Liberty and Community Go Together

Written by Jeffrey Tucker.

“If God is so great, why did he make grapes and wheat instead of wine and bread?”

The Rabbi asked the question as part of a wedding ceremony I attended this weekend.

I already had the answer in my mind: because God wants us to work with our human hands.

This was not the answer the Rabbi quoted from the Talmud.

“Because God wants us to learn to cooperate with others in order to live better lives.”

And it is true: no one person can perform well all the tasks that are necessary to turn grapes to wine and wheat to bread. Attempting to do it alone leads to frustration, exhaustion, and deprivation. Working with others makes everything much easier and more morally satisfying. We discover value in others and feed off the value they discover in us.

Why tell this riddle as part of a wedding? Because we were witnessing the coming together of two lives, a union of love, backed by an intention of mutual support, two people who have found value in themselves by discovering it in another special person. It was entirely appropriate. Two individuals have become a community – people working together for a common end.

Love and Markets

The popular characterization of markets is exactly the opposite of the moral forces underlying markets. But the meaning of this insight goes beyond nuptials. There is a form of community that is the whole basis of the market economy. It is an extended network of human relationships worked out in peace and mutual agreement. So far as we know, the capacity to form such cooperative relationships is distinct to the human experience.

Roger Scruton goes further to describe such relationships as the evolutionary basis of what we call morality:

Morality is like a field of flowers beneath which the corpses are piled in a thousand layers. It is an evolved mechanism whereby the human organism proceeds through life sustained on every side by bonds of mutual interest.

As the market economy grows more sophisticated, it develops price signals that help with calculating profits and losses. It develops interest rates that assist in signaling the best approaches to investment. The extended order can appear highly complex, powerful, and even detached from human concerns.

And for this reason, people who can’t see below the surface have long attacked the market for being rooted in individual greed, selfishness, and the desire to screw over your neighbor. They see competition as a terrifying force that rewards the few at the expense of the many. This whole characterization is exactly the opposite of the moral forces underlying markets.

You can look at Wall Street, the lives of the 1%, the mind-boggling complexity of financial markets, and imagine anything you want. But the truth is that all these institutions and signals distract us from the root of all market institutions: human relationships. The market rewards us for meeting new friends, reaching beyond our immediate family members, putting aside biases and tribal feelings, cultivating personalities that are active and outgoing, being creative in finding new ways to work with others toward common ends.

Contemporary nationalism is not authentic community. The market specializes in finding new and better ways of doing this. But it doesn’t do this automatically, like some machine operating independent of human will. It achieves this because it enables all of us to act on our dreams, and to test those dreams against the volition of others. We must persuade others to go along, whether to work with us, invest in our product or service, or purchase it with an exchange of their property for our property.

The market is our opportunity to grow personally and live better lives. And it achieves this very thing for millions and billions of people every day. In premodern times, when the market was limited, our tools were primitive and the world was dominated by top-down forms of authoritarian control. Then, opportunity for people simply was not there.

For hundreds of thousands of years, human experience knew not the idea of progress. You were what you were born to be and nothing more. Surviving was enough.

The development of the market economy changed that. It ennobled the human mind, human work, and gave life and reward to the capacity to get along with others, cooperating on an ever greater scale, even unto all ends of the earth.

Market vs. National Community

The longing for some connection to others seems to be an intractable feature of the human experience. We want to find meaning beyond our own ego, some sense of worth that is not limited to our self understanding. We want our lives to be bigger than we alone can make them. And this impulse can be turned to good or evil.

The market has met this need in so many ways, but it is not the only institution competing to give us this. We have other forms of identity that all matter: language, geography, race, and religion all form parts of our sense of self as it relates to others. The question is whether we want to turn these conditions into full-blown ideologies.

Here is the modern basis of what we call nationalism. As Ernest Renan explains, it is a false form of community organized around one of these four identity marks. Wherever you find it, you can observe some toggling going on between these four marks.

The rise of American nationalism right now is a case in point. The opponents of Trump say that his regime is about race. No, it’s about religion. No, it’s about geographical exclusion. No, it’s a form of language imperialism. Actually, it’s all of these really, not one consistently or completely. Whatever it is, it absolutely must rely on forced forms of community rather than voluntary ones.

What matters is what contemporary nationalism is not. It is not a voluntary extension of the longings of the human heart: “self determination,” in the language of 19th-century liberalism. It becomes raw statism, a false form of community that is antithetical to our highest longings.

Albert Jay Nock put the point clearly: “As a general principle, I should put it that a man’s country is where the things he loves are most respected. Circumstances may have prevented his ever setting foot there, but it remains his country.”

Just as true love requires more than one, neither liberty nor community can long exist without the other.This is especially true in the 21st century when hardly anything around you has been produced in one geographic territory, by one race, by people of one religion, by people who speak only one language. The market has managed to create for all of us a form of global community of astonishing diversity, bringing people together who otherwise would have no connection to each other.

But, say the skeptics, we don’t actually know these people. True, which makes this form of community all the more magical. We have entered into relationships, meaningful ones for our lives, without personal knowledge of every member. That is the hardest kind of community, a group whose members serve each other without no further knowledge. Here we find the basis of a truly lasting peace and rising prosperity. It could never happen if we had to know everyone with whom we had some relationship. Under those conditions, we never achieve greatness. (The groom in the wedding actually wrote in detail about this topic.)

True Love

The wedding ceremony I attended was so beautiful, so inspiring, and there wasn’t a person in attendance who wasn’t enormously happy for the couple. Two people found each other and discovered through each other a higher purpose for their lives than they could otherwise experience on their own. The whole is greater than the sum of the parts.

This is the most intimate, distilled, and aesthetically compelling version of what the market economy has done for all over us, all over the world, every day. It is working daily to make everyone more valuable to everyone else. Liberty alone has created community. Just as true love requires more than one, neither liberty nor community can long exist without the other.

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Why Can’t You Pay For Sex?

Written by Ninos Malek.

Is it illegal to date or marry someone only because they are famous, wealthy, or both? No. Are there unattractive people who have good looking dates or spouses only because they are famous or wealthy? Yes.

Is it legal to go to a nightclub for the sole purpose of meeting someone to “hook up” with? Yes. Most Friday and Saturday nights — and on most Spring Break evenings — people are having sex with other people whose names they haven’t even bothered to learn.

Consensual sex is legal. But as soon as one party offers cash to another in exchange for sex and that money is voluntarily accepted, it’s considered prostitution, and that is illegal. This is hypocritical, illogical, and wasteful — and it needs to stop.

It’s interesting that one person can, in effect, legally recompense another with a nice house, jewelry, vacations, expensive cars, fancy parties, and tickets to sports and entertainment events in order to have that person as a dating partner or spouse.

Consider three beautiful young blonde women who had sexual relations with a much older man, not directly for cash, but for rooms in a well-known and luxurious mansion, for the privilege of getting their photos on the cover of a popular magazine, and for the fame bestowed by appearing on television. And these young women are simply the stars of the reality TV series The Girls Next Door.

Don’t get me wrong — I am not judging them or the much older man, who by now you likely know is Hugh Hefner. But what if another old man simply paid cash to three women to have sexual relations with them? That would be illegal.

Why criminalize?

When I ask students how many of them believe consensual, non-marital sex between two adults should be illegal, none raise their hands.

Then I give them two scenarios. In the first scenario, a man who is only looking to have a sexual encounter approaches a woman at a bar and sits next to her. He strikes up a conversation, buys her a drink, and eventually takes her to an expensive restaurant for dinner. After a nice dinner and some good wine, he asks her if she will go to his hotel and have sex with him and she agrees. Let’s assume that the man paid a total of $300 for the drinks and dinner. Is this legal? Yes, it is. This scenario is played out somewhere every night of the year.

In the second scenario, a man approaches a woman at a bar and says, “Look, I can pretend to care about getting to know you but I won’t. I just want to have sex with you. Will you come back to my hotel and have sex with me for $300?” If she agrees, this is considered prostitution.

My question is this: What is the real difference between the two scenarios? I am not arguing that either scenario is appropriate or moral. Many people have different moral and religious standards regarding one or both of those scenarios. The point is, the government allows Scenario A, but spends money and human resources fighting Scenario B. Why is Scenario B the government’s business? Why does the government believe the former is morally superior to the latter?

Of course, I am not referring to situations where people are forced to have sex. This is immoral, and the government has a legitimate duty to put a stop to it. But if adults want to have sex and pay or receive money for it, why should the government stop them?

And what if the only way some individuals can get sex is by paying for it? Perhaps nobody finds them attractive enough to have sex without some type of direct, clear compensation. Isn’t the government discriminating against these conventionally unattractive people?

The government has certain limited and legitimate duties to perform. Perhaps you think sex work is an immoral lifestyle. However, it is arguably no less moral than a lifestyle of random “hooking up,” or the stereotypical lifestyle of the professional athlete or rock star who brags about how many women he has had sex with (e.g., Wilt Chamberlain and Gene Simmons).

It is the duty of government to protect property rights and to prosecute individuals who coerce or force themselves upon others. However, the government needs to stop wasting resources on voluntary, adult sexual exchanges. A police officer who could be out stopping real crime, but who is instead assigned to a vice squad as an undercover prostitute, represents a lost opportunity to make communities safer. It is time to put an end to this hypocritical and wasteful prosecution of sex workers and their clients.

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In Praise of Immigrants

Written by Jon Basil Utley.

Three new technologies of the last 20 years made America’s economy great again: the iPhone, Google search, and horizontal drilling and fracturing. All came from first-generation immigrants. Steve Jobs was the son of a Syrian immigrant; Google came from two young men, one a Russian immigrant; and fracking came from the son of a Greek goatherder. There is a simple reason: immigrants, to paraphrase Frankie Laine’s great song, do not have an “ace in the hole”—somewhere to get a free meal or a pad for the night. I too was one, from Russia. Immigrants didn’t have any ace in the hole; when I looked over my shoulder there was nothing except, sometimes, an imaginary hungry wolf. My mother got me a good education but as a child, I was among the poorest in almost any group of children. That’s the real incentive immigrants have.

Steve Jobs’s father was a poor Syrian—yes, an Arab of all people. Google’s co-founder was Sergey Brin, who came to America as a six-year-old. Google’s search engine is compared to Gutenberg’s invention of printing for its impact on mankind. George Mitchell’s father was a Greek goatherder, hardly a favored category for the anti-immigrants. George himself grew up in an apartment over a shoeshine stand which his father managed; he graduated first in his class from Texas A&M University. Quoting The Economist, “few businesspeople have done as much to change the world as George Mitchell.”

Since the 1940s an oil or gas well was drilled vertically in oil sands maybe 200 to 400 feet thick; then the pipe was perforated with holes (fracked), exposing some 400 feet on all sides to flowing oil/gas. Horizontal drilling allows the drill stem and pipe to go outwards up to a couple of miles following the directions of the oil sands or rock. This meant that a single well could expose tens of thousands of feet of oil-rich rock in several directions to fracking and production! This put America back as the world’s top oil and gas producer. America is now building more and more gas export facilities and already earns billions of dollars from new gas exports to Mexico, Asia, and Europe. We will soon become the world’s third-largest liquid natural-gas exporter. It has created hundreds of thousands of well-paying new jobs as giant petrochemical plants are also built to take advantage of our low cost gas. New pipelines are also bringing cheap natural gas to the East Coast and Northeast. America is one of the very few countries which can so prosper because of our network of pipelines and railroads in the producing states and our private ownership of mineral rights.

It’s immigrants who have always been vital for America; yes even the lowly, illiterate Mexican laborers upon which California and much southern agriculture depends. In Wisconsin, which is second to California in milk production, about 60 percent of immigrants on dairy farms are undocumented, according to a Bloomberg report. I worked a summer on a dairy farm when I was 16. It’s tough work.

And half of all illegal immigrants are Europeans, South Americans, and Asians who overstayed their visas. Immigrants from India are leaders of tech startups in Silicon Valley. According to Forbes, “It’s not just Silicon Valley. We found that Indians start more companies than any other immigrant group in California (26%), Massachusetts (28%), Texas (17%), Florida (17%), New York (27%), and New Jersey (57%).” Half of all the Fortune 500 largest companies in America were founded by immigrants or children of immigrants! At the other end of entrepreneurship are the thousands of tiny lunch shops and services which provide convenient meals and snacks and other services in our great coastal cities. They are an immense convenience to office workers and are almost always run by Asians or Latinos. Then there is the vast amount of child care for working mothers and well-off career women provided mainly by Asian and Latin immigrant women.

The adoration of the anti-immigrants for assembly-line factory jobs is a fantasy. I suggest trying it. Or construction, where millions of unemployed Americans are supposedly chomping at the bit for jobs. I used to do it in my twenties and thirties. It’s tough.

Trump’s “millions of dangerous criminal aliens” now turn out to include all those who are paying Social Security taxes into U.S. citizens’ accounts or have a broken tail light in traffic. Trump just moved the goal posts!

Bin Laden’s Dying Wish

In 2009 I wrote “How Bin Laden Bankrupted America,” pointing out that his ultimate dream was to create chaos inside America, to get Americans to fight each other. We are getting closer to that time with Trump’s anti-immigrant rhetoric and proposals. Trump’s vitriolic language and his splitting off immigrants from old-line nationalists are putting America on a downward path. Remember that Mexicans are less than half of our immigrants. There are also millions of Asians, Irish, Polish, and others who all now feel and fear that they could be next. If Trump also curtails world trade and damages America’s high-tech manufacturing and service sector in a vain attempt to bring back old blue-collar jobs, we will surely descend into chaos.

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Is a National Government Necessary for National Defense?

Written by Robert Higgs.

Gordon Tullock used to taunt anarchists by asserting that if the USA abolished its government, people would not have to worry about the Russians taking over the country because “the Mexicans would get here first.”

This little story actually incorporates a common objection to anarchy—namely, the idea that because, if a country abolished its government, other countries would not necessarily follow suit, the governments of those other countries would be free to, and would, simply take over the country that, lacking a government, also lacked an effective means of defending itself against takeover by a foreign power.

This thinking presumes at least two critical ideas: first, that defense of a population requires a government that rules that population; and, second, that if a government has the power to take over another country, it will do so.

As for the first assumption, it seems clear that a national government may prove an ineffective means of defense in any event, as many governments have demonstrated through the ages. Moreover, it is certainly conceivable that decentralized measures of defense, such as pervasive guerrilla groups operating more or less independently, might prove effective in preventing a foreign takeover.

As for the second assumption, the persistence of many small countries with weak governments, even in today’s world, certainly calls into question the idea that effectively defenseless countries cannot persist. Surely Brazil has the means to conquer Uruguay, but it does not do so. Surely Germany or France has the means to conquer Belgium, but neither does so. And so forth in regard to many other countries. Governments have various good reasons for refraining from such possible conquests.

Thus, even if the Mexicans could get to the USA first, it is by no means certain that they would choose to do so. And if they did invade the USA, it is by no means certain that they would succeed in the conquest they sought.

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Defending a Free Nation

Written by Roderick Long.

Defense: How?

How should a free nation defend itself from foreign aggression?

Defense: Why?

This question presupposes a prior question: would a free nation need to defend itself from foreign aggression? Some would answer no: the rewards of cooperation outweigh the rewards of aggression, and so a nation will probably not be attacked unless it first acts aggressively itself.

On the other hand, if this were true, conflicts would never occur — since no one would make the first aggressive move. It’s true that the rewards for cooperation are evident enough that most people do cooperate most of the time. That’s what makes human society possible. If people weren’t basically cooperative, no government could make them so — since the people in government would have as much difficulty working together as all the rest of us.

Still, a small but troublesome minority obviously do believe they’re better off not cooperating: we call them criminals. Maybe they do tend to lose out in the long run — but on the way to that long run they cause a heck of a lot of damage to the rest of us.

More importantly, governments face different incentives from those faced by private individuals. Under a government, the people who make the decision to go to war are not the same people as those who bear the greatest burden of the costs of the war; and so governments are much more likely than private individuals to engage in aggression. Thus it’s a mistake to model a nation-state as if it were a single individual weighing costs against benefits. It’s more like a split personality, where the dominant personality reaps the benefits but somehow manages to make the repressed personality bear the costs. (Hence the superiority of private protection agencies: a protection agency that chooses to resolve its disputes with other agencies through war rather than arbitration will have to charge constantly rising premiums, and so will lose customers to nicer agencies.)

That doesn’t mean governments are completely isolated from the bad effects of war. Certainly the people in power will suffer if they lose the war, especially if their country is conquered by the enemy. And they can also share in the prosperity that peace and free trade bring. But the disincentives for war are much weaker for governments than for individuals — which means that it’s a dangerous world out there, so a free nation needs a defense.

Why Not a Government Military?

Most societies, at least in this century, handle the problem of national defense by having a large, well-armed, permanent military force, run by a centralized government, funded by taxation, and often (though not always) manned by conscription. Is this a solution that a free nation can or should follow?

I don’t think so. First of all, I don’t think there should be a centralized government. My reasons for this position have been set out in some detail both in FNF Forums and in recent issues of Formulations, so I’ll just summarize the main points briefly:

First, government is unjust. Government, by definition, requires its citizens to delegate to the ruler all or part of their right to self-defense. (An institution that does not require this is no government, but something else.) But to “delegate” a right involuntarily is no delegation at all; the right has simply been obliterated. And I do not see how this can be justified. By what right does one group of people, calling itself a government, arrogate to itself the right to take away the rights of others? (As for taxation and conscription, I can’t see that these are anything more than fancy words for theft and slavery.)

Second, government is impractical. Government is a monopoly: it prohibits competition and obtains its revenues by force. It thus faces far less market pressure, and its customers are not free to take their money elsewhere. As a result, governments have little incentive to cut costs or to satisfy their customers. Hence governments are, unsurprisingly, notorious for inefficiency, wastefulness, and abuse of power.

So, since I don’t want a government, I obviously don’t want a government military. However, even in societies that do have a government, I think it’s still a good idea not to have a government military. A government which has an army that it can turn against its own citizens is a lot more dangerous than a government that doesn’t. That’s why so many of this country’s Founders were so adamantly opposed to a standing army, seeing it as a threat to domestic liberty (see, e.g., the Virginia Declaration of Rights, drafted by George Mason). (A standing navy worried them less because it’s harder to impose martial law on land by means of sea power! If the United States had been an archipelago of islands, they might have thought differently.) In this country today, U. S. soldiers are reportedly being asked whether they would be willing to shoot American citizens! A free nation needs to find a less dangerous way of protecting its citizens.

The Dangers of Centralization

Centralized government poses yet another threat to a nation’s liberty. The more that control over a society is centralized in a single command center, the easier it is for an invading enemy to conquer the entire nation simply by conquering that command center. Indeed, invaders have historically done just that, simply taking over the power structure that already existed.

By contrast, a society in which power is decentralized lacks a command center whose defeat or surrender can deliver the entire nation into bondage. For example, during the American Revolution the British focused their energies on conquering Philadelphia, at that time the nominal capital of the United States, on the assumption that once the capital had fallen the rest of the country would be theirs as well. What the British failed to realize was that the United States was a loose-knit confederation, not a centralized nation-state, and the government in Philadelphia had almost no authority. When Philadelphia fell, the rest of the country went about its business as usual; Americans were not accustomed to living their lives according to directives from Philadelphia, and so the British troops ended up simply sitting uselessly in the occupied capital, achieving nothing. Hence Benjamin Franklin, when he heard that the British army had captured Philadelphia, is said to have replied, “Nay, I think Philadelphia has captured the British army.”

The Dangers of Decentralization?

Having pointed out how excessive centralization can make a nation more vulnerable to foreign domination, let me also point out a respect in which extreme decentralization might seem to pose a similar threat.

In the fourth century B.C., the mass murderer we fondly remember as Alexander the Great conquered nearly all of the area we know today as the Middle East. If you want to read a terrifying story, put down the latest Stephen King novel and pick up Arrian’s Campaigns of Alexander, which in dry and matter-of-fact style records how this erratic psychopath and his tired and aging army somehow swept like lightning across the shattered remnants of the Persian Empire, conquering city after city after city after city after city ….

Now if the various cities had organized some sort of collective defense, and attacked Alexander simultaneously, they would have destroyed his army. Hundreds of thousands of lives would have been saved, and hundreds of cities would have kept their freedom. Instead, the cities faced Alexander one by one, each confident of its own unassailability. And one by one they fell.

This might seem to show that some sort of centralized defense is needed in order to provide effective security. But I don’t think it shows exactly that. It does show the need for organization — for collective, concerted, cooperative action. But not all organization should be viewed in terms of a top-down hierarchical model in which a central authority issues directives and imposes order on the lower ranks. The key to defending a free nation is to have a system of security decentralized enough to lack a command center the enemy can capture, but organized enough so that the invader must face a united collective defense, not a series of individual skirmishes.

In other words, the key is:


Organization Without Centralization, then, is the goal. How to realize that goal is, of course, another matter.

An Encouraging Note

It is admittedly a difficult balance to strike. Before we despair, however, we should notice that the goal we are trying to achieve is relatively modest. The defense of a free nation will be limited to just that: defense. No military interventions around the globe, no imperialism, no foreign adventuring, no gunboat diplomacy. Which means that a free nation’s defense budget will be much cheaper than those of its potential enemies. If we put that fact together with the fact that a free nation is also likely to have a much more prosperous economy than its enemies have, we can see some reason for optimism.

Let the Market Take Care of It

Most libertarians have heard the joke: “How many libertarians does it take to change a lightbulb?” “None, the market will take care of it.”

Perhaps we can give the same answer to worries about national defense. As students of Austrian economics (see, e.g., the writings of F. A. Hayek) we know that the free market, by coordinating the dispersed knowledge of market actors, has the ability to come up with solutions that no individual could have devised. So why not let a solution to the problem of national defense emerge through the spontaneous order of the market, rather than trying to dictate ahead of time what the market solution must be?

In a sense I think that is the answer; but it’s incomplete. As students of Austrian economics (see, e.g., the writings of Israel Kirzner), we also know that the efficiency of markets depends in large part on the action of entrepreneurs; and on the Austrian theory entrepreneurs do not passively react to market prices (as they do in neoclassical economics), but instead are actively alert to profit opportunities and are constantly trying to invent and market new solutions. I see our role in the Free Nation Foundation as that of intellectual entrepreneurs; our coming up with solutions is part of (though by no means the whole of) what it means for the market to come up with solutions. We are the market.

The lightbulb joke captures the Hayekian side of libertarian economics, and Hayek’s insight is an important one. But before following Hayek in a tirade against the evils of “constructive rationalism,” we should remember to balance the Hayekian insight against the equally important Kirznerian insight that the working of the market depends on the creative ingenuity of individuals.

I would thus suggest a different ending to the joke: “How many libertarians does it take to change a lightbulb?” “I’ll do it, for a dollar.”

The Three Economies

In short, then, although we cannot hope to predict precisely what solutions the market will come up with, it’s worth trying to figure out what could work — and indeed, like good entrepreneurs, try to influence the market process in the direction of the solutions we like. (In any case, we’ll have an easier time getting people to join the free nation movement if we have something to tell them about how we propose to defend the nation we hope to found!)

In attempting to devise solutions to the problem of national defense, we need to make sure that we’re not limiting our search to an excessively narrow range of options. In this context I find extremely useful a distinction that was first explained to me by Phil Jacobson. Jacobson pointed out that one can distinguish three kinds of economy: the Profit Economy, the Charity Economy, and the Labor Economy [*]. (I’m not sure I’m using Jacobson’s exact terminology, but never mind.) In the Profit Economy, the people who want some good or service X can obtain X by paying someone else to provide it. In the Charity Economy, the people who want X can obtain it by finding someone who will give it to them for free. In the Labor Economy, the people who want X can obtain it by producing it themselves. As Jacobson notes, when free-market anarchists start looking for voluntary private alternatives to government, they tend to think primarily in terms of the Profit Economy — while left-wing anarchists, on the other hand, tend to think primarily in terms of the Labor Economy. Yet in any real-world market system, all three economies coexist and interact, in different combinations depending on culture and circumstances.

Suppose, for example, that a family emergency arises, and I need more money than my regular income supplies. How can I get the extra money?

I might take a second job, or get a loan. Both these solutions are available through the Profit Economy; if I take the job, I am paying for the money with my labor; if I get a loan, I am paying for the loan through interest payments. In either case, I solve my problem by finding someone who will help me in exchange for some good or service I can offer.

Or I might appeal to a private charity, or to a government welfare program — or obtain an interest-free loan from a friend. In this way, I would be getting my money through the Charity Economy: I find someone who will help me for free.

Or I might cut down on expenses by growing my own food in my garden; or perhaps I could draw on the pooled resources of a mutual-aid organization like those I have described in “How Government Solved the Health Care Crisis: Medical Insurance that Worked — Until Government “Fixed” It” (Formulations, Vol. I, No. 2 (Winter 1993-94)) and “Anarchy in the U.K.: The English Experience With Private Protection” (Formulations, Vol. II, No. 1 (Autumn 1994)). This solution involves the Labor Economy: I find some way of helping myself (perhaps in concert with others who are helping themselves).

In looking for free-market approaches to national defense, then, we should be sure to consider ways in which each of Jacobson’s “three economies” might be able to help.

Defense via the Profit Economy

In the literature of market anarchism, the most commonly offered solution to the problem of domestic security is the private protection agency. (I shall assume general familiarity with this theory. For more details, see, e.g., David Friedman’s Machinery of Freedom, Murray Rothbard’s For A New Liberty, and Bruce Benson’s Enterprise of Law.) In this context, the most obvious solution to the problem of national security is simply to have the protection agencies (or some of them, or a consortium of them) offer to sell protection against foreign invaders as well as domestic criminals.

Some market anarchists, like David Friedman, are sympathetic to this solution, but pessimistic about its viability. The difficulty is that national security poses a much greater public goods problem than domestic security, because it is much harder to exclude non-contributors from the benefits of national security — and if non-contributors can’t be excluded, there’s no incentive to contribute, and so the agencies selling this protection can’t gain enough revenue to make it worth their while.

In previous issues I have explained why I do not regard the public goods problem as a terribly serious difficulty. (“The Nature of Law, Part I: Law and Order Without Government,” Formulations, Vol. I, No. 3 (Spring 1994); “Funding Public Goods: Six Solutions,” Formulations, Vol. II, No. 1 (Autumn 1994).) So I won’t say much about it here.

There are other problems associated with a Profit Economy solution. A united military defense seems to require some degree of centralization in order to be effective, and there is the danger that a consortium of protection agencies selling national security might evolve into a government, as the Anglo-Saxon monarchs in the Middle Ages, thanks to the pressure of constant Viking invasions, were able to evolve from military entrepreneurs providing national defense in exchange for voluntary contributions, to domestic dictators with the power to tax and legislate.

This danger might be especially pressing if the consortium’s soldiers are more loyal to the consortium than to the clients. Political authors from Livy to Machiavelli have warned against the use of foreign mercenaries rather than citizen soldiers, because it is easier for a government to turn foreign mercenaries against its own citizens. A vivid example of this was seen during the Polish government’s attempt to crack down on the Solidarity movement in the 1980’s; when a crowd had to be crushed and beaten, the government used Russian troops, because they feared Polish troops might be divided in their loyalties. (This perhaps gives us some reason to view with alarm the increasing use of multinational U.N. forces by Western governments.)

But the problem is perhaps not insuperable. A consortium of defense agencies would lack the mantle of legitimacy and authority available to a king or government, which would make a power grab more difficult. Moreover, the citizens of a free nation would presumably be armed; and the freedom of any people against an encroaching government rests, in the final analysis, on their possession of arms and their willingness to use them. (Hence governments bent on consolidating their power have generally followed Cardinal Richelieu’s advice to the French monarchs: disarm the people, disband local militias, and monopolize access to weapons in the hands of the central government. But Machiavelli advised the opposite, since he saw an armed populace as an integral part of national defense; thus, like such earlier political thinkers as Xenophon, he would have regarded today’s advocates of gun control as unwisely weakening their nation’s security against invasion. [1] In any case, whether a government or would-be government can succeed in disarming the people ultimately depends on the vigilance of the people themselves; and for this I know no automatic formula.)

Defense via the Charity Economy

People donate money all the time to causes they care about. And the more prosperous they are, the more they donate. Unless libertarian economics is hopelessly wrong — in which case we might as well give up now — people in a free nation would be extremely prosperous. And they would presumably care about national security. So we can predict that a great deal of money could be collected for purposes of national defense by charity alone. Since, as mentioned above, the financial needs of a truly defensive national defense are relatively modest, charity could easily be a major source of defense funds.

Let me mention two problems that occur to me. First, there’s the matter of determining the appropriate recipient of these donations. How could such a recipient be prevented from misusing the weapons it purchases? In essence this is simply the problem of a consortium turning into a government, which was discussed above. The subject of how to prevent libertarian anarchy from evolving into government again — and perhaps a worse government than the one the anarchist system displaced — is a vitally important issue, but one too vast to consider in depth here. (I think this would be an excellent subject for a future FNF Forum.)

The second, related difficulty is this: As I mentioned in “Funding Public Goods: Six Solutions” (Formulations, Vol. II, No. 1 (Autumn 1994)), large companies will have a motive — namely, good publicity — to donate large sums to national defense (just as they now improve their image by donating to environmental causes, etc.). That’s the good news. But the bad news, seemingly, is that these contributions might enable such companies to skew national security decisions in their favor (analogous to large corporations like United Fruit / United Brands getting the U.S. military to intervene to promote corporate interests in Guatemala — or oil companies getting the CIA to oust Mossadegh in Iran; for details, see Jonathan Kwitny’s Endless Enemies).

But I think this would be much less of a problem in a market anarchist society than it is today. Government magnifies the influence of the rich, because government decision-makers do not own the money they control, and so are willing to spend a larger sum to promote corporate interests than they actually receive from those interests in the way of bribes and campaign contributions. Private protection agencies’ costs would be internalized, and so the corporate class would be deprived of this crucial lever. (This would not make it utterly ineffective; for my worries on this score, see my article “Can We Escape the Ruling Class?” (Formulations, Vol. II, No. 1 (Autumn 1994)). But it would significantly decrease its power.)

Defense via the Labor Economy: An Armed Populace

I think both the Profit Economy and the Charity Economy are viable as providers of defense services. There are admittedly problems about trusting the providers of those services, but I think those problems may be soluble.

But to the extent that it is dangerous to delegate the power of national defense, perhaps a significant degree of self-help should be an important ingredient in any national security package. As mentioned above, an armed populace is the ultimate safeguard of a nation’s liberties, against threats both foreign and domestic.

A possible drawback to a heavy reliance on armed civilian-based defense is that it cannot take effect until the enemy has already entered the country — at which point it might seem that the cause is hopeless. But Machiavelli, in his Discourses on Livy, argues persuasively that it is better to meet the enemy on your own home ground rather than his — if, he adds, you have an armed populace. If your populace is not armed, he warns, you should engage the enemy as far from your own soil as possible.

I have often heard it said that it takes roughly three times as many troops to invade a country as to defend it; the defender knows the territory better, does not face hostile locals, and has a much shorter and so less vulnerable supply line. Many military theorists have argued that the South might have won the Civil War if they had stayed put and relied on sniping and guerilla warfare against the invader instead of marching forward to meet the Northern troops on equal terms, in regular battle array. The armed citizenry of Switzerland has long posed a powerful deterrent against potential invaders, enabling that country to maintain peace and freedom for what in comparative terms is an amazingly long time. (Of course, having your country surrounded by Alps doesn’t hurt!)

An armed populace, then, may be a viable defense. But recall the lesson of Alexander: unless an armed defense is organized, an invader can simply pick off individual armed neighborhoods one at a time. What is needed, then, is some kind of citizens’ militia. But a militia called up and directed by a centralized government poses difficulties we’ve mentioned already. The key, remember, is: ORGANIZATION WITHOUT CENTRALIZATION.

The best kind of militia, then, might be one organized along the following lines. Begin with a number of local neighborhood militias, run by their members on a democratic basis — the military equivalent of the mutual-aid societies discussed in previous issues of Formulations. A number of these local militias get together to form a county militia, which in turn combines with others to form a statewide militia, and so forth — so the ultimate National Militia would be organized as an “association of associations” (the French anarchist Proudhon’s formula for what should replace the state), with power and authority running from bottom to top rather than top to bottom. (As for manpower, although many militias have traditionally relied on conscription, this seems unnecessary; if a nation is genuinely under attack — as opposed to engaging in foreign interventions — there is never a shortage of volunteers. And where the populace is used to bearing and handling arms, the training period required for new recruits would be shorter.) Members of each militia would elect their commanding officers (as American soldiers did during the Revolutionary War), and so on up to the commander-in-chief of the National Militia. This bottom-up approach, replacing the top-down approach of a traditional military, would make it much more difficult for the supreme military leader to seize power. Such a militia might well be able to achieve the goal of organization without centralization. [3]

This model might have to be changed somewhat in order to be adapted to a minarchist rather than an anarchist society; we would need to think about whether or not to make the commander-in-chief of the militia subordinate to the libertarian government. Both a yes and a no seem to pose dangers. I welcome suggestions on this topic.

Defense via the Labor Economy: Nonviolent Resistance

Another possible form of organized self-help against an invader is the strategy of nonviolent resistance. This may sound impractical; yet sustained and widespread nonviolent resistance ultimately drove the British out of India, the French and Belgians out of the Ruhr, the Kapp Putschists out of power in Weimar Germany, and racial segregation out of the United States. Nonviolent resistance — “the secession of the plebs” — was also used effectively in ancient Rome by the plebeians against the Senate; and nonviolent resistance by war protestors in this country played an important role in ending the Vietnam War. Nonviolent resistance also had a significant impact against the British in the early phase of the American Revolution, and more recently against totalitarian governments during the Fall of Communism.

Nonviolent resistance often fails, of course, as the blood of Tiananmen should remind us. But violent resistance often fails too. It’s worth considering whether, to what extent, and under what circumstances nonviolent resistance could be an effective tool of national defense.

Many theorists of nonviolent resistance — e.g., Tolstoy, Gandhi, LeFevre — advocate it primarily on ethical grounds, because they view the use of violence as immoral even in self-defense. I do not share this view. (For my reasons, see my article “Punishment vs. Restitution: A Formulation,” in Formulations, Vol. I, No. 2 (Winter 1993-94).) But a recent article by Bryan Caplan (“The Literature of Nonviolent Resistance and Civilian-Based Defense,” Humane Studies Review, Vol. 9, No. 1 (1994)) defend the superiority of nonviolent resistance on purely strategic grounds:

“The ability of the government to use violence greatly exceeds that of the rebels. Indeed, violent rebellion often strengthens oppressive regimes which can plausibly claim that rebel violence necessitates repression. Government’s comparative advantage lies in violent action. The comparative advantage of the people, in contrast, lies in their ability to deny their cooperation without which it is nearly impossible for government to persist. Consider the deadliness to a government of tax strikes, boycotts, general strikes, and widespread refusal to obey the law. While these tactics are nonviolent, their universal and unyielding use should terrify any government. Nonviolence has other advantages as well. Because it seems less dangerous and radical than violence, it more easily … wins broad public support. The costs of participation are lower, so more people are likely to participate. Traditional non-combatants like children, women, and the old can effectively participate in nonviolent struggle. It is more likely to convert opponents and produce internal disagreement within the ruling class. It generally leads to far fewer casualties and material losses than violence. And since it is more decentralized than violent action, it is less likely to give rise to an even more oppressive state if it succeeds.” (Caplan, p. 6.)

To those who object that an oppressive government can simply mow down such defenseless dissenters, making nonviolent resistance impractical, Caplan replies that

“… ideology and consent — whether grudging or enthusiastic — rather than brute force are the ultimate basis of political power. If a large enough segment of the population refuses to comply with the government, it will lose its ability to rule. Merely the threat of non-compliance is often serious enough to provoke the government to redress grievances. Moreover, when governments use violence against protesters who are clearly committed to nonviolence, they undermine their ideological foundations and often make uncontested rule even more difficult. … the very fact that the protesters remain committed to nonviolence even as the government turns to repression to combat them tends to win over previously neutral groups, and inspire and involve other members of persecuted groups. [Gene Sharp] refers to this as ‘political jiu-jitsu’ — jiu-jitsu being a style of martial art that uses an opponent’s aggressiveness and ferocity against him. … insofar as it succeeds, it usually does so by converting opponents, making repression too costly to maintain, and threatening the very ability of the government to maintain power.” (Caplan, pp. 4-5.)

The rise of Christianity might be a good example of what Caplan is talking about; through their nonviolent resistance to persecution, the tiny sect won the sympathy and admiration of many Romans, and ultimately secured their conversion. (Unfortunately, after the Christians gained power, their attachment to nonviolence waned ….)

Caplan extends the idea of nonviolent resistance to the arena of national defense:

“… deterrents are not limited to standard military ones. Rather, it is merely necessary to make occupation so difficult that the costs of conquest exceed the benefits. Massive tax resistance, boycotts, incitement of desertion, and strikes might accomplish this. And, if a would-be conqueror realized that nonviolent techniques might make the costs of occupation skyrocket, he might be deterred from trying.” (Caplan, p. 7.)

Nonviolent resistance to foreign invasion has had a surprisingly strong history of success, and Caplan cites many fascinating examples. He also notes that nonviolent resistance has sometimes been effective, at least in a limited way, even against the most brutal and totalitarian of invaders: “the nations which nonviolently resisted National Socialist racial persecutions [e.g., Norway, Denmark, Belgium] saved almost all of their Jews, while Jews in other Nazi-controlled nations were vastly more likely to be placed in concentration camps and killed.” (p. 10.) But he stresses that nonviolent resistance could be far more effective through organization:

“… since most nonviolence has historically been sporadic and unorganized, it might be possible to increase its effectiveness through training and strategic and tactical planning. … What would happen if countries spent as much energy preparing for a nonviolent struggle as they do for a military struggle?” (Caplan, p. 6.)

Among possible stratagems for increasing the effectiveness of nonviolent resistance, Caplan suggests

“general education and training in the techniques of nonviolence, as well as a ‘West Point’ for training specialists; the wide-spread dissemination of publishing and broadcasting equipment to prevent invaders from seizing all of the means of communication; and local stockpiles … to ease the pain of a general strike.” (Caplan, p. 7.)

Caplan’s main source for the ideas he discusses is Gene Sharp, who has devoted his career to investigating how the techniques of nonviolent resistance might be applied to the problem of national defense. Among the works by Sharp cited by Caplan are: The Politics of Nonviolent Action; Exploring Nonviolent Resistance; Gandhi as a Political Strategist; Social Power and Political Freedom: Making Europe Unconquerable; National Security Through Civilian-Based Defense; and Civilian-Based Defense: A Post-Military Weapons System. Caplan also cites dozens of other works on the subject; I shall simply mention two of the ones that sounded most interesting: Civilian Resistance as a National Defense by Adam Roberts, and War Without Weapons by Anders Boserup & Andrew Mack. I have not read any of these books, but I intend to.

I can also recommend two delightful science-fiction novels that illustrate these ideas: Eric Frank Russell’s The Great Explosion and James Hogan’s Voyage From Yesteryear. In The Great Explosion, a very funny and satirical book, bureaucrats and military brass from Earth attempt to reestablish Earth’s control over the planet Gand, a world of anarcho-pacifists who successfully apply the techniques of nonviolent resistance to frustrate and/or win over the would-be invaders. In Voyage From Yesteryear, a less satirical, more realistic work, the basic plot is the same, except that the anarchist planet (now Chiron, not Gand)3 is not pacifist, and its inhabitants are willing and able to use violence to defend their freedom. They do not rely on violence alone, however, but successfully blend violent with nonviolent techniques to frustrate and/or win over the invaders, with the same result as in Russell’s book. (On a rather different note, Vernor Vinge’s novel Across Realtime tells the story of a government whose invasion of an anarchist society fails because rich crackpots holed up in the anarchist wilderness turn out to have been stockpiling privately owned nuclear weapons! Different strokes for different folks, I guess. All three books are well worth reading.)

I am, I suspect, somewhat less optimistic than Bryan Caplan is about the effectiveness of a purely nonviolent approach to national defense. I’m still inclined to rely on an armed populace, private protection agencies, and an organized but decentralized militia. (For a more cautious assessment than Caplan’s of the effectiveness of nonviolent techniques, see Ted Galen Carpenter’s “Resistance Tactics: A Review of Strategic Nonviolent Conflict: The Dynamics of People Power in the Twentieth Century by Peter Ackerman and Christopher Kruegler,” in Reason, January 1995.) But Caplan’s suggestions deserve our serious consideration. Perhaps the best solution would be one that, rather than either rejecting nonviolence altogether or relying on nonviolence alone, managed to integrate aspects of nonviolent resistance into a violent-if-necessary militia framework (thus following the example of Chiron rather than of Gand). [4]

In any case, I strongly endorse Caplan’s closing plea for further research by libertarians into this area:

“Despite their distrust of state power and interventionist foreign policy, classical liberals have had a difficult time envisioning specific alternatives to violence to combat tyranny. The literature of nonviolent resistance is filled with penetrating insights in this area. And, while classical liberals frequently long for alternatives to both electoral politics and violence, specific suggestions have been sparse. These are merely a few gaps that the nonviolence literature may fill. On a more aesthetic note, many of the historical examples of nonviolence are beautiful illustrations of the power of voluntary institutions to supplement or replace the role of the state.” (Caplan, p. 12.)

Who Will Defend Against the Defenders?

On surveying the options, then, I would argue that as libertarians we have reason to place confidence — albeit cautious confidence — in a three-pronged strategy for defending our free nation, should we be fortunate enough to get one.

  • First prong: a regular high-tech military defense, supported by paying customers and charitable contributions alike.
  • Second prong: an armed citizenry, organized into a decentralized militia.
  • Third prong: organized nonviolent resistance.

These prongs might well be combined into a single fearful scimitar: a militia, collecting dues from its combatant members and contributions from noncombatants or nonmembers, and coordinating violent and nonviolent resistance through one and the same democratic structure.

This would be an impressive military force, I think. And it makes me wonder: what will protect other nations from us? As I read more and more ancient and mediæval history, I come to realize that anarchic, decentralized, egalitarian, individualistic societies are not necessarily peaceful societies. The Celtic and Viking societies we admire so much as libertarian models were among the most effective raiders and conquerors in history. What is to prevent our free nation from itself becoming a threat to the security of other nations (and thus ultimately a threat to its own security, as those nations are provoked into attacking us)?

This worry might be reinforced by reading Machiavelli’s Discourses on Livy, a book I have already cited several times now — and a much more interesting and important book, I think, then his more famous (or notorious) work The Prince. (TheDiscourses on Livy is not a libertarian book by any means; but it contains much for libertarians to ponder. What strikes a libertarian in reading it is the odd way in which Machiavelli manages to combine the political insight and perspicacity of an Isabel Paterson — with the economic insight of a log.)

Machiavelli argues that a free nation is the greatest possible threat to the freedom of other nations:

  • free nations are more prosperous, and thus better armed;
  • they are more politically stable, and thus harder to defeat through treachery;
  • there is higher morale among their citizens, thus making them better soldiers;
  • equal opportunity and free competition among citizens tend to reward, and thus to foster, what Machiavelli calls virtù (by which he means, not “virtue” in our sense, but a combination of self-discipline, boldness, and ingenuity — which are nice things to have in your own nation, but can be dangerous traits in a vigorous and aggressive nation next door);
  • and the high standard of living enjoyed by free nations leads to an increase in population, thus creating a pressure to expand into the territory of their neighbors.

Machiavelli cites Rome and Athens as instances (see also the account of Athens in Thucydides’ History of the Peloponnesian War, in particular comparing Pericles’ panegyric to Athenian libertarianism at II. 34-46 with the Corinthian speech on the restless energy and virtù of Athenian imperialism at I. 68-71); today Machiavelli might add the United States. Of course there are counterexamples: Switzerland, for instance. And despite Machiavelli’s brilliance, he seems to have little understanding of the free market; his notion of a free society thus does not appear to include the concept of free trade, which nineteenth-century classical liberals favored in part because of its tendency to create ties of mutual dependence that discouraged war. Still, it is true that freedom, together with the technological progress that freedom brings in its train, has the effect of increasing people’s options; and one goal one can better pursue when one’s options have increased, is the decreasing of one’s neighbors’ options.

But maybe the solution is that the free nation’s neighbors had better become free nations themselves!


1. Though Machiavelli may not be consistent on this point. He insists that it weakens a nation militarily to have a disarmed populace; but he also insists that it’s dangerous in peacetime to have an armed populace — since, in the absence of an external enemy, they might turn their arms against the government. (Oh no!) But I suspect Machiavelli’s solution would be to keep the nation constantly at war — since his model of an ideal nation is the Roman Republic, which Machiavelli praises precisely for its policy of permanent war, whereby it constantly and unceasingly expanded and gobbled up other people’s territory. That way, since pesky peacetime never arrives, you get all the advantages of an armed populace with none of the disadvantages. Since my aims are rather different from Machiavelli’s (I want to discourage imperialism and encourage resistance to government, not the other way around), I can accept his analysis without sharing his precise recommendations!

2. Phil Jacobson has pointed out to me that volunteer fire departments have historically succeeded in coordinating their activities with one another without centralized control; an unusually large fire in town A will bring in fire departments from towns B, C, and D as well. This example makes me wonder whether an association-of-associations militia would need a commander-in-chief at all.

3. Gand is named, of course, after Gandhi. The significance of the name Chiron is harder to guess. In Greek mythology, Chiron was the centaur who tutored Achilles, and Hogan’s use of the name may be a reference to the fact that the first generation of his Chironians were reared by robots rather than humans. Another hypothesis (somewhat less likely given Hogan’s militant antipathy toward Christianity) is that Chiron is a pun on Chi-Rho, the traditional Greek abbreviation for Christ, signifying that the Chironians embody the true essence of Christianity.

4. As this issue goes to press, the secessionist rebels in Chechnya are having a surprising, though sadly limited, degree of success in employing a mixture of violent and nonviolent techniques against Russian troops.

[*] Web Archive Editor’s note: see Jacobson’s essay “Three Voluntary Economies” in Formulations Vol. 2,  No.1

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Negative Balance of Trade? So What?

Written by Robert Higgs.

The tendency of the USA to have a negative balance of trade (more accurately known as a negative balance on current account) played a prominent role in the recent U.S. presidential campaign. Donald Trump criticized this tendency repeatedly and promised that if elected he would take various actions to reduce or eliminate it. Like most members of the public, Trump views this negative balance as a highly undesirable, economically damaging condition. Despite the prominence of discussions of the negative balance of trade in recent times, however, it is likely that few people really understand much if anything about the system of international payments accounts from which it derives.

Fortunately, interested parties can learn what they need to know about the international payments accounts by studying the documents that accompany the Bureau of Economic Analysis’s presentation of the data or by reading almost daily commentary on this topic by first-rate economists. My own go-to source of sound economic interpretation of this subject is the commentary by Donald J. Boudreaux at the blog Cafe Hayek.

I place the balance of international payments data in the class of statistics for which the world would have been a happier place had the data never been devised, popularized (in a rough way), and used by policy makers. This last aspect is the crux of the matter because the balance-of-trade data in particular can scarcely help but serve as a rationale for pernicious policies, such as export subsidies and tariffs, quotas, and other official restrictions on imports. In short, the data help the government establish and maintain policies that enrich the privileged few at the expense of the unconnected many, including consumers in general and producers who rely on imported raw materials and components, as many do these days.

Although the topic may appear daunting, the essence of the matter is utterly simple. As a fair approximation, each international transaction, whether it be buying, selling, borrowing, or lending across a national border involves a willing party on each side—importers want to purchase goods from sellers abroad, lenders want to lend to borrowers abroad, and so forth. Each party to the transactions expects to benefit by entering into it. In a sane and just world, that would be the end of the matter. People would simply be left alone to make the transactions they wish to make in anticipation of benefiting thereby. If each transactor benefits, how can the nation as a whole suffer?

Of course, one might claim that because, for example, consumers wish to purchase imported products, the sellers of competing, domestically produced products suffer, but such parties have no defensible right to suppress consumers’ freedom of choice simply because the consumers have chosen to patronize alternative suppliers. After all, such losses of sales by domestic producers might have arisen just as easily from changes in consumers’ purchases that had nothing to do with imports (e.g., changes in tastes or the appearance of new, better, competing domestic products).

The whole nasty business of international-balance-of-payments politics exists entirely because rent-seekers exploit the public’s ignorance of economics to prop up their activities with a superficially appealing but completely baseless rationale. They then reward politicians who play along with this shameful hoax. After centuries of mercantilist nonsense, it is well past time that people demanded that the international balance of payments be consigned to the dust bin of history along with the predatory politics of subsidies, tariffs, and other trade barriers that such data chronically serve to support. A government that confines itself to enforcing the people’s just rights to life, liberty, and property has no need of international-balance-of-payments data. The whole complex apparatus can be trashed and replaced by a simple rule: laissez faire, laissez passer.

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