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Anarcho-capitalism (also referred to as free-market anarchism, market anarchism, private-property anarchism, libertarian anarchism) is a political philosophy which advocates the elimination of the state in favor of individual sovereignty, private property, and open markets. Anarcho-capitalists believe that in the absence of statute (law by decree or legislation), society would improve itself through the discipline of the free market (or what its proponents describe as a "voluntary society"). In an anarcho-capitalist society, law enforcement, courts, and all other security services would be operated by privately funded competitors rather than centrally through compulsory taxation. Money, along with all other goods and services, would be privately and competitively provided in an open market. Therefore, personal and economic activities under anarcho-capitalism would be regulated by victim-based dispute resolution organizations under tort and contract law, rather than by statute through centrally determined punishment under political monopolies.
Various theorists have espoused legal philosophies similar to anarcho-capitalism. The first person to use the term, however, was Murray Rothbard, who in the mid-20th century synthesized elements from the Austrian School of economics, classical liberalism, and 19th-century American individualist anarchists Lysander Spooner and Benjamin Tucker (while rejecting their labor theory of value and the norms they derived from it). A Rothbardian anarcho-capitalist society would operate under a mutually agreed-upon libertarian "legal code which would be generally accepted, and which the courts would pledge themselves to follow." This pact would recognize voluntary consent and the non-aggression principle, although methods of enforcement vary.
Anarcho-capitalists argue for a society based on the voluntary trade of private property and services (in sum, all relationships not caused by threats or violence, including exchanges of money, consumer goods, land, and capital goods) in order to minimize conflict while maximizing individual liberty and prosperity. However, they also recognize charity and communal arrangements as part of the same voluntary ethic. Though anarcho-capitalists are known for asserting a right to private (individualized or joint non-public) property, some propose that non-state public or community property can also exist in an anarcho-capitalist society. For them, what is important is that it is acquired and transferred without help or hindrance from the compulsory state. Anarcho-capitalist libertarians believe that the only just, and/or most economically beneficial, way to acquire property is through voluntary trade, gift, or labor-based original appropriation, rather than through aggression or fraud.
Anarcho-capitalists see free-market capitalism as the basis for a free and prosperous society. Murray Rothbard said that the difference between free-market capitalism and "state capitalism" is the difference between "peaceful, voluntary exchange" and a collusive partnership between business and government that uses coercion to subvert the free market. (Rothbard is credited with coining the term "Anarcho-capitalism"). "Capitalism," as anarcho-capitalists employ the term, is not to be confused with state monopoly capitalism, crony capitalism, corporatism, or contemporary mixed economies, wherein market incentives and disincentives may be altered by state action. They therefore reject the state, seeing it as an aggressive entity which steals property (through taxation and expropriation), initiates aggression, has a compulsory monopoly on the use of force, uses its coercive powers to benefit some businesses and individuals at the expense of others, creates monopolies, restricts trade, and restricts personal freedoms via drug laws, compulsory education, conscription, laws on food and morality, and the like.
Many anarchists view capitalism as an inherently authoritarian and hierarchical system, and seek the expropriation of private property. Considerable tension exists between these left anarchists and laissez-faire anarcho-capitalists,[verification needed] as the former generally rejects anarcho-capitalism as a form of anarchism and considers anarcho-capitalism an oxymoron, while the latter holds that such expropriation is counterproductive to order, and would require a state. On the Nolan chart, anarcho-capitalists are located at the northernmost apex of the libertarian quadrant - since they reject state involvement in both economic and personal affairs.
Laissez-faire anarchists argue that the state is an initiation of force because force can be used against those who have not stolen private property, vandalized private property, assaulted anyone, or committed fraud. Many also argue that monopolies tend to be corrupt and inefficient. Anarchist theorist Murray Rothbard argued that all government services, including defense, are inefficient because they lack a market-based pricing mechanism regulated by the voluntary decisions of consumers purchasing services that fulfill their highest-priority needs and by investors seeking the most profitable enterprises to invest in. Many anarchists also argue that private defense and court agencies would have to have a good reputation in order to stay in business. Furthermore, Linda & Morris Tannehill argue that no coercive monopoly of force can arise on a truly free market and that a government's citizenry can't desert them in favor of a competent protection and defense agency.
Rothbard bases his philosophy on natural law grounds and also provides economic explanations of why he thinks anarcho-capitalism is preferable on pragmatic grounds as well. David D. Friedman says he is not an absolutist rights theorist but is also "not a utilitarian", however, he does believe that "utilitarian arguments are usually the best way to defend libertarian views". Peter Leeson argues that "the case for anarchy derives its strength from empirical evidence, not theory." Hans-Hermann Hoppe, meanwhile, uses "argumentation ethics" for his foundation of "private property anarchism", which is closer to Rothbard's natural law approach.
I define anarchist society as one where there is no legal possibility for coercive aggression against the person or property of any individual. Anarchists oppose the State because it has its very being in such aggression, namely, the expropriation of private property through taxation, the coercive exclusion of other providers of defense service from its territory, and all of the other depredations and coercions that are built upon these twin foci of invasions of individual rights.—Murray Rothbard in Society and State
Murray Rothbard used the term anarcho-capitalism to distinguish his philosophy from anarchism that opposes private property, as well as to distinguish it from other forms of individualist anarchism. Other terms sometimes used for this philosophy, though not necessarily outside anarcho-capitalist circles, include:
Anarcho-capitalism, as formulated by Rothbard and others, holds strongly to the central libertarian nonaggression axiom:
[...] The basic axiom of libertarian political theory holds that every man is a self owner, having absolute jurisdiction over his own body. In effect, this means that no one else may justly invade, or aggress against, another's person. It follows then that each person justly owns whatever previously unowned resources he appropriates or "mixes his labor with". From these twin axioms – self-ownership and "homesteading" – stem the justification for the entire system of property rights titles in a free-market society. This system establishes the right of every man to his own person, the right of donation, of bequest (and, concomitantly, the right to receive the bequest or inheritance), and the right of contractual exchange of property titles.
Rothbard's defense of the self-ownership principle stems from what he believed to be his falsification of all other alternatives, namely that either a group of people can own another group of people, or the other alternative, that no single person has full ownership over one's self. Rothbard dismisses these two cases on the basis that they cannot result in a universal ethic, i.e., a just natural law that can govern all people, independent of place and time. The only alternative that remains to Rothbard is self-ownership, which he believes is both axiomatic and universal.
In general, the nonaggression axiom can be said to be a prohibition against the initiation of force, or the threat of force, against persons (i.e., direct violence, assault, murder) or property (i.e., fraud, burglary, theft, taxation). The initiation of force is usually referred to as aggression or coercion. The difference between anarcho-capitalists and other libertarians is largely one of the degree to which they take this axiom. Minarchist libertarians, such as most people involved in libertarian political parties, would retain the state in some smaller and less invasive form, retaining at the very least public police, courts and military; others, however, might give further allowance for other government programs. In contrast, anarcho-capitalists reject any level of state intervention, defining the state as a coercive monopoly and, as the only entity in human society that derives its income from legal aggression, an entity that inherently violates the central axiom of libertarianism.
Some anarcho-capitalists, such as Rothbard, accept the nonaggression axiom on an intrinsic moral or natural law basis. It is in terms of the non-aggression principle that Rothbard defined anarchism; he defined "anarchism as a system which provides no legal sanction for such aggression ['against person and property']" and said that "what anarchism proposes to do, then, is to abolish the State, i.e. to abolish the regularized institution of aggressive coercion." In an interview with New Banner, Rothbard said that "capitalism is the fullest expression of anarchism, and anarchism is the fullest expression of capitalism."
Everyone is the proper owner of his own physical body as well as of all places and nature-given goods that he occupies and puts to use by means of his body, provided only that no one else has already occupied or used the same places and goods before him. This ownership of "originally appropriated" places and goods by a person implies his right to use and transform these places and goods in any way he sees fit, provided only that he does not change thereby uninvitedly the physical integrity of places and goods originally appropriated by another person. In particular, once a place or good has been first appropriated by, in John Locke's phrase, 'mixing one's labor' with it, ownership in such places and goods can be acquired only by means of a voluntary – contractual – transfer of its property title from a previous to a later owner.
Anarcho-capitalism uses the following terms in ways that may differ from common usage or various anarchist movements.
This is the root of anarcho-capitalist property rights, and where they differ from collectivist forms of anarchism such as anarcho-communism where the means of production are controlled by the whole community and the product of labor is collectivized in a pool of goods and distributed "according to need." Anarcho-capitalists advocate individual or joint (i.e. private) ownership of the means of production and the product of labor regardless of what the individual "needs" or does not need. As Rothbard says, "if every man has the right to own his own body and if he must use and transform material natural objects in order to survive, then he has the right to own the product that he has made." After property is transformed through labor it may then only exchange hands legitimately by trade or gift; forced transfers are considered illegitimate. Original appropriation allows an individual to claim any never-before used resources, including land, and by improving or otherwise using it, own it with the same "absolute right" as his own body. According to Rothbard, property can only come about through labor, therefore original appropriation of land is not legitimate by merely claiming it or building a fence around it; it is only by using land – by mixing one's labor with it – that original appropriation is legitimized: "Any attempt to claim a new resource that someone does not use would have to be considered invasive of the property right of whoever the first user will turn out to be." Rothbard argues that the resource need not continue to be used in order for it to be the person's property, "for once his labor is mixed with the natural resource, it remains his owned land. His labor has been irretrievably mixed with the land, and the land is therefore his or his assigns' in perpetuity." As a practical matter, in terms of the ownership of land, anarcho-capitalists recognize that there are few (if any) parcels of land left on Earth whose ownership was not at some point in time obtained in violation of the homestead principle, through seizure by the state or put in private hands with the assistance of the state. Rothbard says,
It is not enough to call simply for defense of "the rights of private property"; there must be an adequate theory of justice in property rights, else any property that some State once decreed to be "private" must now be defended by libertarians, no matter how unjust the procedure or how mischievous its consequences.
Rothbard says in "Justice and Property Right" that "any identifiable owner (the original victim of theft or his heir) must be accorded his property." In the case of slavery, Rothbard says that in many cases "the old plantations and the heirs and descendants of the former slaves can be identified, and the reparations can become highly specific indeed." He believes slaves rightfully own any land they were forced to work on under the "homestead principle". If property is held by the state, Rothbard advocates its confiscation and return to the private sector: "any property in the hands of the State is in the hands of thieves, and should be liberated as quickly as possible." For example, he proposes that State universities be seized by the students and faculty under the homestead principle. Rothbard also supports expropriation of nominally "private property" if it is the result of state-initiated force, such as businesses who receive grants and subsidies. He proposes that businesses who receive at least 50% of their funding from the state be confiscated by the workers. He says, "What we libertarians object to, then, is not government per se but crime, what we object to is unjust or criminal property titles; what we are for is not "private" property per se but just, innocent, non-criminal private property." Likewise, Karl Hess says, "libertarianism wants to advance principles of property but that it in no way wishes to defend, willy nilly, all property which now is called private...Much of that property is stolen. Much is of dubious title. All of it is deeply intertwined with an immoral, coercive state system." By accepting an axiomatic definition of private property and property rights, anarcho-capitalists deny the legitimacy of a state on principle:
For, apart from ruling out as unjustified all activities such as murder, homicide, rape, trespass, robbery, burglary, theft, and fraud, the ethics of private property is also incompatible with the existence of a state defined as an agency that possesses a compulsory territorial monopoly of ultimate decision-making (jurisdiction) and/or the right to tax.
The issue of intellectual property is polarizing among anarcho-capitalists as with libertarians in general, but anarcho-capitalists tend to be against intellectual property. Rothbard argues that patents are coercive monopolistic privileges granted by the state, and says they would not exist in a free society, because they prohibit individuals from independently coming up with the same invention. He also argued that copyrights are in some situations compatible with a free society. His argument is that when a copyright notice is on a piece of literary work this is a signal that the creator of the work does not consent to anyone to using it unless they agree not to copy it, hence if it is used this constitutes a contract. Anarcho-capitalist theorist Stephan Kinsella opposes both patent and copyright intellectual property.
Though anarcho-capitalists assert a right to private property, some anarcho-capitalists also point out that common, i.e. community, property can exist by right in an anarcho-capitalist system. Just as an individual comes to own that which was unowned by mixing his labor with it or using it regularly, a whole community or society can come to own a thing in common by mixing their labor with it collectively, meaning that no individual may appropriate it as his own. This may apply to roads, parks, rivers, and portions of oceans. Anarcho-capitalist theorist Roderick Long gives the following example:
Consider a village near a lake. It is common for the villagers to walk down to the lake to go fishing. In the early days of the community it's hard to get to the lake because of all the bushes and fallen branches in the way. But over time the way is cleared and a path forms – not through any coordinated efforts, but simply as a result of all the individuals walking by that way day after day. The cleared path is the product of labor –not any individual's labor, but all of them together. If one villager decided to take advantage of the now-created path by setting up a gate and charging tolls, he would be violating the collective property right that the villagers together have earned.
Nevertheless, since property that is owned collectively tends to lose the level of accountability found in individual ownership to the extent of the number of owners – and make consensus regarding property use and maintenance decisions proportionately less likely, anarcho-capitalists generally distrust and seek to avoid intentional communal arrangements. Privatization, decentralization, and individualization are often anarcho-capitalist goals. But in some cases, they not only provide a challenge, but are considered next to impossible. Established ocean routes, for example, are generally seen as unavailable for private appropriation.
Anarcho-capitalists tend to concur with free-market environmentalists regarding the environmentally destructive tendencies of the state and other communal arrangements. Air, water, and land pollution, for example, are seen as the result of collectivization of ownership. Central governments generally strike down individual or class action censure of polluters in order to benefit "the many", and legal or economic subsidy of heavy industry is justified by many politicians for job creation within a political territory.
The society envisioned by anarcho-capitalists has been called the Contractual Society – "... a society based purely on voluntary action, entirely unhampered by violence or threats of violence." – in which anarcho-capitalists assert the system relies on voluntary agreements (contracts) between individuals as the legal framework. It is difficult to predict precisely what the particulars of this society will look like because of the details and complexities of contracts.
One particular ramification is that transfer of property and services must be considered voluntarily on the part of both parties. No external entities can force an individual to accept or deny a particular transaction. An employer might offer insurance and death benefits to same-sex couples; another might refuse to recognize any union outside his or her own faith. Individuals are free to enter into or reject contractual agreements as they see fit.
Rothbard points out that corporations would exist in a free society, as they are simply the pooling of capital. He says limited liability for corporations could also exist through contract: "Corporations are not at all monopolistic privileges; they are free associations of individuals pooling their capital. On the purely free market, such men would simply announce to their creditors that their liability is limited to the capital specifically invested in the corporation...."
Corporations created in this way would not, however, be able to replicate the limit on liabilities arising non-contractually, such as liability in tort for environmental disasters or personal injury, which corporations currently enjoy. Rothbard himself acknowledges that "limited liability for torts is the illegitimate conferring of a special privilege"
There are limits to the right to contract under some interpretations of anarcho-capitalism. Rothbard himself argues that the right to contract is based in inalienable human rights and therefore any contract that implicitly violates those rights can be voided at will, which would, for instance, prevent a person from permanently selling himself or herself into unindentured slavery. Other interpretations conclude that banning such contracts would in itself be an unacceptably invasive interference in the right to contract.
Included in the right of contract is the right to contract oneself out for employment by others. Unlike anarcho-communists, anarcho-capitalists support the liberty of individuals to be self-employed or to contract to be employees of others, whichever they prefer and the freedom to pay and receive wages. Some anarcho-capitalists prefer to see self-employment prevail over wage labor. For example, David Friedman has expressed preference for a society where "almost everyone is self-employed" and "instead of corporations there are large groups of entrepreneurs related by trade, not authority. Each sells not his time, but what his time produces." Others, such as Rothbard, do not express a preference either way but justify employment as a natural occurrence in a free market that is not immoral in any way.
Different anarcho-capitalists propose different forms of anarcho-capitalism, and one area of disagreement is in the area of law. Morris and Linda Tannehill, in The Market for Liberty, object to any statutory law whatsoever. They argue that all one has to do is ask if one is aggressing against another (see tort and contract law) in order to decide if an act is right or wrong. However, Murray Rothbard, while also supporting a natural prohibition on force and fraud, supports the establishment of a mutually agreed-upon centralized libertarian legal code which private courts would pledge to follow. Such a code for Internet commerce, called The Common Economic Protocols was developed by Andre Goldman.
Unlike both the Tannehills and Rothbard who see an ideological commonality of ethics and morality as a requirement, David Friedman proposes that "the systems of law will be produced for profit on the open market, just as books and bras are produced today. There could be competition among different brands of law, just as there is competition among different brands of cars." Friedman says whether this would lead to a libertarian society "remains to be proven." He says it is a possibility that very unlibertarian laws may result, such as laws against drugs. But, he thinks this would be rare. He reasons that "if the value of a law to its supporters is less than its cost to its victims, that law...will not survive in an anarcho-capitalist society."
Anarcho-capitalists only accept collective defense of individual liberty (i.e., courts, military or police forces) insofar as such groups are formed and paid for on an explicitly voluntary basis. But, their complaint is not just that the state's defensive services are funded by taxation but that the state assumes it is the only legitimate practitioner of physical force. That is, it forcibly prevents the private sector from providing comprehensive security, such as a police, judicial, and prison systems to protect individuals from aggressors. Anarcho-capitalists believe that there is nothing morally superior about the state which would grant it, but not private individuals, a right to use physical force to restrain aggressors. Also, if competition in security provision were allowed to exist, prices would be lower and services would be better according to anarcho-capitalists. According to Molinari, "Under a regime of liberty, the natural organization of the security industry would not be different from that of other industries." Proponents point out that private systems of justice and defense already exist, naturally forming where the market is allowed to compensate for the failure of the state: private arbitration, security guards, neighborhood watch groups, and so on. These private courts and police are sometimes referred to generically as Private Defense Agencies (PDAs).
The defense of those unable to pay for such protection might be financed by charitable organizations relying on voluntary donation rather than by state institutions relying on coercive taxation, or by cooperative self-help by groups of individuals.
Subrogation, which allows remuneration for losses and damages to be funded by the aggressors, reduces insurance costs and could operate as a business in itself - converting victims from paying customers into direct beneficiaries. The concept of Restitution Transfer and Recoupment (RTR) has been explored by freenation theorist John Frederic Kosanke. RTR agencies would employ bonding agencies, private investigators, private dispute resolution organizations, and private aggressor containment agencies, as required. Instead of having to pay for restitution, victims sell restitution rights to the RTR agencies. This arrangement can be compared to the contractual nature of the Goðorð system employed in the Icelandic Commonwealth by competing chieftains.
Like classical liberalism, and unlike anarcho-pacifism, anarcho-capitalism permits the use of force, as long as it is in the defense of persons or property. The permissible extent of this defensive use of force is an arguable point among anarcho-capitalists. Retributive justice, meaning retaliatory force, is often a component of the contracts imagined for an anarcho-capitalist society. Some believe prisons or indentured servitude would be justifiable institutions to deal with those who violate anarcho-capitalist property relations, while others believe exile or forced restitution are sufficient.
Bruce L. Benson argues that legal codes may impose punitive damages for intentional torts in the interest of deterring crime. For instance, a thief who breaks into a house by picking a lock and is caught before taking anything would still owe the victim for violating the sanctity of his property rights. Benson opines that, despite the lack of objectively measurable losses in such cases, "standardized rules that are generally perceived to be fair by members of the community would, in all likelihood, be established through precedent, allowing judgments to specify payments that are reasonably appropriate for most criminal offenses." The Tannehills raise a similar example, noting that a bank robber who had an attack of conscience and returned the money would still owe reparations for endangering the employees' and customers' lives and safety, in addition to the costs of the defense agency answering the teller's call for help. But the robber's loss of reputation would be even more damaging. Specialized companies would list aggressors so that anyone wishing to do business with a man could first check his record. The bank robber would find insurance companies listing him as a very poor risk, and other firms would be reluctant to enter into contracts with him.
One difficult application of defensive aggression is the act of revolutionary violence (including anarcho-capitalist revolution) against tyrannical regimes. Many anarcho-capitalists admire the American Revolution as the legitimate act of individuals working together to fight against tyrannical restrictions of their liberties. In fact, according to Murray Rothbard, the American Revolutionary War was the only war involving the United States that could be justified. Some anarcho-capitalists, such as Samuel Edward Konkin III, feel that violent revolution is counter-productive and prefer voluntary forms of economic secession to the extent possible.
A prominent debate within the anarcho-capitalist movement concerns the question of whether anarcho-capitalist society is justified on deontological or consequentialist ethics, or both. Natural-law anarcho-capitalism (as advocated by Rothbard) holds that a universal system of rights can be derived from natural law. Some other anarcho-capitalists do not rely upon the idea of natural rights, but instead present economic justifications for a free-market capitalist society. Such a latter approach has been offered by David D. Friedman in The Machinery of Freedom. Also unlike other anarcho-capitalists, most notably Rothbard, Friedman has never tried to deny the theoretical cogency of the neoclassical literature on "market failure", but openly applies the theory to both market and government institutions (see "government failure") to compare the net result. Nor has he been inclined to attack economic efficiency as a normative benchmark.
Kosanke sees such a debate as irrelevant since, in the absence of the state, sovereign individuals will make their own decisions about morality, and will be held accountable via tort and contract law. Communities of sovereign individuals naturally expel aggressors in the same way that ethical business practices are naturally required among competing businesses that are subject to the discipline of the marketplace. For him, the only thing that needs to be debated is the nature of the contractual mechanism that abolishes the state, or prevents it from coming into existence where new communities form.
There is debate between left-anarchists and anarcho-capitalists over which is a legitimate form of anarchism. Most social anarchists argue that anarcho-capitalism is not a form of anarchism because they view capitalism as being inherently authoritarian. In particular they argue that certain capitalist transactions are not voluntary, and that maintaining the class structure of a capitalist society requires coercion, which is incompatible with an anarchist society.
On the other hand, anarcho-capitalists such as Per Bylund, webmaster of the anarchism without adjectives website, note that the disconnect among non-anarcho-capitalist anarchists is likely the result of an "unfortunate situation of fundamental misinterpretation of anarcho-capitalism." Bylund asks, "How can one from this historical heritage claim to be both anarchist and advocate of the exploitative system of capitalism?" and answers it by pointing out that "no one can, and no one does. There are no anarchists approving of such a system, even anarcho-capitalists (for the most part) do not." Bylund explains this as follows:
Capitalism in the sense of wealth accumulation as a result of oppressive and exploitative wage slavery must be abandoned. The enormous differences between the wealthy and the poor do not only cause tensions in society or personal harm to those exploited, but is essentially unjust. Most, if not all, property of today is generated and amassed through the use of force. This cannot be accepted, and no anarchists accept this state of inequality and injustice.
As a matter of fact, anarcho-capitalists share this view with other anarchists. Murray N. Rothbard, one of the great philosophers of anarcho-capitalism, used a lot of time and effort to define legitimate property and the generation of value, based upon a notion of "natural rights" (see Murray N. Rothbard's The Ethics of Liberty). The starting point of Rothbard's argumentation is every man's sovereign and full right to himself and his labor. This is the position of property creation shared by both socialists and classical liberals, and is also the shared position of anarchists of different colors. Even the statist capitalist libertarian Robert Nozick wrote that contemporary property was unjustly accrued and that a free society, to him a "minimalist state," needs to make up with this injustice (see Robert Nozick's "Anarchy, State, Utopia").
Thus it seems anarcho-capitalists agree with Proudhon in that "property is theft," where it is acquired in an illegitimate manner. But they also agree with Proudhon in that "property is liberty" (See Albert Meltzer's short analysis of Proudhon's "property is liberty" in Anarchism: Arguments For and Against, pp. 12–13) in the sense that without property, i.e. being robbed of the fruits of one's actions, one is a slave. Anarcho-capitalists thus advocate the freedom of a stateless society, where each individual has the sovereign right to his body and labor and through this right can pursue his or her own definition of happiness.
Murray N. Rothbard argues that the capitalist system of today is, indeed, not properly anarchistic because it is so often in collusion with the state. According to Rothbard, "what Marx and later writers have done is to lump together two extremely different and even contradictory concepts and actions under the same portmanteau term. These two contradictory concepts are what I would call 'free-market capitalism' on the one hand, and 'state capitalism' on the other."
"The difference between free-market capitalism and state capitalism," writes Rothbard, "is precisely the difference between, on the one hand, peaceful, voluntary exchange, and on the other, violent expropriation." He goes on to point out that he is "very optimistic about the future of free-market capitalism. I'm not optimistic about the future of state capitalism – or rather, I am optimistic, because I think it will eventually come to an end. State capitalism inevitably creates all sorts of problems which become insoluble."
Murray Rothbard maintains that anarcho-capitalism is the only true form of anarchism – the only form of anarchism that could possibly exist in reality, as, he argues, any other form presupposes an authoritarian enforcement of political ideology (redistribution of private property, etc.). In short, while granting that certain non-coercive hierarchies will exist under an anarcho-capitalist system, they will have no real authority except over their own property: a worker existing within such a 'hierarchy' (answerable to management, bosses, etc.) is free at all times to abandon this voluntary 'hierarchy' and (1) create an organization within which he/she is at (or somewhere near) the top of the 'hierarchy' (entrepreneurship), (2) join an existing 'hierarchy' (wherein he/she will likely be lower in the scheme of things), or (3) abandon these hierarchies altogether and join/form a non-hierarchical association such as a cooperative, commune, etc.. Since there will be no taxes, such cooperative organizations (labour unions, communes, voluntary socialist associations wherein the product of the labour and of the capital goods of those who join which they were able to peaceably acquire would be shared amongst all who joined, etc.) would, under anarcho-capitalism, enjoy the freedom to do as they please (provided, of course that they set up their operation on their own – or un-owned – property, in other words so long as they do so without force).
According to this argument, the free market is simply the natural situation that would result from people being free from authority, and entails the establishment of all voluntary associations in society: cooperatives, non-profit organizations (which would, just as today, be funded by individuals for their existence), businesses, etc. (in short, a free market does not equal the end of civil society, which continues to be a critique of anarcho-capitalism). Moreover, anarcho-capitalists (as well as classical liberal minarchists and others) argue that the application of so-called "leftist" anarchist ideals would require an authoritarian body of some sort to impose it. Some also argue that human beings are motivated primarily by the fulfillment of their own needs and wants. Thus, to forcefully prevent people from accumulating private capital, which could result in further fulfillment of human desires, there would necessarily be a redistributive organization of some sort which would have the authority to, in essence, exact a tax and re-allocate the resulting resources to a larger group of people. This body would thus inherently have political power and would be nothing short of a state. The difference between such an arrangement and an anarcho-capitalist system is precisely the voluntary nature of organization within anarcho-capitalism contrasted with a centralized ideology and a paired enforcement mechanism which would be necessary under a coercively 'egalitarian'-anarchist system.
The Austrian School of economics argued against the viability of socialism and centrally planned economic policy. Eugen von Böhm-Bawerk, a colleague of Austrian school founder Carl Menger, wrote one of the first critiques of socialism in his treatise The Exploitation Theory of Socialism-Communism. Later, Friedrich von Hayek wrote The Road to Serfdom, which states that a command economy lacks the information function of market prices, and that central authority over the economy leads to totalitarianism. Another Austrian economist Ludwig von Mises, wrote Human Action, an early exposition of the method he called Praxeology.
Murray Rothbard, a student of Mises, attempted to meld Austrian economics with classical liberalism and individualist anarchism. He wrote his first paper advocating "private property anarchism" in 1949, and later came up with the alternative name "anarcho-capitalism." He was probably the first to use "libertarian" in its current (U.S.) pro-capitalist sense. His academic training was in economics, but his writings also refer to history and political philosophy. When young, he considered himself part of the Old Right, an anti-statist and anti-interventionist branch of the Republican party. In the late 1950s, he was briefly involved with Ayn Rand, but later had a falling out. When interventionist cold warriors of the National Review, such as William F. Buckley, Jr., gained influence in the Republican party in the 1950s, Rothbard quit that group and briefly associated himself with left-wing antiwar groups. He believed that the cold warriors were more indebted in theory to the left and imperialist progressives, especially with respect to Trotskyist theory. Later, Rothbard initially opposed the founding of the Libertarian Party but joined in 1973 and became one of its leading activists.
Classical liberalism is the primary influence with the longest history on anarcho-capitalist theory. Classical liberals have had two main themes since John Locke first expounded the philosophy: the liberty of man, and limitations of state power. The liberty of man was expressed in terms of natural rights, while limiting the state was based (for Locke) on a consent theory.
In the 19th century, classical liberals led the attack against statism. One notable was Frédéric Bastiat (The Law), who wrote, "The state is the great fiction by which everybody seeks to live at the expense of everybody else." Henry David Thoreau wrote, "I heartily accept the motto, 'That government is best which governs least'; and I should like to see it acted up to more rapidly and systematically. Carried out, it finally amounts to this, which also I believe, 'That government is best which governs not at all'; and when men are prepared for it, that will be the kind of government which they will have."
The early liberals believed that the state should confine its role to protecting individual liberty and property, and opposed all but the most minimal economic regulations. The "normative core" of classical liberalism is the idea that in an environment of laissez-faire, a spontaneous order of cooperation in exchanging goods and services emerges that satisfies human wants. Some individualists came to realize that the liberal state itself takes property forcefully through taxation in order to fund its protection services, and therefore it seemed logically inconsistent to oppose theft while also supporting a tax-funded protector. So, they advocated what may be seen as classical liberalism taken to the extreme by only supporting voluntarily funded defense by competing private providers. One of the first liberals to discuss the possibility of privatizing protection of individual liberty and property was France's Jakob Mauvillon in the 18th century. Later, in the 1840s, Julius Faucher and Gustave de Molinari advocated the same.
Molinari, in his essay The Production of Security, argued, "No government should have the right to prevent another government from going into competition with it, or to require consumers of security to come exclusively to it for this commodity." Molinari and this new type of anti-state liberal grounded their reasoning on liberal ideals and classical economics. Historian and libertarian Ralph Raico argues that what these liberal philosophers "had come up with was a form of individualist anarchism, or, as it would be called today, anarcho-capitalism or market anarchism." Unlike the liberalism of Locke, which saw the state as evolving from society, the anti-state liberals saw a fundamental conflict between the voluntary interactions of people – society – and the institutions of force – the State. This society versus state idea was expressed in various ways: natural society vs. artificial society, liberty vs. authority, society of contract vs. society of authority, and industrial society vs. militant society, just to name a few. The anti-state liberal tradition in Europe and the United States continued after Molinari in the early writings of Herbert Spencer, as well as in thinkers such as Paul Émile de Puydt and Auberon Herbert.
Ulrike Heider, in discussing the "anarcho-capitalist family tree," argues in favor of Max Stirner as the "founder of individualist anarchism" and "ancestor of laissez-faire liberalism." According to Heider, Stirner wants to "abolish not only the state but also society as an institution responsible for its members" and "derives his identity solely from property" with the question of property to be resolved by a 'war of all against all'." Stirner argued against the existence of the state in a fundamentally anti-collectivist way, to be replaced by a "Union of Egoists" but was not more explicit than that in his book The Ego and Its Own published in 1844.
Later, in the early 20th century, the mantle of anti-state liberalism was taken by the "Old Right". These were minarchists, anti-war, anti-imperialists, and (later) anti-New Dealers. Some of the most notable members of the Old Right were Albert Jay Nock, Rose Wilder Lane, Isabel Paterson, Frank Chodorov, Garet Garrett, and H. L. Mencken. In the 1950s, the new "fusion conservatism", also called "cold war conservatism", took hold of the right wing in the U.S., stressing anti-communism. This induced the libertarian Old Right to split off from the right, and seek alliances with the (now left-wing) antiwar movement, and to start specifically libertarian organizations such as the (U.S.) Libertarian Party.
Rothbard was influenced by the work of the 19th-century American individualist anarchists (who were also influenced by classical liberalism). In the winter of 1949, influenced by several 19th century individualists anarchists, Rothbard decided to reject minimal state laissez-faire and embrace individualist anarchism. Rothbard said in 1965 "Lysander Spooner and Benjamin T. Tucker were unsurpassed as political philosophers and nothing is more needed today than a revival and development of the largely forgotten legacy they left to political philosophy." However, he thought they had a faulty understanding of economics. The 19th century individualists had a labor theory of value, as influenced by the classical economists, but Rothbard was a student of neoclassical economics which does not agree with the labor theory of value. So, Rothbard sought to meld 19th-century American individualists' advocacy of free markets and private defense with the principles of Austrian economics: "There is, in the body of thought known as 'Austrian economics', a scientific explanation of the workings of the free market (and of the consequences of government intervention in that market) which individualist anarchists could easily incorporate into their political and social Weltanschauung". Rothbard held that the economic consequences of the political system they advocate would not result in an economy with people being paid in proportion to labor amounts, nor would profit and interest disappear as they expected. Tucker thought that unregulated banking and money issuance would cause increases in the money supply so that interest rates would drop to zero or near to it.
Rothbard disagreed with this, as he explains in The Spooner-Tucker Doctrine: An Economist's View. He says that first of all Tucker was wrong to think that that would cause the money supply to increase, because he says that the money supply in a free market would be self-regulating. If it were not, then inflation would occur, so it is not necessarily desirable to increase the money supply in the first place. Secondly, he says that Tucker is wrong to think that interest would disappear regardless, because people in general do not wish to lend their money to others without compensation so there is no reason why this would change just because banking was unregulated. Also, Tucker held a labor theory of value. As a result, he thought that in a free market that people would be paid in proportion to how much labor they exerted and that if they were not then exploitation or "usury" was taking place. As he explains in State Socialism and Anarchism, his theory was that unregulated banking would cause more money to be available and that this would allow proliferation of new businesses, which would in turn raise demand for labor. This led him to believe that the labor theory of value would be vindicated, and equal amounts of labor would receive equal pay. Again, as a neoclassical economist, Rothbard did not agree with the labor theory. He believed that prices of goods and services are proportional to marginal utility rather than to labor amounts in free market. And he did not think that there was anything exploitative about people receiving an income according to how much others subjectively value their labor or what that labor produces, even if it means people laboring the same amount receive different incomes.
Benjamin Tucker opposed vast concentrations of wealth, which he believed were made possible by government intervention and state protected monopolies. He believed the most dangerous state intervention was the requirement that individuals obtain charters in order to operate banks and what he believed to be the illegality of issuing private money, which he believed caused capital to concentrate in the hands of a privileged few which he called the "banking monopoly." He believed anyone should be able to engage in banking that wished, without requiring state permission, and issue private money. Though he was supporter of laissez-faire, late in life he said that State intervention had allowed some extreme concentrations of resources to such a degree that even if laissez-faire were instituted, it would be too late for competition to be able to release those resources (he gave Standard Oil as an example). Anarcho-capitalists also oppose governmental restrictions on banking. They, like all Austrian economists, believe that monopoly can only come about through government intervention. 19th-century American individualist anarchists such as Tucker and Lysander Spooner have long argued that monopoly on credit and land interferes with the functioning of a free market economy.
Although anarcho-capitalists disagree on the critical topics of profit, social egalitarianism, and the proper scope of private property, both schools of thought agree on other issues. Of particular importance to anarcho-capitalists and Tucker and Spooner are the ideas of "sovereignty of the individual", a market economy, and the opposition to collectivism. A defining point that they agree on is that defense of liberty and property should be provided in the free market rather than by the State. Tucker said, "[D]efense is a service like any other service; that it is labor both useful and desired, and therefore an economic commodity subject to the law of supply and demand; that in a free market this commodity would be furnished at the cost of production; that, competition prevailing, patronage would go to those who furnished the best article at the lowest price; that the production and sale of this commodity are now monopolized by the State; and that the State, like almost all monopolists, charges exorbitant prices."
Since anarcho-capitalists disagree with Tucker's labor theory of value, they disagree that free market competition would cause protection (or anything else) to be provided "at cost." Like the 19th-century American individualist anarchists such as Tucker and Lysander Spooner, anarcho-capitalists believe that land may be originally appropriated by, and only by, occupation or use; however, most American individualists of the 19th century believed it must continually be in use to retain title. Lysander Spooner was an exception from those who believed in the "occupation and use" theory, and believed in full private property rights in land, like Rothbard.
Ancient city-states in Greece and Rome depended on liturgies – contributions made by rich citizens for specific purposes – for defense. A liturgy might be used, for instance, to fund the manning of a warship. Although a certain amount was assessed by magistrates, some citizens paid more than required in order to obtain popularity, influence, and sympathy among jurors in the event they were taken to court. During the Second Punic War, Quintus Maximus Fabius Cunctator used his personal resources to pay for the release of some Roman prisoners. When the son of Scipio Africanus, who at the time was acting as de facto commander-in chief, was captured during the war against Antiochus III the Great in 190 BC, he came up with ransom himself. As Rome grew wealthier, greater use was made of private money and/or private armed forces, consisting of relatives and clients, to accomplish public objectives. Between 73 and 71 BC, Marcus Licinius Crassus and Gnaeus Pompeius Magnus used their own resources to suppress the armies of Spartacus in the Third Servile War. Julius Caesar made his fortune by vanquishing pirates in the Mediterranean and then by conquering Gaul. The emergence of the modern state caused the members of the upper classes to be disarmed.
According to David Friedman, "Medieval Icelandic institutions have several peculiar and interesting characteristics; they might almost have been invented by a mad economist to test the lengths to which market systems could supplant government in its most fundamental functions." While not directly labeling it anarcho-capitalist, he argues that the Icelandic Commonwealth between 930 and 1262 had "some features" of an anarcho-capitalist society – while there was a single legal system, enforcement of law was entirely private and highly capitalist; and so provides some evidence of how such a society would function. "Even where the Icelandic legal system recognized an essentially "public" offense, it dealt with it by giving some individual (in some cases chosen by lot from those affected) the right to pursue the case and collect the resulting fine, thus fitting it into an essentially private system."
According to the research of Terry L. Anderson and P. J. Hill, the Old West in the United States in the period of 1830 to 1900 was similar to anarcho-capitalism in that "private agencies provided the necessary basis for an orderly society in which property was protected and conflicts were resolved," and that the common popular perception that the Old West was chaotic with little respect for property rights is incorrect. Since squatters had no claim to western lands under federal law, extra-legal organizations formed to fill the void. Benson explains:
The land clubs and claim associations each adopted their own written contract setting out the laws that provided the means for defining and protecting property rights in the land. They established procedures for registration of land claims, as well as for protection of those claims against outsiders, and for adjudication of internal disputes that arose. The reciprocal arrangements for protection would be maintained only if a member complied with the association's rules and its court's rulings. Anyone who refused would be ostracized. Boycott by a land club meant that an individual had no protection against aggression other than what he could provide himself.
According to Anderson, "Defining anarcho-capitalist to mean minimal government with property rights developed from the bottom up, the western frontier was anarcho-capitalistic. People on the frontier invented institutions that fit the resource constraints they faced."
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Murray Rothbard's history of Colonial America Conceived in Liberty discussed a period where Pennsylvania fell into a state of anarchism and how William Penn struggled for about a decade to reinstate his government over a people who did not want it.
Criticisms of anarcho-capitalism include moral criticisms, pragmatic criticisms, the criticism that anarcho-capitalism could not be maintained, and that anarcho-capitalism is not actually a form of anarchism.
The following is a partial list of notable nonfiction works discussing anarcho-capitalism.
Anarcho-capitalism has been examined in certain works of literature, particularly science fiction. An early example is Robert A. Heinlein's 1966 novel The Moon Is a Harsh Mistress, in which he explores what he terms "rational anarchism". A contemporary anarcho-capitalistic work of science fiction is John C. Wright's The Golden Age.
In The Illuminatus! Trilogy by Robert Anton Wilson the Discordian Society headed by the character Hagbard Celine is anarcho-capitalist. The manifesto of the society in the novel 'Never Whistle While You're Pissing' contains Celine's Laws, three laws regarding government and social interaction.
Cyberpunk and postcyberpunk authors have been particularly fascinated by the idea of the breakdown of the nation-state. Several stories of Vernor Vinge, including Marooned in Realtime and Conquest by Default, feature anarcho-capitalist societies, sometimes portrayed in a favorable light, and sometimes not. Neal Stephenson's Snow Crash and The Diamond Age, Max Barry's Jennifer Government and L. Neil Smith's The Probability Broach all explore anarcho-capitalist ideas. The cyberpunk portrayal of anarchy varies from the downright grim to the cheerfully optimistic, and it need not imply anything specific about the writer's political views. Neal Stephenson, in particular, refrains from sweeping political statements when deliberately provoked.
Ken MacLeod's Fall Revolution series explores the future consequences of the breakdown of current political systems within a revolutionary context. The second novel of the series The Stone Canal deals specifically with an anarcho-capitalist society and explores issues of self-ownership, privatization of police and courts of law, and the consequences of a contractual society.
In Matt Stone's (Richard D. Fuerle) novelette On the Steppes of Central Asia an American grad student is invited to work for a newspaper in Mongolia, and discovers that the Mongolian society is indeed stateless in a semi-anarcho-capitalist way. The novelette was originally written to advertise Fuerle's 1986 economics treatise The Pure Logic of Choice.
Sharper Security: A Sovereign Security Company Novel, part of a series by Thomas Sewell, is "set a couple of decades into the near-future with a liberty view of society based on individual choice and free market economics" and features a society where individuals hire a security company to protect and insure them from crime. The security companies are sovereign, but customers are free to switch between them. They behave as a combination of insurance/underwriting and para-military police forces. Anarcho-capitalist themes abound, including an exploration of not honoring sovereign immunity, privately owned road systems, a laissez faire market and competing currencies.
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