; so therefore that agency goes bankrupt.

So in order for your story to be true, the economies of scale in the ordinary business of an enforcement agency have got to keep growing up to close to the extent of the market. If you have an equilibrium with two or three agencies then I think you're in serious trouble, and I wrote that 30-some years ago. That's not anything new that Randal Holcombe has come up with. But I suggested reasons to suspect that the economies of scale in the ordinary business of enforcement agencies didn't go all that high, and that therefore you could expect to have many competing agencies.

But again, the same point I made before, anybody who says it's impossible — not that it wouldn't work in our society this year, which for all I know is true — has to explain historical societies.

Moderator: The woman in the back of the room.

Audience Member: I have a question about Ayn Rand and [inaudible].

Moderator: Could you speak a little more loudly?

Audience Member: I think Ms. Rand talked about the advantages of [inaudible].

Friedman: I'm not an Objectivist. I can't answer that question.

Moderator: That's a question for David Boaz.

Boaz: I'm not sure I heard the question.

Friedman: Isn't there a contradiction between Galt's Gulch being in effect an anarchy with no visible government, and the fact that Rand was a supporter of limited government?

Boaz: Well, that's an interesting question. I guess I'm actually not an expert on Rand, I'm an expert on what people said about Rand. [Laughter.] That's what I've been studying recently. So I'm not sure about that. I think to some extent, of course, "Atlas Shrugged" is a novel. Her works presented a stylized view of the real world, but were not supposed to be realistic in the sense of truly realistic novels, and Galt's Gulch was a temporary place where people were sort of waiting to go back to the world. However, it is true it appeared to be a functioning society, and perhaps she meant to say that if everyone was like John Galt, then you wouldn't need government, but not everybody is. However, I don't think that would be her answer. I don't think she would say that. So yes, it does seem, at least in microcosm, there's a good question there.

Murray: Just one sentence? Two sentences, maybe? We have to keep scale and size in perspective with all of these issues. Galt's Gulch may very well have worked with its population, Comanche society may very well have worked with its population. But I will give you another example of a government that worked for a long time, and that is Sweden when it was still very small and very homogeneous. I don't think it could have continued to work forever, but in asking about the feasibility of all prospective governmental systems, you have to keep in mind the diversity, the size, the complexity of the society to be governed.

Moderator: Yes, the gentleman in the back of the room.

Audience Member: David Boaz said something like, "We need a limited government to protect us from initiation of force." But I think you have a logical contradiction there because the government, in order to protect you from the initiation of force, starts out by initiating force to fund its own functions. So how can an organization based on a logical contradiction work? [Applause.]

Boaz: Well, I think every government in the world today probably operates on logical contradictions, and they do work at some level. However, I don't think saying that you believe in a minimal government implies that you believe in taxation. Rand addressed this question, not entirely satisfactorily. I don't believe in the initiation of force, and I do think taxes are that. I would, of course, favor a radically reduced government in size, therefore it would need radically less money than today's governments have. Could that be funded through some sort of voluntary fees on contracts? Maybe something like that.

But I think the suggestion that you need — and I sort of agree with Bill Bradford, that what you're really saying is you need a supreme court. There's got to be some final answer if the other competing legal systems don't come to that answer, you need a supreme court. Doesn't take a whole lot to fund that. National defense, at least in today's world, could be a bigger problem.

Moderator: Let's see if Bill Bradford agrees with you.

Bradford: I'm not sure I do. The taxation issue isn't the only contradiction in Rand. For example, how do you claim exclusive jurisdiction without initiating force? I think that the rise of what I would consider to be the contemporary libertarian movement — namely, people like us — came out of the Objectivist movement, primarily because people read Rand and looked at the implications of her arguments more clearly than she did. They understood that if we're going to have a universal prohibition on the initiation of force, we can't have government, for two reasons. One, government costs, and two, any government, even the government that I advocate that's so tiny that Murray Rothbard maintained it was tantamount to his anarchist society, has to claim exclusive jurisdiction. And you can't get exclusive jurisdiction without being able to enforce that jurisdiction.

Friedman: I think some of these "If there's anything enforcing it, there's got to be a government" kinds of arguments are wrong. I want to imagine a society with people who have a good deal in common with each other, without terribly dense population, the kind of place where everybody's farming his own land and knows most of his neighbors, and there isn't a government. And there are pretty widely shared norms. Lots of societies have norms that aren't created by governments. So what happens is that when somebody does something to someone else that the someone else sees as a rights violation, he could use force himself. But that gets pretty dangerous. So what he does instead is that he goes to somebody in the community who has a lot of respect from his neighbors and says, "Are you willing to arbitrate this dispute?" And the guy says yes. Then he publicly demands that his opponent accept the arbitration of this person, or offer somebody else whom their neighbors regard as a decent arbitrator. And the guy has a choice: either he agrees to that, or he doesn't. If he agrees to that, and the arbitrator rules against him, he again has a choice: he either goes along with the judgment, or he doesn't. If he takes the "not" in either case, if he refuses to arbitrate the dispute with a respected arbitrator or then reneges on the agreement, the victim uses force against him, and the victim succeeds in using force against him because everybody else in the community says, "Aha, this is an honest man who has been wronged, acting against a villain." And when everybody else in the community is willing to help you out if necessary, and unwilling to help him, it turns out you've got a big advantage in using force.

Now, this mechanism isn't going to work very well for complicated societies. You would need a lot more institutional structure. But I just want to take it as sort of the primitive version of anarcho-capitalism to make the point that in that society, rules are enforced. When you rob people, bad things happen to you. And yet, there is no supreme court. The rule enforcement is a description of an equilibrium coming from the decentralized behavior of a whole lot of different people. And in fact, that kind of norm enforcement, if you think about it for a while, we all live with regard to various norms that are less serious than not killing people.

Moderator: I think that we can take one more short question and response.

Audience Member: Okay, I'm not an economist, but let's say I agree with Mr. Friedman that basically, those agencies that resort to violence to solve their problems will eventually fail. In a different sense the same thing is happening now: Enron cheated, and Enron lost. But Enron got away with it for a while, and what was at stake there was money, but what's at stake here is force.

Friedman: But I think that I'm describing the equilibrium, and sometimes we make mistakes, and sometimes occasionally there may be violence; but after all, in the world we live in, violence happens too: between states and within states. I'm not a utopian. I've never been a utopian. I assume that even in the best institutions we can arrange, rights will sometimes get violated, bad things will sometimes happen. I'm only arguing that a decentralized market approach to the enforcement of rights and the settlement of disputes is likely to result in fewer bad things happening and rights getting violated less often than any of the others.

Read part 2 of the transcript,
"Freedom: What's Right vs. What Works."

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