Desperate is as desperate does...

Let us walk through Bob Murphy's attempt to refute a post of mine from last week. Early on, Bob writes:

"There are all sorts of historical and current examples of industries and merchants not protected by government, yet they aren’t riddled with violent thugs. For example, poor Chinese immigrants operating a dry cleaning service or restaurant in an inner city probably won’t get much help from the police if they are robbed."

Yes, certainly no Chinese restaurant that is robbed could ever expect any help from the police. But the real notable thing about this claim is the level of research involved. Note the word "probably." Apparently the way to do anarchist "research" is to recline in an armchair making guesses as to what the facts are: just make sure those guesses support anarchist conclusions, and you are fine.

Of course, it is true that poor immigrants do not get the level of police support they deserve, and that when they are robbed it is not going to get the attention that a robbery at a five-star Michelin restaurant would get. And what happens in the absence of adequate police protection? Hmm, I wonder.

But let's go on:

"So they do things like set up bulletproof glass and take other procedures to ensure the (relative) safety of their workers. The relative absence of police and court protection doesn’t cause them to start shooting other dry cleaners."

"In contrast, cocaine dealers in the United States can do no such thing."

Yes, cocaine dealers cannot use bulletproof glass because... because... well, government! that's why. But... in fact, drug dealers do use bulletproof glass, apparently a lot!

Bob continues: "It would be quite easy to ensure that major drug deals never led to a shootout, if only the government would stay out of it."

"For example, the representatives could go to a third party building, owned by someone with  reputation for integrity."

"Personnel and metal detectors at the doors would ensure that nobody were bringing AK-47s into the deal."

"Each group could even put a large bond up with the third party, to guarantee performance and the quality of the product."

"But none of that is possible today, because the government actively interferes with the drug trade."

I have not been able to research this as thoroughly as I would like, but I have talked to a contact on a major-city police force, and he tells me that all of these things that are not even "possible" are, in fact, regular occurrences! However, they are not as effective in the underground market as in the "above-ground" market, of course, because there is no agency standing above the third-party guarantor, ensuring his performance. (Of course, I realize that there is no such agency standing above the state: that is why we try elections, and constitutions, and so forth. And yes, I realize they don't work perfectly: I just wrote a book about that fact.)

"The reason reputable, peace-loving, use-force-as-a-last-resort defense agencies don’t arise is that the government would shut them down immediately."

Yes, and the reason the cocaine trade doesn't exist is that the government would shut it down immediately. Oh, but wait a second: the cocaine trade does exist! The government has not been able to shut it down. Why in the world why they do better at shutting down an industry of peace-loving defense agencies? Of course, sometimes they would shut some of them down, just like they do with cocaine dealers.

We hear from opponents of the war on drugs (such as me, for instance, or Bob) that the government fights this war so inefficiently the drugs are ubiquitous even in its own prisons. But apparently, the government can fight the "war on peace-loving defense agencies" with 100% efficiency, so that we don't even see a single one of them in existence.

"If you want academic support, Ed Stringham has written several peer-reviewed articles (and edited an entire book volume) that showcase historical examples of merchants and customers interacting with each other peacefully, even relying on sophisticated financial contracts, back in the days when there was no single political authority to enforce their agreements."

I am very familiar with Ed's work on early financial markets. It is careful historical research, with very few guesses as to what "probably" happened, as I recall. And it demonstrates that for certain products for which governments would not enforce contracts, such a short sales, traders were able to work out their own rules, and they were generally followed. But it is crucial to note here that they still had a background of government-enforced law, so if they were having trouble reaching an agreement, they knew there would be a penalty if one of them shot the other. So, within the context of government-provided law, private actors often can do a good job of setting up subdomains of rules: the NFL would be a good example.

And note that I certainly don't claim that without government provided law, private actors can't get anywhere in having rules and enforcing them. The Mafia generally does provide order in areas where it is in control, and different Mafia families often have been able to reach agreements to cooperate, agreements which might hold up for some considerable length of time. Private defense agencies are certainly possible. The question is how are they likely to operate? We have good historical evidence for answering this question, and a rather obvious commonsense observation: if we are to have anything worth calling "law," then someone has to be making a final resolution on a dispute that called the law into play. Now, either they have the power to enforce that decision, or they don't. In the former case, then they have power, and it can and sometimes will be abused. In the latter case, it is not really right to call their decision the "final" decision after all.

Bob concludes with this flourish: "to point at organized drug gangs as examples of 'the free market in protection services' is as nonsensical as pointing to them as 'the free market in cocaine production.'"

Well, as Bob may recall, the "pure" free market is an imaginary construction. But in terms of approaching that imaginary construction, the cocaine trade is in most respects far closer than, say the legal pain killer trade. Recall that for anarchists, the government is only a very large gang. To the cocaine industry could be seen as an industry operating almost entirely according to the imaginary construction of the pure market, except that it is constantly harassed by a powerful gang. Meanwhile, aspirin vendors are subject to a myriad of restrictions and regulations the cocaine dealers do not face: minimum wage laws, health insurance provisions, product safety requirements, labeling requirements, taxes, occupational safety laws, and so on.

Of course, all of the above analysis changes considerably if we admit that markets work best with an arbitrator of last resort for disputes. And once we do that, we see what the rather obvious problem with the cocaine trade is.


  1. It gets worse. In his follow-up, Bob claims that you are wrong because drug gangs involved in distributing cocaine are more violent than drugs gangs in involved distributing marijuana. Which gangs are involved in the distribution of marijuana? The Mexican cartels.

    1. But Josiah, a priori, we know that marijuana dealers are less violent. You are trying to contradict this apodictic certainty with... the facts?!

  2. If you guys are done congratulating yourselves, do either of you want to claim that marijuana dealers in the US are as violent as cocaine dealers?

    1. Given that the same people often deal marijuana and cocaine, the idea that they are just as violent as each other shouldn't be so surprising.

  3. Gene, it also seems you are admitting that it was fair of me to say drug cartels exhibit the same amount of "market in action" in regards to cocaine production as security production. If so, then I rest my case; this has nothing to do with anarcho-capitalism.

    1. Bob, *nothing* in the real world has anything to do with anarcho-capitalism: it is entirely imaginary!

    2. Gene: In the real world, private defense agencies will behave more like the Mafia than like Rothbard's imagined agencies.

      Bob: Ha! Those real-world agencies behave nothing like Rothbard's imagined agencies! Therefore, he is unrefuted.

  4. Have you seen Bob's follow-up post?

    1. I know MathMan: worse than the first one!

  5. Suppose drug kingpins hire Murray Rothbard to adjudicate property rights disputes. Drug dealers A and B appear before the court and Judge Murray says,"Present your evidence." They produce signed contracts, witness affadavits, deeds to property, etc. When they finish the undercover federales jump up and arrest everyone.

    Reliable public documentation is an essential component to non arbitary judicial decisions and criminals tend to avoid keeping records of illegal acts. This limits the opportunities to develop effective rules and procedures of conflict resolution outside the law.

    1. Interesting attempt. But I don't think it gets you there.


      1) All preliterate societies that I am aware of have had some sort of justice system. Yes, it is better with written records, but clearly perfectly feasible without them.
      2) I don't think anyone was stopping mafia families in Sicily in the 19 century from writing down anything at all they wanted to write down. Remember, they arose because there was essentially zero law-enforcement in Sicily after the breakdown of feudalism. There were no federales to jump up from anywhere and arrest them.