I am seriously suggesting that international law, as it relates to business and contractual transactions, is effective, and has been even more effective at certain points in history when governments were not involved in enforcing this law at all (see Long’s piece for more on merchant law).

But even international law in general is stable, if not effective. Remember, your claim was that governments are inherently more stable than markets. I gave a counterexample: international relations as a whole are faily stable, even though there is no central authority. Now you can claim that this arrangement isn’t completely effective — and I would agree — but you must recognize that effectiveness is a different issue than stability.

‘Non-government enforced standards do not change when they serve a purpose: ‘

The fact that people do things which benefit them is no great surprise. The key to voluntary standards is that those who find no benefit in complying simply don’t. Enforcement of a law does not ensure compliance, but it changes the cost/benefit matrix. As before, people will agree or disagree over whether laws are therefore a good thing or a bad, but the idea that enforcement makes no difference is in contradiction to all the available data.

Where did I say enforcement makes no difference? Read what I wrote above: I was talking about “Non-government enforced standards,” not “unenforced standards.” Go back to Long’s ATM card example. Anyone is free to come up with a triangle shaped ATM card, but it won’t do much good if it won’t fit in anyone elses machine. This isn’t merely “voluntary” compliance – it’s in the interests of everyone to comply with a standardized rule, even if they would prefer to comply with a different rule.

I’m surprised by this. It’s a fairly well established fact that the absence of competition and innovation makes a monopoly market more stagnant than a competitive one.

I think your using the word “stagnant” here in a confusing way. It is true that monopolies tend to be technologically stagnant relative to competitive firms. But at the same time, a monopoly firm, by virtue of its monopoly power, has the ability to set quantity and price at wherever levels it pleases; an ability that firms in a competitive market do not have. So competitive markets are better than monopolies in two different ways: with regard to technological improvement, competitive markets are dynamic while monopolies are static; and with regard to the power to change society at will, monopolies are largely unconstrained (and thus non-stagnant) while competitive markets are constrained by competition (and thus stagnant in this respect).

Are you seriously suggesting that international law is as effectively enforced as national? The one point of consensus between those who support and oppose the UN is that international law is currently unenforcable. Powerful countries get away with breaking international laws as they see fit to a far greater extent than powerful private citizens in the US. This is a precise example of my point, not of yours.

‘Non-government enforced standards do not change when they serve a purpose: ‘

The fact that people do things which benefit them is no great surprise. The key to voluntary standards is that those who find no benefit in complying simply don’t. Enforcement of a law does not ensure compliance, but it changes the cost/benefit matrix. As before, people will agree or disagree over whether laws are therefore a good thing or a bad, but the idea that enforcement makes no difference is in contradiction to all the available data.

‘And I reject your claim that markets are inherently less predictable than government monopolies.’

I’m surprised by this. It’s a fairly well established fact that the absence of competition and innovation makes a monopoly market more stagnant than a competitive one.

‘I think this is a misunderstanding.’

What you’ve said above makes me suspect not.

I’m not sure why you think dramatic change is more a function of markets than government. International law seems fairly stable, even though there is no central world government to enforce it. The same is true for all types of private law, including arbitration and other generally accepted business practices. Non-government enforced standards do not change when they serve a purpose: see QWERTY, Microsoft Windows, rules of grammer, computer language, etc. Under these standards, people need not fear that the next political administration will sell out to some special interest and change the law. Only if all the people effected by the law are willing to pay will the law change.

And I reject your claim that markets are inherently less predictable than government monopolies. Successful market participants are generally motivated by profit; successful politicians may be motivated by a great many more things: profit, power, public service, nepotism, and so forth. At the same time, voters are much more fickle than consumers partly because there is little or no connection between what individual voters do and what individual voters get. Voters can afford to be fickle because they don’t bear the cost of their actions; consumers do.

My reading of history is that social and legal structure is built on an ongoing basis as the market develops. The key point I’m trying to make is that you can’t simply sweep away the structure without affecting the stability and the function of markets (which, as before, is not a bad thing per se, but needs to be understood by those considering such changes). My conversations with anarchists have led me to believe that most of them consider that markets can function perfectly well without the structure which has built up around those which do function. This is either a misunderstanding on my part, or a key area of disagreement.

I think this is a misunderstanding. No serious anarchist believes that we can build a legal system entirely from scratch and hope that it works. The confusion here is a failure to distinguish between means and end states. All anarchists share a desired end state, but not all agree on the means. The ones I consider reasonable are those who recognize that positive social change takes time, and that baby-steps towards a goal are more desirable than immediate, overnight reform.

There are several interesting things in the second essay you post, but I think it’s getting too far ahead of things. Let me respond to the questions you asked. If we reach understanding there, I’ll be happy to discuss the rest.

‘Why do you say that market-based law lacks a mechanism for determining who owns what? You seem to be placing great importance on the words “specific” and “fluid,” but I’m not sure what you mean by either term, or why you think the market is best described by one while the government is best described by the other.’

I use the term ‘specific’ to refer to a particular set of laws and established property rights, and the term ‘fluid’ to refer to a situation in which more than one competing sets of laws and property rights are being asserted by different parties. The reason the latter is fluid is because there is every possibility that laws and property rights will change dramatically as the balance of power shifts in the same way that competitive markets move a lot more quickly and a lot less predictably than monopolistic ones.

‘There seems to be two issues at play here: first, the claim that in order for a market to work, there must be some standardization of law. Second, the claim that property law must exist prior to and outside of the market.’

I actually specifically avoided making any such claims:

(Me): ‘The point about ‘market-based’ security mechanisms is that they make for a fluid framework for enforcement with neither a given system of values or a given way to determine who owns what. We can discuss both whether or not this would work and how indeed we measure success, but I don’t think it is a point of discussion that a specific set of property rights relies on a specific framework for determining them. The market, in this context, is non-specific for the reasons given above.’

My reading of history is that social and legal structure is built on an ongoing basis as the market develops. The key point I’m trying to make is that you can’t simply sweep away the structure without affecting the stability and the function of markets (which, as before, is not a bad thing per se, but needs to be understood by those considering such changes). My conversations with anarchists have led me to believe that most of them consider that markets can function perfectly well without the structure which has built up around those which do function. This is either a misunderstanding on my part, or a key area of disagreement.

Why do you say that market-based law lacks a mechanism for determining who owns what? You seem to be placing great importance on the words “specific” and “fluid,” but I’m not sure what you mean by either term, or why you think the market is best described by one while the government is best described by the other.

There seems to be two issues at play here: first, the claim that in order for a market to work, there must be some standardization of law. Second, the claim that property law must exist prior to and outside of the market.

Roderick Long responded to both of these objections in a speech he gave over the summer at which I was in attendance: http://www.lewrockwell.com/long/long11.html

Here’s the first answer:

“So let’s first take the case of universality, or having a universally known body of law that people can know ahead of time and count on. Now, can that emerge in a non-state system? Well, in fact, it did emerge in the Law Merchant precisely because the states were not providing it. One of the things that helped to bring about the emergence of the Law Merchant is the individual states in Europe each had different sets of laws governing merchants. They were all different. And a court in France wouldn’t uphold a contract made in England under the laws of England, and vice versa. And so, the merchants’ ability to engage in international trade was hampered by the fact that there wasn’t any uniform system of commercial law for all of Europe. So the merchants got together and said, “Well, let’s just make some of our own. The courts are coming up with these crazy rules, and they’re all different, and they won’t respect each other’s decisions, so we’ll just ignore them and we’ll set up our own system.” So this is a case in which uniformity and predictability were produced by the market and not by the state. And you can see why that’s not surprising. It’s in the interest of those who are providing a private system to make it uniform and predictable if that’s what the customers need.”

“It’s for the same reason that you don’t find any triangular ATM cards. As far as I know, there’s no law saying that you can’t have a triangular ATM card, but if anyone tried to market them, they just wouldn’t be very popular because they wouldn’t fit into the existing machines. When what people need is diversity, when what people need is different systems for different people, the market provides that. But there are some things where uniformity is better. Your ATM card is more valuable to you if everyone else is using the same kind as well or a kind compatible with it so that you can all use the machines wherever you go; and therefore, the merchants, if they want to make a profit, they’re going to provide uniformity. So the market has an incentive to provide uniformity in a way that government doesn’t necessarily.”

And here is the second:

“Another popular argument, also used often by the Randians, is that market exchanges presuppose a background of property law. You and I can’t be making exchanges of goods for services, or money for services, or whatever, unless there’s already a stable background of property law that ensures us the property titles that we have. And because the market, in order to function, presupposes existing background property law, therefore, that property law cannot itself be the product of the market. The property law must emerge – they must really think it must emerge out of an infallible robot or something – but I don’t know exactly what it emerges from, but somehow it can’t emerge from the market.”

“But their thinking this is sort of like: first, there’s this property law, and it’s all put in place, and no market transactions are happening – everyone is just waiting for the whole legal structure to be put in place. And then it’s in place – and now we can finally start trading back and forth. It certainly is true that you can’t have functioning markets without a functioning legal system; that’s true. But it’s not as though first the legal system is in place, and then on the last day they finally finish putting the legal system together – then people begin their trading. These things arise together. Legal institutions and economic trade arise together in one and the same place, at one and the same time. The legal system is not something independent of the activity it constrains. After all, a legal system again is not a robot or a god or something separate from us. The existence of a legal system consists in people obeying it. If everyone ignored the legal system, it would have no power at all. So it’s only because people generally go along with it that it survives. The legal system, too, depends on voluntary support.”

“I think that a lot of people – one reason that they’re scared of anarchy is they think that under government it’s as though there’s some kind of guarantee that’s taken away under anarchy. That somehow there’s this firm background we can always fall back on that under anarchy is just gone. But the firm background is just the product of people interacting with the incentives that they have. Likewise, when anarchists say people under anarchy would probably have the incentive to do this or that, and people say, “Well, that’s not good enough! I don’t just want it to be likely that they’ll have the incentive to do this. I want the government to absolutely guarantee that they’ll do it!” But the government is just people. And depending on what the constitutional structure of that government is, it’s likely that they’ll do this or that. You can’t design a constitution that will guarantee that the people in the government will behave in any particular way. You can structure it in such a way so that they’re more likely to do this or less likely to do this. And you can see anarchy as just an extension of checks-and-balances to a broader level.”

“For example, people say, “What guarantees that the different agencies will resolve things in any particular way?” Well, the U.S. Constitution says nothing about what happens if different branches of the government disagree about how to resolve things. It doesn’t say what happens if the Supreme Court thinks something is unconstitutional but Congress thinks it doesn’t, and wants to go ahead and do it anyway. Famously, it doesn’t say what happens if there’s a dispute between the states and the federal government. The current system where once the Supreme Court declares something unconstitutional, then the Congress and the President don’t try to do it anymore (or at least not quite so much) – that didn’t always exist. Remember when the Court declared what Andrew Jackson was doing unconstitutional, when he was President, he just said, “Well, they’ve made their decision, let them enforce it.” The Constitution doesn’t say whether the way Jackson did it was the right way. The way we do it now is the way that’s emerged through custom. Maybe you’re for it, maybe you’re against it – whatever it is, it was never codified in law.”

‘And I also agree that property rights make no sense outside a specific framework for enforcement. Not that his has much to do with whether market security mechanisms would or would not work. It’s more of a metaphysical question about the nature of ethics.’

The point about ‘market-based’ security mechanisms is that they make for a fluid framework for enforcement with neither a given system of values or a given way to determine who owns what. We can discuss both whether or not this would work and how indeed we measure success, but I don’t think it is a point of discussion that a specific set of property rights relies on a specific framework for determining them. The market, in this context, is non-specific for the reasons given above.

Peter, please visit:

http://www.true-agent.com/juddblog.pdf and, if you would be so kind, contact me off blog at true-agents@true-agent.com .

I’m trying to revive a conversation you were once having at another blog site.

If others are interested in the content, I would be most happy to discuss it here, too.

I’m not sure whether we are agreeing or disagreeing. Yes, obviously ability to pay is dependant upon the security of property rights. But does this mean that property rights must be secured through a coercive monopoly or through the market itself? I don’t see anything inherent in the nature of property rights that necessitates the former.

And I also agree that property rights make no sense outside a specific framework for enforcement. Not that his has much to do with whether market security mechanisms would or would not work. It’s more of a metaphysical question about the nature of ethics.

Either i’m missing something big whenever I talk to anarchists, or the idea of property rights makes no sense outside the idea of a specific framework for enforcing them.

There is no right or wrong answer to your question. The most basic, abstract answer is: whatever mechanisms people are willing to pay for. David Friedman describes one possible mechanism for dispute resolution.