Saturday, October 15, 2005

Criticisms of Anarcho-Capitalism

Thanks to Minhea Tudoreanu for a couple of suggestions, now added to the Libertarians Criticizing Each Other index.

NEW 10/05: A Fatal Instability in Anarcho-Capitalism

NEW 10/05: Anarcho-Capitalism Dissolves Into City States

Paul Birch shows some good reasons to think anarcho-capitalism is a utopian pipe-dream.


Glen said...

I see some problems with the "runaway restitution ramp" argument.

First: as a potential court customer I have to take some account of the possibility of being falsely accused and wrongly convicted of a crime. If criminals are over-penalized in the court to which I subscribe, I have a risk of being over-penalized. Second: the higher the restitution ramp, the less likely it is any penalty will be assessed at all - a larger penalty creates a larger burden of proof and also makes it less likely the criminal can afford to pay the fine in any reasonable amount of time - I'd rather a high certainty of a quick "makes good the damage" settlement than a small chance of a future windfall. Third and most important: An extremely disproportionate restitution ramp makes customers less safe because it makes muggers and robbers and rapists and vandals and corporate criminals more likely to kill all the witnesses.

For all those reasons, I think the idea of a runaway restitution ramp is kind of silly. I can't imagine customers would want to patronize the agency with the highest restitution rate; other factors would likely predominate.

[The other paper seems to rely pretty heavily on the assumptions that (1) between-company disputes are hugely more expensive than within-company disputes (2) this difference dominates the cost of doing business rather than being a relatively small factor (3) there are no diseconomies of scale whatsoever in the industry. If you grant all three of those he's got a case, but I think it proves too much.]

Mike Huben said...
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Mike Huben said...

Good ol' Glen, always assuming perfect information where it makes his argument work.

If the criminals had perfect information about the restitution rate for the victim's agency, you might be right. But the victim would lie or be silent if he thought the truth would make him more likely to be killed. Thus, it would pay the agency to have a very high rate because criminals wouldn't know if it applied to their victims. If it makes criminals overall kill more victims just in case, that an externality causing a prisoner's dilemma for the agencies. We'd expect a race to defect by the agencies.

Frankly, I'd worry much less about problems with the criticism than problems with anarchocapitalism.

Glen said...

As an agency customer, I want criminals to be deterred by the knowledge that I have an agency and by that particular agency's reputation (or their usual court's reputation) for catching and punishing criminals. I'd want to post "this property protected by SafeCo" stickers on my car, house, ectetera.

If, as you suggest, I have to keep it a secret, how is deterrence going to work? Given that catching criminals after-the-fact is uncertain, it's hard to imagine how a huge-penalty-if-caught company that I can't tell anybody I subscribe to would be better than a rational-penalty company that I can.

The "perfect information" assumption ( "sufficiently accurate information" would be more precise) is one I share with the author of the essay you recommended. If you drop that assumption, there's far less incentive for a race toward high restitution ratios and his argument is correspondingly weaker.

(Actually, that he made too much use of perfect information and selective response to incentives was something else that bothered me about the argument - in one essay he seemed to think an infinitely high punishment meant there'd be no crime; this lack of crime was one reason the industry would inevitably tend to consolidate. My contrary expectation is that infinitely high punishments mean criminals get extremely careful, extremely good at killing witnesses and extremely good at paying off judges and policemen, but don't actually stop committing crime.)