Privatized Security: Running Man vs. Neighborhood Government

Via Jesse Walker at Reason Hit&Run. A piece by John Robb at Fast Company puts an interesting spin on the privatization of security.

Robb starts out with a fairly competent backgrounder on netwar, asymmetric warfare, "fourth generation warfare" (or any other cliche you prefer), followed by his picture of the effects of such warfare on the kind of old-fashioned security once provided by national governments:

Then, inevitably, there will be a series of attacks on U.S. soil. The first casualty of these will be another institution, the ultrabureaucratic Department of Homeland Security, which, despite its new extra-legal surveillance powers, will prove unable to isolate and defuse the threats against us....

But the metaphorical targets of September 11 are largely behind us. The strikes of the future will be strategic, pinpointing the systems we rely on, and they will leave entire sections of the country without energy and communications for protracted periods. But the frustration and economic pain that result will have a curious side effect: They will spur development of an entirely new, decentralized security system, one that devolves power and responsibility to a mix of private companies, individuals, and local governments....

Security will become a function of where you live and whom you work for, much as health care is allocated already. Wealthy individuals and multinational corporations will be the first to bail out of our collective system, opting instead to hire private military companies, such as Blackwater and Triple Canopy, to protect their homes and facilities and establish a protective perimeter around daily life. Parallel transportation networks--evolving out of the time-share aircraft companies such as Warren Buffett's NetJets--will cater to this group, leapfrogging its members from one secure, well-appointed lily pad to the next. Members of the middle class will follow, taking matters into their own hands by forming suburban collectives to share the costs of security--as they do now with education--and shore up delivery of critical services. These "armored suburbs" will deploy and maintain backup generators and communications links; they will be patrolled by civilian police auxiliaries that have received corporate training and boast their own state-of-the-art emergency-response systems. As for those without the means to build their own defense, they will have to make do with the remains of the national system. They will gravitate to America's cities, where they will be subject to ubiquitous surveillance and marginal or nonexistent services. For the poor, there will be no other refuge.

Until, that is, the next wave of adaptive innovation takes hold....

That's where Jesse Walker broke off in his quotation from the article. After reading just the blockquoted penultimate paragraph above, I saw Robb's view of the future as--to say the least--dystopian. It reminded me a bit of the original novella version of Stephen King's The Running Man, or Marge Piercy's He, She, and It: a shrunken upper middle class retreating into gated communities and leaving the unskilled, underemployed underclass to the rotting cities, terrorized by corrupt death squads thinly disguised as police forces.

My main reaction was incredulity. First of all, the scenario didn't seem very plausible unless the old local governments actively suppressed organized self-defense by ordinary people in their own neighborhoods. For the poor to have "no other refuge" but substandard protection and ubiquitous police surveillance, the remains of local government would have to be actively in collusion with the corporate mini-states and private security forces. Otherwise, communities with widespread firearm ownership, organized into neighborhood militias, could probably provide pretty cost-effective (and lethal) competition to the high-tech security firms. Blackwater did pretty good in an atomized society in total chaos, like New Orleans. But attempting to impose their rule on a cohesive and well-armed local community that viewed them as the enemy, they'd be cut to pieces.

And with a collapse of the old, centralized, state-subsidized infrastructures and the central government's taxing and spending mechanism, the giant corporations wouldn't be able to externalize their inefficiency costs on the taxpayer. That suggests they'd run out of the funds in fairly short order with which to pay these fancy hired guns.

So in a competition between local, self-organized community defense, and the technofascist "McDonald's owns the world and rules it through Blackwater" brand of anarcho-capitalism, I'd expect the latter to go belly-up pretty fast.

As I commented at Hit&Run, after having read only the blockquoted material above:

Arguably the reason these large concentrations of corporate wealth exist in the first place is their ability to externalize the costs of "public goods" on the taxpayer without paying for the full cost of what they use. If they have to fully internalize the cost of their own "parallel transportation" and security, they may find they're bleeding cash.

On the other hand, unless there's some kind of state licensing cartel that restricts the supply of private security services to expensive, high-tech Robocop firms, there's nothing preventing neighborhoods and communities from organizing their own voluntary security associations (imagine a Neighborhood Watch with guns and surplus police equipment).

I'm pretty skeptical about the ability of big corporations to survive under these quasi-anarcho-cap scenarios, unless the state is brought under another guise....

I should add: the defense provided through cooperative organization and other forms of small-scale voluntary association might be considerably more cost-effective than the high-tech services provided by large corporations with multiple layers of managerial bureaucracy, mission statements, and high overhead, following "best practices" and "industry trends." If Blackwater, allied with a rump state, tries to enforce corporate power on the rest of society, it may find the IEDs and pungi sticks of the neighborhood militias to be pretty effective.

I recently saw a discussion in a comment thread at Mises Blog that reinforced that view. First Keith Preston wrote:

Many if not most an-caps strike me as advocating not so much pure anarchy as much as de facto rule by quasi-feudal insurance companies.

In a subsequent comment, he elaborated on the practical implications of an-cap theory:

Instead of having an elected political government funded by compulsory tax payments to pass legistlation against this or that "crime", individuals simply pay fees-for-service to private protection agencies (like current security guard services) to provide whatever "law enforcement" they wish. Conceptually, I understand this. Here's where I think the "feudal" dimension comes in:

Who decides what the actual "law" is? The subscriber? The owners of the protection service? Their individual employees? Let's say Joe's Protection, INC. says in its ads: "We promise the ultimate in law and order for the lowest price. For a mere (fill in the blank) monthly fee, we will machine gun all shoplifters, hang drug pushers from the lamposts in the town square, flog the guy who adulterated your wife and the kill the dog that keeps barking in the middle of the night. Satisfaction guaranteed."

Now, I'm sure all of the libertarians reading this are by now saying, "Wait a minute! Libertarian law has to be proportional (yes, I've read Rothbard's "Ethics of Liberty", too), drug dealing and adultery are consensual acts and not legitimate targets of prohibition, the dog is the private property of its owner, etc."

But the question is: Who will force the protectors to adhere to libertarian law theory? The standard answer is that the customers of the non-libertarian protection agency can take their business elsewhere but why can't the protectors just say "no dice" and assert themselves as a de facto protection racket as opposed to protection agency (after all, they're the best organized and with the most weapons)? The usual answer is: Well, such an agency would be criminals by libertarian standards and the other libertarian defense agencies would move against them? But what if it was more profitable for the other agencies to simply join them as partners in extortion? Would not the profit motive win out? Is this not what the state is anyway? This is why I say that anarcho-capitalism, in actual practice and taken to its logical conclusion, would probably result
in the eventual creation of feudatories run by private insurance companies, who more or less demanded compulsory protection fees ("tribute")from their alleged "protectees".

To which Vic responded:

1. Many people might oppose prostitution, prefer thiefs to get shot, etc. But very few people would willingly dish out monthly to see these goals implemented. Under the present system, the costs do not seem apparent, and neither does the direct moral responsibility, because we do not write a check for it. Furthermore, the costs of an insurance company with this policy would skyrocket, as you can imagine how difficult it would become to enforce this policy, compared to the libertarian policies of competitors.
Yes, a small minority would feel strongly enough to pay for such a society, but they would end up with a community where most people agree to live this way.


2. You assume that a legitimate company that built a customer base suddenly gets taken over by the mafia. As unlikely as this seems, let's assume it happens. A protection racket becomes expensive to enforce. Imagine the difference between checks coming in and having to go collect them with armed guards. How do you force the bank to hand over someone's finances? And remember everyone has a gun at home. Most neighborhoods would probably also have local militias, with neighbors looking out for each other. And as soon as one company tries this, all their income shift to a competitor willing to protect their new customers. Now you might say a nice little war will break out between the two companies. We could have started with this assumption - what if one company simply tries to take another one over by force?
This becomes a whole new topic, I will just touch on it.

a) The rogue company would quickly bleed its finances.

b) The attacked company most likely has protection contracts of its own

c) the attacked company most likely lacks a central command center to take over


3. Without an existing monopoly on force in place, cartelization never worked in history. You have to worry about new competitors entering the market, but more importantly, price cutting enters the picture sooner or later. Historically, this usually happened. You might say that this cartelization would essentially bring on a monopoly on force. I suppose that could happen, but then we might just end up where we are today. Apologists for the historical inevitability of the present system like to take this line. But once a FMA system takes root, this would become immensely more difficult. They couldn't rely on an income tax in place to finance them. Again remember the armed populace. And I also assume a culture of liberty would follow, making resistance very likely.

That's pretty much my own reaction when I first read the excerpted passage from the Robb piece.

As it turns out, I should have paid more attention to that last teaser line in Walker's post and followed the link. Because Robb himself, after his dark vision of tomorrow, goes on to present a pretty attractive (and Karl Hess-ish) picture of the day after tomorrow (exept for the part about "regulating, taxing and controlling everything," obviously). I resume quoting:

Until, that is, the next wave of adaptive innovation takes hold. For all of these changes may prove to be exactly the kind of creative destruction we need to move beyond the current, failed state of affairs. By 2016 and beyond, real long-term solutions will emerge. Cities, most acutely affected by the new disruptions, will move fastest to become self-reliant, drawing from a wellspring of new ideas the market will put forward. These will range from building-based solar systems from firms such as Energy Innovations to privatized disaster and counterterrorist responses. We will also see the emergence of packaged software that combines real-time information (the status of first-responder units and facilities) with interactive content (information from citizens) and rich sources of data (satellite maps). Corporate communications monopolies will crumble as cities build their own emergency wireless networks using simple products from companies such as Proxim.

By 2016, we may see the trials of the previous decade as progress in disguise. The grassroots security effort will do more than just insulate our gas lines and high schools. It will also spur positive social change: So-called green systems will quickly shed their tree-hugger status and be seen as vital components of our economic and personal security. Even those civilian police auxiliaries could turn out to be a good thing in the long run: Their proliferation--and the technology they'll adopt--will lead to major reductions in crime.

Some towns and cities will go even further. In an effort to bar the door against expanding criminal networks, certain communities will move to regulate, tax, and control everything from illegal immigration to illicit drugs, despite federal pressure to do otherwise. A newly vigilant and networked public will push for much greater levels of transparency in government and corporate operations, using the Internet to expose, publish, and patch potential security flaws. Over time, this new transparency, and the wider participation it entails, will lead to radical improvements in government and corporate efficiency....

Perhaps the most important global shift will be the rise of grassroots action and cross-connected communities. Like the Internet, these new networks will develop slowly at first. After a period of exponential growth, however, they will quickly become all but ubiquitous--and astonishingly powerful, perhaps as powerful as the networks arrayed against us.