Anarcho-Capitalism: So Crazy, It Just Might Work!


George Mason University economist, and advocate of anarcho-capitalism, Bryan Caplan explains why details of the ideological history of human attitudes toward methods and techniques of government show that ideas that almost everyone dismisses offhand as nutty and impossible can and in fact have come to dominate our political culture.

I mean, you think anarcho-capitalism is crazy? Imagine how people used to react to democracy

Let Caplan explain:

Imagine advocating democracy a thousand years ago.  You sketch your basic idea: "Every few years we'll have a free election.  Anyone who wants power can run for office, every adult gets a vote, and whoever gets the most votes runs the government until the next election."  How would your contemporaries react?

They would probably call you "crazy."  Why?  Before you could even get to the second paragraph in your sales pitch, they'd interrupt: "Do you seriously mean to tell us that if the ruling government loses the election, they'll peacefully hand the reins of power over to their rivals?!  Yeah, right!"

A thousand years later, the planet is covered with democracies.  In most of them, defeated incumbents consistently make the "crazy" decision to peacefully walk away from power.  In long-standing democracies, this pattern is so familiar we take it for granted.  But we shouldn't.  The viability of democracy is an amazing fact that begs for an explanation….

Caplan then points out that in the modern world, a political leader who told his cronies their response to losing an election would be to start killin' would not be obeyed, but condemned as "crazy."

The lesson: "Crazy" is relative to expectations.  A thousand years ago, everyone was used to despotism.   No one expected a defeated incumbent to voluntarily hand over power.  As a result, refusing to hand over power didn't seem crazy.  Since it didn't seem crazy, incumbents who refused to hand over power after losing an election probably would have managed to retain power.  In modern Sweden, in contrast, everyone is used to democracy.  Everyone expects a defeated incumbent to voluntarily hand over power.  Refusing to hand over power seems crazy.  As a result, refusing to hand over power would end not democracy, but the incumbent's career.

Now, Caplan says, anarcho-capitalism sounds as nuts as to most everyone as democracy likely did in those days of yore:

"Do you seriously mean to tell us that privatized police companies will peacefully settle disputes, instead of attacking each other until one firm becomes the new government?!  Yeah, right!"

….Suppose however that a stable anarcho-capitalist system existed.  Then this logic reverses.  Since everyone is used to this system, people expectprivate police firms to amicably resolve disputes.  In such a setting, a CEO who advocates a war of conquest would seem crazy—and his pleas to his co-workers would fall on deaf ears.  In a stable anarcho-capitalist society, a war-mongering CEO doesn't get a war.  He gets fired.

Since we've never had anarcho-capitalism, this peaceful equilibrium sounds like wishful thinking.  But it's no more wishful thinking than stable democracy.  Both systems sound crazy when first proposed.  Neither can be stable as long as people expect them to be unstable.  But both can be stable once people expect them to be stable.

You could object: The expectations necessary to sustain anarcho-capitalism are highly unlikely to ever arrive.  But the same was true for democracy a thousand years ago.  Yet somehow, expectations radically changed and stable democracy arrived.  How did expectations change so dramatically?  It's complicated.  But can expectations change dramatically?  Absolutely.

As someone who was first exposed to anarcho-capitalist ideas 25 years or so ago, has written histories of the libertarian movement since then, and is quite confident (even without survey data) that the ideas seem far less crazy to far more people than he could have imagined then, I think Caplan has a point. (On a far narrower level of precipitous shifts in cultural attitudes toward "crazy," I think the progress of ideas such as gay marriage and marijuana's use as medicine or legalization recently are encouraging signs. Things do change.)

Part of the key to Caplan's "It's complicated" is the tireless work of ideological and economic education pursued by all the various thinkers and organizations and journalists and advocates working under the rough rubric of the "libertarian movement," whose history was told in my 2007 book Radicals for Capitalism: A Freewheeling History of the Modern American Libertarian Movement, and whose most recent surprising success was told in my book from last year, Ron Paul's Revolution: The Man and the Movement He Inspired.