Can Anarchy Work?

Peter T. Leeson joins us this week to discuss rational choice theory as it applies to self-governance. What happens in the absence of government?

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Peter T. Leeson joins us this week to discuss rational choice theory as it applies to self-governance. What happens in the absence of government?

We discuss the difference between government and governance, what it means to be stateless, and how anarchy is perceived in the world today.

Show Notes and Further Reading

Leeson’s book on this topic is Anarchy Unbound: Why Self-Governance Works Better Than You Think (2014).

Leeson cites Ludwig von Mises’s Human Action: A Treatise on Economics (1949) as highly influential to his thinking.

Here are a few other Free Thoughts episodes having to do with anarchy and self-governance:


Trevor Burrus: Welcome to Free Thoughts. I’m Trevor Burrus-
Aaron Powell: And I’m Aaron Powell.
Trevor Burrus: Joining us today is Peter T. Leeson, the Duncan Black Professor of Economics and Law at George Mason University. He’s the author of a few books, including 2014’s Anarchy Unbound: Why Self-Governance Works Better Than You Think. Welcome to Free Thoughts, Pete.
Peter T. Leeson: Thanks for having me.
Trevor Burrus: I’d like to start with your CV, which I was reviewing before we started recording, [00:00:30] and it’s quite interesting. You see papers on witch trials, on oracles, on the English longbow, on human sacrifice, and, of course, pirates. There was one that really caught my eye. It’s “God Damn: The Law and Economics of Monastic Malediction.”
Peter T. Leeson: Yeah.
Trevor Burrus: These all sound very interesting, but they don’t really sound like economics. You’re an economics professor, so what gives?
Peter T. Leeson: Well, you’re not the only person to ask that question. I got into [00:01:00] economics primarily through Austrian Economics, and the work of Ludwig von Mises, in particular. He lays out this approach to economics that is all-encompassing with respect to any, what he calls, purposive human behavior, which, in sort of contemporary economic terms is the equivalent to saying, “When people make choices, economics applies.”
There are a lot of other people, who have worked in other traditions, who hold similar views, but Mises [00:01:30] was sort of my guiding light, and the way that I think about economics, the way that I approach my research, reflects that. I take it really seriously. I happen to have, I guess you could say, eclectic and somewhat unusual interests, and so I’m always looking for cases where there is purposive human behavior, where there’s choices that are being made that, at least on the surface, don’t seem to make a whole hell of a lot of sense. In fact, some of them seem downright [00:02:00] absurd. I want to see, examine, those choices, those behaviors, from the perspective of rational choice theory to see if it’s possible to make sense of them, and that has sort of led to the litany of weirdness that is my vita.
Trevor Burrus: Did you originally want to be a historian? It seems like there’s a lot of pretty intense historical research that goes into some of what you’re doing.
Peter T. Leeson: There is. I had no disrespect to historians … I love [00:02:30] history. I do tons of reading in history, as you’ve observed, but I’ve always wanted to be an economist. To me, history provides the sort of facts of the world, if you will, many of which are very unusual, especially historically, at least from a contemporary perspective, which is part of the reason why I end up doing a lot of historical research, but economics provides the analytical toolkit, the theoretical lens that we can apply to those often bizarre facts [00:03:00] to try and make sense of them. The facts of the world motivate the subjects of my inquiry, but it’s the conviction that the analytical tools of economics that are able to illuminate those facts that really spoke to me when I was younger, and still does to me today.
Trevor Burrus: How does Anarchy Unbound, as a collection, fit into what you had said about Austrian Economics and the way you approach the kind of work that you do? [00:03:30] How does that fit into that whole theory?
Peter T. Leeson: Well, there’s a bunch of different ways in which it does so, but I think probably the most important one is this idea of what Mises, in particular, calls social cooperation under the division of labor, which is a kind of clunky phrase for talking about the institutional foundations of civilization, which is a pretty big question. Incidentally, maybe you know this, but, Mises was originally thinking [00:04:00] of entitling human action social cooperation, and, in many ways, I think that that title would have actually spoken a little bit more directly to at least the substantive, as opposed to methodological, meat of what he was getting at.
What he’s challenging us to do, in my view, at least in part, is to try and understand better those institutions that undergird civilization, that promote or inhibit, as the case may be, social cooperation under the division of labor. One of those institutions, [00:04:30] historically and today, that has been very important in that regard, and certainly from Mises’ perspective, was and is government. However, given my historical interest, in particular, what I noticed, and certainly I’m not the first one to have noticed this, is that if you actually look around at the world, past and present, what you notice is a surprising degree of social cooperation that’s able to be carried on in the absence of government, [00:05:00] and so that presents a kind of puzzle. If we typically think of the State as providing basic functions, such as protection of private property rights, protection of people’s persons … If those are absent in these contexts, and we think about those as promoting civilization, then how is it that at least some degree of civilization has been achieved despite it’s absence?
Aaron Powell: If we’re looking at what happens in the absence of government, how are we defining government, and does “government” [00:05:30] mean the same thing as “the State?”
Peter T. Leeson: I think that “government” does mean the same thing as “the State,” but that’s kind of a semantic issue. You might define it differently, but I think the way that at least most political economists are talking about it, “government” and “the State” are the same. What is different, at least as terms are typically used in that literature, is “government” and “governance.” Governance is a broader concept that just refers to the [00:06:00] rules that people may or may not have for protecting property, for example, and the means of their enforcement. Government, on the other hand, is one particular institutional regime for at least ostensibly achieving those goals. However, there are others. There is what I refer to as self-governance or what other people call private governance, which is when you’ve got private actors, who are instead of agents of the State, behaving in ways that perform [00:06:30] those functions.
Aaron Powell: Then, what makes government, as we’re talking about it here, different than, say the Government of Alexandria, Virginia, versus, say, the Institution of George Mason University, which also has systems of rules that people who are part of it need to follow and has consequences for breaking those rules. Is there a fundamental thing that sets the two apart?
Peter T. Leeson: [00:07:00] Yeah, really, you’re question is a very good one and is getting at the core issue, I think, which maybe you asked, but I failed to answer a moment ago about how it is that we define government? How do we distinguish it from non-government? That’s actually a really difficult question, and the short version of it is that I don’t think that there is a single answer to it. There isn’t a precise way to define, “This is government and this is not,” at least in a sort of abstract sense.
[00:07:30] On the surface, that would present a rather serious problem for people like me, who want to make a distinction between government and private governance, for example, and to explore one or the other in a comparative sense, but I think, in practice, our inability to abstractly and precisely define government, doesn’t end up getting in the way of our ability to engage in useful conversations that distinguish between private governance and government, because our intuitions [00:08:00] tend to comport with respect to particular instances about whether or not what we observe in a particular instance we would call a government or something else.
With respect to the question, the specifics of what you mentioned a moment ago, I think everyone looking at the County of Arlington, Virginia, would refer to that as a government. I don’t think anyone would call that self-governance or private governance. By the same token, I think everyone looking at the institution that is [00:08:30] George Mason University would probably not refer to George Mason University as a government or a state, but rather as an organization that operates within the context of a state.
In a like way, although with admittedly much greater ambiguities in some of the cases that I want to consider, I think we generally share ideas about what constitutes the X being government and Y being anarchy, the absence of government, but as I say, there’s haziness [00:09:00] there. To me, perhaps the most useful way to think about it, instead of as a binary classification, is to think about the extent to which we have government or anarchy, the absence of government, private governance, as lying on a spectrum. At one end of the spectrum think institutional and social regimes that lie at one end, we all pretty much agree are government. At the other end, I think we all would pretty much agree are not government or anarchies, for example. Then [00:09:30] there’s these cases in the middle that are hazy, and we can have semantic disputes about that, which aren’t terribly important. Most of the cases that we end up analyzing kind of fall somewhere closer to one or the other end of the spectrum, so it sort of ends up being a moot point.
Trevor Burrus: How do you feel about the word anarchy? A lot of people prefer to use something like statelessness, because anarchy has another meaning, which is chaos, which is … Of course, it seems like a lot of your work is written to at least address the theory that anarchy [00:10:00] is chaos.
Peter T. Leeson: Yeah, well, you know, I like the word, or at least I find it to be a useful words or I wouldn’t … Obviously, I used it in the title of my book. I could have titled it something else. I don’t think it’s a big deal. I sometimes refer to it as statelessness, too, but I have no problem with referring to it as anarchy. From a positive perspective, the perspective of an economist as a scientist, a researcher, which is the perspective that I’m taking in Anarchy [00:10:30] Unbound, I want to use the terminology that’s used in the scientific literature, and that literature commonly refers to the arrangements, or arrangements like those that I’m talking about, as anarchic, in addition to referring to them as stateless.
Trevor Burrus: Now, in terms of some of these situations, because this discussion might be too abstract right now for some of our listeners, what are we actually talking about in the sense of these kind of situations that you study? It seems to me that, especially in Anarchy Unbound, there’s a theme that runs through the book, which is you [00:11:00] think about a situation where most people would say, “Well, this clearly would not work without a government to fix this problem,” and then you explain how that is not always true and can be theoretically shown to work and has not always been true as a historical matter.
Peter T. Leeson: That’s right, that’s right, so the idea is … If you’ll permit me for a moment, all this stuff, in a way, as many things do in political economy, go back to Hobbes. [00:11:30] Hobbes famously describes anarchy, the state of nature, as solitary, poor, nasty, brutish, and short and says that government is the solution. I think it’s pretty clear to virtually everyone at this point that Hobbes was over-pessimistic about the ability of self-governance, of anarchy, to produce some degree of social cooperation and was over-optimistic about the ability of government to basically solve [00:12:00] the social dilemma, to make things nice. Most people realize that some governments at least in history have been really nasty institutions, really terrible regimes that oppressed people, and that mostly escapes Hobbes.
By the same token, in the political economy literature on anarchy or self-governance, it has been for a while pretty widely recognized that at least some degree of cooperation under anarchy is possible via this mechanism [00:12:30] that’s commonly called the discipline of continuous dealings, which is basically just the idea of reputation, so if you do something nasty to somebody else, that person isn’t going to interact with you again and is going to tell all their friends that you’re a nasty person, and they’re not going to interact with you again. More or less, if you’re a relatively patient person, that is to say if you don’t discount the future too much, you are likely to cooperate as a result of the threat of being cut off from trade by people who you cheat. [00:13:00] That’s the sort of mechanism that they’re looking at.
My book is trying to say, look, the literature understands that mechanism, and it sees it as permitting some scope for social cooperation, but it finds that when that particular self-governing mechanism of reputation breaks down, and it may for a variety of reasons, which I can talk about more if you’re interested, but when it breaks down, anarchy doesn’t work, and so [00:13:30] we can only get cooperation under these pretty limited circumstances that support reputation’s ability to function. The first part of the book is looking at cases where those conditions that are supposedly required in order for self-governance to be effective, which is to say the conditions that are required for reputation to be effective, don’t exist, and nevertheless we observe social cooperation, which implies that some mechanism, in addition to or other than reputation, must be supporting [00:14:00] social cooperation.
The second part of the book is concerned with this other piece about people understanding that governments can be bad, and so being less optimistic about government as a solution to the social dilemma than Hobbes was, but, nevertheless, people still generally thinking that, well, despite that, still having some government, even a bad one, has to better than having no government at all. There I’m interested in engaging, empirically and theoretically, [00:14:30] the question of whether or not that’s true, and I find that it’s not.
Trevor Burrus: On the first part, you’re discussing one of … All the essays in the book are very interesting. One of the questions you deal with is how do two groups, who are very, very culturally different, and therefore the reputation that you gain in one group, either for good or for ill if you’re, let’s say, a trader, does not carry [00:15:00] over to the other group, at least as a matter of general practice … How could those ever trade? I kept reading that and thinking Star Trek or possibly the Cantina in Star Wars or just any kind of typical space alien base, like Deep Space Nine or how could the [inaudible 00:15:18] Klingons trade in that situation, if they don’t have the reputation work within their group, and you say it does work, and it actually did work.
Peter T. Leeson: Yeah, exactly. [00:15:30] What I call, in this case, cultural differences, but the literature often calls social heterogeneity, the idea that people are different from each other, is one of the traditions that, according to conventional wisdom, when present, causes self-governance to not function, precisely because, as you were saying, it’s more difficult in that scenario, because of different shared understandings, for example, among other reasons, for reputation to function.
If you look to the world … This would be a huge problem, I should point out. If this were true, [00:16:00] we would have a major issue, because you’ve got to recognize that most of the world, for most of its history, didn’t have anything like what we would describe as governments, and most of the gains from trade that are available lie outside our families and our close social networks, where we share lots of similarities with other people. That would mean that most of the world for most of its history was not able to capture at least a reasonable portion, [00:16:30] and today, I should point out in other context, at least a reasonable portion of the gains from trade that lie outside their group, which would basically mean that humanity wouldn’t exist. Of course, it does, and so the puzzle is how.
Since we know that we can’t rely on reputation alone, in this context of social heterogeneity, we have to find other mechanisms, and the mechanism that I focus on is what I call signaling with social distance reducing signals, [00:17:00] which is a very convoluted phrase, that I wish I hadn’t used. The upshot is very simple. If you’ve got your two alien races, for example, and one of the social differences between them is that they speak different languages, and so they don’t trust each other—they’re afraid to trade; they don’t know if a guy from the other group’s going to cheat them—what one or both of them can do is invest in learning the language of the other alien species. That investment is like a bond.
It’s like a hostage, because it [00:17:30] requires a large, sunk upfront investment on the part of the guy who’s trying to learn the other alien species’ language, and he only recoups that investment over time if he ends up repeatedly cooperating with the members of that other alien group. If he doesn’t, that other alien group stops interacting with him. Hence, there is some role for reputation, but that initial ability to realize exchange requires this sort of ex-anti-filtering of potential cooperators [00:18:00] from cheaters, and the social distance reducing investment or signal, through learning language, that one side makes facilitates that exchange.
Aaron Powell: One of the objections to the kind of research that you’re doing that I’ve heard from people who are less persuaded by or less sympathetic to anarchism, whether politically or just in our daily lives between the various fingers of the State, [00:18:30] is that this stuff is less an example of anarchism or statelessness or a lack of government working as it is once you have governments that provide a basic framework, so these merchants from the different alien races have governments that are protecting them and presumably defending them against invasion from the race that they might trade with and so on. Once [00:19:00] you have that, then people, sure, they can get up to all sorts of neat things without the State being directly involved, but that that’s not quite the same thing as them thinking that, therefore, we really can get away without having the State.
Peter T. Leeson: Yeah. Maybe a similar concern or a slightly different spin on it is sort of this idea about the difference between what you might call violent theft and peaceful theft. [00:19:30] The idea is if government is there to make sure that the strong doesn’t punch the weak in the face and take his wallet, then, yes, maybe we can make sure that one guy doesn’t violate his contract with the other. That would be an example of peaceful theft, as opposed to the punching him in the face, the violent theft.
It’s an important concern, but there are both theoretical answers to the dilemma and, more importantly, what really motivates all this stuff for me is that [00:20:00] if you look to the world, what you’ll find are cases of what we might call utter anarchy, cases where the State doesn’t exist even to provide that basic framework to make sure that the strong don’t plunder the weak, and nevertheless we observe some degree of cooperation. We observe people overcoming that obstacle and being able to realize gains from exchange. A lot of times I feel like the objections that people have, which are sensible, [00:20:30] formed by intuition, they should give pause to look out the window, think a little bit about what they see in the world, at which point they should notice that, wait a minute, reality is rejecting what theory seems to be dictating, which suggests that perhaps my theory is askew.
Trevor Burrus: Now, I think it’s important that our listeners and those who read your work—and I highly suggest to go and read Pete’s work, if you’re listening—that you’re not necessarily, [00:21:00] in the work we’re talking about, making the normative case for anarchy in so far as the literature you’re writing in, because the question here is people who insert impossibility … You’re just addressing that claim, not that clearly government therefore is worthless and it’s never needed anywhere, but where people said, “The only thing that could do this would be government,” you say, “Ah, probably not.”
Peter T. Leeson: Yeah, that’s definitely true, but there’s actually two different [00:21:30] issues on the table there, right? One of them is you’re right, the research that I’m doing is positive in the sense that it’s trying to explain the world as it is, not say anything, at least in this work, about how the world should be. There’s a second component, which often gets blended with that first one, which is whether or not I or other people are making the claim that anarchy is a panacea and self-governance solves everything or that government can never improve upon, [00:22:00] even in principle, anarchic arrangements. As a positive matter, the answer to that is clearly, no; government can in fact, at least in principle, improve on these things, but—and it’s a really important but—the ability in principle for government to improve upon anarchic arrangements does not imply that real world governments, even on average, are producing better outcomes than an anarchic set of institutions [00:22:30] would produce.
The reason for that is not that real world anarchies are magical places of unicorns where glorious things happen. A lot of times, there not very … They’re pretty nasty. Hobbes was kind of right. They’re pretty nasty, some of them anyway. Here’s where, going back to Hobbes again, where he was wrong, governments are often nastier. It’s which one is worse rather than which one is better. Here, it’s [00:23:00] astonishing to me the extent to which people are able to overlook what is, in effect, the modal outcome of government in the world, which is a horrible outcome, so saying that statelessness might be able to improve over that outcome is really setting the bar very low.
Trevor Burrus: I want to go back to another one of my favorite examples. It was hard to choose with all the great examples in the book. One of the things that you discuss, which is something I had never heard of, and I’m a pretty big student [00:23:30] of at least British history, but it’s called … I believe it’s pronounced the [inaudible 00:23:35], the way to pronounce it, the law of lawlessness, which was about a three-century period in the English-Scottish border, particularly though in the 16th century, for giving governance to a group of fairly unruly, but sometimes cooperative English and Scotsman.
Peter T. Leeson: Yeah, yeah. This is the society of the infamous [00:24:00] border reavers, for those who are interested in history. Actually, this is an empirical illustration also of a case where we don’t have government providing even the most basic function of regulating violence, for example, so yeah, from like the 13th to about the 16th century, the Anglo-Scottish border, you have these reavers. Basically, their way of living is not exclusively, but in large part, based on [00:24:30] raiding people on the other side of the border, who were their long-term enemies.
Obviously, England and Scotland had been at war for a long period of time. Even when they weren’t officially at war, these people had serious hostility toward one another and basically went back and forth, plundering each other, and I should point out, they’re peculiar in that it seems to be that they derived some kind of incidental utility from the plundering. They seemed to like it. It was kind of a game, if you could think about it that way, although a very deadly [00:25:00] and dangerous game with serious consequences.
Trevor Burrus: That’s a problem. That shows something to the question of like what about the people who just like to steal or that like to hurt people?
Peter T. Leeson: Yeah, yep. They exist, as the reavers show us, and it’s an interesting thing because you might think that you identify a group like that, and if you could show that, in that group, self-governance actually works reasonably well. Anarchy produced decent outcomes, relative to what might have been the [00:25:30] alternative option anyway. I think it’s a real testament to the robustness of self-governance, because if it could work in a society of basically outlaws devoted to plundering one another, then surely it’s going to have an easier time working among the more regular sort of people, who really aren’t interested in raiding against each other or slaying one another for fun.
Yeah, the [inaudible 00:25:57] that you pointed to was a sort of customary [00:26:00] system of basically kind of cross-border law that emerged among these people over the centuries to not entirely eliminate, again particularly given that the people involved enjoyed it to a certain extent, but to highly regulate, to make less socially destructive, and to preserve and promote some degree of cooperation across the members of both groups. The institutions that emerged are pretty cool, and they’re detailed. In many ways, they’re not terribly different, [00:26:30] at least in fundamentals, from some of the institutions that governed anarchic, medieval Iceland, for example, for those listeners who might be familiar with David Friedman’s famous paper. It’s a different context, in that it’s considering sworn enemies, who are socially and culturally diverse, lacking any semblance of government, even to [inaudible 00:26:57] to prevent violence among them.
Trevor Burrus: Can you give us examples [00:27:00] of what those institutions look like and how they worked?
Peter T. Leeson: Sure. I think probably one that’s similar to medieval Iceland was this idea of what they called [inaudible 00:27:13], which was a kind of wergild, a blood payment. If you killed somebody, you were entitled under a norm—this was obviously not in legislated law—under a norm, to receive some kind of payment. Alternatively, you could take the guy who was [00:27:30] found guilty of having committed the crime and actually kill him yourself, if you were just a vengeful type, and some of these guys were, so you might actually want to exercise that option, if you were an Anglo-Scottish border reaver, and that’s a very sort of crude institution.
Trevor Burrus: Isn’t that exactly what people would say, “That’s what anarchy is like, and I don’t want to live there,” that that’s why?
Peter T. Leeson: It might be. I don’t know. Whether or not you would want to live in a society that has [00:28:00] blood feuding as one of its elements is a different question from whether or not the institution of blood feuding promotes cooperation under anarchy or not, right? I wouldn’t want to live in a society where blood feuding was rampant. By the same token, that doesn’t mean that blood feuding does not promote cooperation, and in fact it does, where it’s used in places like Somalia, for instance, and historically where it was in medieval Iceland or in the 16th century Anglo-Scottish borderlands. [00:28:30] It’s two separate questions that the … Again, veering on the normative versus the positive.
Aaron Powell: Piggybacking off of what Trevor just asked, do we have … Because the examples of anarchy that you’ve given, like the medieval Iceland one that gets brought up at every Students for Liberty event, do we have examples of anarchic societies that do seem like the kind of places we might want to live? We, being [00:29:00] sheltered and not terribly reaver-like, 21st century [crosstalk 00:29:10] modern man.
Trevor Burrus: Will they have Netflix there is what you’re asking, yes?
Peter T. Leeson: Netflix, probably not. Well, it depends. There’s a couple of ways to answer this. One is, it’s an important question, and this is another driving element in the second part of the book, but it’s an important question to ask, in the context of this question, who the “we” is. [00:29:30] If “we” refers to people living in the highly developed Western world, living in the United States for example, I think it’s harder to find positive answers, where we would say yes. I’m going to come to something else in a moment, where I think the answer is yes, or at least we do. To me, the important thing to recognize is that places that have … In other words, we’re comparing in that “we” people who live under extremely successful, [00:30:00] highly functional governments.
For all of the problems that we have, as we make America great again, for example … For all the problems that we have here, they’re really not problems in the grand scheme of things in the grand scheme of populations globally. Most of the world lives in places where government is highly dysfunctional and oppressive. The “we” there … Let’s say that you’re thinking about the Democratic Republic of Congo. That “we,” [00:30:30] if you’re asking them, I think that they may very well prefer, if the choice were sort of given to them in this way, to live under a society where you’ve got blood payment, a [inaudible 00:30:41] system, for example, like we saw with the border reivers, than under their current exploitative government, so the “we” is a very important question to ask, but we can come back to that if you’re interested.
The case where I think the “we,” where we’re thinking about the people who inhabit the developed [00:31:00] world, people who inhabit the United States, for example, there are what you might call pockets of anarchy, where I think are peaceful, that look—they have Netflix, so to speak—that I think people choose all the time over government. Here, it gets a little bit fuzzier, because now we’re sort of back in the realm, where you’ve got people making choices. For example, using private arbitration is overwhelmingly used to resolve commercial disputes domestically in the United States. That’s not because anybody makes [00:31:30] commercial partners put these things in their contracts. They could just all appeal to the government, the State court system, but they try their damnedest to not do that. That’s a last resort, rather than a first choice.
There we don’t observe horrible outcomes. In fact, it seems that we’ve got pretty good outcomes as a consequence of private domestic arbitration, but somebody could say, “Well, yeah, that only works because when the private arbitrator says [00:32:00] that I need to pay you money, I don’t end up coming and trying to murder you in your sleep because the government of the United States is there to make sure that I don’t do that,” or more generally, “that I comply with whatever the private arbitration association said.” This is sometimes called the “shadow of the State” argument.
What it neglects—one of the many things I think that it neglects—is the fact that in the international arena, we, meaning everybody, including people in the highly developed world, obviously live [00:32:30] in the context of international anarchy. There is no world government. There is no super-national sovereign with the authority to enforce arbitration decisions internationally, for example, on citizens of one country in another, and so you might not say that we’re choosing that. That’s a different question about whether or not we have chosen to live in that world versus chosen to live in a world with one world government, but in that arena, [00:33:00] I think you have something closer to complete statelessness, and it seems to produce very peaceable outcomes. There isn’t blood feuding that’s used to enforce it. We were talking about very wealthy individuals who are prosperous and live well, and anarchic arrangements, self-governance, seems to be promoting cooperation pretty well.
Trevor Burrus: It seems like almost the moral of your story, or what you would really want people to do when they talk about anarchy, [00:33:30] is to always compare it to alternatives.
Peter T. Leeson: Yes.
Trevor Burrus: To say it’s always better, or to say that government is always better, in either the large sense or in a smaller sense, is just sort of a nonsensical claim. It is what institutions do you have available to you now and would it be better for there to be no government?
Peter T. Leeson: That’s exactly right, and that’s the economist in me, and hopefully [00:34:00] should be, I think, the economist in everyone. Yeah. The question of how is Somalia doing under anarchy by itself is not a particularly informative one, from a comparative perspective, right? What we want to know, for instance, is whether or not Somalia under anarchy is doing better or worse than Somalia was, not under some hypothetical government that we could imagine that would be great, like if they could have a government like we have in the United States, but under their actual [00:34:30] government, the one that they actually had and, therefore, would likely have if they were to re-institute a government.
The comparative question … Economics requires us to always ask the comparative question. Libertarians, when you argue about, for example … It’s the same thing as when you argue with people, for instance, about, say, the Industrial Revolution, where a lot of people will point out that working conditions were bad during the Industrial Revolution and wages were low, and children were working, [00:35:00] and people were getting their arms cut off in the machines, and so on, all of which may very well be true, but it’s irrelevant for the question of whether or not the Industrial Revolution was welfare-enhancing to people, since, to answer that question, we need to ask whether or not having your arm cut off in the machine and making two cents an hour is better than or worse than working on the farm, toiling on the farm 24 hours a day for one cent an hour and getting [00:35:30] your leg chopped off in a plow. That’s the relevant question.
The implicit standard when people make critiques about the welfare effects of the Industrial Revolution for the population of the time is to apply the standards that we have in the contemporary, developed world, which is, of course, not the right standard, because it’s an irrelevant alternative, unless you have a time machine. The same, exact logic applies to comparative analysis for evaluating the welfare effects [00:36:00] of government versus anarchy.
Aaron Powell: To keep this thing on the normative discussion for a moment, though, if we’re looking around the world, and so we’re saying, as a pampered Westerner, the anarchic societies that we have as examples, might not look all that great, comparatively, but compared to what people in the Congo are facing, it looks pretty good. We’re not [00:36:30] talking about going back in time, so maybe anarchy would be better for the people in the Congo over what they have now. That would be like saying, if you have an infected leg, cutting off that leg is better than dying from the infection, but even better than that would be getting some antibiotics, and so even better than anarchy—yeah, like, yes it might be marginally better—but we’ve got this other thing, which is [00:37:00] good government. We shouldn’t be looking at anarchy, because that’s only a marginal improvement. We should be looking at how to give these people good government that’s going to improve their lives dramatically.
Peter T. Leeson: Yes, which is right, except it, I think, again ignores another central economic concept, which is scarcity or constraints. If, among our options … Going to your leg example, if my options are antibiotic [00:37:30] or sever the leg, then I agree antibiotic. If that’s one of the options that’s available to me, yes, but suppose that I’m too poor to purchase the antibiotic, or suppose that antibiotics haven’t been invented, or suppose that whatever other thing you want to impose that restricts my access to antibiotics, then the relevant comparison is death or cutting off the leg.
With respect to anarchy, it is again similar. If you think that it is within the feasible opportunity [00:38:00] set of, say, contemporary Somalia, to have a government such as that which governs the United States or some Western European country, then I think it is a reasonable comparison to make to look at outcomes in Somalia anarchy versus outcomes in, say, Switzerland, but I think that anyone who is even remotely informed about the history of Somalia, or who simply recognizes that constraints are real … They are the [00:38:30] reason that I don’t drive a Ferrari, even though a Ferrari is better than my Subaru. Clearly, it’s a better car, but I’m income constrained. I can’t have that, so Subaru it is.
Similarly, if Somalia has Swiss government as an option, I would say, “Yes, that would make sense,” but for historical reasons, for reasons of real constraints that they confront, for example the fact that they lived for decades under a socialist style [00:39:00] regime that basically pitted ethnic groups against one another and has set up the institutions of the state, such that they can systemically expropriate people, that is to say it is not a government. They have never had a government that has had checks and constraints that prevented such predation, Swiss government isn’t on the table, and so then the option is, well, how does the type of government that is on the table for Somalia, which we know what it looks like … It’s like the one that collapsed in 1991, or it’s like the ones [00:39:30] that are in all the countries that surround Somalia today, who’s governments didn’t collapse. Given that that’s the option versus anarchy, we face a, I think, very different sort of evaluation.
Trevor Burrus: Now, what you said probably answers this question, which is sort of the inverse of that, but I want to make it sort of clear. When people argue that if the U.S. Government disappears or even is [00:40:00] lessened by 2% … I mean, the way people talk in this town is that a 2% cut in military spending is anarchy or a 2% cut in Medicaid spending is anarchy. Let’s just say it disappears, that what everyone thinks about libertarians … We push the button, make the State disappear, plunge everyone into an absolute dog-eat-dog, Hobbesian world that we can dominate, because we’re the rich ones and the strong ones, which is why we want that in the first place. All municipal governments, [00:40:30] all state governments, disappear. After that, it looks like Somalia, doesn’t it?
Peter T. Leeson: I don’t think it does. Just like there are different qualities of government … There’s the government of Switzerland, and then there’s the government of the Democratic Republic of Congo, and lots of things in between. There are also different qualities of anarchies, right? There’s the anarchy that might, for example, prevail in a place like the United States, if what you described transpired, versus the anarchy that we observe existing, [00:41:00] for example, in Somalia. What shapes those qualities of private governance, of anarchies, I think are the same features, the same constraints that bind or limit our abilities, with respect to the quality of governments that we have.
A sort of shorter way of saying that is that, to the extent that you think that a society’s, the governments that are in its available opportunity set don’t look very good. I suspect that any governance [00:41:30] arrangement, including anarchic ones, don’t look very good either. It’s low-quality government versus low-quality anarchy, and vice versa.
Trevor Burrus: Let me just put that in a … If you have a group of people, maybe in Somalia—I haven’t studied up on it recently, but some African countries, at different times—who want to kill everyone in the other tribe, that’s what they want to do, then either anarchy or governments are going to look pretty bad.
Peter T. Leeson: That’s exactly right. [00:42:00] Then there’s the comparative question of they’re both going to look bad, but which one looks worse, right? Then, for a place like the United States, where we have a long history of private property protection, having been provided by the State, a high trust society with a very developed economy, for example, in that world you would think that, just like our government works pretty well, some of those same very features that help support the functionality, the high quality [00:42:30] of our State, would probably also support a high quality or well-functioning anarchy.
Now, there’s again a comparative question. Whether or not anarchy in the United States, to say that it would be better than it is in Somalia, I think, although a neglected point, is uncontroversial. What is more controversial is the question of whether or not anarchy in the United States, while being better than anarchy in Somalia, would nevertheless still be better than government or worse than government in the United States, which is quite good.
Trevor Burrus: [00:43:00] I thought you were going to answer that question for us. You just stopped there. I was like, “Oh come on, Pete. I’m waiting.”
Peter T. Leeson: Well, I think … In Libertarian circles, there’s this, “Would you push the button”—I’m sure you’ve heard this before—“would you push the button” question. I’ll say this. I would be very hesitant to push the button in the United States, and the reason is because [00:43:30] I think we have it so good. I am open to and could believe, could easily be persuaded—some days I think I do believe—that marginal gains could be made by moving to total statelessness, say, in the United States. However, given how good we have it, right? … People need to recognize that. Given how good we have it, that is a huge risk to take. The downside potential is [00:44:00] sizeable if you’re mistaken, so, since what you’re giving up is pretty good, that’s probably, I think, for most people, probably not a gamble they’d be willing to take.
I probably just ruined all my libertarian cred there, but I also think it’s not really … It’s a fun question, but it’s not the most important question, because, as I mentioned before, most off the world overwhelmingly lives under governments that look much more like the government [00:44:30] of Somalia did before it collapsed than those who live in governments that look like our government. We’re the outliers. North America and Western Europe are the outliers. Once you recognize that, the real question is would you push the button in the Sudan? Would you push the button in … Pick your sub-Saharan African country, where the welfare gains are potentially the greatest, right?
There I think it’s a no-brainer. Yes, we should push the button. Would you push the button in Mexico? [00:45:00] If things get a little hazier, I think I’d push the button there, but for the handful of super outliers, I think the gamble probably isn’t worth it. The point is that, for most of the world, where the welfare gains are greatest, there’s super low-hanging fruit, and there I think there’s an unequivocal yes button pushing, which for a thinking person should make you realize that, at a minimum, what’s being suggested then is anarchy for most of the globe, even if it’s not anarchy [00:45:30] for all of the globe.
Aaron Powell: Then, in a country like the United States, where the button doesn’t exist even if we were inclined to push it, that political anarchy is not on the table, at least anytime soon, what can we as citizens, as voters, as policymakers, learn from the study of anarchy? What do these success stories or these questions that you’ve sought to answer [00:46:00] have to teach us?
Peter T. Leeson: If you think about my research as sort of examining what you might call hard cases for anarchy, cases where people are devoted to hurting each other, cases where people are socially diverse, where there are large populations, and so on, I think, to the extent that we can find a surprising degree of social cooperation in those worst-case scenarios, it should make us that much more optimistic about the degree of cooperation that [00:46:30] we can get out of self-governance, anarchic private arrangements in regular populations. If you think, if you go back to Madison’s paradox of government, supposedly he says we need a government in order to make sure that we basically don’t do bad things to each other, but the problem is that once we empower government to do that, how do we make sure that government isn’t going to hurt us? We know that the general problem, the biggest welfare losses [00:47:00] empirically come from government hurting us.
To the extent that you can scale back what it is that government is doing, you can reduce the potential for those biggest damages, so to speak. If we know that anarchy works in the hardest case, that means that some private solution in the easy case, I think, becomes much easier to buy into, and so it ultimately limits, if you want to think about it, restricts the activities that we have the State involved [00:47:30] in, and thus limits the potential for damage. You don’t have to be an anarchist, I think, or even interested in anarchy, per se, to take away from this kind of research the idea that more private activity, more private institution building, more forms of self-governance, even in an economy or in a country, such as the United States, that’s governed by a relatively well-functioning government, can produce important benefits.
Trevor Burrus: [00:48:00] Thanks for listening. This episode of Free Thoughts was produced by Tess Terrible and Evan Banks. To learn more, visit us on the web at