Replies to Some Errors and Distortions in Bryan Caplan's "Anarchist Theory FAQ" version 4.1.1.

[9.] On the question "How would left-anarchy work?" Caplan writes:

"Some other crucial features of the left-anarchist society are quite unclear. Whether dissidents who despised all forms of communal living would be permitted to set up their own inegalitarian separatist societies is rarely touched upon. Occasionally left-anarchists have insisted that small farmers and the like would not be forcibly collectivised, but the limits of the right to refuse to adopt an egalitarian way of life are rarely specified."

This is a straw man. "Left" (i.e. real) anarchist theory clearly implies and explicitly states the answer to these questions.

Firstly, on the issue of "separatist" societies. Anarchist thinkers have always acknowledged that there would be multitude of different communities after a revolution (and not just Caplan's "inegalitarian" ones). Marx, for example, mocked Bakunin for arguing that only revolutionary communes would federate together and that this would not claim any right to govern others (see Bakunin's "Letter to Albert Richards", Michael Bakunin: Selected Writings, p. 179] Kropotkin stated that "the point attained in the socialisation of wealth will not be everywhere the same" and "[s]ide by side with the revolutionised communes . . . places would remain in an expectant attitude, and would go on living on the Individualist system." [The Conquest of Bread, p. 81] While he was hopeful that "everywhere [would be] more or less Socialism" he recognised that the revolution would not conform to "any particular rule" and would differ in different areas -- "in one country State Socialist, in another Federation" and so on. [Op. Cit., p. 82] Malatesta made the same point, arguing that "after the revolution" there would be "relations between anarchist groupings and those living under some kind of authority, between communist collectives and those living in an individualistic way." This is because anarchism "cannot be imposed". [Life and Ideas, p. 173, p. 21]

Needless to say, these "separatist societies" (which may or may not be "inegalitarian") would not be anarchist societies. If a group of people wanted to set up a capitalist, Marxist, Georgist or whatever kind of community then their right would be respected (although, of course, anarchists would seek to convince those who live in such a regime of the benefits of anarchism!). As Malatesta pointed out, "free and voluntary communism is ironical if one has not the right and the possibility to live in a different regime, collectivist, mutualist, individualist -- as one wishes, always on condition that there is no oppression or exploitation of other" as "it is clear that all, and only, those ways of life which respect freedom, and recognise that each individual has an equal right to the means of production and to the full enjoyment of the product of his own labour, have anything in common with anarchism." [Op. Cit., p. 103 and p. 33]

Ultimately, "it is not a question of right and wrong; it is a question of freedom for everybody. . . None can judge with certainty who is right and who is wrong, who is nearest to the truth, or which is the best way to achieve the greatest good for each and everyone. Freedom coupled with experience, is the only way of discovering the truth and what is best; and there can be no freedom if there is the denial of the freedom to err." [Op. Cit., p. 49]

Secondly, regarding "dissidents" who wanted to set up their own "inegalitarian separatist societies," if the term "inegalitarian" implies economic inequalities due to private property, the answer is that private property requires some kind of state, if not a public state then private security forces ("private-state capitalism"), as advocated by "anarcho"-capitalists, in order to protect private property. Therefore, "anarcho"-capitalists are asking if an anarchist society will allow the existence of states. Of course, in the territory that used to be claimed by a nation state a whole host of communities and societies will spring up -- but that does not make the non-anarchist ones anarchist!

Thus suppose that in a hypothetical libertarian socialist society, Bob tries to set up private security forces to protect certain means of production, e.g. farmland. By the hypothesis, if Bob merely wanted to work the land himself, there would be no reason for him go to the trouble of creating a private state to guard it, because use-rights guarantee that he has free access to the productive assets he needs to make a living. Thus, the only plausible reason Bob could have for claiming and guarding more farmland than he could use himself would be a desire to create a monopoly of land in order to exact tribute from others for the privilege of using it. But this would be an attempt to set up a system of feudal exploitation in the midst of a free community. Thus the community is justified in disarming this would-be parasite and ignoring his claims to "own" more land than he can use himself.

In other words, there is no "right" to adopt an "inegalitarian way of life" within a libertarian community, since such a right would have to be enforced by the creation of a coercive system of enslavement, which would mean the end of the "libertarian" community. To the contrary, the members of such a community have a right, guaranteed by "the people in arms," to resist such attempts to enslave them.

The statement that "left" anarchists have "occasionally" insisted that small farmers and the like would not be forcibly collectivised is a distortion of the facts. No responsible left libertarian advocates forced collectivisation, i.e. compelling others to join collectives. Self-employment is always an option. This can be seen from Bakunin's works [Bakunin on Anarchism, p. 200], Kropotkin's [The Conquest of Bread, p. 61 and Act for Yourselves, pp. 104-5] and Malatesta's [Life and Ideas, p. 99, p. 103]. So the anarchist opposition to forced collectivisation has always existed and, for anyone familiar with the ideas of social anarchism, very well know. Thus during the Spanish Revolution, small farmers who did not wish to join collective farms were allowed to keep as much land as they could work themselves. After perceiving the advantages of collectives, however, many joined them voluntarily (see Sam Dolgoff, ed., The Anarchist Collectives).

To claim that social anarchists "occasionally" oppose forced collectivisation is a smear, pure and simple, with little basis in anarchist activity and even less in anarchist theory. Anyone remotely familiar with the literature could not make such a mistake.

Finally, we should point out that under "anarcho"-capitalism there would be, according to Murray Rothbard, a "basic libertarian law code." Which means that under "anarcho"-capitalism, "egalitarian" communities could only come about within a "inegalitarian" legal framework! Thus, given that everything would be privatised, dissenters could only experiment if they could afford it and accepted the legal system based on ] capitalist property rights (and, of course, survive the competition of capitalist companies within the capitalist framework). As we have argued in sections B.4, F.3 and F.10, the capitalist market is not a level playing field -- which hinders experimentation. In other words, "anarcho"-capitalists has the abstract right to experiment (within the capitalist laws) but hinders the possibility to live under other regimes. And, we must point out, why should we have to pay the stealers of the earth for the privilege to life our own lives? Caplan, in effect, ignores the barriers to experimentation in his system while distorting the anarchist position.

5 How would anarcho-capitalism work?

[10.] This section (How would anarcho-capitalism work?) contains Caplan's summary of arguments for "anarcho"-capitalism, which he describes as an offshoot of Libertarianism. Thus:

"So-called 'minarchist' libertarians such as Nozick have argued that the largest justified government was one which was limited to the protection of individuals and their private property against physical invasion; accordingly, they favour a government limited to supplying police, courts, a legal code, and national defence."

The first thing to note about this argument is that it is stated in such a way as to prejudice the reader against the left-libertarian critique of private property. The minarchist right-"libertarian," it is said, only wants to protect individuals and their private property against "physical invasion." But, because of the loose way in which the term "property" is generally used, the "private property" of most "individuals" is commonly thought of as personal possessions, i.e. cars, houses, clothing, etc. (For the left-libertarian distinction between private property and possessions, see B.3.1.) Therefore the argument makes it appear that right libertarians are in favour of protecting personal possessions whereas left-libertarians are not, thus conjuring up a world where, for example, there would be no protection against one's house being "physically invaded" by an intruder or a stranger stealing the shirt off one's back!

By lumping the protection of "individuals" together with the protection of their "private property," the argument implies that right libertarians are concerned with the welfare of the vast majority of the population, whereas in reality, the vast majority of "individuals" do not own any private property (i.e. means of production) -- only a handful of capitalists do. Moreover, these capitalists use their private property to exploit the working class, leading to impoverishment, alienation, etc., and thus damaging most individuals rather than "protecting" them.

Caplan goes on:

"This normative theory is closely linked to laissez-faire economic theory, according to which private property and unregulated competition generally lead to both an efficient allocation of resources and (more importantly) a high rate of economic progress."

Caplan does not mention the obvious problems with this "theory," e.g. that during the heyday of laissez-faire capitalism in the US there was vast wealth disparity, with an enormous mass of impoverished people living in slums in the major cities -- hardly an "efficient" allocation of resources or an example of "progress." Of course, if one defines "efficiency" as "the most effective means of exploiting the working class" and "progress" as "a high rate of profit for investors," then the conclusion of the "theory" does indeed follow.

And let us not forget that it is general equilibrium theory which predicts that unregulated competition will produce an efficient allocation of resources. However, as we noted in section C.1, such a model has little to do with any real economy. This means that there is no real reason to assume an efficient outcome of capitalist economies. Concentrations of economic power and wealth can easily skew outcomes to favour the haves over the have-nots (as history again and again shows).

Moreover, the capitalism can easily lead to resources being allocated to the most profitable uses rather than those which are most needed by individuals. A classic example is in the case of famines. Amartya Sen (who won the 1998 Nobel Prize for economics) developed an "entitlement" approach to the study of famine. This approach starts with the insight that having food available in a country or region does not mean everyone living there is "entitled" to it. In market economies, people are entitled to food according to their ability to produce it for themselves or to pay or swap for it. In capitalist economies, most people are entitled to food only if they can sell their labour/liberty to those who own the means of life (which increases the economic insecurity of wage workers).

If some group loses its entitlement to food, whether there is a decline in the available supply or not, a famine can occur. This may seem obvious, yet before - and after - Sen, famine studies have remained fixated on the drop in food available instead of whether specific social groups are entitled to it. Thus even a relatively success economy can price workers out of the food market (a depressed economy brings the contradiction between need and profit -- use value and exchange value -- even more to the forefront). This "pricing out" can occur especially if food can get higher prices (and so profits) elsewhere -- for example the Irish famine of 1848 and sub-Saharan famines of the 1980s saw food being exported from famine areas to areas where it could fetch a higher price. In other words, market forces can skew resource allocation away from where it is most needed to where it can generate a profit. As anarchist George Barret noted decades before Sen:

"Today the scramble is to compete for the greatest profits. If there is more profit to be made in satisfying my lady's passing whim than there is in feeding hungry children, then competition brings us in feverish haste to supply the former, whilst cold charity or the poor law can supply the latter, or leave it unsupplied, just as it feels disposed. That is how it works out." [Objectives to Anarchism]

In other words, inequality skews resource allocation towards the wealthy. While such a situation may be "efficient allocation of resources" from the perspective of the capitalist, it is hardly so from a social perspective (i.e. one that considers all individual needs rather than "effective demand").

Furthermore, if we look at the stock market (a key aspect of any capitalist system) we discover a strong tendencies against the efficient allocation of resources. The stock market often experiences "bubbles" and becomes significantly over-valued. An inflated stock market badly distorts investment decisions. For example, if Internet companies are wildly over-valued then the sale of shares of new Internet companies or the providing of start-up capital will drain away savings that could be more productively used elsewhere. The real economy will pay a heavy price from such misdirected investment and, more importantly, resources are not efficiency allocated as the stock market skews resources into the apparently more profitable areas and away from where they could be used to satisfy other needs.

The stock market is also a source of other inefficiencies. Supporters of "free-market" capitalism always argued that the Stalinist system of central planning created a perverse set of incentives to managers. In effect, the system penalised honest managers and encouraged the flow of dis-information. This lead to information being distorted and resources inefficiently allocated and wasted. Unfortunately the stock market also creates its own set of perverse responses and mis-information. Doug Henwood argues that "something like a prisoners' dilemma prevails in relations between managers and the stock market. Even if participants are aware of an upward bias to earnings estimates, and even if they correct for it, managers still have an incentive to try and fool the market. If you tell the truth, your accurate estimates will be marked down by a sceptical market. So its entirely rational for managers to boost profits in the short term, either through accounting gimmickry or by making only investments with quick paybacks." He goes on to note that "[i]f the markets see high costs as bad, and low costs as good, then firms may shun expensive investments because they will be taken as signs of managerial incompetence. Throughout the late 1980s and early 1990s, the stock market rewarded firms announcing write-offs and mass firings -- a bulimic strategy of management -- since the cost cutting was seen as contributing rather quickly to profits. Firms and economies can't get richer by starving themselves, but stock market investors can get richer when the companies they own go hungry. As for the long term, well, that's someone else's problem." [Wall Street, p. 171]

This means that resources are allocated to short term projects, those that enrich the investors now rather than produce long term growth and benefits later. This results in slower and more unstable investment than less market centred economies, as well as greater instability over the business cycle [Op. Cit., pp. 174-5] Thus the claim that capitalism results in the "efficient" allocation of resources is only true if we assume "efficient" equals highest profits for capitalists. As Henwood summarises, "the US financial system performs dismally at its advertised task, that of efficiently directing society's savings towards their optimal investment pursuits. The system is stupefyingly expensive, gives terrible signals, and has surprisingly little to do with real investment." [Op. Cit., p. 3]

Moreover, the claim that laissez-faire economies produce a high rate of economic progress can be questioned on the empirical evidence available. For example, from the 1970s onwards there has been a strong tendency towards economic deregulation. However, this tendency has been associated with a slow down of economic growth. For example, "[g]rowth rates, investment rates and productivity rates are all lower now than in the [Keynesian post-war] Golden Age, and there is evidence that the trend rate of growth -- the underlying growth rate -- has also decreased." Before the Thatcher pro-market reforms, the British economy grew by 2.4% in the 1970s. After Thatcher's election in 1979, growth decreased to 2% in the 1980s and to 1.2% in the 1990s. In the USA, we find a similar pattern. Growth was 4.4% in the 1960s, 3.2% in the 1970s, 2.8% in the 1980s and 1.9% in the first half of the 1990s [Larry Elliot and Dan Atkinson, The Age of Insecurity, p. 236]. Moreover, in terms of inflation-adjusted GDP per capita and productivity, the US had the worse performance out of the US, UK, Japan, Italy, France, Canada and Australia between 1970 and 1995 [Marc-Anfre Pigeon and L. Randall Wray, Demand Constraints and Economic Growth]. Given that the US is usually considered the most laissez-faire out of these 7 countries, Caplan's claim of high progress for deregulated systems seems at odds with this evidence.

As far as technological innovation goes, it is also not clear that deregulation has aided that process. Much of our modern technology owns its origins to the US Pentagon system, in which public money is provided to companies for military R&D purposes. Once the technology has been proven viable, the companies involved can sell their public subsidised products for private profit. The computer industry (as we point out in section J.4.7) is a classic example of this -- indeed it is unlikely whether we would have computers or the internet if we had waited for capitalists to development them. So whether a totally deregulated capitalism would have as high a rate of technological progress is a moot point.

So, it seems likely that it is only the assumption that the free capitalist market will generate "an efficient allocation of resources and (more importantly) a high rate of economic progress." Empirical evidence points the other way -- namely, that state aided capitalism provides an approximation of these claims. Indeed, if we look at the example of the British Empire (which pursued a strong free trade and laissez-faire policy over the areas it had invaded) we can that the opposite may be true. After 25 prosperous years of fast growth (3.5 per cent), after 1873 Britain had 40 years of slow growth (1.5 per cent), the last 14 years of which were the worse -- with productivity declining, GDP stagnant and home investment halved. [Nicholas Kaldor, Further Essays on Applied Economics, p. 239] In comparison, those countries which embraced protectionism (such as Germany and the USA) industrialised successfully and become competitors with the UK. Indeed, these new competitors grew in time to be efficient competitors of Britain not only in foreign markets but also in Britain's home market. The result was that "for fifty years Britain's GDP grew very slowly relative to the more successful of the newer industrialised countries, who overtook her, one after another, in the volume of manufacturing production and in exports and finally in real income per head." [Op. Cit., p. xxvi] Indeed, "America's growth and productivity rates were higher when tariffs were steep than when they came down." [Larry Elliot and Dan Atkinson, Op. Cit., p. 277]

It is possible to explain almost everything that has ever happened in the world economy as evidence not of the failure of markets but rather of what happens when markets are not able to operate freely. Indeed, this is the right-libertarian position in a nut shell. However, it does seem strange that movements towards increased freedom for markets produce worse results than the old, more regulated, way. Similarly it seems strange that the country that embraced laissez-faire and free trade (Britain) did worse than those which embraced protectionism (USA, Germany, etc.).

It could always be argued that the protectionist countries had embraced free trade their economies would have done even better. This is, of course, a possibility -- if somewhat unlikely. After all, the argument for laissez-faire and free trade is that it benefits all parties, even if it is embraced unilaterally. That Britain obviously did not benefit suggests a flaw in the theory (and that no country has industrialised without protectionism suggests likewise). Unfortunately, free-market capitalist economics lends itself to a mind frame that ensures that nothing could happen in the real world that would could ever change its supporters minds about anything.

Free trade, it could be argued, benefits only those who have established themselves in the market -- that is, have market power. Thus Britain could initially benefit from free trade as it was the only industrialised nation (and even its early industrialisation cannot be divorced from its initial mercantilist policies). This position of strength allowed them to dominate and destroy possible competitors (as Kaldor points out, "[w]here the British succeeded in gaining free entry for its goods. . . it had disastrous effects on local manufactures and employment." [Op. Cit., p. xxvi]). This would revert the other country back towards agriculture, an industry with diminishing returns to scale (manufacturing, in contrast, has increasing returns) and ensure Britain's position of power.

The use of protection, however, sheltered the home industries of other countries and gave them the foothold required to compete with Britain. In addition, Britains continual adherence to free trade meant that a lot of new industries (such as chemical and electrical ones) could not be properly established. This combination contributed to free trade leading to stunted growth, in stark contrast to the arguments of neo-classical economics.

Of course, we will be accused of supporting protectionism by recounting these facts. That is not the case, as protectionism is used as a means of "proletarianising" a nation (as we discuss in section F.8). Rather we are presenting evidence to refute a claim that deregulated capitalism will lead to higher growth. Thus, we suggest, the history of "actually existing" capitalism indicates that Caplan's claim that deregulated capitalism will result "a high rate of economic progress" may be little more than an assumption. True, it is an assumption of neo-classical economics, but empirical evidence suggests that assumption is as unfounded as the rest of that theory.

Next we get to the meat of the defence of "anarcho"-capitalism:

"Now the anarcho-capitalist essentially turns the minarchist's own logic against him, and asks why the remaining functions of the state could not be turned over to the free market. And so, the anarcho-capitalist imagines that police services could be sold by freely competitive firms; that a court system would emerge to peacefully arbitrate disputes between firms; and that a sensible legal code could be developed through custom, precedent, and contract."

Indeed, the functions in question could certainly be turned over to the "free" market, as was done in certain areas of the US during the 19th century, e.g. the coal towns that were virtually owned by private coal companies. We have already discussed the negative impact of that experiment on the working class in section F.6.2. Our objection is not that such privatisation cannot be done, but that it is an error to call it a form of anarchism. In reality it is an extreme form of laissez-faire capitalism, which is the exact opposite of anarchism. The defence of private power by private police is hardly a move towards the end of authority, nor are collections of private states an example of anarchism.

Indeed, that "anarcho"-capitalism does not desire the end of the state, just a change in its form, can be seen from Caplan's own arguments. He states that "the remaining functions of the state" should be "turned over to the free market." Thus the state (and its functions, primarily the defence of capitalist property rights) is privatised and not, in fact, abolished. In effect, the "anarcho"-capitalist seeks to abolish the state by calling it something else.

Caplan:

"The anarcho-capitalist typically hails modern society's increasing reliance on private security guards, gated communities, arbitration and mediation, and other demonstrations of the free market's ability to supply the defensive and legal services normally assumed to be of necessity a government monopoly."

It is questionable that "modern society" as such has increased its reliance on "private security guards, gated communities" and so on. Rather, it is the wealthy who have increased their reliance on these forms of private defence. Indeed it is strange to hear a right-libertarian even use the term "society" as, according to that ideology, society does not exist! Perhaps the term "society" is used to hide the class nature of these developments? As for "gated communities" it is clear that their inhabitants would object if the rest of society gated themselves from them! But such is the logic of such developments -- but the gated communities want it both ways. They seek to exclude the rest of society from their communities while expected to be given access to that society. Needless to say, Caplan fails to see that liberty for the rich can mean oppression for the working class -- "we who belong to the proletaire class, property excommunicates us!" [Proudhon, What is Property?, p. 105]

That the law code of the state is being defended by private companies is hardly a step towards anarchy. This indicates exactly why an "anarcho"- capitalist system will be a collection of private states united around a common, capitalistic, and hierarchical law code. In addition, this system does not abolish the monopoly of government over society represented by the "general libertarian law code," nor the monopoly of power that owners have over their property and those who use it. The difference between public and private statism is that the boss can select which law enforcement agents will enforce his or her power.

The threat to freedom and justice for the working class is clear. The thug-like nature of many private security guards enforcing private power is well documented. For example, the beating of protesters by "private cops" is a common sight in anti-motorway campaigns or when animal right activists attempt to disrupt fox hunts. The shooting of strikers during strikes occurred during the peak period of American laissez-faire capitalism. However, as most forms of protest involve the violation of "absolute" property rights, the "justice" system under "anarcho"-capitalism would undoubtedly fine the victims of such attacks by private cops.

It is also interesting that the "anarcho"-capitalist "hails" what are actually symptoms of social breakdown under capitalism. With increasing wealth disparity, poverty, and chronic high unemployment, society is becoming polarised into those who can afford to live in secure, gated communities and those who cannot. The latter are increasingly marginalised in ghettos and poor neighbourhoods where drug-dealing, prostitution, and theft become main forms of livelihood, with gangs offering a feudalistic type of "protection" to those who join or pay tribute to them. Under "anarcho"-capitalism, the only change would be that drug-dealing and prostitution would be legalised and gangs could start calling themselves "defence companies."

Caplan:

"In his ideal society, these market alternatives to government services would take over all legitimate security services. One plausible market structure would involve individuals subscribing to one of a large number of competing police services; these police services would then set up contracts or networks for peacefully handling disputes between members of each others' agencies. Alternately, police services might be 'bundled' with housing services, just as landlords often bundle water and power with rental housing, and gardening and security are today provided to residents in gated communities and apartment complexes."

This is a scenario designed with the upper classes in mind and a few working class people, i.e. those with some property (for example, a house) -- sometimes labelled the "middle class". But under capitalism, the tendency toward capital concentration leads to increasing wealth polarisation, which means a shrinking "middle class" (i.e. working class with decent jobs and their own homes) and a growing "underclass" (i.e. working class people without a decent job). Ironically enough, America (with one of the most laissez-faire capitalist systems) is also the Western nation with the smallest "middle class" and wealth concentration has steadily increased since the 1970s. Thus the number of people who could afford to buy protection and "justice" from the best companies would continually decrease. For this reason there would be a growing number of people at the mercy of the rich and powerful, particularly when it comes to matters concerning employment, which is the main way in which the poor would be victimised by the rich and powerful (as is indeed the case now).

Of course, if landlords do "bundle" police services in their contracts this means that they are determining the monopoly of force over the property in question. Tenants would "consent" to the police force and the laws of the landlord in exactly the same way emigrants "consent" to the laws and government of, say, the USA when they move there. Rather than show the difference between statism and capitalism, Caplan has indicated their essential commonality. For the proletarian, property is but another form of state. For this reason anarchists would agree with Rousseau when he wrote that:

"That a rich and powerful man, having acquired immense possessions in lands, should impose laws on those who want to establish themselves there, and that he should only allow them to do so on condition that they accept his supreme authority and obey all his wishes; that, I can still conceive. But how can I conceive such a treaty, which presupposes anterior rights, could be the first foundation of law? Would not this tyrannical act contain a double usurpation: that on the ownership of the land and that on the liberty of the inhabitants?" [The Social Contract and Discourses, p. 285]

Caplan:

"The underlying idea is that contrary to popular belief, private police would have strong incentives to be peaceful and respect individual rights. For first of all, failure to peacefully arbitrate will yield to jointly destructive warfare, which will be bad for profits. Second, firms will want to develop long-term business relationships, and hence be willing to negotiate in good faith to insure their long-term profitability. And third, aggressive firms would be likely to attract only high-risk clients and thus suffer from extraordinarily high costs (a problem parallel to the well-known 'adverse selection problem' in e.g. medical insurance -- the problem being that high-risk people are especially likely to seek insurance, which drives up the price when riskiness is hard for the insurer to discern or if regulation requires a uniform price regardless of risk)."

The theory that "failure to peacefully arbitrate will yield to jointly destructive warfare, which will be bad for profits" can be faulted in two ways. Firstly, if warfare would be bad for profits, what is to stop a large "defence association" from ignoring a smaller one's claim? If warfare were "bad for business," it would be even worse for a small company without the capital to survive a conflict, which could give big "defence associations" the leverage to force compliance with their business interests. Price wars are often bad for business, but companies sometimes start them if they think they can win. Needless to say, demand would exist for such a service (unless you assume a transformation in the "human nature" generated by capitalism -- an unlikely situation and one "anarcho"-capitalists usually deny is required for their system to work). Secondly -- and this is equally, if not more, likely -- a "balance of power" method to stop warfare has little to recommend it from history. This can be seen from the First World War and feudal society.

What the "anarcho"-capitalist is describing is essentially a system of "industrial feudalism" wherein people contract for "protection" with armed gangs of their choice. Feudal societies have never been known to be peaceful, even though war is always "unprofitable" for one side or the other or both. The argument fails to consider that "defence companies," whether they be called police forces, paramilitaries or full-blown armies, tend to attract the "martial" type of authoritarian personality, and that this type of "macho" personality thrives on and finds its reason for existence in armed conflict and other forms of interpersonal violence and intimidation. Hence feudal society is continually wracked by battles between the forces of opposing warlords, because such conflicts allow the combatants a chance to "prove their manhood," vent their aggression, obtain honours and titles, advance in the ranks, obtain spoils, etc. The "anarcho" capitalist has given no reason why warfare among legalised gangs would not continue under industrial feudalism, except the extremely lame reason that it would not be profitable -- a reason that has never prevented war in any known feudal society.

It should be noted that the above is not an argument from "original sin." Feudal societies are characterised by conflict between opposing "protection agencies" not because of the innate depravity of human beings but because of a social structure based on private property and hierarchy, which brings out the latent capacities for violence, domination, greed, etc. that humans have by creating a financial incentive to be so. But this is not to say that a different social structure would not bring out latent capacities for much different qualities like sharing, peaceableness, and co-operation, which human beings also have. In fact, as Kropotkin argued in Mutual Aid and as recent anthropologists have confirmed in greater detail, ancient societies based on communal ownership of productive assets and little social hierarchy were basically peaceful, with no signs of warfare for thousands of years.

However, let us assume that such a competitive system does actually work as described. Caplan, in effect, argues that competition will generate co-operation. This is due to the nature of the market in question -- defence (and so peace) is dependent on firms working together as the commodity "peace" cannot be supplied by one firm. However, this co-operation does not, for some reason, become collusion between the firms in question. According to "anarcho"-capitalists this competitive system not only produces co-operation, it excludes "defence" firms making agreements to fix monopoly profits (i.e. co-operation that benefits the firms in question). Why does the market produce beneficial co-operation to everyone but not collusion for the firms in question? Collusion is when firms have "business relationships" and "negotiate in good faith" to insure their profitability by agreeing not to compete aggressively against each other in order to exploit the market. Obviously in "anarcho"-capitalism the firms in question only use their powers good!

Needless to say, the "anarcho"-capitalist will object and argue that competition will ensure that collusion will not occur. However, given that co-operation is required between all firms in order to provide the commodity "peace" this places the "anarcho"-capitalist in a bind. As Caplan notes, "aggressive" firms are "likely to attract only high-risk clients and thus suffer from extraordinarily high costs." From the perspective of the colluding firms, a new entry into their market is, by definition, aggressive. If the colluding firms do not co-operate with the new competitor, then it will suffer from "extraordinarily high costs" and either go out of business or join the co-operators. If the new entry could survive in the face of the colluding firms hostility then so could "bad" defence firms, ones that ignored the market standards.

So the "anarcho"-capitalist faces two options. Either an "aggressive" firm cannot survive or it can. If it cannot then the very reason why it cannot ensures that collusion is built into the market and while the system is peaceful it is based on an effective monopoly of colluding firms who charge monopoly profits. This, in effect, is a state under the "anarcho"-capitalist's definition as a property owner cannot freely select their own "protection" -- they are limited to the firms (and laws) provided by the co-operating firms. Or an "aggressive" firm can survive, violence is commonplace and chaos ensures.

Caplan's passing reference to the "adverse selection problem" in medical insurance suggests another problem with "anarcho"-capitalism. The problem is that high-risk people are especially likely to seek protection, which drives up the price for, as "anarcho"-capitalists themselves note, areas with high crime levels "will be bad for profits," as hardware and personnel costs will be correspondingly higher. This means that the price for "protection" in areas which need it most will be far higher than for areas which do not need it. As poor areas are generally more crime afflicted than rich areas, "anarcho"-capitalism may see vast sections of the population not able to afford "protection" (just as they may not be about to afford health care and other essential services). Indeed, "protection services" which try to provide cheap services to "high-risk" areas will be at an competitive disadvantage in relation to those who do not, as the "high-risk" areas will hurt profits and companies without "high-risk" "customers" could undercut those that have.

Caplan:

"Anarcho-capitalists generally give little credence to the view that their 'private police agencies' would be equivalent to today's Mafia -- the cost advantages of open, legitimate business would make 'criminal police' uncompetitive. (Moreover, they argue, the Mafia can only thrive in the artificial market niche created by the prohibition of alcohol, drugs, prostitution, gambling, and other victimless crimes. Mafia gangs might kill each other over turf, but liquor-store owners generally do not.)"

As we have pointed out in section F.6, the "Mafia" objection to "anarcho"-capitalist defence companies is a red herring. The biggest problem would not be "criminal police" but the fact that working people and tenants would subject to the rules, power and laws of the property owners, the rich would be able to buy better police protection and "justice" than the poor and that the "general" law code these companies would defend would be slanted towards the interests and power of the capitalist class (defending capitalist property rights and the proprietors power). And as we also noted, such a system has already been tried in 19th-century and early 20th America, with the result that the rich reduced the working class to a serf-like existence, capitalist production undermined independent producers (to the annoyance of individualist anarchists at the time), and the result was the emergence of the corporate America that "anarcho"-capitalists say they oppose.

Caplan argues that "liquor-store owners" do not generally kill each other over turf. This is true (but then again they do not have access to their own private cops currently so perhaps this could change). But the company owners who created their own private police forces and armies in America's past did allow their goons to attack and murder union organisers and strikers. Let us look at Henry Ford's Service Department (private police force) in action:

"In 1932 a hunger march of the unemployed was planned to march up to the gates of the Ford plant at Dearborn. . . The machine guns of the Dearborn police and the Ford Motor Company's Service Department killed [four] and wounded over a score of others. . . Ford was fundamentally and entirely opposed to trade unions. The idea of working men questioning his prerogatives as an owner was outrageous. . . [T]he River Rouge plant. . . was dominated by the autocratic regime of Bennett's service men. Bennett . . organise[d] and train[ed] the three and a half thousand private policemen employed by Ford. His task was to maintain discipline amongst the work force, protect Ford's property [and power], and prevent unionisation. . . Frank Murphy, the mayor of Detroit, claimed that 'Henry Ford employs some of the worst gangsters in our city.' The claim was well based. Ford's Service Department policed the gates of his plants, infiltrated emergent groups of union activists, posed as workers to spy on men on the line. . . Under this tyranny the Ford worker had no security, no rights. So much so that any information about the state of things within the plant could only be freely obtained from ex-Ford workers." [Huw Beynon, Working for Ford, pp. 29-30]

The private police attacked women workers handing out pro-union handbills and gave them "a serve beating." At Kansas and Dallas "similar beatings were handed out to the union men." [Op. Cit., p. 34] This use of private police to control the work force was not unique. General Motors "spent one million dollars on espionage, employing fourteen detective agencies and two hundred spies at one time [between 1933 and 1936]. The Pinkerton Detective Agency found anti-unionism its most lucrative activity." [Op. Cit., p. 32] We must also note that the Pinkerton's had been selling their private police services for decades before the 1930s. In the 1870s, they had infiltrated and destroyed the Molly Maguires (a secret organisation Irish miners had developed to fight the coal bosses). For over 60 years the Pinkerton Detective Agency had "specialised in providing spies, agent provocateurs, and private armed forces for employers combating labour organisations." By 1892 it "had provided its services for management in seventy major labour disputes, and its 2 000 active agents and 30 000 reserves totalled more than the standing army of the nation." [Jeremy Brecher, Strike!, p. 9 and p. 55] With this force available, little wonder unions found it so hard to survive in the USA. Given that unions could be considered as "defence" agencies for workers, this suggests a picture of how "anarcho"-capitalism may work in practice.

It could be argued that, in the end, the union was recognised by the Ford company. However, this occurred after the New Deal was in place (which helped the process), after years of illegal activity (by definition union activism on Ford property was an illegal act) and extremely militant strikes. Given that the union agreement occurred nearly 40 years after Ford was formed and in a legal situation violently at odds with "anarcho"-capitalism (or even minimal statist capitalism), we would be justified in wondering if unionisation would ever have occurred at Ford and if Ford's private police state would ever have been reformed.

Of course, from an "anarcho"-capitalist perspective the only limitation in the Ford workers' liberty was the fact they had to pay taxes to the US government. The regime at Ford could not restrict their liberty as no one forced them to work for the company. Needless to say, an "anarcho"-capitalist would reject out of hand the argument that no-one forced the citizen to entry or remain in the USA and so they consented to taxation, the government's laws and so on.

This is more than a history lesson. Such private police forces are on the rise again (see "Armed and Dangerous: Private Police on the March" by Mike Zielinski, Covert Action Quarterly, no. 54, Fall, 1995 for example). This system of private police (as demonstrated by Ford) is just one of the hidden aspects of Caplan's comment that the "anarcho"-capitalist "typically hails modern society's increasing reliance on private security guards. . . and other demonstrations of the free market's ability to supply the defensive and legal services normally assumed to be of necessity a government monopoly."

Needless to say, private police states are not a step forward in anarchist eyes.

Caplan:

"Unlike some left-anarchists, the anarcho-capitalist has no objection to punishing criminals; and he finds the former's claim that punishment does not deter crime to be the height of naivete. Traditional punishment might be meted out after a conviction by a neutral arbitrator; or a system of monetary restitution (probably in conjunction with a prison factory system) might exist instead."

Let us note first that in disputes between the capitalist class and the working class, there would be no "neutral arbitrator," because the rich would either own the arbitration company or influence/control it through the power of the purse (see section F.6). In addition, "successful" arbitrators would also be wealthy, therefore making neutrality even more unlikely. Moreover, given that the laws the "neutral arbitrator" would be using are based on capitalist property rights, the powers and privileges of the owner are built into the system from the start.

Second, the left-libertarian critique of punishment does not rest, as "anarcho"-capitalists claim, on the naive view that intimidation and coercion aren't effective in controlling behaviour. Rather, it rests on the premise that capitalist societies produce large numbers of criminals, whereas societies based on equality and community ownership of productive assets do not.

The argument for this is that societies based on private property and hierarchy inevitably lead to a huge gap between the haves and the have-nots, with the latter sunk in poverty, alienation, resentment, anger, and hopelessness, while at the same time such societies promote greed, ambition, ruthlessness, deceit, and other aspects of competitive individualism that destroy communal values like sharing, co-operation, and mutual aid. Thus in capitalist societies, the vast majority of "crime" turns out to be so-called "crimes against property," which can be traced to poverty and the grossly unfair distribution of wealth. Where the top one percent of the population controls more wealth than the bottom 90 percent combined, it is no wonder that a considerable number of those on the bottom should try to recoup illegally some of the mal-distributed wealth they cannot obtain legally. (In this they are encouraged by the bad example of the ruling class, whose parasitic ways of making a living would be classified as criminal if the mechanisms for defining "criminal behaviour" were not controlled by the ruling class itself.) And most of the remaining "crimes against persons" can be traced to the alienation, dehumanisation, frustration, rage, and other negative emotions produced by the inhumane and unjust economic system.

Thus it is only in our societies like ours, with their wholesale manufacture of many different kinds of criminals, that punishment appears to be the only possible way to discourage "crime." From the left-libertarian perspective, however, the punitive approach is a band-aid measure that does not get to the real root of the problem -- a problem that lies in the structure of the system itself. The real solution is the creation of a non-hierarchical society based on communal ownership of productive assets, which, by eliminating poverty and the other negative effects of capitalism, would greatly reduce the incidence of criminal behaviour and so the need for punitive countermeasures.

Finally, two more points on private prisons. Firstly, as to the desirability of a "prison factory system," we will merely note that, given the capitalist principle of "grow-or-die," if punishing crime becomes a business, one can be sure that those who profit from it will find ways to ensure that the "criminal" population keeps expanding at a rate sufficient to maintain a high rate of profit and growth. After all, the logic of a "prison factory system" is self-defeating. If the aim of prison is to deter crime (as some claim) and if a private prison system will meet that aim, then a successful private prison system will stop crime, which, in turn, will put them out of business! Thus a "prison factory system" cannot aim to be efficient (i.e. stop crime).

Secondly, Caplan does not mention the effect of prison labour on the wages, job conditions and market position of workers. Having a sizeable proportion of the working population labouring in prison would have a serious impact on the bargaining power of workers. How could workers outside of prison compete with such a regime of labour discipline without submitting to prison-like conditions themselves? Unsurprisingly, US history again presents some insight into this. As Noam Chomsky notes, the "rapid industrial development in the southeastern region [of America] a century ago was based on (Black) convict labour, leased to the highest bidder." Chomsky quotes expert Alex Lichtenstein comments that Southern Industrialists pointed out that convict labour was "more reliable and productive than free labour" and that it overcomes the problem of labour turnover and instability. It also "remove[d] all danger and cost of strikes" and that it lowers wages for "free labour" (i.e. wage labour). The US Bureau of Labor reported that "mine owners [in Alabama] say they could not work at a profit without the lowering effect in wages of convict-labour competition." [The Umbrella of US Power, p. 32] v Needless to say, Caplan fails to mention this aspect of "anarcho"-capitalism (just as he fails to mention the example of Ford's private police state). Perhaps an "anarcho"-capitalist will say that prison labour will be less productive than wage labour and so workers have little to fear, but this makes little sense. If wage labour is more productive then prison labour will not find a market (and then what for the prisoners? Will profit-maximising companies really invest in an industry with such high over-heads as maintaining prisoners for free?). Thus it seems more than likely that any "prison-factory system" will be as productive as the surrounding wage-labour ones, thus forcing down their wages and the conditions of labour. For capitalists this would be ideal, however for the vast majority a different conclusion must be drawn.

Caplan:

"Probably the main division between the anarcho-capitalists stems from the apparent differences between Rothbard's natural-law anarchism, and David Friedman's more economistic approach. Rothbard puts more emphasis on the need for a generally recognised libertarian legal code (which he thinks could be developed fairly easily by purification of the Anglo-American common law), whereas Friedman focuses more intently on the possibility of plural legal systems co-existing and responding to the consumer demands of different elements of the population. The difference, however, is probably overstated. Rothbard believes that it is legitimate for consumer demand to determine the philosophically neutral content of the law, such as legal procedure, as well as technical issues of property right definition such as water law, mining law, etc. And Friedman admits that 'focal points' including prevalent norms are likely to circumscribe and somewhat standardise the menu of available legal codes."

Moreover, given that the law code exists to protect capitalist property rights, how can it be "philosophically neutral" with that basis? How would "competing" property frameworks co-exist? If a defence agency allowed squatting and another (hired by the property owner) did not, there is no way (bar force) a conflict could be resolved. Then the firm with the most resources would win. "Anarcho"-capitalism, in effect, smuggles into the foundation of their system a distinctly non-neutral philosophy, namely capitalism. Those who reject such a basis may end up sharing the fate of tribal peoples who rejected that system of property rights, for example, the Native Americans.

In other words, in terms of outcome the whole system would favour capitalist values and so not be "philosophically neutral. The law would be favourable to employers rather than workers, manufacturers rather than consumers, and landlords rather than tenants. Indeed, from the "anarcho"-capitalist perspective the rules that benefit employers, landlords and manufacturers (as passed by progressive legislatures or enforced by direct action) simply define liberty and property rights whereas the rules that benefit workers, tenants and consumers are simply an interference with liberty. The rules one likes, in other words, are the foundations of sacred property rights (and so "liberty," as least for the capitalist and landlord), those one does not like are meddlesome regulation. This is a very handy trick and would not be worth mentioning if it was not so commonplace in right-libertarian theory.

We should leave aside the fantasy that the law under "anarcho"-capitalism is a politically neutral set of universal rules deduced from particular cases and free from a particular instrumental or class agenda.

Caplan:

"Critics of anarcho-capitalism sometimes assume that communal or worker-owned firms would be penalised or prohibited in an anarcho-capitalist society. It would be more accurate to state that while individuals would be free to voluntarily form communitarian organisations, the anarcho-capitalist simply doubts that they would be widespread or prevalent."

There is good reason for this doubt. Worker co-operatives would not be widespread or prevalent in an "anarcho"-capitalist society for the same reason that they are not widespread or prevalent now: namely, that the socio-economic, legal, and political systems would be structured in such as way as to automatically discourage their growth.

As we explain in more detail in J.5.12, the reason why there are not more producer co-operatives is structural, based on the fact that co-operatives have a tendency to grow at a slower rate than capitalist firms. This is a good thing if one's primary concern is, say, protecting the environment, but fatal if one is trying to survive in a competitive capitalist environment.

Under capitalism, successful competition for profits is the fundamental fact of economic survival. This means that banks and private investors seeking the highest returns on their investments will favour those companies that grow the fastest. Under such conditions, capitalist firms will attract more investment capital, allowing them to buy more productivity-enhancing technology and thus to sell their products more cheaply than co-operatives. Hence there will be pressure on the co-operatives to compete more effectively by adopting the same cost-cutting and profit-enhancing measures as capitalist firms. Such measures will include the deskilling of workers; squeezing as much "productivity" as is humanly possible from them; and a system of pay differentials in which the majority of workers receive low wages while the bulk of profits are reinvested in technology upgrades and other capital expansion that keeps pace with capitalist firms. But this means that in a capitalist environment, there tend to be few practical advantages for workers in collective ownership of the firms in which they work.

This problem can only be solved by eliminating private property and the coercive statist mechanisms required to protect it (including private states masquerading as "protection companies"), because this is the only way to eliminate competition for profits as the driving force of economic activity. In a libertarian socialist environment, federated associations of workers in co-operative enterprises would co-ordinate production for use rather than profit, thus eliminating the competitive basis of the economy and so also the "grow-or-die" principle which now puts co-operatives at a fatal economic disadvantage. (For more on how such an economy would be organised and operated, as well as answers to objections, see section I.)

And let us not forget what is implied by Caplan's statement that the "anarcho"-capitalist does not think that co-operative holding of "property" "would be widespread or prevalent." It means that the vast majority would be subject to the power, authority and laws of the property owner and so would not govern themselves. In other words, it would a system of private statism rather than anarchy.

Caplan:

"However, in theory an 'anarcho-capitalist' society might be filled with nothing but communes or worker-owned firms, so long as these associations were formed voluntarily (i.e., individuals joined voluntarily and capital was obtained with the consent of the owners) and individuals retained the right to exit and set up corporations or other profit-making, individualistic firms."

It's interesting that the "anarcho"-capitalists are willing to allow workers to set up "voluntary" co-operatives so long as the conditions are retained which ensure that such co-operatives will have difficulty surviving (i.e. private property and private states), but they are unwilling to allow workers to set up co-operatives under conditions that would ensure their success (i.e. the absence of private property and private states). This reflects the usual vacuousness of the right-libertarian concepts of "freedom" and "voluntarism."

In other words, these worker-owned firms would exist in and be subject to the same capitalist "general libertarian law code" and work in the same capitalist market as the rest of society. So, not only are these co-operatives subject to capitalist market forces, they exist and operate in a society defined by capitalist laws. As discussed in section F.2, such disregard for the social context of human action shows up the "anarcho" capitalist's disregard for meaningful liberty.

All Caplan is arguing here is that as long as people remain within the (capitalist) "law code," they can do whatever they like. However, what determines the amount of coercion required in a society is the extent to which people are willing to accept the rules imposed on them. This is as true of an "anarcho"-capitalist society as it is of any other. In other words, if more and more people reject the basic assumptions of capitalism, the more coercion against anarchistic tendencies will be required. Saying that people would be free to experiment under "anarcho"-capitalist law (if they can afford it, of course) does not address the issue of changes in social awareness (caused, by example, by class struggle) which can make such "laws" redundant. So, when all is said and done, "anarcho"-capitalism just states that as long as you accept their rules, you are free to do what you like.

How generous of them!

Needless to say, Caplan like most (if not all) "anarcho"-capitalists assume that the current property owners are entitled to their property. However, as John Stuart Mill pointed out over 100 years ago, the "social arrangements" existing today "commenced from a distribution of property which was the result, not of a just partition, or acquisition by industry, but of conquest and violence . . . [and] the system still retains many and large traces of its origin." [Principles of Political Economy, p. 15] Given that (as we point out in section F.2.3) Murray Rothbard argues that the state cannot be claimed to own its territory simply because it did not acquire its property in a "just" manner, this suggests that "anarcho"-capitalism cannot actually argue against the state. After all, property owners today cannot be said to have received their property "justly" and if they are entitled to it so is the state to its "property"!

But as is so often the case, property owners are exempt from the analysis the state is subjected to by "anarcho"-capitalists. The state and property owners may do the same thing (such as ban freedom of speech and association or regulate individual behaviour) but only the state is condemned by "anarcho"-capitalism.

Caplan:

"On other issues, the anarcho-capitalist differs little if at all from the more moderate libertarian. Services should be privatised and opened to free competition; regulation of personal AND economic behaviour should be done away with."

Moreover, regardless of "anarcho"-capitalist claims, they do not, in fact, support civil liberties or oppose "regulation" of personal behaviour as such. Rather, they support property owners suppressing civil liberties on their property and the regulation of personal behaviour by employers and landlords. This they argue is a valid expression of property rights. Indeed, any attempts to allow workers civil liberties or restrict employers demands on workers by state or union action is denounced as a violation of "liberty" (i.e. the power of the property owner). Those subject to the denial of civil liberties or the regulation of their personal behaviour by landlords or employees can "love it or leave it." Of course, the same can be said to any objector to state oppression -- and frequently is. This denial of civil liberties can be seen from these words by Murray Rothbard:

"[I]n the profoundest sense there are no rights but property rights . . . Freedom of speech is supposed to mean the right of everyone to say whatever he likes. But the neglected question is: Where? Where does a man have this right? He certainly does not have it on property on which he is trespassing. In short, he has this right only either on his own property or on the property of someone who has agreed, as a gift or in a rental contract, to allow him in the premises. In fact, then, there is no such thing as a separate 'right to free speech'; there is only a man's property right: the right to do as he wills with his own or to make voluntary agreements with other property owners." [Murray Rothbard, Power and Market, p. 176]

Of course, Rothbard fails to see that for the property-less such a regime implies no rights whatsoever. It also means the effective end of free speech and free association as the property owner can censor those on their property (such as workers or tenants) and ban their organisations (such as unions). Of course, in his example Rothbard looks at the "trespasser," not the wage worker or the tenant (two far more common examples in any modern society). Rothbard is proposing the dictatorship of the property owner and the end of civil liberties and equal rights (as property is unequally distributed). He gives this utter denial of liberty an Orwellian twist by proclaiming the end of civil liberties by property rights as "a new liberty." Perhaps for the property-owner, but not the wage worker -- "We who belong to the proletaire class, property excommunicates us!" [Proudhon, What is Property?, p. 137]

In effect, right-Libertarians do not care how many restrictions are placed on you as long as it is not the government doing it. Of course it will be claimed that workers and tenants "consent" to these controls (although they reject the notion that citizens "consent" to government controls by not leaving their state). Here the libertarian case is so disingenuous as to be offensive. There is no symmetry in the situations facing workers and firms. To the worker, the loss of a job is often far more of a threat than the loss of one worker is to the firm. The reality of economic power leads people to contract into situations that, although they are indeed the "best" arrangements of those available, are nonetheless miserable. In any real economy -- and, remember, the right-libertarian economy lacks any social safety net, making workers' positions more insecure than now -- the right-libertarian denial of economic power is a delusion.

Unlike anarchist theory, right-libertarian theory provides no rationale to protest private power (or even state power if we accept the notion that the state owns its territory). Relations of domination and subjection are valid expressions of liberty in their system and, perversely, attempts to resist authority (by strikes, unions, resistance) are deemed "initiations of force" upon the oppressor! In contrast, anarchist theory provides a strong rationale for resisting private and public domination. Such domination violates freedom and any free association which dominates any within it violates the basis of that association in self-assumed obligation (see section A.2.11). Thus Proudhon:

"The social contract should increase the well-being and liberty of every citizen. -- If any one-sided conditions should slip in; if one part of the citizens should find themselves, by the contract, subordinated and exploited by others, it would no longer be a contract; it would be a fraud, against which annulment might at any time by invoked justly." [The General Idea of the Revolution, p. 114]

Caplan's claim that right libertarians oppose regulation of individual behaviour is simply not true. They just oppose state regulation while supporting private regulation wholeheartedly. Anarchists, in contrast, reject both public and private domination.

Caplan:

"Poverty would be handled by work and responsibility for those able to care for themselves, and voluntary charity for those who cannot. (Libertarians hasten to add that a deregulated economy would greatly increase the economic opportunities of the poor, and elimination of taxation would lead to a large increase in charitable giving.)"

In addition, the claims that a "deregulated economy" would benefit the poor do not have much empirical evidence to back them up. If we look at the last quarter of the twentieth century we discover that a more deregulated economy has lead to massive increases in inequality and poverty. If a movement towards a deregulated economy has had the opposite effect than that predicted by Caplan, why should a totally deregulated economy have the opposite effect. It is a bit like claiming that while adding black paint to grey makes it more black, adding the whole tin will make it white!

The reason for increased inequality and poverty as a result of increased deregulation is simple. A "free exchange" between two people will benefit the stronger party. This is obvious as the economy is marked by power, regardless of "anarcho"-capitalist claims, and any "free exchange" will reflect difference in power. Moreover, a series of such exchanges will have an accumulative effect, with the results of previous exchanges bolstering the position of the stronger party in the current exchange.

Moreover, the claim that removing taxation will increase donations to charity is someone strange. We doubt that the rich who object to money being taken from them to pay for welfare will increase the amount of money they give to others if taxation was abolished. As Peter Sabatini points out, "anarcho"-capitalists "constantly rant and shriek about how the government, or the rabble, hinders their Lockean right to amass capital." [Social Anarchism, no. 23, p.101] Caplan seems to expect them to turn over a new leaf and give more to that same rabble!