Wealth Concentrations in Free Market Anarchy
A large society with no central authority offers an open invitation to some sleazy individual to consolidate power in his own name.
Patri Friedman has posted his response at Catallarchy.
A large society with a democratic central authority, on the other hand, offers a literally open invitation every election for sleazy, power-hungry individuals to take the reins of an already-consolidated power base. Ostensibly in our names, practically in their own. The flaw he suggests in ancap is simply it reverting to what we already have. While consolidation of power by sleazy individuals is definitely a problem, government, far from being a solution, is the quintessential manifestation of this phenomenon.
The net worth of the richest individual in the US, Bill Gates, is $33 billion. The US federal government is spending about 2 trillion dollars a year these days. I’d be much happier in a world with power distributed in Bill Gates-sized boulders of instead US FedGov-sized mountains.
Here's my contribution to the comment thread:
I’d add that there would probably be precious few Bill Gates-sized boulders in a genuine free market. Without the state to externalize costs and enable the “magic of compound interest” through monopoly returns on land and capital, individual fortunes would probably reach their saturation points at a much lower level. E.G. Wakefield pointed out the problem almost two centuries ago–when laborers have independent access to cheap land and capital, it’s pretty hard to hire them for a wage that allows for significant profit.
It’s also certainly possible to get rich on a small scale from entrepreneurial profit, but the period of quasi-rents is fairly short. The price trajectory of any innovative product or process will quickly tend toward cost, unless the “innovator” is able to use the state to obstruct market entry by others using the same process.
My intuitive guess (FWIW) is that personal fortunes in a free market society would max out in the low tens of millions of $$. At the other end, the lower threshold of subsistence with squatted land and self-built housing would result in a much smaller underclass, as well.
In other words, instead of Friedman's mountain and boulders metaphor, society would be more like coarse, loosely graded sand with a few pebbles in it. Imagine the New Hampshire and Vermont society of the 1780s, with solar panels and composting toilets, and a lot of other 21st century intermediate technology, and you've got it.