by Mises Daily•Terry Anderson•P.J. Hill
The growth of government during this century has attracted the attention of many scholars interested in explaining that growth and in proposing ways to limit it. As a result of this attention, the public-choice literature has experienced an upsurge in the interest in anarchy and its implications for social organization.
The work of Rawls and Nozick; two volumes edited by Gordon Tullock, Explorations in the Theory of Anarchy; and a book by David Friedman, The Machinery of Freedom, provide examples. The goals of the literature have varied from providing a conceptual framework for comparing Leviathan and its opposite extreme to presenting a formula for the operation of society in a state of anarchy. But nearly all of this work has one common aspect; it explores the “theory of anarchy.”
The purpose of this paper is to take us from the theoretical world of anarchy to a case study of its application. To accomplish our task we will first discuss what is meant by “anarchocapitalism” and present several hypotheses relating to the nature of social organization in this world.
These hypotheses will then be tested in the context of the American West during its earliest settlement. We propose to examine property-rights formulation and protection under voluntary organizations such as private protection agencies, vigilantes, wagon trains, and early mining camps. Although the early West was not completely anarchistic, we believe that government as a legitimate agency of coercion was absent for a long enough period to provide insights into the operation and viability of property rights in the absence of a formal state. The nature of contracts for the provision of “public goods” and the evolution of western “laws” for the period from 1830 to 1900 will provide the data for this case study.
The West during this time is often perceived as a place of great chaos, with little respect for property or life. Our research indicates that this was not the case; property rights were protected, and civil order prevailed. Private agencies provided the necessary basis for an orderly society in which property was protected and conflicts were resolved.
These agencies often did not qualify as governments because they did not have a legal monopoly on “keeping order.” They soon discovered that “warfare” was a costly way of resolving disputes and lower-cost methods of settlement (arbitration, courts, etc.) resulted. In summary, this paper argues that a characterization of the American West as chaotic would appear to be incorrect.
Anarchy: Order or Chaos?
Though the first dictionary definition of anarchy is “the state of having no government,” many people believe that the third definition, “confusion or chaos generally,” is more appropriate since it is a necessary result of the first.
If we were to engage seriously in the task of dismantling the government as it exists in the US, the political economist would find no scarcity of programs to eliminate. However, as the dismantling continued, the decisions would become more and more difficult, with the last “public goods” to be dealt with probably being programs designed to define and enforce property rights. Consider the following two categories of responses to this problem:
The first school we shall represent as the “constitutionalist” or “social contractarian” school. For this group the important question is “how do rights re-emerge and come to command respect? How do ‘laws’ emerge that carry with them general respect for their ‘legitimacy’?”1 This position does not allow us to “’jump over’ the whole set of issues involved in defining the rights of persons in the first place.”2
Here, collective action is taken as a necessary step in the establishment of a social contract or constitutional contract which specifies these rights. To the extent that rights could be perfectly defined, the only role for the state would be in the protection of those rights, since the law designed for that protection is the only public good.
If rights cannot be perfectly well-defined, a productive role for the state will arise. The greater the degree to which private rights cannot be perfectly defined, the more the collective action will be plunged into the “eternal dilemma of democratic government,” which is “how can government, itself the reflection of interests, establish the legitimate boundaries of self-interest, and how can it, conversely carve out those areas of intervention that will be socially protective and collectively useful?”3
The contractarian solution to this dilemma is the establishment of a rule of higher law or a constitution, which specifies the protective and productive roles of the government. Since the productive role, because of the free-rider problem, necessarily requires coercion, the government will be given a monopoly on the use of force. Were this not the case, some individuals would choose not to pay for services from which they derive benefits.
The second school can be labeled “anarchocapitalist” or “private-property anarchist.” In its extreme form this school would advocate eliminating all forms of collective action since all functions of government can be replaced by individuals possessing private rights exchangeable in the market place. Under this system all transactions would be voluntary except insofar as the protection of individual rights and enforcement of contracts required coercion. The essential question facing this school is how can law and order, which do require some coercion, be supplied without ultimately resulting in one provider of those services holding a monopoly on coercion, i.e., government.
If a dominant protective firm or association emerges after exchanges take place, we will have the minimal state as defined by Nozick and will have lapsed back into the world of the “constitutionalist.” The private-property anarchist’s view that markets can provide protection services is summarized as follows:
The profit motive will then see to it that the most efficient providers of high-quality arbitration rise to the top and that inefficient and graft-oriented police lose their jobs. In short, the market is capable of providing justice at the cheapest price. According to Rothbard, to claim that these services are “public goods” and cannot be sold to individuals in varying amounts is to make a claim which actually has little basis in fact.4
Hence, the anarchocapitalists place faith in the profit-seeking entrepreneurs to find the optimal size and type of protective services and faith in competition to prevent the establishment of a monopoly in the provision of these services.
There are essentially two differences between the two schools discussed above. First, there is the empirical question of whether competition can actually provide the protection services. On the anarchocapitalist side, there is the belief that it can. On the constitutionalists or “minimal-state” side, there is the following argument.
Conflicts may occur, and one agency will win. Persons who have previously been clients of losing agencies will desert and commence purchasing their protection from winning agencies. In this manner a single protective agency or association will eventually come to dominate the market for policing services over a territory. Independent persons who refuse to purchase protection from anyone may remain outside the scope of the dominant agency, but such independents cannot be allowed to punish clients of the agency on their own. They must be coerced into not punishing. In order to legitimize their coercion, these persons must be compensated, but only to the extent that their deprivation warrants.5
The second issue is more conceptual than empirical, and hence cannot be entirely resolved through observation. This issue centers on the question of how rights are determined in the first place; how do we get a starting point with all its status quo characteristics from which the game can be played.
Buchanan, a leading constitutionalist, criticizes Friedman and Rothbard, two leading private-property anarchists, because “they simply ‘jump over’ the whole set of issues involved in defining the rights of persons in the first place.”6 To the constitutionalist, the Lockean concept of mixing labor with resources to arrive at “natural rights” is not sufficient. The contractarian approach suggests that the starting point is determined by the initial bargaining process which results in the constitutional contract.
Debate over this issue will undoubtedly continue, but even Buchanan agrees that
if the distribution or imputation of the rights of persons (rights to do things, both with respect to other persons and to physical things) is settled, then away we go. And aside from differences on certain specifics (which may be important but relatively amenable to analysis, e.g., the efficacy of market-like arrangements for internal and external peace-keeping), I should accept many of the detailed reforms that these passionate advocates propose.7
Our purpose in this paper is to discuss, in a historical context, some of the important issues that Buchanan says are amenable to analysis. We do not plan to debate the issue of the starting point, but will be looking at the “efficacy of market-like arrangements for internal … peacekeeping.”8
It does seem, for the time period and the geographical area which we are examining, that there was a distribution of rights which was accepted either because of general agreement to some basic precepts of natural law or because the inhabitants of the American West came out of a society in which certain rights were defined and enforced.
Such a starting point is referred to as a Schelling point, a point of commonality that exists in the minds of the participants in some social situation9 Even in the absence of any enforcement mechanism, most members of Western society agreed that certain rights to use and control property existed. Thus when a miner argued that a placer claim was his because he “was there first,” that claim carried more weight than if he claimed it simply because he was most powerful.
Tastes, culture, ethics, and numerous other influences give Schelling-point characteristics to some claims but not to others. The long period of conflicts between the Indians and the settlers can be attributed to a lack of any such Schelling points. We concentrate, however, on arrangements for peace-keeping and enforcement that existed among the nonindigenous, white population.
In the following pages we describe the private enforcement of rights in the West between 1830 and 1900. This description does allow one to test, in a limited fashion, some of the hypotheses put forth about how anarchocapitalism might function.
We qualify the test with “limited” because a necessary feature of such a system is the absence of a monopoly on coercion.10 Various coercive agencies would exist but none would have a legitimized monopoly on the use of such coercion. The difficulty of dealing with this proposition in the American West is obvious. Although for much of the period, formal government agencies for the protection of rights were not present, such agencies were always lurking in the background. Therefore, none of the private enforcement means operated entirely independent of government influence.
Also, one has to be careful in always describing private agencies as “nongovernment” because, to the extent that they develop and become the agency of legitimized coercion they also qualify as “government.” Although numerous descriptions of such private agencies exist, it is oftentimes difficult to determine when they are enhancing competition and when they are reducing it.
Despite the above caveats, the West is a useful testing ground for several of the specific hypotheses about how anarchocapitalism might work. We use David Friedman’s The Machinery of Freedom as our basis for the formulation of hypotheses about the working of anarchocapitalism, because it is decidedly nonutopian and it does set out, in a fairly specific form, the actual mechanisms under which a system of nongovernment protective agencies would operate. The major propositions are:
Anarchocapitalism is not chaos. Property rights will be protected and civil order will prevail.
Private agencies will provide the necessary functions for preservation of an orderly society.
Private protection agencies will soon discover that “warfare” is a costly way of resolving disputes and lower-cost methods of settlement (arbitration, courts, etc.) will result.
The concept of “justice” is not an immutable one that only needs to be discovered. Preferences do vary across individuals as to the rules they prefer to live under and the price they are willing to pay for such rules. Therefore, significant differences in rules might exist in various societies under anarchocapitalism.
There are not significant enough economies of scale in crime so that major “mafia” organizations evolve and dominate society.
Competition among protective agencies and adjudication bodies will serve as healthy checks on undesirable behavior. Consumers will have better information than under government and will use it in judging these agencies.
Cases from the West
Before turning to specific examples of anarchocapitalistic institutions in the American West, it is useful to examine the legendary characterization of the “wild, wild West.” The potential for chaos is a major objection to trust in the market for enforcement of rights, and many histories of the West seem to substantiate this argument. These histories describe the era and area as characterized by gunfights, horse-thievery, and general disrespect for basic human rights.
The taste for the dramatic in literature and other entertainment forms has led to concentration on the seeming disparity between the Westerners’ desire for order and the prevailing disorder. If the Hollywood image of the West were not enough to taint our view, scholars of violence have contributed with quotes such as the following: “We can report with some assurance that compared to frontier days there has been a significant decrease in crimes of violence in the United States.”11
Recently, however, more careful examinations of the conditions that existed cause one to doubt the accuracy of this perception. In his book, Frontier Violence: Another Look, W. Eugene Hollon stated that he believed “that the Western frontier was a far more civilized, more peaceful, and safer place than American society is today.”12 The legend of the “wild, wild West” lives on despite Robert Dykstra’s finding that in five of the major cattle towns (Abilene, Ellsworth, Wichita, Dodge City, and Caldwell) for the years from 1870 to 1885, only 45 homicides were reported — an average of 1.5 per cattle-trading season.13
In Abilene, supposedly one of the wildest of the cow towns, “nobody was killed in 1869 or 1870. In fact, nobody was killed until the advent of officers of the law, employed to prevent killings.”14 Only two towns, Ellsworth in 1873 and Dodge City in 1876, ever had 5 killings in any one year.15 Frank Prassel states in his book subtitled A Legacy of Law and Order, that “if any conclusion can be drawn from recent crime statistics, it must be that this last frontier left no significant heritage of offenses against the person, relative to other sections of the country.”16
Moreover, even if crime rates were higher, it should be remembered that the preference for order can differ across time and people. To show that the West was more “lawless” than our present-day society tells one very little unless some measure of the “demand for law and order” is available. “While the frontier society may appear to have functioned with many violations of formal law, it sometimes more truly reflected community customs in conflict with superficial and at times alien standards.”17
The vigilance committees, which sprang up in many of the mining towns of the West provide excellent examples of this conflict. In most instances these committees arose after civil government was organized. They proved that competition was useful in cases where government was ineffective, as in the case of San Francisco in the 1850s,18 or where government became the province of criminals who used the legal monopoly on coercion to further their own ends, as in Virginia City, Montana Territory in the 1860s.19
Even in these cases, however, violence was not the standard modus operandi. When the San Francisco vigilante committee was reconstituted in 1856, “the group remained in action for three months, swelling its membership to more than eight thousand. During this period, San Francisco had only two murders, compared with more than a hundred in the six months before the committee was formed.”20
To understand how law and order were provided in the American West, we now turn to four examples of institutions which approximated anarchocapitalism. These case studies of (a) land-claims clubs, (b) cattlemen’s associations, (c) mining camps, and (d) wagon trains provide support for the hypotheses presented above and suggest that private rights were enforced and that chaos did not reign.
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