Тег: Ancap

“Ancap” on “Svoboda”

My book “Ancap” has been published in print by Svoboda Publishing House and is available for purchase on Ozon. The first copies are sold at a discount; as of today, the price is less than 300 rubles (varying slightly depending on the payment method), and the sale will last for another 19 days, or until a Ukrainian drone hits the Ozon warehouse in the Moscow region, which serves as an additional incentive not to delay the purchase.

While you’re at it, stock up on other books from the same publisher

A Book About Contracts, Trust, and Trading Enterprises

I asked ChatGPT to style my longread about the problem of contracts as an Arabic treatise. You can see how it handled it in the following text; I haven’t changed a single letter, for as the Lord said: leave man to his manliness, and leave the neural-slop to the neural networks.

A Treatise on How Men Maintain Justice in Their Affairs When There is No Single Sovereign Over Them

In the name of Allah, the Most Gracious, the Most Merciful.

Praise be to Allah, Who created humans in need of one another and made the exchange of goods the cause of the prosperity of the lands. Peace and blessings be upon His Prophet, who was a merchant before he became a Messenger, and who said:

“The honest and trustworthy merchant will be on the Day of Resurrection with the prophets, the truthful, and the martyrs.”

Know then, O seeker of knowledge, that there exist societies where people primarily acquire what they desire through exchange, rather than through gift or violence. In such societies, well-being depends on trade, crafts, and mutual agreements. However, therein arises a particular difficulty: no one can guarantee in advance that every transaction will prove honest.

This is especially noticeable when one person fulfills their part of the agreement today, while another promises to fulfill theirs only after months or years.

Therefore, wise men since antiquity have resorted to written contracts.

The Almighty said in the Surah “Al-Baqarah”:

“O you who have believed! If you contract a debt for a specified term, write it down.”

Note that the Almighty does not command the recording of the purchase of an apple at the bazaar or a cup of sherbet in a teahouse. For such transactions are completed before a dispute can even arise. One hands over the goods, the other the money, and both depart satisfied.

But it is otherwise with agreements whose consequences stretch across time.

When a master hires a worker, he buys not labor already performed, but a promise of labor. When a craftsman accepts an order, he sells not a finished product, but a promise to manufacture it. When a merchant equips a caravan, he buys not goods, but the hope of future profit.

Therefore, the parties are forced to describe their expectations in detail.

Who provides the tools?

Who is responsible for damages?

How to distinguish diligence from negligence?

Which circumstances should be considered excusable?

Without such clarifications, each will later remember only that part of the conversation which is advantageous to them.

However, another difficulty arises here.

For human life is not like the drawings of a geometer.

Aristotle said that matters of practical wisdom do not possess the precision of mathematical objects. And indeed: if a triangle remains a triangle today and tomorrow, people are constantly changing.

A servant may become the friend of the master.

A student may become the companion of the teacher.

A companion may become a rival.

And a man hired to sweep the floor may turn out to be a skilled cook or a skilled thief.

Therefore, every contract is inevitably drawn up by people who know the future worse than it seems to them.

If the relationship ceases to benefit one of the parties, it can usually be terminated with moderate losses. The worker leaves the master, the master releases the worker, and the remaining disagreements are most often not so great as to destroy the lives of both parties for their sake.

But the most difficult case arises when it concerns the investment of capital.

For here the desires of the parties are inherently different.

He who gives the money would like to see it again someday, and with profit.

He who receives the money would be most pleased by a situation in which the money remains with him forever.

Therefore, commercial enterprises need a force that compels people to keep their promises.

However, here too, excess is as harmful as deficiency.

If coercion is too weak, no one will trust their funds to other people.

If coercion is too strong, then every unlucky entrepreneur risks becoming a slave to their creditors.

For the success of an enterprise is never guaranteed.

A ship may sink.

A caravan may be plundered.

A workshop may burn down.

And thus, not every loss is a consequence of deception.

Consequently, the prosperity of a state depends not on maximum severity nor on maximum leniency, but on the correct proportion between them.

In this matter, wisdom resembles what Aristotle called the mean between extremes.

For there exist two diseases of trade.

The first disease consists in that no one owes anyone anything.

In such a society, merchants quickly cease to trust one another, craftsmen work sloppily, and the borrower perceives other people’s money as a gift of fate.

The second disease is the opposite.

In such a society, every debtor lives under the threat of ruin, every worker chooses only between various forms of dependence, and those in power use their might to destroy competitors.

Both diseases are ruinous.

Therefore, reasonable people treat contracts with respect, but do not turn them into an object of worship.

For the contract exists for the benefit of people, and not people for the contract.

If every letter of the scroll becomes more important than common sense, then the contract gradually transforms from an instrument of cooperation into an instrument of domination.

For this reason, all trade rests on the presumption of good faith.

People must proceed from the assumption that their partner wishes to obtain benefit not through the destruction of the deal, but through its successful completion.

A good contract is beneficial to both parties.

If benefit is obtained by only one party, then we have before us not a contract, but a kind of command.

However, hope for good faith alone is not enough.

One must understand which forces make good faith profitable.

In all times, such a task was solved by communities.

A merchant did not travel simply as an individual.

Behind him stood his city.

His kin.

His guild.

His faith.

If the merchants of some city acquired a reputation as fraudsters, the next caravan from that city was met without former hospitality.

If anyone offended such merchants without cause, he risked bringing upon himself the enmity of the entire community.

Therefore, reputation became a kind of wealth.

Ibn Khaldun wrote that people achieve great goals only thanks to asabiyyah — mutual support and solidarity.

The same is true for trade.

However, here too, excess brings harm.

When belonging to a corporation becomes more important than a person’s abilities, the market loses flexibility.

Then monopoly takes the place of trust.

Privilege takes the place of reputation.

And coercion takes the place of cooperation.

Therefore, over time, other ways of ensuring trust emerged.

One of them was insurance.

In such a scheme, a third party appears, who receives payment for the readiness to cover losses from unforeseen circumstances.

But precisely because the insurer does not wish to pay extra, he carefully examines the behavior of the participants of the deal.

Thus, insurance not only distributes risks, but also encourages transparency.

However, it too is not a miracle.

Insurance protects well against misfortune, but protects poorly against evil intent.

If fraud proves more profitable than honest work, no insurance fund can exist for long.

Therefore, merchants also devised pledges and escrow accounts.

In some cases, the money remains with an intermediary until the obligations are fulfilled.

In other cases, the parties risk a pre-deposited security.

But these means too have limits.

They work well where the subject of the transaction already exists.

They work worse where the subject of the transaction is yet to be created.

Precisely for this reason, the most risky type of trade remains the investment of capital in new enterprises.

As the market develops, a greater number of interactions become customary.

Rules appear for them.

Standards.

Intermediaries.

Insurers.

Arbitrators.

Experience.

The world of trade gradually becomes like a beautiful garden, where the paths are paved with stone, dangerous places are fenced off, and a signpost stands at every intersection.

It is comfortable to live in such a garden.

But it is difficult to get rich.

For high profit arises where there are no paths yet.

Therefore, the largest fortunes are created not in the garden, but beyond its fence.

There, where merchants set out for unknown lands.

There, where seafarers seek new routes.

There, where people invest money not in an existing business, but in the mere possibility of its appearance.

Just as Sinbad the Sailor once obtained diamonds from a valley to which no safe path led, a prudent investor seeks opportunities where others see only danger.

Yes, dreamers, adventurers, and fraudsters will always gather around such enterprises.

But beside them, people capable of distinguishing fruitless madness from fruitful madness will also appear.

And it is they who will become the pioneers of new markets.

Others will come later, when the risk diminishes and the profit becomes more modest.

And therefore it should be concluded:

Contracts are necessary.

Reputation is necessary.

Surety is necessary.

Insurance is useful.

But none of these instruments is capable of completely ridging a person of risk.

For risk is the price people pay for the opportunity to discover something new.

And thus, the greatest riches are born not where there is no danger at all, but where people know how to face it with open eyes.

The Problem of Contracts

In the comments of Bitarch and Voluntarist’s post, a discussion flared up regarding contracts and their binding nature. Opinions ranged from the view that a contract is sacred to the view that a contract itself is not worth the paper it is written on, and that only the good will of the contracting parties matters. All this was accompanied by questions about how an ancap society is even supposed to be built if contracts are not observed there. I will try to outline my approach to the problem.

Ancap is a free market plus the decentralization of law. That is, on one hand, it presupposes developed exchange relations—gifting and coercion are not completely excluded, but they certainly do not dominate. On the other hand, there is no top-down guarantee that the exchange will prove to be fair. Especially in situations of deferred exchange, when one party to the deal provides real value right now, while the other promises some presumed value later.

Within the framework of this text, I will understand a contract as the accompaniment of an exchange transaction by certain non-obvious conditions. These are precisely what must be fixed in explicit form, because otherwise, it will inevitably turn out that the parties understood each other differently. There is no particular sense in composing a detailed text describing a transaction for buying vegetables at a market. Often, people don’t even ask for the price: a person simply scoops up the goods, shows them to the seller, the seller names some amount within reasonable limits, the person pays and leaves; everything works on defaults—so much so that one can even not know the language and simply show numbers on a calculator.

It is a different matter if it is assumed that the transaction should take place only if both parties agree to some deferred interaction. For example, there is an employment contract. One party promises productive labor, the other promises payment for that labor. But beyond this, a desire arises to ensure that the parties agree on which party provides the space, tools, and materials; what labor is considered productive and, accordingly, subject to payment, and what labor, conversely, is sabotage and subject to a fine; to what extent the employee is responsible for damage to the employer, and to what extent the employer for damage to the employee, and so on. Fixing this agreement in an explicit form allows, firstly, the parties themselves not to forget after some time what agreement was reached, and secondly, to appeal to this agreement in the event that any of the parties decides to involve third parties to secure their interests.

I need a diligent worker to build a palace…

There is an obvious problem here. Long-term relationships are inevitably accompanied by changes, sometimes quite radical. These changes may be impossible to predict in advance, or their possibility may have seemed too irrelevant at the start to be described. You hire a worker—and after some time you find that they are now a business partner or even a spouse. Or, conversely, that they are a competitor who secured the start of their own business using your client base. Or less radically: you hire a person for cleaning, and it turns out they also cook well. Or they clean the premises so thoroughly that they simultaneously “clean up” some valuables stored therein.

But employment is only half the battle. After all, if the relationship has changed significantly but both parties are interested in continuing it, the new relationship can be formalized through changes in the contract. And if one of the parties is interested in breaking off the relationship, they can simply leave the job or, accordingly, show the worker the door. In this case, the parties may have unresolved claims, but if the breakup is not delayed, the volume of claims will be small, and it will then be easier to write them off than to insist on a final settlement.

It is worse if we are talking about investments. There, a unilateral breach of relationship is precisely what the investor wants to avoid from the very beginning, whereas the recipient of investments is initially interested in exactly this scenario: just give me your money and leave forever. In order for investments to exist as a noticeable phenomenon despite such a powerful asymmetry in incentives, a systemic factor of coercion of the investment recipients is needed, so that they strive to fulfill the original agreements rather than presenting the investor with a fait accompli: the money is spent, there is no return, maybe something will be returned someday, inshallah. At the same time, when this factor works too harshly, the entrepreneur bears additional risks: the success of a business is never guaranteed, even if the entrepreneur did everything in accordance with the original business plan for which the investments were obtained. He may indeed find himself in a situation where the investments are spent, success is not achieved, there is nothing to return, and then the notorious coercion factor begins its violent actions to collect the debt. The cheaper coercion is for the investor, the more readily he will invest in dubious projects, and the harsher the conditions under which he provides investments will be.

The investment climate is precisely formed by the perception of such subtleties: how likely is the sudden intervention of third parties and natural forces into the bilateral relations fixed by the contract; how conscientious are entrepreneurs in following agreed-upon plans, or are they more inclined to collect money for one thing and spend it on another; but also conversely, how likely is it that the goal of providing investments is not the creation and development of a business, but the enslavement of the entrepreneur and turning him into a serf.

In other words, both extremes harm the economic prosperity of society. The conditionally left extreme is bad, where it is impossible to motivate a worker, and any somewhat complex project is simply not implemented because everyone has scattered to their own affairs and steals every single nail from work. And if you are foolish enough to lend money, you had better say goodbye to your money immediately; it will be spent on all sorts of good things, but by the very design of society, you are entitled to no benefit from this. But the conditionally right extreme is also bad, where a worker has a choice between several types of indentured contracts and starving to death, and if someone wishes to work for themselves using borrowed funds, the payment schedule will put them in conditions as difficult as those of a hired worker, only with the hourly prospect of falling into debt slavery. If someone starts a business using their own honestly saved funds, the person who has the resources to coerce their workers and debtors into order feels an irresistible temptation to use those resources to put spokes in the wheels of an independent competitor, even if this would be considered an unlawful act.

Ifrits or djinn? Marx or Pinochet?

Applying this to the topic of contracts, it means that, on one hand, contracts, being evidence of the existence of complex and structured declarations of the parties, are absolutely necessary in a society with a developed market and, generally speaking, should be respected. But, on the other hand, the desire to observe any contract to the last letter at any cost, as well as the desire to describe all conceivable conditions of interaction between the parties in contracts with incomprehensible precision, is counterproductive and leads to the loss of that very respect for contracts, since they begin to be perceived more as a tool of violence by the party who drafted the contract over the party who was given a ready-made text to sign.

The most important thing in contractual relations is the presumption of good faith of the participants. Both the parties to the contract and public opinion must be confident that a contract is, firstly, a privilege of equals (a document describing unequal relations is called a “statute”), secondly, stems from the parties’ desire for their own benefit, and thirdly, a good contract is beneficial to both parties. It is this presumption of good faith that makes one party seriously and benevolently consider the other party’s statement that the previous terms of the contract are no longer beneficial to them and therefore it is desirable to revise them, or if this is impossible, to carefully terminate the contract.

But good faith is not inherent in everyone and not under all conditions. In order for the presumption of good faith to justify itself, rather than prompting one to enter into contracts with fraudsters over and over again, one must understand that powerful incentives work toward this very good faith. It remains to understand what these incentives could be in a world with a developed market and an absence of centralized coercion.

Historically, such incentives were provided almost exclusively by the counterparty’s membership in a particular community that bore a share of responsibility for its member and was therefore forced to independently ensure their good faith in relations with the outside world. If merchants from a certain polis cheated while trading, subsequent merchants from that polis might be robbed or denied entry to the harbor. And if merchants from a certain polis were robbed without reason, a punitive expedition might sail in their stead. Or no one might sail at all, because your polis had acquired a bad reputation among traders. If you hire a stonemason from the guild of free masons, he will work so as not to bring shame upon his corporation. If Swiss mercenaries flee the battlefield, who will be interested in hiring Swiss mercenaries?

However, relying only on such insurance groups also entails costs. At some point, for example, it may turn out that you have the right to hire only a union member, otherwise both you and your worker are guaranteed problems. And now membership in a professional community becomes not a sign of quality, but simply an imposed inevitability. Tying a person to a corporation deprives the market of flexibility, forces the loss of profitable opportunities, slows down progress and, ultimately, harms general prosperity, not to mention that it provokes conflicts out of nowhere—that is, when outsiders poke into things that are seemingly not their business, claiming that they have an interest in this matter.

But if a person does not belong to a group that bears responsibility for them, how can their good faith be guaranteed through purely market incentives? In many cases, insurance can help. A third party is brought into the transaction, who receives an insurance premium and in exchange undertakes to guarantee compensation for damages from unforeseen circumstances that arose despite the good faith execution of contractual obligations by the parties. This party is interested in paying nothing for the insurance event and will therefore try to prove the bad faith of one party or another. This means that the parties become interested in drafting the contract and conducting business as transparently as possible so as not to be left holding the bag when it comes to the prospect of insurance payments.

Will such a scheme help us? Alas, only partially. It does not protect against conscious fraud if the profit from it exceeds the amount of the insurance premium. The fraudster has left with the money, and the insurance company shrugs and says that there is clear bad faith of the counterparty, which they did not insure against and do not intend to insure, because today you pay for the loss from a fraudster’s actions, and tomorrow half of all deals will become fraudulent.

To provide guarantees in trade and employment, escrow account mechanisms and various collateral schemes help quite well. In the case of escrow, the participants of the deal lose the ability to receive payment until they prove the fact of execution of contractual obligations to a third party. In the case of collateral, the loss of one participant of the deal from the actions of another is compensated by the value of the collateral. But this does not help protect the investor at all, because in investments for creating a business from scratch, it is specifically the investor who puts in the money, and the entrepreneur only gives a promise to direct this money toward creating a business that should bring profit.

Is this vulnerability so critical? One must look at the context. The market develops a habit of typical actions because they save transaction costs. In a developed market, competition leads to a decrease in insurance commissions, so insuring risks becomes not particularly expensive, and this is done almost everywhere. The world of typical market interactions turns into a cozy park with paved paths, detailed infographics, and fences in all dangerous places. Sweet, cozy, beautiful, and zero drive. In other words, the profitability of business decreases. A good haul can only be made by opening a new market. And only here do we enter the space of unprotected investments.

Venture investing, based on a bare business idea, is a conscious risk for the chance of a big win. Yes, this sphere will attract strange people: project-pushers, “info-gypsies,” simple fraudsters. But from the investors’ side, those who are ready to deal with such a crowd will enter this sphere—those who can sift through insane projects to find those whose insanity looks noble, reinforce inventor-maniacs with clever managers and technical specialists—in short, the market will reward those who set sail not in a washbasin, but at least in a caravel. And then legends will be composed about them, and someone will also earn money on the reproduction of these legends.

No more drinks for Sinbad!

Contracts, restitution, and pocket courts

The Austrian School denies objective value—value is determined by the subjective assessment of the parties at the moment of the transaction. However, Rothbard’s theory of restitution requires that a penalty correspond to the “actually transferred asset.” If value is subjective, then a corporation’s private court is entitled to recognize a $10 million fine for resigning from a post as a legitimate “transferred title”—and qualify the employee’s departure as fraud, opening the way to forced restitution through labor.

Who determines the proportionality of a penalty clause in a contract, and on what basis, if objective value does not exist and the interpretation is carried out by a court hired by one of the parties?

Konweni

As stated in the wording of the question, value is determined by the subjective assessment of the parties at the moment of the transaction. Accordingly, if a penalty amount is specified in the contract in case of its termination, it means that at the time of signing, the value of concluding the contract was higher for the potential payer of the penalty than the amount of the penalty itself. And if the penalty specified in the contract seems absurdly high to an outside observer, this tells us that it was absolutely imperative for the party in question to conclude this agreement at that moment. Another explanation is that the party signing the contract did not read the penalty clause or rashly assumed that it was some kind of nonsense that no one would take seriously, the key points were discussed verbally, and everything else is just empty legal blah-blah-blah.

However, since the question specifically refers to Rothbard’s opinion, he does not make the qualification about the actually transferred title of ownership for nothing. If an employee had been paid an advance and then left the job without working it off, then the penalty is justified, and its size can be calculated precisely from the amount of the advance (for example, the unpaid amount plus the costs of an urgent search for a replacement employee). But if the labor has not yet been paid for, then the asset has not been transferred, which means that penalty sanctions are inappropriate. This is simply a matter of a broken promise. The employer can try to demonstrate to the court what costs he incurred as a result of the employee’s actions, and the court may well take these calculations into account.

Of course, the contract may contain a clause stating that all disputes are settled in a certain court, which is a pocket court of the employer, unknown to the hired employee at the time of signing. The problem, however, is that the court itself does not engage in the enforcement of its decisions, and in the absence of a state, the plaintiff will have to do this themselves at their own expense (and they will also have to put the court entirely on their payroll, as clients are unlikely to flock there on their own). Of course, through his pocket court, he can impose a crazy penalty on the employee who fled from him, and then send thugs to force him to work it off, provided that the employee does not have such funds. But the economics of such actions only begin to add up in colonial conditions, that is, in the presence of overwhelming military superiority of a cohesive group of colonizers over a fragmented mass of natives. Directly in a free society, being a part of it, it will not be possible to pull off such tricks systematically; the non-legal nature of such an organization of work would be far too obvious. Even if this does not lead to unexpected sanctions from actual or potential counterparties, the employer will have to organize forced labor in a society with free labor, where no one will help him, for example, catch runaway workers. You need it, you catch them. And new workers will likely go and be hired by a competitor.

And now I will answer the asked question directly. Who will assess the proportionality of the penalty and on what basis? The employee will assess it, based on their own subjective considerations. If they pay voluntarily, then it is tolerable. If not, see the paragraph above.

— Hm, maybe I should sign? But that portrait on the wall is far too suspicious…

The Problem of Cartel Collusion in the Sphere of Protection under Ancap

Mancur Olson, in “The Logic of Collective Action,” proved that small groups with concentrated interests always win the coordination game against a diffuse majority due to the free-rider problem. Three CEOs will agree over dinner; a million customers never will, because each rationally waits for others to take the risk first.

What specific mechanism in ancap prevents a cartel agreement between two or three of the largest protection agencies to divide territories?

Konweni

This is a question that also concerned David Friedman. In the chapter “The Mechanics of Freedom,” concerning economies of scale, he reasons that in the law enforcement market, there seems to be a more pronounced positive economy of scale than he initially thought, which in turn increases the likelihood of a cartel agreement.

It seems to me that the cause of this excessive pessimism is the overestimation of the importance of direct armed protection in the security market. Literary descriptions of the security market under ancap are filled with some kind of universal protection agencies that are responsible for security in general across the most diverse aspects and scale easily. Of course, such an initial monopoly, already given in the problem statement, leads an honest analyst to conclude that such agencies will tend to grow significantly and enter into cartels, and their impact on people will be completely total, making the sale of such security services terribly dangerous for clients, as it is only one step away from total enslavement.

But where will these protection agencies come from? Who will be their clients, and what services will they buy from them?

Suppose I don’t live in peaceful Montenegro, where every house has a legal shotgun plus a couple of black guns left over from the war, but, say, in some place like Brazil. I have reasons to fear street attacks, car theft, and break-ins at my home. And then, a startup opens in the city that is ready to serve me, even if I wander into the favelas. What does such a startup need, within the technologies relevant at the time of writing this post? To reach an agreement with the company that owns the lamp posts to place cameras on them, as well as landing pads for drones with a charging function. Then, AI tracks suspicious actions, such as breaking into a house door or a car; a drone takes off from the nearest pole and demands a justification for the legality of the actions. In the case of an aggressive response, it applies measures of influence to the suspect, for example, firing a taser, after which it calls a live squad to process the detention. Similarly, in the case of an attack on a person: it flies in, demands they stop, reasons with those who ignore the instruction, waits for the squad, and returns to the nest. And then comes the court proceeding regarding how much to recover from the aggressor.

After working in this market for six months, the startup is surprised to find that its services are becoming less in demand because the city has become noticeably safer. And what, should they now start harassing me clandestinely so that I renew my subscription? No, of course not; they will simply make the subscription cheaper, and the drones that spend most of their time idle will be used, for example, for delivering pizza.

And what about peaceful Montenegro—do I not need protection agency services there at all? Of course I do. I need it so that when I break my leg while hiking in the mountains, brave rescuers in a helicopter fly to me and pull me out of that hole. Or pull me out of a car that flew off a cliff. Or find me in the sea when a storm carries me far from shore on a SUP board. Or get a cat down from a tree.

You realize that a Brazilian security startup won’t be able to enter the Montenegrin market because that market is completely different? Protection agencies are doomed to locality due to the local nature of threats, and are also doomed to a small size because the nature of threats also tends to change. It is harder for a large company to change, which means inefficiency, and inefficiency means saying goodbye to market share.

But surely there are functions for protection agencies that would be in demand globally? Of course there are, but these are specialized functions. For example, to find someone anywhere on planet Earth who owes me a vast amount of money and refuses to return it. Or a person who killed my mother and knows that I would like to burn him on her funeral pyre because she will need a servant there. Such agencies will not sell a subscription for service; they will have to take on rare one-off orders, as this market is too specific. It is impossible to build global dominance with the prospect of bending anyone to your will and subjecting them to your sinister market power based on this.

And what about the prospect of an external armed invasion? Shouldn’t private military companies be the backbone of any respectable social order if it wishes to call itself ancap? Shouldn’t such companies unite into a mega-cartel dictating its will to all of humanity? To the great regret of the adepts of this branch of human development, in peacetime, the peaceful average citizen is not inclined to finance the military. He doesn’t need war; he doesn’t buy it. An invasion army can only be equipped if you establish taxation on your territory. However, a militia for protection against an invasion army organizes itself in the presence of a free market—quickly, efficiently, and not too expensively, as shown by the experience of at least the Ukrainian war.

Death and/or Taxes

Sperry UNIVAC

Prologue by Ankapan-tyan
We have a new author’s column on our channel, here we will butcher the sacred cows of libertarianism. Because readers complain that it’s boring to comment on me, Bitarkha is tired of it, well, here’s food for discussion.

Yesterday I had a dispute that prompted me to write this post. I ironically described that the Viking warriors were not a professional army because they didn’t live off salaries but from what they could plunder, which elicited an ironic comment about how our modern professional army lives off what it plunders – so the difference is zero. Basically, soldiers on government service get paid a salary, the salary comes from the budget, the budget comes from taxes, and taxes are essentially theft. That’s exactly the sacred cow I want to poke around at a little.

A libertarian’s understanding of taxation is usually like this. I started working for Uncle Joe, bent my back, Uncle Joe gave me $100 for my efforts, then this left-wing (in every sense of the word) guy comes along with a stick, whacks me over the spine, takes $20, and runs off to give them to a sneering bum on the corner who didn’t work a day in his life. SOCIALISM IS THEFT! In this framing of the question, of course, it’s theft. The standard arguments defending taxes – that they will build roads – we all know, and there’s no need to discuss them. I want to approach things from another angle and show that, in some sense, any corporation steals the same $20 from every salary, and thus performs exactly the same governmental role. And so, “fair,” i.e., theft-free distribution of earned money – is much more similar to socialism than state taxation, and you don’t need to automatically shudder when you hear that word. The fact that they take our money always, everywhere – it’s inevitability; they take it with communism and with the Ancap – there isn’t really any difference between state taxes and corporate extortion.

Как это работает на практике? Возьмем случайного человека, который где-то добыл $10к и организовал, скажем, завод стульев. Он нанял 2 квалифицированных сотрудника (допустим, юриста и бухгалтера) и 8 неквалифицированных, которые клепают стулья, купил станки, помещение, доски и работа закипела. Пока все идет по плану. Допустим, все хорошо, и фирма принесла сходу чистую прибыль в $11к. Вопрос, как ее делить? Социалист сказал бы: на 11 частей, каждому по $1к, все справедливо. Но мы не социалисты и учтем, что рабочий не квалифицирован и является бурерожденным (и не вложил в то, чтобы перестать быть бурерожденным, ни копейки), а значит, легко заменяем любым бурерожденным. Значит, он заработал меньше всех, хоть и пахал с утра до ночи. Бухгалтер и юрист — не бурерожденные, их заменить сложнее, и они вложились в свое образование, возвысившись над бурерожденным, значит, им платим больше. Ну и, наконец, босс, его заслуга в том, что он выцыганил у кого-то $10к на бизнес, не каждый на такое способен, значит, ему платим больше всех. В итоге рабочие получили, условно, по $100, белые воротнички — по $500, а все прочее боссу в карман.

На практике, однако, наш эталонный план не взлетит. Почему? А потому что быть бурерожденным никому не нравится, как и видеть, что ты сорвал спину, таская доски и занозил руки, пиля их, и так 30 дней, а получил за это в 10 раз меньше того, чья работа сделать пару звонков корешам-богатеям и пару раз подмахнуть ручку. Так что работать такая схема будет только при условии того, что рабочим вообще больше податься некуда — все работодатели вокруг такие же гниды, а на заводе дежурит ЧВК, всегда готовая вломить дубинкой по почкам тем, кто заикнулся о ереси социализма, то есть о профсоюзе, праве на забастовку, праве на защиту труда и хотя бы на один выходной в неделю.

Были ли такие примеры в истории? Неоднократно, в основном в эпоху дикого капитализма 1880 – 1920х. Union Stock Yard & Transit Co — Чикагские скотобойни; United Fruit Company, устроившая натуральный ГУЛАГ на плантациях в Гватемале и Колумбии; угольные титаны США, дубинками полицейских забивавшие под землю рабочих. Я уже вижу, как анкапы торжествующе потирают руки: так их, давить этих комми-паразитов, расстреливать из пулеметов, чтобы неповадно было воровать у босса честно заработанный навар. В общем, да, ровно так это и было, Банановая бойня в Колумбии закончилась тем, что UFCo попросила правительство послать солдат с пулеметами и расстрелять нахер всех бастующих и требующих человеческих условий труда, что и было проделано. И это не единственный случай. Но постойте… попросила… э-э, кого? Правительство? Разгоняли демонстрации у нас кто? Полицейские и армия…? Компании, при этом, налоги-то щедро отстегивали (а кроме налогов, еще и на лапу президентам банановых республик и их государственным генералам и солдатикам, чтобы веселее стрелялось в народ).

It appears that to establish an ideal benchmark Ankap—where the boss takes 99% of the profits and the commoner works from dawn till dusk for UFCo brass tokens, not even receiving a penny (when previously they exchanged tokens for a bowl of porridge in the cafeteria – and continued working)—we would require the most powerful repressive apparatus to instill fear of Henry Ford in those unconverted to capitalism. This would ultimately result in something suspiciously similar—like that very socialist Gulag which capitalists frighten us with—while simultaneously having precedents for constructing even worse projects, such as rubber plantations in the Amazon. We would need to divert enormous sums from this apparatus, otherwise we’d have to sleep with a saber by our bed and a pistol under our pillow, awaiting the arrival of slaves. It is preferable to use a state that we want to eliminate, which feeds its army through taxes.

Let’s remove these horrors and consider it from another angle: we are good and principled Ankapists; we don’t desire a repressive state apparatus nor do we wish to decimate our workers weekly with police force and feed them plastic porridge. We believe that in an ideal Ankap world consisting entirely of corporations, suppressing worker unrest would cost us more than creating human working conditions—it’s a debatable point, let’s just ignore it for now. And there are so many companies that if we offer miserable work for pennies, even the last bum will be hustled by a neighbor-corporat who splashed out on gloves for him to avoid scratching his hands from logs. Consequently, we would find ourselves without workers. This is the main point of those who argue that the state with its leftist unions, taxes and laws about an 8-hour workday spoils everything; in Ankap each worker will live like a king. Let’s assume this is true, okay.

But what does that mean then? It appears we would need to invest in a safe lathe, goggles from sawdust, gloves from cuts, a respirator from the smell of glue; and if we are building a complex company with complex labor, it’s desirable for our workers to have everything, including a fitness center, free psychotherapist and dentist for their son—otherwise smart people won’t come to us, they’ll go to those with better conditions. We see that Apple and various other IT giants actually compete to offer their expensive employees even more bonuses (let’s not discuss the fact that workers in Amazon warehouses will be fined half their salary if they went to the bathroom longer than once a day). But these same bonuses for employees—medicine, vacation, even education—they come from somewhere? Yes, they come from profit, that very profit which could be spent, for example, on the same wages.

So it turns out that, taxes…? Well, basically yes, a corporation can, let’s say, add +10% to everyone’s salary, or not, but open a fitness center for everyone. And yes, maybe I’m a lazy bum and don’t want a fitness center; I want to blow my 10% salary at the bar instead of jogging on a treadmill. But nothing was asked of me – let Vasya handle it, we’ve decided for him, he contributes from his salary to cookies for everyone in the office, we’re creating positive vibes of kindness, don’t be stingy. But, forgive me, what’s the difference between this and a state sports complex built on my taxes? I just wanted a state tavern, didn’t I?! The only objection here is that if you don’t like it when a corporation deducts your salary for a fitness center – well, go to whoever deducts salaries for bars. Okay, but:

1. They’re deducting anyway, and maybe I want industrial cleaner!

2. They deduct +/- equally: on medicine, education, sport – yes, in general, the same as with the state, i.e., it’s all the same.

3. If you don’t like the tax policy of a super-socialist state – okay, bug out to another one where it’s different, like Argentina, which got rid of all social benefits completely, and that’s just the way it is, paradise! The truth is, taxes now go to Milei in his pocket, as well as funding the state police and security services to suppress criminal plots dreaming of state medicine – thieves, scum!

And people dream of living somewhere like Scandinavia, and their happiness index is practically the highest on the planet.

Therefore, we come to the conclusion: it’s not so important what kind of regime we have. They will steal everyone and always, if stealing means distributing money that doesn’t suit you personally, dear reader. The other thing is that all libertarians believe they will manage to get into a future where their (!) distribution will suit them. For example, if they have a child and want a good dentist for him, a therapist for his wife, and themselves – a weightlifter after work – all free of charge – then it’s reasonable to complain about the corporation that provides all this for their efforts. But this doesn’t cancel out the principle: not everyone in the world wants exactly what you want. In any case, someone will take money from someone (no matter how they are called: contributions, taxes, insurance, etc.) for something that is useless to them personally (or they prefer to take it and deal with it themselves, but they don’t let them). So, my dears, don’t panic over the word “tax,” it’s just one form of extortion that will always be with us, under any regime and any economic formation. Because the alternative to such soft power through fitness centers and free cookies – is a soldier with an M1919 Browning, a barbed wire fence, and a brass token for porridge from sawdust in the cafeteria. Inevitably, they’ll get to us forcibly—the difference is only whether it’s on a fist or a velvet glove.

Capitalist Transutopia

Alex Rozov, author of the Meganesian cycle, began in his LiveJournal preliminary inquiries into how he might best write a capitalist transutopia—that is, a realistic positive picture of pure capitalism, the processes that led to it, and the processes that make it sustainable. I have serious doubts that he will succeed, because his understanding of the market does not seem entirely adequate to me. Roughly speaking, he will be inclined to think about the market more according to Marx than according to Mises. The crowd grazing in his comments is more likely to exacerbate his problems, because, as usual, it is full of choice Hobbesians who believe humanity to be thoroughly depraved and in need of a strong regulator, without which people would, of course, devour each other.

Also interesting is a certain passage set forth by one of his commenters, with which the author generally agreed:

“Professional” supporters of capitalism (writing in popular analytical media) gloss over real capitalism.

“Unprofessional” ones (participating in online flame wars) imagine a picture-book capitalism—or rather, not capitalism at all, but some phantom feudalism interspersed with farmers, artisans, and shopkeepers with primitively structured family businesses.

Real capitalism, however (in which the main players are large companies with pyramids of bureaucracy, complex ownership relations, unspoken deals between top managers and majority shareholders, and even more complex relations with financial-banking and state systems) is unacceptable to the “unprofessionals.” Such capitalism seems (suddenly) to them to be a “leftist distortion of capitalism.”

In short, the state is considered by them to be an indispensable, inevitable, and inherent attribute of capitalism, which accordingly makes all ancap ideas, for them, mere picture-book images that cannot have any relation to reality.

Mikhail Svetov once promised to write a book about libertarianism and flaked. I had to take it upon myself and write my own. Vladimir Zolotorev complained about the lack of a libertarian theory of war; I had to start thinking in that direction as well. Now, it seems, I will also have to compose some sort of fictional text about what one of the many possible embodiments of ancap looks like. I am currently in the bargaining stage: well, maybe I should wait a bit, and perhaps Alex will write something passable after all—he is a prolific author, he even wrote about a cesspit cleaner under communism, so why shouldn’t he solve this new problem, and I won’t have to take up something I’m not good at.

But just in case Rozov doesn’t deliver, or the result matches my current low expectations, I am starting to think about how to do something of my own. My strengths are a sense of style, conciseness, and analytical abilities. My weaknesses are difficulty keeping a broad vision in mind and a poor imagination; that is why my creative work consists of short posts on specific topics assigned by others. However, what is required here is a fairly voluminous fictional text.

Most likely, a passable solution would be a cycle of stories. A sort of Montelliberian cycle as a counterpoint to the Meganesian one. I don’t know. I don’t want to think about it yet. It’s scary to dive into these waters.

Imposing cultural traditions

A quite significant portion of the questions people ask about Ancap boils down to whether one can do this and that, whether it’s permissible to do this and that, how Ancap views this and that. Can you kill pedophiles and murderers? Is slavery and abortion permissible? How does Ancap view intellectual property and global warming?

As you know from memes, Ancaps have a simple, concise, and even fully correct answer to all these questions: the market will resolve it/. In other words, in response to a question about the imaginative subject “Ancap” a specific imaginative subject, “the market,” is pointed out, which will establish the corresponding norms. Of course, this answer is too brief and therefore doesn’t satisfy those asking. Let me elaborate on the topic a bit.

Mostly, people aren’t bothered by what other people do because another person’s behavior fits into another person’s notions of what is proper. And when it stops fitting, that person starts to worry about it, begins to think about how he should relate to it and what can be done with it.

A libertarian can roughly describe his notions of what is proper as “self-ownership is respected, NAP isn’t violated.” This isn’t enough, and notions of what is proper are supplemented by all sorts of “here it’s customary like this.” For example: here right-hand traffic; we let children pass ahead in line; at a restaurant the person who invites pays, and so on. But besides all these ethically neutral customs, there are also those relating to various borderline situations. For example, at what age does sex stop being an adult’s business and become the business of whoever is doing it? Or what kind of natural compensation is permissible to demand from a debtor or from someone who caused damage? Or in what cases does an author have the right to restrict other people from using his work? These things are not derived from basic libertarian principles, as is, for example, right-hand traffic.

In ethically contentious situations, a person tends to offer as a norm the option that’s more advantageous to him personally. If he’s also influential enough – it can be painful to be hit with, it can bring much good, it evokes universal love or simply annoys – then they might agree with his proposed norm; but further down, this decision can easily become a precedent, and now others will cite this version of the norm as local custom. Then, for someone who wants to revise this norm, it will be necessary to be much stronger, more useful, more charming or more annoying, because he’s going against tradition.

Thus, one can speak about the right of the strong: that person who put in efforts to create a precedent, may thereby establish a legal norm. It will be difficult for him to change this norm whenever he wants – in legal tradition this is called the Estoppel principle – if someone previously demonstrated by his actions that he adheres to such-and-such a norm, then he cannot legally insist that it not be applied to him.

In artistic form, the Estoppel principle is well demonstrated in Maxim Shapiro’s famous story “Respect for Cultural Traditions”.

Of course, whoever possesses undeniable superiority in strength, usefulness, charm or sheer annoyingness, or who leads a united group of like-minded people, will be able to promote such a legal norm as “this specific idiot has the right to act in any situation, as he pleases,” creating thereby a state. However, until he creates legal norms for transferring his power, this state will inevitably end with his death, and death is usually quite early. At least this regularity ancient history shows us. But we are considering *ankap* here – that is, the public order in which the probability of success of such idiots is deliberately reduced to a minimum.

So how will they treat heretics, slavery and the rest at *ankap*? You decide. The more effort you put into making your opinion prevail, the more intolerant you are of other opinions – the greater the probability that heretics will be given exactly as many lashes as you outlined to the first one you met. And of course, the greater the probability that in defending your opinion you will suffer unacceptable losses – and wipe out. Nevertheless, if these topics excite you vividly, I recommend boosting strength, usefulness, charm.

And annoyingness.

Respect for Cultural Traditions“

New translation. Gustave de Molinari. Evenings on Rue Saint-Lazare. Chapter 11.

At the request of @mysery_tg, I have produced a translation of one of the chapters of “Evenings on the Rue Saint-Lazare” by Gustave de Molinari (1849). In the mid-19th century, the author conceived and popularized the idea that we now know as ancap; in the text presented here, he lays out the arguments for this system of social organization in a theoretical dialogue with a conservative and a socialist.

The translation was made from David Hart’s English translation of 2009. I did not cross-reference it with the French original, but I hope that the “telephone game” factor is negligible.

Is anarcho-capitalism based not on libertarian principles possible?

The concept of ancap emerged within the framework of libertarian philosophy. However, besides libertarianism, there are other philosophies of freedom, such as objectivism or classical liberalism. It seems that any intellectual tradition aimed at achieving freedom has its own version close to ancap.

Question from Dmitry

I am currently translating an interesting article that traces the anarchist roots of ancap (funny, but many consider ancaps to be fake anarchists) from Proudhon, who, in fact, was the first to declare himself an anarchist. But there are still a few days until the work is finished, so for now, I’ll reflect on how fundamental it is for an anarcho-capitalist society to have specifically libertarian principles at its foundation—self-ownership and all that other NAP stuff.

Let’s replace self-ownership with “we are all instruments of the Lord” or “we are but a third theme in the music of Ainur.” This is simply a shift in the locus of control. Well, okay, now it’s external. Will this shift hinder the construction of ancap? Not particularly. The Lord, in His mercy, gave people commandments. The elves left humans their powerful epic, filled with moral messages. Take it, use it. In songs, you read about loyalty to oaths, or a commandment requires you not to bear false witness—one way or another, you learn the idea of a contract and the obligations under it, which means we have the basis for capitalism.

Can we do without the non-aggression principle? That no one has the right to initiate violence with impunity? No, someone does. Will this hinder the construction of ancap? Well, it depends on exactly who turned out to be the lucky exception to this principle. For example, if we declare that holy fools, small children, and women with PMS can initiate violence with impunity, this will not hinder us in building an anarcho-capitalist society. But if we declare that a certain special knightly order, sworn to maintain peace and tranquility in the Galaxy, possesses the right to initiate violence with impunity—it will be harder, although even then the situation is not hopeless, but we will be critically dependent on the procedures regulating entry into and expulsion from this order.

To what extent can ancap be built on the principles of classical liberalism? Gustave de Molinari described this very clearly. He didn’t know any of the clattering libertarian technical terms like NAP and self-ownership; he simply described how a competitive market for security services would yield better results than a monopolistic one.

What about objectivism? Egoism is a virtue. Reason is a virtue. Demanding that people sacrifice themselves for you is yuck. How is this not a basis for ancap? The principles sound as unfamiliar as appealing to the Silmarillion instead of the Bible as a source of morality, but essentially, by implementing the principles of objectivism, we get the same ancap, only with intellectual property. And yes, the state will not exist, regardless of what Ayn Rand wrote on the subject, because collecting taxes by force is to demand sacrifice from taxpayers, and forcing government officials to work for free is to demand sacrifice from them. But, of course, if voluntary self-governance coordinated by volunteers at their own expense or via donations is “the state,” then okay, let it be the state, but for us libertarians, this is simply ancap.