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Anthony de Jasay on the free rider problem (2008)

Anthony de Jasay (1925-) believes that the presence of large benefits to free riders at the expense of others (the suckers) is the basic reason why society has so many examples of “non-contractual social co-ordination” or coercion:

In the last analysis, all arm’s-length social coexistence and cooperation that is not exchange under contract carries within itself an element of potential abuse by free riding. This is so because when benefits are not contractually tied to contributions both contributors and non-contributors have access to the benefit. The free rider can appropriate some part of it by taking advantage of others (the suckers) who would rather produce the benefit and share it with the free rider than go without it altogether. It tells something of the human condition that room for free riding, and the “strategies” that give access to it, turns out to provide the most basic explanation of the general principles of non-contractual social co-ordination. Our organization is what it is because the opportunities for free riding, offered by the provision of public goods, are what they are.

In the last analysis, all arm’s-length social coexistence and cooperation that is not exchange under contract carries within itself an element of potential abuse by free riding. This is so because when benefits are not contractually tied to contributions both contributors and non-contributors have access to the benefit. The free rider can appropriate some part of it by taking advantage of others (the suckers) who would rather produce the benefit and share it with the free rider than go without it altogether. It tells something of the human condition that room for free riding, and the “strategies” that give access to it, turns out to provide the most basic explanation of the general principles of non-contractual social co-ordination. Our organization is what it is because the opportunities for free riding, offered by the provision of public goods, are what they are.

In the state of nature, a person’s decision to ride free is essentially a utility-maximizing “gamble” on the probability of everybody else’s voluntary decisions to contribute or to ride free, jointly producing the outcome which makes free riding by the person concerned feasible. The outcome, whatever it is, is blatantly “unfair” in the sense of conforming to no rhyme or reason in terms of the relation between contributions and benefits. Yet it has the singularly interesting feature, which is far from devoid of significance in another sense of “fairness,” that it is consistent with public-goods provision by wholly voluntary contributions: it relies on no command-obedience brought about by the surrender of individual to social choice.

The social contract, which makes contributions to public provision mandatory, is nothing more exalted than an anti-free-rider device. It is an attempt at putting right the unfairness of a voluntary system where contributions would be made by those who wanted to insure against public provision failing if too few contributed to it, and free rides enjoyed by those who got away with running the risk of failure and exploited the prudence of others. But while the intent of the social contract is to suppress free riding, its actual effect is to open up an altogether new ground on which it thrives with impunity. For the deterrent to state-of-nature free riding is the falling probability of successful public provision of a good as abuse of it by free riding increases. When the necessary contributions for successful public provision are assured by coercion, no such check operates and free riding is never too risky. Risk, in fact, enters people’s calculations with the opposite sign: from a check upon free riding it turns into its spur.

All must now try and wrest free-rider benefits through the social-choice process, for if some do not others would presumably get away with securing bigger ones at their expense. Must pull who do not want to be pulled. Free-rider behavior thus becomes preventive and defensive, a matter of prudence. Incremental public-goods provision little by little drives out contractual exchanges and the state tends to become “maximal,” without this result being “chosen” in any proper sense of the word, and without anybody in particular being noticeably pleased by it.

About this Quotation:

Jasay takes a game theoretic approach to studying the problem of the free rider and comes to some very interesting but rather depressing conclusions. At the heart of his political and economic theory lies the idea that free societies are fully capably of supplying what are called “public goods” through voluntary cooperation and exchange. This being so, the question then arises why societies have not evolved to the point where these goods are in fact provided by the free market; why have all modern societies gone down the route towards increasing state provisions of “pubic goods”, starting with the old standards of roads, money, and police, but now including health, education, and welfare as well. His answer is the popularity of the idea of a social contract which had as one of its original motivations the forcible inclusion of all individuals in the pool of taxpayers who would fund these services, and thus “suppress free riding.” However, an unintended and unplanned consequence of this original motive was to create political institutions where there are no or inadequate checks or balances to prevent the abuse of free riding. Since anyone can enjoy the benefits of using political coercion to free ride, everybody does so in order to prevent others from doing this first, a kind of “preventive and defensive” free riding. The end result of this process is the modern welfare state where there seems to be no end in sight to the free rider problem.

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