Rob and Gene go to the market
Some people are puzzled over why the rules governing the market can't themselves be an outcome of the market. (Claiming they can't is not the same as saying what goes on in real markets won't influence the rules!)
Let us then imagine Rob and Gene have been cleaning out their pads and finding stuff they don't need, and so they agree to meet at "the market" to exchange things.
"What rules will govern this market?" Gene asks.
"Oh, we don't need to set up some committee to determine this: let's just let the market itself decide the rules!" replies Rob.
"OK," thinks the devious Gene.
They arrive at the agreed upon spot, and Rob lays out the goods he wishes to trade. "What will you give me?" he asks.
"This," Gene replies, and whacks him on the head with a mallet.
Rob passes out, and when he comes to, he looks for Gene to complain. He finds Gene has dragged all the goods Rob brought back into his own house, and is sitting on the porch with Rob's gun on his lap.
"Howdy Rob! I sure do like this 'market' thing you've suggested. Can we have a market again tomorrow?"
"But, but... that wasn't a market! In a market we trade goods, and only after we reach an agreement to do so."
"Who says? That sounds like you wanted to set the rules in advance. But what you told me was the market itself would set the rules of the market. And it looks like I sure won that market competition. So I guess my rules triumphed, and they now govern how this market works, which is I got all the stuff, including this gun, and you'd better go on back home."
Let us then imagine Rob and Gene have been cleaning out their pads and finding stuff they don't need, and so they agree to meet at "the market" to exchange things.
"What rules will govern this market?" Gene asks.
"Oh, we don't need to set up some committee to determine this: let's just let the market itself decide the rules!" replies Rob.
"OK," thinks the devious Gene.
They arrive at the agreed upon spot, and Rob lays out the goods he wishes to trade. "What will you give me?" he asks.
"This," Gene replies, and whacks him on the head with a mallet.
Rob passes out, and when he comes to, he looks for Gene to complain. He finds Gene has dragged all the goods Rob brought back into his own house, and is sitting on the porch with Rob's gun on his lap.
"Howdy Rob! I sure do like this 'market' thing you've suggested. Can we have a market again tomorrow?"
"But, but... that wasn't a market! In a market we trade goods, and only after we reach an agreement to do so."
"Who says? That sounds like you wanted to set the rules in advance. But what you told me was the market itself would set the rules of the market. And it looks like I sure won that market competition. So I guess my rules triumphed, and they now govern how this market works, which is I got all the stuff, including this gun, and you'd better go on back home."
Ring.
ReplyDelete"T.Hug private law, 1,000,000 satisfied customers. How can we help?"
"Rob here. Gene stole my stuff and ..."
"Sir, we do not need details. Please state a service and make a bid."
"Beat Gene senseless and bring me all his stuff. $800."
Ring.
"Gene here."
"T. Hug private law. We are adjudicating a dispute between you and Rob. He requests we
beat you senseless and bring him all your stuff."
"How much is his offer?"
"1200 sir."
"OK. I'll go 1300. And 1700 more to break both Rob's legs."
Ring.
"Rob here."
"T.Hug sir. We have Gene's evidence. Will you match either his $1300 rebuttal or $1700 counter-claim?"
"Of course not! Gene took all my stuff, I can't raise that amount."
Ring.
"Smasher here."
"T. Hug. Rob, 17 Nemesis Way, both legs, 1500 commission."
"On my way."
Ring.
"T. Hug private law, 1,000,001 satisfied customers. How can we help?"
The bit about the mallet is actually quite a good description of what it feels like to debate Gene on his blog.
ReplyDeleteHowever: Could the incident you describe just be part of the process of how rules emerge?
Rob will have learned his lesson and take precautions next time around and no-one will trade with Gene again because he is now seen as a bad guy etc.
So: In order to trade you need some rules about ownership to preexists. Fine. But I can't see any reason why the rules of trading themselves can't evolve through trial and error.
(And Gene "won" this encounter but it should be obvious why it will not be his rules that govern trading in the future - though if he chooses to continue to successfully use violence to achieve his ends he may end up wanting to institutionalize this use of violence into a more permanent structure and undermine the rules of trade I suppose )
rob, I think that's a good point, but it would be quite the stretch to say that this trial-and-error process is a part of the market itself. By this token, even Gene's violence would be considered a market outcome.
DeleteWhen using the word "rule" in this sense, I'm not sure ancaps would claim that rules governing the market can be an outcome of the market.
ReplyDeleteWhen asked what rules would govern the market, Rob would reply: "we each own the stuff we bring to the market, and are not allowed to take each other's stuff without a mutually accepted agreement."
Perhaps the problem is with the notion that agreeing upon a few simple rules "in advance" is sufficient, and the market will work out all of the ugly details.
For example, Rob shows up on market day to find Gene already there, brandishing his mallet. Gene says: "Welcome to my market. I have homesteaded this ground and you are an intruder. Prepare to be whacked."
The next day, Rob wants to add some complicated language to the rules about implied invitations and Lockean provisos, but he's already out of stuff and has little bargaining power.
This exactly what I was complaining about years ago when I was criticizing people who opposed any governmental attempt to define emission rights on the grounds that "lol just let the market solve it". The delineation of rights precedes the market for trading them.
ReplyDelete(Yes, social convention can produce customary rights, and that's one way this public goods problem can be solved, but the very same people criticizing explicit government definition of emission rights, were also unclear on how they expected that to come about!)