Political Theory

Re: Monopoly as the Linchpin to the Libertarian Case

wilderness — Wed, 01 Jul 2009 01:26:16 GMT

Sage:

...or what is likely to happen.

yes the tendency

Re: Monopoly as the Linchpin to the Libertarian Case

Sage — Wed, 01 Jul 2009 00:43:13 GMT

Yeah. Also important is the Cowen/Friedman/Caplan exchange in Anarchy and the Law.

But obviously nothing is inevitable, i.e. nothing is guaranteed to happen. People have free will. What's relevant here is the incentive structures, or what is likely to happen.

Re: Monopoly as the Linchpin to the Libertarian Case

nirgrahamUK — Tue, 30 Jun 2009 23:31:21 GMT

pure rot

extract quote from the 1st one.

However, with many competing protective firms,

potential problems arise. Firms might prey on their competitors’ customers, as competing

mafia groups do, to show those customers that their current protective firm is

not doing the job and thus to induce them to switch protection firms. This action

seems to be a profit-maximizing strategy;

--------------------------------------------------

oh , it seems to be, well.....
thats all the argument i needed. to hell with anarchy then <sarcasm alert>

Re: Monopoly as the Linchpin to the Libertarian Case

hayekianxyz — Tue, 30 Jun 2009 23:16:56 GMT

Sage:
I don't think it's inevitable.

Have you read this, this, this, this and this?

Re: Monopoly as the Linchpin to the Libertarian Case

Sage — Tue, 30 Jun 2009 19:53:33 GMT

Stephen Forde:
Assuming Hoppe's argument regarding the emergence of the state is correct (it seems very reasonable to me), what would you call it when an extra-market institution emereges from market conditions? And is it inevitable? If not what are necessary conditions and what conditions must be necessarily absent?

I guess I would call it the abolition of the market — partial (interventionism) or complete (socialism).

I don't think it's inevitable. People have free will, after all. The key issue here is ideology. Whether or not a social system will survive depends ultimately on public opinion (Boetie). Hoppe says limited government is impossible, but this isn't strictly true; it's just that a limited government has the incentive to become Leviathan. If the people believe in limited government, it's entirely possible (although very unlikely) for it to remain limited. Likewise with anarchy. If public opinion supports anarchy, then it will not devolve into government. But unlike limited government, anarchy has a better set of checks and balances to prevent the formation of governments.

Re: Monopoly as the Linchpin to the Libertarian Case

wilderness — Tue, 30 Jun 2009 15:00:38 GMT

This has been an interesting discussion on the free market, PDA's and the state and such.

My take on this is the ONLY market is the free market and therefore mercantilism, fascism, socialism, and communism are concepts about coercive interventions into the free market... galloping brigands swooping into the market stealing from and murdering the innocents.

The free market is where all production happens. The government is an outgrowth of the free market due to an established criminal band fortifying their position.

for what it's worth.

Re: Monopoly as the Linchpin to the Libertarian Case

AJ — Tue, 30 Jun 2009 14:49:31 GMT

GilesStratton:
You can assume a monopoly in every market and as long as we're using the word "monopoly" in the mainstream neoclassical sense of the word, the market would still be superior to government because there would be exchange in the markets for capital goods and original factors, and as such monetary calculation under the division of labour would be possible.

I don't much about general economics, but does the neoclassical definition of "monopoly" not encompass security and adjudication services?

GilesStratton:
Monetary calculation is what makes the free market superior, and since it is coercion that circumvents the market system, it is not difficult to conceive of a society in which monetary calculation is not a viable option as a result of "private" coercion, as opposed to state ownership of means of productions ("public" coercion).

Yes, it is conceivable in theory, even if we do not believe it to be likely. For instance, a PDA could (theoretically) get powerful enough to significantly interfere with economic calculation without yet being a monopoly. Like if there were only three PDAs. Worse still if they turned out to be controlled by the same family or something. However, I submit that this is getting closer to monopoly (of security and adjudication). The idea I've been entertaining is that we really just want to avoid enforced* monopolies, and we would want naturally want to avoid oligopoly for the same reasons. [It might be useful to note that through this perspective the public/private distinction has no meaning unless there exists a monopoly (on security and adjudication).]

*Note that a monopoly PDA would be automatically enforced, since it would have the capacity to enforce its own monopoly

Not replying to Giles now but as an aside, it looks like even that most innocent of words, "free market," is also a semantic relic of statism. That is, in the AnCap paradigm, "free market" is an artificial distinction insofar as it excludes the market for security and adjudication services. If it includes security and adjudication, then the market as a whole is only free to the extent that it [especially the security and adjudication sector] is decentralized (meaning as far away from monopoly as possible, within reason).

Re: Monopoly as the Linchpin to the Libertarian Case

AJ — Tue, 30 Jun 2009 14:02:39 GMT

Stephen Forde:
The existence of a state demonstrates that it is possible for free market conditions to lead to monopoly conditions. Since free competition is economically efficient and monopoly is economically inefficient, doesn't the emergence of a state prove that there are market failures after all?

In the first sentence you implicitly define "market" to include security and adjudication (which is fine by me). To be consistent, we should retain this definition for the second sentence. In that case, what can be called "market failure" can include failure in the market for security and/or adjudication. In other words, by that definition "market failure" can include being conquered by barbarians, letting any one PDA get too big, or letting a charismatic individual convince enough people that he deserves to be dictator.

So yes, such failures have happened before, and I do think it is non-trivial to show that such would be unlikely to happen in the present age. The onus is on us to provide convincing evidence of why it would be different this time.

I think what's confusing people is that PDAs, etc. would indeed have the ability to be aggressive and coercive. There's no decreed NAP. The whole idea, as I understand it, is that as long as there are many PDAs they would be motivated to keep each other from getting too big. That's why, again, the whole idea is to prevent monopolies. The NAP is just the principle that we theorize (correctly, I think) would be adopted by most societies as a general fundamental rule of conduct in "common law" or whatever it would be called. [Or from a utility perspective, we theorize that societies that adopt the NAP will be more successful than others, and thereby expand while societies that violate the NAP will tend to die out to the degree that they violate it (as history has shown).]

I think we are sometimes confused by the old statist/religious paradigm of "Thou shalt..." into believing that NAP (or AnCap for that matter) will be somehow decreed, when I think we really mean that it will simply arise organically once the state is out of the way.

Re: Monopoly as the Linchpin to the Libertarian Case

AJ — Tue, 30 Jun 2009 13:22:48 GMT

Spideynw:

AJ:
Occam's Razor provides that the simplest solution to a problem should be adopted unless there is compelling reason for additional complexity.

This is a common misunderstanding.

http://en.wikipedia.org/wiki/Occam%27s_razor

"Occam's razor, also Ockham's razor,^[1] is the principle that "entities should not be multiplied unnecessarily." It is apocryphally attributed to 14th-century English logician and Franciscan friar, William of Ockham. The principle states that the explanation of any phenomenon should make as few assumptions as possible, eliminating those that make no difference in the observable predictions of the explanatory hypothesis or theory..."

Read the rest of the article you quoted.

Re: Monopoly as the Linchpin to the Libertarian Case

Stephen — Tue, 30 Jun 2009 03:33:20 GMT

GilesStratton:
The problem with the OP is that it hinges on a particular use of "monopoly" that is primarily adopted my Austrians and libertarians.

I don't think that's a big deal, as long as the definition is pointed out and an example is given; especially when it is explained that restricted entry into a market tends to bring about higher prices and lower quality of products as a result of the firm granted the monopoly privilege being insulated from competition. But I see your point. I'm not really sure how I would argue with a neoclassical.

Re: Monopoly as the Linchpin to the Libertarian Case

Stephen — Tue, 30 Jun 2009 03:25:09 GMT

GS:
I think the answer to your problem is that the state is by definition an extramarket institution, whereas the notion of market failure depends on the notion that problems will occur as a result of individuals conducting private, voluntary transactions with one another.

Sage:
I think you're equivocating between two definitions of market failure: the traditional definition (1) where market production is not optimally efficient; and (2) where market production is abolished and is replaced by communism. (Using Rothbard's definition of market as "a society based purely on voluntary action, entirely unhampered by violence or threats of violence.")

OK, yes. You guys are right. But now I have some questions for both of you.

Hoppe:

First, every state, that is every monopolistic protection agency, must begin, or can only originate on an extremely small territorial level, such as a village. It is practically inconceivable that a world State, or a protection monopoly encompassing the entire world population could come into existence from scratch.

The second thing we have to notice is that not just anyone can reach even reach a local protection monopoly. Rather, the local protection monopolists are initially members of the natural social elite. That is, they are initially accomplished and acknowledged members of society. They were also, before they reached the position of a monopolist, previously chosen voluntarily as protectors. Only as established and recognized elites, whose authority is essentially voluntary, is it possible for them to make this decisive step toward monopolization and get away with it.

That is to say, every initial local government or state originates in the form of personal or private lordships or of princely rule. No one would entrust just anyone with the maintenance of law, order, and justice, and in particular if this person or agency had a monopoly for this particular task. Instead, people would look for protection obviously from someone known, and known to be a knowledgeable person, and only such a person, a noble or an aristocrat, can possibly attain a monopoly position initially.

Assuming Hoppe's argument regarding the emergence of the state is correct (it seems very reasonable to me), what would you call it when an extra-market institution emereges from market conditions? And is it inevitable? If not what are necessary conditions and what conditions must be necessarily absent?

Re: Monopoly as the Linchpin to the Libertarian Case

nazgulnarsil — Mon, 29 Jun 2009 23:18:09 GMT

this whole thing rests on the idea that people need logical justifications for their beliefs. they do not. people don't defend the state just because it seems okay. they defend it because to do otherwise throws all their other beliefs into doubt. since the ego is tied up in belief when you threaten beliefs you are threatening a person directly. the root cause is psychological bias. when you root that out sicknesses like nationalism, religion, and vague thought in general just sort of naturally falls away. for example the person who thinks of the state as mommy must be cured not of statism but of maternalism in general. the person who sees the state as the valient defender must be cured of the need to be defended. when you instill people with independence they naturally come to resent the state. But there is a class of people whom this will not work on. the perennial underclass who does not or can not produce will never be in a position to not take handouts. this class will grow as large as society lets it. In a democracy this class is especially dangerous, once they have the vote the apparatus of the state will be turned entirely to servicing leeches. Then begins the road to serfdom, not a serfdom of the underclass. a serfdom of the producers.

Re: Monopoly as the Linchpin to the Libertarian Case

Sage — Mon, 29 Jun 2009 20:27:22 GMT

Stephen Forde:
The existence of a state demonstrates that it is possible for free market conditions to lead to monopoly conditions. Since free competition is economically efficient and monopoly is economically inefficient, doesn't the emergence of a state prove that there are market failures after all?

I think you're equivocating between two definitions of market failure: the traditional definition (1) where market production is not optimally efficient; and (2) where market production is abolished and is replaced by communism. (Using Rothbard's definition of market as "a society based purely on voluntary action, entirely unhampered by violence or threats of violence.")

The anarchist position is that (1) is false. Your worry seems to be about (2). If so, then this isn't about market failure in the traditional sense, because the market is not allowed to work; it is abolished. As Giles pointed out, the State is an extramarket institution.

I'm not sure about the anarchist position on (2). I guess I could say, yes, there are "market failures" in the (2) sense, because this is the realm of extramarket institutions, i.e. aggressive violence, ideology, etc. It's certainly possible that a State could take over an anarchist society. But we have to remember that what's relevant is the comparative analysis between anarchy and government; this just means the score is ten billion to one.

Also, this reminds me of this thread where someone brought up the "if private security is so great, then why don't we have it?" objection.

Re: Monopoly as the Linchpin to the Libertarian Case

Spideynw — Mon, 29 Jun 2009 19:51:08 GMT

AJ:
Occam's Razor provides that the simplest solution to a problem should be adopted unless there is compelling reason for additional complexity.

This is a common misunderstanding.

http://en.wikipedia.org/wiki/Occam%27s_razor

"Occam's razor, also Ockham's razor,^[1] is the principle that "entities should not be multiplied unnecessarily." It is apocryphally attributed to 14th-century English logician and Franciscan friar, William of Ockham. The principle states that the explanation of any phenomenon should make as few assumptions as possible, eliminating those that make no difference in the observable predictions of the explanatory hypothesis or theory..."

Re: Monopoly as the Linchpin to the Libertarian Case

hayekianxyz — Mon, 29 Jun 2009 19:29:08 GMT

The problem with the OP is that it hinges on a particular use of "monopoly" that is primarily adopted my Austrians and libertarians. You can assume a monopoly in every market and as long as we're using the word "monopoly" in the mainstream neoclassical sense of the word, the market would still be superior to government because there would be exchange in the markets for capital goods and original factors, and as such monetary calculation under the division of labour would be possible.

Monetary calculation is what makes the free market superior, and since it is coercion that circumvents the market system, it is not difficult to conceive of a society in which monetary calculation is not a viable option as a result of "private" coercion, as opposed to state ownership of means of productions ("public" coercion). Look at Somalia, it's essentially stateless, and yet, even countries with large states are doing better in terms of economics (and I don't think it's entirely attributable to previously accumulated capital goods.)

@Stephen Forde,

I think the answer to your problem is that the state is by definition an extramarket institution, whereas the notion of market failure depends on the notion that problems will occur as a result of individuals conducting private, voluntary transactions with one another.