Propertarian Podcast #007 Market Fascism

Intro Music: Tri-Tachyon  Enter the Tesla Machine


It’s an article of faith among many libertarians that violence, and particularly aggressive violence, is necessarily negative sum.

Prices contain information and markets broker them (in a subjective utility maximising way.) Violence only short circuits that, disrupts markets, destroy price signals, and makes everyone worse off.

But this is not correct.

In the first place, market transactions aren’t necessarily positive sum. If they are fraudulent or create negative externalities for those not party, they can be negative sum.

And in the second place, violence is itself a signal, and transmits information. A threat expresses a subjective evaluation just as an offer does in the marketplace. “Hey, don’t do that or we’re going to fight.”

And the initiation of hostilities demonstrates the authenticity of that information just as a payment does in the marketplace. One undertakes real cost, and real risk, in resorting to violence.

(In contrast, whining, and playing the victim DO NOT demonstrate the authenticity of grievances in the way that resorting to violence does, and so are liable and likely to prove negative sum, if indulged, just as theft is liable and likely to prove negative sum, in the marketplace, because it does not make a sufficient demonstration and exchange of value.)

Markets and prices on the one hand, and violence and threats on the other, are both necessary components to a stable, functional, and efficient society and economy. To suppress either wholly in favor of the other, would be to forego the benefits they offer, and to pervert incentives towards destructive outcomes.

No society which does either will be able to compete, long term, against one which makes a more sensible tradeoff between them, making best use of information supplied by both exchange and conflict.

Violence is the means of expressing the subjective evaluations not captured by price signals, which are as vast and varied as those which are.

I like markets and shit, suitably tempered by prohibition on what is demonstrably harmful.

Offers and prices are the way of communicating positive values in the marketplace, with payment the authentication made that such communication is accurate.

Threats are the means of communicating negative values in the marketplace with initiation of violent hostilities the authentication that such communication is accurate.

Prices may be reckoned in money, or in blood.

But either way, decentralized methods of decision making are generally best, with authority only better in select cases, and those too, vetted and delimited by decentralized means.

Realistically, you have more power to get your way if there is only one leader. If there are multiple candidates, one of them might try to win your support by offering you something you want. Or you might be able to influence the coalition backing a particular candidate in some way. But there is no guarantee your candidate will win, and if not, you are SOL.

A king has to choose whether to give you enough to obtain your support, threaten enough to obtain your submission, or simply kill you. But in the latter cases, he must still give enough people, enough things, that they are willing to threaten or kill you on his behalf. And he is also forgoing more benefits by obtaining your submission rather than your support or your death rather than your submission.

It is within your power to make your support (including the cost of what you ask for it) worth more than your submission, and your submission worth more than your death. And so, if you are wise, and the king is wise, he will prefer to offer enough to obtain the first.

If the king is unwise, then you can fight. And others will rally to your cause if your claimant seems wiser.

Ending democracy, ipso facto, is a step in the right direction. Democracies have shitty incentives (Hoppe.) But even more damaging in the long term, democracies breed shitty people because democracies are vote farms and (if all votes count the same) the most economical way to farm votes is to breed dependent parasites.

Lysander Spooner said “a ballot either signifies a bullet, or it signifies nothing.” But a bullet is more honest.

All states require the voluntary consent and support of enough individuals and groups to compel the submission of the remainder.

And the coalition that performs this function always arises by negotiation and exchange (you want this benefit, or that, to participate in our coalition? Well, we want these concessions in return.)

Democracies actually set a fairly low bar for popular support at 51%. And a democracy will never be ruled by a coalition much larger than 51%. If you’re getting more than 51% of the vote, you’re leaving rents on the table. You could take more, or give less, and still win the election.

Additionally, if your aim is to maximise the profitability of an electoral victory, in terms of rents extracted, you will build your coalition of the cheapest votes, the most worthless and parasitic individuals.

A rich man’s vote is expensive, you have to not take most of his stuff. But if you do, you can buy many votes.

As the 51% feed on the productive, their numbers will grow. That’s what happens when you feed parasites. But as we said, you don’t want to win more than 51% of the vote. So the ruling coalition in a democracy is always in the position of being able to give its most productive members the boot and throw them to the wolves, to begin consuming them in turn. This is why democracies always become weaker and more parasitic, why “Cthulu only swims left” and we can observe, in every democratic polity, a persistent “ratchet effect.”

In contrast, a wise authoritarian will begin building his coalition of supporters with the best. And while he need not attract 51% support to maintain his rule, there is no reason to stop there.

Support is generally less costly and more profitable than submission.

So a sensible authoritarian will continue bargaining for support until there is no one left in need of compulsion except those who have nothing to offer which is worth what they demand in exchange for peaceful cooperation, whose demands are too costly or unreasonable to merit entertaining; in short, people who probably should be coerced.

So in summation, I do expect authoritarian regimes, on the whole, to be more friendly to liberty than democratic ones.

And this expectation is borne out by an examination of historical monarchies, especially European ones.

The allegation is often made (by libertarian anarchists) that what states do is fundamentally incalculable, but that it is always negative sum. In other words, we cannot know the absolute value of any state or state policy, but we can be certain about its sign.

Voluntary trades in the marketplace – as the argument goes – are always mutually beneficial (else they wouldn’t occur) and positive sum.

State policies differ in requiring coercion. If they did not require coercion, they could occur in the marketplace. But if they do, then someone is losing out, so there is no way to be sure they represent a net gain. Without the mechanism of voluntary exchange, the information transmitted by prices in a marketplace are absent and no calculation is possible. In all likelihood they represent a net loss, certainly a loss relative to the opportunity cost of the purely voluntary marketplace foregone.

But it doesn’t seem that states ever would have become ubiquitous or persistent if this were true. Empirically, state-ridden peoples have proven competitive against stateless ones. If error and parasitism were the whole story, they would not be. States, after all, are in constant conflict and competition with one another and with alternatives (or at least they were at one time.)

However, the argument is incomplete and therefore incorrect.

We can reasonably expect voluntary, fully-informed, exchanges – free of externality – to be Pareto improvements. (They make someone better off and no one worse off.)

But in the first place, market transactions don’t always live up to this standard, because they are not necessarily fully informed nor free of externality.

And in the second place, some of the things states do might; because they are of the nature of voluntary exchanges.

An individual exchanges the sum total of costs a state imposes (on them) for the sum total of benefits it offers (to them) every time they voluntarily choose not to move to the jurisdiction of another state. (And these exchanges can be made more precisely calculable by reducing the exit costs and increasing the number and variety of states on offer.)

Furthermore, all states require the voluntary consent of at least enough individuals and groups to successfully compel the submission of the remainder. And the coalition that arises to perform this function arises by a process of reciprocal exchange (You want such and such a boon to participate in our coalition? Well we want this concession and that from you in exchange.)

In brokering these exchanges, a Monarchy offers several advantages over a democratically elected government.

A democracy will be inherently and irreparably susceptible to negative-sum corruption because of the problem of concentrated benefits and dispersed costs. A policy which benefits 1,000 people $10,000 each may be politically profitable even if it costs a million people $100 each. The concentrated interest will be relatively less hampered by information costs and coordination problems. So it will be able to muster more votes and resources in defense of the policy than those harmed will be able to muster against it, though the harm be much greater.

Nothing would stop anyone from proposing such a policy to a king. And a king could get away with implementing it. But a king, who owns his realm and title, as well as its capital value, would not benefit from doing so. The future revenue he could expect to derive from his realm and subjects would decline as a result. And so his incentive would be to veto such proposals.

Furthermore, in a majority democracy, if your ruling coalition encompasses more than 51 percent of voters, it’s leaving rents on the table. If you’re getting, say, 70 percent of the vote, that simply means you’re delivering more value than you need to and failing to extract as much as you could. You could take a little more and give a little less without losing the election. So in a democracy, we can expect the ruling coalition at any given time to consist of about 51% of voters (and those the worst 51%) and that does indeed seem to be what we see.

But conflict and compulsion, though inevitable and irresolvable under democracy, are costly and actually largely unnecessary. So we can expect a wise monarch to start building his coalition of supporters with the best and keep working his way down the list until the only people that remain in need of compulsion are those who have nothing to offer which is worth what they demand in exchange for voluntary cooperation: in short, people who probably should be coerced.