Anarcho-Capitalism

Anarcho-capitalism is an individualist political philosophy that embraces stateless capitalism, and calls for the provision of all goods and services—including systems of jurisdiction, law enforcement, and territorial defense—by the free market. This philosophy argues that a free market system, based on private property, would maximize individual liberty and happiness. Further, anarcho-capitalism rejects the state as a coercive entity that engages in legal aggression, in the form of taxation and physical force. Anarcho-capitalists assert that property can only be legitimately obtained through trade, gift, or original appropriation and that each individual has the right to own the full product of his labor when applied to his own justly acquired property. Any property obtained by through the use of state coercion is considered stolen from the private sector. This embrace of unfettered capitalism leads to considerable tension between anarcho-capitalists and those anarchists who see the rejection of capitalism as being essential to anarchist philosophy, tantamount with rejection of the state.

The first well-known version of anarcho-capitalism was developed by Austrian School economist and libertarian Murray Rothbard in the mid-20th century, synthesizing elements from Austrian School of economics, classical liberalism and 19th century American individualist anarchism. Central to Rothbard's theory of anarcho-capitalism is the sovereignty of the individual and the principle of non-aggression. However, various theorists have differing, though similar, philosophies which they label anarcho-capitalism. While Rothbard bases his philosophy on rationalist natural law, others, such as David Friedman, take a pragmatic consequentialist (utilitarianist) approach, by arguing that anarcho-capitalism should be implemented because such a system would have consequences superior to all other alternatives. Hans-Hermann Hoppe, on the other hand, uses "argumentation ethics" for his foundation of "private property anarchism," being closer to Rothbard's natural law approach.

Philosophy

The nonaggression axiom

The basic axiom of libertarian political theory holds that every man is a self owner, having absolute jurisdiction over his own body. In effect, this means that no one else may justly invade, or aggress against, another's person. It follows then that each person justly owns whatever previously unowned resources he appropriates or "mixes his labor with." From these twin axioms — self-ownership and "homesteading" — stem the justification for the entire system of property rights titles in a free-market society. This system establishes the right of every man to his own person, the right of donation, of bequest (and, concomitantly, the right to receive the bequest or inheritance), and the right of contractual exchange of property titles. Rothbard's defense of the self-ownership principle stems from his falsification of all other alternatives, namely that either a group of people can own another group of people, or the other alternative, that no single person has full ownership over one's self. Rothbard dismisses these two cases on the basis that they cannot result in an universal ethic, i.e., a just natural law that can govern all people, independent of place and time. The only alternative that remains to Rothbard is self-ownership, which he believes is both axiomatic and universal.

In general, the nonaggression axiom can be said to be a prohibition against the initiation of force, or the threat of force, against persons (i.e., direct violence, assault, murder) or property (i.e., fraud, burglary, theft, taxation). The initiation of force is usually referred to as aggression or coercion. The difference between anarcho-capitalists and other libertarians is largely one of the degree to which they take this axiom. Minarchist libertarians, such as most people involved in Libertarian political parties, would retain the state in some smaller and less invasive form, retaining at the very least public police, courts and military; others, however, might give further allowance for other government programs. In contrast, anarcho-capitalists reject any level of state intervention, defining the state as a coercive monopoly and, as the only entity in human society that derives its income from legal aggression, an entity that inherently violates the central axiom of libertarianism.

Some anarcho-capitalists, such as Rothbard, accept the nonaggression axiom on an intrinsic moral or natural law basis. It is in terms of the non-aggression principle that Rothbard defined anarchism; he defined "anarchism as a system which provides no legal sanction for such aggression 'against person and property']" and said that "what anarchism proposes to do, then, is to abolish the State, i.e. to abolish the regularized institution of aggressive coercion." In an interview with New Banner, Rothbard said that "capitalism is the fullest expression of anarchism, and anarchism is the fullest expression of capitalism. "Alternatively, others, such as Friedman, take a consequentialist or egoist approach; rather than maintaining that aggression is intrinsically immoral, they maintain that a law against aggression can only come about by contract between self-interested parties who agree to refrain from initiating coercion against each other.

Private property Central to anarcho-capitalism are the concepts of self-ownership and original appropriation:

Everyone is the proper owner of his own physical body as well as of all places and nature-given goods that he occupies and puts to use by means of his body, provided only that no one else has already occupied or used the same places and goods before him. This ownership of "originally appropriated" places and goods by a person implies his right to use and transform these places and goods in any way he sees fit, provided only that he does not change thereby uninvitedly the physical integrity of places and goods originally appropriated by another person. In particular, once a place or good has been first appropriated by, in John Locke's phrase, 'mixing one's labor' with it, ownership in such places and goods can be acquired only by means of a voluntary — contractual — transfer of its property title from a previous to a later owner.

Anarcho-capitalism uses the following terms in ways that may differ from common usage or various anarchist movements.

This is the root of anarcho-capitalist property rights, and where they differ from collectivist forms of anarchism such as anarcho-communism where the product of labor is collectivized in a pool of goods and distributed "according to need." Anarcho-capitalists advocate individual ownership of the product of labor regardless of what the individual "needs" or does not need. As Rothbard says, "if every man has the right to own his own body and if he must use and transform material natural objects in order to survive, then he has the right to own the product that he has made." After property is created through labor it may then only exchange hands legitimately by trade or gift; forced transfers are considered illegitimate. Original appropriation allows an individual to claim any "unused" property, including land, and by improving or otherwise using it, own it with the same "absolute right" as his own body. According to Rothbard, property can only come about through labor, therefore original appropriation of land is not legitimate by merely claiming it or building a fence around it; it is only by using land — by mixing one's labor with it — that original appropriation is legitimized: "Any attempt to claim a new resource that someone does not use would have to be considered invasive of the property right of whoever the first user will turn out to be." As a practical matter, in terms of the ownership of land, anarcho-capitalists recognize that there are few (if any) parcels of land left on Earth whose ownership was not at some point in time transferred as the result of coercion, usually through seizure by some form of state. However, unless records and titles exist to confirm the theft and the rightful individual owner most do not believe that this history de-legitimizes current ownerships which they maintain are based on consensual transactions. Though, Rothbard believes that stateless societies would lack recordkeeping, claiming that "only government officials seem to have the time, energy, and resources to devote to such activities." In the case of slavery, Rothbard says that in many cases "the old plantations and the heirs and descendants of the former slaves can be identified, and the reparations can become highly specific indeed." He believes slaves rightfully own any land they were forced to work on under the "homestead principle." If property is held by the state, Rothbard advocates its confiscation and return to the private sector: "any property in the hands of the State is in the hands of thieves, and should be liberated as quickly as possible." For example, he proposes that State universities be seized by the students and faculty under the homestead principle. Rothbard also supports expropriation of nominally "private property" if it is the result of state-initiated force, such as businesses who receive grants and subsidies. He proposes that businesses who receive at least 50% of their funding be confiscated by the workers. He says, "What we libertarians object to, then, is not government per se but crime, what we object to is unjust or criminal property titles; what we are for is not "private" property per se but just, innocent, non-criminal private property." Likewise, Karl Hess says, "libertarianism wants to advance principles of property but that it innoway wishes to defend, willy nilly, all property which now is called private...Much of that property is stolen. Much is of dubious title. All of it is deeply intertwined with an immoral, coercive state system." By accepting an axiomatic definition of private property and property rights, anarcho-capitalists deny the legitimacy of a state on principle:

"For, apart from ruling out as unjustified all activities such as murder, homicide, rape, trespass, robbery, burglary, theft, and fraud, the ethics of private property is also incompatible with the existence of a state defined as an agency that possesses a compulsory territorial monopoly of ultimate decision-making (jurisdiction) and/or the right to tax."[8]

The contractual society The society envisioned by anarcho-capitalists has been called the Contractual Society — "... a society based purely on voluntary action, entirely un­hampered by violence or threats of violence." — in which anarcho-capitalists claim the system relies on voluntary agreements (contracts) between individuals as the only legal framework. It is thus difficult to predict precisely what the particulars of this society would look like; particulars which are disputed both among anarcho-capitalists and between them and their critics (see Criticisms of anarcho-capitalism below).

One particular ramification is that transfer of property and services must be considered voluntary on the part of both parties. No external entities can force an individual to accept or deny a particular transaction. An employer might offer insurance and death benefits to same-sex couples; another might refuse to recognize any union outside his or her own faith. Individuals would be free to enter into contractual agreements as they saw fit.

One social structure that is not permissible under anarcho-capitalism is one that attempts to claim greater sovereignty than the individuals that form it. The state is a prime example, but another is the modern corporation — defined as a legal entity that exists under a different legal code than individuals as a means to shelter the individuals who own and run the corporation from possible legal consequences of acts by the corporation. It is worth noting that Rothbard allows a narrower definition of a corporation: "Corporations are not at all monopolistic privileges; they are free associations of individuals pooling their capital. On the purely free market, such men would simply announce to their creditors that their liability is limited to the capital specifically invested in the corporation ...." However, this is a very narrow definition that only shelters owners from debt by creditors that specifically agree to the arrangement; it also does not shelter other liability, such as from malfeasance or other wrongdoing.

There are limits to the right to contract under some interpretations of anarcho-capitalism. Rothbard himself asserts that the right to contract is based in inalienable human rights[4] and therefore any contract that implicitly violates those rights can be voided at will, which would, for instance, prevent a person from permanently selling himself or herself into slavery. Other interpretations conclude that banning such contracts would in itself be an unacceptably invasive interference in the right to contract.

Law and order and the use of violence Morris and Linda Tannehill, in The Market for Liberty, support natural law as the basis of an anarcho-capitalist society but object to any statutory law whatsoever. They assert that all one has to do is ask if one is aggressing against another (see tort and contract law) in order to decide if an act is right or wrong. Murray Rothbard, on the other hand, while also supporting a natural prohibition on force and fraud, supports a centralized Libertarian legal code.

Unlike both the Tannehills and Rothbard who seek an ideological commonality of ethics and morality, David Friedman proposes that "the systems of law will be produced for profit on the open market, just as books and bras are produced today. There could be competition among different brands of law, just as there is competition among different brands of cars."

Anarcho-capitalists only accept collective defense of individual liberty (i.e., courts, military or police forces) insofar as such groups are formed and paid for on an explicitly voluntary basis. According to Molinari, "Under a regime of liberty, the natural organization of the security industry would not be different from that of other industries." Proponents point out that private systems of justice and defense already exist, naturally forming where the market is allowed to compensate for the failure of the state: private arbitration, security guards, neighborhood watch groups, and so on. These private courts and police are sometimes referred to generically as Private Defense Agencies (PDAs.)

The defense of those unable to pay for such protection might be financed by charitable organizations relying on voluntary donation rather than by state institutions relying on coercive taxation, or by cooperative self-help by groups of individuals.

Many anarcho-capitalists admire the American Revolution and believe it is the only U.S. war that can be justified.Like classical liberalism, and unlike pacifism, anarcho-capitalism permits the use of force, as long as it is in the defense of persons or property. The permissible extent of this defensive use of force is an arguable point among anarcho-capitalists. Retributive justice, meaning retaliatory force, is often a component of the contracts imagined for an anarcho-capitalist society. Some believe prisons or indentured servitude would be justifiable institutions to deal with those who violate anarcho-capitalist property relations, while others believe exile or forced restitution are sufficient.

Another controversial application of defensive aggression is the act of revolutionary violence against tyrannical regimes. Many anarcho-capitalists admire the American Revolution as the legitimate act of individuals working together to fight against tyrannical restrictions of their liberties. In fact, according to Murray Rothbard, the American Revolutionary War was the only war involving the United States that could be justified; however some anarcho-capitalists, i.e. Samuel Edward Konkin III feel that violent revolution is counter-productive and prefer voluntary forms of economic secession.

History and influences Liberalism Main article: Liberalism

Gustave de Molinari (1819–1912).Classical liberalism is the primary influence with the longest history on anarcho-capitalist theory. Classical liberals have had two main themes since John Locke first expounded the philosophy: the liberty of man, and limitations of state power. The liberty of man was expressed in terms of natural rights, while limiting the state was based (for Locke) on a consent theory.

In the 19th century, classical liberals led the attack against statism. One notable was Frederic Bastiat (The Law), who wrote, "The state is the great fiction by which everybody seeks to live at the expense of everybody else." Henry David Thoreau wrote, "I heartily accept the motto, 'That government is best which governs least'; and I should like to see it acted up to more rapidly and systematically. Carried out, it finally amounts to this, which also I believe, 'That government is best which governs not at all'; and when men are prepared for it, that will be the kind of government which they will have."

One of the first liberals to discuss the possibility of privatizing protection of individual liberty and property was France's Jakob Mauvillon in the 18th century. Later, in the 1840s, Julius Faucher and Gustave de Molinari advocated the same. Molinari, in his essay The Production of Security, argued, "No government should have the right to prevent another government from going into competition with it, or to require consumers of security to come exclusively to it for this commodity." Molinari and this new type of anti-state liberal grounded their reasoning on liberal ideals and classical economics. Historian Ralph Raico asserts what that these liberal philosophers "had come up with was a form of individualist anarchism, or, as it would be called today, anarcho-capitalism or market anarchism."[21] Unlike the liberalism of Locke, which saw the state as evolving from society, the anti-state liberals saw a fundamental conflict between the voluntary interactions of people — society — and the institutions of force — the State. This society versus state idea was expressed in various ways: natural society vs. artificial society, liberty vs. authority, society of contract vs. society of authority, and industrial society vs. militant society, just to name a few.[15] The anti-state liberal tradition in Europe and the United States continued after Molinari in the early writings of Herbert Spencer, as well as in thinkers such as Paul Émile de Puydt and Auberon Herbert.

Ulrike Heider, in discussing the "anarcho-capitalists family tree," notes Max Stirner as the "founder of individualist anarchism" and "ancestor of laissez-faire liberalism."[22] According to Heider, Stirner wants to "abolish not only the state but also society as an institution responsible for its members" and "derives his identity solely from property" with the question of property to be resolved by a 'war of all against all'." Stirner argued against the existence of the state in a fundamentally anti-collectivist way, to be replaced by a "Union of Egoists" but was not more explicit than that in his book The Ego and Its Own published in 1844.

Later, in the early 20th century, the mantle of anti-state liberalism was taken by the "Old Right". These were minarchist, antiwar, anti-imperialist, and (later) anti-New Dealers. Some of the most notable members of the Old Right were Albert Jay Nock, Rose Wilder Lane, Isabel Paterson, Frank Chodorov, Garet Garrett, and H. L. Mencken. In the 1950s, the new "fusion conservatism", also called "cold war conservatism", took hold of the right wing in the U.S., stressing anti-communism. This induced the libertarian Old Right to split off from the right, and seek alliances with the (now left-wing) antiwar movement, and to start specifically libertarian organizations such as the (U.S.) Libertarian Party.

Individualist anarchism in the United States

Lysander Spooner (1808–87).Main article: Individualist anarchism in the United States Anarcho-capitalism is influenced by the work of the 19th-century American individualist anarchists, and is regarded as a form of individualist anarchism by several scholars.[23][24][25][26][27][28][29][30][31] However, this claim is highly controversial among some other types of anarchists. The anti-capitalist individualist anarchists believe that capitalism cannot exist in the absence of a state, in the sense that they believe profit would be impossible in a free market due to competition. Anarcho-capitalists disagree that profit would be impossible in a free market and argue that the old individualists had an improper understanding of economics to think so. Rothbard sought to meld the 19th-century individualist theory with the principles of Austrian economics: "There is, in the body of thought known as 'Austrian economics', a scientific explanation of the workings of the free market (and of the consequences of government intervention in that market) which individualist anarchists could easily incorporate into their political and social Weltanschauung" (Egalitarianism). The 19th-century individualist anarchists espoused a labor theory of value, while the anarcho-capitalists adhere to a subjective theory, leading to differences over the legitimacy of profit.

Benjamin Tucker opposed vast concentrations of wealth, which he believed were made possible by government intervention and state protected monopolies. He believed the most dangerous state intervention was the protection of a "banking monopoly" which concentrated capital in the hands of the privileged elite. Though, he also argued that harmful monopolies that were created by government intervention could be maintained in the absence of government protection because of the accumulation of great wealth (see predatory pricing). Anarcho-capitalists also oppose governmental restrictions on banking. They, like all Austrian economists, believe that monopoly can only come about through government intervention. Individualists anarchists have long argued that monopoly on credit and land interferes with the functioning of a free market economy. Although anarcho-capitalists disagree on the critical topics of profit, social egalitarianism, and the proper scope of private property, both schools of thought agree on other issues. Of particular importance to anarcho-capitalists and the individualists are the ideas of "sovereignty of the individual", a market economy, and the opposition to collectivism. Like the individualists, anarcho-capitalists believe that land may be originally appropriated by, and only by, occupation or use; however, most individualists believe it must continually be in use to retain title. Notable 19th-century American individualist anarchists include Lysander Spooner and Benjamin Tucker.

The Austrian School Main article: Austrian School

Murray Rothbard (1926–95).The Austrian School of economics was founded with the publication of Carl Menger's 1871 book Principles of Economics. Members of this school approach economics as an a priori system like logic or mathematics, rather than as an empirical science like geology. It attempts to discover axioms of human action (called "praxeology" in the Austrian tradition) and make deductions therefrom. Some of these praxeological axioms are:

humans act purposefully; humans prefer more of a good to less; humans prefer to receive a good sooner rather than later; and each party to a trade benefits ex ante. These are macro-level generalizations, or heuristics, which are true for the many, but not necessarily true for any particular person.

Even in the early days, Austrian economics was used as a theoretical weapon against socialism and statist socialist policy. Eugen von Böhm-Bawerk, a colleague of Menger, wrote one of the first critiques of socialism ever written in his treatise The Exploitation Theory of Socialism-Communism. Later, Friedrich Hayek wrote The Road to Serfdom, asserting that a command economy destroys the information function of prices, and that authority over the economy leads to totalitarianism. Another very influential Austrian economist was Ludwig von Mises, author of the praxeological work Human Action.

Murray Rothbard, a student of Mises, is the man who attempted to meld Austrian economics with classical liberalism and individualist anarchism, and is credited with coining the term "anarcho-capitalism". He was probably the first to use "libertarian" in its current (U.S.) pro-capitalist sense. He was a trained economist, but also knowledgeable in history and political philosophy. When young, he considered himself part of the Old Right, an anti-statist and anti-interventionist branch of the U.S. Republican party. When interventionist cold warriors of the National Review, such as William Buckley, gained influence in the Republican party in the 1950s, Rothbard quit that group and formed an alliance with left-wing antiwar groups. Later, Rothbard was a founder of the U.S. Libertarian Party. In the late 1950s, Rothbard was briefly involved with Ayn Rand's Objectivism, but later had a falling out. Rothbard's books, such as Man, Economy, and State, Power and Market, The Ethics of Liberty, and For a New Liberty, are considered by some to be classics of natural law libertarian thought.

Real world examples of anarcho-capitalism

19th century interpretation of the Althing in the Icelandic Commonwealth, which authors such as David Friedman and Roderick Long believe to have some features of anarcho-capitalist society.To the extent that anarcho-capitalism is thought of as a theory or ideology - rather than a civilizing process - critics say that it is unlikely ever to be more than a utopian ideal. Some anarcho-capitalist philosophers, however, point to actual stateless societies to support their claim that large scale anarcho-capitalism can function in practice.

Medieval Iceland According to David Friedman, "Medieval Icelandic institutions have several peculiar and interesting characteristics; they might almost have been invented by a mad economist to test the lengths to which market systems could supplant government in its most fundamental functions." While not directly labeling it anarcho-capitalist, he argues that the Icelandic Commonwealth between 930 and 1262 had "some features" of an anarcho-capitalist society — while there was a single legal system, enforcement of law was entirely private and highly capitalist; and so provides some evidence of how such a society would function. "Even where the Icelandic legal system recognized an essentially "public" offense, it dealt with it by giving some individual (in some cases chosen by lot from those affected) the right to pursue the case and collect the resulting fine, thus fitting it into an essentially private system."

However, some disagree with this assessment, arguing that Medieval Iceland was a communal rather than individualist society - [p]eople of a communitarian nature... have reason to be attracted [to Medieval Iceland]... The economy barely knew the existence of markets. Social relations preceded economic relations. and that when a free market finally did arise, that it was the cause of the end of the republic - "During the 12th century, wealth and power began to accumulate in the hands of a few chiefs, and by 1220, six prominent families ruled the entire country. It was the internecine power struggle among these families, shrewdly exploited by King Haakon IV of Norway, that finally brought the old republic to an end." Most anarcho-capitalists, however, believe that the loss of property rights, which coincided with the introduction of the tithe and other Roman/Norman influences, centralized authority permitting cartelization and ultimately monopolization of political power.

Conflicts within anarcho-capitalist theory The only significant dispute within the anarcho-capitalist movement concerns whether an anarcho-capitalist society is based on deontological or consequentialist grounds. Natural-law anarcho-capitalism (such as that advocated by Rothbard) holds that a universal system of rights can be determined through natural law. Consequentialists such as Friedman disagree, maintaining that rights are merely human constructs that rational humans create through contracts and individual relationships, resulting in the system that leads to the best consequences for all parties.

Friedman describes an economic approach to anarcho-capitalist legal systems. His description differs with Rothbard's because it does not use moral arguments — i.e., it does not appeal to a theory of natural rights to justify itself. In Friedman's work, the economic argument is sufficient to derive the principles of anarcho-capitalism. Private defense or protection agencies and courts not only defend legal rights but supply the actual content of these rights and all claims on the market. People will have the law system they pay for, and because of economic efficiency considerations resulting from individuals' utility functions, such law will tend to be libertarian in nature but will differ from place to place and from agency to agency depending on the tastes of the people who buy the law. Also unlike other anarcho-capitalists, most notably Rothbard, Friedman has never tried to deny the theoretical cogency of the neoclassical literature on "market failure," nor has he been inclined to attack economic efficiency as a normative benchmark.

Anarchism and anarcho-capitalism Main article: Anarchism and anarcho-capitalism Many anarchists strongly argue that anarcho-capitalism is not a form of anarchism, since they believe capitalism to be inherently authoritarian. For example, individualist anarchists Kevin Carson and Ken Knudson argue that capitalism cannot occur without state power being used to back the expropriation of surplus value from the laborer. All anarchists favor purely voluntary interaction and oppose coercive interactions, but anarcho-capitalists and their anarchist opponents disagree on whether certain actions are considered voluntary.

According to The Anarchist International, capitalism is an economic plutocracy that includes its own hierarchy. They place anarcho-capitalism outside of the anarchist movement, and into the classical liberal tradition "Plutarchy without statism = liberalism." American individualist anarchism is sometimes regarded as a form of "liberal-anarchism." However, some prominent anarchists, such as Benjamin Tucker,[39] regard individualist anarchism as a form of socialism. Many traditional anarchists espouse a form of labor theory of value, which they put forth as one reason that profit, rent, and wage labour are exploitive. While classical capitalists such as Adam Smith also accepted the labor theory of value, most modern economists, including anarcho-capitalists, state that value is subjective and adhere to marginalism.

Several scholars see anarcho-capitalism as a form of anarchism but academic scholars such as Barbara Goodwin put anarcho-capitalism closer to libertarianism rather than to other forms of anarchism.

Criticisms of anarcho-capitalism Main article: Criticisms of anarcho-capitalism Criticisms of anarcho-capitalism fall into several categories: practical criticisms which claim that anarcho-capitalism is unworkable in practice; critiques which claim that capitalism requires a coercive state to exist and that a society can be anarchist or capitalist, but not both; general critiques of the morality of capitalism and liberalism which also apply to anarcho-capitalism; and a utilitarian critique which claims that anarcho-capitalism would not maximize utility.

Objectivists, argue that in the absence of a state, an anarcho-capitalist society would degenerate into a "war of all against all". Other critics argue that the free rider problem makes provision of protection service in an anarcho-capitalist society impractical.

Many anarchists and socialists argue that certain capitalist transactions are not voluntary, and that maintaining the capitalist character of a society requires coercion incompatible with an anarchist society. Socialists and other anti-capitalists also argue that a capitalist society, anarchist or not, has severe moral and/or practical failings which render it undesirable.

Anarcho-capitalists maintain that to the extent that a society has permitted implementation of natural market substitutes for the coercive state, it has become a voluntary society which is morally superior.