Market Dynamics of Police Protection

I wrote this a few years ago. I'm not really sure why I never posted it.

The Flaw in Anarcho-capitalism

Go here for a really long definition of anarcho-capitalism. Go here for articles from the point of view of anarcho-capitalists.

It has often been said, and I believe, that there can be no monopoly in any industry where government does not create it. Even in products with a network component to their value (those products that become more valuable to the individual consumer when more people use it, like telephone systems and computer operating systems), the constant flux in technology and habits will inevitably wear away at any particular company's market share. AT&T had a monopoly, but only because telecom regulation made it prohibitively difficult for competitors to enter their market. Microsoft seemed to have a monopoly at one time, but challengers to that monopoly crop up every day--we're not far from a Linux distro that can be used by the average person, for example.

It is also recognized that every product and service in a free market is going to have the highest quality and lowest cost any human system can give it. Anything that turns a significant profit is going to attract more labor and investment, the effort of outsiders to that industry to claim a part of those profits. Rising supply meets the demand, prices fall, profits fall, untill some other industry becomes "too" profitable, and everybody who can rushes to meet the need there. Provided there are no artificial barriers to entry into the market for a particular product or service (like requiring government-issued licences to practice everything from law and medicine to hair-styling and pest-control), prices and services must ultimately be reasonable. (You want to know why health-care is so costly? Look no further than the government's entry-fee of fifty-thousand dollars or so for the practice of medicine, and their exclusion of any form of medicine that does not meet current political needs.)

The anarcho-capitalist suggests that police protection would benefit from the same dynamics every other service does in a free market. Current policing is wasteful, inefficient, and corrupt. The belief is that if there was NO entity with an exclusive monopoly on police protection, things would be significantly better. If a particular security organization became corrupt, they would simply loose customers; taxation would not continue to fuel an ineffective and corrupt institution, since there would be no taxation. Thus, police protection would be subject to the same mechanism of economic choice every other service is subject to, which would be good, right? Unfortunately, I belive, so long as men are sinners, such a situation will never exist, not for any length of time. The market dynamics of the use of force and the threat of such use are fundamentally different from every other product and service.

When one produces, when one labors to change one form of matter to one that is useful, one has a number of choices as to what to do with this piece of property: it can be used for immediate personal gain, or it can be exchanged for the fruit of another's labor. For example, a farmer might spend the year ploughing, planting, watering, and finally, harvesting. A subsistance farmer consumes the whole of his produce, and does his own house-building, tool-making, and such besides. A more prosperous farmer specializes in farming, acquiring better tools, using better methods for a particular subset of crops, and then exchanges the produce (which is greater than a farmer who had to spend time and energy on other tasks) for the produce of others: the wheat farmer exchanges wheat for apples with the orchard owner; wheat for beef from the cattle herdsman; wheat for plough maintenance from the blacksmith; wheat for bread from the baker, who bought his flour from the miller, who bought the wheat from the wheat farmer. As wealth increases, that wheat farmer starts to produce so much wheat that he can exchange it for music and arts, research in the art of wheat-growing, or anything else he might desire.

The use of force is no different in that it can be used for immediate satisfaction of desires or in trade with another; however, it is here that the similarities end, because, unlike the subsistance farmer, we perceive a significant moral difference between the use of force for immediate satisfaction of desires, and the use of force in trade.

The use of force for immediate satisfaction of needs and wants is what we call crime. The burgler breaks windows, enters a house, and takes what he wants. The raider sweeps down on the countryside in the company of his fellows and steals the produce of the farmer. The mugger knocks a man down and takes his wallet. The angry man kills the one who "made him angry." The zealot murders in the name of his god (though this might be described as an exchange, between the murderer and the "god"). Standing against them are the "subsistance-fighters" who raise their own weapons in defense of their own property.

Such people are the reason police protection is required. The idea of the anarcho-capitalist is that the second group, those who professionally use violence for money, but only when violence is warrented by the initial violence of the other party. I would argue, however, that in addition to that particularly professional form of violence-on-the-market, there would be a proliferation of many corms.

First, you'd have your basic thief. Whether there would be more or less of those than there currently are, I don't really know. It is possible that, more lucrative occupations existing due to the absence of taxes and regulations, there would be fewer. More effective police services migh reduce their numbers in areas inhabited by people who can afford more effective police services. I don't know, but I suspect that, given the considerably more dangerous nature of petty crime, and more lucrative nature of other kinds of violence, petty crime would, at worse, be no more common than it presently is.

Then you'd have the armed citizen type. These would own and be practiced in the use of a weapon, but have as their primary occupation something else, using said weapons only in self-defense. Among these would be people who, when angry or drunk, would also use their weapons, but I suspect such people would be weeded out in all but the ares of lowest population density. People who do this might shoot someone, but they tend to get shot themselves, far more often than the average person--particularly when the average person is not prevented from carrying their own weapon by a police force. The lower population-density areas I refer to are such places as the high seas, rural areas, etc.

Then you'd have private police organzations. In exchange for money, they would do the job of defending people's lives and property, generally only of those who could afford to pay. Of course, mercenaries would come in many other forms, as well.

A local olive oil distributor could hire men to intimidate competitors out of the market. A rancher could hire men to protect "his" property--which just happened to be on the OTHER guys ranch a few days ago. An investor could include violent men as part of his attempt to buy someone else out of their business. And finally, a police protection organization could attempt to use their capacity to do violence to force competitors out of an area they claim. The question is, which form would be the most profitable to both provider and customer, and thus predominate?

Let us examine the situation where money is the only concern. The doers of violence can be grouped into three basic types:

a = those who use force solely for direct acquisition of property (thugs)
b = those who provide police protection for a price, and who will take "no" for an answer.
c = those who provide police protection for a price, the payment of which is enforced coercively, competitors being excluded coericively.

We must consider the amount of police protection required by a client, and that amount differs by which type they choose. If they choose the police group "b", they are going to need an amount of protection equal to "a + c", since the group that won't take no for an answer will also be attacking. If they take the protection of group "c", the amount of protection they'll be paying will be equal only to "a", since group "b", as a matter of principle, will not attack. Thus, model c wil predominate, since it will be the most profitable model for both the customer and the provider.

The wildcard in this analysis, of course, is the vast body of armed citizenry. If a community is inhabited by people who are violently opposed to allowing anyone to FORCE them to accept police services, anyone who tried, or even seemed to be trying, might end up strung up by a lynch mob. This assumes, however, that either the capacity to use force is relatively evenly distributed (and it generally isnt in a specialized economy, any more than the ability to produce food or build houses is), or that enough of the people at large are willing to die for a matter of principle, since it would be bloody work for a lynch mob to take down a bunch of well-armed gangsters.

Many anarcho-capitalists wisely focus on education, rather than political action. The State is group c, writ large, the result of natural economic forces. The only thing that will shut down model c is if people generally stop trying to use force for personal economic gain--if group "a" goes away on their own. So long as men are sinners, there will always be government in some form. The only question is the scale.