Analytical Anarchism


Here’s how Michael introduces the site:








Quote of the Day: Mises Edition








Power Corrupts Rational Thought

Wray Herbert reports research showing that a sense of power gives people the illusion of control over random events:

One recent study may offer some insight into the connection between power and hubris and delusional thinking. Stanford University psychologist Nathanael Fast actually started off exploring the positive effects of power. His idea was that power creates a false sense of control over life’s events, and that this feeling of control in turn boosts self-esteem and optimism. But his findings apply just as well to prideful overconfidence. Here’s the experiment:

Fast and his colleagues used a well-tested laboratory technique to prime some volunteers’ sense of power. Then they used a clever test to see if these feelings of power influenced their sense of control over random events. They had all the volunteers play a dice game to see if they could win a prize, and they were allowed to either roll the dice themselves or to let someone else roll the dice. A roll of dice is random, no matter who rolls them, so those who chose to roll the dice were displaying an unrealistic sense of control over random events.

The results were unambiguous. As reported in the journal Psychological Science, each and every one of the volunteers who was primed for power (compared to controls who were not) grabbed the dice. They had the delusional belief that, by rolling the dice themselves, they could control the outcome.

Herbert suggests this as an explanation of political corruption: due to a higher sense of control, people in positions of power see themselves as more able to evade detection and punishment. While that’s probably true to a certain degree, I suspect the the impact of illusions of control are much greater on well-intentioned policy.  A false sense of control will turn even the most altruistic rulers (though power does corrupt morally, as well) into men of system apt see society in easily-influenced, mechanistic terms.

Evolution, Entertainment, and the Socialist Calculation Debate

Eric Crampton is justly worried that the God-Game genre, typified by SimCity and Civilization, fills people with technocratic hubris, giving rise to the fatal conceit that a benevolent planner can actively improve the lives of citizens through direct intervention. He quotes a review of the new game Dawn of Discovery which complains that the complexity of running an entire society doesn’t make for interesting gameplay:

Naturally, as your population grows, so too does the amount of each good that the population consumes, but there’s no clear way to determine just how many tons of a particular good your residents require. This makes it needlessly difficult to anticipate upcoming shortages, and it’s easy to get frustrated when you find yourself in the midst of a dairy crisis or similar shortage that could have been avoided with clearer information regarding supply and demand.

As Eric points out, any planner in the real world would face even more serious problems. The sheer complexity of social and economic life makes large-scale planning impossible:

If you as central planner don’t build things like airports, ports, libraries, universities, temples or a colosseum, they just don’t get built. If your workers don’t build farms and mines, no entrepreneur steps in to do it. In SimCity, or at least the version I played more than a decade ago now, you have to specify rigid zoning and can’t just let the city evolve. Unfortunately, any realistic game that requires the central planner to make all of these decisions will require that we encounter the calculation problem; it’s neat to see the game reviewer complaining about it. Of course, the gaming would be a bit more boring for the player if he could just set some basic laws, a low tax rate, and try to stay on good terms with the other civilizations out there: the game is designed to maximize fun for the player, not to maximize utility for the simulated persons within the game. The more that games disguise the inefficiencies caused by the “economic planning” approach, the less will today’s players appreciate Hayek.

I think that’s dead right, and also applies to any form of entertainment with a macro-social setting. We enjoy playing games with relatively simple cause-and-effect dynamics because our minds evolved to deal with simple cause-and-effect situations. Most of the challenges we faced in our ancestral environment, and continue to face in our everyday lives today, involve overcoming a particular problem without much need to be concerned about unintended consequences.

A society at large, though, doesn’t work this way, but is instead a complex system in which results emerge from the interaction of many individuals pursuing their disparate goals. Any attempt to improve outcomes through top-down intervention is just as likely to make matters worse. There is conflict between our folk economics and reality and, when we want to be entertained, folk economics always wins: nobody wants to play a game in which the only winning move is not to play, or read a book with no protagonist.

The availability heuristic means that consuming stories of active characters changing the macrostructure of the world singlehandedly through sheer grit and determination is likely to bias our perceptions of reality. The ease of imagining some situation, for example, seems to affect its perceived likelihood. Since entertainment does our imagining for us, it will likely bias our models of the world.

While many fictional biases are likely to affect our everyday lives (by making us afraid of terrorists, for example), technocratic hubris and the “Great Man” theory of history probably don’t matter most of the time. Where they could plausibly have an effect is in the political realm, biasing both voter preferences towards statism and giving policymakers too much faith in their own technocratic abilities. Unfortunately, politics provides no incentives for the correction of our biases.

Customer-Owned Protection Agencies



He expands a little in a footnote:











This is why I am now a tentative anarchist.

Protection Agency Cartels and Organizational Innovation

Every liberal worthy of the label is a philosophical anarchist. The presumption of liberty – i.e. the notion that everything is permissible unless shown otherwise, with the burden of proof resting with those who would restrict liberty – means that we should only resort to politics after all peaceful means of solving social conflict have been exhausted. Force will always be required to stop bad people raping and killing, but I think it’s an open question whether force against the innocent (taxation) is required to fund protection against the guilty.

Market anarchists such as the Tannehills and David Friedman have argued that it is not. They imagine private protection agencies and courts voluntarily competing for customers on the open market. The current monopoly on violence would be replaced by many firms filling diverse market niches and being forced to respond to customer needs. As in any other market, they say, competition will do a far better job of satisfying customer preferences than a coercive monopoly.

If these arguments are correct, it’s pretty hard to see how anyone valuing individual preferences above all else could support government. Anarchy won’t be utopia, but it will make people far freer than they are under government.

Many anarchists will claim that since markets work better than government for every good they’ve been tried, we must conclude that they’ll also work well for policing and court services. While there’s definitely some merit in this argument, I think we need to be very careful when comparing the market for organized violence with other markets.

Tyler Cowen and Dan Sutter have had me convinced for some time that orderly anarchy is unstable and would result in something very similar to a highly predatory government. To avoid perpetual war, competing protection agencies will need some way of resolving disputes when customers of different agencies come into conflict.

Suppose Alice is a customer of Agency A and Bob is a customer of Agency B. Since agencies compete partially on the basis of offering different rules tailored to customer preferences, some things viewed as a crime by Agency A will be deemed permissible by Agency B. What happens when Alice demands compensation for some action Bob has performed which she has paid Agency A to protect her against? In a world without interagency arbitration, Agency A will punish Bob. Bob will demand that Agency B protect him from this, and the two agencies will go to war. We end up with Hobbesian anarchy.

Of course, this would be very expensive for everyone concerned, and there is a strong incentive to provide for peaceful means of dispute resolution. This is where private arbitration firms come in. To avoid conflict, protection agencies will agree to be bound by the decisions of independent courts whenever conflicts arise.

Arbitration is a natural monopoly, since it’s very important to customers of protection agencies that they be able to resolve disputes with customers of other agencies. This requires considerable cooperation between competing protection agencies, including the ability to exclude or otherwise punish agencies not playing by the rules. The capabilities required of competing firms to cooperate (“cooperative efficacy”) to avoid Hobbesian anarchy – communication, ability to punish defectors, etc – are the very same things required to form a profit-maximizing cartel capable of excluding market entrants and ignoring customer preferences. From the customer’s point of view, it would be hard to distinguish this from an extremely predatory state.

So: if protection agencies can’t cooperate, we end up with chaos. If they can, we end up with a de facto state. Orderly libertarian anarchy is not a stable equilibrium.

Bryan Caplan and Ed Stringham point out that refusing to deal with harmful outlaw agencies (e.g. those allowing murder, or always willing to defend their customer with violence without concern to their guilt or innocence) is a self-enforcing constraint. The arbitration network can declare such agencies rogue, and it is in every other agency’s interest not to deal with them. It will remain profitable, however, to continue dealing with agencies which behave decently but refuse to abide by the rules of the cartel.

It therefore requires more cooperative efficacy to enforce a cartel arrangement than it does to exclude genuinely rogue agencies: there is a zone of stable libertarian anarchy between Hobbesian anarchy and despotic government. Cowen and Sutter admit that such a zone exists, but insist that it is a narrow one. We have no reason to think that this is where we’ll end up and should not wish to experiment with anarchy.

As far as the argument has gone so far, I basically agree with Cowen and Sutter. I don’t think the debate has gone far enough, however. Stringham and Hummel attempt to reply to Cowen and Sutter by arguing that ideology can change the payoffs facing protection agencies: positive material payoffs would be outweighed by negative psychic payoffs of cartelization if only those running protection agencies would internalize the libertarian worldview. That may be so, but I’d feel very uncomfortable if the only barrier between me and a despotic cartel was ideological.

The place the debate needs to go, in my view, is looking at forms of organization other than a simple subscription service protection agencies might take to pre-commit to not cartelizing. Cowen mentions this at the end of his 1992 paper “Law as a Public Good,” (not on the web, but available in Stringham’s excellent volume Anarchy and the Law) but doesn’t go into any detail and the idea has not been pursued by anyone else.

Cartelization is a market failure, and like any market failure provides incentives for its own solution (see Coase on the lighthouse, for example). A firm which can guarantee its customers that it won’t enslave them in the future will receive more custom than one which cannot make such a guarantee. This would generally require forward-looking consumers, but there don’t seem to be any collective action problems to overcome. If we ever get to the situation where the state has withered away, I would bet on people being reasonably far-sighted in their choice of protection agency.

Of course, just because there’s an incentive to provide something doesn’t mean it can actually be provided. Anyone inventing a perpetual motion machine would become very rich. Unfortunately, such a machine seems to be a physical impossibility. I don’t see any reason, however, to suppose that credible commitment to non-cartelization is impossible, and there are some plausible candidates for how it might be achieved.

This post is getting long, so I’ll leave discussion of the particular ways firms might pre-commit for another day (Update: see here). By the way, this detailed overview of public choice theory and anarchism by Powell and Stringham is great stuff for anyone wanting a broad understanding of the literature.

Anarchist Prisons

David Skarbek’s recent paper Self-Governance in San Pedro Prison provides evidence for the possibility of orderly market anarchism and, when combined with past research, against that of orderly non-market anarchism. The abstract:

The inmate-governed community in the Andersonville Civil War prison camp resulted in a state of violence and disorder. Past research argues that self-governance in prisons results in a dominant group comprised of the most violent inmates preying upon other members of the community. This paper examines the inmate-governed San Pedro Prison in Bolivia, and it argues that order within a situation of prison anarchy is possible when inmates can engage in economic exchange and have access to well established markets that they expect to persist.

Looks very interesting. My to-read list is getting out of control.


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