What is Market Anarchism?

Adam Smith Center

Adam Smith Center

Members of Adam Smith Center Singapore.

What is Market Anarchism?

Imagine a world of no government, where every function and service in society is provided by private, competing businesses and voluntary organisations. This is essentially, the world that market anarchists envision. Also called libertarian anarchism and/or anarcho-capitalism, this philosophy is a specific branch of libertarian thought which believes in the abolishment of the state, and accordingly, the complete privatisation of state functions.


Anarchism is not chaos 

Wouldn’t anarchism mean chaos? Not so. In this case, anarchy doesn’t imply chaos, or lawlessness. There will still be rules and governance structures, but the difference is that they will not be provided by a single territorial monopoly. In simple terms, there will not just be one provider of “governmental functions” over a single land space, but there will be multiple, competing service providers in a given jurisdiction. The set of laws you live under will no longer be determined by where you happen to be born into, but what you actually choose, just like how you may choose your cellphone provider (M1, Singtel, Starhub, etc).


Polycentric legal order

This is also called a polycentric legal order, as opposed to a monocentric one. Polycentric orders have existed throughout history, and is not a radically new concept. In much of Western Europe, there was “legal pluralism”, which meant that no one single provider of law had ultimate influence. According to Harold Berman, the legal scholar, “the pluralism of Western Law has been, or once was, a source of freedom. A serf might run to the town court for protection against his master. A vassal might run to the king’s court for protection against his lord. A cleric might run to the ecclesiastical court for protection against the king.”

We often think that law is something that must be provided by government. This is understandable; for this is the kind of system we are used to and have lived with. But let’s take a journey into history once more. History reveals a long track record of law that was generated outside of the government sector in a bottom-up process, facilitating social cooperation and exchange. The Law Merchant “lex mercatoria”, for instance, was a private institution in Medieval Europe that governed commerce and facilitated trade across the continent, and has exerted much influence over the development of maritime law till today. Celtic Ireland and Medieval Iceland are also great examples of societies that had law outside of the government.


Why anarchism?

But in the first place, why do anarchists insist on abolishing government? Are we just motivated by an irrational hatred of government? That is not so. Market anarchists have very good reasons why we wish to remove government from society altogether.

First, we note that throughout history, governments have been a very dangerous source of evil. Research by R.J. Rummel in Death by government shows that approximately 262 million individuals were killed by their own governments in the 20th century, 6 times more victims than in war. The reason for this is because of the rise of authoritarianism and totalitarian regimes, in which the power that government had was literally unlimited. These numbers only reaffirm the famous saying “power corrupts, and absolute power corrupts absolutely”. Thus, market anarchists are wary of the fearsome power of government, and want to protect people from it.

But couldn’t we simply limit government with various mechanisms? Need we be so drastic as to remove government entirely? This brings us to the second point.

Attempts to limit government power are ultimately futile. Minarchists and classical liberals are people who want to limit the power of government, and they try to achieve this by methods like democratic voting, a system of checks and balances, federalism and ensuring the power of exit. However, in reality, these efforts are, despite the good intentions of its advocates, ultimately insufficient. Democratic voting is rife with problems of voter ignorance and demagogic practices by charismatic politicians; the system of checks and balances degenerates into a system of “you scratch my back, I scratch yours”, due to the repeated dealings of politicians within the same state system. For individuals to exercise the power of exit, they need to completely uproot themselves from their society and move elsewhere, an exorbitant cost that many won’t exercise.

Ultimately, it is also naïve to place a monopoly of power and the use of force in the hands of a group of men, and expect them to limit their own power. This is plain silly, as Sartwell puts it: “to cure people of the selfishness and violence at our hearts, we will heavily arm some of them and authorise them to restrain, imprison or execute others of them”.

If we believe that human beings are not angels, and are prone to corruption and advantage taking, then there’s no reason to suppose that efforts to limit power, which must themselves be sustained by fallible humans, will work. Market anarchists are very realistic people, and argue that it is far better to remove this monopoly of power and the use of force completely from such dangerous individuals.

The third reason to consider would be the superiority of the private enterprise system. Both theory and history have amply demonstrated the efficiency of the free market capitalist system to deliver superior outcomes than the monopolistic, bureaucratic, government sector. If most of us Singaporeans already suppose that we would prefer the market to deliver and provide food services, telecommunications and aviation, there’s all the more reason to suppose this same system can also provide policing, defense, and legal services that governments have traditionally provided.


How will such a system work?


In this decentralized, polycentric legal system, all laws are voluntarily agreed to. Individuals will choose to be served by their choice of a “Dispute Resolution Organisation” (DRO). Each DRO will have a contract with every other DRO (represented as the large document icon), and each subscriber of a given DRO will consent, via a contract with that DRO (represented as the small document icon), to be bound by that DRO’s contracts with the other DROs. Dispute resolution will be served by an individual’s DRO, and will follow the agreed upon guidelines in the said contracts.

DROs will work with a pool of private arbitrators, whose job will be to make judgments on conflicts, disputes and alleged crimes in society. These arbiters will be individuals who are known to be intelligent, well educated, fair, and objective, and will be chosen according to means specified in the applicable inter-DRO contract.

When a dispute between two parties goes to a private arbitrator, the rulings will follow either one of two (private) sources of law: 1) property owners or local associations of property owners could specify the body of law to govern interactions occurring on their property, e.g. Seasons Park Condominium Association. 2) Private arbitrators themselves develop different rules that competing DROs choose to adopt. Practically, such rules could converge on common norms based on market situation e.g. all printers use the same paper size.

Individuals in a market anarchist society can expect the DROs, to have a great incentive to keep their person and property safe. As businesses, the DROs strong incentive to provide high quality at lowest cost, superior to current statist system. DROs could sell different packages to their customers, and could range from a “basic protection plan” consisting to house alarms, regular patrols and crime detection services, or more advanced plans which might include personal bodyguards.

The following table illustrates the essential and ultimate improvement of the market anarchist system:

The voluntariness of the market anarchist system makes it more just, and both traits make it less abusive and more responsive to people’s needs.

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Adam Smith Center

Adam Smith Center

Members of Adam Smith Center Singapore.