Liberty Matters

Comment on Roderick T. Long on Gustave de Molinari


Molinari’s 19th century defense of anarcho-capitalism deals with some, but not all, of the objections familiar to its modern defenders. He considers the risk of a cartel of protection agencies and argues that the customers would respond by revolting against them, as the French revolted against the Ancien Regime.[1] It is not an entirely persuasive response—there have been lots of tyrannies that were not overthrown—but it is a response. He considers the problem of national defense and argues that the agencies would cooperate to provide it in their mutual interest—ignoring the free-rider problem due to the public-good nature of defense.
He does not, however, consider one problem routinely raised by critics of anarchy, from Rand on down—conflicts between agencies. If I think the customer of another agency has violated my rights and he denies it, how, other than by violent conflict between the agencies, is the dispute to be settled?
The response that some modern anarcho-capitalists would offer is that all agencies would agree on a common legal system, deducible by reason, and accept the verdicts of private courts judging according to that system. Molinari, however, writes that “The sense of justice seems to be the perquisite of only a few eminent and exceptional temperaments,”[2] and later, discussing the alternative of monopoly provision of justice in a democracy, appears skeptical of the view that “human reason has the power to discover the best laws … ,”[3] so it does not look as though that answer is available to him. An alternative, and in my view more plausible, response is that each pair of agencies, in order to avoid the costs and uncertainty of violent conflict, will agree on a private court to settle their disputes, bargaining on the basis of what legal rules they believe will make the product they produce most attractive to their customers. The agreement will then be enforced by the discipline of repeat dealing, each agency knowing that if it refuses to accept verdicts that go against its customers, the other will do the same.[4] That solution does not seem to have occurred to Molinari, possibly because the problem did not occur to him.
A more serious weakness in his defense of replacing monopoly government with competition is that much of it depends on arguments that appear logical only if you do not think very hard about them. Thus, for instance, he writes:
Either communism is better than freedom, and in that case all industries should be organized in common, in the State or in the commune. Or freedom is preferable to communism, and in that case all industries still organized in common should be made free, including justice and police….[5]
Which sounds fine as rhetoric, but makes very little sense. One could as easily argue that either all metal is heavier than all wood or all wood is heavier than all metal—neither of which happens to be the case. Part of the problem is Molinari’s understandable ignorance of economic ideas not yet invented when he was writing, ideas that help explain why some activities are or are not better suited to market production than others. He is left making the best arguments he can, but they are not always very good ones.
In summary, most of what anarcho-capitalists have learned in the century and a half since Molinari wrote is what economists more generally have learned. We are better able to distinguish good arguments against our position—national defense really is a public good, and so presents problems for a pure market society—from bad ones, and better able to offer good arguments, largely from Public Choice theory, against the alternative.
A feature of Molinari’s thinking that I found intriguing because of the parallel with modern libertarian thought is the idea that increased mobility could provide a solution to the faults of existing institutions. In his case that meant labor exchanges taking advantage of new technology—the railroad to move people and the telegraph to move information. For us it means the Internet, usually seen as a solution to problems not of employers, Molinari’s concern, but of governments. It is true, as Roderick points out, that even if information is mobile, individual workers often are not—while telecommuting has made one part of Molinari’s solution more practical than he imagined, geographical ties are still a constraint for those with real-space jobs. But even the real-space employee can use the Internet to reduce the geographical specificity of the rest of his life; if most of your social life occurs online, you can move to any job without abandoning your network of friends and acquaintances. That makes Molinari’s solution to his problem more viable for us than for him, as well as increasing the degree to which governments must compete for citizens.
The part of Roderick’s piece that I found least convincing was his criticism of Molinari for failing to consider worker control of industry as a solution to the problem of unequal power between employer and employee. Roderick refers to legal barriers to worker control but does not, at least in this essay, actually mention any. As best I can tell, in modern capitalist societies, there is nothing to prevent workers from starting their own firms or buying out the stock of the firms they currently work for—as I pointed out some 40 years ago, income is sufficiently large relative to capital to make either, in many cases, a practical alternative.[6] Worker-owned firms exist but are uncommon, save in industries such as law where the ordinary corporate form is legally forbidden[7] — the opposite of the pattern one would expect if they were really a superior form of economic organization.
One explanation is risk aversion—in a worker-owned firm both the physical capital and the human capital of the owners are linked to a particular firm in a particular industry, making changes in the value of both highly correlated. Other explanations involve problems of organization and incentives; worker democracy within a firm has many of the same problems as political democracy. Arguably the ideal form of government is competitive dictatorship, the way in which restaurants are currently governed—I have no vote on what is on the menu, an absolute vote on what restaurant I choose to eat at. It is also the way in which traditional employment is organized, competing for workers rather than customers.
I end by offering some evidence for Roderick’s description of Molinari’s writing as “clear, engaging, and witty. Here is one of my favorite passages, from the Soirées, an imaginary exchange between a socialist, a conservative, and an economist—the latter obviously Molinari. The subject is eminent domain:
THE ECONOMIST … An owner can have his property confiscated under the law of expropriation for reasons of public utility. THE CONSERVATIVE What? Do you wish to abolish that tutelary law without which no undertaking on the grounds of public utility would be possible?…THE ECONOMIST Oh, and is not a farm which produces food for everybody not an undertaking also useful to all? Is not the need to eat at the very least as universal and necessary as the need to travel?…THE CONSERVATIVE … The development of a railway is subject to certain natural exigencies; the slightest deviation in the route, for example, can entail a large increase in costs. Who will pay for this increase? The public. Well, I ask you, must the interest of the public, the interest of society be sacrificed to the stubbornness and greed of some landowner. THE SOCIALIST Ah, Mr. Conservative. These are words which reconcile me to you. You are a fine fellow. Let us shake on it. THE ECONOMIST There are in the Sologne vast stretches of extremely poor land. The poverty stricken peasants who farm there receive only a meager return for the most laborious efforts. Yet close to their wretched hovels rise magnificent chateaux with immense lawns where wheat would grow in abundance. If the peasants of the Sologne demanded that these good lands be expropriated and transformed into fields of wheat, would not the public interest require that this be granted them? THE CONSERVATIVE You go too far. If the law of expropriation were used in the cause of public utility to transform lawns and pleasure gardens into fields of wheat, what would happen to the security of property? Who would want to manicure a lawn, lay out a park, decorate a chateau? THE SOCIALIST Expropriation always entails an indemnity. THE CONSERVATIVE … There are things for which no indemnity could compensate. Can you pay for the roof which has sheltered generations, the hearth around which they have lived, the great trees which witnessed their births and their deaths? Is there not something of the sacred in these centuries old abodes, in which the traditions of the ancestors live on, in which so to speak the very soul of the family breathes? Is not the expulsion of a family forever from its ancient patrimony, the commission of a deeply immoral assault? THE ECONOMIST Except, of course, when it is a question of building a railway.[8]
[1] “And if all the companies agreed to establish themselves as monopolies, what then?” Readings p. 145, Soirees p. 332, translation p. 298. [The draft translation used for the Conference Readings can be found at the OLL: <Molinari revised chapters 1 3 6 11>].
[2] Readings p. 111, from “The Production of Security.”
[3] Readings p. 117.
[4] That approach is sketched in part III of D. Friedman, The Machinery of Freedom, available for download at <>.
[5] Readings p. 134, translation p. 287, Soirees pp. 318-19.
[6] Machinery of Freedom, chapter 24.
[7] Large law firms are owned by the partners, a subset of the workers.
[8] Readings pp. 59-62, Soirees pp. 70-73, translation pp. 68-71.