Wealth Concentrations in Free Market Anarchy
Richard Epstein, in a symposium on the limits of state power at Reason, wrote:
Patri Friedman has posted his response at Catallarchy.
Here's my contribution to the comment thread:
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.
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.
posted by Kevin Carson | 8:59 AM
8 Comments:
Brilliant. I would also add the point that Bill Gates did not start from zero and earn his money purely through entrepreneurial profit, he was a child of privelege (indeed, he's the son of a senior partner at one of the most politically connected law firms in the country) who had a leg up in areas such as education, connections for financing, etc, etc. In addition, his company built most of its latter fortunes through such state sponsored monopolies as copyright and software patents. His company's use of the courts to suppress competition is legendary.
In a truly open market, Mr. Gates would have to compete openly, without such advantages. I seriously doubt that he would have the fortune he has in a truly open market. If he did, he would deserve every penny.
I can't think of a single large (multi-billionaire) fortune in the United States or anywhere else, for that matter, that would survive a truly open market. The mountains would quickly become pebbles. You are most definitely right there, Kevin.
It seems like the best way to get a long-term meal ticket in an anarchy would be through personal celebrity, rather than through actual work. There wouldn't be as much money from CD sales, with no legal obstructions to bootlegs, but recording artists make the majority of their money from touring anyway. That wouldn't seem to be subject to much change; people still want to see their stars up close. Even famous actors and writers could use the personal appearance technique to generate wealth - signed copies of books, reading tours, highly expensive stage shows after a blockbuster movie comes out, etc.
The major change would be that it would be impossible to pass along much consolidated wealth to the children of the famous. The actual cash could be transferred, but in a left-anarchist society it couldn't even be really invested in anything, only spent. An anarcho-capitalist society would allow investment, but not in long-term monopolies like patents, and the rent-accruing power of land would be somewhat watered down, if you're right about how property rights would work.
On the Bill Gates front, I think the only way to make money would be to release open source software and then offer better tech-support services than the next guy. So Bill would be just a slightly bigger fish, because of his reputation, than all the other Microsoft experts his near-monopoly has generated.
Alex,
I mean rents resulting from aritificial, state-enforced scarcity. I think that's something Rothbardians/Lockeans, Geoists and mutualists would agree on the existence of. Of course, they'd disagree on how far the artifical scarcity extends: the Rothbardians would object only to titles that couldn't *ultimately* be traced to homesteading by personal alteration; the individualists/mutualists would object to any title not currently established by occupancy and use; and the Geoists would object to uncollected site-rent. I go with the Tuckerites, obviously.
Presto and Matthew,
I think you're both partly right on Bill Gates. On the celebrity thing, Matthew, it seems likely that your idea of Gates being just a slightly bigger fish from his status as the original creator and providing superior ongoing value to customers is also a good model for how celebrity (what there was of it) would function in a free market society. Without copyrights (and consequently without big film production companies, big record companies, big publishers, etc.), there'd be a lot more music being produced on the Phish model, and desktop publishing with modest returns, and cheaply (but well) made indy movies like Sky Captain.
I'm not sure if the original question was about the susceptibility of anarchy to be taken over by some system unsmoothed by usage, by people completely violating its principles piratically, as it were. If so, your otherwise accurate comments miss the point of the question. Remember that 1780s Vermont nearly became a border prinicpality under Ethan Allen, aggressing/defending against New York and a buffer between the USA and Canada. Also remember that "artificial" scarcity is sometimes like artificially burning firebreaks before a natural fire - that was Wakefield's context, artificial scarcity during transition to avoid establishing extensive approaches which would be unsustainable.
Peter,
Much of the owning classes' agitprop for enclosures and the like was couched in "disinterested" terms about the welfare of "society"--but it boiled down to a complaint that labor wouldn't work cheaply enough unless it was robbed of direct access to the means of production and subsistence. I think this is true of Wakefield. His view of "sustainability" translates, into practical terms, into what's sustainable for those who want to make money off of others' labor in a colonial society. ("I can't sustain hiring people at this rate for much longer, or I might have to do some work myself.") Everybody except the plutes would have viewed a society of subsistence farmers and self-employed tradesmen as perfectly sustainable.
Most ruling class notions of "general welfare," even when sincere, have a large element of "What's good for General Motors" in them.
Ah, but, Wakefield was working in a context of colonies that were opening up, i.e. intrinsically in transition. We have the natural experiment of South Australia and the other Australian colonies to show us the actually obtaining alternatives in the conditions of the time. SA avoided convict labour and never ended up with a squatter/free selector tension, and the gains from land sales (i.e. from the exploitation) were ploughed back into bridges, railways - and subsidised immigration. I would have agreed with you if Wakefieldism had been applied to an isolated Australia, but it was in fact a better (not ideal) way of handling new immigrants who would otherwise have been fenced out by earlier comers making extensive use of land. When
Rats. Defeated by the blog again. To sum up, the unsustainability I meant wasn't the unsustainability of an extensive colony, but of a colony's existing transition towards being more heavily settled. Extensive uses would have needed to be wound back once later arrivals settled anyway, and Wakefieldism didn't rip off erlier ones but rather applied the economic rents to opening up things for the later arrivals. I won't go into the precise techniques, but the applications of the gains are relevant as well as the fact that these were removed from those in place at each stage - they weren't rent seeking activities applied to private gain.
Isn't it ironic how leftists are so worried about evil capitalists somehow stealing everyones money, even theoretically but they have no problem with the government stealing everyone's money, because the government are a bunch of angels ruling over us terrible terrible evil humans.
http://theavowedanarchist.blogspot.com/
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