Understanding the Voluntary Society

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Let's imagine I have extremely troublesome neighbors living next door to me.  And they're not just troublesome, they are downright rotten and they violate my private property with nuisances like noise, smells, occasional vandalism, and verbal threats.

If there was no government solution to everything, there would pretty much always be a voluntary market solution.  Government gives you one-size-fits-all, so that's why they can only think of these dumb ideas.  They also have no incentive to avoid waste since they take their resources by force.

The above simple answer is usually not enough for people, so a more detailed solution is as follows:

Protection (Insurance) Agency Example

In my scenario, since there is no government solution, I would hire a private insurance agency to deal with the problem neighbor matter.  I would agree to pay a monthly premium to the agency that they decide on after observing my situation.  They would have an interest in setting the premium to the right level depending on how the neighbors act when they do their inspection(s) before we sign the contract.

I may have a high premium because my neighbors are unusually difficult.  If I have a high premium, I might tolerate my neighbors until I feel I have evidence that they have sufficiently transgressed against my property.   When my neighbor transgresses against my property, I will make a claim and let my agency will decide how to handle it in the most effective manner.

So I don't have to personally think of ways of dealing with the problem because I have paid experts who have a financial incentive to get it done for my particular situation.

If my agency cannot deal with the problem, my contract stipulates that my agency will pay to move me to a new location, lock, stock, and barrel.  So they have a huge incentive to figure out a creative solution.  Either way, problem solved.

Arbitration Agency

I outlined that the contract was between me and my insurance agency. Let's assume this would be a reputable, well know insurance agency. If I have any disputes with them, we both agree to take our dispute to an arbitrator.  If either of us are unhappy with the decision, we can appeal the first arbitrator to a second.  If the first arbitrator is overturned, the first arbitrator pays, so they have an incentive to do it right the first time.  In fact, it would always be "loser pays" for any dispute.

If the loser cannot appeal and does not make the winner whole, they are financially ostracized, which can ruin a business and an individuals who want to make future contracts.  So civilized people would want to avoid it at all costs; they will abide by the arbitrators decision.

This is called a "voluntary society."  As opposed to a society that operates on coercive violence.

You may wonder if police still exist in this scenario, and I think they certainly could, as long as they keep to themselves when there is no calls out for them and when people have other arrangements.

The less we look to government solutions, the better off we'll be.

In this scenario I describe, it would be highly unusual to look to any kind of government judges after already agreeing to a private solution.  Someone who appeals to government after a getting a private arbitrator would also be ostracized.  They don't mix well unless all parties agree to mix them.  It's like using baseball rules in a game of cricket.

Take the SMS ban while driving.  That should most certainly be an insurance arrangement.  Your insurance company should ask if you intend to SMS while driving.  If you say yes, you should pay more.

The Altruistic Body

It might be hard to believe that it is never necessary to look to government for any reason.  Maybe you are looking for a wise, altruistic, disinterested body with unlimited resources that knows the likely outcomes of the great many schemes of man?

This person knows if you've been bad or good, right?  I think I have heard of him.  He wears a red coat and has a white beard, right? Rides a slay, I think.

Yeah, I stopped believing in Father Christmas a long time ago.

I joke.  But I don't.  I'm sorry if that seemed glib or condescending, but that's what I think of the "all seeing eye" of government.  It's fiction.  It's Santa Claus.

Yet I do believe there is a set of overarching laws that all market actors must follow without exception.  They can be boiled down to:

  1. All parties do what they agree to do.
  2. Non-aggression Principle is in play (which means do not initiate force).
  3. Failure to follow 1 or 2 will result in ostracization.

You may wonder if the above rules I set out require a governing authority.  I do not believe they do.  That's the point.  Enforcement turns completely on the idea of ostracization.

P.J. O'Rourke said, “When the legislature controls what is bought and sold the first thing that is bought and sold is legislators.”

Therefore it follows that if ostracization controls what is bought and sold the first thing that is bought and sold is ostracization.  Meaning you will do everything to protect against, and buy protection from, whatever limits you in the market place.  It becomes a commodity.

At Least Repeal Regulation

In America, Vice Presidente Dan Quayle once talked about how something like 100 or 100,000 regulations being eliminated in a particular government agency.  I can't remember the details.  But it resulted in a net savings of $20 or $25 billion for the businesses being deregulated.  How much do you think would have been saved if they just got rid of the whole ball of wax?

Regulations cost money to implement and enforce.  Obviously someone has to benefit or else why would regulations come about?  Government is one body that benefits.  But market competitors also benefit.  So they lobby to regulate their own industry.

Regulation is really just government backed "cartelization" (as in "to make a cartel").  A private cartel that has no government privileged to back it cannot last very long.  Someone in the cartel will lower their prices to take advantage of the other cartel members who made a pact to keep their prices high.  Once one member lowers his prices, the whole thing falls apart.

Government regulations have the same effect, but they are harder to bust than cartels because government regulation carry the "color of law."

For example, in Virgina, there's a town that requires professional photographers need get a special license.  Illegal photographers cannot advertise their business in the paper or the phone book. Regulation was supposed to improve the industry but all it did was increase the capital required to start.

Another example, in 1934, the last taxi license was issued in New York City for $10.  A fixed number of licenses traded back and forth from then on.  Now, those licenses trade for around $100,000.  So taxi drivers cannot start their own business without very heavy capital.The little guy has been excluded and the big guy likes this arrangement.

That's all regulation does.  It makes people feel good (a false sense of security) and gives the big guy a huge advantage.

I think private (for profit) certification is a better option instead.  We have the Better Business Bureaus and Consumer Reports, but their role is undermined by government regulations that overlap with them.  Ever hear of the UL?  That's the private body that tests and certifies electrical equipment.  The UL is successful *because* the government never really got into that field.  Many people think the UL *is* a government agency, but it's nothing of the sort.

The certification companies position their business so that they profit by their expert opinions.  They spend limited funds judiciously to test and certify.  If it turns out they fudged something, they are putting their name and business on the line.  Without regulation, someone is always ready to compete with them, just waiting for the smallest slip-up.

Child Molesters

You might ask, "Do I really think a voluntary society can deal with things like child molesters?"

I think the incentive to fix problems is there if you look and are free to innovate.  Remember, if I knew exactly how the free market would handle each opportunity, I could be dictator.  There are innovative solutions we could never dream of.  The way it might work is thusly:

Imagine there exists a child with only one parent and that parent is pretty much the only one who knows the child exists.  So for the most part, nobody cares if the child exists or not.  Then assume the child is abused by his or her parent.

Let's suppose a private protection agency is formed to seek out evidence to suggest children like this could exist.  Let's further suppose that this protection agency could put together evidence by using investigative technique like interviewing neighbors and going through people's garbage, etc.  These techniques are not aggressive techniques and therefore do not violate the non-initiation of force principle.  And *if* they are perceived by anyone as a violation, they can go to arbitration.

The protection agency has to take risks, but they have to also weigh the risk against losing settlements in arbitration.

The protection agency weighs the evidence and the risk against the incentive to put their reputation and livelihood on the line to break into the suspected house of a child abuser to rescue the child.  They then go to arbitration with hard evidence and an actual perpetrator in their custody.

For the initial incentive, we need to assume there is a standing bounty for child abusers in this voluntary society.  Voluntary charities can put up money and resources to give incentive to protection agencies.

The child will grow up and might eventually need protection agencies for him or herself.

This protection agency could be thinking of the long term goals of saving children in order to build a well known and successful brand, thereby offering service back to the children it saves.

This is just one isolated line of reasoning.  I think this line of reasoning can be adapted to a lot of different scenarios or even ignored and approached in a completely different, voluntary way.

No Utopia

I make no claim that any voluntary society would be utopia.  But wild-cards like serial killers would have to deal with an armed society.  And an armed society is a polite society, which would certainly be an improvement.  Neighbors would know each-other and look out for one another because they know they only have each-other and any mutual protection pacts they've developed.

I don't see how charity is Utopian.  Charity is something conservatives point to whenever they make arguments against high taxes.

I don't see how voluntaryism is Utopian.  Voluntary interaction is a very fundamental form of free association.  The notion of "unlimited contract" is just another way of talking about voluntary interaction.

There may in fact be situations where it's not lucrative to participate in a particular market.  That is called a wasteful enterprise.  Unfortunately, our current system keeps us in the dark about exactly which situations are lucrative and which ones aren't.  It's not a conspiracy, it's just how socialism works.

So if there's no money in belly-button-lint-removal, nobody should be trying to make a living doing it.  But if there's a government paying people to do it, they'll do it, even if it's wasteful, to the detriment of other tasks.  That's basically socialism.

Socialism distorts market signals.  Like right now, the cash-for-clunkers program is distorting market signals.  Car companies think there's demand for certain models, so they will move capital* to produce those models in order to meet the "demand."  But the demand is artificial.  If the distortion stops, the demand will fall.  It has nothing to do with real resources being traded.  It's all artificial.

* (Moving capital is a HUGE SERIOUS BIG deal.  Over time, it is where financial bubbles come from.  Moving capital, by definition, makes it hard to "go back" to another capital position.)

In a free society, it might not be lucrative to start a daisy-picking agency.  So if it's not lucrative, or if it's not mildly rewarding, it won't be pursued as a profession.  To suggest it should be perused by force for *any* reason, and force funds to be allocated to that pursue, is the very definition socialism.

So if catching a really smart serial killer is a wasteful enterprise, it shouldn't be anyone's profession.  Maybe it can be someone's hobby.

By the way, may I ask how police in our society, who are paid by force, can catch really smart serial killers who can not be caught in a voluntary society?

Posted via email from Anthony Martin's Weblog

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5 Comments

  1. Lots of good stuff here. I'm reminded of Bob Murphy's booklet Chaos Theory.

    http://mises.org/store/Chaos-Theory-P190.aspx

    It seems as if another solution to the noisy neighbor problem would simply be to negotiate directly with the neighbors—either to buy them out entirely, or to offer to compensate them to avoid engaging in certain kinds of behavior.

    • If that's what my agency recommends, sure. But I probably already tried everything prior to calling the experts. 🙂

    • Reason says:

      "either to buy them out entirely, or to offer to compensate them to avoid engaging in certain kinds of behavior."

       

      Great solution. Now I can get paid for being a noisy neighbor. What's that? You want me to stop being irresponsibly loud on my property? Pay the price I demand or buy my property for the price I set. It's a win win.

  2. Voice of Reason says:

    I spotted 10 very clear problems in your article.

     

    1. "In my scenario, since there is no government solution, I would hire a private insurance agency to deal with the problem neighbor matter. "

     

    In what manner? Negotiations? Pay them off? Buy their land? These sound like very expensive transactions. Rather than resolving a conflict that clearly interferes with your rights, your solution is to pay the instigator. See my response to the comment above. Now we create incentive for people to be bad neighbors. They get a great payday.

     

    You also incorrectly assume that once you hire the insurance company you won't have to deal with problems anymore, except you neglect the incredible premiums that will surely skyrocket since, let's face it, who wouldn't want to get payed for being an ass to their neighbors? You also have the chance that your insurance company is going to decide it's cheaper to move you than deal with the problem. Great, now you have to leave your home that you may have had in the family for generations. Can you refuse? Sure, but don't expect the insurance company to offer anymore solutions for your neighbors after you refuse their offer.

     

    2. "If I have any disputes with them, we both agree to take our dispute to an arbitrator. If either of us are unhappy with the decision, we can appeal the first arbitrator to a second. If the first arbitrator is overturned, the first arbitrator pays, so they have an incentive to do it right the first time. "

     

    Yikes! Where shall we begin...

     

    Let's start with arbitration in general. Arbitration is always a messy solution to legal problems. Let's say you go to Walmart and buy an appliance, and it malfunctions, causes a fire and burns your house down. You want to sue Walmart, but you didn't realize that when you bought the appliance, it included a terms of use agreement that required mandatory arbitration. Alright, fine, whatever. Instead of taking it to court you just go to arbitration, no big deal, right? So who arbitrates the dispute? The terms of use agreement provides the answer: Walmart Arbitrators of America. It's an arbitration company who gets all their business solely from Walmart. That means Walmart will keep sending them millions of dollars in business every year, provided they make "good" decisions. What do you think Walmart thinks is a good decision?

     

    Isn't arbitration a great solution to the legal system? How could there possibly be any bias?

     

    Now let's get back to your arrangement. We have one arbitrator, and if the decision gets appealed to a second arbitrator (and why wouldn't it?) and if they reach the opposite conclusion, the first arbitrator pays. So now you need an agreement from the first arbitrator to pay for the costs if the second arbitrator overturns their decision. How do we get them to agree to that? You have two possible ways this will work out.

     

    You recommend an arbitrator to act as the "appeal arbitrator". They will obviously respond with "hell no!". Legal issues are complex. The right answer is not always clear. No one is going to agree to front the bill just because some other guy at some other arbitration company thinks it should have turned out the other way. No solution here. Let's try the other possibility.

     

    The other possibility is the arbitrator you choose recommends their own "appeal arbitrator". Who do they recommend? This great company they've worked with for many years. What kind of relationship do they have? The Appeal Arbitrator reviews the first arbitrator's decisions, and if they decide the first arbitrator did everything correctly, first arbitrator is happy and keeps sending them business. If they decide the first arbitrator made a mistake, then the first arbitrator loses money and finds themself a new Appeal Arbitrator.

     

    In the end, the arbitrator's incentive to "get it right" is no greater than it was before.

     

    3. "In fact, it would always be "loser pays" for any dispute."

     

    Now my incentive to bring an action is diminished, even if I know I'm being screwed over. Why? Because if I lose, then I get screwed over by the defendant AND I have to pay for the court/arbitration costs. There's a reason this system was abolished.

     

    4. "If the loser cannot appeal and does not make the winner whole, they are financially ostracized"

     

    The problem with this arrangement is it does not offer any solutions to the current Statist set up. Think about it. In our current system, the public votes to create a law, and then if you refuse to follow that law, they force you to follow it. How? First they Fine you. Then they arrest you. Then they throw you in jail where you rot until you die. Great.

     

    But does ostracization solve this problem? Let's check. You have a disagreement with your neighbor. At arbitration, they win. Now you have to pay a fine to the neighbor. If you don't, you get ostracized. No one buys from you, no one contracts with you. You run out of money, you can't buy food, or water, and you die. Wonderful Solution. Either way, you're at the mercy of the community, and if you refuse to obey, they kill you. How can you seriously and honestly call that a voluntary society?

     

    5. "It might be hard to believe that it is never necessary to look to government for any reason. "

     

    Yes, you say we never need government, but then you gave a list of 3 laws that should always be adhered to. And who enforces these laws? A Private company? What authority do they have over me if I don't obey? None. So now we're back to ostracization? And do you remember where that leads us? If I don't follow the community's rules, agreement or not, they kill me. How is that different from Statism?

     

    6. "it would be highly unusual to look to any kind of government judges after already agreeing to a private solution. Someone who appeals to government after a getting a private arbitrator would also be ostracized."

     

    That's a wonderful solution. So now when I try to sue Walmart for selling me that faulty blender that burned down my house, I have to go to "Walmart Arbitrators of America", and if I try to appeal to some other authority, I get ostracized. And where does that lead us? I get killed. Wonderful.

     

    7. "But it resulted in a net savings of $20 or $25 billion for the businesses being deregulated. How much do you think would have been saved if they just got rid of the whole ball of wax?"

     

    You really know how to look at all sides of the issue. Obviously we should deregulate all businesses! I mean, if they just make more money, what's the problem? You know what the first regulation we get rid of should be? How about the regulation that prevents companies from dumping waste in our ground water? Think of all the money the companies will save? Surely this will provide a great benefit to everyone. Let's just get rid of the whole ball of wax. It really is that simple and easy.

     

    8. "There are innovative solutions we could never dream of."

     

    Right, and if no one can think of them, then no one can implement them.

     

    9. "Let's suppose a private protection agency is formed to seek out evidence to suggest children like this could exist."

     

    Did you even read your solution? It requires people to pay a private company to spy on them by talking with neighbors and searching through our garbage. Sign me up! Why wait for the government to set up big brother when I can pay someone to watch my every move right now? I'm sure that will be a huge success...

     

    10. "I don't see how voluntaryism is Utopian."

     

    Finally we agree on something. If it doesn't provide a solution, why bother?


  3. ... let's face it, who wouldn't want to get payed for being an ass to their neighbors

    That's the point, though. If no one will give you a good premium, then that's a market signal. It's a signal that you're in a situation that is untenable.

    In the end, the arbitrator's incentive to "get it right" is no greater than it was before.

    Actually, it is. The example used was that the terms of service require Walmart approved arbitration. Once enough people get burned, Walmart will lose business, if it really is that bad. Or, people will just accept that you buy Walmart products, knowing that they play the system and they don't actually stand behind their product.

    You run out of money, you can't buy food, or water, and you die.

    I'm assuming in this scenario, you were unfairly accused and unfairly ruled against in arbitration. Because if this was a purely fair and proportional ruling, ostracization to the point of death doesn't seem as shocking.

    On the other hand, what if someone falls through the cracks? I'd prefer a system that ostracizes someone to death vs. a system that executes prisoners. If you're being ostracized, there's still a chance someone will take pity. An appeal, of sorts.

    But I also think it's not as likely for there to be an unfair ruling in the first place.

    If I don't follow the community's rules, agreement or not, they kill me. How is that different from Statism?

    Because ultimately, whatever it is that upholds order in a voluntary society can be held accountable.

    How about the regulation that prevents companies from dumping waste in our ground water?

    Interesting choice of words. Apparently regulations magically prevents harm. Actually, accountability prevents harm. Regulations are typically written by the people it regulates. So I'm not sure if we're on the same planet anymore.

    Finally we agree on something. If it doesn't provide a solution, why bother?

    Because 100% control of my own property and 0% control over anyone else's property is just morally superior. All other solutions fall short, morally.

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