Regulation

“Corporate capitalists don’t want free markets. They want dependable profits, and their surest route is to crush the competition by controlling the government.” – RFK, Jr.

It is often claimed in “progressive” and “liberal” circles that we need more regulation to curb the influence and power of big business. This belief is based largely on a misconception as to the origin, purpose and result of regulations.

During the period between the end of the American Civil War and roughly the 1890s, business in the US tried to cartelise but found it could not. In general, cartels can only control a market when force is introduced. During this period, every attempt to form a cartel and raise prices led to new competitors that realised they could undercut the cartels. In response, big business began lobbying the government to pass laws “in the public interest” (as all laws are claimed to be) that would enable them to keep competitors out. It worked. (Find a large amount of research on the subject here.)

Today, regulations and other laws protecting business include corporate personhood, accounting standards, safety standards, environmental standards and intellectual property. In addition, there are subsidies (“corporate welfare”), amounting to perhaps $98b a year, selective tax breaks and contracting. In each of these categories, government and industry have made a variety of laws enabling large firms to eliminate competition. As such, they are a kind of tax taken from consumers who would pay lower prices and entrepreneurs who would be able to make their livings doing what they want. The tax is given to business owners who would be forced to lower prices or improve services in a free market. The Small Business Administration in 2005 estimated the total cost of these regulations at $1.1 trillion.

Accounting standards are widely considered necessary to prove a firm is not cooking the books. But in the absence of state regulation, concerned investors would find a way to insure against this possibility with audits. An example of the enormous and unnecessary complication of accounting standards is the Sarbanes-Oxley Act, passed in the wake of the Enron accounting scandal and failure. The Act made accounting more complicated. Implementing it costs a firm millions of dollars. Millions of dollars is pocket change for a big corporation, but prohibitively expensive for new and small businesses that could otherwise rival them. As a result, fewer businesses are created, and wealth and power are concentrated in the larger firms. We now have a complex tax code that could not be implemented by less than a team of accountants. The same is true of the legal code. The modern legal code was designed so that teams of high-priced lawyers can get away with murder and people without money see no justice.

Sarbanes-Oxley is, of course, but one law in a sea of other laws. Those who say the 2008 financial crash was caused by a lack of regulation may do well to realise there were thousands of lines of financial regulations already. They often cite the repeal of parts of the Glass-Steagal Act as the only incidence of deregulation they can think of, but this change did nothing to enable banks to make bad loans. A look at the facts indicates very clearly that regulation was the main cause of the bubble that caused the massive destruction of wealth for all but those whose ties to the state got them trillion-dollar bailouts.

Negative externalities, which seem to be the reason people beg the government to get involved in the market, are easily externalised in a statist society. The same big corporations pollute and break the law repeatedly. They are sued by the government, they pay the government, which means it gets another legal donation from an interest group, and then they are allowed to continue business as usual. The lawsuits are a bone thrown to voters and the corporations shake them off like lice. But they give the appearance that justice has been done. The corporations nonetheless retain all the benefits they get from the state in the form of legal personhood, subsidies, tax loopholes, intellectual property and regulatory barriers to competition. The state does not protect us against negative externalities.

Intellectual property enables firms to monopolise virtually anything they create. Consider the effects of IP laws in the pharmaceutical industry. Kevin Carson explains that drug patents are unnecessary to recoup expenses and develop the most effective drugs.

First of all, there has been a dramatic shift away from fundamentally new kinds of blockbuster drugs, because it’s much more cost-effective to put money into tweaking the formulas of drugs whose patents are about to expire just enough to qualify for repatenting them—so-called ‘me, too drugs.’ Second, a great deal of the basic research on which drug development is based is carried out at government expense in publicly-funded universities. Around half of the overall cost of drug R&D is taxpayer-funded. And in the United States, under the terms of legislation passed in the 1980s, the patents on drugs developed entirely at taxpayer expense are given away—free of charge—to the drug companies that produce and market them. Third, most of the actual R&D cost for developing drugs comes, not from testing the version of a drug actually marketed, but from securing patent lockdown on all the other major possible variants.

Generic drugs do not get developed, or get banned as soon as they are, because they are competition. The poor people who need them most do not get them. Intellectual property, Carson concludes, is murder.

We can divine the purpose of regulation from its results. We now have giant, multinational corporations straddling the Earth, with no government willing or able to oppose them, with the exception of a few populist, anti-imperialist holdouts. Large corporations’ alliance with the state has enabled the two to control natural resources and all manner of other markets. Consumers thus have fewer choices and higher prices than in a market freed from regulation. But freedom is always preferable to laws and regulations imposed by the state. Freedom allows economies and the arts to flourish. It means scientific advances and technological innovation. And it forces responsibility on those able to handle it while still allowing for us to help each other.

The solution to the control of markets by cartels is to free them. That would make customers the true regulators. If they decry a firm’s practices, they can stop buying from it and start buying from its competitor. If you abhor business, you are free to start and join one of the thousands of cooperatives in the world or simply produce and give to your neighbours. But demanding more regulation to prevent big-business malfeasance is akin to shooting oneself in the head to cure one’s headache.

The alternative to the state, part 6: breaking free

“Once one concedes that a single world government is not necessary, then where does one logically stop at the permissibility of separate states? If Canada and the United States can be separate nations without being denounced as in a state of impermissible ‘anarchy’, why may not the South secede from the United States? New York State from the Union? New York City from the state? Why may not Manhattan secede? Each neighbourhood? Each block? Each house? Each person?” – Murray Rothbard

The worst thing the British ever did for India was to unite it. India is a vast country of a billion people with nothing in common. As many as a million people died and 12m were displaced when India was partitioned. Today, an insurgency in the east of the country started and continues because of a central government stealing their land in the name of “development” that the people are not interested in, and 100,000 farmers have committed suicide. India has gone to war with Pakistan several times and approached nuclear war over a border clash. None of these things would have happened if India had followed Gandhi’s vision.

“The ideally non-violent state will be an ordered anarchy,” said Gandhi. He believed India should comprise independent enclaves that were not subject to violence by powerful governments. His idea of swaraj, which means self-rule, was how to avoid domination by foreign rulers. It meant continuous effort to defend against subjugation. “In such a state” of swaraj, said Gandhi, “everyone is his own ruler. He rules himself in such a manner that he is never a hindrance to his neighbour”. Swaraj is not just about throwing off shackles but creating new systems that enable individual and collective development. Unfortunately, the forces of power prevailed, and India became ruled by rapacious Indians only marginally better than foreigners.

Many statists believe we need national organisations and associations. But I do not understand why. Most decisions could easily be taken on a personal level, and the ones requiring collective action could come on the community level. As I have made clear on this blog, voluntary collective action is realistic and preferable to coercion. Democracy cannot be said to offer true freedom to the individual without freedom from the government’s every edict. In Democracy: the God that Failed (p81), Hans-Hermann Hoppe explains “[w]ithout the right to secession, a democratic government is, economically speaking, a compulsory territorial monopolist of protection and ultimate decision making (jurisdiction) and is in this respect indistinguishable from princely government.”

Let us go further into justification for secession. Here is Scott Boykin on the subject.

“Modern political thought has produced three main types of argument for the state’s legitimacy. One, found in Kant, grounds the state’s authority on the purported rightness of its institutions and aims.” By whose judgement? If the individual is the judge of what is right and wrong, the individual who deems the state’s institutions and aims wrong has the right to secede; at least, the individual who practices non-aggression.

“Another, found in Locke, holds that consent, whether explicit or tacit, is the source of the state’s authority. A right of secession challenges this-position in maintaining that consent may be legitimately withdrawn in favor of an alternative political arrangement.” If democracy is based on the consent of the governed, does that mean one can withdraw one’s consent?

“The third, found in Hume, bases the state’s authority on its usefulness in producing order, which facilitates the individual’s pursuit of self-chosen ends.” The modern state, in a variety of legal ways, destroys order and limits the individual’s choices. Therefore, you have the right to secede.

You, an individual, and your family and friends, can opt out of a system based on violence. No, I do not mean you can leave and go somewhere else. All countries, by definition, have governments, and government, by definition, is force. I mean you have the right to end a relationship with those who threaten you with violence.

Community secession

To start, however, I recommend secession on a community level. The only reason I advocate community secession is that no political entity will recognise an individual who secedes until the right to do so is itself recognised, which might not be for a long time. It may be just as true that national governments will not recognise local secession either; the history of secessionist movements is, after all, the history of central states’ making war on separatists.

As I have written elsewhere, anarchy exists and has existed in numerous places throughout history. It often arises during or after a war, revolution or other crisis. Those things may be coming to democratic countries, as they have in Greece and to a lesser extent the US with the Occupy movement. Think how hard it is for the people to change everything from how bad it is now. As a result, many are realising they can make a better society on a local level. They are leaving the state and the banks and the big corporations behind and making a new start.

Thus, we can start sovereign communities. The sovereign community is not subject to the authority of any state besides a local one its members have all willingly signed on to. Naturally, the “community” could be as big as it wants, provided positive consent is granted. It would enable everyone who wants to escape the state to do so, while not dismantling it for those who still want to live under a state system.

I propose entire communities separate, one by one, from the state. They might use legal means and go through the courts, as law is how things get done in a statist society. The sovereign community would not be cut off from all other communities; there is no doubt people would still visit each other. They would just not pay taxes or consume government services. They would make their own rules.

How to break away

Breaking free of the state could be undertaken bit by bit, as in these communities.

–The town council of Sedgwick, Maine, unanimously passed a law exempting the people of the town from all external laws related to food. Federal laws prohibit the growing and selling of certain foods; these people do not care. They have declared food sovereignty.

–Some places are moving away from fiat currency imposed by central banks. Greece’s current situation of lawlessness is leading many to adopt a cashless economy. Barter exchange has become the norm for many Greeks.

–That said, the Greeks may have been forced to act this way with the collapse of the Greek economy. Other communities are taking similar measures without being forced by circumstance to do so. Pittsboro, North Carolina, issues its own currency. It already had the US’s largest biodiesel cooperative, a food cooperative and a farmers’ market. Now it has taken a further step toward self sufficiency. According to Lyle Estill, a community leader, the currency has experienced no inflation. And Pittsboro is not the only one. Cities and towns around the US are rejecting Federal Reserve notes for circulation.

–Other communities are passing laws that refuse to recognise federal laws regarding corporations, such as corporate personhood. More than 100 municipalities in the US have passed ordinances prohibiting multinational corporations from dumping or spraying toxic chemicals, building factory farms, mining, fracking and extracting water.

–The Free State Project aims to make New Hampshire the first state to secede (successfully) from the US. The idea is for libertarians to congregate in order to have the biggest impact. (Not all anarchists agree on this strategy, incidentally.) New Hampshire is not the only state hoping to secede, with independence movements in California, Texas, Wyoming, and presumably other states I am unaware of.

–Keene, New Hampshire, has become a kind of centre for anarchist activism, encouraging the liberty-minded to flock there. It has not seceded from the US but might do in the future. Its people engage in all kinds of agorism, mutual aid, outreach education and civil disobedience. Learn more here and here.

–Like Keene, anarchists and socialists gather in Exarcheia, a part of Athens, Greece. It houses many organic food stores, fair trade shops, anti-authoritarian and anti-fascist activism.

Such piecemeal changes can be steps toward freedom and independence for one’s community, but they could just be a declaration of sovereignty over one particular thing members of the community do not want controlled by someone else. Alternatively, people could break away entirely from the state in one fell swoop. Has anybody done that?

–The Lakota nation, an American indigenous group, seceded entirely from the United States of America. It canceled all treaties it held with the state and its members renounced their citizenship. They hope to reverse the enormous harm 200 years of incorporation into the US has caused.

–Seasteading is an option that becomes more viable every year. Seasteading means building new homes on barges, ferries, refitted oil platforms or islands out in the ocean. Most have been unsuccessful, succumbing to natural disasters or lack of support. That is no reason to write off the whole idea. The real challenges are in construction and, as with all sovereign communities, escaping the violence of the state. Seasteading might not only mean building homes, but also resorts, casinos, aquaculture, deep-sea marinas and even universal data libraries free from copyright laws.

–Freetown Christiania, is an enclave of  Copenhagen with just under 1000 residents. It is a self-governing and self-sustaining community which, though officially part of Denmark, is de facto largely independent. It began in 1971 and has become a kind of sanctuary for outcasts such as single mothers and drug addicts. The people make rules by consensus and have banned hard drugs, though marijuana and hashish have been sold openly.

–As mentioned in previous posts, the Yubia Permanent Autonomous Zone in California is an example of a community that has broken away from the state and established communities based on the non-aggression principle. “The most important thing to understand about Yubia,” says its website, “is that it is not only a place — it is a way of being.”

–These things could happen on a much wider scale. One goal of anarchism is to reduce our vulnerability to repression by the state. We can develop alternative economic and security organisations and decision making. People have already started decentralising the internet, making it harder to implement a kill switch. Hackers, who were once mischievous teenagers, have grown up and have launched satellites to enable a free internet outside of the state’s reach.

–Similarly, in an economy based on a single currency that is regularly debased by a central bank, a new form of online currency known as bitcoin has emerged. It has the chance to revolutionise global finance. One article explains its significance: “There’s decent incentive for small businesses to use it—it’s free to use, and there aren’t any transaction fees. At the moment you can buy the services of a web designer, indie PC games, homemade jewelry, guns, and, increasingly, illegal drugs. If the internet is the Wild West, BitCoin is its wampum.”

–Or we could eliminate money. Setting up a resource-based economy based on the vision of the Venus Project and Zeitgeist holds wide appeal. Some people call their ideas idealistic. Who knows until they try? For those who are interested in building such a society, let them do it. People will join if it shows signs of success. Set a time and a place, get together and make it happen.

–Though difficult without the support of those around, breaking free does not have to take place at a community level. Business and professional associations might decide to stop following pointless laws and paying taxes, while nonetheless continuing to act responsibly. Schools can ignore federal and state laws regarding curriculum or the hiring and firing of teachers, instead making those decisions in concert with parents and perhaps students.

Unfortunately, these things are only possible when enough people, let’s say a critical mass, agree and are willing to fight for these rights against the state they are compelled to obey. The biggest danger inherent in secession is the same one sovereign communities have had throughout history: the state does not give up control over anyone easily. But people are showing more and more that they are fed up of statism, and are doing something about it. Find more about breaking free at www.secession.net.

The alternative to the state, part 5: contract-based communities

“The future social organization should be carried out from the bottom up, by the free association or federation of workers, starting with the associations, then going on to the communes, the regions, the nations, and, finally, culminating in a great international and universal federation. It is only then that the true, life-giving social order of liberty and general welfare will come into being, a social order which, far from restricting, will affirm and reconcile the interests of individuals and of society.” – Mikhail Bakunin

The movie Bowling for Columbine showed a headline about a town in the US requiring everyone to own a gun. Naturally, most people in the theatre with me shook their heads. What a bunch of ignorant townspeople, right? But if you are in a place where you know everyone has a gun, how likely are you to break into someone’s house? Wouldn’t be a very sensible idea, would it? But even if you think it is a stupid idea, is it right for you to impose your beliefs on others?

I don’t know why it needed to be a government decision, but at least it was local, which makes it easy enough to move to the next town if you don’t like it—far more reasonable than expecting someone to move to another country or go live in the woods. In a stateless society, no one would be expected to move, because the possession or non-possession of firearms would have been a stipulation of the rules one would have already agreed to to be permitted to live in the community in the first place.

Now, in every democratic country, we have a race, a fight—always of image over substance—to see who will take the reins of power, so that the winner can impose his or her beliefs on the entire population by force. Would it not make more sense to have smaller groups in which people could live by the values they want? If abortion is murder, disallow it in your community; but why should millions of people who disagree with you be forced to follow your values? The option—the right—should exist to secede. Hans-Hermann Hoppe, in Democracy: the God that Failed, points out that “[s]ecession solves this problem, by letting smaller territories each have their own admission standards and determine independently with whom they will associate on their own territory and with whom they prefer to cooperate from a distance.” (p117)

In my last post, I suggest a variety of ways of using privately-produced law, such as arbitration, dispute-resolution organisations and insurance, to get the benefits of ideal state services without being subject to the wayward decisions of the elite. This post goes into detail on another, related idea of anarchists: the community based on a contract. This and the next post propose seceding from the state and building stateless, or sovereign, communities.

The sovereign community

When moving somewhere new, people are usually subject to certain by-laws passed down by the municipality, if such a level of government exists. Such laws might include not letting one’s grass grow too long or driving under 30kph in a school zone. In general, the lower down the level of government, the fewer people it represents, the more accountable it is. A government that presides over only a few thousand people, in fact, is barely a government. Unlike any other government, it would have little or no bureaucracy, few powerful lobbies and people would not need to rally en masse to make changes. A group of a few hundred people who make decisions on consensus is not a government at all, as there is no one imposing decisions on others.

The ideal unit of human organisation is not the nation or the race but the community. Dunbar’s number, the number of individuals the average human can maintain a stable relationship with, is between about 100 and 200, most likely because we evolved in communities of this size. In a community, people grow up around each other and share a culture. They know and learn from and trust each other. True communities make only minor distinctions between family and friends. Their members will defend each other and the community. Rules (or laws) are best made on the community level, because it is much easier to come to a consensus and ensure that the rules represent the wishes of everyone. Rule enforcement, too, would be far easier, because the enforcers would know the offenders. Shaming, ostracism and reconciliation are all much easier. And we do not need to get rid of professional enforcers and prisons for the truly recidivist criminals; we just would not pay unrepresentative and uncaring institutions to do it for us.

The exemplary sovereign community would counter the objection that statists have that anarchy can only mean killing each other wantonly. People who believe in this nightmare scenario not only do not read anarchist ideas on preventing that possibility; they disregard the enormous differences between the modern world and the stateless world of old.

-First, we are used to peace. Many hunter-gatherer societies are used to war. We are accustomed to diversity of culture, language, skin colour, ideas and ways of living. We no longer react toward people we have never seen before as members of other tribes who are likely hostile.  We are used to peaceful interactions with all the thousands of anonymous people we meet over our lifetimes and get into intractable conflicts with maybe twenty of them. People who like peace will defend and build on it, just like people who appreciate their freedom will not give it up easily.

–Even in the past century we have become more peaceful. The decades leading up to World War One were marked by militarism in Europe. War was seen as salutary for a nation and a man. This feeling is now accepted far less widely. One can see evidence for this claim in the statistics alone: people are killing each other less now (relative to population) than any time in history. See Steven Pinker’s the Better Angels of Our Nature for statistics on and possible reasons for this development.

-Second, we can communicate with those members of other tribes in town hall gatherings, dispute-resolution organisations, or just over the phone in ways that even one hundred years ago was impossible. World War One was caused in part by poor communication among the warmakers. Unsure of each other’s intentions and lacking the easy long distance calling we take for granted, part of the march to war was, in fact, a blind stumble of guesses. We no longer suffer from the same lack of communication. Equally importantly, stateless societies would not have vast war machines at their disposal.

-Third, where most people see the inevitability of war, a better understanding of the causes of war reveals that states have, for hundreds if not thousands of years, nearly always been the initiators of war and the causes of terrorism. They make war to enlarge the power and wealth of the people on top. Through taxation and debt, they force their subjects to pay for it. Without the apparatus of legal plunder and the build up of militaries, war is far less likely.

-Finally, we have all the ideas necessary for peaceful and prosperous living, from ideas of stateless, democratic decision making to how to take care of each other through mutual aid.

I conceive of “community” in very broad terms. It could mean cities or something even larger, if they can somehow be managed, as well as towns; cooperatives of farmers or workers; or whatever other associations they want to put together. Individual communities’ making their own rules would mean anyone’s kind of anarchism can be attempted. You could try a propertyless commune or a Galt’s Gulch (let’s hope the capitalists and the communists don’t engage in a Cold War); whatever you think makes the most sense.

I use the word “rules” to differentiate what I am talking about from “law”. “Law” has a number of definitions but this blog goes by that of law as an imposition by uncaring elites on a populace, which is what most laws are. “Rules” here mean the things people have decided to follow, not just to make others follow. They are what people agree to when going to a new place and can be changed when they no longer serve the common good.

Some sovereign communities will have leaders of one thing or another, as do most or all communities. Leaders are great, but it is hard to lead hundreds of thousands of people without an urgent, common cause (which is why a sense of urgency and a flat hierarchy are important for large corporations to stay ahead of the competition). But leading on a smaller level is not a problem. Small groups are more flexible and can act like teams more easily than big ones.

Sample rules

If a community decides on a code of rules, it can institutionalise them by having those who want to live there sign a contract. The contract would say that the people living there would adhere to those rules if they wish to remain there. Some stipulations in the contract might read

–adhere to the non-aggression principle. It is possible to build a community entirely on this premise, with very few other rules. Freedom would be maximised, though there would be other consequences as well.

–join the mutual aid network, or certain aspects of the mutual aid network, such as neighbourhood watch, health insurance, pensions for old people, and so on.

–no private property. People who believe property is theft would probably want that in writing.

–no violence whatsoever. This one is for pacifist communities. I would not want to take away someone’s right to defend him or herself, but pacifists have a different point of view, and if they want to organise on that basis, they should be free to do so. (The problem is, of course, the danger from outsiders; living high in the mountains may eliminate this risk.)

–immigration rules. As good as immigration can be for an economy and for opening minds, for one reason or another, it is possible that a community would not want too many newcomers. Perhaps it would put a strain on the local environment. Perhaps they just do not like Paraguayans. I do not like racism, but I do not force others to accept my beliefs. Let immigrants go where they are welcome, where they can improve their lives and the lives of those around them.

–the minimum drinking or drug-taking age, and which drugs are prohibited.

–no parental abuse or neglect of children, or else the community intervenes and adopts them until the parent is rehabilitated.

–no Walmart. If communities want to protect local business and even foster infant industries, they can erect barriers to trade as selective as they like. No to big box stores’ setting up in this neighbourhood (or even no buying from such stores and bringing it home). Nowadays, we have the ability to trade with millions of people around the world. A community that makes its own rules does not need to be hampered by one-size-fits-all laws, tariffs and sanctions over whole nations written for minority interest groups.

—Communities and individuals would be able to decide with whom, anywhere in the world, they would trade. Hoppe again: “Consider a single household as the conceivably smallest secessionist unit. By engaging in unrestricted free trade, even the smallest territory can be fully integrated into the world market and partake of every advantage of the division of labor, and its owners may become the wealthiest people on earth.” (p115) Secession  promotes economic integration to the extent independent units want it.

—Sovereign communities would likely form confederations with others, as was the case in pre-British-ruled Ireland, with no violence involved in leaving the group. They may prefer to trade with others of similar values. This principle is similar to the idea of buying fair trade, supporting small businesses over big or boycotting companies that abuse their workers.

–how to make decisions, and when not to. Not all decisions need to be made collectively. A man is free to the extent he does not have to follow decisions he disagrees with. But for those decisions that are made collectively, such as building a road or a school, the rules should specify a decision-making mechanism. The process most respecting of the individual is consensus. Consensus is, of course, rejected as a way of making decisions on the national level, but that is why it is preferable to do it on a lower level, where important things like new rules and punishments can be discussed by the people they will affect. The higher the level, the less representative decision making is and the easier it is for a majority to trample on a minority.

—If the community is too big for consensus, let the decision-making apparatus split and different people can choose which to join without moving. “Community” does not have to be an exclusive territory. As long as they agree not to impose their policies on others, they can live next to each other in harmony. Given what we know about polycentric law, such an arrangement is possible.

–rules for arbitration. My last post propounded a free market in dispute-resolution, arbitration and enforcement. But it is possible that a single community will have a single organisation in charge of arbitrating disputes among members. It may have an authority figure charged with ensuring decisions are enforced. The village policeman is often a friendly, respectable, trusted, admired member of society. It is not necessary to do away with him just because we do not like the FBI.

–penalties for non-compliance. These might start with simply talking to the violator for breaking smaller rules once or twice. Next could be public reprimand—singling out the person for criticism at a community meeting, and asking him or her how he or she will address the problem. A larger offense might require monetary compensation, perhaps working to pay off one’s debt to the victim. As a major punishment for something the community considers very offensive, probably after one or more chances to reform, the community could kick out the offender (or put it to a vote). If the offender is irretrievably violent and the people believe he or she requires deterring or punishing, they can lock him or her up. Of course, a society based on polycentric law would deal with these things equally well.

Whatever codes of ethics communities decide on, there is likely to be a great deal of similarity among them. Free communities will probably agree on some variation of the NAP, participating in a neighbourhood watch or sharing the costs of policing the streets, and so on. Some might be more entrepreneurial or socialist or fearfully protective than others, but most will probably still adhere to common norms. And when they share best practices, people get better ideas. Anything is possible when millions of people are free to decide.

The armed corporation

A common fear statists have of a free society is that a corporation, or some other large entity, would one day take up arms and attack and control people. In effect, this fear is the same as the fear of a government: that a small group will get together to take money and power away from a larger population. I agree that we must remain vigilant about such things, which is why free communities have many options for dealing with such a scenario.

As I explain in my post on human nature, humans have a sense of reciprocity: you help me and I will help you. The good guys, and good businesses that provide value to their customers, are the ones that succeed over time. That is why the image of the free market as the “law of the jungle” is erroneous. The law of the jungle is where the powerful come to dominate others, which is what a state enables. A free market means businesses would need to provide value, or they would not make money.

There are some psychopaths out there. We do not want to give psychopaths the means of violence, which is the main reason we should deny them access to the levers of the state. But they may also have access to large amounts of money through a corporation on the free market. They will lose from any customers who consider their actions illegitimate, but it is possible those customers will not know. That is why we have the media.

The huge variety of media in our society, from Democracy Now to Fox News to our friends and family, are one way to tackle organisations that act immorally, because consumers will withhold their dollars if they are deeply opposed to a business’s actions. Many consumers make choices based on their impressions of the companies they buy from. There have been a number of successful boycotts, which give more credence to the fact that businesses a) are beholden to the market and b) can be pressured by small numbers of ordinary people into changing for the better. Business groups such as the Better Business Bureau ensure that ethical businesses get certain benefits of belonging to clubs and the unethical ones get shunned.

All manner of organisation can use boycotts, along with public shaming of people involved, if their rules for ethical behaviour are broken. Shaming can actually be a powerful weapon, as we see when we see a man’s bad cheque on the side of a cash register. It can be used against those who violate the non-aggression principle, as has been suggested regarding police who use pepper spray on unarmed protesters. We need good reputations in life to be able to sign contracts, and we sign many of them in our lives. (Two people who have thought and spelled out the problem well are Stefan Molyneux on dispute resolution and David Friedman on private law.)

Since the people who own and run corporations would no longer have limited liability or other legal protections, the same rules apply to them as to corporations themselves, and anything I say about corporations must apply to the people who make them up. Through private law, people would be able to sue individuals working in the businesses who perform acts of aggression, rather than just suing the corporation. No corporate personhood, no bailouts and other transfers from taxpayers to corporate executives, no regulations preventing small businesses from entering the market: corporations would be far weaker without the state.

They would also have no legal mandate to make a profit, though it is more accurate to say that at the moment they must do what their shareholders want. As not all shareholders of all corporations are purely interested in making money, and others believe ethical behaviour is a way to make money, some of them have taken to shareholder activism, and have made positive changes in the corporations they own that way. Here we have yet another check on corporate power, and I see no reason to believe it would disappear without a government.

The idea that we should worry about private armies is misplaced. Whom does the national military serve? The elite control the state. The state and all its institutions serve the elite. A national military is the private army of the elite. It is paid for by the taxpayers, rather than the elite. In fact, the elite would probably not make money if they needed to pay for their wars themselves.

Some businesses benefit when a state goes to war, but not many. It is usually only the select businesses whose executives and shareholders belligerent governments are beholden to. But the question people who fear a corporation might go to war fail to ask is, who pays for modern war? Taxpayers gain nothing from war; they only lose. Businesses only profit when they get someone else (ie. taxpayers) to pay for it. If Halliburton had armed itself and gone into Iraq for oil, the costs would have far outweighed the benefits. It could have just traded with free people for it and saved millions on weapons. (See my take on the case of Iraq here.)

At the moment, some big corporations, usually oil companies, do attack people indirectly. They move into an area of people with no means to defend their land and the local government defends them against possible peasant unrest. It is possible to blame the corporations that bribe the state to use violence against these innocent people. However, if the state did not exist, the means of violence would not be paid for by the taxpayer. It would be paid for by customers, who would pay higher prices, and employees, whose wages would be lower. In effect, the tax would shift from individuals who do not benefit to those who do, and the prices might be exorbitant.

Moreover, bad PR costs a lot. People of conscience who find out that corporations are employing violence can boycott the corporations. All these things hurt sales. But we cannot force the people in the state who use violence to pay for it themselves, nor can we boycott the state. If a corporation stops caring about making money in the marketplace and only extracts it by force, it has become a state. Thus, the argument that if the state no longer existed, corporations would be just as able to commit violence does not follow. One way or another, anarchists oppose the initiation of force when done by anyone, be it a government, corporation, gang or otherwise.

But even with all this evidence corporations would not have unchecked and indominable power, it is still possible that corporations would commit overt violence, as if they were a government or a mafia, because they would probably still be disproportionately commanded by psychopaths, have lots of money and struggle for dominance. That is why the problem is not government per se, but the initiation of force. I do not care if it was a government or a corporation or just one person who killed 100 peaceful people; the problem is that they were killed. It could be hard to check corporations, like it is hard to check them and governments and other groups today. Not all information would reach everyone affected; not everyone would join in every boycott; not everyone would change due to public disgrace. So we need more ideas.

A stateless society would not be a completely peaceful utopia. How could it? When will we end aggressive behaviour? Few anarchists I know would even try. A lot of them believe that communities should separate from the state and become autonomous. Suffice to say, communities of free people would defend themselves against an aggressive corporation in the same way that they would defend themselves from any state or empire. That is something they have been doing for thousands of years. They or any anarchic society would need to have some kind of protection. That protection could come from the free market, as corporations competing for business would provide their customers with the protection they need. I understand the worry that those corporations could just turn on their customers and steal from them. However, businesses in a free market will provide enough customers with what they want that their owners will not want executives to start killing people. As Robert Murphy explains in detail, there is a market for security, and it could work very well against a corporation or any other organisation that wishes to harm people.

If a security company (or any other company that depends on repeat customers and good reputations, which is all successful ones not receiving state protection) kills or steals from or even enslaves a bunch of people, there are two problems. First, they will have less profit. I don’t think greed is necessarily bad: it depends how it is channeled. If you want to maximise profit, the rational solution might be to be a highly ethical corporation. In theory, and usually in practice, wherever free markets have existed (today’s markets are not very free), people are far wealthier, partly because they can pursue their self interest, partly because their motivation and creativity are higher, partly because they are forced to compete with others if they wish to remain profitable. If corporations want money, they are better off being good businesses and providing what the customers want, and if they do, the customers will come back.

Likewise, most corporations find that being good to their employees pays dividends in employee loyalty and motivation. If they start killing employees, or even just thwarting their attempts to unionise, employees must make a decision: stay here and risk getting bullied or murdered by this corporation, or quit and find another way to make a living. That is their decision. But as competition for workers grows, corporations need to provide better wages and working conditions. A major reason the vast majority of businesses do not regularly cheat customers and shoot employees is that it is not in the interest of their owners to do so.

Communities would still have rules, just like all societies have rules, and they could decide one of those rules would be no Walmart. That could mean no Walmart stores, no Walmart goods, and even no Walmart employees if they felt that strongly, would be allowed in the town. Every community that shunned Walmart in this fashion would mean that much less money, and thus power, for Walmart. Of course, we might not be able to get every community to push away our hypothetical violent or otherwise unethical corporation, but surely we should not force them to believe what we believe. If we are right, people might see it in time; and if they do not, they probably cannot be saved anyway.

The second solution to the problem of protection against a violent corporation is for people to defend themselves. Attempting violence against free people would probably lead to anyone sympathetic’s helping them out in the name of ending injustice, just as abolitionists used to attack slave owners in attempts to free slaves. People should really be able defend themselves anyway, at all times, whether there is a government or not, because violence can be committed whether there are 1000 police on the street or none. History shows that people band together in times of crisis, which include villages or cities allying to repel aggressors. And if they did so and had any chance of winning, where would this leave the business? It would need to reconsider any kind of violent campaign, and if a business is supposed to make money, waging its own war is clearly not the answer.

People could defend themselves, of course, but they could also have competing private defense agencies. If there is no central authority with a monopoly on the means of violence, a variety of organisations would have those means. They already exist to provide security guards, cameras, and so on. If one of them tried to attack people, the people could hire one or more of the many other organisations to defend themselves. If for some reason one turned belligerent, people could call another, or several others. And if worst came to worst, they could take up arms themselves.

In sum, it does not follow that corporations would make things much worse without a coercive state. Corporations would have far fewer unearned benefits without the state. Oversight is provided by journalists and consumers, and is spread by the innumerable media we have at our disposal and by word of mouth. There are already rules of ethics that would continue to govern the actions of consumers and executives, and when the people make rules for themselves and their communities, they can back them up by defending themselves from greedy outsiders with force if they need to.