APPENDIX: A minarchist’s position

‐Friedmanian anarcho‐capitalism tends towards territorial monopolies in the
 use of coercive power
 ‐there is a cost to competition in protective services over an area
  ‐negotiation costs between agencies—these are minimized when there is
   no territorial competition
  ‐each protection company has considerable power; it is advantageous for the
   company, and neutral to each individual customer, to demand that only one
   protection company be employed at a time
  ‐it is also possible to make the other companies’ business very difficult
   by denying access to privatized infrastructure, like roads and airspace;
   this is only a problem for the clientele as a whole, not to the individual
 ‐enforcement of rights to territorial property naturally ties each
  protection company to a certain area
  ‐a reduction in transaction costs will follow if other rights are enforced
   by the same company
  ‐extra costs will be incurred to each of the individual protectees if they
   opt for redundant protection of their territorial property rights, however
   most of the benefit bought by redundancy goes to surrounding people
   ‐i.e., the guarantee obtained thru redundant protection of non‐revival of
    territorial monopolies in violence is a public good
  ‐extra costs are incurred if the territory is not contiguous and roughly
   spherical in a sort of cultural metric
   ‐problems with rights of passage
   ‐problems with response time to incidents
  ‐costs can be reduced by reducing the border area to other territorial
   ‐the cost of enforcing a territorial border scale with the length of the
    ‐this not only goes for usual governance rights, like the states’, but
     also for private territorial property
   ‐the area, people and resources spanned by an area scale quadratically
    with the border length, giving rise to significant returns to scale in
    the above costs
 ‐the cost of high numbers of protection companies
  ‐when the number of enforcement companies grows, transaction costs
   between them scale superlinearly

 ‐returns to scale in enforcement
  ‐all enforcement relies on a kind of inverse Commons
   ‐if criminals were to organize, crime would be profitable
    ‐from this perspective, crime isn’t efficient, just profitable, so
     profitable!=efficient on most markets which are not perfect!
   ‐this is the real reason for large‐scale enforcement, the like of what we
    see in nation states
    ‐we need to pit one criminal against another, in order to keep them from
    ‐this is the reason organized crime is punished more severely than
  ‐a workable protection company needs to be large enough to fight organized
   crime, with means of gathering income which are unlawful and extremely
   ‐slave trade is one that will always remain, even under anarcho‐capitalism
 ‐it is clamed that rights enforcement as a market suffers from multiple
  equilibria, and that anarcho‐capitalism and states could represent such
  ‐the above is sufficient to cast doubt on the idea, since according to this
   viewpoint, anarcho‐capitalism actually tends toward state‐like organization
  ‐the implication is, anarcho‐capitalism cannot be an equilibrium if the
   above holds
 ‐when these costs are minimized, we get a sequence of events
  ‐anarcho‐capitalism is instituted
  ‐small, individual protection companies solidify the area they protect to
   increase responsiveness and to lower prices for service
  ‐the companies agree to small‐scale territorial monopoly to lower
   transaction costs with other companies, and also scheme to get monopoly
   power in their area (monopolistic competition), thus speeding up the
   monopoly development through the increasing costs of interaction
  ‐larger protection companies utilize the inverse Commons and undercut
   smaller competitors
  ‐organized crime proves a tough nut, and customers flock to the larger
   protection companies which are the only ones capable of keeping the mafia
   in check
  ‐some small protection companies go rogue, and start employing scare tactics
   with weapons of mass destruction; large companies fight them off, but the
   population within their reach is subsequently semi‐voluntarily dearmed
  ‐the large protection companies now have territorial monopolies in force,
   and they keep growing
   ‐the growth will only stop when managerial costs outweigh returns to scale
  ‐we end up with a state, but without any of the usual checks and balances we
   associate with the state
 ‐ergo, efficiency in rights protection calls for something else than
  protection companies
  ‐the outer layer cannot be achieved in terms of efficiency, since whenever
   it has enough power to enforce the rights, it has enough power to stiffle
   any opposition to it
  ‐the outer layer must be something like a state, and it cannot be stable;
   the state’s functions as a rights enforcer will always have to be actively
  ‐hence, minarchy and the idea that the fight for freedom is never over
‐the results of the rise of territorial monopoly in anarcho‐capitalism
 ‐we can get a Rothbardian/Hoppean monarchy or oligarchy
  ‐kingdoms cannot have liquid markets, especially when they print their own
   ‐the monarchy’s value cannot be capitalized
   ‐monarchs face the problem of calculation
   ‐thus, contrary to Hoppe’s claims, the monarch cannot rationally maximize
    the value of his kingdom
   ‐also, the use value of a certain kind of monarchy will be monarch‐
    ‐this is an instance of firm‐specific capital
    ‐a monarchy thoroughly reengineered to fit the needs of a certain monarch
     will be more or less useless to another
  ‐since the valuations of the monarch are what counts in a monarchy, normal
   efficiency concepts do not apply; everything in the kingdom must be
   subjugated to the monarch’s wishes, not to those of the people themselves;
   thus, it is unclear whether the price system can actually function the way
   e.g. Hayek or Mises take it to
  ‐when we aim at maximum total utility, the consumer surplus from non‐
   tradeable goods of each citizen is a plus; when we aim at the maximum
   welfare of the monarch, only tradeable goods and services count; hence
   the monarch has an incentive to grab the consumer surplus if there is
   ‐the implication: total welfare does not materialize, and the monarch is
    likely to force his subjects to work more than they want, to sell them,
    or, more generally, force them to provide services which they wouldn’t,
   ‐in other words, what was previously unsellable now becomes just that
    ‐such unsellables, like babies wanted by pedophiles, can indeed be
     mass‐produced in a Hoppean monarchy
    ‐such production will take place as normally unsellable goods and services
     tend to have very high market value
     ‐pace examples of slave trade by organized crime and the like
 ‐moreover, even if the ruler is a corporate entity, it will at the very
  least behave according to the theory of optimum taxation which is quite
  different from what overall efficiency would require
  ‐capitalization will force a rational ruler to resort to
   non‐distortionary taxation, like lump‐sum taxes, so this will likely lead to
   a purely distributionary change

‐the Bigger Picture
 ‐should we think more about externalities?
  ‐is allocation really the big picture? how about distribution?
 ‐how about coercion? is it a marketable good, really?
  ‐I don’t think so
  ‐the trouble with coercion is, the fear/threat it causes is a public good
   ‐this is what Nozick implicitly aims at
   ‐this is also what drives all enforcement of rights, at the very lowest level
    ‐if it works for just enforcement, why should it not work for injusticeable
    ‐I think whenever any entity has enough power to stop crime, it
     will also have enough power to exploit
  ‐to sidestep the risks
   ‐mechanisms should be present to correlate the resistance to the
    state/protection company if exploitation is to occur (the scale advantages
    come precisely from the assumption of independence, which organized crime
    breaks; the republican mindset, aimed at in the US constitution, is one
   ‐competition between protection companies could be enforced from above
    (competition will cease if the above point on territorial monopoly is
    true; it will have to be artificially maintained)
   ‐there should be a countervailing power which can only work when
    exploitation is at hand (arming the population is one example)
    ‐whether this power is organized (like the French militia) or not (like
     the US population as a whole) is another question