I recently read Anarchy Unbound: Why Self-Governance Works Better Than You Think (Cambridge Studies in Economics, Choice, and Society) by Peter Leeson and what an excellent book it is! Most people have a negative knee jerk reaction to the idea of anarchy, usually because they think anarchy would be a Hobbesian chaotic nightmare. Peter shows that this initial perception is not accurate using rational choice economic analysis of history and law, demonstrating many cases of self-governance: privately created social rules and institutions. These private arrangements were used to protect property, enable trade or create governance. In order to do this kind of analysis, we must distinguish between governance and government.
One fascinating thing about the book is that Peter isn’t just considering the “easy” cases where most people think self-governance could feasibly work, but also circumstances where most people would think it couldn’t work. Examples include:
- self-governance when populations are socially diverse
- self-governance when self-governance when individuals face the risk of physical violence
- self-governance in societies composed exclusively of “bad apples” – e.g. gangs, pirates
Mechanisms of self-governance / private law can use internal enforcement or external enforcement. Some mechanisms are peaceful e.g. reputation, social shaming – while others are violent e.g. blood feuding, risk of physical violence. I liked the discussion on these concepts in the book:
- The discipline of continuous dealings – as a response to the prisoner’s dilemma problem implied by Thomas Hobbes.
- Coasian bargaining – as a way of reducing the social cost of plunder/theft.
- Social distance and signalling – individuals can manipulate their social distance , thus signalling credibility to one another, and this separates ‘cheaters’ from ‘cooperators’, easing decisions of who to trade with, even in societies with heterogeneous groups.
- Constitutions (Pirates, Gangs) – Creating consensus about an organisation’s rules, Regulating behaviour that is individually beneficial but harmful to the overall organisation, Generate information about member misconduct and coordinate enforcement of rules.
Peter’s case for anarchy and self-governance is measured – its not suggesting that anarchy and self-governance literally work best in all possible cases. His analysis includes discussion of Somalia, and outlines useful ways of thinking about Somalia:
- The importance of only examining the “current governance opportunity set” (rather than imagining ‘Unicorn government’ as a realistic possibility for places like Somalia).
- We should compare like with like and compare “Low quality anarchy” with poor quality government, rather than disingenuously comparing “low quality anarchy” with high-quality western level governments.
- Despite the existence of “low quality anarchy” in Somalia, it still performed better than many of its peers (neighbouring countries) on many human quality of life measures over the anarchy time period. See 2007 article, “Better off stateless: Somalia before and after government collapse”.
What happens if a government cannot place binding constraints on political rulers? We’re likely to see government predation:
We can apply this kind of thinking to governance opportunities in LDCs (least-developed country). If institutional condition (1) required for ideal political governance – binding constraints on political actors – isn’t satisfied, as it tends not to be in the poorest parts of the developing world, the second-best governance arrangement can be achieved only by departing from institutional requirements (2)-(4): government power to provide law, enforcement, and public goods. That is, conditional on government being unconstrained if it exists, welfare may be maximised if it doesn’t.
The reasoning here is straightforward. If government is unconstrained, fulfilling conditions (2) – (4) enables predatory government – it creates the very means of such predation.
This argument is used to show that low-quality anarchy will likely outperform predatory government. If implemented in countries with ‘high quality government’, instead of the “low quality anarchy” we saw in Somalia, I think we would instead see “high quality anarchy”.
It’s only $14 for the Kindle version on Amazon, and I recommend the book to anyone curious about libertarianism, and also to any libertarians/anarcho-capitalists who want to gain a deeper appreciation for historical examples of self-governance. Absent the state, people can, have and still do cooperate peacefully and efficiently given the constraints they face. After reading the book, you will gain a deeper appreciation of the concept that government is merely one type of governance.