On Libertarianism and Statecraft, Part III: Governance, State, and Defense
By Insula Qui
Author’s note: The main themes of this series will be further expounded upon in my upcoming book Anarcho-Monarchism, which will be available in April.
Alleviating Burdens of Property
As established in Part II, the entire burden of owning property is usually too much for a single person to bear. Any person who fully owns property in a libertarian social order has the responsibility of an absolute monarch. He would have to uphold all control over legislation, arbitration, and upkeep when it comes to his property. The only way to alleviate this burden is to outsource part of it to someone who is more capable of managing the property. This is necessarily a person or group of people who can harmonize the interests of multiple property owners into a cohesive social structure which allows for property to be used to the greatest possible extent. When market forces are properly in order, this is all but inevitable due to the effects of forming economies of scale and creating a more advanced division of labor.
If each person is fully responsible for his own property, then even the people who are least suited for managing property are in charge of their property. When the management of property becomes outsourced, this is no longer the case. The logic supporting the division of labor still applies even where libertarians might not want it to apply. Having a society means that there will be certain people who specialize in the management of property. There will be people whose job is to ensure that the burden of holding property is reduced. Even when there is no state, these people constitute a government.
Government and State
One must not conflate the government with the state. The state is an entity that monopolizes force, while government is simply the managerial entity in control of property. The state claims partial ownership over property, which gives it the ability to tax and legislate. It is difficult to conceive of a government that lacks a state, but this is simply due to a limited imagination. The abolition of the state does not imply an abolition of governance; quite the opposite. The proliferation of individual sovereignty will bring about an increase of governance and statecraft. Because owning property is a burden, governance services become necessary for human flourishing. The only exception would be if all people in society are capable sovereigns, which is never going to be the case.
There are individuals who are sufficiently capable at managing their own property so as to have no need for outside governance. However, a significant number of these people already have libertarian proclivities and are drawn to philosophical libertarianism. And since the majority of the population are not libertarians, we can only assume that most people are not capable of shouldering the entire burden of their property ownership. This produces the demand for governance, and this is why there is a natural tendency to form states. Even if one does not support them, governance structures will characterize human society even without a state.
Most anarcho-capitalists would argue that there is actually no demand for a government, and that the bureaucratic government would be replaced by decentralized market actors for managing land. This ignores that even small associations for managing apartment buildings and housing developments are structured like governments. There is no possibility that governmental structures will not emerge from the demand for systems which can harmonize different private interests. These governmental structures must be value-productive in order to survive, as they are still within the confines of the libertarian society and are not subsidized by a state. All states fundamentally weaken property rights to increase their own power, and will always act according to the taxes they collect.
The Myth of the Market
One reason why market governments are necessary is that not every problem can be solved simply by using the forces of material exchange. Social cooperation will not always be reached through economic competition. For example, an immense problem for which libertarians have no systematic answer is the imposition of negative externalities through the bad neighbor problem. Having the government be an agency bound by contract ensures that these negative externalities can be dealt with. It also means that social damage resulting from infringements upon property is minimized. This is due to the contractual nature of a government which preserves the power of property. This can solve the issues of monopoly and virtue that plague modern states and affect any potential libertarian society.
If one ignores contractualism, which forms the basis of libertarian interaction, one ignores the main practical reason for why one ought to support libertarianism. The right to form contracts is the right to choose how cooperation takes place and how to create a functional society. Contracts will form governments, and contractual governments will result in the practice of statecraft. This is a positive development; there is no reason to be dogmatically opposed to governance. Structures to govern a society are generally desirable for all people within that society. Most people benefit greatly from having a social management using proper statecraft.
State and Market
But what would prevent contractual governmental organizations from falling into the same pitfalls of federal entities? How can we prevent the adverse effects of the centralization of power when governmental structures lay claim over multiple sovereign areas? In order to answer these questions, it is necessary to determine the optimal size for governance. Most of the current nation-states are demonstrably beyond their optimal size and the supranational organizations are even more beyond the size at which good governance can occur. It is impossible to govern properly an area so large that the government loses all contact with those whom it governs. Although accurate economic calculation is impossible for any government, the problem worsens when the government is less aware about what the population wants. There can be no good governance on an impersonal basis. The only way to create a government of the optimal size is to enable market selection to find this size.
If market governments ever impose disutility, there will be a dissolution of those governments, for destructive governance cannot last without some form of coercion. This ensures that market governments can never be destructive in the same manner that states are. There should be no conflation of market governance and state governance, as the problems of central planning and coercion only apply to the state. Since all people are only bound by contract and personal loyalty in a libertarian society, the market governments are another expression of this. Governments will stop engaging in their own central planning and start harmonizing the plans of individuals. Furthermore, the coercive effects of power do not exist if there is no coercion. The contractual government cannot go against the interest of the population with impunity.
Contrary to libertarian instincts, the more an economy and society are governed, the better functioning they will be. Even though the state generally decreases value in society and is destructive, governance is a productive tool. The better property is managed, the more prosperity can be produced with that property. An efficient allocation of resources is achieved by having resources governed according to proper statecraft.
Violence
The other important part when analyzing social interactions between different property holders is considering what happens when there is conflict. Crime will always exist and is an important social issue to address. The state as it currently stands is the worst criminal offender and enabler of criminal activity, but this does not erase the importance of law and order. But how is it possible to organize the prevention of crime and foreign invasion in a libertarian society?
An easy answer is to simply say that the military and the police can be privatized. This is a respectable position and one that has been defended at length by other libertarian philosophers. If the market works, it must also work when it comes to defense. If the state cannot be trusted with production, it cannot be trusted with producing defense. The last industries the government should have control over are those that allow the state to gain control over every other industry.
However, it is possible that having a military force and a police force without an overarching system of governance could be sub-optimal. This is complicated by there being no benefits to the people when centralizing defense above the optimal point at which it would be provided in the free market. (The states, however, greatly benefit from centralizing violence.) The best way to determine the proper size of defense agencies is to have the market system figure it out.
Defense on the Governance Market
This does not mean that defense necessarily must function only as a private service. Both national and personal defense could better function under overarching co-operation. Libertarians often herald competition in the industry of defense and claim that violence is unlikely to erupt because it has a far larger cost than benefit. Although this is true to an extent, there are still perverse incentives involved. If a defense agency manages to increase the demand for defense, it will increase its own profits, all else being equal. When the demand for defense is increased, it must be due to additional overarching violence, or at least the threat or perception thereof. Defense agencies could intentionally cause violence to increase demand for their own services. This goes against the purpose of defense. This is also a problem with the state, but that does not mean that it is not also a problem with market defense.
The only way to prevent this is to have a meta-regulatory agency that has supreme authority over all defense agencies. Individual defense agencies can only keep each other in check to a limited degree. When there is a central agency which enables cooperation, it becomes much easier to solve problems caused by perverse incentives. When violence is put on the market, it will always have inherent problems because violence is the only thing that can disrupt a market order.
The meta-regulatory agency cannot, of course, have an ownership stake in the defense agencies. It can never directly contract these agencies; the only purpose it can serve is to protect the interests of the public if they are ever in conflict with the interests of the defense agency. This is done through contract, as everything else in market governance. The contract results in creating terms for the dissolution of or exit from the agency of market governance. As long as these terms are met and a person is no longer a part of the structure, the market government loses its authority. When this has been done, market government returns to the role occupied by all market agencies and cannot use its managerial or regulatory powers. If it attempts to do so, it will be met as any other invader would be. The potential for exit guarantees that the market government can never expand beyond its proper role.
The same governance structure can also defend against civil war. When market incentives are not enough, conflict can be avoided using cooperation to prevent coercion. Even if the public goods problem is not a serious issue, costs are lowered for individual persons if everyone is using defense companies. This is because law is better enforced when all people subscribe to it. Furthermore, the mitigation of perverse incentives is a similarly valuable goal. If an entity offers to mitigate perverse incentives and contractually obliges all people to pay for defense, there is the best possible allocation of resources. Of course, all of this would be possible only insofar as it is strictly voluntary.
The Anti-Socials
What happens when someone is not willing to cooperate and does not want to be involved in the social system? What happens to the anti-socials in society? The answer to this is quite simple and brutal: the incentive for any given person is to try to conquer the anti-social individual. In other words, the anti-socials will be physically removed from society. This is obviously in violation of moral decency and ethical norms unless there is an additional ethical reason to attack these anti-social individuals. If they have previously committed crimes or if they behave in a savage manner, this conquest can be ethically justified. Few people would stake much on the defense of anti-socials. But the ugly truth is that solitary individuals are vulnerable to violence, regardless of the ethics of the matter.
This is not to say that most people would immediately try to conquer solitary individuals. However, such individuals are much more likely to fall victim to crime. A system of governance mitigates this by joining a plethora of solitary individuals into a cohesive force with incentives to keep each other secure and safe from violence. The force that has made Western civilization possible is the militia, which gives men camaraderie and hierarchy through combat. This is only possible within a society and goes beyond any formal military. Having a well-ordered militia is integral to create a free and libertarian society that can remain competitive with statist societies. And as we have established earlier, forming these cohesive systems will naturally result in governance and not a disjointed and purely economic force.
Conclusion
The natural condition of man is governance, and the natural way of organizing the world is through governance. But the modern state has only arisen in the past few centuries. The civilized state has only outlasted the modern state by a few millennia. The vast majority of human existence occurred without a state, but this does not mean an absence of hierarchy or an absence of governance. The modern state is not inherent to man, but governance is inherent to civilization.
In a civilized society, governance must reach outside the tribe. This is simply due to the burden of property and the problems with having violence on the free market. The solution to this is not the state, but rather cooperative contractual structures functioning according to libertarian ethics. In Part IV, I will discuss other reasons why governance is necessary and who would govern in which way.
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