Anarcho-Capitalism: The Ideal.

Aleks Popovic
May 2, 2021
Economic Policy

Anarcho-capitalism is a very unknown political ideology to the general population, and this paper is being written with the intention of informing the reader about this ideology. This paper will be structured by first explaining what anarcho-capitalism is, then go into the ethics of anarcho-capitalism and also go into why you should be an anarcho-capitalist. This paper will then explain law in an anarcho-capitalist society, followed by the economic factors of anarcho-capitalism and to wrap it up, this paper will show historical examples and evidence on why anarcho-capitalism is best. 

What is anarcho-capitalism? Anarcho-capitalism combines two of the most controversial stances to take on a position: Anarchism and laissez-faire capitalism. Anarcho-capitalism is a system based on complete privatization of everything in society within a market. Simply put, anarcho-capitalism is just 100% pure capitalism. Anarcho-capitalists seek the abolishment of the state and the privatization of everything within society. Before this paper continues it is imperative that one common fallacy is brought up. This is what is known as the public goods fallacy. The common critique of anarcho-capitalism is the simple idea that not everything can be privatized and must be owned by the state. This idea is very flawed in nature. How do we fund public goods and state owned property? The taxpayer pays for these public and government owned goods. What this means is that all so called public goods are in reality just privately owned by the taxpayer. Therefore, everything can be operated through a private mode of production and through voluntary exchange and funding everything that is currently owned by the state can be privatized if it is deemed necessary by the will of the people. To simplify it, everything that is currently a public good owned by the state can most definitely be owned by the private sector. 

Now the paper will move onto the actual ethics of anarcho-capitalism. At is core every single system relies on an ethical justification for it. Without ethics we wouldn’t be able to determine which system is considered good and which are considered bad. The justification for anarcho-capitalism is based on the pure idea of property rights. We get our idea of property rights from self-ownership. Since we own ourselves that's what we derive the concept of property rights from. So, I would argue that since we have property rights from self ownership. We ought to protect rights, and since property rights exist, we ought to aim for a society which best protects property rights. In order to protect property rights a state cannot exist due to the state itself being a violation of property rights. What is a state? A state is a coercive monopoly on the use of force. Private property exists within the states given territory and the state has a monopoly of force on that territory. That would consequently mean that the state can take any action against private property owners in society. The most prevalent is taxes in our modern society. Taxation is a violation of property rights, meaning we shouldn’t have taxes in our society based on what was said previously. Overall, the state's existence itself is also a violation of property rights even if we had no taxes. As previously established, a state has a coercive monopoly on the use of force in a given area and property owners exist within that area. A state must have some level of coercion involved with it due to it being a monopoly of force. Since the state has a monopoly of force then people cannot freely compete with the state still giving ultimate power to the state. They cannot compete with the state due to the state, meaning the state has a coercive monopoly instead of an efficient monopoly. Since it is a coercive monopoly it in turn is a violation of property rights. To quickly touch on the justification of self ownership as our justification for property rights.  Argumentation ethics is a great way to justify it. Argumentation ethics simply states that in order to engage in argumentation you must have ownership over the self, so by engaging in argumentation by trying to disprove self-ownership you are engaging in a performative contradiction, making your claim invalid. It is important that two common arguments are addressed in this paper as well to limit further confusion between the reader and other arguments they hear against it. The first common argument against argumentation ethics was put forward by Robert Murphy and Gene Callahan. The argument is that argumentation ethics can at most establish self-ownership only to one’s mind and mouth and only during the period that the individual is engaging in argumentation. This critique of argumentation ethics can be separated into two parts. The first being argumentation ethics only posit self ownership over the mouth and the brain and the second being that it is only during the period of argumentation. To address the first part, the argument by Murphy falls apart when we consider the interconnectedness of the body. While it is not necessary to have legs, arms, hands, etc. to engage in argument, an act of aggression against an individual even presupposing this argument to be true would still fall under a performative contradiction. Secondly, the argument that this truth claim expires the moment in which argumentation no longer occurs is complete nonsense and discredits the very epistemological a priori Austrian tradition in which posits a ultimately a priori truth deduced from irrefutable material axioms. To claim that truth claims expire the moment they are no longer in use to decay into historicism. The quantity theory of money holds true in every scenario and cannot be falsified by that of experience, the same thing holds true for argumentation ethics. To claim these truth claims expire is nothing more than verbal illiteracy. The second common critique of argumentation ethics was put forward by Jason Brennan which is simply that Hans Hermann Hoppe conflated liberty rights and claim rights when formulating argumentation ethics. This critique isn’t necessarily wrong, but opponents of argumentation ethics derive a complete non-sequitur from this argument. In fact it is not even a critique. In order to have the material to engage in argumentation it is not necessary that one possess ownership at all. It is only necessary that private property exist in some format so the individual can use, for example, rental services to contain temporary use rights over the necessary material to engage in argument. However this very necessity presupposes the private property ethic, and for one to argue against this is a performative contradiction.

Now it is important to talk about why you should be an anarcho-capitalist. The first reason, as previously established, is the simple idea of property rights. Anarcho-capitalism is one of the only systems along with Voluntaryism and Hoppeanism that actually respect and properly protect property rights. This reason is enough to simply be an anarcho-capitalist due to the simple idea of protection of rights. Aside from the property rights justification, I also firmly believe that anarcho-capitalism is the system which maximises individual satisfaction in a single system. Every single individual human acts to bring themself more satisfaction than what their previous level of satisfaction was. What this means is that by allowing man to act freely they will then all act to bring them more satisfaction and happiness. Praxeology states that humans act in their own self-interest and act to boost individual satisfaction and happiness. So, by allowing freedom in an economy, it will allow individuals to be able to allow people to do everything by complete voluntary exchange. That means it will in turn boost overall utility, satisfaction and happiness for everyone. Going into this further would be pointless as the general principle is simply to allow people to boost individual satisfaction and happiness. 

Now, I will write on how law in an anarcho-capitalist society would work. There would simply be private police, private courts and private rights enforcement agencies.  The core of anarcho-capitalist law is that rights enforcement agencies act like an insurance company. Their sole purpose is to enforce your rights and your rights being property rights as previously established in this paper. Rights enforcement agencies take the job of getting justice for you when your rights are violated. For example, if you're away from your house and someone breaks in and steals something, you would go to your rights enforcement agency and say that someone stole your TV. It would then turn into your rights enforcement agency’s job to get justice for your property rights being violated. They could turn to a private police agency or have their own detectives. Either way, the idea is that they will enforce rights in society for the individual. As far as the police system goes, if you get into a situation or see crime happening, you would simply call the police, which are privately owned, and they would show up to deal with the issue at hand. 

This paper will not go into full economic details on anarcho-capitalism, but this paper will go into a simplified idea on how the economy would work. Anarcho-capitalism would just be a complete laissez-faire capitalist economy justified through the Austrian School of Economics. It is impossible to fully describe Austrian Economics in this paper, but I will give a few reading suggestions to further your personal knowledge. For beginner books I would start off with, “Economics in One Lesson” by Henry Hazlitt, “Choice” by Robert Murphy, “What has Government done to our Money'' by Murray Rothbard and “Austrian Economics: An Introduction” by Steven Horwitz. After reading these four books, you can read various essays and papers relating to whatever topics you choose. To get total information, it will take a long time, but it could be well worth it. The Mises Institute has a bookstore, and you can get almost every book on Austrian Economics and Libertarianism there. They also have PDFs of most books. This paper encourages you to read at least the first four books that have been recommended and further your knowledge on economics to become more fond of a complete laissez-faire system. Some will bring up the belief that America during the Gilded Age and 1800s was a laissez-faire capitalist system, but this claim is foolish. A laissez-faire system has never existed.

For my last argument on this case for anarcho-capitalism, although there has never been a complete anarcho-capitalist system there have been relatively similar systems, and I want to talk about one in this paper: the London Stock Exchange. In the early beginnings of what would come to be known as the London Stock Exchange, individuals and brokers gathered at coffee houses all around London, providing a trading floor for the people interested in the business and market of investing. The buyers and sellers would turn the coffee houses into private clubs, which would serve as organizations providing an atmosphere where trades and traders follow a common set of rules. The buyers and sellers of the coffee houses had to find ways to make their business and business ventures attractive. They would do this by providing some sort of insurance against fraud through the rulesets that had been privately established in the clubs, although these rules were not official, nor did the exchange have an official rulebook until 1812. The London Stock Exchange Writes; “London Stock Exchange is one of the world’s oldest exchanges and can trace its history back to the coffee houses of 17th century London.” Brokers would initially deal and handle their business at the Royal Exchange, but this would become outlawed (supposedly due to the brokers’ rude manners), and in 1696, the government passed an act to “Restrain the Numbers and the Practices of Brokers and Stock-Jobbers.” The brokers would not pay this much mind, and it didn’t hinder their business as much as would have probably been preferred. Instead, the brokers of 17th century England would handle and conduct business in the coffee houses around London. It is here, also, that John Caisting would publish prices for things such as gold, ducats, silver staters and pieces of eight. Thomas Mortimer writes, “the usual rendezvous of Stock-jobbers” was “Jonathan’s Coffee-house, in Exchange-alley.” A common problem in the beginnings of this kind of trading was deliberate fraud and unintentional defaulting. Many weeks would pass before a trade came to completion, and brokers ran the huge risk of their trading counterparts not being able to pay on settlement day. The first response to this problem was defaulters being shunned and banned from Jonathan’s. If a broker did not follow through with his bargains or agreements, he was labeled a “lame duck.” Mortimer describes a lame duck as follows: “A name given in Exchange Valley to those who refuse to fulfil their engagements. The punishment for nonpayment is banishment from Jonathan’s but they can still act as brokers at the offices.” However, this solution would only be temporary, as the “lame ducks” would return to Jonathan’s despite their banishment and pose a huge risk to newcomers and beginners. For that reason, the coffee houses began writing down the names of these lame ducks, to warn others not to deal or make agreements with them. This boycotting would serve as a form of non-coercive enforcement against those who were unreliable and untrustworthy. While shunning worked to a degree, some brokers would eventually decide that coffee houses open to the public left more to be desired. Feeling the need to be more exclusive, and in turn having safer and better transactions, brokers would invent new ways for this to happen. In 1765 the Bank of England built a Rotunda where trading took place, but this proved to be unsuccessful. The Rotunda provided a place for the dishonest traders, but brokers would devise a strategy to solve the confusion and disorder amongst the community. Mortimer writes; “The gentlemen at this very period of time have taken it into their heads that some of the fraternity are not so good as themselves, and have entered into an association to exclude them from Jonathan’s Coffee House.” Jonathan’s Coffee House served as a meeting place for the stockbrokers and traders of 17th and 18th century London, that is, until it was destroyed in 1748 by a fire and then rebuilt. In 1762, a club of 150 brokers would form a contract with J’s C-H to use it exclusively, and this meant that they would be able to exclude non-members and lame ducks. An ejected broker would come to sue the place and newly formed club, with the government interfering and declaring that J’s C-H did not have the right to exclude outsiders. The same 150 brokers, bummed out by the lawsuit but nonetheless still determined, would in 1773 purchase a building of their own and use this to conduct their business. This formal club was known as “New Jonathan’s” (later Stock Exchange). The London Stock Exchange writes; “The occupation of the new building was the earliest manifestation of a formalised, though not yet regulated, stock exchange.” An old newspaper reported in 1773, "Yesterday the brokers and others at 'New Jonathan's' came to a resolution, that instead of its being called 'New Jonathan's,' it should be called 'The Stock Exchange,' which is to be written over the door. The brokers then collected sixpence each, and christened the House with punch." Mortimer wrote in 1801, “Brokers assemble at a very large coffeehouse, called the Stock-Exchange.” New Jonathan’s/Stock Exchange posted the following: “The proprietors of the Stock Exchange, at the solicitation of a very considerable number of the Gentlemen frequenting it, and with the unanimous concurrence of the Committee appointed for General Purposes, who were requested to assist them in forming such regulations as may be deemed necessary, have resolved unanimously, that after 27 February next this House shall finally be shut as a Stock Exchange, and opened as a Subscription Room on Tuesday 3 March at ten guineas per Annum ending 1 March in each succeeding year.”

In conclusion, anarcho-capitalism is indeed the best system possible because of the reasons previously established. The first being that anarcho-capitalism is simply the most ethical and the system that protects private property rights the best. Secondly, this paper brought up why you should be an anarcho-capitalist, which is that humans will always act to satisfy themselves more than their current satisfaction level, so allowing voluntary exchange would allow for higher levels of satisfaction in society. Third, I brought up how private law works and it can best protect property rights. The fourth point didn’t make an argument and was more about how one can learn more about Austrian Economics and laissez-faire capitalism. As my final claim, I brought up the early London Stock Exchange and showed how private property handled a system very well. To simplify everything, anarcho-capitalism is the best system. 


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Aleks Popovic

My name is Aleksandar popovic I am 16 years and an anarcho-capitalist. I am from Toronto, Canada and enjoy economics and diving deep into local, federal, and international economic policy. I love baseball and any politically related topics.