Тег: conflict

How does libertarianism propose to solve the problem of blackmail?

Suppose one company threatens another with sanctions if they do not enter into a contract, and the sanctions could be genuinely serious and severely damage that company’s budget; how do you see the solution to such hypothetical problems?

Matvey

Let’s introduce different terms depending on what kind of sanctions are envisioned, because the reaction to the threat will heavily depend on this.

Let’s define robbery as the demand for a predatory deal under threat of physical violence, extortion as the demand for a predatory deal under threat of economic sanctions, and blackmail as the demand for a predatory deal under threat of disclosing information that the target of the threat would prefer to keep hidden.

The reaction to robbery depends on the balance of power, the determination to resist, and an assessment of the situation regarding the possibility of receiving outside help. For instance, under current conditions, it often turns out to be cheaper to comply with the robbery demands of a state, although sometimes one can try to negotiate a way out, provided, of course, that state officials respect at least some principles—for example, those considered official laws of that state, or any others. (For example, in Montenegro, an attempt to negotiate a way out is the most obvious response to any attempt at state robbery.) Cases of forceful resistance to the state are also possible, and if such cases are frequent, political scientists say something like “state X is a failed state.”

Robbery demands from private individuals are far more likely to encounter forceful opposition, as such opposition is much more likely to be supported by bystanders, and in some relatively sane state jurisdictions, even by representatives of that very state, especially if the robber acts completely recklessly.

Extortion is perceived by many economic agents as lawlessness and a direct invitation to bypass the sanctions. If the bypass proves successful—that is, if the losses of the party applying the sanctions are almost higher than the losses of the party bypassing them—then the sanctions will be quickly lifted, perhaps even with apologies. However, if the author of the economic sanctions is the state, its officials may, in turn, consider the evasion of sanctions as lawlessness and move from extortion to robbery. Fortunately, the state is not a single organism, but a multitude of actors with their own interests, and bypassing sanctions usually implies that certain officials are interested in making it work.

Finally, in a blackmail situation, the target must solve a difficult dilemma: agree to let all interested parties find out something about them that they would prefer to hide (which is usually something unsightly), or enter into a predatory deal, usually without guarantees that the blackmail will end there. We often encounter such stories in detective novels, and it is easy to see that a wide variety of outcomes are possible. The most boring stories are those where the blackmailer honestly fulfills their part of the deal, and the target of the blackmail, accordingly, escapes with a mild scare. A note to potential blackmailers: act exactly this way. A note to potential targets of blackmail: do not abuse deals with your conscience; in the long run, honesty and openness pay off more.

Internal conflicts of volunteer organizations

Not long ago, I published a long post Internal Dynamics of Libertarian Communities. Among other things, it mentions the danger of “beastly seriousness” over trifles:

Subconsciously realizing the certain comicality of their position, the disputant, in a polemical frenzy, begins to accuse opponents of violating even the most basic value principles.

And just recently, I received a direct message:

I believe that the current Secretary has exceeded their authority. The Council is unable to resolve this crisis on its own, as some Council members support the Secretary’s actions, while others remain indifferent to what is happening. This is not an isolated case that is being questioned, but this particular case is already egregious.

What is this egregious case? It turns out a Telegram chat admin enabled slow mode in the chat. Why slow mode is needed in a chat of two dozen people, I have no idea, but this case perfectly illustrates how easily, in a purely voluntary organization, people take offense at the slightest manifestation of disrespect from those endowed with certain technical powers.

And here is another case, a public one—and also indignation directed at the secretary: one of the MTL-court judges removed the court secretary from handling a case because the secretary, in the judge’s view, handled correspondence with the parties incorrectly and also for some reason was present in the chat where the judges were discussing the case. And the secretary, instead of stepping down, stayed put; instead, the judge was removed.

This pattern repeats constantly. What is required for it to emerge?

  1. An organization consisting of volunteers
  2. The presence of a sole administrative position within it
  3. The administrator having technical capabilities to restrict the rights of other organization participants.

That’s it. Sooner or later, a situation will arise where the administrator begins to interpret their functions broadly and applies their technical capabilities in a way that restricts the rights of other organization participants, and some participants will view this action as an abuse of power.

If the organization had paid employees, the administration’s actions would be perceived more calmly (any whim for your money). If there were a whole board instead of one administrator, one could appeal to one member to roll back the actions of another (also a very rich class of conflicts, though far less acute). Finally, if the administrator lacked technical capabilities that could be abused, it would be much harder for them.

Let’s leave point 1 alone, because conflicts in hierarchical commercial organizations can be discussed by Bitarch and Voluntarist.

Point 2 is much easier to overcome. If the group is small and consists of formally equal participants, then everyone should be made an admin (if some participants have a sort of probation period, admin rights can be granted after its successful completion)—this serves as a visible confirmation of mutual trust within the organization. Alternatively, one could do without admins entirely.

As for point 3, it depends too much on the chosen communication tools. In Montelibero, Telegram is used almost exclusively for this. In it, the only way to disable technical administration capabilities for a group is to create it using a service account, add participants, and then remove the creator from the group. In principle, this is also a solution for a small, tight-knit group that wishes to communicate strictly on business and does not want to lose internal cohesion over someone’s wounded pride.

Of course, administrators are useful. But that is exactly the line of reasoning that etatists use to explain the utility of the state. No, the utility comes not from administrators, but from a tradition of respecting colleagues. Applied to working groups, this means self-restraint regarding off-topic posts and communication style. If such a tradition is established, an administrator is not needed. If it is not established, it cannot be implemented by the strength of one administrator alone. In any case, the goodwill of the other participants is required.

Internal dynamics of libertarian communities

This will be a long-form text in three parts. It was written by request of Soz, for a donation of 50 EURMTL. The work took nearly a full month. For ordinary questions with attached donations, this is indecently long, but I recall that back when Bitarch didn’t yet publish on my channel himself but commissioned me to write long-reads, the pace was comparable. Unfortunately, I struggle to keep large concepts in my head, so as the volume of the task increases, the working time increases in a clearly non-linear proportion: a couple of days for a Telegram-format post, a month for a long-read, a year and a half for an 84-page book…

The task from the client was formulated not very clearly, but it amounted to creating and presenting a conciliatory narrative for the Montelibero community, which is currently experiencing internal friction due to differences in approaches to achieving the movement’s goals.

It seemed appropriate to me to expand the topic slightly, but not so much that the final recipes would be inapplicable to the specific community.

Part 1. Why don’t libertarians like contracts?

There is an opinion that libertarians adore contracts and almost pray to them. This is not true. Libertarians, for the most part, have a fairly ordinary system of values, and therefore they do not like contracts. What they love, like all normal people, is an atmosphere of openness and mutual trust. Anyone who claims otherwise most likely loved it once too, but their trust was betrayed.

What is trust? It is the conviction that the counterparty will sincerely defend your interests, and if they conflict with his own, he will still try to take yours into account as much as possible, and if necessary, occasionally compromise his own. Openness, on the other hand, means that the counterparties provide full and reliable information about their interests and other facts related to the subject of interaction. How could one not love this?

This is precisely why libertarians prefer to gather in communities. In a circle of people sharing common values, trust is usually higher, and if these values are libertarian, then—especially in business matters—mutual trust may, to an outsider, even border on naivety.

A contract, however, is a product of mutual distrust. Please state exactly what you will demand from me and what you are ready to give me in return, and what tools we have to compel each other to comply with what is written. And further clarify the meaning of the terms, so that it doesn’t emerge in court that you meant something completely different from what you hinted to me…

It’s not that libertarians completely neglect contracts when making deals among themselves, but usually it is just a brief summary of a chat conversation, purely so as not to forget: I borrow so much, for such a term, at such a rate, payments in equal monthly installments on the first of the month. The higher the trust, the more nuances are left out.

Trust in deals and the ability to rely on people to defend your interests is a huge treasure, as it reduces transaction costs to a negligible minimum, and thus ensures maximum market efficiency. But this treasure, unfortunately, is very fragile.

Trust can be destroyed by a fraudster. This is a very banal risk, and it is partially mitigated by simple tenure in the community. The longer a fraudster is forced to maintain an impeccable reputation to gain trust, the larger the deal he needs to scam the counterparty and ultimately still end up in profit.

But trust can also be destroyed by a pedant. Someone who, in a libertarian community, will demand as detailed a contract as possible, and then start insisting that it be followed to the letter—is a repulsive counterparty. He literally positions himself as an outsider, saying that you are all suspicious types ready to scam anyone at the first opportunity. Therefore, here are ten pages of fine print in tooth-grinding legal jargon, now let’s go get it notarized, and here we have a state court specified, and here is the penalty for delay, and so on and so forth.

Therefore, libertarian communities tend to reject both fraudsters and nitpickers, striving to preserve the innocent simplicity of trust-based relationships. But consistent rejection also requires conscious and unpleasant effort. A fraudster can be charming, and if he hasn’t personally scammed you, there is a temptation to continue being friendly with him. A pedant can be a strong professional, and this provides an incentive to tolerate him despite all the discomfort of communication.

Therefore, in real libertarian communities, complete ostracism is rare. Usually, a community member who causes repulsion is simply pushed to the periphery. There, he can either reshape his behavior and over time return closer to the core, or remain in the vague status of a partial outcast, or leave the community of his own volition. So, libertarian communities are quite resilient to problems with individual people, and these do not have a noticeable impact on the atmosphere of trust. However, another phenomenon is far more dangerous. A split.

Part 2. Why don’t libertarians like corporations?

There is an opinion that the world of victorious libertarianism is a war of corporations. Having read the first part, it is easy to conclude that this is also not true. But it is not that simple.

Communities whose members share libertarian values are capable of having a very high level of internal trust. However, libertarian communities usually have not only values but also goals. Their members do not like the outside world, where freedom is quite poor, and they strive to somehow combine the efforts of community members to influence the outside world and make it freer. This noble aspiration, alas, is capable of leading to rather sad results.

In order to turn a community into a movement—that is, to prompt community members to achieve a certain goal—this goal must be either quickly and verifiably achievable, even at the cost of serious effort (for example, a movement to abolish some repressive law), or easily broken down into stages that obviously bring one closer to the final goal (for example, a movement for EU accession, for which there is a checklist of requirements).

However, it may turn out that the goal looks tempting but suffers from a lack of specificity in implementation (for example, making Montenegro a free country). In this case, several movements may arise around the goal, differing in their ideas of exactly how this goal is achieved. For example, part of the community decides to focus on political transformations in Montenegro, and another part on building an economy independent of the state. And another part declares that it does not wish to adhere to the proposed goal and is satisfied simply living in accordance with its values (that is, remaining just a community).

The situation is exacerbated if certain activities of the movement appear from the outside not only as not bringing it closer to the declared goal, but as completely contradicting it. For example, if the goal is a free society, then any regulations of communications and business relations can easily be declared as contradicting the final goal, even if they perform an important tactical task of lowering the heat of conflict in a dispute or improving coordination in a working group.

Add to this the natural isolation of participants of one movement from participants of another movement—and soon we will inevitably see that the level of trust between several movements within one community has decreased, despite the continuing unity of basic values.

This isolation is further strengthened if a movement is formalized into a corporation. What was simply the coordination of people united by a goal has become management procedures, delegation of authority, setting tasks for working groups, accounting and control—in short, the methods familiar to all of us for making an activity more efficient.

Against the backdrop of such complication of the primary community, those who try to return to the happy past, criticizing the present, are perceived as gloomy retrogrades denying any movement toward the goal.

Thus, a relatively homogeneous community cannot move in a coordinated way toward any complex goal. But with the appearance of structures for achieving complex goals, it, firstly, still cannot move anywhere entirely in a coordinated manner, and secondly, it also loses the atmosphere of trust. What is to be done?

Part 3. How can libertarians maintain a balance of trust and efficiency?

It is quite easy to determine from the outside how great the internal unity of aspirations is in a community. If they argue about fundamental questions, then there is no unity. It is simply a discussion platform, a community united by the value of discussion as such, not its subject. If, however, disputes are over trifles, it means that agreement on basic things was reached long ago; it isn’t even discussed. This does not, however, make disputes over minor details less ridiculous and potentially less destructive.

The devil begins with the foam on the lips of an angel who has entered the fight for a holy right cause. The best path to a community split is animal seriousness in trifles (recall the pedant from the first part). Subconsciously understanding the certain comicality of their position, the disputant in a polemical frenzy begins to accuse opponents of violating basic value principles. Thereby making it clear that they perceive opponents as strangers who somehow ended up in the community.

Therefore, the first rule for a libertarian community that does not want splits is: everyone here is a libertarian. That is, they agree among themselves regarding the basic principles of their ideology.

The second rule develops the first: do not demand ideological purity from others. One can call oneself not just a libertarian, but an agorist. One can gather a bunch of agorists around oneself. But claiming to other libertarians that, for instance, you are not agorists and therefore are latent etatists is a bad idea.

The third rule generalizes the second: excessive detailing is harmful. The more detailed some description, some contract, some charter, or some rules are worked out, the more likely it is that reality will not fit the description, rules will be violated, and the charter will be interpreted based on immediate benefit. A good document is brief, evocative, and strives to capture precisely the spirit of what one wanted to express.

The fourth rule develops the third: an alliance is better than a merger. If a certain group can exist autonomously—let it exist. If it faces a task that it cannot handle on its own, let it enter into an alliance with other groups. If, instead of solving the task, the groups start merging into a single organization to solve the task, all the momentum will be spent on arranging the merger process.

The fifth rule is an antithesis to the fourth: do not judge what is better for others. If, for example, some groups have already merged into something that seems unnaturally large, there is no need to panic and declare war on them. Either they are fine with it, or they will eventually split up on their own. It is better to contact individual members of that group, applying the fourth rule.

One could continue to fantasize, but five rules are already a lot, see the third rule. Therefore, I will limit myself to what has been stated, and in conclusion, I will briefly summarize all three parts of the text.

  1. Trust is what libertarians unite for in communities. Trust must not be destroyed, otherwise the community loses its meaning.
  2. Organization is what without which a community will not move toward a goal. But organization devours trust, and thus destroys the community.
  3. A balance between trust and efficiency is possible, but it is not achieved automatically. One can formulate several rules, the observance of which will help maintain the balance.

Do not be your own enemies; we already have enough enemies from the outside.

How should a libertarian behave if they find out that children in their neighbors’ family are being subjected to domestic violence?

Yesterday we were sitting in a club, and someone asks me: so, apparently, at the MTL-lunch Svetov was grilled with questions, and he didn’t answer the subject, so what, you wonder, do you think about this?

In Svetov’s defense, I will immediately note that if he is incriminated for communicating via canned responses, then I, as a rule, base my answers on my own previous responses to similar questions, or on more general concepts I have formulated earlier. Therefore, here you go, to start with, the answer to a related question about what a child should do when they are subjected to domestic violence. And then I will expand the thought on what third parties should do when they encounter violence against other people’s children.

Libertarian morality dictates intervening in conflicts on the just side. Justice is the feeling of proportionality between the value of the subject of the conflict and the damage caused during the conflict. Therefore, the first thing to do when seeing a conflict is to quickly determine by eye what the subject of the conflict is, compare it with the damage suffered by the parties involved, and then make a decision for oneself whether to intervene or not.

However, in the case of children, the situation is complicated by the fact that a child is not fully a legal subject and is under the jurisdiction of the parent, and damn strong grounds are required to invade someone else’s jurisdiction. Therefore, the best tactic our hypothetical libertarian can adhere to is to attract a sufficiently substantial support group to their side. These could be other neighbors (a neighbor can most easily justify why this conflict concerns them at all—they hear it, see it, and feel irritation), but one can also attract simply outsiders, as long as they are ready to express their independent opinion about what is happening.

In some ways, this process is similar to bitcoin mining. In conditions of conflicting chains, the one backed by the most accumulated hash rate is considered true. Similarly, in our case—the parent provides justifications for their correctness and attracts supporters of their position—and the neighbor, opposing the violence against the child, provides their own arguments and attracts their own supporters. Each supporter acts as a node in the network with their own hash rate, that is, the ability to impose costs on the opposing side. If those who speak out against domestic violence are able to cause serious problems, this becomes a strong argument to stop the violence or avoid the problems some other way, for example, by moving.

Of course, the clash of positions will not necessarily be so harsh; it is quite likely that the parties will reach a compromise. For example, an agreement may be reached that on payday the child goes to stay overnight with a neighbor, and then the parents can drink to their heart’s content while the child is safe. Or the neighbors might propose a system of non-violent penalties for the child if they are indeed prone to causing serious damage to those around them.

Nevertheless, it is always useful to keep the scenario of possible escalation in mind, so as to intervene in others’ conflicts with a view to one’s own capabilities. And to upgrade those capabilities in advance.

The Network of Moral Pressure

Is it kosher to punch the faces of runners in Z-shirts on the spot? Or should one first clarify, “Are you truly part of the force that deprived me of my country?”

VoiceInTel

Nothing is good or bad in itself; everything depends on the circumstances. Let’s look at what our circumstances are.

First of all—both you and I, and the “Z-supporters” you mentioned, are emigrants.

There is a conflict between us and the Z-supporters. That is, we intend to use the same object for different, mutually exclusive purposes. What is this object of conflict? It is public opinion among the citizens of the state receiving us, namely Montenegro.

We plan to use it so that Montenegrins believe: all Russians who have moved to Montenegro are against Putin and Putin’s aggression; they are peaceful, civilized European people just like the Montenegrins themselves, and they should be welcomed in the country with the same readiness as Ukrainian refugees, or at least on general grounds, like some Germans.

The Z-supporters require a completely different public opinion—that Montenegrins know: all Russians support Putin, he is waging a just war against NATO, which attacked Russia in Ukraine, Russia has always been a friend and an elder brother to all the brotherly Balkan peoples, and now, when Russia drives NATO out of Ukraine, it will come and drive NATO out of Montenegro too, because this malicious Anglo-Saxon organization, generally speaking, bombed Montenegro, so let it get out. And in general—Crna Gora je Srbija. The Montenegrin brothers are doing great; look, they’ve elected a pro-Serbian president, let them keep going in the same vein.

It would seem that we and the Z-supporters have the same desire—to have good relations with the locals. However, we are appealing to different groups of locals. They appeal to those suffering from Great Serbian ressentiment. We appeal to those who consider wars of aggression unacceptable. In other words, both we and the Z-supporters are exploiting the local political divide. Where could this lead? To a situation where Russian citizens start being expelled from the country—simply for interfering in local politics, since this is a private fight, and both high-fighting parties do not wish for escalation.

That is exactly why we don’t run through the streets with FSB flags and shout that Putin is a dick. Running through the streets with flags is a privilege of Ukrainians; no one will expel them from the country.

So, of course, we are interested in making sure that Z-supporters don’t run through the streets of Montenegro. However, punching them in the face right away is still not “kosher.” First, a Z-supporter might actually be a Serb, and to avoid awkwardness, it makes sense to find this out before punching them in the face. Second, a Z-supporter, even if they are Russian, might simply not understand the reasoning laid out above and view running around with Z-symbolism simply as supporting a favorite sports team.

In short, in our situation, it is better to approach them and start a conversation. And if it’s a Russian, then argue reasonably to make them understand that Russians should not wave their political orientation in the street—it’s against “spiritual staples.” But if they start getting aggressive about it—then, of course, they should be provoked—and then punch them in the face within the framework of self-defense, as the great and terrible principle of non-aggression teaches us.

A question about the interaction between the ECU and people outside the ECU

Detailed question from Zanudny (not backed by any donations, but it’s always better to give a bore what they want without dragging it out too much)

In the event of abandoning the territorial principle, how will relations between two sovereign entities not linked by any ECU/FPCU, etc., be regulated?

Let’s imagine a statistically realistic situation under conditions of competition among sovereign jurisdictions for territory. Those that establish mandatory laws for citizens (but not for all people in general, including stateless persons, as existing states do for the “human and citizen”). Since they are contractual, not all residents will enter into the proposed agreements. If sovereign jurisdictions are extraterritorial, then opportunists cannot be driven away. Who can convict them and under what laws, if they do not create their own LJ? What will protect citizens from the arbitrariness of “stateless persons,” including violence, if they are not separated territorially and there are no zones of responsibility? What will protect the opportunists themselves from violence by individual “citizens”?

Please note, I am not considering non-recognition or conflict between jurisdictions here. If there are no common rules of the game and no higher authority, looking at history, this seems inevitable. Nor is this a question about the dictate of a local majority, although in the absence of claims to territory, claims to benefits will remain (otherwise there would be no private property). This will not necessarily trigger the “market,” because even entering into trade relations is a contract, and we are talking about sovereign jurisdictions that may autarkize for the sake of security or create a monopoly. The question is: what will guarantee the freedoms of those who would simply like to leave (or even stay) in a given territory without recognizing the legal system of their neighbors, in the event of a conflict, if they have no “protection” behind them?

Answer from Ancap-chan

The questions are getting longer. On one hand, this shows that people are absorbing the previous material. On the other—posts are stopping fitting into the Telegram channel format. Oh well, to hell with the format, I’m used to it.

So, in a certain territory, there are several contractual jurisdictions, as well as a number of individuals who couldn’t care less about all these jurisdictions and do not want to join any of them. This is quite logical, because what is a jurisdiction for? To resolve conflicts with other people using some kind of mediator. But the vast majority of conflicts are perfectly settled without any mediator! How many of you have had to sue someone even once in your life? At the same time, people constantly find themselves in the zone of influence of someone else’s rules. If these rules are known to them in advance and they agree with them, the rules are usually obeyed. If the rules are unknown in advance, people behave as they are used to, and then they are told that there is a different order here, and they adjust their behavior accordingly. If the rules are known and people disagree with them, they try to bypass the rules, sabotage them directly, or obey them but with visible reluctance.

As I have already written, panarchy is an unstable transitional state from territorial monopoly jurisdictions to pure ancap. You are touching upon the problem of how people for whom ancap has already arrived should behave toward those who still have panarchy in their heads. And that’s exactly how they should behave: according to ancap. As long as everything is settled amicably, live as good neighbors. When it stops being settled, organize a movement in your support, with or without the participation of hired professionals.

The most important thing for the unstable situation of panarchy to shift toward ancap, rather than toward the good old territorial monopolists, is the absence of demand for uniform rules, a single order, or a higher decision-making body. On one side of the scale, we have the maximization of convenience—everyone wants rules to be adapted to their ideas of what is right. On the other side will be the desire to save mental effort. It is easier to remember uniform rules than to keep different options in mind.

Thus, the simpler the set of regulations, the more likely it is to become nearly universal. The more complex it is, the greater the chance it will remain purely niche. In a simplified explanation, all libertarian theory boils down to one or two principles. Indeed, based on the bare principles of self-ownership and non-aggression, one can interact superficially with almost anyone, but for various highly specialized legal issues, more substantial codes, longer than a single page, will be required. Fortunately, they will not be needed by everyone and not very often.

So let’s drink to the right scale continuing to outweigh!

How will people interact, for example, in a village or in a city where every house is in a different contractual jurisdiction?

анонимный вопрос

Here, it seems to me, the confusion is caused by the claim about contract jurisdictions—that they will replace the state. “Yeah,” a person says, “so every house in the village will belong to a different state; what kind of mess is that going to be?”

What does the fact that a person’s house is in a certain jurisdiction actually mean for them? It means that if the house becomes the subject of a conflict, or if a conflict occurs on its territory, the resolution of that conflict (if the homeowner for some reason decides not to do it themselves) is handled by the jurisdiction.

The only case where a conflict arises with such an approach is a boundary conflict. For example, there is a dispute over who owns the fruit from a branch of a tree growing on one plot that overhangs another plot. In this case, both jurisdictions would have to be involved, and it becomes their task to agree on how to resolve the conflict.

And, obviously, if a client is not satisfied with how their contract jurisdiction handles conflicts, they look for one that presumably will do it better and enter into a contract with it. In general, fundamentally, nothing here differs from buying home insurance or a contract with a provider for connecting a home to the internet, gas, water, or electricity. Except that changing a jurisdiction is much easier than changing a gas supplier.

If the apple example seems trivial, what would you say about a boundary conflict over an oil field?

A case about stealing a business

Miloš

The Setup

A scientist and talented manager, let’s call him SM, headed an experimental laboratory at the sunset of Soviet power, and after 1991, created a private firm to monetize its scientific developments. The partnership proved successful. A clientele emerged, placing commercial orders, and a steady flow of cash followed. The scientists’ earnings increased, and it became prestigious to enter the laboratory, including for the purpose of defending a dissertation. In the new economic conditions, SM strengthened his good name—his personal brand, as they say now.

The scientist was wise and understood that he would not live forever; in the mid-2000s, well into his sixties, he chose his best student (BS) as his successor, who owed the boss a great deal. They verbally agreed that after a few years, the teacher would hand over his scientific post and a share in the business to the student under certain conditions. Until that happened, the successor was appointed as SM’s deputy with signing authority.

Time passed. But the “grandfather” aged slowly. On the contrary, developing an enviable energy, he managed to marry yet again—this time a young (very young and beautiful) student, a PhD candidate from the provinces. SM intensively began arranging the life of his new family: he solved the housing issue on a large scale, started traveling to resorts with his young wife, took up downhill skiing in his old age, and meanwhile devoted less and less time to work. But business was going well: the deputy did not let him down, and money arrived in SM’s account regularly. Commercial orders grew, and the laboratory was strengthened by new staff brought in by BS. For his part, SM did not mistreat the future successor and, as he believed, paid him generously, very generously. Everything was fine; for the boss, a warm, almost “Boldino” autumn had begun.

The Climax

However, complex and unpleasant questions were accumulating in the deputy’s soul, such as “how long must I wait?”. He had the same thoughts as Pushkin’s Onegin regarding the uncle who was, as is well known, of the most honest rules. The best student continued to remain No. 2, although he was eager for the No. 1 position. BS could not ask the boss directly when he would take over. Yet he received indirect signals from SM that the agreements were still in force. The message was: wait, my friend, and happiness will be yours; meanwhile, our business is my personal business.

Not immediately, but BS realized it was time to stop worrying and start acting. He began with something simple: creating his own client base by poaching his boss’s clients. He registered his own company and nudged customers toward the idea that, for tax reasons, the contract for the work should formally be concluded with his company rather than the boss’s firm.

Over time, BS attempted to switch the largest companies to himself, whose executives knew SM personally. They signed the documents, extending the trust they had in the teacher’s name to the student. Perhaps everything would have slipped through here as well, but every now and then BS began to let slip in conversations with old clients that he, BS, was actually conducting all the business in the scientific company, while the “grandfather” was useless. He claimed the boss was pushed around by his young wife, understood little about the business, and it was long past time for him to retire. All of this did not escape the attentive ears of the interlocutors. Some of them informed SM in polite terms about the danger he had failed to notice, being preoccupied with an intensive family life.

The Resolution

Several years passed this way. SM’s wife successfully defended her dissertation and, through patronage, obtained a very good position, remaining as young and beautiful as ever. The same could not be said for her husband, who had crossed the threshold of his seventies. He remained impeccable in providing for the family’s material needs, but he could no longer maintain the greatly increased spiritual and other needs that such a beauty craved and undoubtedly deserved. However, some other men, far from being Doctors of Science, were quite capable of providing these other needs. The professor eventually reached this discouraging conclusion after connecting the corresponding dots. The family life cracked and quickly came to a logical end. The spouses separated, and in doing so, the wife managed to secure the enviable shared living space as a memory of her husband.

The teacher, left alone, was as if waking from a faint, and after a short period of reflection, returned to his laboratory—or, to put it in modern terms, to business. His business. It turned out that his professional skills had not vanished; his favorite work not only comforted him but again began to bring pleasure. But the euphoria of the return did not last long, only until SM conducted a detailed analysis of the orders and contractual relationships. First, suspicions arose that orders were disappearing somewhere, and then he looked at the documents, quickly remembered the warnings of his friends, and met with them. The truth revealed itself to him in all its harsh guise, and he finally understood, turning to the facts, that his deputy was brazenly and effectively openly stealing his business.

A conversation took place between the teacher and the student, if it could be called a conversation. After that, having calmed down and reasoning concretely as businessmen—but without the extremism sometimes characteristic of businessmen (they were, after all, intelligent people)—SM and BS realized they were in a difficult situation and began to think about how to live further. Initially, each saw emotional arguments for an immediate and harsh “divorce.” But upon more detailed analysis, factors emerged in favor of continuing cooperation, whatever that might entail.

Meanwhile, the rift between SM and BS became exposed, consequently alienating the employees. Strangely, the battle line was drawn not between the “old” and “new” staff brought in by the boss or his deputy, but along the moral positions of the parties, mainly on the question of who cheated whom. Furthermore, the confusing scheme of how orders were processed began to affect the quality of the work. Mistrust grew among clients toward the laboratory, its head, and the deputy: from the outside, it was impossible to tell who was right and who was wrong. Other negative factors appeared, which ultimately led to a weakening of the flow of orders and affected the financial situation of the employees.

With each passing day, the situation became worse…

Questions

  1. How should the characters in the case have acted to avoid such a situation?
  2. How can the current conflict be resolved? What would you recommend SM and BS undertake to reach an agreement?
  3. Is it possible to preserve the profitable business created by SM in such a situation? How can this be done?

Constraints. The company owner is already over 70 years old. Even if he returns to the operational management of the business, he will not be able to engage in the company’s development for long. Additionally, it is important to note that the private research firm was created thanks to the owner’s authority and connections based on a state laboratory. One part of the business cannot exist without the other.

Answers

1. How should the characters in the case have acted?

As is easy to see, all the misunderstandings in the given case arose due to vague agreements. The first vague agreement: BS is forced to do all the work for a salary, based on a promise to inherit the business in an undefined future. The second vague agreement: the absence of a prenuptial agreement and, consequently, a conflict of expectations between SM and his spouse. The third vague agreement: the dubious legal status of the entire business, since officially it all remains a laboratory within a state research institute, and it is precisely this legal form that forces the first agreement to remain vague.

It is clear why SM preferred to stay under the wing of the state in the early nineties: it provides enormous savings at a stage when the business has not yet stood on its own feet. Here you have premises in the institute at the budget’s expense, plus a wealth of various informal connections in state structures of different levels, which can be used to pull off various schemes.

In the new post-Soviet economic reality, passing on the position of laboratory head as an inheritance is somewhat archaic. The timely establishment of a more adequate company structure could have provided the tools to prevent the conflict between SM and BS. For example, SM could have received a share in the business in addition to a salary and gradually increased it. The business itself could have been scaled more confidently instead of being confined to the size of a laboratory—but that, of course, is a matter of taste, ambition, and market conditions.

In general, the only task of a business owner that cannot be delegated to managers is controlling that management does not plunder the business. If the business owner does not perform this single task, then he alone is ultimately responsible for the business slipping through his fingers. To the extent that the state can be likened to a commercial company, the people are certainly responsible for the appalling quality of state management and the plundering of state property into the pockets of civil servants—but that is an off-topic in this case.

Thus, if regarding the business, the solution lies in removing it as completely as possible from state regulation, then regarding marriage, such things are not permitted by family codes. According to the code, a prenuptial agreement cannot provide for economic sanctions for extramarital affairs, which makes SM’s position in this deal more vulnerable. However, this is not so important. All agreements could have been concluded in advance. On the other hand, such romantic infatuations in old age are inevitably accompanied by a certain affectation, so it would be strange to expect a sober view from SM during the “mating season.”

By the way, if the company had been separated from the research institute in its time and represented an independent business, the appearance of SM’s spouse on the horizon would have inevitably led BS to demand clear guarantees of receiving the business; otherwise, it would have by default passed as inheritance to SM’s spouse, without all these dances with appointing a new lab head at the scientific council.

2. How can the current conflict be resolved?

I would advise formalizing the separation of roles. SM remains the lab head in the research institute until he decides to retire, and also holds the status of a scientific consultant with a good salary in BS’s company. BS retains his position as head of sector (or whatever it was) in the boss’s lab and remains the general director of his own company. As for what form to keep SM’s company in, I won’t venture a suggestion. Management could be transferred to BS. One of the companies could be liquidated. They could be merged into a holding. It’s not fundamental.

The point of the proposed solution is that each party has tools against the other, but no incentive to use them without extreme necessity. SM continues his scientific work, which should have a positive effect on his mood and zest for life, and the salary in BS’s company will allow him to continue living in style, as he is used to. At the same time, he no longer needs to ensure the business is not being plundered, since the business has already been transferred; only the rent remains. BS retains all clients and operational management, which means he has guarantees of maintaining control over the business and incentives to develop it in every way. He could fire SM, but then he would lose his position in the laboratory.

What am I doing wrong?

If you have been threatened with the state

Bitarch’s Column

Suppose someone you know or a business partner has taken offense at something and has begun to threaten you with the leviathan. Let’s say the laws are also on their side, and they are demanding money or something else from you. You disagree with these demands and believe you are in the right, and you would prefer to ignore state laws, but it is profitable for your counterparty to use them against you. What should you do?

If your kind word does not have enough persuasive power to resolve the conflict privately, there is nothing terrible about threatening to also turn to the state on your part. Its laws are written such that everyone is guilty before it, so your threat is something like resorting to the doctrine of mutual nuclear deterrence.

Describe to them in vivid detail all the problems that you both will face if you start official disputes; tell them that you are ready to go to the end, but would gladly avoid all this mutual disgrace if they, following your lead, show consciousness and refuse to use the state against people.

It doesn’t matter at all what you threaten with. The state will roast one person for unauthorized apartment redevelopment, another for paying staff under the table, and a third for swearing in a public place. Something will definitely be found.

Isn’t it wonderful when even your own minor disagreements can be turned into an act of defiance against the regime!

Under ancap, it is unlikely that all countries will instantly become single-story, so the question is about collective property.

Specifically regarding apartment buildings: what can be done in a future libertarian Russia with lunatics who keep rabid dogs in their apartments, bring trash from the landfill, drill every day, etc.?

анонимный вопрос

I have already answered a practically identical question, but since we have returned to this topic, I will now approach it from a slightly different angle.

In a recent post on monopolies, I mentioned that in a free market there are both factors contributing to the growth of companies and factors contributing to their fragmentation. The inconveniences that individual apartment owners face when attempting to jointly manage an apartment building clearly tell us that in this area, the tendency toward the growth of companies will be stronger in a free market. And indeed, it is more convenient for one developer to build an apartment building, for one legal entity to manage it, and so on. So, as the initial non-market Russian distribution of property (where every apartment has its own owner) is smoothed out, we will more and more often arrive at a situation where apartments are owned by a landlord and rented out by them.

Thus, the boundaries of acceptable behavior when using the apartments will be determined primarily by the owner, not the tenant, and for a quiet, decent resident, this is certainly convenient: you inform the owner that the neighbor is going crazy and has filled the apartment with some stinking junk, and the owner will set things right.

Now, in the event that the neighbor bothering you is actually the owner of their apartment, we fall within the framework of the usual problem of negative externalities: filing a claim, negotiations, threats, court, compensation. Moreover, again, if you are not the owner but a tenant, the problem is solved more easily, since it is easier to determine the amount of damage. You declare your willingness to move out if your landlord does not resolve the problem with the neighbor, and the landlord then presents claims to the neighbor, based on the amount of rent they risk losing, and this is a much more reliable basis for legal proceedings than other methods of assessing damage.

The moral. Housing maintenance is also a business, and no one promised that doing business is easy. But there are ways to make your life easier; after all, it’s the market.