WorldSys: Austrian Home Study Course, Week 26

READINGS: “Private Security” in Bob Murphy’s Chaos Theory.

1 What is anarcho-capitalism?

The most thorough possible endorsement of private property rights and free markets. Anarcho-capitalists believe that infrastructure, healthcare, police, armies, and everything else should be provided by the private sector.

2 Are all Austrians anarcho-capitalists?

Today, it definitely seems that way, but historically many prominent Austrians, including the likes of Mises and Hayek, were minarchists.

3 How could law be privately provided?

Murphy believes that insurance companies would be incentivized to finance armies in order to protect the lives and property they’re insuring because, in the event of an invasion or similarly destructive event the insurance companies would be obliged to pay out enormous sums.

4 Do anarchists believe that all humans are basically decent and law-abiding?

No. Anarchists generally seem to believe that people are decent enough to have a society without tearing it apart, but they are not committed to any silliness about the angelic qualities of human nature. This is why they spend time thinking about how the private sector could provision courts, police, and armies — because these things will still be required.

5 How are insurance companies involved in [Bob] Murphy’s proposals?

Centrally: it is insurance companies that Murphy believes will pay for armies. Just as insurance companies would be willing to pay to build earthquake shelters and earthquake-proof buildings in a seismically-active region so too would they be willing to fund defensive forces which, in the long run, will result in their having to pay out less.

6 Wouldn’t Murphy’s system basically be a State run by insurance companies?

No, as alluded to in a previous question set insurance companies simply do not face the same incentives as a state. They do not have a territorial monopoly on violence, they personally own the resources being deployed in various capacities, and they are liable for damages.

7 Give an example of experts or “authorities” from other disciplines where force is definitely not involved.

Murphy cites baseball clubs and French restaurants as examples — one needn’t be a professional athlete or have an encyclopedic knowledge of foreign cuisine to manage establishments devoted to these pursuits, provided one is willing to hire other people to identify the requisite talent.

So if I, as a private-sector general, were allowed to compete with the Pentagon for wartime strategy, the first thing I’d do is start trying to identify and hire experts in logistics, intelligence gathering, and battlefield tactics. I would also look around for a historian who could draw from a reservoir of knowledge to make comparisons between ongoing conflicts and historical ones.

8 How might social/economic pressure persuade disputants to submit to arbitration?

Conflict tends to be expensive and obnoxious. In the majority of cases we can reasonably expect people to be willing to submit to arbitration when conflicts arise because ‘going to war’ with a person — either on a national or individual level — is often simply not worth whatever is to be gained.

9 How does the Misesian calculation argument relate to military defense?

In the same way that it does anywhere else. The calculation argument essentially claims that public ownership of the means of production — factories, lumber, labor — doesn’t allow prices to work, which means that performing rational economic calculations becomes impossible.

How is a given unit of wood or steel to be put to the best use? Without price signals there simply isn’t any way to tell.

Well, this fact doesn’t change when the subject of discussion changes to defense. Every rivet in every tank, every piece of glass in every rifle scope, every hour spent training troops or sending them out on patrol is scarce, and subject to the same economic laws as all scarce goods are.

If you accept this, then you’ll see that Misesian worries over the calculation problem apply to military defense as much as to constructing roads, harvesting wheat, and performing root canals.

10 Why would insurance companies ever pay for military defense?

As discussed in several earlier questions, to reduce long-term payouts. If I’m insuring skyscrapers, bridges, tunnels, roads, and other massive infrastructure projects it damn sure makes sense for me to use some of my profits to pay for a small military able to protect these investments from foreign invaders whose bombs and guns might destroy them.

11 Why does Murphy think that private militaries should have their budgets multiplied by a certain factor before comparing them to government budgets?

Because governments pretty much never underpay for anything, and private sector investors would almost certainly get military equipment for a fraction of the cost. No one is shocked by the $38 million price tag of an F-14 Tomcat because the government’s monopoly on defense has made it impossible to determine how much such a weapon should cost.

12 If the U.S. military is second to none, doesn’t this prove that government is the best way to provide defense?

No, because said military is competing against other state-provisioned armies, not privately-provisioned ones, so at best we can say that it demonstrates that one government (ours) is better than other governments at building enormous war machines.

But the deeper question is whether or not the U.S. military could do a better job of innovating new fighter jet designs and manufacturing existing fighter jet designs than a private firm. On the evidence, I think this is unlikely.

13 Perhaps a draft is detestable for moral reasons, but doesn’t it give a society the best means to defend itself from attack?

The best means of defending from attacks is a volunteer army of willing soldiers who know for what and for whom they are fighting, backed by a robust industrial economy and the high military technology provided thereby.

14 Wouldn’t a private army take over a society?

This would be less likely if there were many competing defense agencies, and it would be a fairly rare situation for conquest to be more profitable than trade.

But I do admit to having less sympathy for the anarchist case on this point. History is replete with examples of precisely this scenario unfolding, and I’m less sanguine about that not happening in a modern anarchy.

15 Would an anarchist society need to develop nuclear weapons in order to deter invasion?

Not necessarily. Plenty of societies exist today without nuclear weapons deterring invasion, and an anarchist society might well be bleeding-edge in the private provision of nuclear defense systems.

It’s also worth remembering that anarchist countries, being poorly suited for conquest, would be harmless neighbors unlikely to provoke a preemptive invasion.

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