Anarchocapitalism would break down

A commenter writes,

Law enforcement, like soldiering, doesn’t work well on a contract basis because it relies on a fundamentally different approach to morality than capitalism does. Jane Jacobs’ Systems of Survival is worth reading on this point, but the basic idea is that a guardian who can be bribed is no guardian at all. Guardian morality rigorously and ostentatiously spurns trading because it is necessary to signal to one’s allies that you will be dependable even in the face of severe temptation (which combat is full of).

I take this as saying that police, security guards, and soldiers need a binding force that replaces or supplements monetary incentives. Otherwise, there is a risk that the guard will change sides in the middle of a conflict, going over to the highest bidder.

41 thoughts on “Anarchocapitalism would break down

  1. This idea is called loyalty; and capitalism requires it to function. If you have an insurance contract and the enforcement is open to bribery, then it is worthless. The moment you are out of cash with no prospects of getting any more, you are vulnerable and the contract will magically get ‘renegotiated’ at best.

    In a repeated game theory context, that might get punished by potential future contract partners; but if cheating is sufficiently incentivized, it will simply make insurance unaffordable.

    As a soldier, the Army wants loyalty to the ‘nation.’ But there is also loyalty to a fellow soldier; and that is a strong force, and perhaps a good predictor of loyalty to the more abstract entity. If he has nothing to offer me, with no prospect of having something to offer me… will I leave him in his quandry or will I stick my neck out?

    Ultimately, no threat of enforcement will motivate the behaviors required of real loyalty. It’s all intrinsic motivation. The hardest moment is the moment of perceived betrayal – when you decide to stick with it and be loyal regardless. Capitalism and homo economicus has trouble with the forgiveness required in the repeated prisoner’s dilemma…

    • I wrote the original comment and yes, that’s what I meant. The motivation has to be intrinsic; the whole point is to render the guardians immune to threats and bribes so that they can rely on each other and society can rely on them.

      The military has gotten really, really good at solving the prisoner’s dilemma. So good that soldiers rarely defect when the risk of death or lifelong injury is high and the soldier expects no tangible reward. So good that when you’re heavily outnumbered and call for backup, the backup will almost certainly arrive and will be on your side when it gets there, despite the fact that the enemy is in a position to make a much better offer.

      • Interestingly, many defections have a strong ideological basis, e.g., to Communism, Islam, etc.

        • But do they occur on the field of battle? My impression is no. The closest example that I can think of would be Gen. Vlasov and his troops (~100,000) in WWII, but they were captured first (often after being practically abandoned by the rest of the Soviet army) and defected while in German POW camps. However, the “depth” of their defection is questionable, because in May 1945 when Germans were crumbling, Vlasov’s corps attacked the Germans in Prague to prevent them from destroying the city and massacring Czech resistance fighters.

          • Here are a few cases I was thinking of: Bowie Bergdahl, Robert Garwood, Some of the few defectors to North Korea. Thinking about it, this may be “availability bias” on my part as incidents that have been in the news during my lifetime. There are those many prominent cases of treasonous espionage on behalf of the Communists for ideologically-motivated reasons, but of course those are quite different cases from soldiers defecting on the field of battle.

      • Military conflicts are iterated, the primary reason you don’t defect from the losing side of a battle to the winning side of the battle is that the battle rarely determines the outcome of the war. Swapping sides like that means you are not particularly trusted by your new allies, and very much hated by your old ones. It is very difficult for them to make an offer that is actually better in the long term that is worth it to them and to you.

        • 1) Most offers are better than getting shot. Being the lowest-status member of the winning side is better than being the highest-status guy who got killed. War is far more about avoiding the stick than getting the carrot (for most people).
          2) There’s a reason half the tinpot dictators in the world have titles like “colonel” or “generalissimo”. Defection often takes the form of a coup by the previously subordinate against the previously superior. Vladimir Putin, formerly of the KGB, is an excellent example from the paramilitary side of things.

          • Death is rarely a certainty in an engagement, and the offers at the points that it is aren’t forthcoming. The other side doesn’t want just bodies (most of the time), as they are a cost.

            #2 has almost no relevance to the proposed question.

      • Which is greater? Loyalty to each other or loyalty to society? I ask because in the case of misdeeds on the part of one or more guardians, can society really “rely on them” or will they side with their brothers in arms.

      • We do not expect the military to be immune to better offers. When defeat is certain, surrender is morally acceptable. Indeed, western countries have negotiated treaties about the procedures for surrender, and the treatment of those who have surrendered, which would amount to a social-level acceptance of the “better offer” (you increase your chance of losing the war very slightly, but you get to have your people back afterward).

    • BenK

      Loyalty is the enemy of capitalism. For capitalism to truly work, especially in more complex economic systems, everything depends on parties setting aside loyalties. Otherwise, every transaction has to take place on two levels: you have to apply a monetary price and a social capital price to get anything done.

      What capitalism does need are social norms that deflect the natural inclinations of people to constantly rent seek using any leverage possible.

  2. The idea that private police can be bribed and public police cannot is absurd.

    • Public police can certainly be bribed. But public police have strong norms against bribery and private police have an economic imperative to make sales; which do you think will be more resistant to bribery? No system is perfect, but some systems work better than others.

      • As others have said, in the private world the notion of “professionalism” is a strong norm against bribery.

      • Also, private actors can make pre-commitments to pay penalties in the case of defection. In most countries, this takes the form of contracts and state-provided law enforcement. And, in places with no state law enforcement, “honor culture” enforcement of pre-commitments can be quite severe.

  3. The non aggression principle is the bedrock of ancap
    but soldiers and police are hired to violate it
    the solution to the contradiction is to make violence immoral if used for personal gain but justified when used for public benefit
    but then you end up with professions that are not ayn rand compliant

    • A woman who kills a man who is trying to rape her does not violate the non-aggression principle nor does anyone who acts on her behalf.

      • Sure, but what do you do about a guy like Laverntiy Beria. He was head of the Soviet secret police, and also a prolific rapist (also torturer, but that was his profession, not his hobby). No self-interested party is going to accept a contract to enforce the law against a guy like that; a paycheck doesn’t outweigh the very high odds of watching your whole family get tortured.

        https://en.wikipedia.org/wiki/Lavrentiy_Beria#Sexual_predator

        Consider also that the high school in Parkland, FL, where the recent shooting occurred had an armed officer on site. He did nothing (i.e. he defected); it was probably on some level a smarter move than attempting to engage an enemy who was younger, more prepared, likely faster, and likely better armed.

        • Plus he was just putting in extra hours to pad his retirement. Which works out to 103k a year for the rest of his life iirc. Dont want to put yourself in harms way if a payoff like that is imminent.

  4. Wouldn’t that end up affecting the company’s reputation and impacting it monetarily, at least in the long run? The contractors of these services would seek traditional businesses or accept new ones only with sound contractual clauses.

  5. I’d like to see some empirical evidence of this. Considering there’s a long history of mercenary armies, it should be possible. I’m inclined to agree with this idea, but in the absence of evidence I’m not at all confident in my opinion

  6. The majority of this comment and the responses here are off base with regard to economic incentives. Straight line logic, if a security guard is more valuable when they are loyal then breaking that loyalty will be a strong signal not to hire the security guard in the future, and this goes for the bribing party. If you bribe a security guard to switch places how much can you actually trust him in the future? He has just demonstrated that he can be bought, and that he can be bought at a price that makes it profitable for the buyer. So in the long term the person accepting the bribe has to be compensated for the value of his defection, plus the long term losses incurred, plus the short term losses incurred.

    The circumstances where it becomes profitable to bribe people in this way are relatively rare, and so large scale defections should also be relatively rare.

    • 1) “Security guard” is not generally a job that people invest highly in or that pays much better than other common jobs. The opportunity cost of defection is pretty low, and is often easily covered by a percentage of the spoils.
      2) Drug cartels are well known for offering their enemies a choice of “the silver or the lead”- accept a bribe and betray your employer (silver) or get shot (lead).
      3) Some historical examples:
      a) Colonel Muammar Ghadafi: Military officer who defected, started a coup, and ruled Libya from 1969-2011.
      b) George Washington: In 1755, “Commander in Chief of all forces now raised in the defense of His Majesty’s Colony”. You may have heard how that worked out.
      c) Most of the coups on Wikipedia’s list: https://en.wikipedia.org/wiki/List_of_coups_d%27%C3%A9tat_and_coup_attempts_by_country

      • People who are getting paid as a ‘security guard’ at a low wage have very little value as a defector though, so the pay for defection is low, so again unlikely. It is rare for someone to be of low value to an employer but to be high value as a defector (though not unheard of).

        Drug cartels exist in highly asymmetrical situations, where the country as a whole has few well paying options outside of the drug trade. Much like defecting to the US for Communists was a boon because living a modest lifestyle in the US is already a large gain for many living under communism. Assuming that AC would work like a drug cartel in an impoverished country is starting from the assumption that it has failed, and becomes tautological.

        a. coups are like drug cartels, they occur in already failed circumstances.

        b. the founding fathers spent a lot of time and effort trying to negotiate with the crown, and they were not bribed to defect.

        c. coups bear little to no resemblance to the hypothetical offered.

        • At the higher levels where we are likely to have historical records, the defection will generally not be in favor of accepting a bribe from another employer. It will be in favor of taking over for oneself.

          Also, battlefields (or even gunfights) are generally too chaotic for negotiation. The sort of defection that happens in the moment is excusing oneself from combat (i.e. cowardice). Shifting a significant group’s allegiance from one side to another takes much more coordination, but it happens. Italy shifting loyalty during WWII from the Axis to the Allies is a good example.

          • I’ll also note that one does not pull off a coup by oneself. The footsoldiers of a guy like Ghadafi or Musharraf or Saddam were ordinary soldiers defected in favor of a better offer.

    • Various mercenary groups in the middle ages were famous for demanding double agreed upon pay the night before a battle. Many defected by either going home or fighting for the other side in battle if they had been bribed. And yet these very same groups were contracted again and again despite the reputation, at least in part because their prowess on the battlefield was proven.

      “Reputation risk” just becomes one more variable in the self interest calculation.

  7. 1) The reality of police, bribing and corruption is one area that was far force abuse 150, 100 or 50 years ago. How many bribing scandals were there in the 1970s? (There was lots of bribery before the 1970s but I assumed the press did some protecting here.) I have wondered why this is true but assumed higher union wages is one reason. Any thoughts on this is appreciated.

    2) In terms of the military, it is sort of society signal for a lot young people as employer.

    • If you want details, Jane Jacobs’ book is short and readable. She’s considered one of the all-time greats of sociology for a reason.

  8. Not only the security forces, judges and lawyers have to be loyal too to be of any use. This extends even to normal for-profit business corporations, whose employees don’t trade goods and duties among themselves or with outsiders and are instead expected (and relied upon) to be loyal to the corporation.

    • Sure. I’m a financial statement auditor in my day job, and there are a whole bunch of imperfectly-functioning rules trying to thread that needle. The work is paid for by a corporation, but its value rests on the expectation that we won’t express a clean opinion on fraudulent financial statements issued by that company even if our customer would much prefer that we did. The rules work tolerably well most of the time, but there is the occasional Enron or Worldcom. It’s not a fully-solved problem.

      More generally, my very limited understanding of economics is that they’re still trying to solve the principal/agent problem and haven’t really begun on the principal/chief executive agent/vice agent/regional agent supervisor/local agent manager/agent sorts of problem that occur all the time in real life. Again, it’s not my field and I could be wrong.

  9. This argument proves too much. Other occupations that would break down under capitalism include

    – security guard
    – attorney
    – arbitrator
    – talent agent
    – professional athlete in a team sport
    – manager

    All of these jobs involve acting on behalf of someone else, yet somehow they manage to exist outside of government employment. As in government, bribery happens but apparently not enough to make them impossible.

    • It’s one thing to act on behalf of someone else. It’s another thing to risk your life for someone else. It’s a third thing to honor a contract with someone else when there’s no other relevant authority powerful enough to stop you from just robbing them.

      • Bodyguards and security guards do sometimes risk their lives for others. I think it’s too reductive to say that contracts are kept only because ultimately someone will jail or shoot people if they don’t. How many of your daily transactions would ever go to a government court if they went awry? Have you ever made and kept a promise to a friend? Reputation and ethics go a long way. Heck, large markets in illicit drugs exist on the dark net, where every buyer and seller knows the government isn’t going to enforce their contracts.

        In any case, just because predators and contract defectors wouldn’t have to fear a government under anarcho-capitalism, doesn’t mean they would have nothing to fear. A life of crime creates enemies.

        • Well, yes. Jacobs’ “guardian morality” is largely about cultivating a reputation as a dependable ally and a cruel enemy, so as to ensure that one always has plenty of allies and few enemies. Naturally, the best way to cultivate that reputation is to 1) be the kind of person of whom those statements are true (acting as if your honor/reputation is more important than money, because it is) and 2) do so ostentatiously.

      • When you take a job that might incur personal risk like this you are not often going to be in a situation where you have the opportunity to trade for your life.

        • No, but you are likely to have opportunities to walk away when it matters, defecting on your previous contract (they’ve been paying you for years for your work today) in favor of surviving. Like that officer at the high school in Parkland, FL did.

  10. The problem with anarchocapitalism is that unless everyone behaves virtuously and as your model predicts, that you need a strong central government to maintain property rights. Of course if everyone behave exactly the way your economic model needs them to act, then even socialism works well. Too bad people don’t follow the rules.

    Steve

  11. I do agree that anarchocapitalism would break down. But, the idea that law enforcement is necessarily moral becomes ludicrous on its face, once one learns about phenomena like policing for profit (aka civil asset forfeiture), which – in the US – allows police, prosecutors, tax authorities and other government agencies to take property without proof of wrongdoing by its owners, and use it for the benefit of the agencies’ own personnel. And, not only does this go on, but the agencies in question will – without apparent embarrassment or self-awareness – stand up and claim it is a necessary and important tool of law enforcement.

  12. I first read “Law enforcement, like soldering, doesn’t work well on a contract basis” Seemed an odd comparison to me.

  13. While members of a military typically have a very strict code about what constitutes acceptable behaviour and enforce this code by discharging anyone who violates it. However, that code can vary greatly from country to country or era to era.

    The U.S. military has a very strong code about not interfering with domestic politics. Turkey, Egypt and Pakistan provide modern examples of a very different norm. When it comes to selling loyalty, the Roman Legions, though by far the most professional soldiers of their time, would often chose the next emperor based on who had paid the highest wages in the past.

    These codes can change and change rapidly. My own time in the Navy came in the midst of two sweeping changes in our culture: the first were the social attitudes regarding homosexuality; the second those about heavy drinking. In 1995 the former was cause for discharge and in 2015 it was the later. (As a Sailor who had a lot of homosexual sex whilst drinking heavily in Bangkok, Hong Kong and Singapore, I consider myself very lucky to have hit the “sweet spot” when both were fine.)

    Another time of rapid change of expected conduct happened when we moved from a draft to an all-volunteer force. While the change was by far an improvement in the long run, my friends who served in the 80s recall a troubled transition.

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