Do You Know About...
the Battle of Plassey, in which a private company fought the ruler of Bengal and used its victory to gain rule over the subcontinent of India! But... but... I thought private companies only engaged in voluntary transactions, and only governments conquered territories!
Just link to stories about Blackwater or the Fed. They are privately owned.
ReplyDeleteBut then people might say, "Wait a second Gene, this is just silly."
"...Two years later, on 24 September 1598, another group of merchants, having raised £30,133 in capital, met in London to form a corporation. Although their first attempt was not completely successful, they nonetheless sought the Queen's unofficial approval, purchased ships for their venture, increased their capital to £68,373, and convened again a year later.[9] This time they succeeded, and on 31 December 1600, the Queen granted a Royal Charter to "George, Earl of Cumberland, and 215 Knights, Aldermen, and Burgesses" under the name, Governor and Company of Merchants of London trading with the East Indies."
ReplyDeleteDid the Fed arise this way too? Merchants pooling capital and stuff?
"I thought private companies only engaged in voluntary transactions [...]"
ReplyDeleteThis is not a view anarcho-capitalists are committed to. They even seem to be required to hold the opposite view, since they typically think that private companies could defend a territory against external aggressors.
OK, David K, how about, "I thought private companies were only supposed to engage in non-coercive transactions"?
ReplyDelete"Private companies"(of which the Governor and Company of Merchants of London Trading into the East Indies, a/k/a "the East India Company" is not a very good example, having been a "public-private partnership" long before that term came into use) are like anyone and anything else -- they generally do whatever they want, if they can get away with it.
ReplyDeleteThe question is whether the state tends to let them get away with less in the way of bad things, or to aid them in getting away with more while merging into symbiotic relationships with them.
IMO and of course anecdotally, the historical evidence weighs very much on the latter side of the scale.
Much as I agree that private army abuses are possible, I hope I don't sound like some principle-addled psycho when I mention that the British East India Tea Company isn't exactly what libertarians mean by "private company".
ReplyDelete"the British East India Tea Company isn't exactly what libertarians mean by "private company"."
ReplyDeleteI know, Silas, I know! And the Soviet Union wasn't exactly what Marxists meant by a communist society!
"the historical evidence weighs very much on the latter side of the scale."
ReplyDeleteTom, from where did you collect your examples of corporations operating in stateless societies?
By the way, I agree that the relationship between the East India Company and the British state is very important here: The East India Company was operating where the British state could not control its actions, and is therefore a good example of what to expect from corporations in the absence of states constraining there behaviour.
ReplyDeleteRejecting the BEITC as an example of a private company would be more like rejecting the Russian Empire, c. 1914 as an example of communist society -- something I would consider completely fair for communism proponents to do.
ReplyDeleteSeriously -- a company granted a lucrative monopoly and used as an arm of the state's foreign policy is about as far from a private company as you can get.
Are private companies potentially abusive? Yes. Can they secure worrisome monopolies? Absolutely. Are they branches of an empire's state department with a state-protected monopoly on tea? Er, no.
"OK, David K, how about, 'I thought private companies were only supposed to engage in non-coercive transactions'?"
ReplyDeleteSome libertarians might believe this. (I am assuming by "non-coercive" you mean "non-aggressive.") The more sophisticated ones probably think that private companies operating in a free market would have an incentive structure that would make them, ceteris paribus, less aggressive than states (e.g., the latter can externalize their costs through taxation - as did the East India Company!).
"I know, Silas, I know! And the Soviet Union wasn't exactly what Marxists meant by a communist society!"
And flippant remarks (even if repeated again and again) aren't exactly what logicians mean by a sound argument.
"The East India Company was operating where the British state could not control its actions, and is therefore a good example of what to expect from corporations in the absence of states constraining there behaviour."
If "the British state could not control [the East India Company's] actions," why did the Company have to ask the British government to be granted the right to wage war? Why isn't the Company an example of what to expect from government-chartered corporations whose business is based on government monopolies and who have been explicitly permitted by the governemnt to wage war?
If the East India Company had not had a trade monopoly and the right to tax, would it have been more or less aggressive?
"The Company, despite the increase in trade and the revenues coming in from other sources, found itself burdened with massive military expenditures, and its destruction seemed imminent. State intervention put the ailing Company back on its feet [...]" (see here)
Ah, now I understand that we need governments in order to protect us from warlike private companies!
"The more sophisticated ones probably think that private companies operating in a free market would have an incentive structure that would make them, ceteris paribus, less aggressive than states (e.g., the latter can externalize their costs through taxation - as did the East India Company!)."
ReplyDeleteWhich means... companies, in the absence of a controlling state, will act like states themselves.
"f the East India Company had not had a trade monopoly and the right to tax, would it have been more or less aggressive?"
It got those things because it was aggressive! So you're asking, "If someone wants to use merely peaceful means to get ahead, or they more or less likely than someone who doesn't to use only peaceful means?"
They asked permission from the British government for these things because they were headquartered in Britain. If Britain had been ancapistan, with no government to ask, what would have stopped them from merely seizing a monopoly (as they had to do against the Dutch, French, Danish, and Portugese, anyway -- their monopoly, when it existed, was only a barrier to other British companies) and simply giving themselves the right to tax once they were militarily victorious? You might say, "Well, then they'd be a State!"
Just so -- in ancapistan, we'll simply wind up with corporate quasi-states instead of the kind we have now.
Gene wrote:
ReplyDeleteThey asked permission from the British government for these things because they were headquartered in Britain. If Britain had been ancapistan, with no government to ask, what would have stopped them from merely seizing a monopoly (as they had to do against the Dutch, French, Danish, and Portugese, anyway -- their monopoly, when it existed, was only a barrier to other British companies)
You don't see how the Dutch, French, Danish, and Portugeuse, might have been able to have more access to foreign markets if instead of the British Empire, it had been the British Ancap Region?
I confess I don't know the history. But you're saying the British East India Company received no help at all from the British navy in these matters?
"[The fact that the East India Company levied taxes] means... companies, in the absence of a controlling state, will act like states themselves."
ReplyDeleteAs I said before, if the Company had not received government help, it would probably have gone bankrupt because of its huge military expenditures; in this case it would not have been able to establish its system of taxation in India.
"So you're asking, 'If someone wants to use merely peaceful means to get ahead, or they more or less likely than someone who doesn't to use only peaceful means?'"
No, I was not assuming that a company voluntarily respects property rights. But immediately after the abolition of the state, no private company would probably have the power (or the perceived moral right) to tax everyone, to run the entire judicial system, etc.; therefore, private companies would (at least initially) have an incentive to commit less aggressions (other than taxation and maintaining a judicial monopoly) than the state used to. If a corporation attempted to become a state, it would have to fight costly battles while still being constrained by the relatively unfavorable incentive structure I just described.
"[I]n ancapistan, we'll simply wind up with corporate quasi-states instead of the kind we have now."
So you think that only a government can make it prohibitively costly for a private company to become a state? But why should other companies (including protection agencies), militias, a libertarian-leaning public opinion, the prohibitive height of military expenditures etc. always be unable to do the job? (If the historian I have quoted is right, the height of expenditures almost would have done the job in the case of the East India Company.)
The more serious problem seems to be: How do we abolish existing states? If libertarians are able to pull this off, they are a fortiori able to prevent a new state from arising.
"The more serious problem seems to be: How do we abolish existing states? If libertarians are able to pull this off, they are a fortiori able to prevent a new state from arising."
ReplyDeleteExactly backwards. It's relatively easy to abolish states: consider the English, American, French, Russian revolutions. What is very, very hard -- I would say essentially impossible -- is to stop something else from immediately rushing in to fill the power vacuum. Power is part of human society. It's fantasyland to think you can wish it away. Realistically, all that can be done is try to keep it in a tolerable form.
It seems to be harder for an organization to become a state than to remain one (once it is securely in power). This implies that it is easier for any given ideological movement or political force to prevent an organization from becoming a state than from remaining one. Of course, forces that overthrow governments usually don't even want to prevent a new state from arising, which explains why revolutions have usually resulted in new states. But if the Mises Institute had the power to abolish the federal government, it would probably also be able to prevent Blackwater (which has far less resources and support among the population) from conquering the U.S.
ReplyDelete"Power is part of human society."
Here is an article by Bruce Benson about stabile primitive societies with non-monopolistic judicial systems. Or consider David Friedman's example of semi-anarchy in medieval Iceland, which lasted for centuries. (You can of course respond, "Anarchy might work in primitive or pre-industrial societies, but not in modern, industrialized ones.")
"But if the Mises Institute had the power to abolish the federal government, it would probably also be able to prevent Blackwater (which has far less resources and support among the population) from conquering the U.S."
ReplyDeleteYes, they would, since they themselves would be the new State -- Hoppe has done us the great favour of demonstrating that the logical upshot of Rothbard's system is not "a new liberty," but a totalitarian plutocracy that tolerates no dissent whatsoever.
"Yes, they would, since they themselves would be the new State [..]"
ReplyDeleteI didn't mean "power" to refer only to military power. Suppose the Mises Institute would manage to convince so many people to become Rothbardians that the U.S. government could no longer continue to operate. (I am not saying this is the most promising strategy.) This would not necessarily make the Mises Institute "the new State."
"Hoppe has done us the great favour of demonstrating that the logical upshot of Rothbard's system is not 'a new liberty,' but a totalitarian plutocracy that tolerates no dissent whatsoever."
This caricature of Hoppe's essay "On Conservatism and Libertarianism" comes with ill grace from someone who has repeatedly attacked Rothbard for (allegedly) misrepresenting others. The view that the owners of gated communities have the right to exclude people who publicly advocate ideas that are incompatible with the stated purpose of the community is scarcely "totalitarian." Hoppe explicitly predicts that a "natural order" will be highly pluralistic (Democracy - The God That Failed, p. 163, fn. 14, p. 212, fn. 25). (You have also falsely attributed to Hoppe the view that low time-preference is "the essence of morality." Saying that very high time-preference rates tend to encourage various kinds of undesirable behavior doesn't count as "equat[ing] morality with low time preference.")
""As soon as mature members of society habitually express acceptance or even advocate egalitarian sentiments, whether in the form of democracy (majority rule) or of communism, it becomes essential that other members, and in particular the natural social elites, be prepared to act decisively and, in the case of continued nonconformity, exclude and ultimately expel these members from society. In a covenant concluded among proprietor and community tenants for the purpose of protecting their private property, no such thing as a right to free (unlimited) speech exists, not even to unlimited speech on one’s own tenant-property. One may say innumerable things and promote almost any idea under the sun, but naturally no one is permitted to advocate ideas contrary to the very purpose of the covenant of preserving and protecting private property, such as democracy and communism. There can be no tolerance toward democrats and communists in a libertarian social order. They will have to be physically separated and expelled from society."
ReplyDeleteOK, that's from SOCIETY, not from "gated communities."
"This caricature of Hoppe's essay "On Conservatism and Libertarianism" comes with ill grace from someone who has repeatedly attacked Rothbard for (allegedly) misrepresenting others."
Well, as seen above, it's not a mischaracterization at all. And I have shown quite conclusively how bad an intellectual historian Rothbard is. As far as your charge re Hoppe and morality: evidence, please? I will gladly correct the statement if I am offered something other than sheer assertion.
""As soon as mature members of society habitually express acceptance or even advocate egalitarian sentiments, whether in the form of democracy (majority rule) or of communism, it becomes essential that other members, and in particular the natural social elites, be prepared to act decisively and, in the case of continued nonconformity, exclude and ultimately expel these members from society. In a covenant concluded among proprietor and community tenants for the purpose of protecting their private property, no such thing as a right to free (unlimited) speech exists, not even to unlimited speech on one’s own tenant-property. One may say innumerable things and promote almost any idea under the sun, but naturally no one is permitted to advocate ideas contrary to the very purpose of the covenant of preserving and protecting private property, such as democracy and communism. There can be no tolerance toward democrats and communists in a libertarian social order. They will have to be physically separated and expelled from society."
ReplyDeleteOK, that's from SOCIETY, not from "gated communities."
"This caricature of Hoppe's essay "On Conservatism and Libertarianism" comes with ill grace from someone who has repeatedly attacked Rothbard for (allegedly) misrepresenting others."
Well, as seen above, it's not a mischaracterization at all. And I have shown quite conclusively how bad an intellectual historian Rothbard is. As far as your charge re Hoppe and morality: evidence, please? I will gladly correct the statement if I am offered something other than sheer assertion.
In sum, Hoppe's "totalitarianism" appears to consist in the view that "habitual advocates" of economic egalitarianism or "non-family and kin-centered lifestyles" should, due to discrimination by private property owners, live in "ghettos" and be unable to attain "many positions or professions." This is less harsh than the way in which states have typically dealt with proponents of views they considered destructive of society (e.g., the Federal Republic of Germany imprisons people for denying the holocaust or approving of national socialism). It is also worth noting that just a few decades ago, homosexuality used to be a criminal offense in many nontotalitarian Western countries, while Hoppe merely wants gay-rights activists to be socially ostracized. (This is not to say that Hoppe is right with his recommendations and predictions; in particular, he might overestimate the degree to which different neighborhoods would adopt the same policies.)
ReplyDeleteAt any rate, a highly decentralized society of proprietary communities competing for customers appears to be less likely to become totalitarian than a centralized, monolithic nation state.
See also this statement by Hoppe
("However, if you take the statements out of context and omit the condition: in a covenant… then they appear to advocate a rights violation") and this one by Kinsella (endorsed by Hoppe).