Laissez-faire Capitalism

I'm having a hard time seeing how laissez-faire capitalism can exist in anything but anarchy. Laws are coercion, therefore laws are force, therefore laws interfere in the market, therefore laissez-faire capitalism wouldn't exist in a society with laws.

Has anyone reasoned their way out of this?

Post 1

Saturday, January 3, 2009 - 12:39pm

Laws are coercion, therefore laws are force, therefore laws interfere in the market, therefore laissez-faire capitalism wouldn't exist in a society with laws.

Are you serious? First, it would be helpful if you qualified what you mean by "laws." Are you including all laws, or just some of them?

Second, I can't make a connection between laws that prohibit murder and the those same laws hurting the market. Can you connect the dots for me, especially if you think all laws interfere with Capitalism, thus, Capitalism cannot exist outside of anarchy?

Thanks.

Post 2

Saturday, January 3, 2009 - 1:12pm

Jeff S,

Laws are coercive, by their nature. And it is the fact that they are backed by force that makes them coercive.

(Strictly speaking, one wouldn't define law as coercion or as force. A law is a rule, based upon ethical principle, that is enforced by government.)
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You said, "laws interfere in the market, therefore laissez-faire capitalism wouldn't exist in a society with laws."

The problem with that statement is that the market referred to is the free market. A free market presupposes that laws based upon individual rights are efficiently enforced. Otherwise people wouldn't be free to make choices. If they couldn't make choices, you don't have a free market. It is the individual rights that separate out initiation of force, theft, threats of force, and fraud from all of the rest of the possible actions that could be chosen. A free market is one where you can do anything except use force, fraud or theft.

For that reason, you can never have laissez-faire capitalism without those laws that directly arise from individual rights. Those laws only coerce and force people to interact voluntarily - thus they only coerce and force thugs - hence a free market.
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In terms of the players:
- Traders (everyone making voluntary arrangements),
- Guardians (cops, courts, military),
- Thugs (bad politicians, thieves, con artists, bad cops, rogue governments, muggers, rapists, etc.)

A good set of laws, well enforced minimize the thugs.

Post 3

Saturday, January 3, 2009 - 1:48pm

Jeff,

This is dangerous**, but think of a poker game:

Six guys are playing poker and one of them is found cheating. What do you do? Here are the possible options:

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1) let everyone suffer (so that the cheater gets off scott-free)

2) let everyone subjectively react emotionally (e.g., if someone wants a whole lot of revenge -- such as to rape, torture, and kill the cheater and/or his family -- then let him)

3) agree on a rule that places the enforcement of justice into third-party hands, objectively
===============

Do you agree that these three ways exhaust the alternatives? If so, then do you agree that the third way is "the way to go" (i.e., not just one that YOU'D choose -- but one that is right for everybody; one that is "objectively" right for "all" human poker players)?

Ed

==============
**The reason it's dangerous to envision the market as a poker game is that gambling is zero-sum, where one man's gain is another's loss; and markets are positive-sum, where both parties trade -- by free choice -- to a mutual benefit.
(Edited by Ed Thompson on 1/03, 1:51pm)

Post 4

Saturday, January 3, 2009 - 2:04pm

Frederic Bastiat is helpful here. He views law as "the collective organization of the individual right to lawful defense." Not all force is equal. Under laissez-faire, initiated force is bad; force in response to that initiated force is okay. So self defense, organized or otherwise, is just peachy.

Put otherwise, the law is not merely force or coercion. It is a *response* to *initiated* force or coercion. Laissez-faire is okay with this.

Jordan

Post 5

Saturday, January 3, 2009 - 2:04pm

Jeff: "Laws are coercion"

The rule of law in a free market is used to prevent coercion in market transactions. A "rule of law" is useless without a means of enforcement. The means of enforcement cannot itself be a marketable entity (the anarchist's solution) or by definition it would exist outside of the "rule of law".

Post 6

Saturday, January 3, 2009 - 2:15pm

Mike,

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The rule of law in a free market is used to prevent coercion in market transactions. A "rule of law" is useless without a means of enforcement. The means of enforcement cannot itself be a marketable entity (the anarchist's solution) or by definition it would exist outside of the "rule of law".
=====================

I think that this might be real wise. I've never heard it said that way, though -- that law enforcement couldn't, by definition, be a marketable entity. Either way, you've got me thinking (and that's always good).

Thanks.

Ed

Post 7

Saturday, January 3, 2009 - 2:41pm

Jees, Ed, I thought that was what I said in post number 2 - "A free market presupposes that laws based upon individual rights are efficiently enforced. Otherwise people wouldn't be free to make choices. If they couldn't make choices, you don't have a free market."

(but Mike's phrasing is certainly snappier - I'll give him a sanction for that! Although, technically speaking, you can have "The means of enforcement" as a marketable entity - what can NOT be a marketable entity is the law. A court can - and at times does - hire contractors for elements of enforcement. But all enforced decisions flow from one set of laws.)

Post 8

Saturday, January 3, 2009 - 3:31pm

Crap, I can't hook into wifi at work for one day and I miss out. Yeah, I'd go with Ed and Steve's thoughts on this.

Post 9

Saturday, January 3, 2009 - 4:10pm

Sorry, Steve.

Mike's phrase was snappy enough to get me thinking. Sometimes, you need to hear the same thing in different words in order to "get it." I agree that you had already brought up the logical (genetic) dependence of markets on the pre-existing enforcement of individual rights. And I do find your logic on this currently -- and perhaps for all time -- undeniable.

As you've laid it out, there appears to be two sides to this crucial issue: your side (minarchy) and the wrong side (anarchy).

:-)

Sincerely.

Ed

Post 10

Saturday, January 3, 2009 - 1:12pm

Thank you for replying, Ms. Isanhart.

Are you serious? First, it would be helpful if you qualified what you mean by "laws." Are you including all laws, or just some of them?

Yes, I'm serious. I wouldn't have posted the question if I wasn't. My time is important to me, as I'm sure yours is to you.

I imagine I would include all laws since all are a form of coercion, and off the top of my head, I can't think of any specific, necessary law that wouldn't impact the market. Murder? Certainly. If a man sells poison as a cure-all, knowing it's poison, knowing it will kill people, shouldn't there be some punishment for that? Or would the market just let him go?

Second, I can't make a connection between laws that prohibit murder and the those same laws hurting the market. Can you connect the dots for me, especially if you think all laws interfere with Capitalism, thus, Capitalism cannot exist outside of anarchy?

I think it's important to clarify that I'm talking about laissez-faire capitalism. If we can substitute "capitalism" for "laissez-faire capitalism," that's more than okay with me. Just so we both know we're talking about the same thing.

Post 11

Saturday, January 3, 2009 - 4:22pm

No need for me to reply. See Steve, Ed, and (especially) Jordan for that.

Post 12

Saturday, January 3, 2009 - 4:33pm

It seems I'm under a bit of a delay in posting, so my questions in this post might actually get answered before the post makes it to the board. In that case, my apologies if it looks like I'm asking you to repeat yourselves. Also, I hope you don't mind if I address several people in this one post.

Mr. Wolfer, you wrote:

A free market presupposes that laws based upon individual rights are efficiently enforced. Otherwise people wouldn't be free to make choices.

Why not? Certainly it's not impossible for a society to be comprised entirely of rational individuals who believe in individual rights and laissez-faire capitalism and would never require these laws. No individual would ever initiate force against another - a Galt's Gulch, if you will.

Regardless, I don't think this really gets to my point. Or, if it has, I've completely missed it. My argument is that laws are an initiation of force. If you wanted to start a new society based on one political maxim - no man may initiate force on another - and you create an objective law, with proscribed punishment for anyone who broke the law, then you have already broken the law. You've already initiated force, in the form of coercion, by simply writing the law and threatening, or promising, to enforce it.

Post 13

Saturday, January 3, 2009 - 6:08pm

Such a perfect society would be at the mercy of the first thug that came along and decided that they didn't believe in such a philosophy.
Also, Galt's Gulch, as described in fiction, possessed advanced means to obfuscate its position from the millions of people that WOULD have razed it to the ground. It also did contain men capable of violence, if it became necessary.
It seems that you're caught up in some sort of mathematical conundrum. Thug a initiates force X. Gov't initiates for Z on Thug. So you see 2 "initiations", and everyone is wrong. I think its more helpful to say that Thug initiates force, society responds WITHIN THE SAME "ENGAGEMENT" with enough force to mitigate the effects of the use of force. The force was initiated by the Thug and only the thug.

Post 14

Saturday, January 3, 2009 - 6:26pm

What Ryan said.

I see a distinct dividing line between an individual and the rest of society. Isn't that what laws hope to maintain? A distinction?

Post 15

Saturday, January 3, 2009 - 6:45pm

Jeff S,

I think the answer is in my post, but I'll rephrase it here (and answer the other question).

First, the goal to shoot for is a practical society that is better than this one and moving towards an ideal. The ideal would be something like Galt's Gulch, but until you have some assurance that all of your citizens are, and will remain, people who would never engage in violence, you need some mechanism to give you that free market. The alternative is a non-free market, a market where initiating violence is on an even footing with making voluntary agreements.
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If we passed but one law and it said do not commit murder, it would only stand as coercive to a murderer. To enforce it would only direct force against murders. Morally, the murderer gave up his claim to rights when he committed the murder and therefore the state can arrest, try, convict, and imprison or execute him. The law does not coerce anyone but murders and would-be murders.

So, specifically addressing your question, laws are not an initiation of force. (I'm assuming laws based upon individual rights, not the mess of laws we have now). They are self-defense and/or retaliation - never an initiation of force.

If your moral code is such that you have the right to defend yourself - then that defense is not considered initiation of force, then it is not considered that when delegated to government.
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Maybe it helps to remember that force requires an action. With a law, the application of force requires the violation of the law. It is true that the law sits, threatening that action, but both the threat and the actual exercise of force only take place for the law's violator (again, assuming valid laws). So the law itself is NOT force, it is conditional threat to execute force against violators.

Post 16

Saturday, January 3, 2009 - 7:24pm

Jeff S,

Here is another good reason for laws. Without a body of laws that described contracts we would have problems. Two good people, with honest intentions, could sign a contract that they later have a serious disagreement over. Each accuses the other of misunderstanding some aspect of the contract. Three things are needed:
1. Some preexisting standard that the particular contract can be compared for a determination. Contract law would have been there for consultation before they signed theirs.
2. A neutral third-party with expertise to render a decision using known and fair procedures (courts, arbitrators).
3. A government arm that will enforce the court's decision. Without that justice could never be counted on, and few people would be willing to enter in contracts knowing that the other party could choose, without penalty, to violate their agreements. And we would only be able to sustain that primitive kind of economy that can't make commitments into the future.
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And, what about the laws that protect children from abusive parents. We have tens of thousands of parents that use harsh violence against their own kids every year - the doctors at the emergency room see the kids that are burned, stabbed, beaten, raped, etc. Without those laws, I can't imagine what mechanism would fill in.

Post 17

Saturday, January 3, 2009 - 8:07pm

Jeff:

My argument is that laws are an initiation of force. If you wanted to start a new society based on one political maxim - no man may initiate force on another - and you create an objective law, with proscribed punishment for anyone who broke the law, then you have already broken the law.

Jeff it seems you regard responding to an initiation of force as an initiatory action? Why? Can you see how that doesn't meet the definition of initiation? If you are responding to an initiation of force by using force, you are retaliating, not initiating. Initiating means to take first action.. Laws, at least just ones, are rules for how retaliatory force is to be used in response to an initiation of force.

Laissez-faire Capitalism is the political philosophy that advocates the government not interfere with voluntary trade. By passing laws that prohibit involuntary acts (e.g murder, theft), you are not restricting voluntary trade, it is therefore not a contradiction to have a laissez-faire Capitalist system with laws.
(Edited by John Armaos on 1/03, 8:13pm)

Post 18

Sunday, January 4, 2009 - 9:34am

Ed and Steve, thanks for the sanctions.

Of course I didn't mean the hired guns when I said "means of enforcement". I had two goals in my reply to Jeff S:

1. Address his misconceptions about coercion in free markets.
2. Address anarchy with respect to the rule of law.

I believe in getting to the point in the fewest words as possible. I don't think anything anyone has said has made the slightest difference in Jeff's POV. He say's "My argument is laws are an initiation of force". That's the point of view of a criminal predator who produces nothing. The necessity of a rule of law and enforcement of it is obvious to those who work and want to keep what they earn.

Post 19

Sunday, January 4, 2009 - 11:08am