Schools of Thought in Classical Liberalism, Part 6: Anarcho-Capitalism

Nigel Ashford,

Release Date
May 9, 2012


Free Markets and Capitalism

What is an anarchist?  Most people associate the word “anarchist” with the political left. However, there are anarchists who advocate for completely unrestricted capitalism, also known as anarcho-capitalistism. Two prominent anarcho-capitalists are Murray Rothbard and David Friedman, both of whom believed there should be no government. Dr. Nigel Ashford discusses the views of Rothbard and Friedman.
Rothbard favors anarcho-capitalism based upon his belief that it is always wrong to use force, except in self-defense. For Rothbard, the government is illegitimate because it relies on coercion. David Friedman, on the other hand, argues for anarcho-capitalism based on empirical evidence. Friedman believes that the market is always more efficient than the government.
Both believe there should be no state at all. Rothbard criticizes government for its use of force, while Friedman criticizes its inefficiency. Both argue that there are free-market alternatives to all government services. While many libertarians favor a minimal state, Rothbard and Friedman suggest that any state is likely to grow well beyond its intended role.

Frequently Asked Questions [Text]: Anarchy seems very radical to many people. If you’re wondering how anarchy would work and you want to learn some common critiques, check out this thorough FAQ written by economist Bryan Caplan.
Friedman’s “The Machinery of Freedom” [free eBook]: For David Friedman, anarcho-capitalism isn’t just an abstract thought experiment. In his book “The Machinery of Freedom,” Friedman provides a blueprint for anarcho-capitalism, and outlines the benefits of anarchy.
Primer on Rothbard [Text]: If you are interested in a more detailed discussion of Rothbard’s anarcho-capitalism philosophy, check out this thorough primer by Edward W. Younkins.
1. What is the non-coercive axiom?
2. What is a consequentalist defense of anarcho-capitalism?
3. How would defense be provided under anarcho-capitalism?

Schools of Thought in Classical Liberalism, Part 6: Anarcho-Capitalism
So now we’re going to look at Murray Rothbard, David Friedman, and anarcho-capitalism. Murray Rothbard, famous for lots of things but particularly his book For a New Liberty. David Friedman, who’s Milton Friedman’s son, wrote a book called The Machinery of Freedom. As far as the first thing to say is that when people hear anarchism they tend to think of ideas as being on the left and in some sense collectivist. But there is a school of thought within classical liberal thought who are anarchists who base their ideas on capitalism. That’s what we’re going to have a look at.
Murray Rothbard, he defended his position, he based it on this idea of natural rights. In that sense, similar to Rand and Nozick and other believers in it. But he was also strongly influenced by Mises, and he developed what he called the noncoercive axiom, the noncoercive truth. It is always wrong to use force except in self-defense. It’s always wrong to use violence except if you’re protecting yourself against somebody who’s trying to use violence against yourself. He says that’s the principle we should use to establish what government should do.
David Friedman, from a different point of view, he very much follows the same methodology of his father: Chicago’s school of empirical analysis. He says, we answer this question by comparing what’s the relative efficiency of leaving things to the market and what’s the relative efficiency of leaving it to the government. Two very different sorts of methodologies, one clearly based on natural rights; one clearly based on consequences. Why do they think the government should be limited? In fact they go beyond that; they believe there should be no state at all.
Well that raises the question then, what is a state? The classic definition of a state comes from Max Weber, the German sociologist. A state is an institution which claims a monopoly of a legitimate use of force over a given territory. So within a society that a government covers, nobody else is allowed to use force. Only the government should be allowed to use force.
Rothbard criticized this because he said what governments do? They violate our rights. They obtain what they want through coercive means. If we don’t do what the government wants, they will throw us in prison. So for example, he says that taxation is theft. If somebody came along and took 25 percent, 40 percent of our income and said if you don’t give it to me I’m going to put you behind a jail, we would call that person a thief, a criminal. Rothbard says, why do we behave any differently when it’s the state that comes along and says it wants to take 25 percent and 50 percent of our income? It is the state is simply a criminal which is violating our rights.
David Friedman, taking this efficiency approach, he says the state is inevitably inefficient. All right, we carry out the empirical approach; we measure government efficiency versus market efficiency. He concludes the market is always more efficient than government. Whereas his father, Milton Friedman saw there was some circumstances where that wasn’t true, he argues empirically, it’s always true. Even things that most people assume that only the government can do, like defense or provision of roads, David Friedman argues, actually the market can provide these things most efficiently. This is what he argues in his book, The Machinery of Freedom.
So they conclude that the best society is one of anarchy, one without any government at all. So government is both illegitimate—it has no specific moral claim on us than any other single individual. And it’s also inefficient—it cannot provide more efficiently the goods and services that the market is able to provide. An alternative exists. We tend to forget, for example, that there are more people employed in the private security sector than employed by the police force. Most people are protected by private institutions not the police. We just tend to ignore that. We ignore the fact that many disputes between businesses don’t go to our state courts. In fact, many business disputes are settled in private arbitration courts because state courts are so slow; they’re so inefficient; they’re so unreliable. Many businesses will prefer to use private arbitration agencies to do this.
So they think that the other alternatives to the state provide these goods, and they also argue, all right, suppose we do believe in something like a minimal state. If you create a minimal state, it will never stay minimal. It will be unstable. And it will either have to go in one direction, which is the most likely: It will start as a minimal state and then it will grow and it will grow and it will grow and it will grow, or—this is what they favor—let’s go to anarchism of having no state whatsoever.